Nursing home placements can occur suddenly after an unexpected medical setback. Being prepared with the following will not only make your life easier in the event of a nursing home emergency, but the elder law firm helping you with the Medicaid planning and application process will be better able to help in protecting money to the extent possible. Here’s what you can do now:
1. Get Your Financial Power of Attorney Document in Place
Having a financial power of attorney document is helpful for many reasons apart from Medicaid planning, but when applying for Medicaid long-term care benefits, having the right financial power of attorney is critical because:
- Without financial power of attorney, you may not be able to order missing financial records needed to prove eligibility for benefits. An applicant for Medicaid benefits has the “burden of proof.” Missing old financial records can result in your application being rejected by the PA Department of Human Services for “failure to provide verification” and leave the nursing home bill being unpaid. Unpaid nursing home bills can result in lawsuits, often against the spouse and children of the nursing home resident under Pennsylvania’s filial support laws.
- Without financial power of attorney, you may not have legal authority to move money in a manner that helps shelter it from nursing home costs. This can preclude many Medicaid planning techniques. We recommend that you have your POA drafted by an elder law attorney if the document might be used in the Medicaid planning or application process. Without a solid power of attorney that is appropriately drafted, Medicaid planning may not be possible, and more money may need to be privately paid to the nursing home than would otherwise be the case.
- If there is no financial power of attorney, it may be necessary to initiate guardianship proceedings in the event of your incapacity, a costly and time-consuming process that can be avoided if you have a capable and trustworthy person in your life who could help you as your agent under power of attorney if you became disabled.
2. Maintain Five Years of Financial Records
There is a 5-year lookback when applying for Medicaid long-term care benefits. In this lookback, the government reviews your financial transactions for the past five years before approving payment for an applicant’s nursing home care. Pennsylvania requires financial records going back as far as 5 years. If you don’t have the records, our office is good at helping you gather them, but it can be a big job to reconstitute this volume of paperwork. We recommend that at any given point you have ready access to the following:
- Copies of all bank and financial statements going back 5 years.
- Copies of checks over $500 for the past 5 years
- Copies of invoices or receipts to explain large expenditures for the past 5 years.
Saving all this old paperwork may seem like a lot of work, but it is much better to save these documents on an ongoing basis than it is to piece together 5 years of financial dealings on short notice. The County Assistance Office needs to make its determination regarding eligibility within 45 days of the filing of the Medicaid application. We as the applicant have the burden of proof. If you do not have the bank statements, they can and do deny Medicaid long-term care benefits.
3. Consolidate Assets
The more financial institutions you deal with, the more bank records you will need to secure as part of the 5-year lookback. When you close an account, save a copy of the closing paperwork, check, and deposit slip showing where you put the money. The fewer accounts there are, the easier it is to apply for benefits. That said, talk with your financial advisor before closing any accounts since there can be good reasons for having several accounts. Several reasons for not cashing out an account for consolidation include early surrender fees on CDs, tax consequences, or lost death benefits, converting an exempt asset to non-exempt status.
4. Don’t Make Large Cash Withdrawals
It is difficult to document where money has been spent when it was paper currency (cash). Most people just don’t save receipts when they pay cash. Large cash withdrawals (over $500 in aggregate in any month) give your elder law attorney one more thing to discuss with the government worker reviewing your application for long-term care benefits. To the maximum extent possible, use credit cards, debit cards, and checks to pay large bills. If you absolutely need to pay cash for something costing more than $500, save the receipt. Otherwise, the Medicaid caseworker can presume that you gave the money away, and this presumed gifting causes problems with the Medicaid application process.
5. Meet With an Elder Law Attorney Before the Emergency
A consultation with an elder law attorney before nursing home placement will get your questions answered and make sure you are prepared for the future. If possible, it is best to secure answers to your questions before an emergency:
- Should I make gifts or not? What if I already did?
- Is my retirement account an exempt asset?
- Can I pay a relative or friend to provide caregiving?
- How does the Medicaid spend-down work?
- Is it too late to protect assets for my spouse or children?
- Are the exceptions to the transfer rules?
- Will they take my house?
Many articles on our website provide general information, but we recommend that you consult with us ahead of time if possible, so you have advice tailored to your situation. These are my favorite meetings because I get to tell you ways to avoid problems. If it’s too late for the advance meeting, well we are sometimes able to fix problems after the fact, but it is more difficult.
Applying for Medicaid benefits is an involved process, but if you 1) have a financial power of attorney, 2) save 5 years of financial records, 3) consolidate assets, 4) avoid cash withdrawals, and 5) get some basic elder law advice before an emergency, you’ll be more prepared than most.
That said, long-term nursing home placement takes many if not most of our clients by surprise. Whether you have the time to prepare ahead, or are struck by an unexpected nursing home placement, our office can help. We can help you avoid mistakes, be prepared, and protect assets to the extent permitted by law.
Disclaimer: We recommend that you receive ongoing legal advice from an elder law attorney before attempting to navigate the Medicaid application process. If you have questions or wish to secure our services, please contact us.