﻿Can a parent help adult children and not be penalized by medicaid? - AgingCare.com

My boyfriend was laid off from his job two years ago. At first he lived off his savings and 401(k) but when that ran out his father offered to give him money to pay his bills and not lose his house. For the first year his father also lived with him but for the second year his father has been in Assisted Living (after having an accident that left him needing more care than he could get at home). His father has continued to give him money though. His father receives a pension & social security which pays approximately 65% of the Assisted Living bill each month and he pays the balance from his savings. However, that money is running out. If he needs to apply to Medicaid to pay the difference on his Assisted Living (or eventually Nursing Home), will he be penalized for the money he's been giving to my boyfriend to help him out? They both live in Connecticut (not sure if that makes a difference). Would he even be eligible for any Medicaid since he gets a pension & social security?

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Cat - you have 2 different situation going on - 1. is if he will qualify "income" wise for Medicaid & 2. an possible "asset transfer" issue for the $ he gave your BF.

The income part is pretty straightforward. Income is what he gets each month from SS, a pension or other monthly income. Your state will set the exact amount that it allows for it's maximum. Like my mom is in TX and it is $ 2,094.00 income per month. So go to CT Dept of Human Serivces or Aging website to see what it is.
If dad is more than the amount, there are things that can be done.

2. Now to the totally sticky part....the $ dad has been giving BF can be viewed as gifting and can incur a transfer penalty. When hid dad applies for Medicaid, the state will require his financials. To what degree and how far back depends on the state and the NH's list. My mom's lookback in bank statements was 3 years & 6 months. So I would suggest that from this day forward, his dad needs to STOP giving him any more money. You want all the future bank statements to clearly show only checks written out to the AL for his care or for things for his needs (like buying him clothes toiletries @ target or co-pays for doctor visits or his medications). No more checks to Sonny. If dad's 401K and his income can pay for his AL for the next couple of years, you all may not have the gifting show up in dad's Medicaid application review. So lucky you if that happens. But I wouldn't count on it......what will happen is that once dad's financials are reviewed the $ will show up. Then whomever signed dad into the AL or NH or did the application will get a transfer penalty inquiry letter from the state. This is pretty important letter and has to be responded to as indicated in the letter......you have to file an appeal or file for an extension of time to respond. Personally if you get this letter, you need to get an elder law attorney to work this out for his dad. I had to deal with a transfer penalty on my mom's car (she gifted it to worthless nephew almost at the edge of the 5 year look-back period for Medicaid review) and I was able to get that done but it was pretty simple but alot of work in a couple of weeks (getting Blue book value, then letters from mechanics of car's crappy state, photos of car, cancelled checks on work on the car) to get the value decreased so that is was under the 2K in assets allowed for Medicaid. But for you all, that the $ was just gifted will be obvious and hard to get around on your own.

I would suggest that you & BF sit down and go over and tally up how much money dad has given him for each year. That will give you some idea of how much of a transfer penalty you may be looking at. Now the transfer penalty formula is totally whack to figure out. I think the states can determine how they set the start date for the penalty date so there is no 1 way to figure it out. But the basic number is whatever your state has set as it's daily reinbursement rate to the NH for room & board. Like in TX it is about $ 145.00 a day (which is low), so if dad gifted 25K, then it would be a 172 days in which dad will be ineligible for Medicaid to pay for his NH stay. (I'm simplifying it as there are these loco %'s in transfer date and application date that make it totally impossible to figure out, and I'm pretty OCD on this stuff.....) Dad because he is now impoverished qualifies for the Medicaid program but is ineligible for payment till the transfer penalty is paid. The NH usually send out a letter to whomever signed dad in that they expect to be paid this amount or dad will be discharged (a 30 day notice). Family either comes up with the $ or dad goes to family to live. Very often the penalty is waived if there are outstanding circumstances or there just isn't the money, but I think you need an attorney to work this out for you as it is probably too stressful for a DIY project.

There is also another issue....you need to find out if your state - CT - allows for Medicaid to pay for AL. Not all states do or they may just do it on a limited waiver program to divert Medicaid funds to do this. You should ask the admissions office at the AL he is in right now. Also check to make sure they participate in Medicaid - many AL do not. In TX where my mom lives, it is easier to get them into a NH and have Medicaid pay for it then have them get a waiver for AL & the waiting list for AL is long and you are private paying till they finally get a spot. Medicaid is managed by the states so vary widely & wildly on what they do.

Does your BF have a copy of the admissions contract? If he doesn't, he wants to get one. I would NOT let on to the AL that there may be any issue with dad's financials in the future. Just say you want to get all his documents together to make things all efficient. Then go through the contract to see how this AL deals with non-payment. One thing that is critical is IF the facility will bill you at Medicaid rate or at private pay rate. Could be a huge butt difference. Understand?

Who signed dad into the AL and how was the signature done.? You want to have everything done so that dad signs everything himself. If he can't, then it has to be signed as "John smith as agent & DPOA for James McHenry Smith", neither Sonny or you should ever sign your name. Really never ever do that.Good luck and keep a sense of humor in all this.
Helpful Answer (2)

Both positions are understandable, first a father wanting to help his son. Second, Medicaid is intended for people without other means. Many non-eligible people were divesting their assets (by gifting to family) close to end of life in order to become eligible while keeping the wealth in the family, therefore the 5 year lookback was implemented to make the system more sustainable for all who need it. End of life expenses can be extremely high, so even someone who worked and planned for a comfortable retirement may end up on Medicaid eventually.

See an attorney, the gifted money may, likely will, cause a penalty period for dad from Medicaid. His income will be taken into account, there is a way to set up a trust where the monthly pension goes to the government and he can become Medicaid eligible. Remember as long as he has savings above a meager amount he will also be ineligible.

Hopefully BF is back on his feet and has worked his way back to a position were he will now be able to help dad.
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