By Sandra Schildgen

For people seeking Medicaid benefits to pay for long-term care, the financial documentation required to apply can be onerous. A new Illinois law aims to ease the burden on applicants by allowing their financial institutions to provide documentation directly to the Illinois Department of Human Services that administers the Medicaid long-term care program.

People suffering from Alzheimer’s, dementia, or other disabling conditions often face the difficult choice of entering a long-term care facility. Not only is this decision heart-wrenching, it can also be financially challenging because of the exorbitant costs of nursing home care.

While Medicaid long-term care benefits are intended for the impoverished, many people are forced to apply for Medicaid long-term care benefits to pay nursing home bills. Since these benefits are meant for the financially needy, Medicaid has several criteria in place, including:

  • Maximum asset limits for the applicant and spouse
  • The applicant cannot have given away assets within five years prior of applying, with very limited exceptions for people that include spouses, caretaker children and disabled children who meet specific requirements

Medicaid reviews five years of information on assets and financial accounts of the applicant (and spouse, if applicable) to ensure that the applicant did not give away assets, except as allowed. The Medicaid review requires all pages of each monthly financial statement and canceled checks and deposit slips for transactions over certain amounts. It is difficult for an applicant to obtain five years of records of every single asset he or she had during that time, even if he or she no longer owns the asset. Unfortunately, failing to provide required information will probably result in a denial of benefits.

Easing the documentation burden

Effective this year, an amendment to the Illinois Banking Act, the Illinois Credit Union Act and the Saving Bank Act allows a Medicaid applicant to authorize a financial institution to provide Medicaid directly with the required documentation to receive Medicaid benefits. Applicants just need to sign a Customer Consent and Authorization for Release of Medical Records form before a witness and notary. Once the financial institution receives the completed form, it must provide the documentation within 10 days or after the applicant pays reasonable costs for reproducing the documentation.

However, we recommend that Medicaid applicants use this authorization cautiously. There are many types of financial transactions the Medicaid eligibility rules apply penalties to. During these penalties, Medicaid will not pay for care. In these situations, it is better to know ahead of time there will be issues, since there are ways to lessen or nullify the impact of these transactions with a proper review and planning before the Medicaid applicant submits an application.

Attorney or agent requests

Under the new provisions, the applicant must sign the request form and must also be competent to do so. Since the applicant is likely not to be competent if they’re going into a nursing home, his or her agent under a power of attorney for property would be the one collecting the required documentation. The new provisions allow the applicant’s attorney or agent to request and obtain the records directly, and then that person would provide the records to Medicaid. The new provisions do not require that financial institutions respond within 10 days when a request is made through an attorney or agent, however.

In addition, applicant’s attorneys and agents under powers of attorney for applicants are routinely denied access to the information Medicaid requires from an incapacitated applicant. Since the new provisions do not require that financial institutions comply with attorney or agent requests, there may be limits to the law’s utility if the applicant is not competent and is unable to sign the consent form. Practitioners will need to wait and see.

Medicaid long-term care benefits are essential for many elderly or incapacitated people facing high-cost nursing home care. The change in the law, even with its potential limits, is a helpful tool now available to Medicaid applicants to ease the challenges of accessing these much-needed long-term care benefits.