Medical Assistance – Why You Need to Know How it Works

Notwithstanding the fact that most elderly patients in Pennsylvania nursing homes are financed by Medical Assistance, most people do not know anything about the program.   Since most seniors are not aware of the program or how it operates, they do not plan for it or avoid some pitfalls that would interfere with their qualification for it.

Medical Assistance, known nationally as “Medicaid” is a federal and state program that provides healthcare coverage for certain groups of beneficiaries, including persons seeking nursing facility care and home and community based long term care. The federal law provides guidelines for care and each state must provide care within those broad guidelines. In Pennsylvania, the program is administered by the Department of Public Welfare (“DPW”) whose responsibility is to establish rules and standards and to determine eligibility.   This is accomplished through the local County Assistance Offices (“CAO”).   In Bucks County, the single Assistance Office is located in Bristol, Pennsylvania.

In order to qualify for Medical Assistance (“MA”), a patient must be medically and financially eligible.   This task is accomplished through the joint efforts of the CAO and the Area Agency on Aging (“AAA”).  The AAA determines medical eligibility and the CAO determines financial eligibility.   A patient entering a long term care facility that is part of the MA program (not all nursing homes accept this coverage) will receive an admissions packet explaining the program and containing an application of admission.  Many people receiving this package begin to fill out the form without realizing that they need to qualify in order to receive benefits.  They may even start working with the nursing home providing personal and financial information prior to determining whether they can even obtain these benefits.   This adds additional stress and confusion to an already difficult process for a family.

To add to the confusion, many people are admitted to nursing homes for “rehab” and not long term intermediate care.  Rehab or skilled nursing care is medical treatment and it is either covered by Medicare or private health insurance or some combination of these programs.   Surprisingly, many people know very little about how their Medicare coverage works and what it pays.   In our practice, most people buy Medicare coverage based on price alone.   This is a risky thing to do.  Many patients have Medicare HMO coverage which costs less and basically replaces Medicare coverage with a managed care insurance plan.  These plans, while less expensive, are very stingy with coverage.  Patients find that they are discharged long before they are ready and certainly before the 100 days that these HMOs may provide.  This places a burden on the patient, the patient’s family and on the nursing home.  And the surprise that awaits the patient is that they suddenly are “private pay.”   With an average daily rate of about $250, this is quite a shock for people.

If a patient or a family is aware of how Medicare coverage works, they will plan for the transition to MA.  The idea is to achieve eligibility at the time the Medicare coverage ends.  Given the shorter stays paid for by HMOs this is a difficult if not impossible task.  It is always better to address this before one is admitted to a facility.   Unfortunately, again, most people do not think about this until it happens.  This results in patients paying far more than they need to pay.   Or worse, it results in the patient’s family or children having to pay for the nursing home bills.   Pennsylvania law requires children of indigent parents to pay for parent’s medical bills.  Our planning focus has recently shifted from protecting parent’s assets to assuring that children don’t have liability.   The two primary reasons that people are denied coverage is lack of documentation and gifting.  Since it takes quite a while to get a decision by the County, there is often a nursing home bill of many thousands of dollars before an applicant finds out there is a problem.  This results in a time consuming and stressful appeal.

As to gifting, the CAO looks to see what a person or couple has given any money away within the five (5) years preceding the application for assistance.  Statements and checks are reviewed. ANYTHING paid out without obtaining “fair consideration” is considered a gift.   If an applicant closes an account for cash and does not deposit that cash into another account, it is deemed a gift.  If an applicant transfers their home into joint names with their child it is a gift.  Any unexplained spending that exceeds a total of $500 in any month will be added to the gifting total.  And what happens when you make gifts?  You CANNOT obtain coverage from MA for the period of time that the gifted money would have paid for care.  In other words, if you give $15,000 away to a child three years before applying for assistance, at the time you otherwise qualify (when you are broke), the program will not pay for the first two months of care.  This is determined by taking the $15,000 and dividing it by the average price of a nursing home in PA (around $7,500).  In such case, the patient, the patient’s spouse or the patient’s children are then on the hook to pay for this care.

The best advice I can give you is to prepare early.  If you are married this is even more important. There are a lot of things married couples can do to prepare for the eventuality of long term care and to preserve assets.   This is a complicated program.  Do not accept advice from nursing homes or from any professional other than a qualified elder law attorney.  Unless you work within this system every day, you are not going to be able to provide sound advice to families.   Act early and obtain competent advice and your experience will be difficult but not catastrophic.

mm About Leonard L. Shober

Leonard L. Shober has focused a quarter century on representing clients in their estates and tax matters. He began his legal career in an estate planning practice. However, his interest in taxes and estate planning led him to pursue a Master of Laws (LLM) from Temple which he completed in 1994. Len continued his estate and tax practice which ultimately led to a focus on the needs of the elderly and disabled. At Shober & Rock, Len focuses on elder law, tax and estate planning and estate and trust administration.

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