Question: What needs to happen to the monthly income generated by a Gifting/Short-Term Medicaid Compliant Annuity Plan when the individual unexpectedly goes to the hospital and re-enters the Medicare system for skilled nursing home care? Assume that the individual has a Medicare supplemental insurance plan.
Answer: By the end of the month, a Medicaid applicant/recipient must find a way to spend-down the monthly income. If the income is not properly spent-down, it converts to a resource by the 1st of the following month. Then, if the Medicaid applicant/recipient accumulates more than
$2,000.00 in countable resources, he or she is no longer eligible to receive Medicaid benefits.
To accomplish the income spend-down goal, I usually recommend that the Medicaid applicant/recipient should pay past bills, finalize their pre-paid funeral arrangement, and purchase personal items - clothing, medical equipment, eyeglasses, hearing aids, dental work, etc. Additionally, in those cases where it is expected that the children will need to advance funds to cover out of pocket nursing home expenses not budgeted within the Medicaid Plan, I have the Medicaid applicant/recipient pay off the obligation.
The obligation is evidenced by a DRA Compliant Demand Promissory Note in favor of the children which states that any amounts advanced by the children are legal obligations of the Medicaid applicant/recipient. The promissory note is executed at the beginning of the Medicaid Plan.
Also, if the Medicaid applicant/recipient does not have a $1,500.00 face value life insurance policy - exempt resource, I would have them purchase one - Krause Financial Services, LLC, offers a guaranteed issue product. As a last resort, if funds still exist, I would have the Medicaid applicant/recipient purchase a Stand-Alone Medicaid Compliant Annuity. The funds will be lost to the nursing home as part of the monthly co-pay amount or under the primary beneficiary designation, but the Medicaid applicant/recipient's Medicaid benefits will never be in jeopardy.
Another strategy is that the Medicaid applicant/recipient could irrevocably pre-pay the attorney for future Medicaid re-certifications - no refund is possible. The Medicaid applicant/recipient's family will take comfort in knowing that an attorney is involved in the annual Medicaid renewals.
