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Importance of Medicaid Planning from a Nursing Home Perspective

By Kim Boyer

Without proper planning, some nursing home residents do not become qualified for Medicaid or maintain their eligibility. If that occurs, the resident may not receive necessary services, or the nursing home may not be paid for its services. Here are some actual case examples:

Case One: A nursing home called our office about a resident who had lost her eligibility for Medicaid benefits. The resident’s sister, who was her power of attorney, was not paying the patient liability and allowing it to accumulate in an account in the patient’s name.

The facility took steps to become representative payee of the patient’s income; however, the patient lost her Medicaid eligibility when the account went over $2,000. Unfortunately, the sister did not cooperate, and when there is no payment source in place, the Public Guardian’s office will not accept the case.

Our office filed for guardianship, using a professional guardian. The guardian then spent down the account and re-applied for Medicaid, which was approved. However, Medicaid would not cover the months when the account was over $2,000. The nursing home had an outstanding bill and there was no money to pay that bill, but ongoing months were covered by Medicaid.

Case Two: A nursing home called our office about a resident who had a bill over $17,000 in arrears. The resident had spent down all of her assets to less than $2,000, and had applied for Medicaid. Her application was denied because the resident owned a piece of land in another state, worth practically nothing after the costs of selling it, yet valued enough to cause ineligibility.

With proper planning, the real property would have been listed for sale, making it an exempt asset, before the Medicaid application was filed. After the denial, the property was listed for sale and another application for Medicaid was submitted and approved.

Case Three: A daughter of a nursing home resident called our office about her mother who had just been denied Medicaid. Her mother had spent down all of her assets to less than $2,000, and she did not understand why the application was denied. By the time she received the denial, the nursing home bill was over $23,000.

Although her mother had less than $2,000 in her bank account, she had an insurance policy with a face value of $3,000 and a cash value of $2,500. In Nevada, if an individual has life insurance with a face value of more than $1,500, the cash value of the policy is considered a countable asset.

Had the proper Medicaid planning been done, the life insurance policy would have been cashed out and spent down before the application for Medicaid was made, and Medicaid would have been approved.

Proper Medicaid planning is beneficial to both the resident and the nursing home.

Disclaimer: Information provided as a service of Kim Boyer, Certified Elder Law Attorney, updated as of 01/01/13. It does not constitute legal advice. For specific questions you should consult a qualified attorney.

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