by Andrea Di Dio
I recently had a phone consultation with a lady who decided to apply for Medicaid for her mother without consulting with an Elder Law Attorney. When her mother entered the skilled nursing facility, she had less than $40,000 remaining in her individual name. The daughter was unaware of the resource limit to qualify for New Jersey’s Medicaid Only program, which allowed her mother a maximum of $2,000 in her name. The daughter believed she could help her mother become eligible by transferring $34,000 of her mother’s money to herself and her children leaving her mother with $6,000 to spend on her care for the next five months – this was a critical mistake!
The problem was that the daughter was unaware of Medicaid’s transfer penalty rules. Medicaid has a 5 year look back to discover if the applicant made any transfers for less than fair market value, aka “gifting,” to ensure only those who are in financial need of Medicaid benefits will qualify. If gifting is discovered, the Medicaid agency assesses a penalty period. The penalty period is determined by adding up the value of transfers and dividing this value by the average cost of nursing home care in New Jersey ($332.50/day or $10,307.50). Once this penalty is assessed, the County Medicaid agency essentially informs the applicant that despite being medically eligible and having only $2,000 remaining in their name, the government will not cover the cost of care for the duration of the penalty period. As you can imagine this can have a devastating effect on an applicant and their family. As for the daughter’s situation, her mother was hit with a 3.5 month penalty period for the transfers made to the daughter and grandchildren. These transfers ultimately cost the family an outstanding bill of close to $100,000. The most unfortunate part of this situation is that it could have been completed avoided if the mother and daughter would have consulted with an experienced elder law attorney when they first considered the need for Medicaid benefits.
An elder law attorney would have sat down with the family and explained every relevant aspect of the Medicaid program including how to become eligible, what care would be covered, how the government would seek reimbursement after the Medicaid recipient passes away, and how the attorney could help to make the application process as smooth as possible. The attorney would be very candid about the family’s situation and if nothing more, the family would have walked away with a complete understanding of the process that lies ahead of them.
Whether you realize it or not, applying for Medicaid benefits is a legal process and one should not go about it without consulting the appropriate legal professional. Anyone who recommends otherwise, is simply doing you a disservice that could have devastating results.
What exactly is an Elder Law Attorney?
As a practicing elder law attorney, I am often confronted with the most obvious questions; What do you do exactly? How are you any different from an Estate Planning Attorney? My response often leaves these individuals enlightened.
Elder law has become a growing specialty in this country over the past 50 years. The main reason for this trend is the increase in life expectancy of our seniors caused by advancements in medicine and healthcare. Recent statistics estimate that the average man will have a life expectancy of 83 years and the average woman will have a life expectancy of over 85 years. This is an unprecedented trend in history. In order to manage this situation, the federal government has taken on the financial burden of long term care for many Americans and enacted statutes to regulate federal assistance. The result is a labyrinth of rules and regulations that are confusing and difficult to navigate. For this reason, the practice of elder law developed to address the range of legal issues facing members of our aging society such as: housing for seniors, managing financial affairs, paying for medical care, government benefits for long term care, and tax issues related to medical care.
The practice of Elder law consists of navigating the healthcare, government benefits, tax and finance laws that affect seniors in the most efficient and effective manner. A good way of understanding the difference between elder law and estate planning is to explain the primary focus of each. Estate planning focuses on what happens to a person’s assets upon their death, while trying to minimize taxes and efficiently distribute the assets to beneficiaries. Elder law focuses on what happens when one continues to live and has increasing care needs while taking into consideration finances and individual circumstances. An elder law attorney must be well versed in estate planning because it is an important part of long term care planning; however, the converse is not true because estate planning does not typically have the same focus on healthcare and eligibility for government benefits.
It is important that you seek out the right legal professional if you are faced with a legal issue in one of the following areas: financial long term care planning, age discrimination in employment, guardianships, veterans benefit planning, Medicaid planning and applications, special needs planning, and estate planning. Don’t try to navigate this maze alone. Seek the professional advice you deserve.
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