Methods of Payment of Medigap Insurance After Eligibility

Appointment of Representative Payee

1. Once eligibility is established, the nursing home receives the Medicaid reimbursement rate as payment. The actual amount paid to the nursing home by Medicaid is reduced by any recurring monies received by the individual such as social security and pension payments, which are to be remitted to the nursing home on a monthly basis.

2. Such payments received during any given month constitute resources on the “first moment of the first day” of the subsequent month.

3. The $2,000 threshold could be exceeded due to the lack of attention to automatic deposits of social security and pension payments to a Medicaid recipient’s checking account.

Planning Point: Once the date of eligibility is near, counsel should advise and assist the responsible family member to designate the nursing home as representative payee for social security benefits of the Medicaid recipient. Social security payments will then be made directly to the nursing home. The danger of disqualification due to inadvertent accumulation of social security monies will be eliminated.

Alternative Arrangements: If a recipient maintains Medigap insurance, Medicaid will subsidize such costs. In such case, it might be prudent not to designate the nursing home as representative payee since the recipient would have to rely on the nursing home to pay the Medigap premiums from the assigned monies. If Medigap insurance is to be maintained, the following possibilities exist:

(a) Designate nursing home as representative payee and arrange for home to pay Medigap premiums (risky).

(b) Continue Social Security payments to applicant’s account. Applicant (or attorney-in-fact) pays premiums directly and remits any excess funds to the nursing home.

(c) If pension payments can cover the Medigap premiums, designate nursing home as representative payee of Social Security, pay premiums from pension funds, remit any excess pension monies to nursing home.

4. Payments from qualified retirement plans cannot be assigned. Therefore, in the event of such payments, recipient should maintain a checking account for deposit of such funds. These monies are to be paid to the nursing home monthly.

5. At the point of eligibility or within ninety days of eligibility (the “90-Day Rule”), all joint accounts with community spouse should be terminated. The entire balance in a joint account will be treated as a resource of applicant. There should be a separate account for applicant. Also, a separate account in the name of community spouse should be the receptacle for pension and social security payments of community spouse and other monies.

Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.

© February 11, 2009, Issue 1