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Need to spend some unexpected money mom received to Medicaid requirements. Reimburse funeral expenses ok? When my father recently passed away, Mom got a bump in her SS income that the nursing home isn't claiming. We need to spend down her money. Options we are looking at are: (1) getting her a electric bed, so she can raise and lower her head without waiting for an aide, (2) letting her give money to a sister who needs repairs on her home - (what are the limits on her giving money?). (3) Reimburse family for the money we gathered for her funeral when we thought she might die earlier this year (she's rallied quite well and surprised us all!). We are also in the process of transferring POAs to 2 new sisters, so we have to decide rather quickly what we are going to do. The ombudsman I spoke to this afternoon wasn't much help, so I don't know which option is best, allowed, or if we are missing any choices. HELP!

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I agree with all of the above comments, depending on the amt of money involved. Always prepay your funeral expenses, then you will know she will have the kind of funeral she wants. some states limit this, in IA, I think it's $20,000. (So people can't use it as a way to hide money. Say you prepay $100,000 and then the funeral costs $15,000 and the family keeps the leftover.). Yes, buy her an electric bed, a lift chair and any other medical equipment you think she will need and use. Lift chairs alone can be $1,000 for a nice one, more if it needs to be heavy-weight. An electric bed can be $15,000, easily. Now if she has more that that, I would look into the trust idea, or just spend it on her care. it's her $, use it to see she gets the best care possible. Then when it's gone, she goes back to Medicaid, or if she passes away, the family gets what's left over.
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I just spoke with the Medicaid representative. Her funeral expenses ARE allowable, and she can pay those back to family members. We just have to provide documentation of her pre-need plan and the paybacks. (We also got her Medicaid rate changed...so the excess money is no longer going to be a problem!)

Thanks again to everyone who chimed in. You've been a big help.
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Again, my friend's mom is the one who inherited the money, and she's the one who had the trust with her son as the trustee. She had federal benefits pretty much her whole life including Medicaid, so the money was totally unexpected but she didn't own it, her son did. I'm all for the trust as long as the trustee is trustworthy, and I would gladly use a trust if I was in the same situation as this particular family was. I don't see anything morally wrong with putting the money into a trust, as long as it's done legally as this family experienced. Because she used a trust, it didn't hurt her benefits or her Medicaid one single bit. I think part of the reason why it didn't is because she has specific disabilities that runs in the family, so I have someone else mentioned here it may have been a special needs trust, and I'm definitely all for it!
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I know putting money into a trust prior to applying to Medicaid is not illegal and can be done under the advisement of a good elder law attorney. Anyone needing to go into a NH should have the family or POA consult with an Elder Law Attorney. What I did say is I think it is MORALLY wrong to set up and put money into a trust AFTER claiming to be destitute and needing the government, ( ie the Taxpayer,) to pay a person's way. If someone should get an inheritance or other windfall, that should be used up before expecting taxpayers to pay. Everyone complains about how high taxes are, well this is one of the very big reasons why.
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Tmaggie84: See below---
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How Gifts Can Affect Medicaid Eligibility

We’ve all heard that it’s better to give than to receive, but if you think you might someday want to apply for Medicaid long-term care benefits, you need to be careful because giving away money or property can interfere with your eligibility.

Under federal Medicaid law, if you transfer certain assets within five years before applying for Medicaid, you will be ineligible for a period of time (called a transfer penalty), depending on how much money you transferred. Even small transfers can affect eligibility. While federal law allows individuals to gift up to $14,000 a year (in 2016) without having to pay a gift tax, Medicaid law still treats that gift as a transfer.

Any transfer that you make, however innocent, will come under scrutiny. For example, Medicaid does not have an exception for gifts to charities. If you give money to a charity, it could affect your Medicaid eligibility down the road. Similarly, gifts for holidays, weddings, birthdays, and graduations can all cause a transfer penalty. If you buy something for a friend or relative, this could also result in a transfer penalty.

Spending a lot of cash all at once or over time could prompt the state to request documentation showing how the money was spent. If you don't have documentation showing that you received fair market value in return for a transferred asset, you could be subject to a transfer penalty.

