There is a common misconception that Medicaid planning is not in the best interests of nursing homes. After all, the longer the resident privately pays the nursing home – at $7500 per month or more, the more money the nursing will make. However, many nursing homes recognize how financially harmful this approach can be. What happens for example, when those private pay residents run out of money before they qualify for Medicaid benefits? How does the nursing home get paid? As many nursing homes can attest, since family members are not responsible for paying the nursing home, it is extremely difficult to collect on their outstanding bill. Until the resident is approved for Medicaid, the nursing home rarely gets paid which typically results in the loss of thousands of dollars. Had Medicaid planning been undertaken, the nursing home would have been paid. Here are a couple of recent examples where the nursing home suffered due to the lack of Medicaid planning:
Scenario one: A client called on behalf of his mother who had a nursing home bill over $20,000 in arrears. Several months ago, the client had spent the last of his mother’s money on her nursing home bill and then applied for Medicaid benefits. However, her application had been denied due to vacant land the client had assumed was worthless since he had given up trying to sell it years ago. The tax assessor had valued the land at $10,000.
With proper Medicaid planning, this could have been avoided if the land had only been listed for sale at least 90 days prior to the filing of the Medicaid application.
Scenario two: A daughter applied for Medicaid on behalf of her mother and was denied. Now the nursing home was owed over $14,000 and there was no money to pay the bill. Both the nursing home and the daughter had assumed the Medicaid application would be approved because her mother’s bank account balance was less than $500. However, no one realized that her mother’s $2000 life insurance policy was a countable asset. Because the policy had a cash value of $2500, her mother was properly denied Medicaid benefits.
Again, had proper Medicaid planning been done, the policy would have been cashed out and spent down well before the Medicaid application was filed. This would have avoided the nursing home being stuck with a large bill that will likely never be paid.
THE BOTTOM LINE: The nursing home and its residents benefit from proper Medicaid planning.