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Issue Date: November 15, 2007, Posted On: 11/16/2007

Don’t panic if denied Medicaid, there are options

By Philip C. Amaru


Philip C. Amaru

When a loved needs nursing home care, it is a very emotional and stressful time for families. Many families simply assume that the cost will be covered by Medicaid.  Unfortunately, that is not always true. Many are denied Medicaid. 

So, what do you do when a loved one is denied Medicaid?

There are typically two reasons why an individual would be deemed “ineligible” for Medicaid.  First, a person would be denied because her or she has too much money. And, no, I’m not referring to millionaires.

I’m talking about everyday folks who own a home and have worked hard and saved diligently all their lives.

The second reason a person would not be eligible is if that individual had gifted or transferred assets.

In the situation of too much money, Medicaid would send a notice to the individual informing the person of denial because assets are in excess of a certain dollar amount.  Then the individual would be told to “spend down the assets” to $2,000 in order to be eligible to receive Medicaid. 

It’s simply not true. Liquidating assets is NOT the way to go. There are other legal options.

If a loved one is already in a nursing home or just about to enter one, it is not too late to protect that person’s assets, despite what Medicaid states with regard to spending down assets.

For example, in a situation of husband and wife, when one spouse needs nursing home care, Medicaid would view their assets combined as one person, not individually. If they have not done prior planning and have too much money, Medicaid would insist that they spend down their excess assets in order to receive assistance. But then, what happens to the spouse who doesn’t need nursing home care and remains at home?

All of the assets for the spouse who remains at home can be saved and Medicaid will provide assistance to the spouse in the nursing home. It requires special planning (in accordance with Medicaid laws and regulations) but it can be accomplished. 

For a single person needing nursing home care who is denied Medicaid because of too many assets, it is possible to reduce that person’s payments to the nursing home and still qualify that individual for Medicaid. For someone who is paying $11,000 a month to a nursing home, payment can be reduced and in some circumstances, to a more manageable $2,500 a month.

Now, let’s talk about gifts and transferred assets. Giving away money or putting your home, car and other things in someone else’s name, according to Medicaid, causes ineligibility.  Essentially, Medicaid views that those gifted/transferred assets could have been used to pay for nursing home care. Because of this, Medicaid calculates a penalty period associated with the transfers.

Prior to a change of law in February 2006, Medicaid would look-back three years and would assess a period of ineligibility based upon how much time in the nursing home the gifted money would have bought. If the penalty period associated with the specific transfer had expired by the time that person needed nursing home care, all would be well and the gift/transfer would be exempt. 

Recent legislation has changed the look-back period to 60 months, and also changed when penalty periods begin and end. Consultation with a professional who is well-versed in Medicaid regulations is strongly recommended prior to transferring or gifting money and other assets.

The Federal government has established regulations affording people the right and the opportunity to protect their assets, even if a family member is already in a nursing home. 

Many folks who have been denied Medicaid believe that there is no other alternative than to spend down their assets in order to receive assistance. But, there are other options. A loved one can attain Medicaid eligibility and still preserve assets. 

Attorney Philip C. Amaru of Commonwealth Advisory Group in Dedham, Mass., has been helping elders and their families preserve their assets when faced with nursing home care for more than 15 years. He can be reached at (800) 705-1415.

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