Why Pay Someone to File an Application I can Complete Myself?
The call usually starts out this way. “I’ve given all of Dad’s money to the nursing home already and am ready to apply for Medicaid. His situation is really simple. I can handle it myself but I just have a few questions.” I’m always happy to try to help whenever I can but when I tell people that doing it yourself can often cause a loss of tens or even hundreds of thousands of dollars they act surprised. A recent case we handled in our office will illustrate.
Julie called us regarding her dad, who was in the hospital, ready to be transferred to a nursing home. She had picked out a nursing home, applied for Medicaid and thought she had a plan in place. Dad would move to the nursing home, private pay for a few months and then move over to Medicaid. Then she got a letter from Medicaid stating that Dad had made a number of asset transfers which would result in his being ineligible for benefits. The caseworker requested copies of checks and documents explaining deposits and withdrawals before he could tell Julie how long her dad’s penalty would be. Julie called us in desperation.
Now, I have to tell you, that some of the most challenging cases we get are those where we haven’t done the planning for families or even filed the Medicaid application but, rather, are called in to finish a process that has suddenly been derailed. And that, unfortunately, was what happened to Julie. The nursing home she lined up for Dad learned of the Medicaid problems and said she needed to get them straightened out before they could admit him. We took a look at the details and here is what we discovered.
Dad had transferred his home to his children 10 years earlier. That wasn’t the problem. However, Dad was still living there and paying much of the expenses of the home, but doing so by way of reimbursing Julie who was actually paying the taxes, insurance, etc. Additionally, Dad had been giving money to his children over the past several years, hardly unusual, but, transfers subject to a penalty, nonetheless. Finally, Julie had been using Dad’s bank account to deposit some of her own funds. She did this out of convenience but didn’t realize what a problem it would cause when Medicaid counted it as Dad’s.
The questionable transfers totaled almost $75,000, a 10 month Medicaid penalty if we couldn’t prove otherwise. So, we rolled up our sleeves and got to work. We learned that Julie’s brother Bill was disabled. Transfers to a disabled child are exempt from the transfer rules (something Julie didn’t know and which never came up at the Medicaid interview). That reduced the questionable transfers to $50,000.
We then painstakingly went through the nearly four years of account statements and had Julie provide us with as much information as possible to piece together the entire picture of money going in and money going out of Dad’s account. We separated what was actually Julie’s and proved it to Medicaid. Most of the payments that Dad made relating to the home he no longer owned we also were able to get Medicaid to treat as reasonable home expenses.
All this helped to reduce the $75,000 down to $20,000, resulting in a 3 month penalty. Dad entered the nursing home, the family private paid for 3 months and then Medicaid kicked in. The net savings to the family by knocking 7 months off the penalty was $70,000. Not knowing the Medicaid ins and outs, Julie would have never been able to do it on her own. Yes, she filled out the application. But, it was the rest of the complicated process she needed our help with.