2 Years Private Pay and Then Medicaid – Part 2

In my post last week, I told you about a son who called.  His mom had been paying for care for almost 2 years at an assisted living facility (ALF).  Thinking he was ready to apply for Medicaid benefits, he called our office for help.  His mom, however, still owned real estate worth approximately $1.5M.  So why did he think she was ready for Medicaid?

He explained to me that 2 years earlier, his brother had been handling his mother’s care and finances and arranged for her move to the ALF.  When his brother said that they needed to pay for 2 years and then Mom could qualify for Medicaid, he didn’t question it.  He also didn’t look at the admissions agreement that his brother signed on his mom’s behalf.

The mistake he made was actually a quite common one.  The facility’s policy – as is the case with a majority of ALFs – is that a resident must pay for the cost of care at the private pay rate (much higher than the Medicaid rate) for a minimum of 2 years before the facility will make a Medicaid slot available to her.  People wrongly interpret that to mean “if we pay for 2 years then we will get Medicaid.

This is incorrect and overly simplifies the process.  First of all, Medicaid eligibility is decided by the State upon submitting a Medicaid application.  Any agreement between facility and resident obviously is not binding on a third party – in this case the State.  You must meet the program’s financial eligibility requirements regardless of what you and the facility agree to.

I then explained to him the Medicaid eligibility requirements.  He didn’t really have much of an idea of how Medicaid works.  When I explained that you must have less than $2000 of assets to meet Medicaid’s resource limit, he quickly understood.  He told me his mistake was not questioning what his brother had told him 2 years earlier.

I did tell him that with some strategizing and restructuring of assets we could still protect some assets and then qualify for Medicaid but if we had this conversation 2 years ago when they made the move to the ALF, the financial outcome could have been so much better.