Fair Hearing

How to Apply for Medicaid Nursing Home Benefits

Nursing homes are expensive.  Medicaid (called SoonerCare in Oklahoma) covers the cost of Nursing Home expenses for those who qualify.  Unfortunately, many myths surround how to apply or become eligible.

Medicaid Myths:

  • You cannot own anything
  • You have to give everything away
  • You can only have $2,000
  • You cannot be eligible for 5 years

Medicaid Eligibility

Medical:  The person applying for Medicaid must need services provided either in home or in a skilled nursing facility.

Financial:  The rules surrounding Medicaid eligibility are very complex.  Medicaid is a federal program that states administer.  There are rules regarding assets, however there are many exceptions and exemptions from those rules.  In short, a person applying may have far more than $2,000 and still be eligible.  Married couples can protect large portions of their life’s savings.

Citizenship:         Applicants must be United States citizens.  Certain exceptions apply to certain non-citizens residing here legally.

Medicaid Application and DHS

The Medicaid application process can be simple but many people fail to become qualified if they do not provide the correct information.  The caseworker looks at the income and current assets.  Perhaps the most troublesome requirement is the production of 60 months of records, including cancelled checks, from all financial institutions.  These are required for any account even if it has closed during the 60 months.

Why does Medicaid Want 60 Months of Records?

The 60 months is called the “Look Back Period”.  Transactions are examined to see if property was given away for sold for less than its fair market value.  If such a transaction is found, the caseworker may impose a “Penalty Period”.

What is a Penalty Period?

The Penalty Period is amount of time the applicant must wait before Medicaid will begin paying for the care. 

Penalty Period Examples:

Example 1:  It may be possible to explain the transfer to the satisfaction of the caseworker.  However, it is likely that the transfers will be penalized.

Applicant gave grandchildren $10,000 over the past 60 months (birthday or Christmas presents)$10,000
Medicaid divides that amount by the daily divisor  The 2017 rate is $144.6710,000 ÷ 144.67 = 69

 

Penalty Period69 days

 

Example 2:  In a recent case, a penalty period was imposed on church tithing.  The applicant appealed to a Fair Hearing and was able to show that the giving was a pattern that had not changed in decades.  The Appeal wiped away the penalty period.

Applicant gave Church $10,000 over the past 60 months as a pattern of tithing or giving.$10,000
Medicaid divides that amount by the daily divisor  The 2017 rate is $144.6710,000 ÷ 144.67 = 69

 

Penalty Period69 days reduced to zero on appeal

 

Example 3:  Father deeds $400,000 farm to son and applies for Medicaid 4.5 years later.  This example demonstrates two points.  First, if the date of application was delayed 6 months, then the transfer of the farm would not be considered at all.  The second point is that there is no limit to the amount of the Penalty Period.

Applicant deeded son a farm valued at $400,000  4.5  years ago$400,000
Medicaid divides that amount by the daily divisor  The 2017 rate is $144.67400,000 ÷ 144.67 = 2765

 

Penalty Period2765 days (7.5 years)

What is a Fair Hearing?

A Fair Hearing is a process where the decision of a caseworker can be challenged.  Denials of applications and imposition of Penalty Periods are good reasons that such an action may be considered.  A notice of disagreement is filed.  It is a good idea to prepare a brief stating the applicant’s side of the case.  In the brief, the factual or legal conclusions behind the casework’s denial or penalty period can be fully challenged.  At the hearing itself, the parties are allowed to present their sides.  The Administrative Hearing Officer takes the matter to a committee that then issues an order which may agree with, overturn or modify the caseworker’s decision.

How an Elder Law Attorney Can Help:

It is never too late to plan even in crisis.  Among the things Elder Law Lawyer can do includes:

  • Presenting the application for benefits in a way that explains the exceptions or rules for the caseworker.
  • Identify troublesome transactions that may cause penalties. Once identified, there are ways to cure the penalties, delay applications or take some other course to avoid or minimize the Penalty Period.
  • Developing permissible transfers that preserve assets while minimizing penalty periods.
  • File a Fair Hearing Request and represent you at the hearing.

