Where Should I Keep My Will

Your original will needs to be found in the event of your death, otherwise the provisions in it won’t be enforced. If the original will cannot be located, Pennsylvania law presumes that you revoked it and your assets could be distributed according to the state’s intestacy laws to people who you would prefer not to inherit. Although there are ways for a lawyer to attempt to probate a photocopy of a will, doing so can be expensive with an uncertain outcome.

If your will excludes relatives who would otherwise inherit your estate in the absence of your will, then extra precautions should be taken to safeguard it. Although suppressing a will is a serious crime in Pennsylvania, an excluded family member may find it and be tempted to destroy it.

In our experience, clients do not often lose their original wills to fire or theft. The biggest risk of loss seems to be misplacement of the document. Our clients or their heirs simply do not remember where the document has been placed for safekeeping.


So where should you store your will? Here are some options to consider:


Bank Safe Deposit Box.

Our strong recommendation is that you keep your will in your own safe deposit box with a local bank and tell your executor the name and location of the bank branch. You can also have your lawyer note the safe deposit box location in your file. If you pre-plan your funeral, have the funeral director note your file with the location of your will.

In the event of your death, a safe deposit is “frozen” and access is prohibited by non-spouse co-owners of the box. There are two exceptions. The box may be entered by family members without probate for the limited purpose of searching for a will and cemetery deed. Pennsylvania law allows access to the safe deposit box after the death of the owner without probate for these two reasons.

When entering a box to search for the will or cemetery deed, a bank employee is going to accompany the family members searching for the document, and must complete form REV-487 from the Pennsylvania Department of Revenue. No other documents or items may be removed from the box until the executor is formally confirmed by the Register of Wills Office and returns to make a full inventory of all contents in the box. We do not recommend that you keep your will (or any belongings) in somebody else’s safe deposit box. In our opinion, a bank safe deposit box is the best and most secure place to keep your will.


Safe at Home. 

Many of our clients prefer not to pay for a safe deposit box, but do have a fire-resistant safe at home, and this can also be a suitable place for you to keep your will. Of course you should be sure to tell your executor how to get into the safe at the time of need. One note of caution, thieves may make off with your safe if it is not heavy and bolted into the floor. We have had two clients over the past 20 years who had their safes (and wills) stolen in this manner.


Filing Cabinet at Home.

If you do not have a safe deposit box or safe, you probably have one central location at home where you organize your financial records and important documents. We recommend that if you choose to keep your documents at home, that you show your executor the exact location of your original will during your lifetime.

Some of our clients relocate in their later years to new living arrangements. Sometimes those helping with the move discard seemingly unimportant financial records in the process. Documents are boxed up, put in storage, and sometimes thrown away. We receive several phone calls per year where family members are struggling to find an original will that had been kept at home but cannot be found after the sale of a house or other relocation. Keeping your original will at home is not ideal, but if you do, definitely tell your executor where it is. If your will excludes a family member, the will should not be kept at home if that family member may have access.


With your Lawyer.

Some law firms offer to hold wills for safekeeping. At our firm, we recommend that clients keep the wills in their safe deposit boxes. However, if you choose to leave your original will with a law firm, keep a photocopy in a safe location at home or scan it into your computer, and tell your executor that the original has been left with your lawyer. Ask the lawyer what will happen to your will in the event of his or her death, or retirement.

The fact that the law firm holds your will does not obligate the executor to hire that firm for legal advice with the estate administration. The executor has the right to hire the law firm of his or her choosing, and does not need to retain the law firm which has been safekeeping the original will.


Robert C. Gerhard, III is an elder law attorney with the Montgomery County estate planning and elder law firm of Gerhard & Gerhard, P.C. Attorney Gerhard has handled estate planning and administration matters for over 20 years. He can be reached at (215) 885-6785 with questions or comments.

Pennsylvania’s Filial Support Law: Children Can Be Held Responsible for Parent’s Unpaid Nursing Home Bill

worried kids

Disclaimer: This article has been posted for general information purposes only, and discusses Pennsylvania law. You should not act upon the information in this article without first retaining legal counsel.

By Robert C. Gerhard, III, Esquire

Pennsylvania appellate case law has upheld lower court decisions that imposed liability on children for their parents’ unpaid nursing home bills under Pennsylvania’s filial support statute. It can be surprising for our clients to learn that this potential liability exists -just by virtue of being a nursing home resident’s child. Filial support liability does not require a court to find that the child did something wrong or caused the arrearage with the nursing facility.

Nursing homes are using Pennsylvania’s filial support law as a collection tool with increasing frequency.  Here is an excerpt from Pennsylvania’s filial support statute with key provisions italicized for emphasis:

(a) Liability. –

(1) Except as set forth in paragraph (2), all of the following individuals have the responsibility to care for and maintain or financially assist an indigent person, regardless of whether the indigent person is a public charge:

(i) The spouse of the indigent person.

(ii) A child of the indigent person.

(iii) A parent of the indigent person.

(2) Paragraph (1) does not apply in any of the following cases:

(i) If an individual does not have sufficient financial ability

to support the indigent person.

(ii) A child shall not be liable for the support of a parent

who abandoned the child and persisted in the

abandonment for a period of ten years during the child’s


23 Pa.C.S. § 4603

These filial support lawsuits are normally filed by nursing homes when phone calls and other traditional collection efforts fail, especially when a Medicaid application is denied due to recent asset transfers. The problem gets worse when there is a lack of communication from the family regarding billing matters.