While most transfers are penalized, certain transfers are exempt from this penalty. Even after entering a nursing home, you may transfer any asset to the following individuals without having to wait out a period of Medicaid ineligibility:

your spouse
your child who is blind or permanently disabled
a trust for the sole benefit of anyone under age 65 who is permanently disabled

In addition, you may transfer your home to the following individuals (as well as to those listed above):

your child who is under age 21
your child who has lived in your home for at least two years prior to your moving to a nursing home and who provided you with care that allowed you to stay at home during that time
a sibling who already has an equity interest in the house and who lived there for at least a year before you moved to a nursing home

Before giving away assets or property, check with your elder law attorney to ensure that it won't affect your Medicaid eligibility.

For more information on Medicaid’s transfer rules, click here.

For more on the gift tax rules, click here.
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This isn't an inheritance, btw. It's a bump up in her SS payment after Dad died. I found out this morning that Medicaid hasn't evaluated her account nor changed her rates. This means an extra amount each month just shy of $1000 that we have to deal with. I have a call in to a Medicaid rep to see if I can get some of these questions answered. Thanks to all for your input, it's been extremely helpful.
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you know to avoid arguing whether a trust is legal or not after on Medicaid.......contact an ELDER ATTORNEY who deals with all that kind of stuff. just don't go by a banker friend..........a friend is a friend until someone gets into trouble, then lets see how long that "friend" stands behind you or with you. I am not saying that this "friend" of onerare find is not good, but always check with an ELDER attorney (A GOOD ONE) and see what is truly right.
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No gifting is allowed under Medicaid rules.
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You should retain an estate attorney.
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marymember,

Yes, you should've been given a copy of the contract, and again, it sounds like shady business.

Again, contact the Better Business Bureau and the Federal Trade Commission, and if necessary, get a lawyer who handles this type of business but start with consumer protection lawyers in your area.

Another thing you can try is contacting the head department of nursing for that nursing home. Just call the nursing home and ask for head department of nursing. When someone comes on the line, just describe what you said here
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I would like more information. About three weeks ago a private nursing home gave me the name of a Medicaid consultant who visited my friend who is private pay and in assisted living, but her money will run out in a few months. Her money is tied up with a financial advisor and from these annuities her monthly fee for the assisted living facility is paid. (around $5,000 per month).
This consultant charged $3,000 and we "stupid" and paid. We talked to the director of the assisted living and she said my friend would become Medicaid if she left, even though she still has about $35,000 in annuities, etc.
This consultant said she would not refund our $3,000. She said we signed a contract, but hasn't given me a copy of the contract, although I have emailed her numerous times. She has not once replied to any of my emails. Not once. And I have emailed her four or five times, I guess I signed a contract, or my friend signed a contract. I don't even remember! But legally, shouldn't I have received a copy of the contract? I never understood all this gifting and penalty stuff. I tried to get her to give me step by step instructions. What to do?
marymember
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marymember,

Here's another tip I just found online:

If you suspect fraud, take these steps:
1. Contact the Federal Trade Commission (FTC) or use the Online Complaint Assistant to report most types frauds.
2. Report fraud that used the U.S. Mail to the U.S. Postal Inspection Service.
3. Report identity theft or data breaches through IdentityTheft.gov.
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marymember,

