Before we get into the nitty gritty of an answer, let’s consider the situation. A family member is in a nursing home for long term care. The monthly bill is over $8,400 per month (per the Michigan state average). The resident and family justifiably fear loss of all savings and the family home too. Given this reality it is easy to see how a client in this vulnerable situation could be taken advantage of.
First let’s make clear that there are some clients who do not need an attorney’s assist. A typical example may be of an elderly lady who lives in a low income apartment. She may have only $20,000 in savings and does not own a house or car. For her prepaying funeral arrangements, paying off bills and purchasing some other necessities may establish eligibility. Her application should be very simple. However even in such a case her children, who would be filing the application may hire an attorney and use some of her money so that they will not have to miss work to handle the application. The attorney’s fee should be modest in that case.
So who does and who should hire an attorney? It is the client who has significant savings in various institutions, a home and other “assets.” This person has much to lose. And, the need is doubly true if the client has a spouse. Clients do not hire an attorney to fill out a four to six page application. There is much more to do and much more to the value of the attorney’s work. Here are some considerations:
First: Here’s a surprise that many families run into: they cannot complete the Medicaid application process without the expense and delay of going to the probate court. Let’s say the resident is a husband who has an IRA and a truck in his name alone. The wife or children cannot access the IRA or sell the truck. They are often directed to the probate court to be appointed his guardian so they can get the cash out the assets for Medicaid “spend down.”
How can the attorney help? He can often avoid the cost and delay of probate court entirely by having the resident knowingly sign a power of attorney.
Second: The attorney should help the family save money during “spend down” before the application is submitted. Spend down means that the applicant has only $2,000 at the time of application. If an average suburban married couple follows the advice of most nursing homes they may spend over $100,000 at the nursing home before applying for Medicaid. The attorney should be able to help an average couple to save that $100,000.
Third: A little known fact is that Michigan has “Medicaid estate recovery.” That means the government will take the house for repayment after the applicant and spouse dies. This can be a loss form $100,000 to $300,000 and up. Part of the attorney’s work is to make sure the government does not get the house.
Fourth: The application process involves identifying all assets and getting all the “documentation” to prove the assets value. Here’s a common example: a resident has an annuity or life insurance. A Medicaid application will be rejected without “documentation” of the current cash value of the asset. It can take four weeks to get the needed paperwork. When children help elderly parents, finding or recovering the documentation can be challenging and time consuming. And, yes, Medicaid will and does reject applications for lack of paperwork. That can be an unbelievable expensive. Again, Michigan nursing homes charge, on the average, over $8,400 per month. If a Medicaid worker rejects an application after three months the loss is over $25,000!
Fifth: The attorney must advise the client of the best, most suitable, “asset and income protection” strategy. This can result in a savings of over $100,000 as referenced in the First point, above. In fact we have recently saved many families over $300,000! And, we have gotten the resident’s income for the at-home spouse so she can afford to live in their home.
Sixth: The attorney should get eligibility and submit the application in as soon as possible. Put it this way. If the family could get the application in three months time and the attorney in one month, that savings alone would be almost $17,000! That is using the state average. Some suburban nursing homes are charging over $10,000 per month!
Seventh: The attorney will represent the client(s) before the Medicaid agency. Many Medicaid workers give clients and families wrong information. We see many mistakes that are not to the client’s benefit. For example, the agency will lose an application and tell the client to re-file with the result of loss of months of coverage. Your attorney will not allow that to happen.
And a bonus, Eighth: The attorney should prevent the applicant/resident from being transferred out of a good nursing home, where he got post-hospital rehab, to a poor one that always has beds open because nobody wants to be there. We have prevented many such transfers and our clients stay at the good nursing home.
So, let’s get to the question, how much should an attorney charge? An easy answer is the attorney’s fee should reflect the attorney’s expertise and using that expertise the attorney will save the family much more than they would have paid if they tried to follow nursing home advice and did the application themselves. In addition we must consider that the family needs to spend time with the nursing home resident and not be running around trying to get a Medicaid application through. They should focus time on the resident while the attorney handles the application. These things are the VALUE of the attorney’s service.
So, how much should an attorney charge? Sad to say, there is no one answer. While each client has different issues, there are some very common situations. Let’s say we have an average suburban couple. Mr. Smith has Alzheimer’s and Mrs. Smith, on the brink of physical exhaustion can no longer care for him. They have a home worth $195,000 and $250,000 in savings. What’s not average? A client may have a business with multiple parcels of real estate, leases and business entities. Now that is complicated!
And finally, a yardstick measure: Consider all of the above. If your case is average a rule of thumb is one month’s nursing home bill for devising your best asset and income protection strategy, completing the application and handling it in the Medicaid agency. If the work is much more complicated it may cost twice that. We’ve heard reports of some attorneys charging $25,000 and more. If you get a fee quote that is very high, inquire of the work that the attorney must do to get the application through. And, get a second opinion.
We might note that there are two ways attorneys charge for applications: 1) attorney asks for a retainer and bills hourly against the retainer; 2) a flat fee. Most clients prefer the latter since they know the fixed cost and the fee will be part of “spend down.” The “blank check” of the hourly fee makes most folks feel uncomfortable about the unknown cost. And besides, the last bill comes in after spend down instead of being part of the Medicaid spend down. In our office we only use the flat fee.
Hope this answered your questions. If not, give us a call. All the best,
Jim