Sally was the “responsible daughter” and it seemed like whenever
there was a family problem, it fell to her. She was the one her dad trusted the
most, so years ago he named her as the agent on his Power of Attorney. He knew
that she would make sure his finances were safe and that he would be well cared
Sally visited her father at the care center nearly everyday to
make sure he was getting the care he needed. She talked with the folks in the
business office and made sure that dad’s bill was paid every month on time. When
it came time to file the Medicaid application, the facility assured her that
there would not be a problem and that they would handle the paperwork for her.
After a few stressful months Sally got a letter from the State
Medicaid agency that was very confusing to her. That’s when she showed up in
our office, looking for an explanation.
We asked Sally to bring along the paperwork and when she
did, we quickly discovered the “mistake.” The problem was that about three
years ago, unbeknownst to Sally, her father had loaned her brother about $25,000.
When Sally provided the financial information to the social worker at the
nursing home, there were no gifts or transfers shown on the application.
The problem came when the state case worker began going back
through the records. She discovered the check written to brother Bob for
$25,000 and she also learned that Bob had never paid anything back and there
was no written loan agreement. In other words, while her father hoped to get
the money back from his son one day, the fact was that this was a gift.
So the state case worker said there was going to be about a
three plus month penalty before Medicaid would begin paying. The nursing home
then went back to Sally who had signed the application and told her they needed
payment for those five months of care that they had provided while waiting for
the application to be approved.
I explained that the gift that caused the penalty wasn’t Sally’s
fault…but it wasn’t the facility’s fault either.
In point of fact, the facility was owed the money. Now there
were some mitigating circumstances that we brought to the attention of the
nursing home and we’re still waiting to see how this will finally be resolved.
The sad thing is that if Sally had gone to an elder law attorney
ahead of time, the “loan” would have been discovered in enough time to make the
penalty expire through one of the strategies attorneys have under the Deficit
Unfortunately, these are not strategies that lay people can
implement without a great deal of legal knowledge. In the end, it’s unfortunate that
this mistake, which could have been fixed, is now going to cost the family some
Whenever I lecture in public, I always tell the audience that
you wouldn’t think of going through an IRS tax audit without being represented
by your attorney or accountant. It’s the same with a Medicaid application.
Having an elder law attorney handle the application can save
you and the nursing facility tens of thousands of dollars and a whole lot of
aggravation and stress.