It sounds like very shady business from your description, especially if the person won't give you a copy of the contract. Does this person work for an actual agency or does she work privately? If she works for an agency you might want to get a hold of a supervisor and tell her what you just told us. Another thing you'll want to do is get a hold of the BBB in that particular area and file a report. Another wise move is to get a lawyer who can handle this type of matter. I would start with contacting consumer protection Lawyers for starters and follow all leads you're given until you find someone who can help.
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I hired a Medicaid Consultant for my friend who is in Assisted Living to help. We thought she was a caseworker, but she charged us $3,000 and told my friend to spend down and wanted to get her immediately in a nursing home. I absolutely didn't understand this spending and gifting. She wouldn't refund any money, even though it had been about four days. She will not reply to my many emails and won't give me a copy of the contract. I absolutely do not know what to do. My friend has about $35,000 in annuities. Her financial advisor said not to go along with this gifting stuff. Her money is tied up in annuities and stocks and will run out in a very few months. Advice, PLEASE.....
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Nancynurse, It's legal but no it's not wrong, not by a long shot! If it was wrong, it wouldn't be legal to put money into a trust and trusts would definitely not be available. There are many people hurting financially in this world, and I'm glad there are trusts available for people who really need them because there comes a time when people need extra money to cover their needs when there's more month then there is money, and that's where I firmly stand and I won't budge on this one. My friends mom inherited twice, and both times the money went into a trust because her son was her trustee and the lawyer is the one who set it up. The lawyer also happened to be the executor of the will on both occasions. Of course the money was definitely used for appropriate purchases where it was needed, and eventually the money ran out. What I saw is exactly how I know something about this particular topic, his mom has been on benefits most of her life and was still able to inherit big money twice now. It's very right to give money to people who most need it, and this helped to better her life to some great degree and it did not hurt her benefits, not by a longshot since a lawyer was involved. I'm all for the trust as long as the trustee is trustworthy. My friends mom didn't even own a dime of that money though it was willed to her. There's no reason a person badly needing money should refuse an inheritance as long as trusts are available, trusts exist for a valid reason and that's where I firmly stand
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1RareFind What you are saying just sounds morally wrong, even if it is "legal". Medicaid isn't a free ride and is meant for people who have no other way to pay for the care they need. After a person is already on Medicaid there shouldn't be any hiding of resources in a trust. Sorry but it is taxpayer money that is funding those Medicaid expenses and if a person has resources they should be used before taxpayers money. That is one of the problems with our country and the healthcare and welfare system today. My mother is on Medicaid for Nursing Home care. All of her Social Security goes to the nursing home except for $50 for personal expenses each month. Her SS is the bumped up amount she got after my father died. I think in Tmaggie84's case Medicaid just hasn't caught up to the bump up in income and they will expect reimbursement of those funds to the nursing home eventually.
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1Rare is spot -on about doing a trust even after being approved for Medicaid.

It would be some sort of SNT / special needs trust & almost always with the state as the primary beneficiary. So upon their death, any funds left over go to the state to offset payments & IF there is still funds left then to heirs. The SNT maybe can even have a set aside for funeral incidentals.

Usually the goal is to have it such that the SNT defunds before they die or if they are living in the community to defund before they enter a NH.

They aren't too too complex but require an atty to do IMO.
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Oh yes you can put money into a trust me, I've been on Medicaid for years and I was looking into Oh yes you can put money into a trust me, I've been on Medicaid for years and I was looking into how to protect my own benefits, and I've been on Medicaid most of my life. I was expecting some money from a life insurance policy when a trust came up. I have a banker friend who knows me well enough to know what's what, and a trust is definitely the way to go when you're dealing with several thousand dollars. Medicaid recipients are definitely allowed to have a trust because the trust owns the money and anything that goes into it. The person to whom the money and assets belonging get to control the money and assets, but they just don't own them. Another person I know is also on benefits and she had two inheritances. She was allowed to put the money into an account under someone else's name. One of those inheritances was about $90,000. Her son who happened to be the trustee was not on benefits and he handled her money on both occasions, and both inheritances were close to the same size from two different people. Her benefits were not harmed because the lawyer helped the family set up everything
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You cannot put money into a trust after the recipient is already on Medicaid. The money will have to be spent on qualified purchases and the recipient will have to go to private pay until the money is gone and then go back on Medicaid.
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as long as the money is in a trust there's nothing to worry about because the money would not be in the ownership of the recipient, but rather of the trust. The good thing about a trust is you can control the assets but you just don't own them
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You need to call Medicaid. Each state has different requirements. No money should be given to anyone. Better you go to the Medicaid office with all papework. Bank Statement that will show what she has and the amount of SS. Savings account, CDs, RAs ect. The Social Worker at the home should be of some help.
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I really like the electric bed idea, would she own it out right or would it be a rental? If it's a rental, you'll probably pay more since you'll never on it unless you rent to own. When you actually own it, there are no payments on it when it's paid for. If she needs a power chair, you can actually buy that and any other equipment out right.

