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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 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.

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.

No related posts.

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.

Resources – Joint Accounts

Rich Shea — Sun, 22 Feb 2009 13:36:22 +0000

This is the first in a series of posts that will examine certain types of assets that families have to deal with when pursuing eligibility for Houston Nursing Home Medicaid benefits. For every asset available to the Houston Medicaid applicant there are two critical questions that you must know the answer to:

Is the asset counted as a resource of the applicant for Houston Nursing Home Medicaid benefits; and
If it is counted as a resource, how much of the value of the asset is counted against the applicant?

At first thought, many people believe a joint account is either not counted against the applicant for Houston Nursing Home Medicaid benefits or at worst is only counted at 50% of its value. In reality, the rules are quite different.

If an applicant has a joint bank account and can legally withdraw funds from it, all the funds in the account are considered a resource of the applicant for Houston Medicaid benefits. However, this is only a presumption, your Houston Medicaid Attorney is allowed an opportunity to prove that some or all of the funds are the property of someone else.

For example, if a parent and child own a joint bank account the presumption is the entire balance is available as a resource if the parent applies for Houston Nursing Home Medicaid benefits. However, if the child contributed funds to the account and never expected the parent to use those funds, then you have the opportunity to have less than the full value of the account counted against the parent. It is important to remember the issue will ultimately be decided by a judge and you must be able to prove your claims. Simple statements are often insufficient proof.

Your Houston Medicaid Attorney can help your family determine what assets will be counted against an applicant for Houston Nursing Home Medicaid benefits while also building a case to protect as many assets as legally possible.