Pennsylvania Medicaid Long-Term Care Numbers and Fact Sheet

Pennsylvania Medical Assistance (Medicaid) Long-Term Care Numbers and Fact Sheet

According to the Pennsylvania Department of Aging, there are over 2,400,000 Pennsylvania residents over age 60.  More than 240,000 Pennsylvania residents are over age 85.  Out of the fifty states, Pennsylvania has the third highest percentage of elderly residents.   One in five older Pennsylvanians live in or near poverty.   The Deficit Reduction Act (DRA) has been implemented in Pennsylvania.  Here are “Pennsylvania’s Medicaid Numbers” Stay tuned for additional updates…

Read more “Pennsylvania Medicaid Long-Term Care Numbers and Fact Sheet”

Pennsylvania Medical Assistance Estate Recovery Program

The Medicaid Payback: Pennsylvania’s Medical Assistance Estate Recovery Program

What follows is an updated version of an article that was authored by Attorney Gerhard and previously published in the Pennsylvania Bar Association’s law journal, the Pennsylvania Bar Association Quarterly.

By ROBERT C. GERHARD III, Esquire, CELA*

Introductionnurse-home-cont

 

This article discusses Pennsylvania’s estate recovery program in detail. Federal law requires each state to operate an estate recovery program that seeks repayment from the estates of deceased recipients of Medicaid long-term care benefits. Most of our clients refer to this program as “the Medicaid payback.” Pennsylvania complied with this federal mandate by passing Act 49 of 1994, Section 1412, 62 Pa. C.S. §1412. Pennsylvania’s estate recovery program has collected over $500,000,000 to date! Most of the recoveries are from the sale of the homes of deceased nursing home residents, but the estate recovery program seeks payback from probate estates that exceed $2,400. There are several exceptions to the estate recovery payback.

Read more “Pennsylvania Medical Assistance Estate Recovery Program”

Pennsylvania Elder Law Reference Guide 2021

Pennsylvania Elder Law Reference Guide 2021

Meeting With Your Lawyer
Perhaps the most difficult part of the estate planning process is overcoming procrastination and scheduling that initial consultation. For the best results, you need to deal with an attorney who provides estate planning services on a regular basis.

Read more “Pennsylvania Elder Law Reference Guide 2021”

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 2021 transfer penalty in Pennsylvania is one day for every $364.90 that was given away. This figure of $364.90 is known as the 2021 “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 27 days. $10,000 divided by $364.90 = 27 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 2021.  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 205 days of Medicaid ineligibility. ($75,000 divided by $364.90 = 205 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 $2,382 in gross income (2021) 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 $364.90 = 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.

 

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 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.

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 $10,000 – $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.