Medicaid Long-Term Services and Supports (MLTSS) is the government program that pays for nursing home care and long-term care in other settings for people who meet the stringent financial requirements. The application is filed once the non-excluded resources (assets) are below the specified levels. Along with the application form itself, the applicant must supply numerous documents as proof of eligibility. These are called “verifications.” Among other things, the applicant has the responsibility to supply a copy of every single financial statement including copies of cancelled checks (if any) for every single asset that was owned by the applicant or their spouse during the five years preceding the application. The Medicaid agency is required to conduct a ” 5-year Look-back.”
What is a transfer penalty? In general, if an applicant gave away assets during the look-back period, they will be penalized in that they won’t receive Medicaid benefits for a certain period of time. There are some exceptions which we have written about on this blog over the years, such as transfers to a spouse or to a disabled child, among others. This penalty period is based on a State formula, and starts when the person is otherwise eligible — meets the income and resource requirements, and submits a complete application.
The five-year lookback creates astounding hazards for many if not most applicants. State and federal law impose a penalty for an “uncompensated transfer,” which means a gift. In the law as commonly understood, a gift is a transfer of cash or transfer of an asset which is gratuitous; not for fair value; or not a purchase of goods and services for the applicant or their spouse. Typical examples might be: “selling the house for a dollar,” paying for the grandchild’s wedding, paying for the pool installation in a child’s back yard, making charitable donations, or just giving a family member some money. It’s very difficult to avoid penalties for true “gifts.”
However, some very common things that people do are often being treated as “gifts” by the County Medicaid agencies, and often result in transfer penalties:
— ATM withdrawals and checks payable to “cash,” unless the applicant can produce a receipt to prove what the cash was spent on.
— Regular weekly payments to a child for proven in-home caregiving, if there wasn’t a written, dated, employment contract before the payments began.
— Room and board fees when the elder lives in someone else’s house
— Reimbursements to a child who used their own account to buy the parent supplies, pay for prescriptions, etc. , unless there’s a dollar-for-dollar match up with a receipt.
Getting early legal advice can make all the difference for an aging individual who may need to apply for Medicaid to pay for care in the next five years. Careful planning can avoid the traps that are awaiting the MLTSS applicant, and by working with an attorney on the application you’ll get advice on interpreting the regulations and assembling the evidence needed.
Call for an appointment for MLTSS/Medicaid eligibility planning and applications ………… 732-382-6070