How do you handle money with a physically and socially active client who has a need for spending money in the community?
While it may be tempting, giving this client spending money straight from their account can cause a whole range of problems.
Many of the government support programs and services typically utilized by elderly or disabled individuals often have requirements when it comes to spending money for the client, and each program’s rules can contradict another program’s rules.
Here is a typical example:
Joe is a 70-year-old widow. He is under plenary guardianship of the person and property. He receives social security retirement, VA Aid & Attendance, and has a small private pension. He has a homesteaded home and assets of around $50K in multiple bank accounts including CD’s and savings accounts.
He is a physically and socially active individual who lives in an ALF and likes to go on facility shopping trips. He has requested money for these outings.
If you give him spending money, what harm could you be doing? Let’s look at the different rules for each different program type.
Guardians are required to follow probate rules and statutes when it comes to Guardianships. Under probate rules, unaccounted funds may only be given to a ward when there is a specific court order in place authorizing this transaction.
This type of court order recognizes that you are giving funds to an incapacitated adult, and as such you are not required to track the specific spending of these funds.
In general, it may be best practice to petition the courts for a court order for allowance for any client who is capable of managing this small amount of funds and spending the money on themselves.
On its own, the probate rules don’t cause any problems. However, the problem comes in depending on where the funds originate from – Social Security, VA, State Pension, Private Pension, Railroad, etc.
Special Needs Trust
Typically, a special needs trust (SNT) cannot pay cash directly to the client, for their own spending, as it can affect the client’s Medicaid eligibility. This is because Medicaid takes the position that giving funds to a beneficiary directly from their SNT can jeopardize their Medicaid eligibility.
If Joe has a trust, you cannot utilize his trust to obtain his spending money. Instead, the trust can only pay to vendors, suppliers, his facility, etc.
Social Security Rep Payee
As the Rep Payee, you have a responsibility to annually report how SSA or SSI funds were spent or saved. This includes funds given to the client, regardless of the court order received from probate. Social Security, as a federal entity, pays little attention to county probate court orders.
If you give Joe spending money out of his primary checking account, and this is the same account used to receive his SSA or SSI funds, you could be creating a reporting problem.
Medicaid / Social Security / SSI
These types of programs typically require a certain amount of money be spent on the client for their personal needs. For example, ICP requirement is $35.00 for Skilled Nursing Facility residents.
A good policy is to have this amount (or more) spent on the client each month. However, if the client has access to these funds, such as through a facility trust account, you will need court order to comply with probate rules, because it may be difficult to accurately account for how each dollar was spent.
There are lots of nuances with VA, but in general the VA may not recognize probate court orders. Again, the problem of accountability occurs when trying to prove which specific “bucket” that dollar came from.
In a perfect world, the solution would be to have separate checking accounts for each type of funding and program group. Unfortunately, this solution is totally impractical, and is time and cost prohibited.
Take our sample client, Joe. In a perfect world, he would have three separate checking accounts where each of his separate income types would deposit into. Ideally, funds could be spent from each of the accounts, ensuring that funds don’t mix with one another, don’t mix with any other assets, and where the funds spend match each of his program requirements for that income source.
Talk about an administrative mess. So what do you do?
For us, it means having detailed tracking and reminder systems in place to ensure that the clients are receiving their funds from the appropriate income sources for the appropriate amounts, and that those funds are being spent on appropriate expenditures according to the multiple set of rules for the programs they are on.
What is your solution for managing the complicated program requirements that contradict each other?
This blog is shared by Theresa Barton, the expert behind The Guardian Network with more than 25 years of experience in the field of Elder Advocacy, Care Management and Guardianship. Learn more about Theresa’s work and resources for families, caregivers and health, support and legal professionals here.
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