With nursing home costs at $10,000 per month or more, it is important to make sure that the bill is paid in full, whether it is paid privately or with Medicaid long-term care benefits. This is especially true if you are the financially solvent child with siblings who lack the ability to pay and who are essentially judgment-proof. Sometimes the child who caused the unpaid nursing home bill has no money, leaving the other siblings holding the bag.

Nursing homes can sue all the children, regardless of fault, and let the children affix blame and seek reimbursement among each other. As a matter of strategy, nursing homes sometimes file this type of lawsuit in order to “get the attention” of the nursing home resident’s other children who may not be aware of the financial problems, and enlist their help in motivating the other family members to remit payment or cooperate in the Medicaid application process.

You might have inadvertently signed a nursing home agreement for a parent that made you a “voluntary guarantor.” The liability which attaches because of that contractual provision is in addition to filial support liability. The filial support law is not about children being held liable because they signed an admissions agreement as a guarantor or in any other capacity. Rather, this statute is about children being sued merely because of the parent-child relationship.

Hiring a certified elder law attorney can prevent mistakes that lead to filial support lawsuits. Here are some of the more common situations that generate nursing home collection lawsuits:

  • $50,000 was gifted to Child 1 over the course of several months within the 5-year look-back. Child 1 struggles financially and is without resources. Child 1’s father enters a nursing home and pays the bill until his resources have been spent-down to below the Medicaid limit. Unfortunately the application for long-term care benefits is denied due to the transfer penalty caused by the gifting to Child 1. Child 1 cannot return the money, he spent it. The nursing home’s collection attorney does research and finds that Child 2 owns a home and has assets. The nursing home can sue Child 2 for the parent’s unpaid nursing home bill even though the entire problem was caused by the gift to Child 1.
  • Mother is admitted to nursing home and all resources are properly spent-down, but nobody applies for Medicaid long-term care benefits or hires an elder law attorney for advice. The out-of-state children think the local child is handling things, but the local child drops the ball or makes a mistake. Unless an exception applies, each child can be held financially responsible for mom’s nursing home bill.
  • The Medicaid application is filed too late, preventing retroactive coverage and leaving a gap in payment. The child handling the nursing home billing matters reports being told “not to worry, the grant will be retroactive.” The Medicaid application is approved, but not retroactively because of the way the assets were spent-down. There is a “gap” in the Medicaid coverage. The nursing home can attempt to sue the children for the unpaid balance.
  • The application for Medicaid benefits is denied because verification is missing, and nobody supplies the paperwork. Nobody files an appeal. Time passes. It becomes too late to file an appeal. Litigation follows and the children are sued under the filial support statute.

The fact that you did not sign the admissions agreement with the nursing home does not protect you from such a lawsuit. The fact that you thought mom or dad should be at home and not in a nursing home does not help. In fact, you can be sued even if it was your brother or sister who insisted on nursing home placement over your objection. The filial support obligation is “no-fault.”

The case of HCR v. Pittas illustrates the operation of Pennsylvania’s filial support law. In this case, the Pennsylvania Superior Court (an appellate court) affirmed a lower court decision that ordered the son of a nursing home resident to pay $92,943 on the basis of Pennsylvania’s filial support law.

The defendant son argued that his siblings should have been sued as well, not just him, but the court rejected this argument. The son also argued that nursing home sued too quickly, i.e., that the filial support lawsuit should have waited until after the Medicaid appeal was finalized. The court rejected this argument too, and the Pennsylvania Supreme Court declined to accept review of the decision. HCR v. Pittas, 2012 PA Super 96 (May 7, 2012); Cert denied March 27, 2013.

Here are some suggestions on how to prevent situations that risk filial support liability:

  • Try to avoid the problem of an unpaid bill by getting ahead of the situation. Smart money secures a consultation with a certified elder law attorney. Find out what you don’t know in your particular case. An experienced elder law attorney can help avoid mistakes that give rise to filial support liability.
  • Do not assume that your mom, dad, sibling, or nursing home is handling the Medicaid application process correctly. If they drop the ball, you might be held liable. Be involved in the process.
  • If mom and dad are elderly, they should be very careful about making gifts to help children. If you have a sibling who is struggling financially or who is not self-supporting, the financial help to that child can eventually result in a Medicaid denial if either parent needs nursing home care. You might be sued, even though it was your brother or sister who received the financial help.
  • If mom or dad made gifts or loans to you or your siblings within the 5-year look-back, see an elder law attorney if you sense nursing home care might be needed. There are often ways to reverse gifting problems if you secure advice early enough. Waiting too long can make the problem virtually unsolvable. The financially responsible children may then be the ones who get stuck with the bill.
  • At the root of many filial support lawsuits is a denial based on “failure to provide verification.” Make sure your parents have 5 years of bank records, including copies of checks for expenditures of $500 or more. They should not throw away bank statements or receipts for large expenditures. Many times these old bank statements can be obtained online at no cost.
  • Your parents should not be making large cash withdrawals from the bank. Although we have been successful with these “cash cases” in the past, it can be nearly impossible to verify the disposition of cash since parents rarely save receipts. The Medicaid rules permit the Pennsylvania Department of Human Services to presume that these cash withdrawals were gifts that result in a transfer penalty (period of Medicaid ineligibility.) The burden of proving otherwise falls on the applicant.
  • Have your parents’ elder law attorney communicate with the nursing home so their business office knows that steps are being taken to address the unpaid bill. The nursing home can sue even though a Medicaid application is pending or is on appeal. However, facilities tend not to file filial support lawsuits when a reputable elder law attorney is handling the application and there are communications and updates that give the facility comfort that matters are being addressed.

