asset protection

Threats to Medicaid: Can You Prove It?

Cash payments or informal caregiver arrangements can affect your loved one’s ability to qualify for Medicaid upon going into a nursing home. Here’s what you need to know…

Giving Money to Family Can Jeopardize Medicaid Eligibility

When someone applies for Medicaid, the state looks back 5 years to see if any money was given away to the family. If so, the state imposes a penalty, or a delay of benefits. Sometimes money was clearly given to the family. Other times, it was used for the loved one, but the family can’t prove it. Check out the case below for a specific example.

Michigan Family’s Benefits Delayed – No Proof of Expenses

Betty Jensen was aging and suffering from dementia. She remained in her own home, but started needing more and more assistance to stay there. In May of 2011, her grandson (Jason) acted on her behalf and hired someone to be Ms. Jensen’s caregiver.

When he hired the caregiver, Jason did so informally without a written contract. For nearly a year, Jason paid the caregiver using almost $19,000 worth of Ms. Jensen’s assets. In March of 2012, Ms. Jensen’s dementia progressed to the point where she had to enter a nursing home.

In April of 2012, Jason applied for Medicaid benefits to help offset the cost of his grandmother’s care. While she was found eligible for benefits, the Department of Human Services (DHS) penalized her for “divesting” funds. They classified the payments to the caregiver (along with some other “gifts”) as “divestments.” That meant her Medicaid benefits were delayed for 7 months and 2 days.

Sadly, Ms. Jensen died before Medicaid started covering her nursing home expenses. (In Central Illinois, this delay would have cost Ms. Jensen and/or her family approximately $35,000!)

Her grandson appealed the ruling and lost, because the payments were made to the caregiver without a written agreement that should have been put into place before care began. The case was appealed several more times with varying results, but ultimately the courts sided with DHS, stating that an agreement with a caregiver needs to be written and official.

Caregiver Agreements in Illinois

The above case happened in Michigan, but the same thing could have easily happened in Illinois. The problem with paying cash for caregivers or hiring home help without any documentation is that there is no proof where the money went. Any “gifts” can cause a delay in benefits. And if a family member is taking out large amounts of cash or writing checks without documentation, the caseworkers may assume they are gifts.

Read more about ways elder law attorneys like us can help with in-home care: 9 Ways Elder Law Attorneys Can Help with In-home Care

The Complex World of Medicaid

Medicaid is our country’s largest healthcare benefits program, paying 70% of all nursing home bills in the US. One in six Americans are covered by it. The laws governing Medicaid are some of the most complex and confusing laws in existence. They are often nearly impossible to understand without highly experienced legal assistance. Without proper planning and advice, many people unnecessarily jeopardize their future care, their well-being, and the security of their family.

Medicaid Planning Can Help Even if You’re Already in Nursing Care

Medicaid planning (or what we here like to call Life Care Planning) ideally should be started when you are still able to make sound legal and financial decisions. (Somewhere around the age of 65.) That way you can still have control over what you want and how you want to live.

What many don’t know is that even if you’re already in a nursing home, it’s rarely too late to do planning that can save some of your financial resources. Read our article, “7 Ways an Elder Law Attorney Can Help Even if Your Loved One is in a Nursing Facility

To find out more about how to avoid the crushing costs of long-term care by planning ahead at every stage of life, make plans to attend our upcoming workshop – Aging With Confidence: 9 Keys to Wise Planning & Peace of Mind. Give us a call at 217-726-9200 to sign up today!