May 21

Record keeping and Medicaid Applications in NY


Billy Wilson via Compfight

Joann was a good daughter.  She did what any good daughter would do:  when mom became ill, she sacrificed her own life and well being to take care of mom.  She left full time employment and took a part time job, so she could be with mom to help her take care of her medical and daily needs, something that became a full time job.  Between the two of them, they didn’t have much money, so they pooled it together to help make ends meet.  They used to same bank account to deposit Joann’s small pay check and mom’s Social Security.  Joann also combined a substantial divorce settlement she had received from her ex-husband with a small amount of savings of her mother’s.  By combining these finances, they were able to keep up the modest home they lived in and pay the bills.  They were just getting by.

What Joann didn’t realize until it was too late, was that she had set herself up for financial disaster once she no longer was able to take care of her mom at home, and mom had to move into a nursing home to receive proper care. 

When Joann came into my office she was desperate.  She had struggled through a Medicaid application for her mother, but the Medicaid office was giving her a hard time.  She didn’t understand why.  Clearly, mom didn’t have the money to pay the $10,000 plus per month that the nursing home wanted; she absolutely needed assistance.  Clearly, in Joann’s mind, Joann had used much of her own money to take help care of mom; now it seemed the Medicaid office was holding this against her. 

What Joann didn’t realize was that she had been setting herself up for disaster because Joann and her mother shared a joint bank account.  Mom put her money in the account, and Joann also put her earnings from her employment in the same account, and they both put a modest amount of money from savings and a divorce settlement into the same account. 

Firstly, the Medicaid office operates with the presumption that ALL of the money in the joint bank account belongs to the applicant; in other words, they assume that all that money belonged to Joann’s mom.  Joann has to PROVE to the Medicaid office that the money she had deposited into the account was in fact her money; she had to prove it was hers to be entitled to keep her own money.  Could you prove through documentation where the all the money you put into a joint account came from?  Would you be stressed having to come up with that proof right away so your mom could qualify for Medicaid? 

Secondly, Joann and her mom had the habit of paying for most things in cash.  If Joann went grocery shopping, she’d stop at the bank to cash a check and then use the cash to buy the groceries.  There’s nothing wrong or illegal with this, except that it makes it very difficult to prove what the money was used for; so the Medicaid office will presume that the money was a gift, subject to a penalty period unless you can prove otherwise.  Joann well knew that each and every transaction was used for food or household necessities; but she never thought she’d have to reconstruct all of these cash transactions to prove what the money was used for.  As you might imagine, it was nearly impossible to reconstruct all these transactions. 

So what happened in the end?  Each and every time Joann took out her own money out of the joint account she established with her mother, the Medicaid office declared that money to be a GIFT from Joann’s mother to Joann, and they declared that so-called GIFT to be subject to a PENALTY PERIOD! 

Once the penalty period was established, the Medicaid office refused to pay the nursing home.  The nursing home didn’t like that very much at all.  So, the nursing home sued Joann.  What did they sue her for?  For taking her mother’s money for herself!  And because Joann couldn’t prove that she had put the money in the account from her own funds and was taking her own money out of the account, the nursing home won a $40,000 judgment against Joann.  Ironic and unjust?  Yes.  Does this happen?  All the time.

What lesson can we learn from Joann’s mistakes?  The first lesson is NEVER comingle the parent’s money with the child’s money.  Maintain separate accounts!  If the parent ever has to make a Medicaid application, all of her financial records for the past five years will need to be provided to the Medicaid office.  If monies are comingled, then much explaining and proofs need to be provided.  Secondly, maintain clear and detailed records of how the money was used.  Keep receipts for all purchases made with cash, and be sure to keep bank statements, cancelled checks and account book registers that show to whom checks were written and why.  A good idea would be to use debit cards, since the payee often is clearly printed on the bank statement. 

What else could Joann have done in this case?  She could have entered into a written care agreement with her mother.  You think this is silly, why would you need a written agreement with your mother – she is your mother after all and she’s not going to stiff you.  It’s really not about how worthy the parent or the child is:  the Medicaid office will interpret that any assistance that a child gives to a parent is done for “love and affection” and therefore is not entitled to a monetary value.  However, if you can present a properly written agreement to the Medicaid office, they will have to consider the moneys paid from parent to child as a payment for services rendered (not subject to a penalty) and not a gift (is subject to a penalty). 

If you are in the State of New York and have further questions about PLANNING FOR ELDER CARE or MEDICAID APPLICATIONSor feel you have a personal injury case, please CONTACT OUR OFFICE through our website or call our office at 1-800-471-4730.

This Blog/Web Site is made available by the publisher for educational purposes only as well as to give you general information and a general understanding of the law, not to provide specific legal advice. By using this blog site you understand that there is no attorney client relationship between you and the Blog/Web Site publisher. The Blog/Web Site should not be used as a substitute for competent legal advice from a licensed professional attorney in your state.