Pennsylvania’s statute provides for some exceptions to filial support liability. For example, if you really do not have sufficient financial ability to support your parent, the court will take that into consideration. Also, there is no liability if the parent abandoned their child for ten years or more before the child attained age 18. Not being in contact with your parent as an adult for many years due to estrangement is not necessarily enough to avoid liability.

Although nursing homes certainly prefer to avoid such litigation, they will do what they need to do in order to get paid. Often these lawsuits can be avoided with proper legal representation. Ignoring an unpaid nursing home bill will make matters much worse.  If a parent is trending toward the need for nursing home care, speak to an elder law attorney, especially if you sense a problem.

Robert C. Gerhard, III Esquire is the managing shareholder of Gerhard & Gerhard, P.C., an estate planning and elder law firm located in Montgomery County, Pennsylvania. Attorney Gerhard specializes in elder law, with emphasis on Medicaid Planning, Medicaid Applications, and Medicaid Appeals. He is the author of the Pennsylvania law treatise, Pennsylvania Medicaid, Long-term Care.

Uh oh: Nursing Home Handling Medicaid Application

fork in the road 

Disclaimer: This article has been posted for general information purposes only, and discusses Pennsylvania law. You should not act upon the information in this article without first retaining legal counsel.

By Robert C. Gerhard, III, Esquire

It can be expensive for you to have the nursing home business office handle the application for Medical Assistance (Medicaid) long-term care benefits. Nursing homes are paid less per month from those residents who qualify for Medicaid benefits – significantly less. Accordingly, there is no financial incentive for the nursing homes to advise nursing home residents or their families on how to protect assets from nursing home costs or accelerate Medicaid eligibility. You should consult with an elder law attorney who is familiar with Medicaid long-term care benefits and the application process.

The longer nursing home residents pay their bills privately, the more money the nursing facilities make. In fact, some in the nursing home industry have suggested that they actually lose money on Medicaid residents. This may be due to the fact that under applicable law, nursing home residents cannot receive a lesser quality of care just because they qualify for Medicaid long-term care benefits.

Clients have come to our office for help where nursing homes advised residents with a spouse in a nursing home to spend-down “half” of their assets and that the nursing home would handle the application process “for free.” Unfortunately, one client was “the spouse at home” who spent-down her retirement account, which was actually an exempt asset under Pennsylvania law, and did not need to be spent-down at all. This client was spending more money than needed. A simple consultation with an elder law attorney could have completely avoided this financial disaster.

Other clients come to us after working with a nursing home when benefits have been denied and they sense something has gone wrong. Sometimes clients are told by the nursing home “not to worry” and that the nursing home grant will be approved retroactively to the date of admission. When the case is denied due to excess resources, it can turn out that the suggestion “not to worry” was misplaced. If you are spending $9,000 – $12,000 on private pay nursing home costs, you should be very concerned about making sure the Medicaid application is approved to the earliest effective date possible.

The nursing home is permitted to assist its residents with Medicaid applications. With the proper authorization, nursing homes can also attempt to handle appeals before administrative law judges before the Pennsylvania Department of Human Services’ Bureau of Hearings and Appeals when benefits are denied. Sometimes things work out, other times things go poorly. The problems with the Medicaid application process may or may not be the fault of the nursing home.

An unfortunate but inherent conflict of interest exists in these situations. While both the resident and the nursing home have the mutual goal of making sure benefits are approved, it is not in the financial interest of the nursing home to reduce the amount of private pay money it receives. It is in the interest of the nursing home resident, and the nursing home resident’s spouse to qualify for Medicaid as quickly as possible. There is an inherent conflict of interest.

Is it the nursing home’s responsibility to advise the spouse who is not in the nursing home about how to protect his or her assets? Will the nursing home provide advice about how an asset can be legally transferred to a trust for the benefit of a disabled child, or how the community spouse can avoid impoverishment? Will the nursing home advise you about how to legally avoid the Medicaid estate recovery payback? You may never know what assets could have been preserved if you had consulted with an elder law attorney.

Merely advising the family to purchase irrevocable burial reserves is not sufficient, and is hardly Medicaid planning. In fact, there are many situations where funding the irrevocable burial reserve is not necessary in order to qualify for Medicaid long-term care benefits.

There are laws designed to protect the community spouse from impoverishment. There is an appeal process and planning strategies to increase the share of assets for a low-income community spouse. It is appropriate to retain the help of an elder law attorney to make sure you are protecting what you are permitted to keep.

Children who are helping their parents apply for Medicaid benefits should consult with an elder law attorney – especially if they are acting as agents under power of attorney. You can spot issues ahead of time, avoid mistakes, and know that you have done all you can do to protect assets as permitted under the law.

