How to pay the nursing home while Mom is in penalty period?

Is it possible to have the bank that holds the trust to pay the facility directly? That is what I have been told will happen with my mother when her LTC policy runs out. I may be missing something from this situation but I have been in touch several times with officers at the bank involved for my mother. They told me that when there is no longer coverage from her LTC policy they will pay her bill directly from remaining funds in a trust set up years ago by my grandmother for my mother. My mother is now in a not for profit AL facility. They do not accept Medical but there is a benevolent fund for residents who have been on private pay for a period of time. This concerns me as there has to be money available in the fund but others in the financial field have told me that generally a resident is not kicked to the curb after years of residency in said facility. I would try to speak to the bank holding the trust account.

I am POA and Trustee of my moms account.  So that there would be no question about the transactions and her money, I went to a separate bank to create her Trust account and also created an account for me as the Trustee.  If mom needs money added to her checking account (which is at a different bank) to be able to make her monthly payment...as Trustee I transfer money from the Trust into the Trustee account and then from the Trustee account into her checking at the other bank.  That way I never really touch the money and the transactions are all electronic and explainable as to what went where and why.

I agree with others here who are suggesting that you go back to your elder law attorney and I see that you have. Any co-mingling of monies between daughter and mother is not good as far as Medicaid goes.

Go back to the lawyer & ask this same question. I would not attempt to give wrong advice. I know in my situation, had I not discharged my mother from SNF that I was private paying the days Medicare didn’t pay, I had appointment to do nursing home Medicaid application ...which would’ve included a note payable. Medicare only paid if she was doing physical therapy & progressing...which she wasn’t. They never got her back to walking again. The reason I changed my mind at last minute was I came there & they left her in bed with dirty diaper & food tray uneaten...nobody helping her. So I took her home.
Hugs 🤗

I agree that these attorneys do not really give very explicit advice. When we placed mom into MC (not nursing home, private pay only, no Medicaid), money from irrevocable trust was needed to pay the monthly fee.

Your questions/concerns are the same that I have:
"I have a fuzzy recollection of the lawyer saying that I could use the $$ in the Trust to pay Mom's expenses if the need arose. They did caution that I could not use that $$ to pay my mom directly. So now we have reached the point where I definitly need to use some of that money but I just don't know the correct way to go about it. I'm terrified that the Medicaid approval will get messed up."

I write a check from the trust and deposit it into mom's account so that with her pension and the special rep payee SS account, the fee and incidentals would be covered. When we sold the condo, the attorney had indicated to me that I should NOT be depositing the money into mom's account, so that if/when she needed NH, it wouldn't be a gate to Medicaid.

Okay, fine, but my concern is putting this money into MY account and then paying the remainder needed from there would be easy enough, but how does the IRS and state view this? Income to me, that I must claim? I don't want that on my plate!!! I have enough to deal with now. Also, while I would be "paying" that remainder, wouldn't Medicaid question who is paying the residual? How does it not been seen as "gifting" any more than depositing it into her account and paying from there?

The other issue I have with all this is that Medicaid IS for people who do not have the means to pay. I firmly believe that if someone has the money, trust or not, they should be paying their own way. Does that mean I might not inherit anything? So what? Inheritance isn't guaranteed for anyone! Granted, NH cost much more than MC, but again, if one has the funds, one should pay one's own way, in my opinion! My brothers may not agree, but they don't manage any of this, never say anything and don't do much at all for any part of this journey. It was mom's (and dad's) money and should be used for their benefit.

When the condo sold, it was a living trust, so most of the proceeds came to us, however we put it all back into the trust. It did mean having to pay some capital gains, but we used trust money to cover the extra taxes (and then have to claim that money too!) These EC attorneys charge enough for their time, they should be willing to give good, solid advice and answer questions so that all is done correctly. I still don't really understand it, but again, I don't want those funds coming through my account!

If someone out there has a REALLY good explanation, time to chime in, as I am sure OP and I are not the only ones with this issue!

I repeat what others said, call the attorney. He knows the rules for your state.

Did the lawyer die or what? Call him!

I would speak with your attorney if you have someone who has been helping you with this process. If you don't feel like you are getting good answers from him, also speak with Medicaid. You are trying your best to do the right thing. They should be able to advise you on the best way to manage the transition.

