Are You Paying Too Much to Apply for Medicaid?

The requirements imposed upon individuals seeking Medicaid benefits to pay nursing home costs have become less onerous in recent years.  For many years, Medicaid applicants were required to submit monthly statements for every bank and investment account for every one of the 60 months preceding the filing of the Medicaid application.  Under that regime, someone with only 4 bank accounts would have to submit 240 individual account statements.  Then, once those statements were submitted, they were reviewed by a Medicaid caseworker who was on the lookout for any “questionable” transactions.

“Questionable” transactions include unexplained deposits and substantial expenditures.  Therefore, unless the source is obvious from the account statement, any deposit showing up on those 240 statements would be questioned by the Medicaid caseworker seeking to ascertain the source of the funds deposited, and any payment of $1,000 or more likewise would be called into question.  The problem is magnified if the applicant or the applicant’s spouse had any additional bank or investment accounts.

That being the case, in order to be prepared to address a Medicaid caseworker’s questions, lawyers assisting Medicaid applicants under the old system would review all of the bank statements and seek explanations from the applicant or applicant’s family for any transactions that likely would be questioned.  That process could be time consuming, and, if the law firm performing such review billed the client on an hourly basis, then the legal fees to pursue the Medicaid application would be high.

In recent years, however, the Medicaid application process has been streamlined.  No longer is a Medicaid applicant required to submit 60 individual account statements for each of the 60 months preceding the month the Medicaid application is filed.  Now, applicants need only submit a few statements for the most recent months, and then a single statement for a particular month for each of the preceding five years.  Hence, under current practice, rather than submitting 60 statements for each account, an applicant only has to submit 8 statements, and it is only those 8 statements that will be scrutinized by the Medicaid caseworker.   Thus, for a Medicaid applicant with four accounts, the number of statements needed to be submitted for scrutiny was reduced from 240 to 32.

If one were to continue to operate under the old system and submit 60 monthly statements for each account, and then spend the time to closely scrutinize each of those statements and any transactions that might be called into question, then such person would  be doing extra work for little or no added benefit.  While one might argue that such greater scrutiny may enable the lawyer to ferret out potential problems that might arise in the context of the Medicaid application, a prudent consumer must decide whether this added scrutiny is needed.  If the additional documents being reviewed are not even required to be submitted to support the Medicaid application, then one must consider whether reviewing such documents in fact adds value to the representation, particularly when the client is paying by the hour for any work that is being done.

The Gatesman Law Office, on the other hand, works with clients to file Medicaid applications that conform to the streamlined application standards, thereby saving clients time, money, and frustration.  [It can be very costly and frustrating to try to obtain historical monthly account statements if the Medicaid applicant has not retained copies of those documents for the preceding five years.]  Moreover,  when Mr. Gatesman undertakes a Medicaid application case, his clients understand how much the engagement will cost from the outset, rather than entering into an agreement to pay legal fees in an open ended manner, where hourly charges continue to increase as more and more work is done to evaluate account statements.

As with any service provider, it is important that the consumer understand the nature of the services being offered and the terms under which the client will pay for such services.  With that information, the client can ascertain whether the services are a good value.

William M. Gatesman has been assisting clients to obtain Medicaid benefits for nursing home care for 20 years, has successfully pursued appeals of adverse eligibility determinations during that same time period, and has taught numerous continuing education programs for lawyers on Medicaid eligibility, Medicaid applications, and Medicaid appeals.  If you have any questions about Medicaid eligibility or require assistance in obtaining Medicaid benefits, and you would like to work with legal counsel that offers good value, please give us a call at 301-260-0095.


William M. Gatesman, Attorney at Law

William M. Gatesman assists clients in Maryland and D.C. in the areas of elder law and Medicaid planning, asset protection planning, special needs planning, estate planning, probate and estate administration, wills, trusts, powers of attorney, and health care decision making documents.  Mr. Gatesman is available to meet with clients in his offices in Rockville, Columbia, Frederick and Hagerstown, Maryland, and is available to make house calls as needed in those locations and in other areas of Maryland and D.C.

Call 301-260-0095 for more information or to make an appointment.

