Recently the following letter appeared in the Asheboro Courier-Tribune. My response follows.

The Letter

If you, a family member or parent, are thinking of going on Medicaid, you need to read this story.

If you or an elderly parent still has property in their name, consider signing it over to your child or family member to be eliminated from Medicaid recovery.  This needs to be done a few years before going on Medicaid.  A Medicaid representative can give you details.

Our family was shocked a few months ago to receive a letter from Medicaid against mom’s estate, claiming they need $72,000 reimbursement to cover mom’s health care cart for the last one and a half years of her life.

Mom passed away last December.  She had been a widow for over 20 years since Dad passed away with cancer.  They were honest, hard-working people.  Somehow, most of their lives they found a way to save and put back a little money for their care later in life.  Mom had a severe head injury from a fall at home in 2008.  She almost died, was at Baptist Hospital approximately three weeks and then from there to rehab, then to assisted living.

Later, because her health was deteriorating, she had to go to a nursing facility.  She paid for her nursing care from her savings up until the last one and half years of her life.  Because her life’s savings were gone the family had to sign her up for Medicaid.  The family was told at that time she could keep her house.  (The house was still in her name since she never expected to have to live in a nursing facility.)

Mom was 96 and a half years old when she passed away.  She and Dad through life did everything as good citizens, saved for their care, paid their taxes, were good to their fellowman, asked for nothing for themselves.

In mom’s will she wanted her property sold and divided between us three children.  We may not even make enough selling the house to pay Medicaid.  Mom and Dad would be heartbroken over this situation.  So sad, so sad.

My Response

The November 2, 2014 edition of the Courier-Tribune ran a letter from a person outlining an unfortunate series of events involving her late mother and Medicaid. I felt very sorry for her. The loss of her mother was compounded by a series of events that could have been avoided.

She explained that her late parents had saved and worked all their lives. Eventually, after Dad’s death, Mom had to go into a nursing home. She paid the nursing bill for 18 months before running out of money.

She then went on Medicaid. $72,000 later Mom died and Medicaid assessed a claim against Mom’s only remaining asset – her home.

Unfortunately, the writer did not act on good advice (although she probably received plenty of advice). I’ll respond here.

First, she suggested a parent with property should consider “signing it over to a child or family member to be eliminated from Medicaid recovery.” This is rarely a good idea. The property will then be subject to the control (and creditors) of that family member. Also, it can be a bad idea from a tax standpoint. Often thousands of dollars can be saved, and security assured, by using a trust.

Later they received notice that Medicaid needed “$72,000 reimbursement to cover mom’s health care.” I hope she understood that nobody needed to reimburse Medicaid beyond the value of any property Mom may have had remaining.

The writer then described a sudden injury to Mom, resulting in hospitalization, rehab and assisted level of care before moving on to a nursing home. These situations often arise suddenly, which is why advance planning is important.

Mom then paid for the nursing home until her savings were depleted. Quite often there are exceptions that would have prevented Mom from having to do that. Many times there are planning opportunities that would have enabled Mom to save a least a portion of her savings. Although the usual advice is “spend it down until you’re qualified” that is seldom the only solution.

She also explained being told when she applied that Mom “could keep her house.” That meant that Mom’s residence did not count for purposes of Medicaid eligibility. As this family has come to understand, however, Medicaid eligibility is a different matter from Medicaid estate recovery. The family could have explored a number of different strategies to save the home.

The writer then told us a story I have heard many times (which explains why I enjoy helping people like this). Mom and Dad “through life did everything as good citizens, saved for their care, paid their taxes, were good to their fellowman, asking nothing for themselves . . . . Mom and Dad would be heartbroken over this situation.” I could not have expressed it better.

Finally, after receiving the Medicaid estate recovery notice she was told “there was nothing they could do.” Occasionally this is not at all the case. There are exceptions, and it is worth checking to see if one applies.

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