 

While no attorney can guarantee results, applicants typically benefit from the services of an Elder Law attorney knowledgeable with the workings of Medicaid.

History of Church Tithing

Marian joined her church in 1990.  From that time on, she made tithed 10% of her income and other contributions to support her church.  Her giving of first fruits continued even after she became ill.  When she could no longer remain home, she sold her house and donated 10% of the proceeds to the Church. 

Need for Medicaid / SoonerCare

Marian was out of money by the end of 2016.  Medicare does not pay for long-term nursing home care.  Her income was insufficient to cover the cost of her nursing home.  In fact, she the cost exceeded her income by about $4,000 per month.  She had no choice but to file for Medicaid.  Medicaid, a separate program from Medicare,  pays the difference between her income and the nursing home’s reimbursement rate.  SoonerCare is Oklahoma’s version of Medicaid.

Medicaid Application and Examination

Medicaid is needs based program.  A person with too many countable assets will be denied.  In the past, people gave away property in order to qualify for this benefit.  In order to prevent intentional impoverishment, strict rules were adopted.  Now when anybody applies for Medicaid, the Department of Human Services (DHS) case worker is required to obtain financial records for the past 60 months.  The purpose is to attempt to determine whether assets were given away to become qualified to receive Medicaid or without receiving something of equal value in return.  Unfortunately, DHS is likely to treat all donations as improper gifts.

Church Giving Treated and Improper

In Marian’s case, she had given about $14,000 to her church over the past 60 months.  DHS used that amount to calculate a “penalty period”.  The penalty period is the length of time an applicant must wait before benefits are paid.    It is calculated by dividing the value of the property given away by $144.67[i] to determine the number of penalty period days.  This meant that she would not be eligible for benefits until 96 days after she was broke.  Either the family must come up with the difference; the facility eats the cost or the resident faces eviction.

Appeal to Fair Hearing Judge

Fortunately, the caseworker’s decision is appealable.  A Fair Hearing allows an applicant to file a request a hearing if DHS denies an application or imposes penalty period.  Marian requested a hearing because the rule say:

 A penalty would not apply if the individual can show satisfactorily that the intent was to dispose of assets at fair market value or that the transfer was exclusively for a purpose other than eligibility.

Because of Marian’s faithful pattern of tithing the Fair Hearing Judge agreed that no penalty should be imposed.  However, if Marian suddenly began giving as her health declined, the decision may have gone against her.

Conclusion

Planning is the best tool to avoid a bad result.  In fact, many families can save a significant amount of resources just by knowing the rules.  Having an attorney experienced in Medicaid laws can help avoid denials and penalties.

 

 

 

[i] 2017 rate.

DHS Denies Grandmother’s SoonerCare Nursing Home Benefits

Imagine that your grandmother is denied benefits because she spent all of her money trying to remain in her home. DHS looks at the finances and says that because she paid family members that she now has to wait 2 years. We did not like that answer and fought the decision.

Before a person is qualified for Medicaid they must be both financially and medically eligible.  An application is completed then the family must provide 60 months’ worth of financial records to the Oklahoma Department of Human Services.  DHS looks for gifts with the assumption that they were made to become eligible for Medicaid.

Gifts create Penalty Periods

It is not unusual for the DHS to impose a penalty period when someone applies for nursing home benefits.  The rules are so complex that the caseworker may apply the wrong standard.  Money paid for legitimate services may be treated as gifts.  This happened in the case of Ms. Clara.**  Ms. Clara and her husband were in their 90s.  They suffered from limited mobility, medical problems and dementia.  Living alone was not an option as they were both at risk of falling. Ms. Clara often put beans on the stove and forgot about them causing a fire risk.  Their doctor suggested 24 monitoring.  The family held a meeting and agreed that they, together with some close friends, would provide caregiving services and be compensated at the rate of $10 per hour.   They provided needed supervision and other services for about two years.

