Important Changes in Federal Legislation Regarding Medicaid Eligibility
On February 8, 2006, at 3:35 p.m., President Bush signed The Deficit Omnibus Reconciliation Act of 2005. This new law will impose punitive new restrictions on the ability of the elderly to transfer assets before qualifying for Medicaid coverage for nursing home care.
To summarize, the new law:
1. Changes Medicaid’s “look back” period for asset transfers from 3 years to 5 years
2. Changes the start of the penalty period from the date of transfer to the date of Medicaid eligibility. In other words, the penalty period does not begin until the nursing home resident is out of funds, meaning he or she cannot afford to pay the nursing home. This essentially kills the “half-a-loaf” process, a very effective strategy used by elder law attorneys to protect assets in a crisis.
These two measures are extremely drastic. The primary winners will be the State and Long Term Care Insurance Carriers. The losers will be families, nursing homes, and elder law attorneys. Crisis planning will be eliminated.
In addition, the new legislation will deny Medicaid coverage for nursing home care to any applicant with home equity valued above $500,000 (up to $750,000 in some states).
The new law also includes the expansion of Long Term Care Insurance Partnership plans nationally. Partnership plans, in addition to paying for long term care needs, allow an individual to protect all or a portion of their assets in the event of a nursing home stay.
If ever there is a time for proper long term care planning, it is now. Please contact me so that we can discuss how this impacts your clients and your practice!