As the population ages and health care costs skyrocket, seniors and their caregivers struggle with how to pay for long-term care without losing everything they have worked a lifetime to build. While Medicare covers much of the cost of physician and hospital visits for those over age 65, it does not pay for long-term care.
Medicaid is a government program that pays for health care costs for those who, under the program guidelines, do not have sufficient assets or income to pay for themselves. Even someone with substantial income or assets can qualify for Medicaid if proper planning is done. Some states look at income to determine qualifications, while others look at assets.
Some people try to qualify for Medicaid the wrong way, by fraudulently hiding income or assets. In 1994, Stephen Gossman applied for Medi-Cal (California’s Medicaid program) for his grandmother. While on the application he stated that his grandmother had no money, she in fact had $220,000 from poker winnings in a stuffed chair and had $115,000 from the sale of her Los Angeles residence. Medi-Cal paid $116,000 in expenses for her San Diego County nursing homes. Gossman took his grandmother’s unreported money and used it for a downpayment on his home and put the remainder in a closet, depositing it in small amounts to avoid bank transaction reporting requirements.
Gossman was charged with 17 counts of money laundering and health care fraud. He was sentenced to almost 4 years in prison, fined $315,000, and ordered to reimburse Medi-Cal the $116,000 it paid for his grandmother’s nursing home expenses.
Gossman and his grandmother could have achieved their goal legally. They could have used her funds to purchase assets that would be exempt in California: A residence, household goods, a car, up to $6,000 of income-producing property, up to $1,500 in life insurance, and a burial plot. In California, the grandmother could have gifted the exempt assets to Mr. Gossman without jeopardizing Medi-Cal eligibility.
Medicaid rules and, accordingly, planning techniques vary considerably from state to state. What works in one state may not work in another. However, one thing is certain: a fraudulent Medicaid application will be dealt with seriously in any state.
An attorney that focuses their practice in Elder Law and Estate Planning can help you structure your assets to allow qualification for Medicaid benefits legally. Mr. Gossman and his grandmother thought their choice was between paying his grandmother’s lifetime savings to nursing homes or fraudulently qualifying for Medi-Cal payment of those expenses. Had Mr. Gossman and his grandmother sought professional advice, they could have qualified for Medi-Cal benefits legally. This would have allowed Mr. Gossman’s grandmother to pass her legacy to him legally.
Mr. Ronald “Chip” Morrison, Jr. is a Board Certified Specialist in Estate Planning and Administration by the Louisiana Board of Legal Specialization and a member of the American Academy of Estate Planning Attorneys. He has devoted his practice to estate planning and elder law matters for more than 16 years and he has helped thousands of clients throughout southern Louisiana meet their estate planning goals and pass on lasting legacies to their loved ones. To learn more about how you can achieve your estate planning goals, please call our office at (504) 831-2348 or contact us through our website.