Why plan for Medicaid, especially if you have lots of money, aren’t in bad health or not heading to a nursing home?
This is a common question that any otherwise healthy individual asks themselves all the time. I often hear remarks like, “I’ve got plenty of money,” “My mom is closer to needing a nursing home than me,” and “I’ll call you when I get closer to retirement.” These are all legitimate statements. Lets break them down and address them individually.
Pre-planning versus Crisis Planning
My work with Medicaid involves two types of planning, pre-planning and crisis planning. Pre-planning involves gathering income and asset information, identifying potential problems, and developing a plan that will protect the individual and maintain that protection throughout the years prior to actually needing Medicaid. Crisis planning speaks for itself for the most part. An individual is either in need of Medicaid immediately or will be in the near future, has excess funds, and needs advice on spending down in compliance with Medicaid Policy.
Unfortunately, the truth is that a very low percentage of individuals actually plan for Medicaid, either because they feel they won’t need it or because of the stigma surrounding Medicaid.
My work experience has always involved healthcare in some aspect with the last 10 years pertaining to Long-Term Care Planning, specifically with eligibility and application processes for state and federal benefits. Lets start there and walk through some experiences I have had that address the need for education and planning long before the actual need for Medicaid arises.
Money. I can’t stress enough that the costs associated with Long-Term Care are exponential and continue to grow at alarming rates. Therefore, there is no such thing as enough money or a good enough LTC policy when you’re dealing with $6,000.00 per month for care in some cases unless of course you happen to be a millionaire, which most of us are not.
Planning. It’s very difficult to anticipate the need for state and federal benefits to help fund Long-Term Care costs. The rules and regulations are very complex and involve policies and penalties that are not easily understood by most people. Spending down the appropriate amount of money at a Skilled Nursing Facility does not automatically qualify you for these benefits. You may very well find yourself out of money with no ability to receive state or federal assistance.
Now, let’s dig in a little bit.
Many states attribute a large portion of their Medicaid budget to Long-Term Care.
This necessitates a fair amount of scrutiny with their Nursing Home Medicaid applications. The state Eligibility Specialists comb through all Nursing Home Medicaid applications pretty thoroughly, some would say to the point of being overly punitive. I’ve noticed that many of my former co-workers and various people throughout the healthcare industry have poor working relationships with the state. I feel this is due in large part to what they perceived to be excessive or unnecessary documentation requests etc. However, I think the opposite is true in many ways. I believe Medicaid policies and procedures are there for a good reason. I have the utmost respect for these workers and what they do. It’s not easy upholding policy and protecting the applicant, the facility, and the taxpayers. Medicaid is a complex program and the application process can be time consuming and frustrating, both for the worker and the applicant.
The state Eligibility Specialists are governed by certain criteria for what is considered acceptable documentation / information.
They must follow this criteria in order to appropriately determine a person’s eligibility. Understandably, by law they cannot simply take a person’s word as documentation. The first thing I tell clients is Medicaid is all about their documents. If it’s not documented, it didn’t happen. For instance, state regulations allow an applicant to pay a family member for providing care, but only if there is a written contract in place prior to initiating the payments. An application is considered incomplete if any verification item that was requested by the state was not received or doesn’t meet the documentation criteria and can result in a prolonged application processes or denial. I learned very quickly what was expected by the state and made sure that an application and all accompanying documents met their standards when first submitted. This resulted in a relationship based on mutual respect among all parties.
The main goal when when I’m working with someone is to inform them on how Medicaid Policy assesses and views their personal, financial, and medical circumstances.
The goal is to learn the rules, identify potential problems, and develop a plan. Planning should not be used for gaining eligibility under false pretenses by finding loopholes with the intent to deceive or hiding assets. This is Medicaid fraud, plain and simple. Obviously, the earlier you learn the rules and identify any potential problems the better the outcome when and if you need it. Most people are not well versed in what is or isn’t beneficial or even legal concerning Medicaid policy. Consequently, this usually results in being unaware that they could be making decisions that would impact their eligibility for state and federal benefits. Naturally, I realize that not everyone can or will enlist my services. This is why I always make a point to inform and educate throughout my initial free consultation. My mother frequently reminded me to always leave a person or place in a better state than I found them.
