A Six Figure Medicaid Mistake (Part 4)

In this week’s blog post, I continue to tell you about a call I received from a family who tried and failed to get Medicaid for Dad.  As I explained last week, the nursing facility employee misunderstood how Medicaid works in the case of a married couple where only one spouse is applying for Medicaid.

The healthy spouse – in Medicaid language known as the “community spouse” – must spend down under a certain asset limit which is calculated using a snapshot date.  Last week I explained the formula.  In our case, Dad had entered the hospital and then the nursing facility 16 months ago so we had to go back to the value of assets at that time.

But, what counts as an asset is more than what one might assume.  Bank accounts, investment accounts, stocks, bonds, mutual funds, CDs and annuities are obvious assets.  There are, however, less obvious assets such as life insurance with cash value and accounts opened for other family members such as children and grandchildren.  For example, if the Medicaid applicant or spouse opened an account for a grandchild but it is actually co-owned with that other person, then the account will be considered an asset of the applicant or spouse unless it can be proven that the child or grandchild provided the funds deposited into that account.

On the other hand, if the account was set up for a minor grandchild as an UTMA (Uniform Transfer to Minors Act) account with the applicant or spouse listed as custodian for the grandchild, then the account is owned by the grandchild.  The question then becomes “what did the applicant or spouse transfer to this account and when”.  That’s because those transfers, if made within 5 years of when the Medicaid application is filed, will be subject to a Medicaid penalty.

In our case, Mom had many different accounts across a number of different asset classes.  Next week I’ll get more specific about that.