By Robert C. Gerhard, III, Certified Elder Law Attorney
When preparing for long-term care and applying for Medicaid in Pennsylvania, one of the most overlooked but critical steps is closing inactive, very small, or unnecessary financial accounts well before the application process begins. While these accounts may seem harmless, they can become a major obstacle during the Medicaid application due to the five-year look-back period enforced by the Pennsylvania Department of Human Services (PA DHS) and the County Assistance Office (CAO).
The Five-Year Look-Back: What It Means
Medicaid applicants must provide financial documentation for the five years prior to the date of application. This includes bank statements, transaction histories, and explanations for any large or irregular transfers. Every account—no matter how small or inactive—is subject to scrutiny. Typically they ask for every statement for the immediate past two years, and then January and July for the remaining 3 years of the 5-year lookback.
Why Inactive Accounts Create Problems
Even accounts with minimal balances or no recent activity can cause delays and complications:
- Record Retrieval Challenges: Banks often archive records after a period of inactivity. Retrieving these documents can be time-consuming and may require payment of fees to the bank, sometimes significant fees.
- Lost Access: Forgotten login credentials or closed branches can make accessing old accounts difficult. Sometimes financial institutions merge, and although the acquiring financial institutions normally have access to the old account information, it can be more difficult to access.
- Unnecessary Burden: Each account adds to the volume of paperwork, increasing the risk of missing documents or triggering red flags during the review.
The Cost of Inaction
Failing to close unnecessary accounts can lead to:
- Application Delays: Missing or incomplete records can stall the Medicaid approval process when the application is denied for missing verification and you need to then file an appeal while you attempt to locate the old records.
- Additional Expenses: Some banks charge for archived statements or require notarized requests.
- Stress and Confusion: Families already navigating an already difficult time may find the added administrative burden overwhelming.
Proactive Planning Pays Off
Here’s what we recommend:
- Review All Financial Accounts: Identify accounts that are no longer used or needed.
- Consolidate Where Possible: Fewer accounts mean fewer records to manage.
- Close Inactive Accounts Early: Do this well before the five-year look-back period begins.
- Keep Documentation: Save final statements and closure confirmations for your records. Save copies of the deposit slips or other confirmations for electronic deposits so we can easily trace the funds.
How We Can Help
At Gerhard & Gerhard, P.C., we guide families through every step of the Medicaid planning process. From identifying problematic accounts to assembling the necessary documentation, our team ensures your application is as smooth and stress-free as possible.
Planning ahead is the key to protecting your loved one’s care and your peace of mind. Contact us today to schedule a consultation.
