The Problem of Unexplained Deposits – Part 1

More and more of the Medicaid applications we handle these days involve issues surrounding assets received by way of the death of a family member.  More often than not it will be a spouse who died, however, it may also be a parent or other relative.  As part of Medicaid applications now, the State routinely asks for documentation of withdrawals from the applicant’s accounts but also for deposits into these accounts which can be more difficult to explain.

Because Medicaid rules require a 5 year look back, some of these transactions may be difficult to recall, especially if the applicant is the only person who knows.  A little bit of detective work and knowledge of probate procedures can be especially important.

I have always said that unexplained deposits can be more damaging than unexplained withdrawals.  That’s because unexplained withdrawals will result in an approval with a Medicaid penalty.  Once the penalty expires Medicaid benefits will begin.  

On the other hand, unexplained deposits will cause an application to be denied for lack of verification.  In essence, the application is denied because it is incomplete.  You can immediately refile but if you can’t explain the same unexplained deposits that caused the first denial you’ll end up with the same result – at least until the deposit falls outside of the 5 year look back.  This has the potential to result in a longer waiting period before Medicaid kicks in.

Next week I’ll share some of the issues we have had with deposits by way of inheritance or otherwise and how we have handled them.