When someone in Arizona applies for Medicaid to help with the cost of long term care, the agency (here in Arizona, that agency is ALTCS – the Arizona Long Term Care System) reviews the bank statements of the applicant (and spouse, if the applicant is married), to identify any transfers of funds out of those accounts within the past five years for which adequate compensation was not received. If the applicant can’t show what goods or services were paid for, the agency can impose a penalty period, which is a period of time during which ALTCS will not pay for care even after the applicant otherwise qualifies for benefits.
Unfortunately, sometimes what looks to ALTCS like a gift was, in fact, not given voluntarily. What happens when an applicant was exploited into giving money away now needs to look to Medicaid to pay for care?
In Arizona, as in most states, the agency will waive the transfer penalty when the applicant can show that the transfer was the result of a violation of legal authority, such as identity theft or other fraudulent transfer. In order to successfully make this claim, the applicant or her representative must show that a Court or physician has found that the applicant lacks mental capacity, that someone with apparent legal authority to handle the applicant’s finances violated the terms of that authority, and that someone acting on the applicant’s behalf has exhausted all legal remedies to get the funds back, including filing police reports or pursuing civil recovery.
For example, I recently worked with two different people whose funds were depleted by someone who presented himself as the lawful spouse of the applicant, and, in that capacity, directed the applicant’s funds to him- or herself. We were able to document to ALTCS that the “spouse” had been reported to Adult Protective Services, which conducted an investigation and then involved law enforcement. In one case, we demonstrated the the applicant’s court-appointed Guardian and Conservator had sought to have some of the assets returned, and in the other we showed that family went to court to have the purported marriage set aside. The agency found the undue hardship and waived the penalty period even though the various legal proceedings were still in process. However, the penalty was not waived for another applicant whose child had made significant withdrawals from the applicant’s bank account when the applicant still had mental capacity, and the applicant refused to make or participate in any complaint against that child.
Although a significant amount of documentation was required to show the undue hardship, ALTCS did consider what was presented and made a decision in the best interest of applicants who lacked the mental capacity to protect or advocate for themselves.