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.