Good news from your update below for you, Nancy, and so glad of it. Hold the Lawyer's feet to the fire. After all, if they are great they will see you for more business.
So glad it is straightened out, and I so agree to keep it as absolutely clean and question free as you can. I am relieved you got good news today.
I am POA and Trustee of Trust for my brother, and it is so so so so simple. Compared to yours. But it still drives me just nuts and I am so worried I will mess up that I copy everything, keep everything AND write a diary of everything and account book as well. Simple as it is I will need a Mack Truck to haul "proof" to any court that every questioned it.
I will say this all is an education I never wanted at age 77.

Nancy, my suggestions, ASAP ask billing what rate mom is paying. If its full freight private pay, do your best ABCs (ask, beg, cry) to get mom billed the lower Medicaid daily room & board reimbursement rate. You should be able to Google out to find your states rate & you want to know this figure before talking with the NH.

The “cant pay her directly” the atty said, is cause it gets looked upon as “income”.

85% annuity payout that covers expenses is pretty good - she must have sold a pretty pricey home - if you add in her SS$, how short is it to cover her monthly? If it’s pretty close, I’d try to get the siblings to pay the difference to the NH directly. & leave dealing with the Trust out of this, it sounds super sticky and with remainderman stuff. Remember if it’s irrevocable, when she finally dies, unless state made her change successor beneficiary stuff, you kids get $. No MERP in theory as trust pass outside of probate, it’s not an asset of her Estate, is my understanding. Some states do go after Trusts tho, it something to clearly ask your MIA attorney.

I too hate hate hate annuities. Folks buy them, don’t understand them and do it out of fear. & hear what they want to hear for annuities being “allowed” for Medicaid. Meanwhile hefty commissions made till forever. Any crossover between the law firm & the insurance agent who sold the annuity?

Really if your mom paid for an atty for advice & to shepherd her Medicaid application, they should have provided you as the Trustee / DPOA a info sheet or FAQ as to how to deal with the transfer penalty and pay the NH so no blowback from Medicaid when her renewal & its supporting documentation for the renewal gets reviewed. There’s gonna be a renewal sent, Medicaid is not filed once & done. The renewal process paperwork - due like couple of weeks from receiving - I had no idea even happened and had packed all of my mom’s stuff submitted initially in storage, that was a fun weekend.

so there’s 3 income sources for mom? $ paid by the annuity, $ in the Trust & then her Social Security income? Is that it?
If so, can the annuity pay out and the Trust pay out each month whatever $ amount she has as a shortfall from her SS income to totally pay her NH bill? They both get done as a scheduled deposit first of the month into her checking account that gets her SS$. Then you as her DPOA and signature on her checking account write a check from her checking to Shady Acres NH to cover that months bill.

Why? Heres my understanding..... you do NOT want to deposited a check from your own in your name bank account into mom’s account. It looks like you are paying mom and so it’s income to her.
AND PLUS
if you write a ck to yourself from her account, then go & deposit that ck into your account, it on the surface looks like you are signing checks to yourself so your gifted funds from her account to you. Both of these aren’t your intention but that’s what it looks like. Comprende?


Also the idea of “building” her account so it has a good bit of $, bad idea. For Medicaid, they cannot exceed 2K a mo in non exempt assets for almost all states but a few (NYS) . If she starts her mo & ends her mo (after paying NH) over 2k, and those bank statements are submitted for her renewal. She’s over Medicaid max. She already has some sort of transfer penalty drama happening, don’t add to it by going over the 2k.

I’ve just got to ask, what type of transfer penalty does your mom have?
Like a non compliant annuity done? Or Irrevocable trust done but inside the 5 year lookback? Some other gifting of her assets?
How many days is her penalty period estimated to be?
Did the atty clearly review with you that the penalty is by # of days but based on $ amount penalized? Will mom’s sources of funds be able to pay out for the entire penalty period at current monthly rate?

It’s a math problem & if mom should come up short before penalty period is over, then you or other family will need to pay the shortfall if mom is to stay in the NH. If when you put pen to paper, it’s looking like that might happen, speak with your siblings as to their paying a share AND speak with NH billing as to what rate she is paying. Like if private pay day rate or it’s the lower Medicaid reimbursement room & board rate. NH may have discretion to accept the lower Medicaid rate if you can negotiate this. Usually it’s something the attorney does as part of dealing with the penalty and it’s fallout.

again, I’m beyond curious..... what’s the penalty on?