Why You Shouldn’t Walk into the Medicaid Office Alone

I’ve
written before about the dangers of filing a Medicaid application yourself,
without any idea of how the Medicaid rules work. But, in the past month we have
had a rash of calls from folks who did just that and ended up with Medicaid
penalties – months of Medicaid ineligibility and no way to pay for care.

It’s
a disturbing trend but it can’t be ignored. The state is taking longer to
decide Medicaid applications and is scrutinizing them more than ever. Why?
Because it just doesn’t have the money to pay for care. If it can find
transfers and impose penalties – waiting periods – that means it doesn’t have
to pay for care during those months.

So
often, when I explain how the Medicaid penalty works the response I get is, “no
problem, Mom didn’t gift any money” or “Mom never really had much money so it
won’t be an issue”. But, there is a certain innocence in that answer, a lack of
understanding of the Medicaid regulations and of the economic recession that is
affecting our government as well as average Americans.

For
example, several times in the past month we have received calls from people who
have been questioned by Medicaid about transfers that have been made by the
applicant 3 and 4 years ago. It typically starts with a letter from the
Medicaid caseworker asking for documentation concerning a particular
transaction on “such and such date” or a request for copies of all checks over
$1000.

So,
here’s the problem. Before you filed the Medicaid application did you ever
review those checks,or is now the first time? What happens if the checks are
payable to family members – or to any individuals for that matter – but not to
businesses? Well, Medicaid will ask you what those checks were written for.

Your
explanation must be backed up by documentation. So if Mom wrote you a check
to reimburse you for something, but you don’t remember what, or you can’t
produce the paperwork to support that, it is subject to a Medicaid penalty.

Do
you remember what you did 4 years ago? Do you have paper records to back up
what you say you did with your money if someone asked? Oh, and keep in mind
that you aren’t being asked about your own finances but rather someone else’s.
If you haven’t been managing Mom’s accounts you don’t know what you you’ll
find. Now add a deadline to the mix. The letter you received from Medicaid says
you’ve got 10 days to provide the documentation or the application could be
dismissed. But Mom didn’t keep her old statements so you’ll have to contact the
bank to get replacements. Good luck getting that in 10 days.

In
this type of environment it becomes very easy to see how well intentioned
families end up with disastrous consequences. Mom has no money left and
Medicaid won’t pick up the cost of care when they thought it would, leaving a
gap of months (the more uncompensated or unexplained transfers the longer the
gap). The nursing home needs to pay its bills and is looking to the family to
pay the $10,000 or $20,000 (or more) balance. The finger pointing starts as
does the talk of lawsuits.

That’s
why it bears repeating. You can’t walk into the Medicaid office, innocently
hand them all your documents and say “please give me Medicaid”. You’ve got to
be prepared. You’ve got to know what’s in those documents and how you are going
to respond to the inevitable questions. It’s like an IRS tax audit. You’d be
crazy to walk into the auditor’s office without a professional. Same thing with
Medicaid. The stakes are just too high.