Out of Money and Out of Help

Ms. Clara’s husband passed away.  Shortly afterwards her daughter, who spearheaded the caregivers, also passed away.  The family was no longer able to manage the caregiving.  About this time Ms. Clara ran out of money as well and entered a nursing home.  She applied for Medicaid skilled nursing benefits.  DHS examined the bank statements and initially concluded that $60,000 was transferred to family members. Instead of viewing the payments as compensation for services, DHS treated them as gifts. Later, they revised the number to $113,000 which created a penalty period for 792 days.  Click Here To See Denial of Claim

Caseworker Used Flawed Reasoning, Ignored Facts

The caseworker used flawed analysis when she rejected the application.  She treated the $10 per hour as an being paid without return of fair market value.  In short, she treated the payments as gifts. She ignored Ms. Clara and her husband’s needs.  She also failed to consider that paying a company would have cost at least twice as much to provide the same care.

The Caseworker was 98.6% wrong. 

A brief was written to explain to the Administrative Law Judge how the caseworker erroneously applied the law and ignored relevant facts.  Negotiations with DHS’s attorney reduced the amount in controversy fro $113,000 to $106,000.  A fair hearing was needed to resolve this amount.

The Hearing:  Facts and Witnesses

The Administrative Law Judge conducted the hearing by telephone.  About a week in advance, we delivered Ms. Clara’s exhibits.  The family did a great job keeping time logs that were used to calculate the amounts paid to the caregivers.  Exhibits were created to show how the checks related to the time logs.  The grandson was an excellent witness and was able to describe the care his grandparents needed.  The Administrative Law Judge asked pointed questions to each side.  It was clear that he wanted to know the facts and come to the right decision.

The $111,000 Victory*

Family provided care for 2 years.

About 2 weeks after the hearing, and just in time for Ms. Clara’s 97th birthday, the Appeals Committee issued its opinion.  Of the original $113,000 used to calculate the penalty period, the committee found only $1,983 to be a gift.  So instead of 792 days of ineligibility, only a 13 day penalty period was imposed.  Read Decision Here.  It turns out that the caseworker was 98.6% wrong.  The ineligibility or penalty period was reduced from more than 2 years to less than 1/2 of a month.

What this case means:

Medicaid rules are complicated.  Attorneys who practice in this area must seek constant training to stay up-to-date on the changes.  DHS’s overworked caseworkers and employees approach their job with a certain viewpoint. This prospective can lead them to make the wrong decision resulting in potentially devastating results for applicants.  In Ms. Clara’s case they applied the wrong law and were wrong about the facts.  Frankly, as with all humans, they make mistakes.  A fair hearing is one way to rectify a bad decision.

Planning vs. Legal Challenges

Attorney involvement occurred late in this case.  There may have been ways that the family could have protected more assets with advance  or crisis planning.  Perhaps the caregiver compensation could have been structured or explained in a manner that was more palatable to DHS.   Providing more detailed information during the application may have prevented DHS from taking a position that they stubbornly held onto.  Instead, a year long battle occurred before DHS was required to approve the benefits.  Ms. Clara, the family and the nursing facility would have benefited from more certainty.

If you receive a bad decision, have it reviewed

It is very possible that a denial or imposition of a penalty period is wrong.  An attorney knowledgeable in Medicaid rules and regulations should be consulted.  If DHS’s decision is wrong there are avenues to challenge the decision.  Ms. Clara’s family and the nursing facility worked with our firm to present her case at the fair hearing and achieved a significant result.


 

*The appeals, results, awards, and settlements listed on this website are an example.   These results should not be used for comparison to your case or to any other case.  These examples and are not intended to predict the outcome of any potential case. Every case is different and must be evaluated based on its own merits. This website should be not be construed as a representation or guarantee that your case will produce a similar settlement or result.

I am the grandson and legal guardian for the above case. Richard did an excellent job representing us in the DHS fair hearing. Uber knowledge of case law and dhs interworking. I recommend him highly.
thanks, DLM

 

** Clara is not the client’s last name.  The attached opinion was redacted or otherwise modified to preserve the client’s identity.

No client photographs were used in this article.

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