AFTER SPENDING DOWN:

WHAT YOU STILL HAVE TO DO WHEN YOUR
SPOUSE -- MOM -- GRANDPA - AUNT SADIE  (ETC.)
HAS APPLIED FOR MEDICAID IN CONNECTICUT

(revised 6-23-13)
DISCLAIMER

Lisa Nachmias Davis
Davis O'Sullivan & Priest LLC
129 Church Street, Suite 805
New Haven, CT 06510

203-776-4400
Fax 203-774-1060
davis@sharinglaw.net
www.sharinglaw.net


        It's not enough to "spend down" to the right level of assets, submit the application no more than three months later, and respond promptly to requests for information by the Department of Social Services.  Even when you think your loved one is eligible for Title 19, if (s)he is a nursing home resident (s)he still has certain obligations, and if you are "in charge" of his or her assets, the nursing home feels, rightly or wrongly, that you have certain obligations too.  Chief among these is the obligation to pay "APPLIED INCOME" to the nursing home during every single month that you expect will be covered by Medicaid.
 
        What is "applied income"?  It is the amount the applicant must "contribute to the cost of care," a/k/a the co-pay.  Basically, this is the amount that the State will not pay the nursing home, so the nursing home will look to the resident's income to make up the difference.  Suppose the nursing home and the State have agreed that the nursing home will get $7,000 for every month care is provided to a resident receiving Medicaid.  If the resident's "applied income" is $1,000, the State pays $6,000 and the resident is supposed to pay $1,000.  "$7,000?!" you say. Well, yes -- the rate set by the State is usually much less than the private rate.  You can see why the nursing home is upset if the $1,000 is not received.
 
        It would be nice if the State or the Nursing Home would just tell you from Day One the amount that you have to pay.  But you are not always told (or if you were told, it may be in the pile of papers you never read because you were looking for a bank statement from four years ago.)  Even if you aren't told, you must be sure that this is paid, or there can be big problems!  Effective October 1, 2013, once the nusing home or state does tell you the amount, if you choose not to pay it, the nursing home can sue you after 90 days..
 
        How to compute applied income?  For someone who is single, it's pretty straightforward.  You start with the resident's GROSS INCOME.  You subtract the following:

  • Personal needs allowance (used to change every July 1st -- currently $60/month)

  • Medicare premium, if any.

  • Medical insurance premium, such as Medigap.  (This gets tricky if it is paid quarterly -- the State will usually deduct the monthly share when computing the amount.)  In theory, you may be able to deduct for medical expenses. You can often deduct for unpaid medical bills from the prior six months, but only after discussing with the case worker, and not if any gifts were made. Consult an elder law attorney!

  • If there is a spouse in the community -- not in the nursing home -- a "Community Spouse Allowance."  Consult an elder law attorney on this one!

  • If there are minor children -- a Family Allowance.  Consult an elder law attorney!

  • If the resident has the intention, and a reasonable expectation, of returning home within six months -- a housing allowance that cannot exceed $400-$650/mo. Consult an elder law attorney!.

  • If the resident is getting a REDUCED "aid and attendance" benefit of $90/month, as a veteran or a veteran's widow(er), (s)he can deduct $90.  (If the resident is still getting a bigger amount, no luck, NO deduction.)  If the veteran is still getting the full benefit of $1000+ (est.) received at home, there is NO $90 deduction.

  • Some other unusual deductions may apply, like Holocaust reparations.
      No -- you cannot deduct for the costs to keep up the condo in Florida that is being listed for sale.  No -- you cannot deduct for the property tax on the home in which the resident still owns a "life use."  Or for the storage facility fees. Or income taxes. Or the attorney!
 
      Imagine a single person, with $2,000 of income, Medicare Part B premium of $104.90 (some premiums are higher), and a supplemental premium of $300 per month.  The Applied Income would look like this:
 
$2,000.00
-    104.90
-    300.00
-      60.00
$1,535.10 = applied income!
 
Suppose you forget to do this for 12 months.  That's $18,421.20 that someone will owe the nursing home!  (Although sometimes the State will let a Medicaid beneficiary pay off an old nursing home debt out of income over time, that doesn't apply when the debt is because you failed to pay this "applied income.")
 
       Why can't they tell you this right away?  Sorry -- you may not get this number spelled out for you until the State grants the Medicaid application and sends out an official notice that says "you must pay" and lists this figure for every month of eligibility.  While the nursing home can't use a new law to sue you if you don't pay until 90 days after it has given you a notice with the amount of applied income, it can still sue you using other theories, such as breaking the terms of the admissions agreemet you might have signed.
 
       Is this too hard?  The nursing home may be particularly interested in "making it easy for you" by suggesting that the Social Security checks go directly to the nursing home.  In many cases, the nursing home may go behind your back and get the resident to sign something to make this even "easier."  There are downsides to this, however:  (1)  If the resident moves, it may be hard to retrieve the Social Security.  (2) There is an old saying that "he who pays the piper, calls the tune."
 
       You will also have to keep the non-exempt assets down to $1,600
(don't forget cashing in the insurance, and if the person is single and isn't returning home that will include putting the house on the market -- in CT it is exempt while listed for sale at a reasonable price); if there is a spouse, get the other assets into the spouse's name; report any changes in assets or income within ten days; and fill out redetermination forms.  But paying the applied income is the most easily overlooked -- and the one that is most likely to result in someone being sued for an unpaid bill.  And YES -- FAILURE TO PAY APPLIED INCOME IS THE FASTEST WAY TO GET THE FACILITY TO APPOINT A CONSERVATOR AND/OR FOR YOU TO GET SUED BY THE NURSING HOME, no matter how good your intentions.
 

       If you still have questions -- consult an elder law attorney!

  Disclaimer:  This information is maintained to benefit the elderly in Connecticut and nationwide by providing a resource to attorneys, caregivers, and others assisting the elderly.   This is not legal advice,
and establishes no attorney-client relationship.  Accuracy and currency are not guaranteed.
The law changes often; this may be out of date.
USE AT YOUR OWN RISK.
Please report changes, errors, and suggestions to Lisa Davis.