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Medicaid Mythbusters Part 2

Rich Shea — Tue, 14 Dec 2010 23:18:21 +0000

This is another installment in my mythbusters series to help get some accurate information out there concerning some popular myths that surround eligibility for Texas nursing home medicaid benefits.

Myth
You can make gifts within five years of applying for benefits and just not tell anyone; or the State of Texas will not find out.

Fact
A Medicaid application averages about 45-90 days before the HHSC makes a decision. What do you think they are doing during that time? They are investigating and looking for clues to any assets that may not have been identified on the application. And even if you slip by on the initial application, if the asset is discovered later on you will lose your benefits then and incur liability for the benefits the state already paid. Hoping that you do not get caught is not a strategy.

Myth
You can make gifts of real estate, or cash, or stock, without creating a penalty as long as they are “small”.

Fact
Gifts or any transfer where the Medicaid applicant or their spouse receives less in value than they transferred to another person are a minefield for the inexperienced. There is no blanket exemption that a person can gift without penalty like there is for federal gift tax purposes. Any gift or questionable transfer can be the basis of a penalty that disqualifies your loved one from Medicaid. Unfortunately too many people without proper advice end up spending several thousands of dollars on nursing home costs because they incurred a penalty over a few hundred dollars. Not a good trade in my opinion.

Myth
If you have a joint account with a family member or someone else and you simply remove your name from the account that is not a transfer resulting in a penalty.

Fact
Removing an account owner’s name from an account and cutting off their access to the funds in the account is a gift transfer which will result in a penalty and period of ineligibility. This is the same as writing a check for the full amount of the account to the other account owner.

Don’t make the mistake that ends up costing your family tens of thousands of dollars. The Texas Medicaid rules are very harsh and do not distinguish between “innocent” mistakes and intentional acts to deceive. Protect yourself and your property with an experienced Texas Medicaid Attorney today.

Medicaid Mythbusters

Rich Shea — Thu, 25 Nov 2010 13:23:34 +0000

The Medicaid nursing home benefits program causes a lot of confusion. Part of why I publish this website is to get accurate information out there into your hands so you don’t make a decision based on rumors, stories, and other inaccurate sources of information. There are a lot of popular misconceptions about eligibility for Texas Medicaid. Let’s take a look at some of them.

Myth

You can make small or large gifts to family members within five years of applying for benefits and still qualify for Medicaid benefits without penalties.

Fact

There is no annual limit you can give to family members that will not create a penalty for Medicaid eligibility. Any gift can create a penalty. The confusion that sparked this myth is the annual gift tax exclusion which only applies to gift taxes and has no impact on Medicaid.

Myth

Your parent will lose everything before he or she can receive Medicaid benefits.

Fact

Potential Medicaid applicants do have some flexibility in making the most of their assets before qualifying for nursing home benefits. Married applicants can usually protect a sizable amount of assets for their spouse, and unmarried applicants can usually get more with their remaining assets than simply paying the nursing home bill until everything is gone.

Do not spend all of your money on nursing home bills. Find out how you can protect yourself and your family with a Texas Medicaid attorney.

Medicaid Mythbusters Part 2

Funeral Contract Mistakes

Rich Shea — Sun, 21 Nov 2010 13:05:13 +0000

Before spending all of their assets many families that work with an experienced Medicaid Attorney purchase a funeral contract for the Texas Medicaid recipient. The reason is simple, once the family member is on Medicaid they will never be allowed to have more than $2,000 in assets. Funerals generally cost a lot more than $2,000 so it makes sense to use some of the remaining funds to provide for this future need while the funds are available now.

Funeral contracts are like any other contract and can be a bit complicated. In any given funeral contract you may have 3 different roles to identify: purchaser, owner, and beneficiary. Unfortunately, many of the funeral contracts I see that people have purchased without legal advice are not setup in the proper way. These families often end up with a family member who has power of attorney for the Medicaid applicant being identified in the contract as the owner or purchaser. That is not the best way to setup a funeral contract if you want to go “by the book” and minimize potential problems during the 45+ day Medicaid application review period.

Speak with a Texas Medicaid Attorney and get help if you want to avoid mistakes like these before and during an application for Medicaid nursing home benefits.

No related posts.

