I once heard of a case in which a woman’s indigent mother had been receiving Medicaid assistance from the state for hospice care and foster home care for a lengthy period of time prior to the mother’s death. Under Medicaid eligibility rules, the mother was not allowed to have assets, except for a checking account of no more than $2,800.

Upon the mother’s death, there was a remaining balance of about $2,100 in the checking account, which had been set up as a POD (Payable Upon Death) account designated to go to the daughter upon the mother’s death. The daughter decided to use the funds to apply toward her mother’s funeral expenses, which totaled about $2,500.

Several months after the funeral, the daughter received a form letter from the Estate Administration Unit of the Oregon Department of Human Services. The letter from the state sought to recover the mother’s assets to reimburse for the costs of assistance that had been paid out by the state for the mother’s care.

This was alarming to the daughter because the funds had already been used for payment of funeral expenses. Upon discussing further with the state representative, the daughter learned that up to $3,500 could be allowed as funeral expenses. The daughter submitted paperwork to prove that the funds were used for funeral expenses, and that appeared to satisfy the state.

Persons who apply for Medicaid assistance are required to meet eligibility requirements based on both assets and income. They are not allowed to have more than a minimal amount of assets. Thus, in the case described above, the mother did not have other assets beyond the $2,100 in her checking account.

Under Medicaid rules, adult children are not required to contribute their own assets to care for their parents, and care facilities are not permitted to seek such personal commitments and agreements from adult children. However, some care facilities do present forms and agreements, which attempt to establish contractual liability on the part of the adult children. People who are handling paperwork for their aged parents should be careful to read everything before they sign, and consult an attorney if there are any questions.

But, what about the $2,100 that was in the mother’s checking account, which was listed to be payable upon death to the daughter? That could have presented a problem if the daughter had spent the funds for other than the allowed funeral expenses. She could have been required to pay back the funds. She had full access to the funds immediately upon her mother’s death, and the letter from the state did not arrive until several months later.

It is important to realize that the state generally has a claim for reimbursement collectible against all assets in which the recipient of care has an interest at the time of their death, including the residue in small checking accounts. Thus, persons who have access to such funds need to be aware that there is potential for a reimbursement claim by the state. If there are questions about these matters, it is always a good idea to seek legal advice.

Bruce Coalwell has been an attorney in Roseburg since 1981 and is a shareholder in the law firm of Dole Coalwell, P.C.

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(2) comments

Sharon

My father having just gone into the disease of Alzheimers, signed his house over to me and with that I was able to put him into foster care homes for a couple years and hire an attorney and buy his funeral expenses, when that time came along.. There were also 2 times he was put in the state hospital because he became hard for me or, at that time, no one else that could care for him. NOW, here is the panic button! 2 yrs. after he passed, I received a $4,000 bill for his care at the state Hospital. His money was gone! Thank goodness I had retained the lawyer.
He had sent out notices in the paper and 2 letters to the Oregon Hospital that he had passed away and any pending bills needed to be submitted. That lawyer earned every dollar he was paid because of that notice, otherwise, I would have had to go through 3 yrs of expenses showing the hospital where every penny of my father's money went. This was a valuable article and I hope my experience helped you too.

Mogie

Very informative article.

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