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While Medicaid started out in the 1960s as a program for the poor, today it is the primary way middle-class families legally finance long term care for their loved one.  This is particularly true of older persons, who did not have the opportunity to purchase long term care insurance due to age or health.  It is also true for Baby Boomers who succumb to catastrophic illnesses but who failed to obtain long term care insurance, believing it to be too expensive or that they would never need it.

Life Care Planning, Estate Protection, Disability,
VA & Medicaid Assistance Lawyers

Health Care and Flaming Hoops

Health Care and Flaming Hoops

 

The ordeal many endure just to get their spouse or parent the financial assistance they need for essential health care has just gotten a whole lot tougher.

 

In southern Illinois, when a spouse, parent or other loved one needs long term care, whether that care is at home, in a supportive living facility, or in a nursing home, the family is almost always forced to eventually turn to Medicaid for assistance.

 

While Medicaid started out in the 1960s as a program for the poor, today it is the primary way middle-class families legally finance long term care for their loved one.  This is particularly true of older persons, who did not have the opportunity to purchase long term care insurance due to age or health.  It is also true for Baby Boomers who succumb to catastrophic illnesses but who failed to obtain long term care insurance, believing it to be too expensive or that they would never need it.

 

Every so often the Medicaid eligibility rules for long term care benefits change.  Over the years, the changes have made it more difficult to qualify for Medicaid.  Because of a lack of good information, and much myth and mis-information, many people who might legally qualify their loved one for this valuable financial benefit simply give up and never apply for Medicaid.   Some mistakenly believe that their spouse, parent or other loved one could never qualify.  Others needlessly fear the loss of their home, farm or other assets.

 

Despite the numerous changes, elder law attorneys who have an intimate knowledge of the Medicaid system have continued to qualify their clients for benefits.  They also have helped preserve at least half of the family's assets.  Often, depending upon the facts of the case, all of the assets, including a home or farm, could be preserved.

 

Recently, Medicaid adopted new procedures.  They did not change the eligibility rules, but they have changed the rules by which they will process applications for benefits.  Now Medicaid applications are subject to being scrutinized by the Office of the Inspector General in what are called "Long Term Care Asset Discovery Investigations."

 

Every application for Medicaid benefits must now be accompanied by much more extensive financial information and documentation requested in an additional financial information form.  This additional form is very intrusive and needlessly intimidating.  The form makes the qualification process very difficult without professional assistance.

 

While an applicant need not answer all questions or supply all of the documentation requested on the additional form, the form must at least be signed in order to avoid an automatic rejection of the application for benefits.  Unfortunately, many will find the form so overwhelming that they will give up and simply sign the form.  This would be a huge mistake because it will almost certainly trigger closer scrutiny of the application by the Inspector General and give him carte blanc.  It would be like giving the IRS a green light to audit every aspect of the applicant's financial dealings for the past three years.

 

The form itself creates significant barriers to Medicaid qualification.  For example, the third question on the form requests what must surely be designed by Medicaid to create such a high hurdle to qualification that many will simply give up and go no further: it requests a listing of all expenditures within the prior 36 months for mortgage payments, food, taxes, telephone, water, gas and electricity.  This can be followed by a request for documentary proof.  Even if the person filling out the form does not give up, folks who paid by cash rather than by check will have a difficult time complying. Those who have not saved their monthly bank account statements also will have problems; they will need to have their banks search their archived account records (generally at the cost of several hundred dollars) and provide them with copies of the account statements they did not keep.

 

The additional form goes on to request detailed information regarding any person who has been helping the applicant with their financial affairs.  This would include a family member who is the applicant's agent under a power of attorney.  The additional information requested about the family member goes beyond what is necessary and, in this writer's opinion, is obviously designed to intimidate family members.

 

The additional form also requests detailed information and documentation regarding the applicant's financial affairs for the 36 month period prior to the application.  For example, the form requires disclosure of information regarding any inheritance, all jointly held assets in Illinois or any other state, and the purchase of any type of annuity. Folks who have purchased an annuity, believing the investment to be a safe harbor, will suddenly find that their investment is at risk.

 

The form goes on to request much, much more.  For example, the form asks whether the applicant, a spouse or anyone on their behalf cashed in (or closed) any CD, bank account, and a long list of other assets.  Many of the requested transactions might have been for very legitimate reasons. For example, a CD might have been cashed in to pay for living expenses or rolled over to a CD at a different bank at a higher interest rate.  Families attempting to sort all of this out will generally find it to be difficult at a very stressful time.

 

The form requests detailed information regarding all sales of assets, such as cars and real estate, as well as all gifts or transfers of money or property. Without significant Medicaid experience and detailed knowledge of the Medicaid rules, the person filling out the form risks making very costly mistakes.

 

Finally, the person filling out the form must sign it under penalty of perjury, and in another effort to intimidate, the person is warned that "Any false statements, or documents, or concealment of material fact may be cause for prosecution . . ."

 

The form is then submitted by the local Medicaid office to the Office of the Inspector General. This is where the really hard work begins.

 

For starters, everything submitted to the local Medicaid office must be resubmitted to the Inspector General.  Failure to do so within a very short time frame of 10 days (from the date of the letter, not the date the letter is received) or to comply with any other request for additional information or documentation can result in a denial of the application.

 

The Inspector General then engages in a very long process in which a C.P.A. scrutinizes all financial information and documentation, nitpicking every detail of the applicant's financial affairs.  (The tenacity of the C.P.A. makes this writer suspect that he is a former I.R.S. tax auditor.)

 

Regrettably, the new procedures will adversely impact the most vulnerable and those least able to deal with jumping though all of the flaming hoops.  They do not impose impossible barriers to obtaining Medicaid qualification or the ability to protect the home and other assets.  They simply make the process of achieving these ends much more difficult without professional help. In fact, the new procedures make the need for professional help critical if the goal is to qualify for Medicaid benefits at the earliest date possible while also protecting the home and other assets.

 

Finally, while this article paints a grim picture regarding the new Medicaid procedures, the reader should not let this deter them from considering Medicaid for themselves or their loved one.  Like the tax laws, the new Medicaid procedures can be daunting.  But with good help, the red tape can be dealt with so that this valuable financial benefit will be available for the person who needs long term care.

 

Richard Habiger is an elder law attorney. You may contact him at 618-549-4529 or

on line at www.HabigerElderLaw.com.