The purpose of this website is to educate consumers and their advocates regarding legal developments that may affect their lives. Mr. Gatesman has written the articles that follow on this website, organized by date of publication. To assist you in locating articles of interest, there is a search feature and a subject matter index in the column on the right side as you scroll down this page. You also may sign up to receive newly published articles by email in the newsletter signup box on the right.

The Steps to Selling Your House Quickly

I often work with people who, in the administration of the estate of a deceased loved one, find themselves in the position of having to sell the deceased person’s house. Useful to such clients, and to anyone else who is selling a house, are these tips, the Steps to Selling Your House Quickly, which tips one of my mentors, who has much experience investing in and selling homes, shared with me.

First, pay attention to the curb appeal of the house. The moment a potential buyer drives up, the house should look neat and tidy, and it should appear to the prospective buyer, before she even sets foot into the house, that the property has value. Then, once the prospective buyer enters the house, she should find the space clean and tidy and all obvious defects should be fixed. There should be clean curtains or dust-free hanging shutters on the windows.

Pay Attention to the Kitchen.  The astute reader will note that I used the pronoun “she” when referring to the buyer in the paragraph above. That was a conscious word choice on my part because, as my mentor emphasized to me, one who markets a house for sale should market the property to a woman. As my mentor explained it, when a couple buys a house, it is the wife who typically has the final say as to which house is chosen. That being the case, the seller should pay attention to the kitchen when marketing the house. The kitchen should be above average, and it must have a dishwasher. In order to ascertain whether the kitchen is above average, the seller should engage a realtor who sells houses in the price range for which the house will sell. Such a realtor would be best suited to advise the seller as to how well the kitchen stacks up to other houses in the target market.

Lest you think the above paragraph has a sexist tilt, it is important that the kitchen be above average whether it is a man or a woman buyer who will make the final purchasing decision. As my mentor says, “you live in the kitchen, not in the bathroom.” That being the case, any pre-sale improvement budget should be focused on the kitchen, it being sufficient that the bathrooms be clean and serviceable. While that adage may not ring true in the ultra high end housing market where master bathrooms are the size of bedrooms in other houses, it is a good general rule of thumb for those seeking to sell residential real property.

Staging the House. The seller should set up the house to make it most attractive for potential buyers. If rooms are filled with clutter, on the one hand, or are left empty, on the other hand, it leaves the impression that the rooms are small. It is particularly important to stage size-challenged rooms. For example, the seller should place in a small dining room a dining room suite of furniture that fits the dimensions of the space. This strategic removal of clutter and placement of furniture is referred to as “staging” a house to make it more attractive for potential buyers.

The master bedroom should be staged with a bedroom suite that includes a king-sized bed, if possible. For a house with very small rooms, the seller could stage the master bedroom with a queen sized bed and a suite of furniture that does not overwhelm the space. My mentor suggests that the appearance of the master bedroom is of utmost importance and that potential home buyers are less interested in the “kid’s rooms.” Nevertheless, those lesser bedrooms likewise should be staged with furnishings that make the space appear most desireable because, as stated above, a vacant room will seem to be smaller than a room that contains the essential furnishings to make it obvious that such room, regardless of its size, is large enough for its intended purpose.

Also, when deciding how to stage the house, take care not to move furniture or pictures that have been in place for a long time lest you expose carpet or patches of the wall that are of a different color than the rest of the surrounding surfaces, which changes in color accrue over time as the space is exposed to sunlight and day to day living.

Price the House Right from Day One. As a general rule of thumb, it costs 1% of the selling price per month to own a house, so it is best to sell the house quickly and not let it sit on the market. In order to accomplish this goal, the house must be priced right on day one. Indeed, a seller can be confident that potential buyers will know the prices for which houses are selling, especially in this internet age, and such potential buyers can easily identify, and pass on by, houses that are not competitively priced.

In order to achieve the objective of pricing the house right from day one, the seller should work with a realtor who sells a lot of houses in that particular price range.

Offering Practical Client Representation. By following these steps, a home seller will greatly improve the chances of selling the real property quickly and for top dollar.

In addition to assisting clients with managing the administration of an estate when a loved one dies, William M. Gatesman is prepared to provide practical suggestions, such as those addressed above, to ensure that the estate administration is carried out smoothly and efficiently. Mr. Gatesman offers such practical perspective in all his areas of practice to provide the best service and value to his clients.

