The Department of Social Services and Medicaid

My mom has Alzheimer’s and has been living in my house for the past four years. Shortly after she moved in, she gave me $60,000.00, worried that she might need to apply for Medicaid and would have too much money in her name. It has been roughly three and an half years since she transferred the money to me. During the four years, I did not take rent from her but from time to time I used the money that she gave me to pay for food and utilities. I also used some of the money to pay mom’s credit card bills. She fell two weeks ago, was hospitalized, and is now in a rehabilitation facility. Her doctor thinks it would be best if we considered Nursing Home care for her. I know that there can be a problem if Medicaid sees that she gave money away, but here I assume it will be all right because I used the money for her expenses, is that correct?

Unfortunately, it may not be. As you are likely aware, when an individual requires long-term nursing home care and is looking to rely on Medicaid as a pay source, there is a five-year look-back. What this means is that Medicaid, through the Department of Social Services will require full financial disclosure for the five years immedicably prior to entering the nursing home. When the financial statements are reviewed, the presumption is that all cash withdrawals and all monies transferred are gifts, and accordingly, a penalty of one month will be assessed for each roughly $12,800.00 that is transferred. Even though in your case you used the money for your Mother’s expenses, whether the Department of Social Services considers that a give-back and credits the monies you used to pay for your Mother’s expense will depend on exactly what the money was used for and how clear a trail you can present. Technically, the only giveback that is recognized by the Department of Social Services is if “the person to whom they were transferred: uses them to pay for nursing facility services for the Medicaid applicant/recipient; or provides the Medicaid applicant/recipient with an equivalent amount of cash or other liquid assets.” In other words, if they money transferred was used to pay for household expenses on behalf of your Mom this might not be considered a return of the assets for Medicaid eligibility purposes and could result in a period of ineligibility. All that being said, there are still planning opportunities available to you, which could either reduce or remove any potential penalty. It is a good idea to consult with an attorney who is well versed in this area prior to making any application to the Department of Social Services for Medicaid benefits to assist with the payment of costs associated with a long term stay at a nursing home.

Filed in: Ask Nancy, Uncategorized

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