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Medical Assistance Planning For a Couple: A Case Study

As you may have read in our article published last week, handling the issues that surround a loved one who needs skilled nursing care can be very confusing, overwhelming, and expensive. There can be so many issues that it may be difficult to know where to begin and how to get help to qualify for Medical Assistance. See the case study below that may feel all too familiar.

Meet Patricia and Pete, who are both in their early 80’s, and have been married for almost 60 years. Like most couples from their generation, Pete worked outside of the home while Patricia worked inside their home. They have three children.  About ten years ago, Pete was diagnosed with dementia.  Their daughter, Nancy, is divorced and, after she lost her job, she and her daughter moved in with her parents several years ago to help care for Pete. One son, Tom, is disabled and their other son, George, is a busy and successful businessman who is supportive from afar.  Recently, Pete fell and broke his hip and now is in a nursing home, which costs $9,800 per month.  In appreciation for Nancy’s help with Pete’s care, Pete and Patricia have promised her the house and have paid for Nancy’s daughter’s tuition at the community college close to their home.  They also have supported their disabled son, Tom, by giving him $600 per month for his rent over the past 5 years. Patricia is worried about how to pay for the nursing home and how to preserve the home to keep their promise to Nancy.  George expressed concern because he heard something about filial responsibility laws that make adult children responsible for paying for their parents’ cost of care. What should the family do?

Pete’s care needs, community spouse financial concerns, gifting, promises to children, and children’s support responsibilities are just some of the issues this family is facing. The sooner Patricia and Pete get help, the better; however, even if they wait there are usually things which can be done to help families such as theirs navigate the long term care system. First, Pete’s care needs must be addressed to make sure that he has been discharged to a nursing home that will be able to accommodate all of his needs. The family will have to regularly monitor his care and attend care plan meetings at the facility in order to help maximize Pete’s care.

Second, Patricia’s situation needs to be reviewed to make sure that she is financially able to remain in the family home, as most of the income coming into the house is from Pete’s pension. Even at this point of crisis, there are plans which can be put in place to ensure that Patricia can retain some of Pete’s income to pay her own bills at home, despite the fact that the Medicaid rules state that the nursing home resident’s income must be used to pay for his care.  Pete’s share of their finances must be spent down to a certain level in order to qualify for Medicaid.  There are a number of items that are allowable expenses besides Pete’s nursing care: prepaid funerals, house repairs, a new car for Patricia, to name a few.  In addition, any money remaining over the limit could be redirected to increase Patricia’s income because she does not have much income presently.

Gifting is also a common problem in qualifying for Medicaid. Understandably, the state does not want to pay for Pete’s nursing care if he had the money in the not so distant past, but instead of using it to pay for his care, he gave it away.  Consequently, the state has created a penalty for gifting that will result in a period of ineligibility for Medicaid.  Paying for their granddaughter’s college was a gift and will make Pete ineligible for Medicaid. The period of ineligibility will depend on the amount of the gift given. The payment of Tom’s rent could also be considered a gift unless he is considered blind or permanently and totally disabled for SSI purposes.

Beyond gifting, consider the sacrificial caregiver, Nancy, who has devoted several years to caring for her parents. With proper legal guidance, Pete and Patricia can most likely fulfill their promise of transferring the house to her as long as the transfer is done at the right time and meets the caregiver exception to the gifting law.  In addition, the use of a family caregiver agreement would allow the family to pay Nancy for the care she provides moving forward. What about continuing to help Tom, after Pete and Patricia are both gone?  They could create a supplemental needs trust for Tom now in order to preserve some money to help him with his needs in the future.  This would not be considered a gift and would help spend down Pete’s financial share to qualify sooner for Medicaid payments for his care.

Last, but certainly not least, there are the obligatory support responsibilities that George mentioned to the family. Could the adult children really be held responsible to pay for Pete’s nursing care?  The short answer is yes.  If Pete is ineligible for Medicaid because of any of the above gifts and the nursing home has an outstanding bill that Patricia cannot afford to pay, then the nursing home can sue one or all of children to pay Pete’s bill.  Thus, even though George did not benefit from any of the above gifts, he could be sued for Pete’s care because he has the “deepest pockets.” George could attempt to sue his siblings to get repaid, but their ability to pay seems remote. That would make for awkward family get-togethers!

If you have any of the above questions or concerns and are looking for answers, our staff would be happy to speak with you.

Jessica F. Greene, CELA,* LL.M. in Elder Law

*Certified as an Elder Law Attorney by the National Elder Law Foundation