Record Keeping for Seniors

To shred, or not to shred: that is the question.

While USA Today’s recent “Managing Your Money” column advised that people shred documents, many Elder Law attorneys disagree. USA Today’s writer Sandra Block encouraged seniors to shred documents—in order to protect themselves from identity theft—but Medicaid can require five years of canceled checks and other financial records. In fact, failing to have required documentation could delay Medicaid nursing home eligibility. Medicaid can require five years of canceled checks and other financial documents to support an application for nursing home coverage. A more measured approach to shredding, which safeguards important financial data, can help ease the application process.

Myth: Canceled checks can be shredded after reconciling them with bank statements.

Reality: While that approach may work for IRS purposes, Medicaid may require that canceled checks be produced.

Why? Federal Medicaid law provides that gifts made within the lookback period are penalized. States set forth procedures to ferret out whether unlawful gifts were made. Some Medicaid agencies may require check copies, documenting all expenditures made within the five-year window.

With bank mergers, obtaining canceled checks can be a problem. Saving documents—not shredding them—is a more prudent practice, eliminating the uncertainty and difficulty in obtaining canceled checks and preventing unnecessary stress and expense.

The IRS is not the only government agency that requires documents. A senior who may need nursing home admission should keep financial records for the preceding five years. Other needed records vary according to state law, and the counsel of an elder law attorney could prevent problems later.