If you want to delay a loved one’s application for Medicaid benefits to pay for nursing home care, there are plenty of ways to do it. This article, the second in a multi-part series, explains two more ways people mess things up.
What are the most common mistakes people make when attempting to qualify an elderly loved one for Medicaid? We posed this question to Matthew Bravette, one of the attorneys at Bratton Law Group, a Life Care Planning Law Firm with offices in the Southern New Jersey and Philadelphia areas.
Do-it-yourself estate planning causes all manner of problems for families, and one of the most troublesome actions involves adding a family member or a friend to a bank account without fully understanding the risks and the eventual Medicaid implications. “A parent might add a child to their bank account as a joint account holder instead of having a power of attorney prepared,” Matthew explained. “Maybe that child accidently or intentionally deposits their own paycheck or funds into that account, or they make a withdrawal from the account, or they make a payment for something out of that account. If those things happen within five years of the Medicaid application, the applicant is going to have the burden of verifying where those funds came from and, if they were withdrawn, what they were used for. This can be very difficult to do.”
Co-mingled funds can create more problems. “Let's say you added your child to your checking account and that child deposits a large amount of money into that account,” said Matthew. “If you apply for Medicaid, any funds in that checking account are going to be considered a countable resource against the applicant. Another example is when a child adds the parent to the child's own account as a matter of convenience. All of the child’s money is now considered a countable resource against the parent’s Medicaid application.”
Matthew says that families often believe they have good reasons for making these moves. “The family often believes that this will make it easier for them to help an aging parent with payment of bills, money management, and to help prevent exploitation, but there are better methods available to help achieve these same outcomes,” he explained. ‘All those so-called conveniences will evaporate when it’s time to apply for Medicaid for the parents. Which funds belong to the parent? Which funds belong to the child? Now you're dealing with an account where most or even all of the funds belong to the child, yet the Medicaid applicant is unable to explain the transactions that happened over the last five years.”
Another mistake includes not planning to maximize the community spouse resource allowance and any available spousal exemptions. “Medicaid has some favorable rules in place, and they're designed to protect a healthy spouse against impoverishment,” Matthew noted.
The Community Spouse Resource Allowance (CSRA) is assessed based on “snapshot dates,” which are different points in time where the state will look at a couple's total countable assets to make a determination as to how much the community spouse is entitled to keep. The snapshot date can greatly affect what the community spouse is entitled to keep. “There's a lot of room for variation, and you can end up in a situation where you accidentally spend down way beyond what is needed,” said Matthew. “Spouses are also permitted to have certain assets that are not counted as part of the Medicaid application process. We want to try to plan well in advance to help maximize the possible spousal protections.”
The next article in this series will address another common mistake families make during the Medicaid application process.