The Fox is Guarding the Hen House in a Maryland Guardianship

In Maryland, if one asks a Court to appoint a guardian for a person who is alleged to be disabled (the “alleged disabled person”) where such alleged disabled person is believed to be unable to manage his or her own affairs, the Court will appoint a lawyer to represent the alleged disabled person (the “court appointed counsel”). Sometimes, if there is a need to take immediate action to protect the alleged disabled person, the Court might, on the strength of a petition alone, appoint a temporary guardian for the alleged disabled person, which temporary guardian often is a lawyer chosen by the court.

In theory, the court appointed counsel and the temporary guardian are fiduciaries whose job it is to protect the interests of the alleged disabled person. Sometimes, however, it appears that such court appointed fiduciaries do not fulfill that responsibility.

Consider the following circumstance.

A health care facility is caring for Husband. Wife is unhappy with the facility’s treatment and wants husband to come home, and for the moment is withholding payment. Wife holds a financial power of attorney and a medical power of attorney for her husband, meaning that she has authority to manage his personal, medical, and financial affairs.

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Medicaid Updates Transfer Penalty Rule

If one applies for Medicaid to pay for long term care in a nursing home, the state will look to see if the applicant made any gifts in the five years preceding the Medicaid application. If so, then (with some exceptions addressed in various articles on this website) a period of Medicaid ineligibility will be imposed.

For many years before 2014, the period of ineligibility was determined by dividing the amount of the gift by $6,800, which amount was supposed to be the average monthly cost of care in a nursing home. In July, 2014, that number was changed to $7,940. Medicaid has again updated the divisor to take into account Nursing Home care cost inflation.

Effective July 1, 2016, the divisor to determine the number of months of Medicaid ineligibility for gift transfers is $8,684, which means that one would be ineligible for one month for every $8,684 in gifts made during the five years preceding the Medicaid application.

Bear in mind that the term “gift” means any transfer of resources with respect to which the transferor did not receive full value. Thus, if a person sold her house for less than it’s fair market value (Medicaid uses assessed value or an appraisal to determine fair market value), then Medicaid will treat the difference between the sales price and the deemed fair market value to be a gift transfer even if such sale was made to a third party in a bona fide arms length transaction.

We at the Gatesman Law Office endeavor to stay at the cutting edge of new developments in Medicaid law and policy.

Should you have any questions as to how this new policy might affect you or a loved one, please contact us by clicking the Contact link on this website.

Bill Gatesman

A People’s Lawyer

A client recently posted a review of my services on AVVO, the independent legal resource website. You may CLICK HERE to read the review.

This client referred to me as “A People’s Lawyer,” and wrote the following:

William Gatesman assisted me in having my father’s trust terminated and the trust assets distributed to me and the other beneficiaries of the trust before the time that those assets were supposed to be distributed. We did this with a petition to the circuit court and the court allowed the distribution without holding a hearing based upon Mr. Gatesman’s written petition. And, while I engaged Mr. Gatesman to obtain this result, he went a step further and negotiated with the Trustee’s attorney to get the trustee to reimburse me for expenses I had paid relating to my father’s death, something I had been trying to do without success. Finally, Mr. Gatesman proposed and worked out an arrangement whereby the other trust beneficiaries agreed to reimburse me for a portion of my legal fees.

I am very pleased with Mr. Gatesman’s representation. He was easy to work with, he got me the result I had requested, and he made suggestions for other ways I could benefit from the representation and succeeded in obtaining those results. I highly recommend William M. Gatesman.

When a Parent Dies Owning a House with a Mortgage, May the Children Inherit the House Without Getting a New Mortgage?

When a parent dies owning a house that is subject to a mortgage, the question arises whether a child or other beneficiary of the parent’s estate can inherit the real property without obtaining a new mortgage by simply continuing to make the payments on the existing mortgage.

In general, mortgages are subject to a “due on sale clause,” which is a term in the mortgage agreement that allows the lender to accelerate the loan (that is, immediately collect the balance due) upon the transfer, or retitling of the real property to another person. However, under Federal law, there are a number of transfers that may be made without triggering a due on sale clause, including a transfer of the property to a relative of the deceased owner as a consequence of the owner’s death.

