When a resident of a long-term care facility passes away, the executor of their estate oversees distributing any remaining money or assets according to the resident’s wishes. However, if no executor or beneficiary is listed, or if the information is outdated, leftover funds may be considered abandoned. Similarly, if a resident moves to another facility without leaving a valid forwarding address, the long-term care provider must determine how to handle these funds and comply with laws for returning them to the rightful recipient.

What Types of Resident Funds Require Special Handling?
In long-term care, resident funds that need attention often include:

• Overpayments for room, board, or other services
• Balances left in resident trust accounts

Before funds can be returned, providers must identify the cause of the credit balance. In most cases, these funds should be returned to the resident (or their estate) or to their insurance provider.

What Steps Should Providers Take?
Providers are legally responsible for returning funds that remain after a resident leaves. The process depends on state laws and the amount involved. In some states, the money goes directly to a beneficiary or estate executor. If no rightful owner can be located, the funds must be sent to the state, which then attempts to find the recipient. Certain states require providers to send all unclaimed funds to the state without trying to locate the owner first.

How Long Do Providers Have to Return Funds?
Resident accounts should be closed within 30 days of discharge. Once outstanding third-party payments (excluding Medicaid) are resolved, any credits on the account must be refunded to the resident or their responsible party. Providers usually issue a check, but if it is returned and the owner cannot be found, the funds are considered abandoned. State rules vary on how long providers can hold these funds before handing them over, ranging from one to two years depending on Medicaid guidelines.

What Are the Risks of Non-Compliance?
Leaving credits or unreturned funds on a former resident’s account for too long can trigger compliance audits. Failing to follow Medicaid rules may result in penalties, fines, and survey tags. Additionally, unresolved credits can push a resident’s account over Medicaid asset limits, jeopardizing their eligibility. Providers must monitor account balances closely and process refunds on time to avoid these risks.

How can providers protect themselves against an audit?
Adopting these best practices will help your organization manage funds efficiently and minimize risks:

1. Create a clear policy for managing leftover resident funds in line with state Medicaid rules
2. Require a beneficiary form when residents open trust accounts
3. Close and clear discharged accounts promptly
4. Ensure contact information is up to date; if mail is returned, follow up with family or a responsible party
5. Implement a structured process for handling overpayments
6. Regularly review account balances to submit required payments to the state on time
7. Conduct quarterly internal audits of trust accounts and credit balances

Managing leftover resident funds is a critical responsibility for long-term care providers. Compliance with Medicaid and state laws can be complex, especially when operating in multiple jurisdictions. Partnering with a knowledgeable advisor like Richter can help you develop effective processes for managing these funds. To learn more about our Resident Trust Fund Management & Advisory Services, contact us at 866.806.0799.