Costly Mistakes – Why Clients Need an Elder Law Attorney

​Melissa Negrin-Wiener, Esq.

Elder Law is rooted in an intricate and detailed set of statutes and regulations. Unlike most areas of practice, the field of Elder Law is constantly changing. In the Medicaid arena, the Department of Health regularly directs the local Departments of Social Services to re-interpret the Medicaid regulations. These directives are often followed by appeals, the outcome of which can change the planning and processing of all Medicaid cases.

 A recent trend has shown clients seeking lower-cost advice and services by utilizing non-lawyer, "Medicaid specialists" to process Medicaid applications. However, like the old adage, you get what you pay for. Mistakes in the Medicaid context can easily cost tens or even hundreds of thousands of dollars. An attorney immersed in this type of work must undertake proper legal planning and accurate and thorough processing of a Medicaid application.

One example of costly mistakes can be found in the handling of real property. Marcia[1] lived with her mother in the home she grew up in for the last 30 years. Marcia's mother sought assistance in applying for Medicaid benefits and was referred to a non-attorney "Medicaid specialist." Title to the house that Marcia lived in was solely in her mother's name. A Medicaid application was submitted and approved. When Marcia's mother passed away, however, Marcia received a Notice of Claim wherein Medicaid asserted a lien against the real property for the $225,000 paid for her mother's care. The only asset of the estate was the house- the house that Marcia planned to live in for the rest of her life.

The Social Services statute and implementing regulations[2] states that a person will be eligible for Medicaid if the applicant's house is transferred to that person's:

1. Spouse.
2. Child who is blind, disabled or under age 21
3. Sibling who has an equity interest in the home and who resided in the home for at least one year before the person was institutionalized; or
4. Child who resided in the home for at least two years before the person was institutionalized and provided care to maintain the person at home ("caretaker child").

Clearly, Marcia was entitled to the "caretaker child"    exemption. Accordingly, the home could have been transferred    to Marcia during the Medicaid planning process and it would have been completely protected. Medicaid could not assess a lien on the house and Medicaid could not impose a penalty upon the transfer. The "'Medicaid  specialist" did not know the law and Marcia was incorrectly advised that as long as she lived in the home, it would be protected. Marcia now needs to sell the house or otherwise   come   up with $225,000 to pay back the state. As is often the case, these costly mistakes are not discovered until it is too late.

In another case, John and Diane [3] lived with John's mother in her home for the past seven years. The Medicaid application filed by a “Medicaid specialist" was approved with a penalty period of 40 months based on the transfer of title to the home to

John and Diane. Although John fell into the category of "caretaker child," the deed was transferred to both John and Diane. The case law interpreting this regulation makes clear that the "caretaker child" exemption extends only to natural children. Further, John and Diane had taken a mortgage for half of the value of the property. As such, one-half of the value of the property was transferred for consideration. As it stood, however, John and Diane would need to pay the nursing home approximately $480,000 ($12,000/month) due to the 40 month penalty period. Had John and Diane retained an Elder Law attorney, this costly mistake would not have happened.

While some of these mistakes can be successfully appealed, it comes at great cost to the client — both financially and emotionally. Had these clients retained an Elder Law attorney ab initio, these costly outcomes could have been avoided.

These are but two examples relating to real property. Elder Law practitioners come up against many issues that are specific to our area of practice, such as Promissory Note planning to protect assets upon or even after nursing home admission, Undue Hardship applications to reverse a penalty period that resulted from action taken by someone other than the applicant, applications and hearings to prove that an asset transfer was a gift made for a purpose other than to qualify for Medicaid benefits, and more. Elder Law attorneys can provide the legal advice necessary to handle all such cases properly from the beginning, saving the client time, money and much unnecessary angst.

  Note: Melissa Negrin-Wiener is a partner at the Elder

Law firm Cona Elder Law in Melville.  She is the President of the Suffolk County Women’s Bar Association and is an Advanced Elder Law Mediator.  For more information, go to www.conaelderlaw.com.

          [1] Names have been changed for confidentiality

          [2] N.Y. Soc. Serv. Law §366(5)(d)(3)(i); 18

              N.Y.C.R.R.  § 360-4.4 (2)(c)(iii)(b)

          [3] Names have been changed for confidentiality