Category: Medicaid

A lawyer I know is assisting a client seeking Medical Assistance to pay for his mother’s nursing home care. Mother has less than $2,500.

Prior to entering the nursing home, the client, as agent under mother’s power of attorney, assisted his mother by paying in-home care givers using mother’s funds. Such payments totaled $200,000 over a several year period. While doing so enabled mother to continue to reside at home giving her a better quality of life, at the insistence of the caregivers, such payments were made “under the table”. In other words, no employment taxes were paid for these care costs, and the payments were not reported to the IRS.

Client applied for Medicaid, which was denied because the caseworker improperly treated the $200,000 payments as gifts causing Medicaid ineligibility. In fact, such payments were payments for services. The client, on his mother’s behalf, contested the denial and the matter was set for a hearing before an administrative law judge.

Now the client is fearful that providing a sworn statement as to the reason for the payments will expose the client or his mother to potential civil or criminal liability relating to their failure to report the care giver payments to the IRS.

So, instead of running that risk, the client will withdraw his challenge to the denial of Medicaid benefits. That is unfortunate because the payments to the care givers clearly were not gifts.

This cautionary tale is but one example of the complex matters frequently addressed by elder law attorneys as they seek to guide their clients through the maze of public benefits law.

Last month, in the Article entitled Letting the Fox Guard the Henhouse, I suggested that a married couple could use an annuity to enable the spouse at home to retain more assets than otherwise would be available to her.

Annuity Replaces Lost Income
Enabling the spouse to keep more assets is particularly important when one considers the Medicaid rule that requires that most of the income earned by the spouse in the nursing home must be paid to the nursing home as a contribution to the cost of care. Hence, whatever additional assets the couple can retain by using an annuity will serve to offset the lost income, income the couple most likely depended on to maintain the day-to-day household expenses.

Specialized Annuity
The strategy discussed in last month’s article involves the use of a specialized annuity. I have addressed the characteristics of such annuity in my article discussing the 2006 Medicaid rule changes. You can read that article by clicking -HERE-.

These Articles are Not Legal Advice
As with any article on this website, you should not consider the ideas presented here as constituting legal advice to you in particular, or advice that addresses your particular situation. For more information, click the Is This Legal Advice? tab at the top of this page.

I recently met with a woman whose husband requires nursing home care. The couple owns a house and has $200,000 in the bank. Upon learning that the woman had come to see me, the nursing home representative offered to help her apply for Medicaid and filed a Medicaid application on her behalf.

Why Did the Nursing Home File a Medicaid Application?
I found it odd that the nursing home would file a Medicaid application when it knew full well that Medicaid would not be granted unless something was done with the cash in the bank. Then it dawned on me: is it possible the nursing home filed such application to further its own interests?

The Medicaid Application Will Be Denied.
In this case, the Medicaid rules allow the couple to keep only $100,000 in the bank. Because they had $200,000, Medicaid would not begin to pay for husband’s nursing home care until the couple had spent the other $100,000, and the Medicaid application filed by the nursing home would be denied because the couple has too much money. With such denial would come a notice stating that the couple had to spend $100,000 and then reapply for Medicaid before the State could begin to pay for the nursing home costs.

Was the Nursing Home Pursuing It’s Own Interests?
I wondered, after hearing that the nursing home filed the Medicaid application, if the nursing home’s purpose was to get such a Medicaid denial notice in order to show such notice to the wife and tell her she needed to continue paying the nursing home until she spent $100,000 on nursing home costs.

A More Beneficial Alternative.
The other alternative that I had discussed with the wife was that she could use that excess $100,000 to purchase an annuity to provide her with additional income, thereby allowing her husband to qualify for Medicaid immediately.

Two Possible Courses of Action.
In other words, there are two courses of action available to the couple. One alternative is to pay to the nursing home $100,000 of the $200,000 in the bank and then apply for Medicaid. At that point, there is only $100,000 to cover the retirement needs of the wife living at home (husband’s needs will be covered because Medicaid will pay the nursing home costs.)

The other alternative is for the wife to use $100,000 to purchase an annuity that will return the full amount to her over a three to five year period. Those funds, together with the $100,000 remaining in the bank accounts, $200,000 in total, would be available to cover the retirement needs of the wife living at home. As in the first alternative, husband’s needs will be covered because Medicaid will pay the nursing home costs.

Which Would You Prefer?
Most people would prefer to keep $200,000 for their retirement years as opposed to keeping only $100,000. Because the Medicaid rules allow one to do so, why wouldn’t the nursing home, which offered to “help” the couple get Medicaid benefits, assist the wife to keep the full amount? Unfortunately, because Medicaid reimburses nursing homes at a slightly lower rate than a private pay resident, nursing homes prefer to have families pay privately for as long as possible and not take advantage of cost saving strategies like the one discussed above in which the wife got to keep $200,000 instead of $100,000.

However, it is a lot easier to live comfortably in retirement when you have $200,000 in savings than when you have only $100,000.

So, whenever a nursing home suggests that it will assist in applying for Medicaid benefits, one has to wonder: is this a case of the fox guarding the hen house?

It has been awhile since I last wrote an article on the Maryland Elder Law website. I have been focusing my energy on revising the appearance of the site. My efforts are now complete with the addition of my photograph on the main page. While the old version of the website contained a photograph, I struggled to add the photo to the new version. I do all of my own website modifications, learning as I go. While I know a thing or two about estate planning, elder law, and photography, website development is a relatively new endeavor and I continue to learn as I go in the creation and revision of this and my affiliated websites.

One of the challenges of website development is designing a site that looks the same on each of the various web browsers in use today, Internet Explorer, Firefox, Opera, Safari, and others.  If you find that the website looks awry, please click the Contact Us link above and send me a message to let me know what looks funny about the site.

Now that the redevelopment process is complete, I am free to write more articles on legal topics of interest to our readers.

Stay Tuned.

The “Secret Handshake” refers to that gesture known only by the select few who are allowed access to an exclusive club.  I use that as the title to this post because the State of Maryland has adopted policies that make it hard for people who do not have “inside information” to make good informed decisions regarding their financial planning should nursing home care loom on the horizon.

Continue reading “The Secret Handshake – Paying for Long Term Care in a Nursing Home” →

I stumbled upon a blog written by Trevor Rosen that provides invaluable information for people seeking to do legal research in Maryland.   For example, his May 2, 2009, blog post gives guidance on how to obtain legislative history for Maryland statutes.  Lawyers use legislative history to ascertain the lawmakers’ intentions when passing legislation.  Legislative history is important if a law is not clear, or if the meaning of the law is in dispute and the matter must be decided by a court.  When courts interpret statutory law they frequently refer to the legislative history.

Rosen provides many other resources to assist lawyers and others who seek to research Maryland law.  I have placed a link to Trevor Rosen’s blog in the Web Links section of this webpage.  To see Rosen’s blog, click on the words “Researching Maryland Law” in our Web Links.

The Gatesman Law Office works with personal injury lawyers to assist their clients in protecting the assets they recover for their clients. Sometimes, it is prudent to utilize a special trust to protect any public benefits the injured party may be getting. If, for example, the client is eligible for Supplemental Security Income (SSI) and Medicaid, using such a trust is essential. Without the trust, the client will lose both SSI and Medicaid.

Continue reading “Personal Injury Trusts” →

A lawyer who is doing Medicaid planning for a client asks: “The Medicaid caseworker has requested to see my client funds account records.  Must I give her this information?  Is this a problem?”

This inquiry reveals one of the many pitfalls of Medicaid asset preservation planning.

Continue reading “Unintended Consequences” →