“Why should the timing of filing for Alabama Medicaid matter to me?”
“Why does the timing of applying for Alabama Medicaid matter?”
Why does the timing of applying for Medicaid even matter? What’s the big deal?
Keep this in mind.
You know about the five-year look-back.
If we apply now, Medicaid looks back five years and asks, “Were there any gifts?” If it finds gifts, then there’s a penalty period.
The number changes just a little bit every year, but right now (July 2017) the number is $5,800.
If, for example, your mother has a stroke and now she’s in a nursing home, there are certain things you cannot control.
You cannot go back in time three years ago when she gave the money to your brother and now he’s blown all the money.
We can’t undo that.
If he still has the money, sometimes we can give a gift back.
But a lot of times, that money is gone or that property has been sold.
There are a lot of things we cannot control, but remember there’s always going to be something that we can control.
That’s what I want to look at.
I’ll give you an example.
I’m using big numbers because I want it to be very memorable for you.
Imagine that we’ve got $580,000 given away in October 2012.
Then we decide to apply August 2017.
Remember when we apply and we’re qualified, Medicaid looks back five years.
Five years is going to be somewhere around August 2012.
Are they’re going to see this $580,000 gift that was made October of 2012?
They’ll see it.
Then what’s the penalty?
100 months that the family is going to have to pay for that nursing home care out-of-pocket.
A hundred months!
The person going in will have income, but still you’re privately paying for those 100 months.
That’s because we decided to apply in August 2013.
Let’s look at another option.
We hold off on applying until December 2017.
When we apply and Medicaid looks back five years, that’s going to go to about December 2012.
Are they going to see the gift in October of 2012 back here?
They won’t see it, because they only look back five years.
So the penalty is zero.
There is no penalty because when Alabama Medicaid looks back five years, they don’t see any gift.
That’s the reason why the timing of when we apply for Alabama Medicaid is so important.
The difference in applying in August and applying in December makes hundreds of thousands of dollars’ worth of difference.
I haven’t seen this from our folks at Alabama Medicaid, but in some states you’ll see people say “Oh, this is terrible! This is outrageous. We can’t stand for there to be lawyers out there advising clients on how to maximize their benefits and minimize the penalty.”
It always struck me as odd because if you went up to that person and you said, “So you have four children? You don’t claim any of those children on your tax return, do you? Even though they all live at home and they’re all dependents.”
He goes, “Of course I claim them as dependent. You get a deduction for that.”
So you say, “You don’t claim your mortgage interest as any deduction on your taxes, do you?”
He says, “Of course I do. I have the right to do that.”
“And, sir, when you give $1,000 a month to church, you don’t claim that, do you?”
“Of course I do.”
It’s funny, with taxes we can clearly see, as long as you stay within the rules, you should do everything that you can legally and ethically to minimize those taxes, to maximize your deductions.
It’s the same thing here.
We have a choice to say, “In the month of August, I’m going to pay for it out of my pocket. I’m going to pay for dad’s nursing home. Then in September I’m going to write a check for $6,000, then October and November. Then in December I’ll apply.”
That’s not being dishonest or manipulative.
It’s just being smart.
It’s playing by the rules here.
Never let anybody tell you – well, you can’t stop them from telling you but don’t let them convince you – that it’s wrong to plan or it’s wrong to do things to maximize your benefit. Anybody who says that to you, just ask them about their taxes, and suddenly that’s different.
You’re supposed to do that.
The truth is you have the rules and opportunities under Alabama Medicaid to maximize your benefits.
It’s just like Alabama Medicaid can say, “You applied on the last day of the 60 months. If you applied one day later we wouldn’t have implemented any penalty. But since you applied one day too soon, we’re going to hit you. You have to pay 100 months of $6000 a month.”
Is that unfair?
No, it’s not – because Medicaid followed the rules.
They put the rules out there.
Understand the rules, understand your rights, and then take the correct action.
It makes a huge difference knowing when to apply.
If you have any questions…
We’d love to chat with you.
You can reach us by phone at 1-205-879-2447.
Or, if you prefer, you can fill out a contact form and we will get in touch with you.
Thanks for reading, and have a great day!