In fact, many nursing homes do advise residents and their families to seek legal counsel from an elder law attorney. This is often the case when they spot gifting within the 5-year look-back that can cause an eligibility problem, or when they encounter other difficult situations, such as when family disharmony is preventing the spend-down of excess resources or hindering the effort to obtain the verification that must be supplied to the County Assistance Office.

It is often much safer from a risk-management standpoint for the nursing facility to refer the Medicaid application out to a reputable elder law attorney than to attempt to handle it in-house. If a problem arises in-house, the family may blame the nursing facility for the failed Medicaid application.

Our office has gotten along well with the many nursing homes with which we worked with over the years. They know that we are not recommending risky strategies that end up causing problems with Medicaid applications being approved. We recognize that the facilities are running a business. It is not their responsibility to help a family engage in Medicaid planning. Your best bet is to retain the services of a knowledgeable elder law attorney who can provide advice about your rights and responsibilities.

Robert C. Gerhard, III Esquire is the managing shareholder of Gerhard & Gerhard, P.C., an estate planning and elder law firm located in Montgomery County, Pennsylvania. Attorney Gerhard specializes in elder law, with emphasis on Medicaid Planning, Medicaid Applications, and Medicaid Appeals. He is the author of the Pennsylvania law treatise, Pennsylvania Medicaid, Long-term Care.

Nursing Home Medicaid Benefits Denied

appeal deadline


Late Medicaid Appeal: Bradford County Manor v. Pennsylvania Department of Human Services

Disclaimer: This article has been posted for general information purposes only, and discusses Pennsylvania law. You should not act upon the information in this article without first retaining legal counsel.

By Robert C. Gerhard, III, Esquire

The recently decided Commonwealth Court case of Bradford County Manor v. Pennsylvania Department of Human Services[1] illustrates the importance of timely filing an appeal when Medicaid long-term care benefits have been denied. Additionally, this case shows how critical it can be to enter sufficient evidence into the record before the Bureau of Hearing and Appeals in order to support a request for a late appeal, nunc pro tunc.

The normal deadline for appealing a denial of Medicaid long-term care benefits is 30 days after a notice (Form PA-162) has been issued by the County Assistance Office (CAO), but there are exceptions to this general rule which permit late appeals under certain circumstances. In this case, the Commonwealth Court upheld the Bureau of Hearings and Appeals finding that Bradford County Manor’s late appeal was untimely, and found that the grounds for a late appeal, nunc pro tunc, had not been established based on the evidence of record.

Ms. Congdon entered the Bradford County Manor nursing facility on February 8, 2010 suffering dementia, and an application for Medicaid long-term care benefits was filed for her on March 2, 2010. Ms. Congdon’s family was informed by the Pennsylvania Department of Human Services’ caseworker that certain missing documentation was required in order to make a determination regarding eligibility for nursing home Medicaid benefits. That missing verification was supplied in short order, but based on that documentation the County Assistance Office promptly denied long-term care benefits with a written notice dated April 1, 2010 citing “excess resources.”

A second application was filed and that subsequent application was eventually approved. Unfortunately long-term care benefits were only authorized retroactively to January 1, 2011, leaving an unpaid nursing home bill for some period of time between Ms. Congdon’s admission to Bradford County Manor and January 1, 2011 when benefits under the second application were approved.

This type of case is referred to by some elder law attorneys as a “gap in coverage case.” Benefits are approved, but not far back enough to cover all that is owed to the nursing home. Medicaid long-term care benefits can only be authorized retroactively to the first day of the third month before the month in which a Medicaid application, Form PA-600L, is filed. With the benefit of hindsight, it would have been important for Ms. Congdon to appeal the denial of benefits under the first application, and not just file a second application.

It can be difficult for applicants and nursing home business offices to discern eligibility, or a quick path to eligibility when faced with a denial of benefits. The rules are complicated, and the financial information needed to make accurate decisions on whether to appeal or re-file is not always immediately available.  We can see now that it would have been preferable for those helping Ms. Congdon to immediately file an appeal of the first denial as a protective measure.

An appeal of the first denial notice was eventually filed on February 25, 2015, almost 5 years after the date of the initial denial notice. There are situations where appeals after the normal 30-day deadline are timely, or can be satisfactorily explained and treated as timely, but a nearly 5-year delay is going to require a solid explanation, and in these late appeal cases the appellant bears a heavy burden of proof.

The Commonwealth Court cited applicable precedent in upholding the administrative law judge’s decision: “An appeal nunc pro tunc will be allowed only where the petitioner’s delay was caused by extraordinary circumstances involving fraud, a breakdown in the administrative process, or non-negligent circumstances related to the petitioner, his counsel or a third party.” C.S. v. Department of Public Welfare, 879 A.2d 1274, 1279 (Pa. Cmwlth. 2005).  Our Supreme Court has held that a breakdown in the administrative process occurs “where an administrative board or body is negligent, acts improperly or unintentionally misleads a party.” Union Electric Corporation v. Board of Property Assessment, Appeals & Review of Allegheny County, 746 A.2d 581, 584 (Pa. 2000). In such cases, “an appeal nunc pro tunc may be warranted.” Id. (emphasis added). The petitioner bears the burden of establishing that an administrative breakdown has occurred. J.C., 720 A.2d at 197.”

