Long Term Care

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.

Crisis Medicaid Planning, What to do When You Need a Nursing Home Now

Medicaid is a needs based program. This means that people with excessive assets or income cannot qualify for Medicaid. For many, this will be the only government program that they will ever seek.  (These are general rules in Oklahoma).

What Assets Count and Don’t Count?

Non-Countable Resources:

These are things that you can own without becoming unqualified for Medicaid. Generally these are:Nursing Home Patient
• Your home
• One car
• Household belongings
• Prepaid burial plans
• Family burial plots
• Term life insurance
• Whole life insurance with face & cash value below $1,500.
• Retirement accounts in payment status

Countable Resources:

Maze Medicaid Rules fotoAlmost everything else is considered a resource that Medicaid look at to determine whether or not you qualify. This can include:
• Cash / Money Market Accounts / CDs
• Stocks / Mutual Funds / Bond Funds
• Nonresidential land
• 2nd or more cars
• Cash value in life insurance policies
• Businesses
• Income generating properties

Things you cannot have & qualify

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Click Here to Get More Answers

  •  Life insurance with cash value over $1500

  • Institutionalized individual with

    • More than $2,000 in countable assets or

    •  Income greater than $4365

  • A married couple with excessive assets (those with more than $25,000 in countable resources need a plan)

Crisis Planning can solve many of the issues that would prevent an individual from receiving benefits.

For example, it may be possible to shift assets and income from the institutionalized spouse to the well spouse.
Life insurance policies may be converted to a living benefit or liquidated.
It is possible to “Spend Down” countable assets so that they do not count. Spending down may include:
• Repairs or improvements to the home
• Upgrading vehicle
• Purchasing Prepaid Burial Policies
• Paying off debts or taxes
• Paying for services
• Purchasing Medicaid Qualifying Annuities
• Making Medicaid Qualifying Loans

What if Medicaid Has Turned You Down?  Has Medicaid Imposed a Penalty Period?

It may be possible to correct the issues and reapply.

Get my resource brochure.

For those seeking services in Oklahoma, download and complete this Questionnaire:

mediciad crisis planning worksheet

Mom is aging and needs lots of care but has limited resources.

The family is looking for a way to cut her unneeded expenses while meeting her needs. One expense that families consider cutting is a life insurance policy. After all, most of us purchase life insurance to pay for living expenses of a family, children’s college or to pay-off the house following the death

Beautiful senior couple in the park

of the insured. Often a senior has grown children and a paid off mortgage and a family with sufficient resources. Therefore, the temptation is to stop paying the life insurance premiums. What many families fail to realize is that the life insurance can be converted into a life care plan specifically designed to pay the costs of care for their loved one.

How it works:

The policy owner transfers ownership to Life Care Funding who creates a fund to pay for the care of the individual. Money is held in a FDIC insured bank. Every month the nursing home, assisted living center, home healthcare provider or others providing medically necessary services or supplies are paid as directed.
Benefits:

• Provide federally tax-free fund to pay for covered expenses
• Eliminates the expense of life insurance premiums
• Prevents forfeiture of life insurance investment
• Can delay need to apply for government benefits
• Provides family with flexibility to adjust the care to meet their loved one’s needs

Part of Your Long Term Care Planning:
The importance of this as a tool cannot be overstated. Some use this strategy as part of their Medicaid or Veterans Wartime Pension planning.
The Internal Revenue Code Section 7702B(b) provides special exemptions for sales of life insurance policies insuring the lives of individuals who are terminally ill or chronically ill. In the case of a terminally ill insured, the proceeds from the sale of the policy will not be subject to U.S. federal income tax regardless of how the proceeds are used. And, if the insured is chronically ill, the proceeds will not be subject to U.S. federal income tax so long as they are used solely to pay for qualified long-term care services.

Please call 405.340.6554 to find out if this is right for you. Or Complete An Application

Have More Questions:  See Life Care Funding Questions & Answers Page

Click Here for Workshop Schedule

Please note that the actual tax treatment of the proceeds from the sale of a life insurance policy will depend on many factors, including but not limited to who owns the policy, the health of the insured, the use of proceeds, the size of the estate and the state in which the policy owner lives (for purposes of state taxation).  This material does not constitute tax, legal or accounting advice, and neither Winblad Law PLLC nor any of its attorneys, agents, employees, or representatives are in the business of offering such advice.  The information above cannot be used by any taxpayer for the purpose of avoiding any IRS penalty.  Anyone interested in selling a life insurance policy in order to fund Long Term Care Benefits should seek professional advice based on his or her particular circumstances from an independent tax advisor.

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