A MEDICAID PLANNING SUCCESS STORY

Arlene lived with a daughter in a different state. Her dementia had progressed so she couldn’t really participate in her own care anymore. She needed nearly 24/7 attention.

Daughter suddenly told her siblings here that she could no longer handle taking care of mom, and was bringing her back here on short notice to become their responsibility. Surprise!

None of the children here could care for mom themselves, and given Arlene’s minimal ability for self-care, she needed nursing home care, not just personal care home or assisted living placement. Luckily, the family arranged for a spot for mom. When she arrived, they went straight from the airport to the ER for an exam, which found no acute health problems, then on to the nursing home.

The challenge however was how to pay for Arlene’s care but still protect as much as possible of her remaining savings for any additional care that she might need – and protect the kids themselves. She didn’t have much, but it was more than the tiny amount she was allowed to keep for Medicaid to pay for her.

Without expert planning help, the kids would just spend down each month until there was virtually nothing left. Adequate care for Mom’s needs might even cost them directly and threaten their own financial security. With my Medicaid planning advice, they got a much better result.

There were potential roadblocks to be overcome for Medicaid eligibility, though:

  • Arlene had gifted a good chunk of money to her kids in recent years.
  • Mom also paid her caregiver daughter every month for her care, but without a required written family compensation agreement in place, and
  • She had way more money in the bank that she was allowed, under the rules.

I was able to help Arlene and her family solve these problems and accomplish the goals.

The first problem was handled pretty easily: we researched and documented that the gift was a little more than five years earlier, and therefore irrelevant.

The second problem, regular payments to her daughter, was harder. Medicaid presumes that any transfer to a family member is a gift, made without adequate consideration, which causes a penalty period of ineligibility. To rebut the presumption and show that there was no gift, you ordinarily need to show a written family care agreement for compensation, that predates the payments. Without any such formal agreement, we had to prove that valuable services were received, and that the payments were not gifts.

My investigation first turned up old medical records that we argued showed that daughter brought mom to all her appointments, received all the medical instructions, shared the same address and was in fact Arlene’s live-in caregiver. We also showed that mom actually had serious health needs and really needed full-time care. We also dug up a handwritten note between the children that we argued constituted a sufficient written family agreement as required under the rules.

Finally, to spend down but not lose everything, we helped Arlene to make a gift to her children – yes, a gift that was permitted under a properly executed strategy – after she was already in the nursing home - of a little more than half her remaining savings. We then helped her use a Medicaid-compliant immediate annuity that turned her remaining savings into income for her during the following months

The result? After a number of months (and a lot of dialogue), Medicaid agreed and began to pay the nursing home for mom, while the kids retained about half of mom’s assets for her, to use for her additional costs of care, such as private duty care in the nursing facility when needed. The children’s own financial protection was secured too.

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