You or an elderly loved one has been denied Medicaid. Now what? Whether denied for nursing home care or home and community based services, the need for care persists. While there may be no additional financial resources available to pay for care, the situation is not as hopeless as it may feel. There are several paths that a family can pursue, and in most cases, a denied Medicaid applicant can become Medicaid-eligible with time and planning.
When a Medicaid Denial Notice is received, there are three options to become eligible: 1) request a reversal, 2) appeal the denial / request a fair hearing, or 3) implement Medicaid planning strategies and re-apply for Medicaid. Which option to choose depends on the reason for which one was denied Medicaid and whether or not the applicant believes they were incorrectly denied. While common reasons for denial and corresponding courses of action are covered below, Medicaid Planners can be extremely instrumental in helping one decide what to do based on their situation and can assist in challenging a denial. Note that a verbal denial by a caseworker is not a formal denial.
Did You Know? 25% of Medi-Cal applicants are incorrectly denied Medicaid due to caseworker errors according to one California Medi-Cal Planner.
It is important to understand the reasons for a Medicaid denial prior to exploring one’s options on how to proceed. Applicants receive a Medicaid Denial Notice, which clearly states the reason for which one was denied eligibility. Follows are the most common reasons for denial.
1) The application was incomplete or there were errors made on the application. An applicant may have overlooked a section of the application (and left it blank) or accidentally wrote down incorrect information.
2) Required documentation was missing or not provided. A significant amount of documentation is required to verify eligibility. Necessary documents vary by state, but some examples include proof of income and copies of tax returns, bank statements, and property deeds.
3) The applicant did not meet the functional criteria. In other words, one is denied Medicaid eligibility because their care needs are not severe enough to warrant the type of assistance they are requesting.
4) The applicant is over Medicaid’s income and / or asset limit(s). Income and asset limits are state-specific. See state-by-state financial eligibility criteria.
5) The applicant violated Medicaid’s Look Back Period. This denial factor is actually an approval, but with a Penalty Period due to gifting assets, including selling them for under fair market value, within 60-months of applying for long-term care Medicaid. The Penalty Period is a defined period during which the applicant is ineligible for Medicaid. For example, a caseworker may find an applicant violated the Look-Back Rule by giving away $20,000 in assets, and is therefore, penalized with several months of ineligibility.
Professional Medicaid Planners are extremely skilled in assisting Medicaid applicants denied eligibility in becoming Medicaid-eligible. They can find Medicaid errors, including misinterpretation of Medicaid rules and regulations, and assist in overturning a Medicaid denial. They can also assist in implementing Medicaid planning strategies to lower income and / or assets and reapplying for Medicaid. Find an Expert Medicaid Planner.
What to do when denied Medicaid? Most people think “appealing the Medicaid denial” is their only course of action, when in fact, making an appeal is just one of three options and probably the least attractive and most time-consuming of the options. Detailed information about the three approaches follow.
To request a Medicaid denial reversal means communicating with the caseworker in a less formal manner than making an appeal, usually through email or by phone. When an applicant has made an error in the application paperwork or failed to provide a required document, they can contact their caseworker and mention the error that was made, why it was made, and provide them with the corrected information or missing paperwork. Often, this simple process can result in a reversed decision.
If the applicant thinks the caseworker has made an error in their calculations or in their interpretations of Medicaid’s complex rules, requesting a reversal can also be effective. However, it is best to proceed with caution and respect when doing so and it may require escalating the issue to a supervisor. Private Medicaid Planners can be of great assistance in this situation. If one suspects an error has been made, a Medicaid Planner can review the decision, identify the error which was made, and provide the applicant with the supporting documentation to present to the caseworker or their supervisor to illustrate the error. Alternatively, Medicaid Planners will often communicate directly with the caseworkers on their clients’ behalf. Find a Medicaid Planner to review a Medicaid denial.
Requesting a reversal is, by far, the fastest approach to changing a Medicaid denial to an approval. This approach can take days, while a formal appeal or a re-application can take several months. Furthermore, a reversal preserves the applicant’s original date of application. This means, when approved, they are approved retroactively to their original application date, meaning their care costs will be covered retroactively.
When an applicant was correctly denied Medicaid (most often for financial reasons), they can often become Medicaid-eligible through implementing planning strategies and then re-applying. For example, sometimes an applicant is denied Medicaid because assets are over Medicaid’s limit. The reason for “excess” assets could be something as simple as the applicant not understanding which assets are, and are not, counted towards the asset limit. Had the applicant been aware and had “spent down” the extra assets prior to application, eligibility would not have been denied.
Other re-application situations arise when the applicant has monthly income over the income limit. Regardless of whether an applicant has income and / or assets over the limit(s), if they cannot afford to pay for the care they require, professional Medicaid planning assistance should be considered. Working with a Planner and re-applying for Medicaid enables the applicant to restructure their finances so that they meet the eligibility requirements.
There are many planning strategies allowed by Medicaid to enable one to become financially eligible. This includes Qualified Income Trusts, Irrevocable Funeral Trusts, and Medicaid-Compliant Annuities. Some of these techniques are complicated and require the expertise of a professional Medicaid Planner to implement correctly. Remember, a Medicaid office will have a record of past applications and will know the applicant’s financial situation at that time. Drastic differences in a financial situation may generate questions, which the applicant must be prepared to explain and provide documented evidence of why their financial situation has changed. Again, this is where professional assistance can be very helpful. Read about the different types of Medicaid Planners.
