Is It OK to Pay My Way?

Mother has a stroke and moves in with you to live in the in-law suite in your home.  Mother pays you each month to cover her share of the utilities and to pay for the separate phone line installed in her room,  which line is included on your own personal telephone account.

Some time later, Mother needs long term care in a nursing home.  Unfortunately, she has only $1,000 in the bank and has been subsisting month to month on her income.  So you help your mother to apply for  Medicaid benefits to cover her nursing home costs.

The Medicaid caseworker accepts your application and does nothing for several months.  The nursing home, knowing that you have applied for Medicaid, requires that your mother only pay her income to the nursing home per month, which she must do in order to get Medicaid.  However, such payment is substantially less than the $8,500 per month the nursing would cost without Medicaid.

Five months after filing the Medicaid application, which is a typical application processing period, the caseworker informs you that mother’s contributions to the household expenses and the telephone bill will be treated as gifts to you, causing your mother to be ineligible for Medicaid.  In response, the nursing home sends you a bill for $40,000 for five months of care and will start billing $8,500 per month for future months.

“That’s outrageous,”  you exclaim, “my mother simply paid for the cost of heating and cooling her living space and for her private telephone line!  Those were not gifts to me!”

Outrageous as that may seem, it is true that the Medicaid rules penalize that type of cost sharing unless it is supported by a contract between you and your mother.

For this reason, any time a senior family member is contemplating entering into a financial transaction or co-living arrangement with another family member, it is wise to seek competent legal counsel.   Indeed, seemingly commonsense actions could have far reaching adverse consequences if nursing home care ever becomes a necessity.

The Gatesman Law Office stands ready to assist your family in doing appropriate planning to ensure that such surprises do not occur in your life or the lives of your parents.