Medicaid is essential in helping individuals access medical care, especially elderly patients in need of long-term nursing care. But accessing Medicaid requires undergoing the 5-year look-back period, which is when Medicaid reviews your finances for the 60 months preceding your application date to determine whether you have gifted or transferred any financial assets in order to qualify for Medicaid and avoid paying for care out of pocket. Because nursing home care is so expensive, being denied Medicaid benefits can be a painful and stressful experience.
Fortunately, there are steps you can take to overcome Medicaid denials.
What You Should Do If Medicaid Is Denied
If you’re denied Medicaid benefits because of a gift given during the 5-year look-back period or for another violation, you should address the issue head-on with help from an elder law attorney. Medicaid benefits are complex, and the consequences of denial can quickly grow into an overwhelming financial hardship.
For example, if you enter a nursing home without Medicaid and find you are unable to afford the cost of nursing facility care, or the Medicaid application is denied, a relatively small unpaid bill can morph into a much larger liability when the nursing home’s lawyers pursue collection activity. This is because the nursing home’s admissions contract will likely hold you liable not only for the unpaid nursing home bill, but also for the legal fees they incur while suing you for payment.
If you are denied Medicaid due to a look-back transfer penalty, here are the potential choices and challenges ahead:
- An appeal or undue hardship waiver may be possible. If the Medicaid application is denied due to a transfer penalty, you are generally granted 30 days in which to appeal, and this can sometimes be longer depending on the facts. A lawyer can help you identify the grounds for appeal and the deadline for doing so. It can also be possible to request a hardship waiver of the transfer penalty.
- Period of ineligibility imposed. If the transfer penalty is not appealed, and it is in fact imposed, then the gifts within the look-back will give rise to a period of ineligibility for Medicaid long-term care benefits.At the time of this writing, the daily transfer penalty is $482.50 per day. As an example, a $20,000 gift found in the look-back could give rise to a transfer penalty of 41 days, as $20,000 divided by $482.50 is roughly 41. During this timeframe, the nursing home will not be paid by Medicaid. Other arrangements will likely need to be made to pay the nursing home, such as:
- Exempt assets may need to be sold in order to pay for the nursing home bill, or the nursing home could put a lien on real estate if it exists.
- Family members, such as adult children, might have to spend their own funds to pay their parent’s nursing home bill.
- If there is a spouse at home, the share of resources normally protected for the spouse at home to prevent spousal impoverishment may need to be partially or completely depleted to pay the nursing home due to transfer penalty, i.e., the period of ineligibility for Medicaid benefits imposed on account of the gifts.
- The nursing home may petition for guardianship. Sometimes when the nursing home is unpaid and the resident is mentally incapacitated, such as from dementia, their lawyers will petition the court for the appointment of a guardian. The guardian will then gain access to any assets that may remain, see to the proper payment of bills, and make sure income is paid to the nursing home each month to the extent required by law. This guardian may also demand an accounting from an agent under a power of attorney who may have misappropriated assets, and they may potentially pursue litigation against those who are in receipt of assets that were transferred in the 5-year look-back that are giving rise to the transfer penalty. It is common for the nursing home’s attorney to seek the removal of an agent under a power of attorney during the guardianship process.Guardianship under these circumstances can be an upsetting and expensive process. If an unpaid nursing home bill gets too large, the facility may be so concerned that it decides to take legal action to protect its financial interests. It is not unusual for the costs of guardianship proceedings to be paid from the incapacitated person’s funds by court order, even where the nursing home initiated the proceedings. Fortunately, sometimes all it takes to avoid the filing of guardianship is to communicate with the nursing facility about where things stand, especially if you need a little extra time to access enough funds to pay in full. This ongoing communication can reassure their business office that the process is proceeding properly.
- The nursing home can sue. Nursing homes will sometimes sue the spouse for the arrearage caused by a transfer penalty. If there is no spouse, they will sometimes sue the children pursuant to Pennsylvania’s filial support law and force the children to pay for their parent’s unpaid nursing home bill. If there are several children, they may do an asset search of the children and decide to pursue only the children with assets, even if the financially responsible children had nothing to do with the asset transfer giving rise to the penalty period.
- Notice of intent to discharge. If the nursing home is going to be unpaid for a long period of time due to a resident running afoul of the 5-year look-back, the facility may attempt to remove the resident from their community, providing a “notice of intent to discharge.” Discharge from the nursing home may or may not be possible, since the facility needs to make sure there is a safe discharge plan, but even the threat of this happening can be incredibly stressful and upsetting for those involved.
Responding When Medicaid is Denied
If you are facing financial hardship due to a Medicaid denial, discuss your options with an elder law attorney. In many cases, open communication with your elder law attorney, Medicaid, and the nursing home (as recommended by your attorney) can assist in appealing the denial and give you more financial resources and options to pay for care.
If you have additional questions, contact Gerhard & Gerhard, PC to discuss your options.
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Disclaimer: We recommend that you have 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 Gerhard & Gerhard, P.C.