Not receiving the denial notice from the County Assistance Office (CAO) can permit an appeal beyond the 30-day time frame in certain cases. In the Bradford County Manor case the CAO supervisor testified at the hearing that the notices were sent, and the administrative law judge found his testimony as credible, even though the CAO failed to retain the notice as was technically required by DHS policy. Testimony by the CAO supervisor stating that it was the CAO’s business practice to send the required notice to the applicant’s authorized representative was credited as sufficient. Additionally there was no testimony of record from Ms. Congdon’s authorized representative or otherwise to substatiate that she did not receive the denial notice.

An applicant’s lack of mental capacity, coupled with lack of notice to the applicant’s authorized representative can be a reason for an appeal filed after the 30-day deadline to proceed. However, even though Ms. Congdon suffered dementia, it appears the court noted the active pursuit of the second application by the family and nursing facility to be an indication that there were people working on the matter who should have taken steps to bring the appeal more quickly.

The court recited the key elements that must be proven when seeking permission to file an appeal nunc pro tunc, specifically that: (1) the appeal was filed within a short time after learning of and having an opportunity to address the untimeliness; (2) the elapsed time period is of very short duration; and (3) appellee is not prejudiced by the delay.”

The party filing the request for an appeal nunc pro tunc has the burden of proof, and the appellant in Bradford County Manor v. DHS did not meet that burden. The nursing home did not file its appeal until 1,796 days after the denial notice was issued.  Even if the appeal of the first denial had been brought more quickly, it is not clear that an appeal nunc pro tunc would have been permitted to proceed. The court noted that even where the nunc pro tunc criteria are met, the appeal *may* be permitted to proceed. Late appeals are a challenge.

There are some potential lessons to learn from this case:

  • The “authorized representative” of a Medicaid applicant must carefully follow the application though the system and should sometimes file an appeal as a protective measure. It is easy enough to withdraw an appeal if not needed, but it is not easy to prevail where the appeal is filed late – especially when the appeal is filed almost 5 years late!
  • Families with a loved one in a nursing home should consult with an elder law attorney to help them through the application and appeal process. Any denial of benefits needs to be taken seriously. It appears that the applicant in this case worked directly with the nursing home and did not hire an elder law attorney.
  • A gap in Medicaid benefit coverage for nursing home care should be quickly identified, and promptly addressed. Although late appeals can be permitted under certain circumstances, the burden of proof is high.

[1] Bradford County Manor v. Pa Dep’t of Human Services, (Pa. Cmwlth. May 25, 2016).

Robert C. Gerhard, III Esquire is the managing shareholder of Gerhard & Gerhard, P.C., an estate planning and elder law firm located in Montgomery County, Pennsylvania. Attorney Gerhard specializes in elder law, with emphasis on Medicaid Planning, Medicaid Applications, and Medicaid Appeals. He is the author of the Pennsylvania law treatise, Pennsylvania Medicaid, Long-term Care.

2020 Asset Limits for Pennsylvania Medical Assistance (Medicaid) Long Term Care Benefits


Disclaimer: This article has been posted for general information purposes only, and applies only to Pennsylvania residents. You should not act upon the information in this article without first retaining legal counsel.

bank statement spend down
It is important to follow the Medicaid rules when spending down to below the applicable resource limit. Sound legal advice will prevent you from spending down more than is necessary.

By Robert C. Gerhard, III, Esquire

We are commonly asked about the Medical Assistance (Medicaid) long-term care resource limits. In order to qualify for benefits the applicant must be “resource eligible.” This commonly involves a spend-down of excess resources to below the applicable limit. The problem is that there is a great deal of misinformation out there about how far one must spend-down before becoming eligible for benefits to cover nursing home costs.

This article will attempt to clear things up a bit as you begin your research. This article is not a substitute for legal advice, but should help you better understand the topic.  You will generally do better navigating the Medicaid application process if you have an experienced elder law attorney help you along the way.

Single, Widowed, and Divorced Medicaid Applicants

The answer to the resource limit question is a bit more straightforward for a single applicant than for a married applicant.  For a single, non-married applicant, the resource limit depends on the person’s “gross” monthly income.

If a non-married person applying for benefits has more than $2,349 of gross monthly income, then the resource limit for countable (non-exempt) resources is $2,400. If the applicant has gross income which is $2,349 or less, then the person’s resource limit is $8,000. Examples of “countable assets” include checking and savings accounts, stocks, bonds, brokerage accounts, and non-resident real estate.

This income limit, now $2,349 /month, normally changes on January 1st of each year. This monthly figure represents 300% of the federal SSI benefit amount and is usually revised upwards each year due to inflation. $2,349 is the income threshold amount for 2020. This number is expected to be revised upwards by a few dollars on January 1, 2021.

We advise our clients not to rely on the bank statements to show the gross monthly income. The deposit amounts reflected on the bank statements normally verify net monthly income, not the gross income.  The deductions are often subtracted from the gross amount of income for taxes and health insurance before the net amount is deposited.

For example, the amount of Social Security income that hits the bank account each month is usually net of the Medicare B premium.  Similarly, pension payments often have federal income tax or supplemental health insurance premiums withheld. The caseworker reviewing the Medicaid application at the County Assistance Office will definitely determine the applicable resource limit based on gross income. The caseworker will need written proof of the monthly gross income amounts, typically Social Security and pension income.

