I received an email late last night from a client with whom I recently met in my office. The client’s elderly parents, both mother and father (80s an 90s), have had some serious medical problems over past few months. It now appears that both of them will be needing skilled nursing home care in the near future, if not immediately.
In our office conference we discussed the process involved in planning for Medicaid benefits to pay for the nursing home care for both parents. The client retained us to engage in Medicaid planning for the parents. We provided the client with our Medicaid planning questionnaire and asked that it be completed as soon as possible, and we would prepare the Medicaid plan as quickly as possible (probably within two weeks). I assured the client, based on the information already provided that we could work to have the client’s parents eligible for Medicaid nursing home benefits by the end of next month at the latest. The email from the new client related a conversation had with a “well meaning friend.” The “friend” urged my new client to immediately withdraw all of the client’s parents’ financial assets and place them into new accounts titled just in the client’s name. The client wanted to know whether that is something that should be done to preserve the parents’ assets.
My response was that the client certainly should not take that action. Neither should ownership of the parents’ home be transferred outright to the client, as another friend recommended. (We will consider whether it is appropriate to use an enhanced life estate deed, or “lady bird deed” for the transfer of the home to the client at some point – within the legal parameters allowed by Medicaid law – protecting the home without incurring a penalty period that could eliminate receipt of Medicaid benefits.)
As I explained to my client, such transfers would be deemed “uncompensated transfers” by the Florida Department of Children and Families (“DCAF”), the state agency that handles applications for Medicaid benefits for nursing home costs. Uncompensated transfers will result in a “penalty period” during which neither parent would be eligible for Medicaid benefits to pay for their nursing home care, and someone, likely my client, would be required to either pay the nursing home, or take care of the parents at home.
Anticipating the next question would be how would DCAF learn about the transfers (a question often raised in my consultations with clients about Medicaid planning), I explained that the State (through DCAF) has access to many financial records and the public records to verify asset ownership, asset transfers, and other information, that allows the case worker to verify much of what is placed in the application for Medicaid nursing home benefits. Banks and other financial institutions also keep detailed records on the opening and closing of accounts, that can be obtained from the financial institutions.
More importantly, I explained to the client that the application for Medicaid benefits to pay for nursing home costs requires that all uncompensated transfers over the past five years (60 months) be disclosed on the application. Failure to accurately complete the Medicaid application, either by omitting transfers that should be included to misstating the character of a transfer, could result in prosecution for Medicaid fraud. A conviction for Medicaid fraud could result in a prison sentence for the person completing the Medicaid application. I cautioned the client that during the term of imprisonment, there would be no one to care for the client’s parents, who would be ineligible for Medicaid to pay for their nursing home care. Where would they go?
I then reiterated our earlier conversation in my office. There are planning options that are completely legal that can be taken to qualify elderly family members for Medicaid benefits to pay for nursing home care, and still preserve substantial assets for family members to provide care and support for the elderly person that otherwise is not covered by Medicaid benefits. Proper Medicaid planning allows assets to be preserved for the parents’ needs beyond the benefits provided by Medicaid, consistent with family objectives, ensures that the elderly infirm parents will be properly cared for at all times, and avoids any issues that could lead to prosecution or imprisonment.
When planning for Medicaid eligibility, it’s best to keep it legal!