Legal-Ease: Changing order of steps changes a lot
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Medicaid, a welfare program created by the federal government and operated by the state government with federal oversight., pays for many forms of financial assistance to needy people, including the cost of nursing home care and care provided in the recipient's home.
Medicaid is a wonderful program; without it, many Americans would not be able to afford the health care they need. In this article, let's look at a recent change in the rules regarding Medicaid paying for in-home care for aged and disabled people, and how what seems like a minor change in the order in which steps are taken has a dramatic effect on whether to seek in-home care help from Medicaid's Aid and Disabled Waiver Program (ADWP).
Medicaid calls its program to pay for in-home care the "Aged andDisabled Waiver Program" ("ADWP"). The program has been around for a long time and used to be called the "Home and Community Based WaiverProgram".
Family in-home care-givers quickly discover that in-home care-giving is hard, relentless work, yet they (and the ill family member) want to keep their Loved One at home as long as possible. When they read about the ADWP, it sounded like a perfect way to afford additional in-home caregivers to enable the sick family member to stay at home.
I have to admit I am not a fan of the ADWP, because it sounds a lot better on paper than it turns out to be in real-life. My gripes are: (a) The Legislature never funds the program adequately to meet all the requests for help, often leading to many months delay before any help is available; (b) often, even with Medicaid providing financial help, families cannot find or keep reliable in-home workers to provide the care relief needed by the caregiver; (c) When an applicant has been approved and a "slot" is available in ADWP, Medicaid often will not pay for enough hours of help to provide the relief needed by the family caregiver to make the in-home care work.
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* Before the change. Historically, someone who wanted ADWP help would contact a medically focused branch of Medicaid in Charleston, called "Kepro," requesting that a Kepro representative come to the home and conduct a medical assessment of the patient's needs to determine whether Medicaid's helping pay for additional in-home care is medically justified. If the medical assessment indicates that the additional in-home help is justified, the Kepro representative would send a letter to the family, indicating that the Medical Need is there and indicating how many hours of in-home care Medicaid would pay for, providing that within the next 30 days the applicant contacted the local Department of Health and Human Resources office and show the Medicaid caseworker that the applicant is financially poor enough to be eligible for Medicaid's help. Notice that back then, Medicaid, through Kepro, would tell the applicant whether and how much help Medicaid would provide, provided the applicant was financially "poor enough" for Medicaid. This enabled the family to size up whether Medicaid would help at all, and, if so, whether its help would be adequate to make in-home care possible, before rearranging the applicant's (and spouse's) life savings in order to become "poor enough" for Medicaid.
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* The Change in order of Steps. Recently, Medicaid reversed the order of the steps to apply for ADWP help. Now, when Kepro is contacted, Kepro sends the applicant a letter advising that IF, within the next 30 days, the applicant shows the local office of DHHR that the applicant is financially "poor enough" for Medicaid's help, THEN the Kepro representative will come to the home and do a Medical Assessment to decide whether Medicaid will help at all and if so, how much help it will pay for. The applicant must be Medicaid "poor" BEFORE learning whether Medicaid will help at all, and if so, whether Medicaid will help enough to make in-home care workable.
For most applicants, becoming financially Medicaid eligible involves arranging the applicant and spouse's life savings in dramatic ways which cause them unpleasant financial side effects. For example, many folks in the Mid-Ohio valley worked in industry and their life savings are in tax-deferred retirement IRA or 401K accounts. To Make themselves "poor enough" for Medicaid the applicant and spouse have to withdraw those funds from their income-tax sheltered IRAs and 401Ks, and they have to pay the income tax on all the withdrawn funds when they are withdrawn. Similarly, if their life savings are invested in stocks, they likely would have to sell their stocks and pay any capital gains income tax that might be owed. The tax financial side effects can cost a lot.
This is a high price to pay just to find out if Medicaid's Aged and Disabled Waiver Program will help. What at first appeared to be merely flip-flopping the order of steps actually makes finding out whether ADWP will help a risky and expensive experience.
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Gerald W. Townsend is a partner in the law firm of Fluharty & Townsend, Parkersburg, West Virginia, with special emphasis upon Medicaid planning to protect assets from nursing home costs. He can be reached at jtownsend@fntlawoffices.com.