Every day, people conduct their lives using cash payments. They go to ATMs or they write checks to “cash” and get cash from a bank teller. They use cash for groceries, and to pay their gardeners, hairdressers, and snow shovelers. They hire people for home repairs big and small. They pay in cash for furniture or remodelling when the cash price is cheaper. They don’t keep millions of receipts, and in some cases, don’t even get receipts. When parents and adult children live together, it’s not uncommon for the middle-aged child to pay the bills and for the elderly parent to reimburse the child, sometimes with cash. Sometimes cash is transferred into the adult child’s account and is then used to help pay the bills. That’s normal every day life.
It’s a good idea to start thinking about “creating a 5-year paper trail.” If you live with your child, set up a system for shared expenses that is easy to track. Save your receipts and use separate credit card accounts. If your child is paying the bills for you, you can make them the Power of Attorney on your checking account so that you don’t have to transfer cash into their checking account for this purpose. Use your checks, credit card or debit card whenever possible, and of course, save your bank statements and cancelled checks for five years. Set things up in a way that makes it easier for your family member to step in and figure it all out if things ever get to that point.
Why? If you become ill and need to apply for Medicaid to pay for home health care or nursing home care, the person filing the application for you will have to report every financial transaction that occurred during the “5-year look-back.” Although there is a law that requires the agency to presume that the applicant spent their monthly income on ordinary costs of living — and didn’t make gifts of their income to other people — see N.J.A.C. 10:71-4.10(n)4 — providing the proofs and explanations can be grueling and time consuming, if not impossible. Some agencies are even presuming that all cash transactions are “gifts.” That means that benefits might be denied because of the perfectly ordinary way that you handled your expenses over the years.
It’s not too late to start making your “5-year paper trail” to improve your access to benefits later. If you need to apply for Medicaid, or your application has been denied, we are here to help … 732-382-6070
All posts provide general information, and do not constitute legal advice for your particular personal situation.