How Do You Apply For Medicaid?

medicaid-applicationThe topic families across the country have done their best to avoid discussing is now the 500-pound gorilla in the room: Dad has been private-paying for this stay in the nursing home for the last six months. At $6,000 or more a month, the money is running out. And fast. What do you do?

Like on the old 45 records, there’s a Side B story: Aunt Sue is facing aging issues and is no longer to live on her own. She has too many assets (checking and savings account, stocks, IRA). Even though she could private pay for her care, is that something the family wants to consider? Are there options for this family?

The inevitable answer is to apply for Medicaid, the government program that would help pay for a qualifying person’s stay in a nursing home. Yes, even in Aunt Sue’s case, applying for Medicaid is a viable option. But trying to navigate the world of Medicaid without the proper tools and preparation is like trying to sail around the world in a rubber raft: it’s nearly impossible!

Where do you start? Let’s start at the very beginning. What is Medicaid planning? It’s the structuring of a person’s assets and income so that he or she can qualify for Medicaid in his or her state of residence. The overall goal is to protect as many of Dad’s or Aunt Sue’s assets as possible and be able to pass some type of financial legacy on to the family. You don’t want all of their hard-earned money, money they spent a lifetime accruing, to go to a nursing home.

It can’t be stressed enough that it’s best to seek out professional help when applying Medicaid: an elder law attorney, certified estate planners, financial planners. They can assist you in creating a plan that’s unique to your family’s situation which involves properly realigning your finances so that countable assets are exchanged for exempt assets or otherwise made inaccessible to the state.

This is going to cost money, right? Yes, it will cost money, but its money you were going to lose any way! (Professional fees are considered a legitimate expense in the spend-down process, by the way.) Of course you could try and save a few bucks and do the work yourself, but the application process is a complicated machine that would make Rube Goldberg proud. A simple error can result in denial, which would cost the family money. And the state’s denial letter is vague, stating something like the family didn’t provide the proper information, and not go more into detail than that. While you’re scratching your head and trying to figure out what information wasn’t included to the Medicaid case worker, the nursing home bill continues to click upwards.

This is where working with the professionals pays off. These are folks who deal with Medicaid on a day-to-day basis, who know up-to-date on the current rules and regulations, and what possible changes are on the horizon. That person or group is someone who’s in your corner, who will fight on your behalf and help you decipher that cryptic Medicaid letter to see what’s missing from the application. The professional is your advocate, your representative, in the Medicaid process.

What else can you expect when applying for Medicaid? Paperwork ad nauseam. The state will ask for copies of birth certificates, marriage license, driver’s license, Medicare Part B card, etc… Get the picture? But that’s just the start. You’ll also be asked to show three to five months of bank statements just to get an idea of the current situation, and five years worth of medical and financial records.

You’ve heard of the Five-Year Look Back, right? This is it. Your life for the last five years is under a microscope. Your grandson graduated from college last year, and you gave him a $5,000 graduation gift. It’s recorded in your checking statements. Guess what? That’s a problem. The state would call that an improper transfer of assets. I know what you’re thinking: the IRS says you can gift money away. That’s correct, but IRS rules and Medicaid rules are different. Can that be fixed? Is it too late to be fixed? It’s a problem like that that a professional can help you with.

Is there a good time to plan for Medicaid? The best time to plan is when you’re still healthy, when you’re able to pay for some of your long-term care and reposition and protect assets for your family. But a lot of family’s don’t have the luxury of time. It’s crisis mode: Dad breaks his hip and has been in the rehab facility for 20 days. He’s not capable of taking care of himself at home, and an assisted living or nursing home is the only solution. Believe it or not, even in those cases, there’s still time to create a doable plan with the assistance of professional help.

Let’s be adults here: most people would prefer to live out their days in their home, but for some families that’s impossible, and the logical solution is a move to an assisted living facility or nursing home. Here’s a cold hard fact: one out of four persons 65 and older will spend some time in a nursing home. For lack of knowing better, families end up paying for nursing home care out of their savings until it runs out. One monthly check at a time they spend down Mom and Dad’s life savings to pay for the nursing home, and in the end there’s nothing left. You probably personally know someone – family member, close family friend, acquaintance – who has done exactly that. They don’t like the fact that the financial nest egg they spent more than 40 years creating evaporated in a short amount of time.

Take the time today to do a little Medicaid planning. Do some research, contact professionals and see what’s necessary for you to pass on a financial legacy to your family.

Remember: it starts with a plan.