That Federal law is known as the “Garn-St Germain Depository Institutions Act of 1982”, which is codified at 12 USC 1701j-3.

Under that law, for residential real property with less than five dwelling units, the following transfers will not trigger a due on sale clause, or, put another way, the lender who holds the mortgage cannot force payment of the outstanding balance due on the mortgage if any of the following transfers occur:

1. the creation of a lien or other encumbrance subordinate to the lender’s security instrument which does not relate to a transfer of rights of occupancy in the property;

2. the creation of a purchase money security interest for household appliances;

3. a transfer by devise, descent, or operation of law on the death of a joint tenant or tenant by the entirety;

4. the granting of a leasehold interest of three years or less not containing an option to purchase;

5. a transfer to a relative resulting from the death of a borrower;

6. a transfer where the spouse or children of the borrower become an owner of the property;

7. a transfer resulting from a decree of a dissolution of marriage, legal separation agreement, or from an incidental property settlement agreement, by which the spouse of the borrower becomes an owner of the property; and

8. a transfer into an inter vivos trust in which the borrower is and remains a beneficiary and which does not relate to a transfer of rights of occupancy in the property.

William M. Gatesman works with clients to craft estate plans and asset preservation plans, some of which involve changing the ownership of real estate. Careful consideration must be made of the effect of any such transfer and whether a due on sale clause may be asserted as a consequence of the transfer.

Beware the Revocable Trust Creditor Trap

In Maryland, creditors may not make a claim against a deceased person’s estate once six months have passed since the person’s death. What that means is that a creditor seeking to assert a claim six months or more following someone’s death will not be allowed to collect the debt.

One exception to this rule is that a creditor who has a secured interest, for example, a bank that holds a mortgage on the deceased person’s real property, will still be able to collect against the proceeds of the sale of such real property, and retains the right to foreclose on the real property if the mortgage payments are not being made. However, such bank would be precluded from collecting more than the sales proceeds if the house sells for less than the mortgage loan balance if the bank did not make a claim in the estate of the deceased person within six months following that person’s death.

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New Procedure to Obtain Estate Tax Return Closing Letter

The Internal Revenue Service will no longer routinely issue estate tax closing letters when it finishes satisfactorily processing an estate tax return. In an online Notice published -HERE-, the IRS states that “estate tax closing letters will be issued only upon request by the taxpayer.” That Notice sets forth the procedure whereby a taxpayer or tax preparer may obtain a Transcript in lieu of a closing letter to ascertain that an estate tax return has been accepted by the IRS.

Circuit Court Upholds Decision to Eliminate Exemption for Joint Assets

On December 1, I wrote an article, Medicaid Exclusion for Joint Assets Under Attack. That article addresses an instance where the State of Maryland Medicaid authority reversed its long time practice of disregarding jointly owned stock where a co-owner who is not the Medicaid applicant refused to sell such stock.  This exclusion is based upon a provision of the Maryland Medicaid Manual that allows for such treatment.

The matter was appealed and an administrative law judge upheld the decision of the Medicaid regulator, so the individual appealed to the Circuit Court of Maryland.  That court has now issued its opinion upholding the decision of the Administrative Law Judge.

My December 1, article concluded that: “This is not the proper way for the Medicaid authorities to change their policy. The proper way is to propose rule changes, either by changing the Code of Maryland Regulations, or by changing the Maryland Medicaid manual. Simply leaving a rule in place that exempts joint assets from consideration, but then attacking such an arrangement by imposing Medicaid ineligibility on a case-by-case basis on unsuspecting Medicaid applicants is bad public policy.”

Now that the Circuit Court has upheld the Administrative Law Judge’s decision, there is great uncertainty as to how jointly owned assets will be treated if one of the joint owners refuses to participate in a sale of such property.  If the Circuit Court ruling were to be treated as binding, then such exemption may no longer be in force, however, there still is a rule in the Medicaid Manual that allows such exemption.

William M. Gatesman stands ready to assist clients in navigating the troubled waters of the Medicaid rules in light of rapidly changing currents, the most recent being the Circuit Court decision eliminating the exemption for joint property where there is a refusal to sell by a co-owner.

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