In February, 2006 Congress passed some significant changes to the Medicaid laws that created some very dangerous traps for unprepared families needing long term care.
At the time I wrote about a case in which Granddad gifted his money to Granddaughter who moved in to care for him.
When she could no longer provide the care and applied for Medicaid she was told, mistakenly, that he was not eligible because of the gifts.
It turned out that the Medicaid ineligibility period had expired.
We filed for Medicaid on her behalf and the application was approved.
A happy ending, but one which I wrote at the time would not end so happily under the new law.
Last week I received a call with an all too common story.
Mom had recently died.
Dad moved in with Daughter, Jane and the plan was for him to live there the rest of his life.
At the same time, Dad gifted $150,000 to Jane and her brother, Joe.
"It's Dad's money.
He can do what he wants with it", she told me.
Well, I think you can guess what happened.
Jane was unprepared for the reality of long term care.
I could hear the stress in her voice as she described the deterioration of Dad's mental and physical state, from the mood swings and erratic behavior to the declining personal hygiene and the inability to walk without assistance.
His care needs were increasing and Jane was unable to handle the increased demands on her time while caring for her own young children.
"I just never expected this," she exclaimed.
"I can't do this anymore.
I need to get Dad into a nursing home and he has $50,000 left.
What do I do?", she pleaded.
I explained to her that once his money was spent down he could qualify for Medicaid, but she and Joe would need to return the $150,000.
But here was the problem.
Jane and Joe had already spent the money and, therefore, couldn't return it.
"Well", I told her, "When Dad's remaining $50,000 is spent down he still won't be Medicaid eligible for another 4 years.
That's because the Medicaid penalty doesn't start until he has less than $2000 to his name and he needs nursing home care.
"It's so unfair," she cried.
"The government is forcing me into poverty to pay for Dad's care.
" I had to patiently explain to her that she and her brother did receive a substantial sum from Dad, money that should be spent for his own care before public funds could be tapped.
The sad truth, however, is that had the family consulted with an elder law attorney before the gifts were made, Dad could have transferred some assets but enough would have been preserved to cover the possibility that he would need long term care before Medicaid eligibility.
Unfortunately, in Jane's case I didn't have any solution to her problem.
She would have to figure out how to care for her Dad or pay out of her own pocket until the Medicaid ineligibility period expired.
It didn't have to turn out this way.
A cautionary tale for all.