If you are considering applying for Arizona Long Term Care System (ALTCS) benefits now or in the future – be prepared! You will likely need to provide copious amounts of financial records, such as bank and brokerage statements, vehicle titles, insurance policy records, closing statements for the sale of real property, deeds, and more!  You should also be prepared to disclose financial information from the prior 5 years, and even receipts for expenditures of more than $500.00. Why? If AHCCCS requests information which you cannot timely provide, the results may be delay in ALTCS approval, imposition of penalty periods, and/or outright denial of benefits.

Under Federal law, state Medicaid agencies, including Arizona Health Care Cost Containment System (AHCCCS), must use an “asset verification system” (“AVS”) to collect information directly from financial institutions to determine whether seniors or persons with disabilities meet financial eligibility criteria for Medicaid long term care programs, like ALTCS. The AVS results can in-turn create burdensome “Requests For Information” by AHCCCS as part of the application process.  Prior to use of AVS, state agencies had to manually verify assets at application and renewal. Typically, individuals reported the value of assets to the state agency and submitted copies of their bank and other financial statements as verification. In theory, the AVS system reduces paper documentation by obtaining electronic verification, which streamlines and expedites application processing, eases burdens on applicants and case workers, and reduces the number of eligible individuals who are denied or lose coverage for failing to comply with requests for documents. However, we have experienced the opposite effect.

Here is how it generally works: At time of application or renewal, the ALTCS case worker submits the individual’s information through AVS. The system sends out inquiries to national banks and local financial institutions based upon the individual’s address. The system may also search for specific banks outside its normal criteria upon caseworker specification. The AVS then returns results. AVS results contain the name and address of the financial institution and the balance of the account on the first day of the month. For ALTCS applicants, AVS can provide balances for the 60-month (5 year) lookback period prior to application. The case worker then acts based upon the AVS information provided; this is where it may get problematic.

There are limitations to the AVS. For example, smaller financial institutions may be non-compliant, there can be delays in AVS response time, and AVS lacks verification on life insurance, stocks, and other types of assets.  In short, the individual applicant must still supply all or most of their financial records as the AVS system is incomplete. However, the biggest drawback for ALTCS applicants is how AVS reports its data to AHCCCS for the preceding 5 years of financial activity, and the “Request For Information” the case worker will generate based upon the results. In short, if AVS detects a large change in monthly account balance (+ or -) the case worker will likely require that change (+ or -) be explained with detailed financial records and supporting documentation.

The result of AVS? When there is a significant decrease in account balance due to specific cash withdrawals, debits, or checks written for which the applicant no longer can produce receipts, AHCCCS may impose a transfer penalty period resulting in delay of ALTCS benefits. This may be true even if the payee is identified on the bank statement itself through debit purchase or by copy of cancelled check.  Conversely, if there was a large deposit (e.g., one-time inheritance, gift, or lawsuit settlement payment), the date, amount, source of funding, and subsequent use of those funds must be explained in detail.  In all cases, the sale of any real property occurring within the 5-year look back period must be disclosed which shall include a copy of the closing settlement statement, proof of deposit of net sale proceeds and (yes!) detailed explanation of how those proceeds were thereafter used (e.g., purchase of replacement residence, payment of long-term care or other living expenses, etc.) must be documented. Gathering and organizing this data can be a daunting task, especially when the applicant now has diminished capacity, or another individual is handling their financial matters and has no prior knowledge or record of the specific financial transactions at issue.

To give you a few examples, we had situation in which a couple paid over $3,000.00 for veterinary expenses several years prior to submitting the ALTCS application. The AVS report picked up the change in account balance and the case worker issued a Request for Information. Even though copies of the cancelled checks payable to the veterinary clinic and written explanation to the case worker that the applicant and her spouse paid for veterinary care for a critically ill pet, the case worker still required copies of the veterinary clinic’s invoices. Fortunately, the veterinary clinic was still in business and able to generate the duplicate original invoices.  In another matter, the applicant had received a one-time lawsuit settlement payment four years prior to ALTCS application.  The AVS report indicated a significant increase in account balance.  As a result, the case worker required we provide copies of the settlement check, all bank statements from date of deposit through the exhaustion of the settlement funds, and explanation how the funds had been expended over the years which was tantamount to a multi-year forensic accounting.

Your take-away? You should be prepared to provide copious financial records (up to 5-years’ worth) before you submit an ALTCS application.  If you or a loved-one may need ALTCS benefits in the future to help pay for long-term care expenses, call us at 480-922-1010 or email info@bivenslaw.com to schedule a consultation with one of our experienced elder law attorneys to learn the best methods to (1) pay and document expenses and (2) maintain financial records to help streamline your ALTCS application and avoid unnecessary delay, transfer penalty period, or even denial.  In consultation, we will also advise on the specific strategies you may wish to employ for asset protection and estate planning.

-Stephanie A. Bivens, Esq., CELA

Disclaimer: The information contained in this article is provided for informational purposes only, and should not be construed as offering legal advice or creating an attorney client relationship between the reader and the firm or author. You should not act or refrain from acting on the basis of any content included in this article without seeking appropriate legal advice about your individual facts and circumstances from an attorney licensed in your state. Bivens and Associates, P.L.L.C. expressly disclaims all liability with respect to actions taken or not taken based on any or all information contained in this article.