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July 19, 2007
THINK BEFORE YOU MAKE A GIFT
According to the Social Security Administration about 40% of all seniors will need nursing home care at some point in their life. If you can afford to privately pay about $400 per day for your nursing home stay, the new record keeping rules will not adversely affect you. But, if you are like most seniors that will need help paying the astronomical rates for nursing home care, the following will be of great interest to you.
Nursing homes are paid in three different ways.
1) MEDICARE - Usually, the first payments to a nursing home come from Medicare. If you are hospitalized for at least 3 nights and then go to a nursing home, Medicare will pay the 1st 20 days in full. The next 80 days are subject to a $124/day co-payment. If you have a supplementary health insurance policy, such as MEDEX, this co-payment may be covered. Also, Medicare only pays as long as you are showing signs of improvement. If your condition is stable or declining your coverage is terminated with very little notice.
2) PRIVATE PAY – Once your Medicare coverage ends, or if you went directly to the nursing home from home, you become a private paying customer. Private pay rates can vary widely. The rates for the nursing homes that I am familiar with range from $275 to $425 per day.
3) MASSHEALTH – In Massachusetts, Medicaid is known as MassHealth. For those who are financially eligible, MassHealth pays for their nursing home and medical care. In very general terms, a single person must have less than $2,000 and a married couple must have less than $103,640 to be eligible.
So if you’re not rich, and you need an extended nursing home stay, you will need help from MassHealth to pay the nursing home. Here is where a new disturbing trend has developed for those seeking MassHealth coverage for their nursing home care. Specifically, I’m referring to how MassHealth treats gifts that you have made within 5 years of requesting MassHealth benefits.
In very basic terms, MassHealth says that if you made any gifts within the last 5 years, and now apply for benefits, you will be denied coverage due to those gifts. How does MassHealth know that you made any gifts? The answer is that they ask for your bank statements and review both withdrawals and deposits. The disturbing trend that I mentioned is that some MassHealth caseworkers are asking for copies of all of your checks for the last 5 years, regardless of the amount. That combined with the presumption that all withdrawals are treated as gifts, unless you are able to prove otherwise, makes this a proposition that, heads, you don’t win, tails, you lose.
Is MassHealth correct in treating all gifts as disqualifying transfers? I don’t think so. MassHealth regulation 520.018 says that an otherwise eligible nursing home resident will be denied coverage if he has made a gift during the last 5 years. But, because Medicaid is a Federal law, we must look at the Federal rules because the Commonwealth’s regulations may not be more restrictive than the Federal rules. The pertinent Federal rule can be found at 42USC1396p(c)(2)(C)(ii) that says an individual will not be ineligible if the gift was “exclusively for a purpose other than to qualify for medical assistance”.
Recently, I had a case involving a nursing home resident mother who was found to be ineligible for MassHealth benefits because of two Christmas gifts that she had made last December. A $100 check to son #1 and a $200 check to son #2. I explained to the caseworker that the mother always made Christmas gifts to her sons and that according to the Federal rules, gifts made other than to qualify for MassHealth are allowable. I filed an appeal. While waiting for our court date, I got a phone call from MassHealth saying that they were going to forget about the gifts and approve my client.
On February 8, 2006, President Bush and the Republican Congress passed the Deficit Reduction Act that created this prohibition against gifting. The problem is that they failed to notify the 40% of seniors who will need nursing home care that making gifts after February 8, 2006 can make you ineligible for nursing home care. So, the next time you make a gift to your child, your church or anyone, you need to ask yourself; Am I making this gift to qualify for MassHealth?
This article gives general information and not specific advice on individual matters. Persons wanting individualized advice on matters discussed should contact an advisor experienced in those matters. To the extent this article provides information on legal matters, it is based on law in effect in Massachusetts on the date of posting (laws in effect in other states are often quite different).
Ronald H. Surabian is a CPA and attorney who works at the Elder Law Center in Saugus, Massachusetts. He also holds Masters in accounting and a Masters in tax law. He currently serves on the board of directors of the Massachusetts Chapter of the National Academy of Elder Law Attorneys. If you have any questions please call me at the Elder Law Center, One Essex Street, Saugus, MA 01906 (781)233-4444. To view this or any prior article, please visit our web site at www.elderlawcenter.org