Which Special Needs Trust is Right for Your Family?

Rich Shea — Sun, 27 Jun 2010 16:40:26 +0000

Many people throw the term “special needs trust” around without much thought. There are actually two distinct types of special needs trusts. Each type has its own very specific set of rules to follow in order to achieve success. If you have a family member with a chronic medical condition that needs a special needs trust the first step is deciding what kind of special needs trust is appropriate.

Third Party Special Needs Trust

The most common type of special needs trust is a situation where a parent desires to set aside an inheritance or other funds for their disabled child to enhance their quality of life without losing everything to chronic medical costs. This kind of special needs trust is referred to as a third party special needs trust because the parent is creating the trust for the child with assets owned by the parent. If the assets used to create the special needs trust are owned by the beneficiary of the special needs trust then you are looking at the other type of trust. That type of trust is called a “”self-settled” special needs trust.

Self Settled Special Needs Trust

A self-settled special needs trust is funded with assets owned by the beneficiary of the trust. Common examples of how this occurs are as part of the recovery in a personal injury lawsuit or if parents failed to take advantage of the benefits of a third party special needs trust. There are two unique components to the self-settled trust. First, with a self-settled special needs trust the Texas Health and Human Services Commission must be repaid upon the death of the trust beneficiary for the Medicaid benefits it paid on behalf of the beneficiary. Second, only the parent, grandparent, legal guardian or court can establish the trust. The beneficiary cannot establish the trust. If the beneficiary’s parents and grandparents are deceased and a guardian is not already in place additional court delays and costs are required to put a guardian in place to establish the trust.

Get Help Today

This is only the beginning of our discussion on the Special Needs Trust. Attorney Richard Shea of The Shea Law Firm can help you leave a legacy for your disabled loved one to protect their quality of life even after you are no longer there to provide for them. Call (832) 592-7913 today.

TexasTitle19.com is your connection to an experienced Houston Medicaid Attorney who can help you find the right nursing home, get the best care, and pay for it all without going broke. We are currently focused on Harris and Montgomery Counties, including the areas of Houston, Conroe, The Woodlands, Spring, Tomball, Humble, and Katy. We also provide Elder Law and Medicaid consulting services throughout all of Texas.

Miller Trust Requirements – Part 2

Medicaid Mistakes: Bad Advice from Unqualified People

Rich Shea — Sat, 01 May 2010 12:28:27 +0000

I regularly receive requests to help families that have already tried their own asset protection plan for Medicaid. Sometimes they come to me after a family member has done something with an account the previous week or it could involve an action from years ago and now the money is all gone. Can you see where this is going? If they contact me to fix something, obviously the do it yourself plan went wrong and they are now in a lurch between the nursing home and the Health and Human Services Commission (HHSC) with past due nursing home bills usually past the $10,000 mark or more.

How Does This Happen?

There is a lot of information on Texas Medicaid out there that is flat out wrong, mildly inaccurate, or completely inappropriate when applied to a specific family’s set of circumstances. Often times you may hear stories from friends or family about what worked for them and it is not uncommon for medical staff personnel in hospitals and rehab centers to make bold statements on your family member’s Medicaid eligibility.

Think twice before putting your loved one’s financial resources and Medicaid eligibility in their hands. Ask yourself, “Do they work for me? Do they know the details of my situation? Do they know the nuances of Texas and Federal Medicaid laws? Will they stand beside me in front of the HHSC?”

In my experience, most pieces of anecdotal advice from unqualified people are horribly inaccurate. Medicaid rules that may seem black and white at first glance often become a lot more complicated when you consider the very important details that make the difference between receiving benefits and being charged with a penalty. (Ordinarily this is where I jump into a story of how many families think qualifying for certain Medicaid exemptions is much easier than it actually is, but we will cover those situations in a separate article)

I hope you are here to educate yourself before going down this same dangerous road. This is my critical Medicaid mistake #1: relying on bad advice from unqualified people.

What Is The Worst That Can Happen?

Bad advice, or no advice, usually creates more problems than solutions. For example, bad advice has led families to transfer assets out of a parent’s name and then spend all of the funds within the look back period of the parent’s application for Title 19 Medicaid benefits. From a legal perspective, there is no rhyme or reason to these situations and they often lead to disaster. So in a case like this a family has transferred and spent everything and gotten themselves into trouble with the HHSC. What happens now?

