Ethan R. Okura
Hawai‘i Herald Columnist
In 1965, President Lyndon B. Johnson signed the Social Security Act into law, which included two programs we often hear about in the news: Medicaid (Title XIX) and Medicare (Title XVIII). Medicaid is a joint federal-state program that pays the medical costs of those with limited resources. It also provides some health care benefits not covered by Medicare, such as long-term care services in nursing homes.
Medicaid laws are very complicated and difficult to research thoroughly. They are a combination of federal statutes and regulations, Hawai‘i statutes and Hawai‘i administrative rules, the Hawaii State Plan (an agreement between Hawai‘i and the federal government that describes how Hawai‘i implements Medicaid), federal guidance from the Centers for Medicare and Medicaid Services and policies established by the Hawaii Department of Human Services. Some of these policies are published in a policy manual that Medicaid eligibility employees can access, while some, on the other hand, are not published anywhere: They are simply decisions made and changed from time-to-time by state employees on how to interpret the various Medicaid laws.
Unfortunately, these policies change often, even if the written law has not changed at all — and sometimes the policy is in direct conflict with the written law. Thus, the only way to know exactly what will work and what will not work is to have recent and continuous experience in applying for Medicaid and communicating regularly with policymakers to get an accurate sense of their current thinking on all of the issues that can come up in the process of applying for Medicaid.
Most of Hawai‘i’s Medicaid workers are good, decent people who do their best to help Medicaid applicants get the health care they need. However, most of them are not lawyers, and yet, they are expected to comprehend vast amounts of information and many rules without having adequate resources or the training to understand all of the complex and complicated details.
But, even when they do know the relevant law, your Medicaid eligibility worker isn’t allowed to give any legal advice to applicants. In some situations, the best thing for you to do might be to take your home out of your revocable trust or to transfer the ownership to a family member. Or, depending on your situation, the best thing to do may be to sell your home to help pay for some of the cost of your care while still legally saving a large portion of the sales proceeds for your family members or friends. Unfortunately, the Medicaid worker will not be able to properly advise you.
In many instances, someone in need will apply for Medicaid and be denied due to a technicality. They will sometimes receive a denial letter even though they should have been approved under the law. We have had new clients come to our office for help after having applied on their own and been denied three separate times over a two-year period. We uncovered technical issues in their application, which led to the denial of their home as an exempt asset. These issues were fairly simple for us to fix and we quickly got the client qualified for Medicaid. However, Medicaid would not reimburse the previous two years’ worth of nursing home costs and by the time they came to us, it was too late to appeal their previous Medicaid application denials.
Another client sought our firm’s help after trying to submit an application for Medicaid through a prominent Honolulu law firm that, it appears, did not have much experience with qualifying for Medicaid. That firm spent a year trying to help the client get qualified, in the process accumulating over $80,000 in legal fees in hourly billing during that year. When they finally came to us, we were able to solve the problem and get the client qualified for long-term care Medicaid within two months, all for a preset flat-rate legal fee that was significantly less.
A final example is about an unfortunate client who sought legal advice and got his parents approved for long-term care Medicaid with the help of a lawyer. The client’s father lived in the nursing home for 10 years. Medicaid put a lien on the family home that amounted to over $1 million. This client could have qualified as an exempt caregiver child and avoided the lien on their home just by having the father sign over the home to him. Be forewarned, however: This will not work in every situation. But, their lawyer didn’t even suggest it, and the family did not know that they should have done it and ended up losing their home to the state.
The conclusion: Sometimes you can apply for Medicaid on your own and the process might be fine. But, before you apply, you should consult a qualified lawyer who is experienced in Medicaid law.
In next month’s column, I’ll write about how to apply for long-term care Medicaid on your own and the steps you will need to take in the process.
Ethan R. Okura received his doctor of jurisprudence degree from Columbia University in 2002. He specializes in estate planning to protect assets from nursing home costs, probate, estate taxes and creditors.
This written advice was not intended or written to be used, and it cannot be used by any taxpayer, for the purpose of avoiding penalties that may be imposed on the taxpayer. (The foregoing legend has been affixed pursuant to U.S. Treasury Regulations governing tax practice.)
This column is for general information only. The facts of your case may change the advice given. Do not rely on the information in this column without consulting an estate planning specialist.
See more articles by Ethan by visiting https://okuralaw.com/blog/