The Money Wasn’t a Gift – It Was a Transfer to a Caregiver (Part 2)

We were discussing Jim’s dilemma with Medicaid last week.  The State discovered additional assets that his grandmother owned, which were not disclosed by Jim’s dad when he filed the Medicaid application a year ago.  They are now seeking $50,000 back.  Jim believes the money was legitimately Dad’s but he probably can’t prove it.  Recreating each transaction will be difficult without Dad’s input and the particular account in question had Grandmom’s name on it for at least 10 years and the original bank no longer exists.  So what are Jim’s options?

 I explained to Jim that the appeal process is a lengthy one.  A fair hearing must be scheduled before an administrative law judge at which evidence must be presented.  If the judge finds in Jim’s favor, the State can still reject the decision.  Another appeal before a Superior Court judge is next.  And given the inability to answer many questions because Dad has died, it makes Jim’s case a long shot at best.  In the meantime, someone has to pay the nursing home which is caring for Grandmom.  At a private pay rate of $10,000 per month the bill will quickly run up.

 I asked Jim about his dad’s estate.  “Dad has a house worth about $200,000”, he told me.  “We haven’t probated his will yet, but I am the executor named in the will”.  I advised Jim that negotiating with Medicaid to repay them out of Dad’s estate would be the best route to go at this point.  Because it will take time to sell the home, however, the State will likely want assurances that they will be repaid .  And the clock is running down on Grandmom’s Medicaid eligibility.  But, the best thing for Jim and his family is to keep Grandmom on Medicaid and in the facility where she has been for the last 18 months.

 There was a long pause.  Jim processed what I said.  He wasn’t happy but he recognized that this was his best option.  Had his dad sought advice before applying for Medicaid he would not have been left with this mess.  But I also told Jim that he should consider himself lucky.  At least his dad left assets with which to repay the State.  Without those assets who knows what would have happened.  Jim, or some other family member, would have had to step up and pay the bill, or be comfortable walking away from the problem entirely, leaving Grandmom with no one to look out for her well being.