Our law firm assists seniors, disabled persons and their family members in applying for Medicaid (T-19) assistance. Medicaid is a state program funded in part by the federal government. Each state has its own Medicaid rules and regulations.
Relying on information from family members, friends or non-elder law professionals is not wise and can be costly. An experienced elder law attorney familiar with the Medicaid program in Connecticut should be consulted prior to applying for Medicaid. We frequently observe the following planning errors people make when applying for Medicaid.
“DON’T WORRY. YOU WON’T BE LIABLE FOR YOUR MOTHER’S BILL IF YOU SIGN THIS ADMISSIONS AGREEMENT.”
ANSWER: A nursing home may try to get you to sign the agreement as the “responsible party.” It is very important that you do not agree to this. Nursing homes are prohibited from requiring third parties to guarantee payment of nursing home bills, but many try to get family members to voluntarily agree to pay the bills. Instead, ask if the person making this statement will sign a release indicating that you will not be liable for your mother’s bills.
If possible, the resident should sign the agreement him or herself. If the resident is incapacitated, you may sign the agreement, but be clear you are signing as the resident’s agent. Signing the agreement as a responsible party may obligate you to pay the nursing home if the nursing resident is unable to. Look over the agreement for the term “responsible party,” “guarantor,” “financial agent,” or anything similar. Before signing, cross out any terms that indicate you will be responsible for payment and clearly indicate that you are only agreeing to use the resident’s income and resources to pay.
“You can give away, within a five-year look-back period, $15,000 to your children and grandchildren and the state won’t go after those funds.”
ANSWER: People often hear of the federal gift tax provision that allows them to give away $15,000 a year to each of their loved ones without paying any gift tax. What they do not know is this refers to a “gift tax” exemption. It is not an absolute right and does not pertain to Medicaid rules and, in fact, could result in a period of ineligibility for months, and, in some cases, years.
“YOU CAN KEEP MONEY IN YOUR ACCOUNT IF THAT MONEY IS FOR TAXES. THE STATE WON’T COUNT THOSE FUNDS.”
ANSWER: The State of Connecticut Department of Social Services will count any bank account in your name as an available asset. The better course of action would be to make an estimated tax payment to the state or IRS.
“IN ORDER TO BECOME “ELIGIBLE” FOR MEDICAID BENEFITS, I CAN TRANSFER ASSETS OUT OF MY NAME AND PUT THEM IN THE NAME OF SOMEONE ELSE.”
ANSWER: If you have assets above the eligibility limits, these “excess assets” have to be “spent down” in order to become eligible for Medicaid. Many times, people will transfer or give away some of their assets rather than spend them. Under the Deficit Reduction Act (DRA), innocent gifts may impact your future eligibility to qualify for benefits.