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The Danger of Acting on the Wrong Information

If you have ever struggled through the long term care system you know that getting accurate information is one of the most frustrating aspects.  It seems the more people you talk to the more confusing and contradictory the process becomes.  Acting on the wrong information can be costly.  A call we received last week from Jim illustrates this point.

 Jim’s mother has kept his father in their home with aides for the past two years but now, he is in the latter stages of Alzheimer’s.  Mom is overwhelmed, stressed and concerned that money is running out.  What will she live on?  Jim is now assisting Mom in searching for a suitable nursing home and hoping to qualify for Medicaid because Mom is healthy and may outlive Dad by some years.  She’ll need every dollar she can preserve.

 Qualifying for Medicaid in the case of a married couple is complicated.  Medicaid takes a snapshot of the couple’s countable assets as of the first day of the first month that the applicant spouse is continuously institutionalized.  That number is then divided in half and the healthy spouse can keep one-half of the assets, but not more than $109,560 (this number is adjusted each year).  The couple must spend down the rest of their assets to below $2000.

 Jim reported to me that one nursing facility told him that his mom could give the facility advance payment of several months of nursing care at their private pay rate while they are applying for Medicaid.  Once the application is approved (it can take 2 to 4 months and sometimes longer to receive word) the facility would refund whatever amount from that deposit they don’t need because Medicaid is then picking up the cost.  So, for example, if they deposit $60,000 with the nursing home to cover the cost of the first 6 months and Medicaid says they will start paying from month 4 then the home would refund $30,000.  Jim said it didn’t sound right to him.  I told him he was absolutely correct.

 What many don’t realize is that the money held by the nursing home on deposit is a countable asset so it affects both the snapshot or starting number and the target spend down or ending number.  That money isn’t part of the spend down until it is paid to the nursing facility for services received.  Medicaid doesn’t allow for payments in advance of services.  If you “pay” the nursing home for 6 months all you have done is move your asset from your bank account to the nursing home’s bank account but it is still yours.

 I explained to Jim that his mom could lose many months of Medicaid benefits, which could dissipate assets she will need for her own care.  He was thankful that he called us when he did.  We are now preparing his dad’s Medicaid application, guiding his mom through the process to insure that she will preserve what little she has left and the nursing home will be compensated for the care they provide.