Medicaid Applications Scrutinized More Than Ever

by Jerrold Bartholomew

Under previous Medicaid policy, applicants for long term care were given the benefit of a doubt most of the time. In some cases, a demonstrated intent to complete asset conversion, which is the process of converting non-exempt assets into exempt or excluded assets and is the heart of Medicaid planning, would be enough to pass scrutiny.

Today, one should expect to have every aspect of a Medicaid application scrutinized and one should be prepared to provide timely and extensive documentation of all assets and recent transactions. Michigan is still fairly mild in its requirements alongside states like New York, which according to some reports requires a full five years of bank records and an explanation of all transactions over $1,000.00. But Michigan has tightened requirements considerably.

You should expect to have to provide third party documentation (statements from financial institutions and the like) for all significant assets. If asset conversion is being employed, expect to have to show what the asset was both before and after the conversion.

The trick here is that financial institutions move slowly and often with indifference to the fact that time is money–$6,500.00 a month or more in most cases. Sometimes it makes sense to cash in small insurance policies before long term care is an issue, just to avoid having a life insurance policy with a cash value of $2,400.00 put the nursing home patient over the asset limit and prevent qualification for Medicaid for a month or more.

Furthermore, an elder law attorney can often earn his keep just by knowing how to move quickly when a nursing home crisis strikes.

Pre-planning for long term care or nursing home care is always best. It is at that point that assets can be consolidated to allow for nimble reactions to changing circumstances.

But above all, gather your documents now. Birth certificates (to prove citizenship), a marriage license, discharge papers, deeds to real estate, etc. You will need all of these things for a Medicaid application and you will need them when you have many more important things to worry about. See this page for a complete list.

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