Having recently navigated this spiderweb myself, this is probably the most important blog that I have written to date. Sadly, Medicare, Medicaid, and Social Security were purposely designed to be complex with many pitfalls. This blog will seek to both explain these programs and warn/protect you, and your loved ones, from what the U.S. Government does not go out of its way to tell you.
Like Medicare, Medicaid is a health insurance program covered by the government. Unlike Medicare, which is issued by the federal government and qualification for enrollment is determined by age and work history; Medicaid is issued by the state, supported by federal subsidies, and qualification for enrollment is determined by disability and/or income. As a result, the process for Medicaid is far more difficult to navigate and to understand. If you have both Medicare and Medicaid, then Medicare typically acts as your primary insurance with Medicaid picking up deductibles and other items that are not covered by Medicare.
To qualify for Medicaid you must have no assets, no savings, and an extremely limited income. What they do not tell you, however, is that Medicaid performs a five-year audit of an applicant’s finances to assure they did not hide or give away assets. I can tell you from experience that this will be the most thorough audit that you will ever encounter – putting even the IRS to shame. While most people are unaware of this audit, Medicaid does not accept ignorance as an excuse. Put simply, if you do not have a receipt and itemized bank statements for every financial transaction in the five years prior to applying for Medicaid, then you will be denied some or all of Medicaid benefits.
The Trick to Medicaid is to Qualify in the First Place
Because Medicaid covers the room and board at care facilities, state governments go out to their way to delay coverage for as long as possible. This is by design, with the hope that the elderly applicant will perish before, or shortly after, receiving benefits. If the state deems that every penny of one’s expenditures cannot be accounted for, then they will likely approve the applicant for partial coverage, which does not include the costliest of coverage - room and board at a senior living facility or nursing home. Make no mistake, the five-year financial audit is more a way to deny benefits than it is to protect the system against fraud, which is rampant in the Medicaid system. Sadly, if Medicaid does not find an elderly applicant worthy of approval, then that applicant is relegated to living with family members who are willing to take him/her in, or living on the street.
If you qualify, then Medicaid can provide the following services:
Inpatient Hospital Services
Outpatient Hospital Services
Diagnostic Screening Services
Nursing Facility Services
Home Health Services
Family Planning Services
Addiction Recovery Services
Some states may include:
PROTECTING YOURSELF AND YOUR LOVED ONES
The most important thing you can do to protect yourself from being victimized by Medicaid is to understand what it is and how it works. Hopefully, this blog will accomplish that task. The second most important thing you can do, if you are within five-years of applying, is to keep a detailed financial record of every penny that comes in and every penny that goes out. This includes keeping copies of all receipts and saving monthly bank statements for every bank account in your name. A particularly devious trick of Medicaid examiners is to require copies of all bank statements, even if the accounts were closed years ago. No statements, then no approval – it is that simple.
What About Medicaid Planning Services?
You may have heard about third party services who, for a hefty fee, will offer to navigate the Medicaid application process and do all the heavy lifting for you. Before you consider such a service, let me tell you what my mother’s Medicaid case worker had to say about these services after she was denied, and I decided to work directly with Medicaid.
Those services are a big waste of money. They complicate the process by asking you a lot of questions, having you dig up all the records and do all the work. Then they simply pass that information to us, which you could have done yourself. I’m sorry to tell you this, but your mother would have had a much better chance of being approved if you did not use this service.
Ironically, Medicaid enables these services by having the fee (typically upwards of $8,000) listed as an approved Medicaid expense. In other words, the $8,000 that you pay these companies is not held against you by Medicaid’s financial audit. It is my experience that these companies work with long-term care facilities in order to guarantee the long-term care facilities are paid for outstanding expenses. This is accomplished by building a case to make a family member who manages the care of a loved one liable for those expenses.
The problem with Medicaid is that you cannot apply until you have less than $2,000 in cash or assets in your name. The costs of a long term care facility are typically $6,000-$15,000 per month. If you are in a long-term care facility that claims to accept Medicaid, then they will put you on what is known as "Medicaid Pending" status when your assets fall below $2,000. You will remain in this status until Medicaid is approved, which typically takes three months. During this time, you will rack up tens of thousands of dollars in unpaid care. If you are approved, then what you owe will be covered by Medicaid. If you are not approved, then (since you have no money) the long-term care facility must eat what you owe them - unless they can get a family member on the hook. Do not be fooled, after years of collecting such obscene profits, the long-term care facility can easily absorb this loss. Instead, it is my experience that the long-term care facility will recommend a Medicaid planning service to build a case against a family member and make him or her legally liable for outstanding costs should Medicaid deny your application. Of course all this could be avoided if Medicaid were to implement the common sense measure of allowing people to apply three months in advance of running out of money. Quite frankly, it looks as if the system were purposely designed to put the elderly in debt.
I cannot stress enough that you should avoid using Medicaid planning services at all costs. Use a senior-law attorney instead. Many Medicaid planning services will build their websites to look like they are senior law attorneys. Others will state that they partner with senior law attorneys (who you must pay separately). Do not confuse these with an actual senior-law attorney that you will retain under your name. In my opinion, the attorneys who work with the Medicaid planning services are not there to represent you - they are there to represent and protect the Medicaid planning service.
Why Use a Senior-Law Attorney?
The word attorney strikes fear into just about every person and organization. Medicaid is no different. When a Medicaid application is filed by a senior-law attorney, the Medicaid case worker knows better than to apply the typical strong-arm intimidation tactics. In some cases, Medicaid will significantly simplify the five-year financial audit to a realistic level for approval. The bottom line is that the simple action of having your application submitted by a senior-law attorney will put the Medicaid case worker on the defensive, while having your application submitted by a Medicaid planning service will do the opposite.
Q. I am on Medicaid pending status and my long-term care facility is asking me to sign over my Social Security. What should I do?
A. Absolutely Not!
If a long-term care facility has you on Medicaid pending, then they are entitled to every penny of your monthly Social Security benefit to offset their costs. However, you should NEVER sign over your benefits directly to them. If you do, and you are denied Medicaid, then it can take months to have these benefits reassigned after the care facility has you removed and when you will need this money the most. Remember, turning over your Social Security benefits to a long-term care facility takes minutes, but getting them back could take months.
Instead of directly signing over your benefits, you should continue to collect your Social Security benefits under your name, then cut the long-term care facility a monthly check for the full amount of Social Security that you receive.
Part 3: Social Security - Coming Next Month
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