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

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.

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.

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.

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.

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.

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.

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!

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.

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.

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.

Igloo, what is Medicaid looking for when they go back 5 years?

First of all get the names and phone numbers of every single doctor she sees, then get on the phone and call each office and ask them if they will continue to see her as a Medi/Medi patient. That is Medicare is primary and Medicaid is secondary. She will not be a straight Medicaid patient, she will still have her Medicare, so doctors call them Medi/Medi patients.

I am speaking from personal experience, I became disabled and had to go on Medicare several years ago. I had very expensive seizure medications and was forced to enroll in Medicaid solely so I could get my medications, but they do cover the remaining 20% not covered by Medicare. Depending on your mothers financial ability they will determine if your mother has a share of cost or if she qualifies for "extra help." I qualified for the extra help and my prescriptions were free for a while and now I pay about $1.50 each.

I totally understand your mother's concern in losing her doctors if she goes on STRAIGHT MEDICAID but this is NOT what I am saying, she will keep Medicare and take Medicaid as her secondary carrier, this did not turn out to be a problem for me as all my doctors who I had been using with Medicare agreed to accept the Medicaid as secondary carriers. When your Mom applies, someone HAS GOT TO GO WITH HER TO HELP HER SPEAK TO MEDICAID. FOR SOME REASON THEY TRY TO THROW YOU IN AS STRAIGHT MEDICAID AND SHE NEEDS SOMEONE TO HELP HER GET THROUGH TO THEM, THAT SHE WANTS TO KEEP HER MEDICARE AND TAKE MEDICAID SOLELY AS A 2NDARY.

As everyone else stated, you HAVE GOT TO STOP HER FROM CONTINUING TO RUN UP DEBT ON THAT CARD. By getting her signed up with Medicare/Medicaid she will most likely have no doughnut hole to worry about or have much of any copay on her prescriptions or office visits. When I went on Medi-Cal here in California they asked me if I had any expenses that I had run up due to medical or prescriptions and they were willing to reimburse at least a portion of them.

Once you correct the problem on the front end and get her on proper insurance then you can decide how to best get rid of her debt. It sounds like bankruptcy may be the way to go if she qualifies. You can keep your home, car, 1 credit card and some other stuff so she will not be destitute but it will be close to it.

Also for her to qualify for Medicaid you need to look up the guidelines in your state as far as income goes and there can be no assets or savings in excess of $2,000.

You need to get a trust or Power of Attorney set up on her right away so you or someone else in the family can help her and act on her behalf if she is unable. Do not wait, just because she signs it now it does not mean she is signing over all power to you immediately, it is just "in place" for the time when it does become necessary.

I have lived this same scenario so I know what I have gone through and how much this can help her.

Good Luck!!

Rovana, I'm afraid I have little knowledge regarding Medicare and Medicaid, but by the end of January I should be an expert. I think there are a lot of changes that need to be made. I think my mom thought as long as her children were sending money there was no need for her to take responsibility and find meds cheaper and look into Medicaid. We have two in college and it is a strain supporting her. I think there is one more credit card she is using to order meds from. I will have to get her a pre paid card to use so we can control her spending.

pstiegman, great advice on things to look out for. I have noticed mail piling up on her desk the last time I visited. Something that concerns me is the amount of medications she is on. She said it is over five different meds per day, She couldn't tell what they were for unless she looked at the bottles. That is a red flag. Mom is still very alert, drives well, and seems to get along fine. But has a great deal of trouble with her finances.
Dogabone, Interesting information you posted. I always thought we should care for our own and honor our parents. Remember the saying "Charity begins at home." It's frustrating to hear of people abusing the system that could afford to take care of themselves.

Medicaid "look-back" review is 5 years from the date of application.

Yep,sounds like Bankruptcy is the only thing to do.Your Mother may as well say bye bye to her doctor and accept it.Unless the doctor accepts Medicaid.
My advice to you is to,
Have your Mother take what money she has in her bank accounts and hide the money at home in a safe place for keeping.Any CD's need to be cashed in.Wait a yr then,file Bankruptcy.Wait another year then have her apply for Medicaid.Medicaid goes back 2 yrs.If she owns more then one car or truck she needs to give one away to you or family so the car or truck isn't in her name.
Appliing for Medicaid your only allowed to have one bank account with limited amount of money in it,one car,home and one credit card.Which the way it sounds your Mother don't need anymore credit cards lol.
Many elderly Millionairs are on Medicaid and food stamps.How do they do it and get away with it?Safty deposit boxes,Hiding funds in other family or friends.Transferring titles,deeds to other family members.Many use the excuse addicted to gambling ,saving lottery tickets that are little wins and once a month call the 1800 number addicted to gambling hotline to cover their butts if ever asked where did the money go.Many people take advantage of Medicaid and get away with it.Just burns my butt seeing people do this.
Anyway,your Mother made the debt her self.She needs to start worring about her money and debt over changing doctors.If she is a elderly?She needs a POA now.
It's not as easy to file Bankruptcy as it was yrs ago.But,it's the only way I can see.

