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Michigan Elder Law Today

Sunday, January 13, 2013

When Should I Apply for Medicaid Nursing Home Benefits

Individuals I consult with as part of my elder care practice frequently wonder when they should submit the Medicaid application for a patient in a nursing home?  The patient they are consulting about is usually their elderly parent or their spouse.

The simple answer to this question is you should never apply for Medicaid until you know you qualify.  For a single person, that means the nursing home resident does not qualify until they have $2,000 or less in countable assets.  For a married couple, that means the spouse who is not in the nursing home has spent down do the “protected spousal amount.”  You can read more about these countable asset levels and qualification criteria on my website.

A more substantive answer to when one should submit the Medicaid application is, in Michigan, it is better to qualify and submit the application as soon as reasonably possible after it is determined that the elder definitely needs to stay in the nursing home.  The reason for this is the application process will be less complex if less time has passed between the date the elder first was hospitalized and entered the nursing home and when the application is submitted.

Why will the application process be less complex?  The answer to that question has to do with a special date, which is referred to as the “baseline date” and the Michigan Medicaid look-back period.  For a nursing home resident, the “baseline date” is the date that the elder was both in a nursing home and eligible for Medicaid.  In Michigan, the Department of Human Services uses the baseline date to calculate the look-back period.   The look-back period is the period of time in which the Department of Human Services reviews gifts, transfers, and divestments that the person applying for Medicaid might have made.  The look-back period is always 60 months prior to the baseline date.  If I were writing the Medicaid regulations, I would have used “review and disclosure period” instead of look-back period, since it is a clearer way to describe what is being required:  the person applying for Medicaid (and their family member that is assisting them) must disclose all gifts, transfers and divestments that have been made in the 60 months before the baseline date and the Department of Human Services has a right to request the bank account statements and all other financial records for that period.

Here is an example of the baseline date and look-back period.  Betty, age 85, recently was admitted to a nursing home after being hospitalized for a week.  Betty entered the hospital on December 29, 2012.  Since she is in a nursing home, and assuming she meets the asset criteria to qualify for Medicaid, Betty’s baseline date is December 29, 2012.  Since the look-back period is always 60 months, this means the Department of Human Services can review any Betty’s financial records back to December 29, 2007 to see if she had made any gifts, transfers or divestments.

Here’s why it is better to apply for Medicaid sooner rather than later after entering the nursing home.  The Department of Human Services is typically particularly interested in the financial records and statements that include the 3 following time periods:

1.      The date(s) the Medicaid applicant made any gifts, transfers or divestments.  All such transactions made within 60 months of the baseline date must always be disclosed;

2.      The date the Medicaid applicant actually entered the nursing home; and

3.      The statements for the month in which the Medicaid application is submitted.

To the extent that the less time has passed between first entering the nursing home and submitting the application, fewer statements may be requested and have to be produced and fewer transactions explained.  This will make the application process easier and faster because you will be more likely to have all the relevant records and be able to remember what the transactions were about, if Medicaid has questions.

Instead of the dates above, let’s assume that Betty entered the nursing home on January 15, 2011 but does not apply for Medicaid until two years later on January 15, 2013 because she has more than $2,000 in savings.  When the application is submitted, there is a good chance that the Department of Human Services (“DHS”) will want the statements and other financial records from January 2011 and maybe even all the statements and records for the two years in between 2011 and 2013.  DHS will be particularly interested in reviewing what has gone on with Betty’s money since she has been in the nursing home.  I hope someone kept all those statements and receipts and can also explain any transactions that Medicaid may have a question about, i.e., “the June 2011 checking account statement shows a check in the amount of $985.  What was that for?”  Otherwise, you might have to order these statements from the bank and other financial institutions in order to recreate the paper trail.  The Department of Human Services may only give you 10 to 14 days to do this, so it can create a lot of stress and hassle.  If you cannot respond in time, the application may be denied, resulting in problems with the nursing home and payment.

Let’s change our example again and assume that Betty entered the nursing home on December 5, 2012 and now, in January of 2013, it is clear that she needs to stay in the nursing home. Betty has not made any divestments in the last 5 years, so when her application is submitted in January 2013, the Department of Human Services may only require financial statements from December and January.  If she has made divestments, those will need to be explained and the statements for that time period should be submitted too.

What if Betty is not yet eligible for Medicaid in January?  That is she has more than $2,000 in countable assets.  It would be a good idea to meet with an elder care attorney who focuses on Medicaid qualification.  If Betty does not yet qualify for Medicaid but need nursing home care, instead of just spending down over several years, it might be better to use some legal strategies to accelerate qualification, so that the application can be submitted sooner.  This will shorten her disqualification period for having excess assets. 

Then the application can be submitted sooner rather then later, so that the application process is easier.  Whether this is the right thing to do depends on the unique circumstances of each person’s situation.  If Betty’s Medicaid application can be submitted sooner rather than later, less financial records may be requested, making the Medicaid application smoother and less complex for Betty and her family.  In addition the nursing home will be happy if the processing of the Medicaid application does not drag on for months.


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