Re-applying for Medicaid resets the application date back to which benefits will be covered.Re-applying for Medicaid resets the application date back to which benefits are covered. For example, if the applicant applied June 15 and went into a nursing home costing $5,000 month that same day, and two months later they were denied Medicaid and re-applied the next month successfully, the applicant might still be out the $15,000 spent on nursing home care for three months. If the decision had been reversed or appealed successfully, the benefits would apply retroactively to their original application date or the first day of the month in which the application was submitted. While there is also Retroactive Medicaid, which may allow an applicant to receive Medicaid coverage for up to 3 months prior to one’s Medicaid application date (if eligibility criteria was met during those months), reapplying when unnecessary is not advised. Re-application is best suited for persons who have been denied correctly and have made the effort to change their financial situation.
How long after being denied Medicaid can one re-apply? One can begin the re-application process immediately, but in practical terms, benefits are calculated to the month. Therefore, most immediate re-applications are for the following month.
Appealing a Medicaid denial can be a tricky and time-consuming proposition for both the applicant and the Medicaid office. On the Medicaid Denial Notice, the appeal process in the applicant’s state will be explained. Typically, an applicant has between 30 and 90 days to appeal, or in other words, request a Medicaid Fair Hearing. Once requested, a date for the hearing is set. A state’s Medicaid agency must have the hearing and issue a decision within 90 days of receiving the hearing request. In some cases, such as an urgent medical need, the hearing can be expedited and done as quickly as possible. Applicants will often retain an attorney or a Medicaid Planner for the appeal process, or at a minimum, have a professional Medicaid Planner review their original application.
If an appeal is successful, benefits are made retroactively to the original application date. This is especially good news given that the time from an original application, to a denial, to an appeal, and finally to a hearing, may take many months. Retroactive benefits for many months’ worth of care, especially nursing home care, can amount to tens of thousands of dollars.
When appealing a Medicaid denial, one should be exceedingly confident that a mistake was made by the Medicaid office / caseworker. Furthermore, if a mistake was made by the caseworker, then the applicant should pursue Option #1 Request a Reversal prior to making the formal appeal.
If you are denied Medicaid due to excess monthly income, there are several paths one might pursue to become income-eligible. First, if you feel you have been incorrectly denied, you should confirm the income limits for your state and type of Medicaid, understand how Medicaid counts income, and then request a reversal.
If you have been denied correctly, there are two options to become income-eligible. One is to allocate excess income into a Qualified Income Trust and the other is to qualify via the Medicaid Needy Pathway. Which approach is available to an applicant is state and program-specific. It is recommended that you discuss your case with a Medicaid Planning Professional prior to implementing one of these strategies and reapplying for Medicaid.
If you are denied Medicaid due to excess assets, the first step is to confirm your assets exceed your state’s Medicaid requirements for the specific type of Medicaid you are applying and your marital status. There is considerable room for interpretation of countable and exempt assets. You might consider having a professional Medicaid Planner review your case prior to requesting a reversal or filing a formal appeal.
If your assets do, in fact, exceed Medicaid’s limits, there are multiple strategies that can be employed to reduce your assets below the eligibility threshold. Read more.
If you are denied Medicaid due to an applicant error, including neglecting to submit required documentation, you should provide the corrected information or missing documentation to the caseworker as soon as possible and request a reversal. A state’s Medicaid agency has a window, the length of which varies based on the state, in which new information and / or missing documentation can be provided and a Medicaid Denial, reversed. If a caseworker is not willing to reverse the decision, you can appeal the Medicaid denial.
If you are denied Medicaid due to caseworker errors, you can contact the Medicaid caseworker and ask for a Medicaid reversal. In some cases, one may need to involve the caseworker’s supervisor or request a Medicaid Fair Hearing. Professional Medicaid Planners often assist applicants in overturning a Medicaid denial due to caseworker errors or a misinterpretation of Medicaid policy. Find a Medicaid Planner.
If denied long-term care Medicaid eligibility due to not meeting the functional (medical) need, you can file an appeal. It is advised that one contact a Professional Medicaid Planner to review the functional criteria for the Medicaid program for which one is applying. Specific criteria varies by state and program, and even if a program requires a Nursing Facility Level of Care, the criteria to meet this need varies by state. At the hearing, you should provide medical records and a statement from your doctor detailing your medical condition and why long-term services and supports are medically necessary.
If you have been approved for Medicaid, but have been given a Penalty Period (a period of ineligibility due to a past asset transfer that violated Medicaid rules), you should have a Medicaid Planning Professional review your case prior to requesting a reversal or filing a formal appeal. Errors are easily made in the complicated application process, both by the person preparing the application and the case manager reviewing the application. A Medicaid Planner will be able to spot these errors and recommend a course of action. This might include correcting the error, recuperating gifted assets, or if unable to recuperate assets, potentially filing an Undue Hardship Waiver, or waiting out the Penalty Period and reapplying.