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.
For most Medicaid recipients, their income is deposited by direct deposit near the beginning of the month, and there is time to spend that income before the last day of the month. Such is not the case for individuals who receive their income on the last day of the month, however. If that income is high enough, then such individuals could find themselves in the position of never being able to qualify for Medicaid. For example, an individual who has no assets but who receives a pension of $2,501 by direct deposit on the last day of each month would not be able to receive Medicaid benefits by the application of this rule, even if such person incurs nursing home costs of $8,500 each month.
For this reason, one Administrative Law Judge in Maryland, after considering an appeal of the denial of Medicaid benefits for someone whose income was deposited on the last day of the month, issued a legal opinion stating that such person could spend that income in the following month and still be eligible to receive Medicaid to cover the nursing home costs because it was simply impossible to spend, before the end of the month, funds that did not even enter the account until the last day of the month (and which funds did not post to the account until the close of business on that last day).
Unfortunately, unlike most court opinions, Administrative Law Judge opinions do not serve as binding precedent which must be followed by other Administrative Law Judges who hear future cases dealing with the exact same issue. That being the case, there have been a number of appeals following that favorable Administrative Law Judge opinion in which the individual seeking to obtain Medicaid benefits was denied Medicaid coverage for the mere reason that such individual had more than $2,500 on the first moment of the first day of the month following a month in which that person’s income was deposited by direct deposit on the last day of the month.
This is a problem that calls out for a regulatory fix, but in the meantime, there are steps one can take to ensure that the Medicaid applicant’s account balance is below $2,500 on the first day of the month, even in instances where such individual receives a direct deposit of income on the last day of the preceding month. While those strategies are beyond the scope of this article, suffice it to say that if you or a loved one requires nursing home care, and pension income is deposited to the bank account on the last day of the month, then certain financial arrangements have to be put in place to ensure that such income deposit does not cause the permanent loss of Medicaid benefits for long term care in a nursing home.
The Gatesman Law Office is available to assist clients in responding to circumstances such as these that would cause Medicaid ineligibility through no fault of the person seeking such benefits for long term care in a nursing home.