When does the penalty period begin?

I'm going to see an elder attorney soon about this. I know about the look back period and have kept very good records about everything that was spent. I’m not sure what Medicaid is going to do about the monies that were stolen by my niece. That was about $4000 one time and smaller amounts prior to my taking over my mom’s finances.
I know that with my father they only looked back one year and it took about 3 months for him to get qualified but he was already in a nursing home.
In my research I am discovering some things that I didn’t know about, such as, the fact that she has a life insurance policy that has a cash value. That will also be included in her asset $2000 minimum. Some folks are saying that it has to be cashed in. They also look at any prepaid burials as assets. Incredible.
I started doing some research after asking this question and found that the penalty period doesn't start until the paperwork is filed and not when the money was transferred/gifted. I was under the assumption that the penalty period was based on when it occurred and not when Medicaid was filed for, which I think is bullshit but they changed it with the Debt Reduction Act to be that way. I was simply waiting for the penalty period to be over before applying. Now I have to rethink that.
I haven't paid down her monies because I was going to use the balance to pay the taxes on the sale of her home. Tax attorney time, I guess.
I’m going to talk to the attorney about what I read is a “life estate”, lump sum for staying at our home or start paying myself each month to pay down her funds.
I just can’t see my mother living with us long term (meaning years). I’m okay with having her live here for the next 6-12 months but longer than that I’m not sure I can handle. I commend the folks on here who are doing that.
It might end up being that I file after she goes into the nursing home and depleting her finances that way. That is what I did with my father.
Too darned complicated. That’s why it is attorney time again.
I hired one for my father and it was the best money spent.

One thought on this, you may want to consider the nursing home now and spend some of her money that way. Make sure that if you decide to place her now that it is a facility that takes Medicaid. If she just enters on Medicaid, you will most likely have limited choice of facility. Many nice facilities have a specific number of Medicaid beds will go to residents that have been private pay and have depleted their funds first.

I don't know much about this, but I think you should start the Medicaid application process ASAP, because I hear it can take up to 18 months or longer.

Search this site for "medicaid penalty period" and "Igloo572" to see previous answers on this subject.

If mom has more than 2K in assets - and she does from the house sale & it seems from an whole life insurance policy - she will not qualify for Medicaid. It is good you are seeing an elder law legal before you do your mom's application. Really you want to do whatever money/asset spend-dowm before you ever apply as it is easier to direct where the $ goes & gets spent on. A good elder law attorney will be able to guide you as to how your state runs their Medicaid review.

Yeah, cash value life insurance has to be cashed in and spent down. If you are pretty sure that is the case, you might as well start on all that now as it will take days if not weeks to get done. If the attorney is going to do all this for you, make sure you take all the insurance documents with you.

About the transfer penalty, each state runs Medicaid so there is no 1 answer. How the penalty is done is a formula based on whatever your state has as it;s reimbursement rate for Medicaid room & board day rate as it's key figure. So in Texas the rate is about $ 145.00 a day (pitiful low), so 55K house transfer penalty would mean that for 379 days mom would be ineligible for Medicaid to pay for her room & board @ the NH. But your mom's 55K from the sale of her home would not be a transfer penalty it would be a spend-down if mom now has 55 large in her bank account. Transfer penalty is only when she gifts or gives $ or other items of value (car, land) to another and it is discovered once they apply for Medicaid. It sounds like all the $ is there except for whatever you reimbursed for house/sale expenses, so this is $ to be spent-down.

Spend-down is very different and you can determine where the $ goes….it could go to pay for the NH or you could spend 20K to get lots of dental work done for mom, or new glasses & hearing aids and a really tricked out walker; or a totally prepaid with NO CASH VALUE burial & funeral policy. Also the attorney might suggest that you do a "personal service contract" or a "rental contract" so that mom pays you a fee to manage her & her funds. It is a legit way to reduce their assets….now it has to be all correctly done and mom issues you or whomever a w-2 and you pay taxes on the income but these seem to be ok for Medicaid if done correctly. Mom can buy clothing and other personal items for herself with her 55K too. All the costs of the attorney should be paid for by mom & from her checking account.

From what I've heard most states do a 3 year review in which they want to see bank statements for 3 years from the date of the application to Medicaid. Start getting all these items together. They can ask for 5 years. For my mom, it was a 3 year & 6 months on all financials. I had to provide a letter from her bank detailing the date of closing, or transfer or cancellation of any account, CD's T bills, etc. Now all those were funneled into her checking account, so that wasn't an issue for her but I imagine it could have been. It took a whole morning at the bank with a bank officer to do this and provide a notarized signed letter for me. They were quite nice about it but I doubt most banks do this as easily or readily.

Good luck and keep a sense of humor in all this!

Yes, Glad, that is a very good point. I've spoken to several assisted living/memory care units to make sure that when she can no longer be in the assisted living that she can transition into the memory care unit. Plus, I've had to narrow it down to ones that will take Medicaid once she runs out of money.
I was hoping to spend down the money before putting her in there but it may just be that we spend down using the money for care. That is why I'd like to talk to an attorney because if we can save some of it somehow I'd like to. If not, then the nursing home will more likely get it.

Very good idea to speak with an attorney. Some of them have social worker types that will assist with placement, and may have in's to nice facilities if you want to spend down first.

Pink: I contacted my Mom's Attorney who set up her Trust to ask for help or input and he put me in touch with a Medi Cal Regulation Specialist here in California. She charges $95 for the initial call (everything is done via the phone and fax or email) she tells you what you can or cannot do and you can ask her questions. She can do the work for you or she can tell you what you need to do if you prefer.
Since she specializes in California Medi Cal I do not think she could probably help you but if you want her number, you might call their office and ask if they know of someone in your state that you could contact. I can give you her web site and you can check it out too. Send me a message or hug whatever it is that we can communicate on and I will forward you her info if you want it.

Raven1, thank you for your kind thoughts. I contacted an elder law attorney this morning and I have an appointment with her on Friday to discuss all of this. I am typing up the whole sordid/complicated issue of my parent's lives and how things were dealt with over time.
She said that she will be able to help me with information and I will probably ask for a caregiver contract to spend down some of this. She said that Oregon was one of the states that allows the elderly to pay family members for their care. Many states don't which is so surprising.
I am thinking that my next step will be to talk to a Medicaid attorney or specialist with the particulars for Oregon. I know that each state has it's own laws and regulations.
It's going to be a major project for me to get all of this straightened out since I dealt with much of my father's finances for many years rather than my mother's.
I'm sure that over time I will get through it.

Raven1, I am so glad that you were able to find someone to help you through the process. It is so very complicated and Medicaid applications can either go easy or complicated. I hope you have an easy one.

Thank you again. So sweet.

if you are thinking about assisted living and you have a term life policy is it better not to have a benificiary listed so they could benifit ..?

Avcidy, my mom has a whole life insurance policy that needs to be cashed or claimed as an asset. I don't know about term life insurance. Sorry.