This Happens When You Withdraw a Parent’s Account Before Medicaid
A nursing home placement is often a medical crisis. Most of the time you’re not expecting it. It comes with a whole slew of issues that you probably never had to deal with before. When you find out what nursing homes cost it becomes a financial crisis as well. People panic. It happens, I see it all the time.
In the midst of that panic some people get the idea to take all or a lot of money out of their parent’s bank account. It could be with the goal of hiding it. It could be with the goal of “paying them back” for money the children spent on the parent. Or it could even be for the goal of preventing fraud by other people that have ATM or check access. No matter the reason, the steps you take have a huge impact on your parent’s nursing home Medicaid case.
The Account Withdrawal
The Texas Health & Human Services Commission caseworker reviewing your Medicaid application goes through a pretty simple process for transactions. This is what they look at:
- Did the Medicaid applicant have access to this money in the last 5 years?
- Did they, or someone else, remove their access to this money in the last 5 years?
That is basically the entire analysis they go through when looking at withdrawals. If your parent had access to the money before, and then they lost access when someone took it out of their account they move on.
You will notice at this first stage the reasons and justifications are not even a factor. It is simply: they had this money on Tuesday, and then on Thursday the money was gone. When you fail this test, then move on to the next step.
Don’t Try Removing Names
Withdrawals and transfers take many forms. For bank accounts, it can be writing a check or taking cash out of the ATM. There is another transaction that surprises people.
This transaction is changing the owner of an account. For example, if a child was a joint owner on an account with a parent, some children will try to remove the parent’s name from the account.
In these cases, when you remove a Medicaid applicant’s name from an account they were on as owner, it is the same as if you wrote a check from them to the other owner. It is a transfer. They will receive a Medicaid eligibility penalty.
Once you fail the first test when they find a “transfer”, they move to the penalty stage. This is the step where you find out how long your parent will have to self-pay their nursing home care. Here is where they have to pin down the exact amount of the “transfer”.
Now, if your case is simply taking $15,000 from your parent’s account and putting it in your account, then the amount of the transfer is obviously $15,000.
If you took $15,000 but spent $3,000 on your parent’s expenses from the original $15,000, then your Houston Medicaid Attorney may be able to get the penalty reduced to $12,000 if you have the evidence. If you don’t have the evidence, then you might be stuck with a $15,000 penalty.
If you get hit with a penalty for $15,000, that’s 92 days of private pay as of today. If you chose an expensive nursing home that costs more than $163 per day, then the cost of the penalty can be more than what you received. For example, if your nursing home costs $190 per day, you are going to pay $17,480 for 92 days. So you received $15,000 but ended up paying $17,480 to get it. That makes no sense. That is why you get expert advice.
What About The Money You Gave Them?
I get a lot of calls from people trying to claim the transfer to them is repayment for purchases or services they provided in the past. You may not realize it, but the legal theory you are hanging your hat on is the “compensation” theory. If a transfer is for compensation then it is not a gift as long as it is reasonable. Well, as with many things Medicaid, you have to meet certain requirements to use the compensation exception. Statements without evidence usually aren’t enough. Here is the regulation in a nutshell:
Compensation for a transferred asset must be provided according to terms of an agreement established on or before the date of transfer. This agreement must have been established exclusively for purposes other than obtaining or retaining eligibility for Medicaid services.
So when you remodeled your parent’s house 3 years ago and then coincidentally decide they pay you for that right after a nursing home placement, you are going to have some problems. The HHSC has been doing this for years and they’ve seen it all, believe me.
The more evidence you have the better your case will be, but the less evidence you have the worse your case may be. Your Medicaid attorney can put the best case forward, but to expect an easy win on facts like that is foolish.
So how are you supposed to avoid mistakes like these? Well, if things are happening fast then speak to your Woodlands Medicaid lawyer before you do any financial transactions. In many cases you can achieve better results using proven strategies. An ounce of prevention is worth a pound of cure, as they say. Significant asset protection may still be possible, but you have to do it the right way or you can create a disaster.
If you have some time before everything comes at you fast, then take some time to browse through my book and learn about the issues you will soon be dealing with.