Dealing with Unexplained Deposits When Applying for Medicaid

HNWApplying for Medicaid Long Term Care Benefits

Medicaid costsMany Medicaid applications involve issues surrounding bank deposits.  As part of the Medicaid application process, the State demands documentation of withdrawals from an applicant’s financial accounts as well as deposits into these accounts which can be difficult to explain, especially years later.

Because Medicaid rules require a 5 year look back, some of these transactions may be difficult to reconstruct, especially if the applicant is the only person who knows and he or she is cognitively weak.

Unexplained deposits can be more damaging than unexplained withdrawals.  That’s because unexplained withdrawals will result in an approval with a penalty.  Once the penalty expires Medicaid benefits begin.

On the other hand, unexplained deposits will cause an application to be denied for lack of verification.  In essence, the application is denied because it is incomplete.  You can immediately refile but if you can’t explain the same unexplained deposits that caused the first denial you’ll end up with the same result – at least until the deposit fall outside of the 5 year look back.

Often deposits are from a spouse or another family member or friend but can come in many different ways. If the Medicaid applicant receives an inheritance by way of a last will, the Medicaid caseworker will ask to see the will as well as an accounting of all the assets of the estate.

Let’s say there is a deposit of $10,000 into the applicant’s account coming from a deceased spouse.

There are also non-probate assets such as life insurance, retirement accounts and pay on death accounts (POD).  Tracking down deposits that turn out to be life insurance proceeds can be difficult if the applicant cannot provide any history to these deposits.  Other family members may be totally in the dark as to these deposits and unable to provide any explanation.  Sometimes obtaining copies of the deposited checks will hold the answer but other times the bank cannot provide those copies.

New accounts may pop up during a 5 year look back.  Perhaps they are the result of a rollover IRA or other retirement account.  These answers may not immediately come to mind but with some effort and investigation they often can be figured out.

Getting the necessary documentation to prove these deposits may/will take some time so it is always best to get your answers ready before you file a Medicaid application.

To discuss your NJ Medicaid application, please contact Fredrick P. Niemann, Esq. toll-free at (855) 376-5291 or email him at  Please ask us about our video conferencing or telephone consultations if you are unable to come to our office.

By Fredrick P. Niemann, Esq. of Hanlon Niemann & Wright, a Freehold Township, Monmouth County, NJ Applying for Medicaid Attorney

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