Savings bonds and Medicaid – what should I do when Dad applies for benefits?

sav-bondsFor generations, savings bonds have been purchased for newborns and retirees alike as an investment in the future. While savings bonds aren’t a complex investment vehicle, bonds that aren’t properly handled can cause Medicaid ineligibility.

Here’s a common scenario:

“My dad owns savings bonds; he bought them years ago and added my name to them when his health started declining, so they are payable to me or him. He is now in a nursing home and needs to apply for Medicaid – do these savings bonds count against him? Since I’m a joint-owner, can I cash them so they aren’t an available resource?”

First, it is important to note that savings bonds are a countable resource – the Pennsylvania Medicaid application explicitly names U.S. Savings Bonds as a resource to report. Additionally, savings bonds list the owner’s social security number, which means savings bonds can be tracked through the Treasury department and linked to a Medicaid applicant.

Although the savings bonds are payable to either you or your father, the state may consider the bonds an available resource for your father, because he can redeem them himself. In Pennsylvania, if a Medicaid applicant can sell a jointly-owned resource without the other owner’s consent, the applicant’s share of the resource is presumed available to the applicant. An applicant’s share of a jointly-owned liquid resource is determined by the applicant’s contribution to the resource; this is a very fact-specific determination, but because your father purchased the bonds, the entire value will likely be considered available to him.

If you cash the savings bonds now, the state may consider the action a gift from your father to you, and he will incur a period of Medicaid ineligibility. The determination of whether this will be considered a gift depends on the circumstances, so it is important to proceed with caution.

Given the complex nature of these resources when it comes to Medicaid eligibility, it is important to seek expert advice. By consulting with a certified elder law attorney, you can learn how your resources are characterized and develop a Medicaid Planning arrangement that best serves your needs.

Protecting the Family Home: Part 2. Can the state take my home after I die to recover Medicaid benefits I received?

When you bought your family home years ago, you didn’t just see an asset with equity value – you saw a legacy you could pass to your children. When the time came for you to move into a nursing home, you were relieved to learn that you didn’t have to sell your home to apply for Medicaid. However, did you know that, without proper advance planning, the state can take your home after you die to recover Medicaid benefits you received?

In Part 2 of our series “Protecting the Family Home,” we discuss what happens to a Medicaid recipient’s home after death and the importance of advanced Medicaid planning.

Although your home is generally an excluded resource for Medicaid eligibility and does not have to be sold while you collect benefits, this protection may be lost after you die. Under a process known as “estate recovery,” the Department of Public Welfare can make a claim against your probate estate after your death to recover Medicaid payments made for your benefit.  Your “probate estate” generally includes all of your property that does not pass through a beneficiary designation. If your home is part of your probate estate, your family may have to sell your house to repay the claim.

Complex planning techniques may be used to protect your family home from estate recovery, but the most effective Medicaid planning takes place well in advance of a crisis situation.  By working with a certified elder law attorney before applying for Medicaid, you may be able to preserve your family home for your children.

At Sykes Elder Law, we have experience with a variety of complex Medicaid Planning techniques – give us a call today to discuss how we can help you achieve your estate planning goals.

Protecting the Family Home: Part 1

Do I have to sell my home to be eligible for Medicaid benefits?

This is the first post in a series discussing what happens to your home when you apply for Medicaid benefits.

When you enter a nursing home and need to apply for Medicaid, the issue of whether your home must be sold can be a concern. People often misunderstand Medicaid’s rules regarding homes, which can make emotional conversations about a loved one’s care even more complex.

Generally, you do not need to sell your home to be eligible for Medicaid. In Pennsylvania, a Medicaid applicant’s principal place of residence, up to $543,000 equity value in 2014, is an “excluded resource.” This means the state will not count the home against you, the applicant, when determining your eligibility for benefits. For the home to earn “excluded” status, you must state in writing that you intend to return to the home.

The home may also be an excluded resource, with no limit on equity value, based on who is still living there. If the Medicaid applicant’s spouse is still living in the home, the home is excluded; this is also true if the applicant’s child — under age 21, blind, or permanently disabled – is living in the home.

Any additional residences, other than the primary residence, are protected if another exclusion applies (for example: the property is income producing) or if the property can be preserved as part of the Community Spouse Resource Allowance (CSRA).

With assistance from a certified elder law attorney, a number of strategies may be used to help protect the family home. At Sykes Elder Law, we have years of experience in Medicaid Planning and can help you find the plan that best suits your needs.

Can I be discharged from a nursing home against my wishes?

For what reasons may a nursing home discharge a resident?

The federal Nursing Home Reform Act of 1987 prohibits transfer or discharge of a resident by a skilled nursing facility except for the following reasons:

Failure to pay. A nursing home can discharge a resident if the bill isn’t paid “after reasonable and appropriate notice.”

However, if the resident is eligible for benefits – such as Medicaid – that would pay for the resident’s stay, and the resident has filed all necessary paperwork to apply for benefits, the nursing home must wait until the application process has been completed.

Health or safety. If the resident’s stay endangers the health or safety of individuals in the facility, that is another appropriate reason. A physician must document the endangerment in the resident’s clinical record.

Resident has improved. Sometimes a resident’s health “has improved sufficiently” so that “the resident no longer needs the services provided by the facility.”

Severe needs. At other times, however, “the transfer or discharge is necessary to meet the resident’s welfare and the resident’s welfare cannot be met in the facility.”

Ceasing operations. If the facility ceases to operate, it will obviously need to transfer or discharge its residents.

Prior to transfer or discharge, the facility must notify the resident, and if known, a family member or legal representative of the resident.

If discharge is because the resident has not paid or the facility will cease to operate, then the facility must give notice at least 30 days in advance. If it’s due to health improvement, 30 days notice is not required “where the resident’s health improves sufficiently to allow a more immediate transfer or discharge.” If due to severe needs, the facility may forego 30 day notice “where a more immediate transfer or discharge is necessitated by the resident’s urgent medical needs.”

The law attempts to balance the rights of various parties. On the one hand, the law attempts to ensure that nursing home residents are free from arbitrary and harmful discharge from care. On the other hand, nursing homes should not be forced to house a resident under unreasonable circumstances.