I just found out my 79 year old mom is in serious credit card debt. Any advice? - AgingCare.com

I just found out my 79 year old mom is in serious credit card debt. Any advice?

Follow
Share

Mostly due to paying for medicine. She says she can't go on Medicaid because she won't be able to see the doctors she needs to see. My siblings and I help her every month already. She may have to move in with us, because the debt is wiping her out. Is there a way to settle the debt.?

This question has been closed for answers. Ask a New Question.
24

Answers

Show:
1 3
Igloo, thank you so much for taking the time to share and help educate me on what to expect. There really is so much to consider when handling her affairs. Your information has helped me be mindful that every step is crucial to the end result of getting her approved for Medicaid. And the way Medicaid will look at her income and account. Though She doesn't have much left, my brother sister and I have been covering her expenses for several years. What she does have a lot if is debt. You brought up the 1099-C form. Wow! thats an eye opener I had no idea it would be taxed as income. I wonder if she declares bankruptcy if she would still be taxed? I'm still trying to figure out if bankruptcy is the best course for my mom.
Helpful Answer (0)
Report

Lighthouse - about the CC debt. You need to be on the look out in January of every future tax year for 1099-C being issued to your mom from the creditor who wrote off the debt. 1099-C is Cancellation of Debt and it is fully taxable income and a copy of the 1099-C is sent to the IRS. Google 1099-C and elderly for more insight.

You have to do something tax-wise if you mom gets them as it can (not always but can happen) make mom ineligible for state programs that require specific income for participation. The $ indicated in the 1099-C is taxable income, so if your state X checks with IRS on income it will show up. She would have to file taxes and show impoverishment for the tax year the 1099-C was issued for. Not hard if they are in a NH but it's not a DIY project imho.
Helpful Answer (1)
Report

Dogabone - well there is nothing like anecdotal stories. I highly doubt that anyone who is wealthy would hide $ to be able to go into a NH so that Medicaid would pay for it. People who are wealthy just are not going to put up with the standards of care that Medicaid NH provides. They have people (& even perhaps those themselves have people) who just "do" for them Cute story though.
Helpful Answer (0)
Report

Lighthouse - Igloo here & my experience is that Medicaid is looking for "patterns of spending". For far back really depends on your state. For us, it was 3 years & 6 months of documentation. To some degree it is a simple scan by the Medicaid worker on the local or county level who reviews the required documents and then also by an algorithm but at the state level (well at least the states that have this contracted out). When you apply for Medicaid, you will be given a 1 or 2 page list by the NH with what documents need to accompany the application.* The NH does their own quick review of the documents to make a determination if you are OK for their taking you in "Medicaid Pending". Then in turn the NH sends your packet along with their bill to the state Medicaid program. Now not all NH do "Medicaid Pending" and that is a whole other issue. Personally I would not place a family member into a NH that doesn't do that, as financially it is just too risky for whomever in the family signs off to be financially responsible.

For example, lets say mom get's $ 1800.00 a month from SS and retirement. Her yearly income is 22K and mom has 2 CD's @ 10K each (interest is pitful so it really is just 20K in CD's). Mom also had 50 K in savings.All of mom's other banking or investments are all tied into her or her late spouses' SS #, so it is trackable, as is any real property ownership (land, house, autos are all recorded by the local assessor and dovetailed into the state records). Now if when mom applies to Medicaid her bank statements show she has only 2K left, then her pattern of spending is suspect. (As the late & quite beautiful Desi Arnaz would say..'Lucy you have some esssplaning to do..")Any funds or property that seem iffy…well you can be asked to account for where the funds went. If they were done improperly, then can be subject to a transfer penalty. So if mom had a home 4 years ago and gifted it to son & DIL, 4 years ago for zero dollars. Then mom could fee a transfer penally based on the tax assessor value on the property. Or if mom now has zero in the bank, and there were 2 - 10K checks written to you, then she may have to account for what the 20K was for.

Transfer penalty are - well for me - totally loco to figure out. It is based on the amount your state pays for daily NH Medicaid R & B rate and then the value of the transfer asset either at the date of the application or the date of the transfer (again depends on how your state runs Medicaid). You want to do whatever to make sure that a transfer penalty inquiry letter never goes to you, imho. The real sticky with transfer penalty is that they are done AFTER mom is in the NH. Then presto surprise 5 months later, you get a letter asking for a detailed accounting of that 25K from 4r years ago and within 30 days. For more fun, the NH will also get the letter. So they tend to require that in order for mom to stay @ the NH - during the penalty inquiry - someone will have to private pay for the NH and make good on the previous months NH debt which Medicaid may or may not ever pay. At NH costing from 4K to 15 K a month, that is a huge amount of $$. If you have any inkling that there may be a $ issue, you should get an elder law attorney. This site has a couple of legal & other experts that are based out of FL as experts, I'd start by emailing them first.

* the NH list can be quite different. For my mom, it was 1 page of required documents, for my MIL it was 2 pages. And this was in the same state. Why is beyond me, other than the NH has it's own way of handling the documents. I strongly advise that you do whatever is asked for in a single document dump. My mom's Medicaid app was slightly over 100 pages but about 1/3 of that was due to her old - school life insurance policy, You want the caseworker to be able to evaluate it in a single sweep for them. If the caseworker (I don't know how this is in other states but they have like 10 minutes to evaluate the application) doesn;t have everything that is required, it will go into the non-compliance pile and you get a letter asking for the documents in super short order OR the application will be denied. Denials have a pretty strict time frame for appeal too. We had a couple of issues with mom's application…like establishing that her insurance was term and not whole life (cash value) and had like a couple of days to get the documentation to the caseworker. I got a broker who held a TX insurance license to write on letterhead that the policy was term and that took care of that, but not everybody has a broker who will just do a letter and like right now for you babe.