It is important to note that not all assets are “countable.” One motor vehicle, household goods and personal effects, burial spaces for immediate family, a properly funded irrevocable burial reserve, and certain business property are examples of property that can be considered non-countable. Non-countable assets can be retained in addition to the resource allowance of either $2,400 or $8,000.

The residence of a single applicant is protected in 2020 to the extent its fair market value is under $595,000. Married applicants can keep their residence regardless of value.

At the time of this writing, the $2,349 figure is also the income-cap, generally speaking, for access to the Pennsylvania Aging Waiver Program. The Aging Waiver program provides home and community-based services for those who might otherwise require nursing facility care but who can be safely cared for at home. The resource limit for Aging Waiver Program is $8,000, but as a general rule the applicant’s gross income needs to be at or under $2,349/month. There is a way to spend-down income to become eligible for Aging Waiver services, but it is not practical for many people, so although it is possible, it is not often pursued. The reality is that most Pennsylvania seniors with gross income over $2,349/month are not able to access the Aging Waiver Program, and can more easily qualify for Medicaid benefits to pay for nursing home care.

Married Nursing Home Residents

Calculating the resource limits in a spousal case is more complicated. Generally speaking, the spouse at home is permitted to protect half of the countable resources up to a statutory maximum, and subject to a statutory minimum. The 2020 maximum is $128,640, and the 2020 minimum is $25,728.

The protected spousal share is determined by the caseworker at the County Assistance Office following his or her review of the Resource Assessment, Form PA-1572. This form is provided to every nursing home resident upon admission in the Nursing Home Admissions Packet. The Resource Assessment captures the resource values as of the date of admission to the nursing home.

The first nursing home admission that lasts 30 days is, generally speaking, the relevant date of admission. Although the Resource Assessment form technically does not need to be filed until you apply for Medicaid long-term care benefits, our office usually opts to file the Resource Assessment shortly after admission to the nursing home – once we are certain the nursing home stay will exceed 30 days. At a minimum you will want to ascertain and document the precise values of the countable assets as of the date of admission to the nursing home. If you delay filing this form it can become more difficult to identify the historical account values as of the date of nursing home admission. It can be done, but it is more difficult to do so.

In cases of undue hardship the resource limit of the community spouse can be increased by filing an appeal, and then pleading the case before an administrative law judge with the Pennsylvania Department of Human Services Bureau of Hearings and Appeals (BHA). Sometimes the appeal can be settled and resolved with a “Stipulated Agreement” with the Department that is reviewed and approved by BHA.

An appeal can also be filed to protect additional assets for the community spouse where that spouse’s income, when combined with the income available from the institutionalized spouse, is insufficient to meet monthly needs.  There are rules designed to prevent spousal impoverishment. The monthly maintenance needs allowance is determined after the caseworker’s review of shelter costs (rent or mortgage), property taxes, homeowner’s or renter’s insurance, and utility costs. The minimum monthly needs allowance is $2,114/month effective since July 1, 2019, and will be revised again July 1, 2020. The maximum monthly maintenance needs allowance is $3,216 effective January 1, 2020. It will be revised upwards on January 1, 2021.

In Pennsylvania, the qualified retirement accounts of the community spouse are not counted, but the retirement accounts of the institutionalized spouse (applicant) do count.

The spouse at home can retain the spousal share, described above, and the institutionalized spouse (the person in the nursing home) is also permitted to keep his or her own resource allowance of either $2,400 or $8,000, depending on gross monthly income. As mentioned above, gross income at or below $2,349/month results in a resource limit of $8,000 for the institutionalized spouse, and income over $2,349/month results in a resource limit of $2,400.

There are cases where the community spouse predeceases the institutionalized spouse, and the surviving institutionalized spouse then has increased income. For instance, this happens when the predeceasing spouse at home had high Social Security benefits, and the spouse in the nursing home had low Social Security benefits. Upon the death of the spouse at home, the spouse in the nursing home will receive the higher of the two amounts. When this happens, the nursing home resident’s gross income may be bumped up to a figure greater than $2,349/month. The change of income must be reported to the County Assistance Office, and this will result in a reduction of the resource limit from $8,000 to $2,400. If resources exceed the limit then there can be a notice of discontinuance set by the County Assistance Office.

We hope you have found this article informative. We can help you protect assets by following the applicable rules.  Please call our office and we would be glad to provide guidance with the Medicaid spend-down.

Robert C. Gerhard, III Esquire is the managing shareholder of Gerhard & Gerhard, P.C., an estate planning and elder law firm located in Montgomery County, Pennsylvania. Attorney Gerhard specializes in elder law, with emphasis on Medicaid Planning, Medicaid Applications, and Medicaid Appeals. He is the author of the Pennsylvania law treatise, Pennsylvania Medicaid, Long-term Care.

Gifts Can Create Ineligibility for Pennsylvania Medical Assistance (Medicaid) Long-term Care Benefits

Medicaid transfer penalties 

Disclaimer: This article has been posted for general information purposes only.  You should not act upon the information in this article without first retaining legal counsel.