Now, that the Medicaid application was denied they recognize they need a Montgomery County Elder Law Attorney to fix the Medicaid eligibility issue. They have already spent everything, how are they going to afford a Montgomery County Medicaid Attorney to help them out of this hole? Speaking for myself, it usually costs more to fix an ill-advised asset protection plan than to create a well designed plan.

Don’t Let This Happen to You

If you are interested in asset protection from nursing home costs without jeopardizing Texas Medicaid eligibility speak with a Houston Medicaid Attorney and do it right the first time. Hope is not a strategy when it comes to proving your case for Medicaid nursing home benefits that cost an average of $5,000 per month.

If you are considering a do it yourself asset protection plan, be prepared to go it alone from start to finish. There are some mistakes that cannot be undone by even the best attorney.

No related posts.

The Spousal Assessment of Assets

Rich Shea — Tue, 16 Mar 2010 13:19:15 +0000

How will you be able to survive if your spouse needs expensive nursing home care? I hear this question a lot from families facing an unexpected nursing home placement. Unfortunately some families that contact me have already spent more of their own funds than they need to before qualifying for Texas Medicaid nursing home benefits. For the families that contact me early enough to protect assets for the healthy spouse or parent the process all begins with something called the “Spousal Assessment.”

The Spousal Assessment for Texas Medicaid is rather straightforward. It is a snapshot of a married couple’s combined countable resources. This snapshot is the starting point for determining the amount of assets the spouse at home will be able to keep while the spouse in the nursing home pursues Medicaid eligibility. The Spousal Protected Resource Amount is later determined from this initial assessment which many people do not even understand is taking place behind the scenes.

When Can You Initiate a Spousal Assessment

The request and assessment may be made any time from the beginning of the continuous period in an institutional setting to the date of application for Medicaid. Ordinarily this is handled by the Woodlands Medicaid Attorney handling the application for the family.

If you do not have a Woodlands Medicaid Attorney representing you then the couple must provide information on their resources and verification as required by HHSC. If the couple does not provide the verification within the time frame requested by HHSC, HHSC does not complete the assessment and takes no further action = no Medicaid benefits.

When is the Assessment Date

The couple’s combined countable resources are assessed as of 12:01 a.m. on the first day of the month in which the first continuous period in an institutional setting began. When determining the first day of the month in an institutional setting for the Spousal Protected Resource Amount, HHSC may count days the person spent in a hospital if the person admits directly from the hospital to an institutional setting. After the continuous period begins, hospital stays and therapeutic home visits are not considered as breaks in the 30-consecutive-day period.

Are You Giving Away Assets You Can Keep?

The Spousal Assessment procedure is a reminder of how important it is to understand the legal rights you have when faced with a nursing home situation. As I mentioned at the beginning, some families do not contact me until it is too late and they have already spent more than they need to. In situations like that, the family voluntarily gave up assets the healthy spouse was entitled to and it can make surviving that much more difficult for the healthy spouse when they are left with less assets than the law allowed them to keep. Don’t make the same mistake. Speak with a Texas Medicaid Attorney today to protect your rights and property.

The Spousal Protected Resource Amount

How Much Can You Give Away Without Penalty?

Rich Shea — Sat, 20 Feb 2010 16:25:29 +0000

In the world of Texas Medicaid eligibility, the words “gift” and “penalty” go together like “sunshine” and “lollipops”. In almost every case where there is a gift within the look back period you will find a penalty that prevents a person from obtaining Texas Medicaid benefits. I regularly speak with families that heard from someone, somewhere, at some point in time that a certain type of transfer or gift is acceptable. In every instance that I can remember this advice was given by someone that is not even a lawyer, or in the few instances where it is from a lawyer, it is not from an experienced Texas Medicaid Attorney. And that is usually the beginning of a long line of mistakes before they find their way to me.

So let’s get the record straight on what you need to be aware of before making that gift you’ve been thinking about. And if you have already made that gift and your family member needs Medicaid benefits within the look back period then run, don’t walk, to a Medicaid Attorney.

