SOUTH BEND -- When Shirley Fulton's husband died in 1992, he left no savings or insurance benefit to pay for a funeral.
The two had been estranged since she left Buffalo, N.Y., years earlier, but Fulton recalls struggling to borrow enough money to take care of her husband's estate -- and vowed not to leave the couple's sons in the same position when her time came.
So not long afterward, Fulton recalls, she bought a term life insurance policy through AARP.
For years, she has made monthly payments to the $11,000 policy, despite otherwise struggling to make ends meet. When she turned 79, she remembers, the company converted it into a whole life policy -- and then her rate rose to $93 per month.
The retired social worker and day-care owner took out a reverse mortgage in the mid-1990s to re-side her small home, she says. With Medicaid, Medicare and SSI, Fulton gets by on about $700 each month.
So when she opened a letter in June telling her that she has been assigned a "spend-down" of $195 per month before she would receive the rest of her Medicaid benefits, she was floored.
Already with about 10 medications for various health problems, payments on a hearing aid, food and utilities, she knew finding another $195 a month would be difficult. "I have no money at the end of the month. How will I live? I have no idea."
Tracking down the 'spend-down'
Medicaid is the state-administered federal poor-relief program for those who qualify, which in addition to income limits includes an asset limit of $1,500. If a person's assets rise above that, he or she is no longer eligible for Medicaid -- unless medical costs are high enough to mitigate the increase in income enough that a "spend-down," like a deductible, is paid toward those costs first.
What Fulton did not realize was that her insurance policy's "cash surrender value" had quietly climbed to a little more than $1,600 this year. And the first state notice she received did not make clear that was the reason for her new spend-down.
After calling the Family Social Services and Family Administration, Fulton learned the policy, which listed two relatives as beneficiaries, was the culprit. After the agency acknowledged Fulton had not been sent earlier notice of the spend-down, Fulton says, FSSA agreed to postpone the change to allow an appeal.
When the 82-year-old contacted a Tribune reporter a few weeks ago, a Sept. 7 hearing was set. That was postponed to allow Fulton to explore other options with the policy.
A Tribune reporter made several phone calls on Fulton's behalf -- including to representatives from Legal Services, AARP and The Arc of Indiana -- and was told the decision didn't make sense: Yes, the larger cash value from the policy was higher than what is allowed, but those circumstances usually result in fewer benefits, period -- not a spend-down.
An FSSA spokesman in Indianapolis did not return several requests over two weeks for information about spend-downs generally or Fulton's case specifically.
But toward the end of last week, Fulton received a letter from FSSA telling her she will not have a spend-down after all -- but that she's eligible for fewer benefits.
"A review of your case recently took place because you reported a change in your circumstances or because of an internal administrative action," the letter reads.
Fulton has already filed an appeal of that decision, too. But it isn't the first time she decided to stand up for herself and others.
'I can't take any more'
Shirley Fulton lived with her husband, James, and their four sons in Buffalo. By 1969, the city where she was born and raised was burdened by riots and a high crime rate.