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  >  New Jersey Medicaid   >  The Problem of Unexplained Deposits – Part 2

The Problem of Unexplained Deposits – Part 2

Last week I wrote about how unexplained deposits have the potential to be more damaging to a Medicaid application than unexplained withdrawals.  That’s because deposits must be explained or the application is denied for being incomplete and those same deposits must be explained in any new application unless  the deposit then falls  outside of  the 5 year Medicaid lookback period.

Often these deposits are a result of an inheritance.  They could be from a spouse or another family member or friend but can come in many different ways. If the Medicaid applicant receives an inheritance by way of a last will, the Medicaid caseworker will ask to see the will as well as an accounting of all the assets of the estate.

For example, the will may leave the Medicaid applicant 1/3 of an estate.  Let’s say there is a deposit of $50,000 into the applicant’s account coming from that estate.  This amount does not establish by itself that the applicant received everything he or she was entitled to.  It is possible that some portion of the estate was disclaimed, a written statement that the person is declining to receive what he or she is entitled to.  

A disclaimer is the equivalent of giving the assets away – what Medicaid calls a transfer for less than fair value which is subject to a penalty.  To be sure that the Medicaid applicant received the full amount of inheritance requires a complete accounting by the executor of that estate.  An accounting is something that an executor should provide to each heir anyway but many fail to do so.  This will become a big problem for the applicant.

There are also nonprobate assets such as life insurance, retirement accounts and payable on death accounts.  Tracking down deposits that turn out to be life insurance proceeds can be difficult if the applicant cannot provide any history to these deposits.  Other family members may be totally in the dark as to these deposits and unable to provide any explanation.  Sometimes obtaining copies of the deposited checks will hold the answer but other times the bank cannot provide those copies.

New accounts that may pop up during a 5 year look back could be the result of a rollover IRA or other retirement account.  A deposit may also be the result of a transfer on death designation.  These answers may not immediately come to mind but with some thought and investigation they often can be figured out.  

Getting the necessary documentation to prove these deposits however, may take some time so it is always best to get your “ducks lined up” before you file a Medicaid application.  If the Medicaid caseworker finds these deposits before you, generally you’ll have 1 to 2 weeks to produce the documentation necessary or your application will be  denied – for being incomplete.