First - any transfer of any asset for less than fair consideration within the lookback period (up to 5 years) of applying for Texas Title 19 Medicaid benefits creates a penalty period of ineligibility. Say it with me out loud – any transfer of any asset for less than fair consideration within the lookback period of applying for Texas Title 19 Medicaid benefits creates a penalty period of ineligibility.

Now that we understand the rule, let’s go over some basics.

You will notice all types of transfers are included in the rule. Be it writing a check to a friend or family member, handing them cash, signing a deed over to someone etc. As it says, any and every transfer for less than fair consideration is included in the scope of the rule. A simple way to look at it is if the person gives away an interest and access to property, you are at risk for your transaction being labeled a penalizing transfer and resulting in a period of ineligibility for Texas Title 19 Medicaid benefits.

One popular transaction that comes up often is taking a joint account and removing the Medicaid applicant’s name from the account. This is a gift. The Medicaid applicant had unrestricted access to the full value of the account on one day and after his or her name was removed from the account they no longer had access to the account. This transaction results in a period of ineligibility.

Another popular question concerns Medicaid penalties and annual exclusion gifts. For tax purposes, each person is allowed to gift a certain value to any person tax free. That is where the annual exclusion gifts end, for tax purposes only. In the context of a Texas Title 19 Medicaid application, a gift that you made which is tax-free can very well be (and almost always is) a gift subject to penalties for Medicaid eligibility purposes.

Another example is special occasion gifts such as birthdays and graduations etc. There is no exclusion for these types of transfers no matter how noble or small they may be. Any and every gift is subject to the penalty period of ineligibility rules whether it is $5,000 or $500.

But I Heard About Such and Such Exception

You may be right, there are a few very narrow exceptions of transfers that do not create a penalty, however the burden is on you and your Houston Medicaid Attorney to establish by the evidence that you qualify within one of the specific exceptions. If you do not prove your case you are left with a penalty, and that is what this article is about. We will review some of these exceptions in detail in future articles.

One final word; if you are considering a strategy of stonewalling the Health and Human Services Commission by denying information, then think again. You bear the burden of proving your eligibility. If the law presumes a transfer is a penalty and you do not prove otherwise your loved one will be denied benefits.

So how much can you give away without creating a penalty?

If you are outside the look back period then you can give away as much as you want. If you are within the look back period then you really can’t give away anything. The best thing you can do is to speak with a Houston Medicaid Attorney to find out what your options are to structure transfers to avoid them being labeled as “gifts” in the first place.

How Much Can You Protect or Give Away?

Rich Shea — Tue, 03 Nov 2009 12:30:35 +0000

This is probably the number one question I hear on a sometimes daily basis from families that are facing a nursing home issue or that are planning ahead in case a nursing home becomes necessary:

“How much assets can we protect, give away, keep?”

The question is pretty straightforward, but the answer is not.

A balancing act takes place in these situations between 1) the financial needs of the potential Texas Medicaid applicant; 2) the potential Texas Medicaid applicant’s desire to protect family assets from nursing home costs; and 3) the eligibility rules of the Texas Medicaid program. In my experience all three factors must be evaluated and resolved in order to provide a complete picture of the situation. Ignoring one often leads to unintended consequences down the road, especially when confronted with a potential 5 year timeline in some cases.

My starting point to answer the asset protection question is to always begin with what is at risk. It does not make much sense to me for a client to spend time and money protecting assets that are not at risk. So, what is at risk? The answer is different for everyone. It depends on the medical and financial condition of the potential Medicaid applicant as well as careful review of assets, income, and expenses.

For example, in the case of a married couple where one spouse is confronted with the immediate need for nursing home care the healthy spouse at home is able to keep assets in a range of $21,000 – $109,000. That is a wide spread and nobody knows the answer in a specific case from just eyeballing a couple of numbers (if they pretend to know the answer without running the numbers odds are they are missing something). The exact answer depends on several calculations based on their specific assets, income and expenses. Until those calculations are done it is impossible to know what assets are protected, and without knowing what assets remain protected nobody knows the best protection strategy for your situation.

So, how much can you protect? I don’t know right now but after we review your situation we can have an accurate picture of what is protected, what is at risk, and what options you have. Speak with a Texas Medicaid Attorney today to protect your life savings from rising nursing home bills.

How Much Can You Give Away Without Penalty?