Secrets of Reading a Bank Statement – 1 of 3
Want to hear a secret? Sometimes a clue to finding hidden assets can be found in your parents’ bank statement.
Secrets of Reading a Bank Statement – When a loved one is going to a Nursing Home – Part 1 of 3
Let’s face it, you have been busy with your life, your kids, your job, etc. You are probably generally familiar with your parents’business, but probably don’t know all of the details of everything they have done.This doesn’t really matter until they have to go to a nursing home and initiate the Medicaid application process – now everything matters!
You think you know about all of their assets, but do you really know all of the details? A person has to be resource eligible (under $2,000 for a single person) to receive Medicaid assistance. When you file the Medicaid application for your parent, you think that she has spent her assets down below $2,000 and that she would be resource eligible for Medicaid assistance. At your request, the nursing home files the application, which comes back DENIED. It turns out that she wasn’t resource eligible. She had a few assets that you didn’t know about.
Sometimes a clue to finding hidden assets can be found in your parents’ bank statements. You should look closely at bank statements before filing the application. You can be sure that DHS will be looking closely at them – that’s how they found that the hidden asset existed when they denied the Medicaid application.
Unknown assets can easily exist. In a typical situation, one spouse is deceased and the other has Alzheimer’s, so neither of them can verify what assets actually do exist. It is very common for the adult children to live out of state, or if they live in state they are rarely intimately familiar with all assets owned by their parents. Unknown assets can easily pop up when searching for anything owned by a couple in the Medicaid review process.
It is important to review bank statements for at least three months. Sometimes an item of income won’t appear monthly, but instead will appear quarterly. That is, it will appear on every third bank statement. Sometimes income items appear semi-annually or annually, so for that reason DHS often asks for 12 months of bank statements.
Just to illustrate how important a bank statement review can be, here are a couple of real life case studies.
Case study # 1:
In one case we were doing a bank statement review and saw a credit for $8.52 on a quarterly bank statement. None of the adult children had a clue as to the source of this income. A little digging revealed that this money was from an oil company. Turns out that Mom and Dad had mineral rights to a tract of property in Oklahoma and this was one of their quarterly royalty checks. The value of these mineral rights was well in excess of the $2,000 asset limit. Therefore even after they had spent down to below $2,000, they still would not have been asset eligible because of the existence of these mineral rights, which were countable assets.
Case study # 2:
In another situation, a small amount of income popped up on the bank statement. Again the adult children had no ideal as to the source of this income. It turns out that Dad had purchased a life insurance policy over 40 years ago and had the premium payments on auto draft. Out of sight – out of mind. The policy had been paid in full many years ago but Dad continued to make the monthly premium payment. The insurance company took these excess payments and purchased stock of the mutual life insurance company which compounded over the years. Mom and Dad now had over $20,000 of insurance company stock in a separate account and no one knew about it. Again, had the application been filed it would have come back denied. Mom would’ve been way over resourced because of this stock, which was a countable asset. It took several weeks to sell the stock and get the money in the account, but had we not discovered this, it would’ve taken several months for the application to be submitted, reviewed, then denied – only then to discover the problem stock, redeem it, spend the money and then start all over again.
From our experience based on the school of hard knocks, it is critical to gather at least 3 months of bank statements on every account (6 months would be better) and do a thorough review before submitting the Medicaid application.
In a couple of weeks we will review some of the RED FLAG ITEMS that stick out like a sore thumb when doing a Bank Statement Review. Stay Tuned!
The information provided on this blog is intended as general information only for a broad audience. It is not intended as legal advice and should not be acted upon as such. If any reader has questions or concerns about any matter mentioned herein, he/she should contact an Elder Law Attorney or other appropriate professional. If any reader has questions or suggestions about a future topic area that he/she would like to see discussed, please contact the author at firstname.lastname@example.org.