Below is a list of a few Medicaid pitfalls:
- Paying for care without proper documentation
As our loved ones age, we begin to realize that they need help at home. There are over one thousand home care agencies in New Jersey and many families interview a handful of them. They quickly realize that home care agencies charge more than private individuals. Even though they charge more for good reasons, families often hire private aides to care for their loved ones to save money. Besides the obvious issues of sub-standard care, no insurance, and income tax issues, they are inadvertently creating a potential Medicaid problem.
When one applies for Medicaid, the County reviews five years of financial statements wherein the caseworker looks for unexplained transfers. Families who pay their private aides in cash, checks to cash, or checks to the aide’s name will have to explain where this money went. The stakes are high. If the caseworker doesn’t have adequate proof, Medicaid will not cover the applicant during a penalty period.
- Applying too late
The other day I spoke with the son of a woman who was running out of money after living in an assisted living community for six years. I recommended a strategy that would allow the mom to qualify for Medicaid and still keep some of her money. After explaining the strategy, the son suddenly exclaimed, “Wait, are you telling me I could have done this years ago and saved even more?” I didn’t want to bring it up but since he mentioned it, I had to agree. Do not wait until your loved one is impoverished to apply for Medicaid. There are often ways to save your family significant amounts of money without jeopardizing a Medicaid application.
- Selling the marital home prior to filing for Medicaid
The primary residence is considered an exempt asset for Medicaid purposes. In other words, the primary residence is not counted towards the asset limit so long as a spouse (or other family member) is living there. We receive calls on a regular basis where the healthy spouse is preparing the house for sale due to a spouse entering a nursing home. When the house is sold prior to a Medicaid application, an exempt asset is converted to a countable asset causing the applicant to be ineligible for Medicaid.
- Failing to understand the rules
In general, applying for Medicaid is fraught with pitfalls. Failing to document expenses, giving gifts at the wrong time, waiting too long to apply, or failing to consider the timing of an application all affect the final result. It is always best to consult with an elder law attorney at the beginning of a health care crisis, not when the money is all gone.