By Robert C. Gerhard, III, Esquire

The Medicaid Gifting Problem.  Parents sometimes help their children financially. Grandparents give money to their grandchildren. Unfortunately if that parent or grandparent is admitted to a nursing home within 5 years of such gifting and needs to apply for Medical Assistance (Medicaid) long-term care benefits there could be problems, sometimes big problems. Specifically, the application for benefits could be denied for a period of time. This is known as the “Medicaid transfer penalty.”  Large gifts can create long periods of ineligibility for Medicaid long-term care benefits.

Medicaid Transfer Penalty.  The 2020 transfer penalty in Pennsylvania is one day for every $352.86 that was given away. This figure of $352.86 is known as the 2020 “daily penalty divisor” and represents the average daily cost of nursing home care in Pennsylvania. The penalty divisor is revised annually for inflation. To illustrate, if a gift of $10,000 has been made within the 5-year look-back, the period of ineligibility would be 28 days. $10,000 divided by $352.86 = 28 days of ineligibility. Partial days of ineligibility are not counted. There are exceptions, but parents and grandparents need to be super careful when making gifts, especially large gifts.

One major problem with the transfer penalty is that it does not commence until the Medicaid applicant is “otherwise eligible” for nursing home care. To make matters worse, it can sometimes take several months before the family receives a denial notice (Form PA-162) from the caseworker at the County Assistance Office identifying the transfer penalty as a problem.

By the time the family is alerted to transfer penalty issue, the damage has been done and can be quite difficult to reverse. The unpaid nursing home bill can result in the facility suing the family. In this situation the nursing home resident’s assets have often been depleted so there is little remaining cash to address the unpaid nursing home bill.

If it can be done safely, taking a parent out of a nursing home is one potential way to mitigate the damage and allow the transfer penalty to expire without incurring additional nursing home bills. Because nursing home placement is a last resort for most families, taking a parent home is often this is not a realistic option. Leaving the nursing home will not reverse the bill that has accrued between the date of admission and the date the gifting problem is discovered.

Children and Spouses Can be Sued.  If the gifting is not addressed properly, the nursing home will be unpaid by Medicaid. The nursing home can then sue the children and spouse of the nursing home resident (any one or all of them, regardless of who received the offending gift) under Pennsylvania’s filial support law. Even the children who did not receive any gifts can be sued by the nursing home for the asset transfers a parent made to other children. (Yes, in Pennsylvania this is true.) Although there are exceptions, Pennsylvania law provides that children can be sued for their parents’ unpaid nursing home bills, regardless of fault. Nursing homes routinely use this law to file collection lawsuits against the children of a nursing home resident where the bill is unpaid. Ill-advised gifting can therefore generate litigation that impacts a whole family – not just the nursing home resident.

Nursing Home Admission Denied.  Nursing homes want to avoid admitting residents who will run out of private pay money and be denied Medicaid benefits due to gifting issues. Nursing home admissions offices ask whether gifts have occurred in the 5-year look-back and sometimes review financial statements before admitting a resident. If the facility discovers that gifting has occurred, the admissions representative may be anxious about the Medicaid application being denied when private pay funds run out, and may refuse to admit the senior to their nursing facility. This means that the parent or grandparent who has made large gifts within the 5-year look-back period may not be admitted to the nursing home of choice when that care is needed.

Exception for Small Gifts.  In Pennsylvania, the Department of Human Services has a policy of not penalizing certain smaller gifts. At the time of this writing, gifts that total less than $500 in a given month (in aggregate) do not cause any period of ineligibility. The exception is for $500/month total, not $500 per person per month. If more than $500 has been gifted in a given month in total, then the exception does not apply.

Adding a Child to a Bank Account.  Adding a child to a checking account or savings account as a joint owner is not normally treated as a gift under Pennsylvania law, even if the addition occurred during the five-year look-back. Simply adding the name of a child to the bank account is not a transfer that would cause a period of ineligibility for Medicaid long-term care benefits. This is because under Pennsylvania law, a deposit account is owned by those whose names are on the account in proportion to their respective contributions. If the parent deposited 100% of the money to a bank account, Medicaid treats the entire bank account as a resource of the parent, even if one or more children have been added as joint owners. However, if the child subsequently withdraws money from a joint bank account, a gift is deemed to have occurred at that moment. If the withdrawal by the child is within the 5-year look-back then the withdrawn funds can give rise to a transfer penalty.

Adding a Child to Real Estate.  To the extent your son or daughter does not pay fair market value for the home, a gift has occurred. Selling your house to anyone for $1 is considered a gift, and if done within the 5-years prior to an application for Medicaid long-term care benefits, can give rise to a transfer penalty and a denial of benefits.

There are a number of exceptions to the transfer penalties where a house is transferred out of the name of a Medicaid applicant. First, the transfer of the residence to a “caregiver child” who lived with the parent can be an exempt transfer if the help provided by that caregiver child kept the parent out of a nursing home for more than two years. If properly accomplished, this transfer does not give rise to a period of ineligibility for Medicaid long-term care benefits. Second, the transfer of a home to a sibling with an equity interest in the property can also be exempt if the sibling lived in the property for at least one year prior to the Medicaid applicant’s nursing home admission. Third, the transfer of resident property to a disabled child, or to a trust for the sole benefit of a disabled person, is exempt from the Medicaid transfer penalties.

