February 9, 2017
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.
February 8, 2017
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.
August 31, 2016
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.
July 21, 2016
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.
July 8, 2016
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.
July 1, 2016
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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December 21, 2015
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.
December 1, 2015
It is a well established principle of the Maryland Medicaid rules that certain jointly owned assets such as stocks or real property will not be counted as available resources to a nursing home resident who applies for Medicaid benefits if the other joint owner refuses to participate in a sale of the property.
For decades, such assets have been disclosed by nursing home residents on their Medicaid applications and such assets have been valued at zero for purposes of determining Medicaid eligibility.
Recently, however, a Medicaid applicant was denied Medicaid coverage for nursing home care because the applicant owned stock, in certificate form, with her son in joint ownership, even though the son had refused to participate in a sale of the stock. Ordinarily, such a denial by a Medicaid caseworker would be overturned when the case was appealed to an Administrative Law Judge, but in this case, the Administrative Law Judge ignored the specific regulation in the Maryland Medicaid Manual that explicitly states that jointly owned stock should not be a countable asset where the joint owner refuses to sell.
Such denial has implications, not only for the particular individual whose Medicaid application was denied, but for Medicaid applicants statewide. Indeed, this case has been appealed to the Circuit Court of Maryland where a senior Assistant Attorney General, representing Maryland’s Medicaid authority, the Department of Health and Mental Hygiene, essentially has requested the Circuit Court to issue a decision that radically revises the long standing Medicaid policy concerning such jointly owned assets.
If the Circuit Court were to uphold the decision of the Administrative Law Judge in this particular case, then it would shroud the process of dealing with jointly owned assets in a cloud of uncertainty. No longer would Medicaid applicants and their advisers be able to act with certainty regarding jointly owned assets, as there would exist the possibility that Medicaid caseworkers could arbitrarily ignore the applicable rule on the strength of judicial precedent.
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.
The State’s efforts to deny benefits in the case under discussion in this article is an example of such bad public policy.
William M. Gatesman is following the progress of this case closely and will inform the readers of this website of any new developments as they arise.
In the meantime, Mr. Gatesman stands ready to assist clients with prudent Medicaid eligibility and asset protection planning in the context of a changing landscape.
August 20, 2015
Mother dies with a will leaving all of her assets to her three children in equal shares. One of her adult daughters receives Medicaid benefits because her assets are less than $2,000 and she has a very low income due to a disability. Such daughter is expected to receive a distribution of $25,000 from mother’s estate. This will cause daughter to lose her public benefits, which will be disastrous for daughter given the very high costs of her medications.
While daughter could petition a court to create a special type of Supplemental Needs Trust, known as a “d4a trust” and once she receives the distribution from the estate, deposit the funds into such trust, there are significant costs to establishing such a d4a trust, and there are administrative burdens associated with such trust, including annual reporting to the State Medicaid authority. Moreover, a d4a trust requires payback to the state for any Medicaid benefits if there are funds remaining in the trust when the trust beneficiary dies. Given the amount to be distributed, one must weigh whether it is worth the cost of setting up a d4a trust if there are other less costly alternatives.
Fortunately, Maryland law provides an opportunity for a trust to be created in a simpler way. Under the Maryland Discretionary Trust Act, a trust may be established for a beneficiary, and the assets in the trust will not be considered to be available resources for Medicaid purposes. Moreover, unlike a d4a trust, there is no requirement to pay back Medicaid for benefits received during lifetime after the beneficiary dies.
While Mother in her will could have provided for a Maryland Discretionary Act trust for daughter, she failed to do so. Nevertheless, the Maryland Discretionary Trust Act provides that “any person having a right to transfer property to another person may create a trust as a transferor under [the Maryland Discretionary Trust Act].” Under this law, the term “person” includes any legal entity, and a probate estate is a legal entity.
William M. Gatesman presently is working with clients to come up with creative solutions to allow estate beneficiaries to retain their essential public benefits where the decedent’s will did not provide for asset protection in light of those public benefits. Establishing a Maryland Discretionary Trust Act trust is one of the tools in Mr. Gatesman’s tool kit to achieve the objective of protecting a beneficiary’s eligibility for public benefits.
April 30, 2015
In order to get Medicaid to pay for one’s long term care costs in a nursing home, one can have no more than $2,500 in assets. While social security and pension income is deposited into one’s account each month, as long as that money is spent before the end of the month, bringing the account balance below $2,500, then Medicaid benefits will not be affected. One routinely spends such income each month because Medicaid requires that the bulk of the Medicaid recipient’s monthly income be paid to the nursing home as a contribution to the individual’s cost of care.
A problem arises, however, when one’s income deposit is made on the last day of the month, as some pension payments are structured, because Medicaid will look at the account balance as of the first moment of the first day of the following month to determine whether the individual has more than $2,500.
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