If you have done a property transfer which was gifting in the past 5, I'd highly suggest for you to just get legal from the get go on the application unless you are used to dealing with governmental mind-think. NH Medicaid is a big butt cost for the states and any application that they can deny is a win for the state. Good luck.
Helpful Answer (1)
Report

Dogabone - if this person was able to withdraw his money and hide it, etc. it must have been a few years ago. His actions wouldn't fly today. Anything transferred within 5 years is considered HIS/HER assets. I am sure he would have to provide some sort of accounting for where all his money went in such a short amount of time. Nope - the states now try to 'recoup' anything they pay for a persons care in a nursing home, etc. Sure hope no one tries this stunt thinking they can get by with it - they won't. If they give the money or assets to their family - they will have to give it all back in the end. Sorry, inheritances are almost a thing of the past.
Helpful Answer (0)
Report

Dogabone, Interesting indeed!
I would like to find an Elder law Attorney to help me prepare for the future. sounds like every state is different. I'll be looking for an attorney in Southwest Florida if anyone has a recommendation please let me know.
Helpful Answer (1)
Report

I'm guessing (how would I know? If only…) but I think most millionaires sail a little less close to the wind than that, and use accountants. Interesting read, though!
Helpful Answer (2)
Report

Well,to say it's legal to do is another story.I would have to disagree on that thought it's legal.
I hear people saying Medicare,Medicaid goes back 3-5 yrs looking at past finances.
I had a 70 yr old friend that lived alone.He was on oxygene.He had the oxygene machine and the tanks.He was paying for this oxygene equipment out of his own pocket.Costing him thousands of dollars a month for this equipment.Not including the doctor bills out of pocket.Have you heard of the old saying "Money Talks"?Well,that's just what he did.He offered the oxygene delivery man $5,000 under the table for a oxygene machine & as many oxygene tanks he could get.The oxygene man accepted the offer.The oxygene man stated these are all unmarked,unnoted equipment as no worries for him or the friend.My friend had enough oxygene tanks to last him 3 yrs.Now that's alot of tanks I must say.Enough tanks to fill a 12 by 12 storage unit.After my friend past away.No company would pickup these tanks because,there was no record of them.It was a pain unloading these tanks.
Anyway,
My friend got tired of paying everything out of pocket.He was watching his money go down.He had $100,000 in CD's and another $100,000 in his bank.He owned his home and 4 cars & 4 trucks.He had another $100,000 in cash hidden in his home that knowone knew about.He decided the only way to get out of paying out of pocket for Medical bills and other bills is to apply for Medicaid.He had a friend that coached him on what to do to apply for Medicaid.To apply for Medicaid your only allowed to have one bank account,one car,one credit card and your home.
So,he transferred the titles of the cars & trucks into someone elses name to hide them.He then,went to his bank and drawed out his $100,000 in CD's and his other $100,000 from the bank.He paid the taxes when he drawed the money out at that time.He then,took all his money"Cash" home.He wrapped all his money in tin foil and then placed all the cash in a safty deposit box at a bank.The bank had no idea what he was placing in the box.
Here's the kicker,
6 months after he moved all of his funds and cars & trucks.He applied for Medicaid & food stamps and was approved."6 months"Not 3-5 yrs."
He told me if he was ever asked where his money went?He would say he gambled it all away with lottery tickets.As addicted to gambling and call the hotline once a month to cover his butt.He also,kept all of his little winning and non winning tickets in a box for proof & record if he was ever asked down the road.
My friend had many health problems as in and out of nurcing homes and hospitals.
When he was in the nurcing homes they took all but $50 of his SS checks.He was never asked where his funds went by Medicaid or Medicare.After he passed away his family had the key to the box.End of story.
I was told millionairs do this same thing and get away with it.
Helpful Answer (0)
Report

Dogabone: There are many millionaires and doctors and lawyers on Medicaid, they did what is called "Estate Planning" and it is legal. On another post someone broke this all down and it was really good, I wish I could remember who and where it was to share it with you.

I have seen doctors and their wives for years walk into medical offices with diamonds dripping off of them and driving Mercedes and yet they would pull out a Medicaid card.... it blew me away and made me angry. They all had money and learned how to keep it for their families.

I am not saying it is right, I am merely stating a fact.
Helpful Answer (0)
Report

They are looking for "gifting" or improper ways of trying to keep money for personal or family use instead of spending it down, like transferring houses, cars, or large sums of money to adult children. They also check on insurance policies with cash value. Some states go back even further than 5 years now too.
Helpful Answer (1)
Report

1 3
This question has been closed for answers. Ask a New Question.
Related
Articles
  • Seniors who depend on a fixed income to fund their retirement are vulnerable to inflation, but proper planning and investing can safeguard their spending power.
  • Many common retirement myths are completely false and end up harming your financial situation. With proper planning, you can help your parents continue to create wealth until their retirement and beyond. Avoiding overly conservative financial decisions can truly pay off.
  • People are living longer in retirement, which means many are at risk of outliving their savings. Retirees who carefully manage their spending are more likely to weather market fluctuations well and make their nest eggs last.
  • 401(k) plans are an employer-sponsored benefit that enables workers to set aside money towards their retirement. How do you decide which kind of 401(k) plan is best for you? Very carefully.
Related
Questions