It is important to find a knowledgeable, ethical, and affordable source capable of guiding you in financial decisions that remain compliant with Medicaid Policy.
I moved back to Iowa this year to explore a job opportunity prior to starting my own company. This experience opened my eyes to the amount of misinformation regarding Medicaid that was coming directly from professional resources in the elder law and healthcare communities. People depend on these professionals to guide them, which makes it extremely difficult to combat preconceived notions simply because an attorney or healthcare professional is telling you one thing and I’m tell you another.
Most people are unaware that Medicaid has a lookback period of 60 months.
I have experienced attorneys advising clients to simply add children’s names to a financial account in order to qualify for Medicaid. There are certain transactions they view as transferring assets for Medicaid purposes, most of which people would be surprised to know. In the past, this technique was used to reduce the value of a financial account for VA purposes, which is ethically questionable, but has never been appropriate for Medicaid. While this would reduce the amount of money attributed to the applicant, Medicaid would view it as “gifting” a percentage of the account to a third party even if no funds were actually dispersed from the account. Medicaid views “gifting” as a transfer of assets in order to qualify for Medicaid, which would result in ineligibility even if they are technically under the asset limit because of the addition of the names. Also, you are specifically asked on the application if any funds have been transferred during the lookback period. You have the option of either disclosing the transfers and taking the penalty or lying, which is Medicaid fraud. Of note, the VA has also recently initiated a lookback period of 36 months with the same questions on their applications, so this technique is no longer a viable option for VA purposes either.
Most healthcare professionals I have experienced have the best intentions and are simply trying to do what’s best for their residents. However, to stay above reproach I truly believe that nursing home personnel should steer clear of state and federal benefit applications or advising their residents on spending down their resources in order to qualify. I have witnessed nursing home personnel advising a married couple to simply spend down half their money and then they will apply for Medicaid on their behalf. I see several problems with this, foremost being that determining a married couple’s total countable resources is complicated and has to be documented by Medicaid, not the facility. An applicant could be spending down more or less money than needed unless Medicaid itself has determined their total countable assets. Also, a facility should not get involved in a resident’s resource analysis as they are benefiting from these resources. I view it as a very large conflict of interest for a healthcare facility to advise a resident on spending down their resources when they are benefiting from said spend down.
A standard Medicaid request involves three months of financial statements. They have the ability to request up to 60 months of financial statements, but typically do not unless there are red flags on the three months submitted.
I have experienced Business Office Managers, Social Workers, and Patient Advocates advise residents to deliberately hold off an application and only submit once their last three month’s of statements are “clear.” Also, Long-Term Care Facilities seem to have the understanding that Medicaid will accept less documentation and issue an approval more easily if it comes from them simply because of who they are. This has always confused me. In fact, in my view a nursing home has vested interests in a quick approval and should not be given the “benefit of the doubt” by the state. I also observed financial consulting companies instructing families to have the facility turn in the application if they felt there would be problems, taking advantage of what they obviously perceived as a bias on the part of the state. Clearly, this means these professionals have full knowledge of what would be considered transfers and are advising clients to “keep it clean” for three months before applying. Keep in mind, the application specifically asks if they have transferred funds, which means they are also deliberately advising individuals to lie on the application. All these things are not only illegal, but unethical and contribute in large part to the growing Long-Term Care Medicaid deficit.
Finally, considering everything involved, pre-planning and pre-screening should be a high priority regardless of your circumstances.
Pre-planning is highly recommended. Ensuring your advocate is knowledgeable in state and federal policy and procedures, not just in legal and healthcare matters is of utmost importance. Knowledge is key. They should also be trustworthy and ethical with your best interests in mind. Also, pre-screening individuals prior to entering a facility is jut as important.
Both pre-planning and pre-screening will not only save a lot of money for the applicant, facility, and taxpayers in the long run, but will inevitably help preserve Medicaid funding for future generations.