Each case is different, so be sure to retain legal counsel before transferring ownership of any real estate. Although the transfer of real estate may be exempt from the Medicaid transfer penalties, there may be many other good reasons to not transfer the real estate. Be aware that avoiding the risk of loss to nursing home costs by transferring the home to a child or other person may not be in your best interest, and may subject the home to other risks of loss, such as a child’s bankruptcy, divorce, lawsuits, or unexpected death.

If a Medicaid application for long-term care benefits occurs within 5-years of a non-exempt transfer, the home can be returned in order avoid the imposition of a Medicaid transfer penalty and “cure” the problem. However, in many cases this is easier said than done. If the person who received the real estate is unwilling or unable to return it, then a lengthy transfer penalty is likely to be imposed.

There are also many tax issues to consider before making any real estate transfer. Notably capital gains tax issues need to be considered, as well as inheritance tax. Transferring your home outright to a child who does not live in the property can result in a large capital gains tax bill when your child later goes to sell the home. Also, if you give away your home yet continue to reside in it, the Pennsylvania Department of Revenue can argue that you impliedly retained lifetime rights to use an occupy the home, thereby subjecting the entire value of your home to Pennsylvania inheritance tax.

Exceptions for Transfers to Disabled Individuals. Transfers to disabled children can be exempt from the normal Medicaid transfer penalties. Public policy favors such transfers, and the laws are written in a way to not unduly restrict gifts for the sole benefit of disabled individuals. Care must be taken not to make outright gifts to children who are themselves receiving public benefits such as SSI or Medicaid. Even though outright gifts to such children would not cause a parent to be ineligible for Medicaid long-term care benefits, the outright gift to the child could render the child ineligible for Medicaid or SSI benefits. Transfers to disabled children receiving SSI or Medicaid benefits are normally best made to special needs trusts. Special needs trusts, also called supplemental needs trusts, are drafted in a way that the funds in the trusts supplement but do not supplant the disabled child’s public benefits. Gifts to non-children can also be made without causing ineligibility for Medicaid long-term care benefits, but those gifts need to be made to trusts. To summarize, gifts to disabled children can be made outright, but gifts to other disabled individuals need to be made to trusts for the sole benefit of the disabled person. These are known as “third party trusts” and they do not need to have a “Medicaid pay-back” provision.

No Exception for Annual Exclusion Gifting.  Gifts within the exemption from federal gift tax are still subject to the Medicaid transfer penalty. Under §2503(b) of the Internal Revenue Code, gifts of $15,000 per person per calendar year are exempt from federal gift tax for 2020.  As a result, many people believe they can give $15,000 amount away each year to each of their children without a Medicaid problem. Although there are exceptions, this belief is generally not true. If such gifting falls within the 5-year look-back, then these annual exclusion gifts can indeed result in the denial of an application for Medicaid long-term care benefits. For example, five years of annual exclusion gifts to a child, at $15,000 per year, means that there would be $75,000 of gifting in the 60-month look-back. That translates into a transfer penalty of 212 days of Medicaid ineligibility. ($75,000 divided by $352.86 = 212 days of ineligibility). It is possible to appeal the denial, or request an undue hardship waiver of the transfer penalty.

Curing the Transfer Penalty. The transfer penalty problem can be cured by a full return of the gift. Unfortunately most children and grandchildren have spent the money and are not in a position to return the funds they have received. Partial cures of gifted assets may not be accepted by the Pennsylvania Department of Human Services as reversing the transfer penalty.

Using Your Resource Allowances to Pay Nursing Home. Medicaid applicants with less than $2,349 in gross income (2020) can have up to $8,000 in non-excluded resources, such as cash in a checking account. If the transfer penalty is small enough, then this $8,000 resource allowance can be used to square up with the nursing home and address the transfer penalty caused by the gifting. For example, a gift of say $3,000 in the 60-month look-back could give rise to a 8 day period of ineligibility. ($3,000 divided by $352.86 = 8 days of ineligibility.) If the private pay nursing home rate is $390/day, then the $3,000 of gifting can cause a $3,120 problem. Instead of asking the children to return the gifted money, an additional $3,120 could be paid to the nursing home, leaving the recipient with $4,880.00, rather than the full $8,000 resource limit. Similarly, in the case of a husband and wife where one is in the nursing home, the spouse in the community is permitted to retain a larger resource allowance in order to avoid impoverishment. If the transfer penalty cannot be reversed on appeal or waived due to undue hardship, then these spousal assets can be used to address the nursing home bill caused by the transfer penalty. Certainly this can leave the spouse at home financially vulnerable.

Exceptions and Appeal Options May Exist.  Before a senior makes any gifts, it is highly recommended that they seek the advice of an elder law attorney. There are exceptions to the transfer penalties, especially when the gift was for a purpose exclusively for a purpose other than to qualify for Medicaid benefits. If you have been denied long-term care benefits due to gifting that has occurred within the 5-year look-back, there are ways to appeal the denial. Our law office handles Medicaid applications and appeals primarily in Montgomery County, Bucks County, and Philadelphia County.

Robert C. Gerhard, III Esquire is the managing shareholder of Gerhard & Gerhard, P.C., an estate planning and elder law firm located in Montgomery County, Pennsylvania. Attorney Gerhard specializes in elder law, with emphasis on Medicaid Planning, Medicaid Applications, and Medicaid Appeals. He is the author of the Pennsylvania law treatise, Pennsylvania Medicaid, Long-term Care.