It's Never Too Early to Prepare for Your Medicaid Application
                                                                                    By: Gary B. Cornick, Esq.


Applying for Medicaid benefits can be a frustrating and challenging process.  In order to obtain Medicaid benefits, an individual must provide a great amount of financial information to Medicaid.  As part of this information, Medicaid can demand financial statements for the five (5) year period preceding the Medicaid application.  Therefore, an individual with three (3) bank accounts will likely need to provide Medicaid with five (5) years of monthly statements for each bank account.  Medicaid will then review the statements to see what transactions occurred during the five (5) year period in question.  Specifically, Medicaid looks for any gifts that may have been given by the applicant during this five (5) year period.  If such gifts are located in the financial statements, Medicaid may delay eligibility for a certain period of time, depending upon the amount of the gift.

The problem that often results in these situations is that people are not always aware of the amount of financial documentation required by Medicaid.  Accordingly, the following situation could occur.  Assume an individual applies for Medicaid benefits in 2022.  In 2019, the applicant made $4,000.00 in cash withdrawals from an account to pay for various living expenses needed at the time.  These withdrawals were withdrawn as cash as opposed to being paid for by check.  Medicaid could take issue with these withdrawals and assume that they were gifts, when in fact they were not.  The burden would then be on the applicant to show that the withdrawn monies were used for the applicant’s benefit and were not a gift.  The difficulty arises in that the applicant (or his or her familiy) may not specifically recall what the money was used for three (3) years ago.  Such a situation can complicate the Medicaid application process.

So, what to do?  Initially, when one reaches an age when the possibility of seeking Medicaid benefits increases, they should be sure to retain all monthly statements they receive from any and all financial accounts in which they have an interest.  This would include accounts that they solely own and those in which they have a co-ownership interest.  Moreover, it is important to keep a “paper trail” of all transactions that one may make during the five (5) year period preceding a possible Medicaid application.  Often this “paper trail” may simply be a cancelled check.  However, in the case where cash withdrawals are made, the applicant should take notes and retain receipts for those items for which the withdrawn cash was used.  This documentation is helpful in overcoming a Medicaid allegation that certain monies were used as a gift. 

Often the years leading up to the time when an individual applies for Medicaid benefits are difficult ones for both the individual and his or her family.  There are often many healthcare and social needs that the individual and his or her family must address.  At such a time, keeping proper financial records may not seem foremost on people’s minds.  Nonetheless, in order to allow a Medicaid application to proceed in the “smoothest manner”, proper documentation should be kept. 

Gary B. Cornick, Esq., who has offices in Somerville and New Brunswick, New Jersey, concentrates in the practice of elder law, Medicaid law, estate planning, guardianship, estate litigation and probate administration.   He lectures to seniors, senior organizations and lawyers throughout New Jersey.  Mr. Cornick is a member of National Academy of Elder Law Attorneys, New Jersey Bar Association, Somerset County Bar Association, New Jersey Bar Association Elder Law Committee, Somerset County Bar Elder Law Committee, and a co-chair of the Middlesex County Bar Association Elder Law Section.  Mr. Cornick can be reached by telephone at  (908) 253-0404.  The firm website is located at www.cornicklaw.com.