Social Security and Student Loans – Part 2
Last week I wrote about Social Security recipients who are delinquent on their student loans, an increasing problem as the population continues to age. For disabled and retired student loan borrowers, if they fall behind on student loan payments Social Security can garnish their checks – hold back an amount to pay down the debt. In reality, however, the amount garnished does little more than cover the fees and interest. 68% of borrowers who have Social Security reduced see none of it pay down their principal amount owed. Is there a way out? A borrower can apply for a financial hardship exemption or reduction. The Department of Education website does not clearly publicize this option, however there is an application form online at www.studentloanborrowerassistance.org. Another option for borrowers is to try to get the loan discharge because they are suffering from a total and permanent disability. A form must be completed and submitted with a document from a doctor certifying that the borrower is totally and permanently disabled. Alternatively, a Social Security Disability or Supplemental Security Income decision is sufficient but there must also be an indication that the Social Security Administration will
Social Security and Student Loans
The rising cost of higher education continues to be a problem. As annual college tuition increases outpace the rate of inflation so does the amount of money borrowed by attendees. Much has been written about the mountain of debt faced by college graduates who once out in the work force struggle to make ends meet on salaries that often do not provide them enough to cover their living expenses and student loan repayment obligations. Others want to start a family or buy a home and are restricted by having to make monthly student loan payments that amount to what is already the equivalent of a mortgage. But what about disabled and retired student loan borrowers? There are tens of thousands of seniors and disabled student loan borrowers who have fallen behind on repaying their loans. Student loans are not easily dischargeable in bankruptcy as are other loans. The result is that more Social Security recipients are caught in the student loan collection process. Social Security benefits can be garnished to pay back outstanding student loans. This means that a portion of a Social Security recipient’s benefits can be deducted to pay back these
Lack of Verification – Worse than a Medicaid Penalty (Part 2)
In last week’s post, I was talking about how Medicaid eligibility hinges in large part on the State’s scrutiny of 5 years of records under Medicaid’s look back period. Transfers of money out of the applicant’s accounts for less than fair value trigger a Medicaid penalty or waiting period for benefits. Clients and their families are very focused on whether a penalty will result because they understand that means they’ll need to cover the additional costs of care. But, documenting the money flowing into the applicant’s accounts is as important if not more so. That’s because failing to explain where money deposited into an account came from will result in a denial of the application for what’s called lack of verification. Let’s say there is a $1,000 deposit into Mom’s account that occurred 1 year before the application was filed. The State will want us to prove where the money came from. Their thinking is that maybe there is another financial account that Mom owns that we didn’t tell them about. And what if there is no such additional account that can be located? It doesn’t matter to the State. As
Lack of Verification – Worse than a Medicaid Penalty? Part 1
Whenever we are preparing to file a Medicaid application on behalf of a client we closely examine the 5 years of records that we will need to provide to the State together with the 16 page application. Those records include every statement for every asset the client owned in the 5 years directly preceding the month we want Medicaid benefits to begin. As I explain to my clients, we are looking at what the Medicaid caseworker will be scrutinizing – money going into the client’s accounts and money leaving those accounts. Money leaving the accounts – whether by check, electronic transfer, cash withdrawal etc. – is important because Medicaid wants to determine whether the applicant received something of equal fair market value back in product or service. If he/she did not, then the uncompensated transfer is subject to a Medicaid penalty. When I explain how the penalty works most people understand very quickly how that can negatively impact the applicant and his/her family. The penalty is actually a waiting period for benefits. If I am in a nursing home and spent down to $2000, but I have transferred $50,000 in the past 5
The Biggest Misconception about ALFs and Medicaid (Part 3)
The last two weeks I have been talking about the biggest misconception about assisted living facilities and Medicaid so let’s continue. I explained to Carol the issue with level of care – that her mom must establish the need for nursing home level care even though she is residing in an assisted living facility. There is, however, another potential problem with getting Medicaid. ALFs must make at least 10% of their beds available for Medicaid. Most facilities only make 10% of their beds available for Medicaid. For that reason, the facility cannot guarantee that a Medicaid slot will be available at the exact time when Carol’s mom qualifies. It has a limited number of slots and they could be filled when Carol’s mom is approved. It is impossible to know years - or even months - in advance whether a slot will be open at precisely the “right time” for Carol. It is a game of “musical chairs” of sorts. When the music stops, -ie. Medicaid is approved – will there be a “chair” available? Impossible for anyone to say. (We have in some cases been able to get that guarantee for our
The Biggest Misconception about Assisted Living Facilities and Medicaid (Part 2)
Last week we were discussing Carol, her mom and a very common disconnect we see when families speak with assisted living facilities. The facility explained its requirement that residents must private pay for a certain period before being considered for one of its Medicaid slots. Carol, however, heard something entirely different. She heard what was said to mean that as long as she meets the private pay requirement, Mom will get New Jersey Medicaid. It’s easy to see why this happens. First of all, the Medicaid rules are quite complicated. The average person is unfamiliar with the rules and regulations of Medicaid and very often the assisted living representative isn’t much more knowledgeable either. There are strict income and asset requirements. Assets must be spent down to less than $2000. Income is viewed by another set of rules. Medicaid has a strict income cap of $2250 of gross income. For applicants who exceed that cap a Qualified Income Trust must be used but the rules are very technical and it is easy to be tripped up and lose Medicaid eligibility for failing to follow those rules. That, however, isn’t the biggest misconception about assisted living Medicaid. We have to