Norman was downright frightened. He just received word from his mother’s doctor that he had no choice but to place his mother in a nursing home to receive 24-hour care. This scared him for two reasons. First, he was terrified of his mother, and he knew she was not going to take this news very well. Second, he feared that the cost of a nursing home would burn through all of his mother’s life savings in a short period of time. He had heard that the average cost of a nursing home in his area was a daunting $5,000 per month. For a brief moment, he considered the option of keeping his mother in her upstairs bedroom and doing his best to care for her himself. But the doctor’s recommendation finally convinced him to look into area facilities for his mother.
At one of the first nursing homes he visited, a social worker asked Norman if he had looked into Medicaid coverage for his mother. She correctly informed him that, if his mother qualified, she would only have to contribute her monthly income to the cost of her care, with the balance of the nursing home bill covered by Medicaid. That sounded great to Norman, but he doubted his mother would qualify because the social worker also correctly informed him that a single person could have no more than a home, a car, and $2,000 in bank account balances to qualify for Medicaid. Norman’s mother was over the limit. He assumed Medicaid coverage was out of the question until the social worker gave him the business card of a local elder law attorney. She told him to set up an appointment with this attorney before assuming that Medicaid coverage was not an option.
At the appointment with the elder law attorney, Norman learned about several unusual Medicaid policy provisions that often trip up applicants for Medicaid assistance. He had heard that Medicaid applicants can have a home and still qualify for Medicaid, but the attorney informed him that this provision gives some applicants a false sense of security. The attorney explained that he typically recommends that his clients transfer the home prior to filing for Medicaid to save the home from Medicaid liens. The state has the ability to place a lien against the home of any Medicaid recipient who dies still owning a home. This means that when the children take steps to sell the home after the parent is gone, the state must be paid back first up to the full amount of assistance provided to the Medicaid recipient before the children get a penny.
Norman appreciated this information, but it confused him. He told the attorney that he knew enough about Medicaid to know that if you give away any assets before filing for Medicaid, you cannot receive Medicaid benefits for five years. The attorney told Norman that it seemed he knew just enough about the Medicaid gifting rules to be scary. Medicaid does have a five year look back provision that allows DHS to inquire about any and all transfers of assets made by the Medicaid applicant prior to the submission of an application for assistance. But this rule does not mean that anyone who transferred assets during that look back period must wait five years to receive Medicaid coverage. Medicaid has a second, often overlooked gifting rule that says when gifts or transfers of assets occurred during the five year look back, a waiting period of one month will apply for every $5,000 transferred. This means if a person gives away $50,000 in assets during the five year look back, but they are now otherwise qualified for Medicaid, a ten month waiting period will apply before Medicaid coverage can begin, not a five year penalty.
This news was better than Norman expected, but some quick math told him that if he transferred his mother’s home into his name, a significant waiting period would still apply, even if that period was less than five years. Norman told the attorney that he lived in the home, too, and he could not afford to lose the home in order to have money to pay the nursing home during the waiting period. He commented that he would just have to continue caring for his mother in the home, as he had been doing for several years now. This piece of information sparked something in the attorney. He asked Norman for clarification – was he saying that he had lived in the home with his mother for several years, acting as her caretaker, so that she could continue living in the home instead of moving to a facility? Norman answered yes. The attorney explained that Norman would fit within a limited exception to the gifting rules that says any transfer of a home from a parent to a child is exempt from the Medicaid gifting penalties when that child has lived in the home as the parent’s caretaker for at least two years before the move to a facility.
This was great news to Norman. He could get his mother the care she needed while still saving the house. He told the attorney that he was going to discuss all this with his mother, but he assured the attorney he would be back soon to take the next steps in the Medicaid application process. Strangely, though, Norman never came back to see the attorney, and his mother never moved to a nursing home. In fact, no one ever saw Mrs. Bates again after Norman’s legal consult. The situation was a real mystery to the attorney, but one thing was for sure – he slashed through all the government red tape to give the family an outstanding long-term care plan, even if for some unknown reason they elected to not use it.