Another idea I suggest is consider putting the money into a trust so that her inheritance won't disqualify her. Putting the money into a trust is very advantageous for protecting it. However, the trustee must be trustworthy with money because if you have the wrong trustee, they can steal and not use the money on the person for whom they're a trustee. Trustees are supposed to be trustworthy, that's where the name trustee comes from. Make sure when choosing a trust that you definitely have the right kind of person as a trustee for the money. You should be able to set up a trust through an elder care lawyer who can set up certain stipulations and even put everything into an agreement that's signed by all involved parties including the lawyer. When a contract agreement is signed, it becomes valid and serious consequences can actually happen if the trustee steps out of line because every dime of the persons money should be accounted for when handling money for someone else.
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your best bet is to contact a good Elder attorney for this and other relevant questions that might arise.
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Any transfers of funds to family members, even for reimbursements for various expenses you mentioned, will be deemed gifts with a resultant penalty period, if she applies for Medicaid within 5 years of the gift. If she is already on Medicaid, it will cause a disqualification period. Depending on the amount of the inheritance she received, she can purchase a "Medicaid-friendly annuity" to convert the money into an income stream. The income would go to the nursing home but at least your mother could qualify or continue to qualify for Medicaid without a penalty period.
Another option is to gift approximately half the money and use the other half to purchase the Medicaid annuity, the monthly payments from which will be used to pay the nursing home during the resultant penalty period. I have lots of examples of how to calculate this in my book. Good luck with everything!!
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Would the money be refunded for the burial expenses to you and sibs if mom paid that again? She cannot give anybody any money for any reason.
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Drat....should read "or she just used the windfall $$ to private pay for the NH till she's back to being impoverished again and re-eligible for medicaid."
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Absolutely NO gifting, reinbursement or payng ANY $ to family or others.

She is already on Medicaid, so her financial history is established and easily verified and she (or her dpoa) will have to do some sort of annual medicaid renewal with signature stating all is correct with penalties for non disclosures.

Choices are limited to buying things that is for her needs or her care or her property (if she still owns a home which is usually an exempt asset for ther lifetime ). Your moms situation is actually kinda common, as she is old & her siblings are old too and someone is going to die and could leave Sissy a bit of $ from their estate or life insurance.

Nobody foresaw being on Medicaid & needing to be & stay impoverished.

What is important is to clearly understand how Medicaid needs the reporting to be done......heres my understanding of this: say she inherits 50k. The month she is issued the 50k check it's "income" and over the amount allowed by Medicaid (income amount set by your state & most about $2,100). The month after it goes from income to "asset" and again over the amount allowed by Medcaid (2k).

IMHO you (or DPOA) need to have a plan in place to spend the $ ASAP to minimize her period of ineligibility in which she will have to private pay for her NH. Ideally you ask whomever you are getting the $ from to wait to issue $ till the 1st of the month so you move the $ through and at the end of the month she is back to her Medicaid income & asset poverty. If its under 30k, you likely can find equipment (that electric bed, a tricked out wheelchair) and a preneed funeral/burial & get this done, paid & thru her bank account within a couple of weeks. If its oodles more $$$, I'd suggest you see an elder law atty. to have a Medicaid compliant special needs trust set up for her. OR she just private as the NH till she's impoverished again.

If its $ done by an estate, she cannot turn down the $. But if the estate is still in probate, the executor could possibly wait months to payout the $. If she should die before this, then she is no longer an heir and the $ moves to whomever next in line in the will. I was executrix for an aunt years ago who's estate was pretty convoluted. It took 4 years. An heir died just a couple of months after my aunt but aunt did her will so that anyone deceased (or their heirs) was not to be included on final settlement of the estate. I, as executor, had no choice but to exclude the kids of the deceased & they were not happy. I'd suggest if this is estate $$, you speak with the executor to see what options are out there.

About reinbursement, this seems to be really super sticky. State seems to view all funds family pays on moms care or property as done by family for free and with no expectation of reinbursment & done out of a sense of familial duty. You'd have to have some sort of legal agreement done in advance to get around any payback being viewed as gifting. Even then it will drag out eligibility and a load of paperwork (this tidbit from the caseworker on my moms Medicaid application). It's imo almost easier to wait till they die and then put the $ to be reinbursed as a claim against the estate in probate. Now if the estate has no assets, then nothing to be done on your ever being repaid.

Transfer / gifting penalties are done on roughly an equation based on what your state pays the NH for daily room & board rate. So 50k penalty for a state that pays $ 300 a day is 166 days BUT for a state that pays $ 175 a day it's 286 days.
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I believe the spend down money can only be used for your Mom and no one else. You can also call your Mom's State Medicaid office and ask them for a list of what is allowed in spending down.
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Yes, this will be a one time spend down. We just got this bump in her income when Dad died....I don't think he's going to die again. ;)
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No money can go to family for any reason. That will be seen as gifting and can incur a penalty. All money has to be used for things your mother needs. If your mother is already on Medicaid, then rules may be different than before she went on it. I hope someone with more information will be along soon. Will this just be a one-time spend-down?
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