When you go, take a good look at a year's worth of bank statements, I think you may find bills unpaid, bills paid twice and bills that should never have been paid at all. These are all little hints of memory loss. Also look at her car for dents and scrapes that she may not remember. These are a sign to take the keys away. Look for scorch marks on the stove, burnt pans, food rotting in the back of the fridge. Check all medications for expiration dates and make sure she has not re-bottled pills and mixed them up. Add up all the factors, ask neighbors how she has been doing, often they see and hear a lot. Have a deep discussion with the MD, is her bloodwork OK? She will likely resist any move, in which case you either seek guardianship, or wait till she falls and goes to the ER and needs repair. At that point get her into a nursing home directly from the hospital , with help from her MD.

Lighthouse, what about Medicare Part D, the prescription drug plan part of Medicare? Also, I believe you can contact Medicare to see if she qualifies for help with prescriptions.

if you and Mom want her to move in with you and you have the funds. consider installing a stair lift. There can be help paying if it is a medical necessity but I don't know how.. When they are no longer needed people often take them out and sell them.

My mom put about 14k on a home equity account paying medical bills that quite possibly she was not even supposed to pay - they had a weird setup with an employer's Special Programs with Medicare that some of the provider websites would not find on first try. Some were almost certainly bills that were sent to her when payment was still pending, and Mom, God bless her, had to just do everything right away...and was too proud to ask for help, of course. I had no good way to unravel what was already done, unfortunately, but was able to put a stop to it. You'll be looking at a big pile of papers and a bunch of long, tedious phone calls, but hopefully it will be worth it. My mom pretty near maxed out a Discover card buying crap she didn't need to top that off.

One way to pay down credit card debts faster - IF and ONLY IF you are very careful and very conscientious AND good enough at math - is to actually use one of those balance transfer offers for 0% or at least at a much lower rate than what you are paying, taking into account any balance transfer fee as well. And be REAL careful with the consumer credit counseling groups - check them out thoroughly, some fly-by-night operations have very similar sounding names, and one legit one was actually taken over by a pretty shady outfit from what I could tell. I ended up getting my Mom out of debt and my family is on track to be done with all of ours (dating from hubby's business failure and emergency move to a new neighborhood necessitating a DIY "bridge loan" from a few years back) Slow and steady, paying way more than minimums wherever you possibly can, staying in control, and avoiding high interest rates does it. Don't rush into bankruptcy if you don't have to, but if you have to, don't be too ashamed of it. Medical bankruptcy is still all too common in America these days!

I certainly have my work cut out. I need to go visit her and go over everything. My first instinct is to be angry, perhaps even confrontational. But, after reading posts here I realize that accomplishes nothing. Just my getting over my initial shock. If mom moves in with us she will have to deal with stairs. And eventually will need to be moved again when she can no longer handle them. I would love to be able to keep her where she is at but that is becoming costly for all of us unless we can find her help with utilities, lower her medical costs etc.

I'm very thankful for all of your replies and for this website. There is much to be learnt here. At the moment, I feel like I'm running a marathon trying to make the best decisions for her.

Bankruptcy sounds like the logical answer.If you are talking about the same consumer credit counciling service we consulted when we had serious debt we decided we didn't want to touch them with a ten foot pole. The service we saw was run out of a lawyers office and they totaled all your card balances and determined your monthly payment based on income. you sent the payment to the lawyer and THEY decided which company would get paid. you had absolutely no say in the matter.
I would get together with Mom and determine her income and expenses and work out a budget. Call the companies individually to work out a payment plan.
I am sure mom wants to continue with the Drs of her choice and the medications they recommend But if you don't have the money to pay you have to find alternatives. If she qualifies financially for Medicaid or one of the new Obamacare options. be quick you only have a few days to sign up so do it today. The drs may have to change but they will be suitable to treat any condition she may have and will pay for everything including any drugs.
If she must pay the drug company use one of the prepaid cards so she does not incur more debt. She is quite possibly being bamboozled by some of the people she consults. Go with her to her PCP and explain the whole medical situation honestly and follow his advice. may elders get into serious debt with credit cards and it sounds as though you need POA for both health and finances rather than continuing to help her out considering moving her in with one of you. There may be other problems that she has been hiding. no one likes giving up their independence but if she has not been managing unfortunately that is what has to happen as a condition of further help

You won't get much change out of the credit card companies, I wouldn't have thought, though their advice is always worth having; but what about these expensive practitioners your mother's consulting? Is it their fees or their prescriptions that cost, and what are possible alternatives? I agree with Ismiami: step one is to plug the leak - stop the debt growing - ideally by finding affordable equivalents to the treatments your mother needs. And make sure she's not being sold modern day snake oil, too. It's amazing what some practitioners consider ethical behaviour.

Ismiami, thank you for your suggestions. Mom said she has to keep a credit card in order to pay for her medicine from one of the companies. I will need to get more information from her and speak to the company. I will get in touch with United Way to gather information about the debt and what can be done.

Medicaid is pretty extensive, it covers more things than Medicare. My dad was often told so, he only had Medicare..
Is she doing alternative medicine? Assuming she has medicare, doe she have a good supplement? What is it she wants she thinks Medicaid will not provide? BTW, some drug companies have discount options, reach out to them.
Would a supplement keep her from the out of pocket additional spend?

You can look at filing bankruptcy. All ways of settling debt look to cut off the credit cards first. The United Way used to have an affiliated service called Consumer Credit Counseling Service, they were legit and worked with you and debtors to set up payment plans for reduced payments.

I only know 2 ways to settle debt, pay or file bankruptcy. My first concern would be to figure out how to stop incurring further debt.


Good luck.