“Medicaid Tip”: Don’t pay cash

Here’s a “Medicaid Don’t” for you: Do not pay cash.

Many of our eldest of elders have always used cash to pay their bills. They grew up during The Great Depression when banks failed and people lost all their money.  They would go to the utility company to pay their bill by cash. They paid for everything with cash. They continue that habit till today. It becomes a Big Mistake when children start helping their aging parent.  Since Mom or Dad do not have a checking account the children will pay the bills themselves by their own checking account or credit card.  THEN the children take cash for reimbursement. They don’t take an exact amount since the parent tells them to take something to pay for their gas.

When the parent goes into a nursing home and applies for Medicaid the Medicaid worker will ask for bank statements, typically about three months back.  When the worker sees hundreds of dollars of cash going out every month, she will ask for an explanation.  The family explains that the money was reimbursement for paying the parent’s bills.

The Medicaid worker faced with potentially thousands of dollars of cash withdrawals over the year will ask plus more bank statements plus receipts proving the claim. The family cannot meet the demand for all receipts.   The worker can conclude since every dollar of cash is not accounted for, all the cash will be deemed gifted away and will impose a “divestment” penalty period.  That means Medicaid will not pay the nursing home.  The penalty period could be months long and the nursing home may sue the parent and child who got the cash.

Don’t use cash.

The cash nightmare can easily be avoided. Get a debit card on Mom or Dad’s account. Keep all purchases separate, including groceries, and you will have no problem with missing receipts.  Keep any reimbursement “for your gas” separate.  If the worker objects to reimbursement, even though you may have a right to reimbursement and can fight the worker’s decision, the amount will be very small.

Good luck.