On Wednesday, February 8, 2006 President
George W. Bush signed into law the Deficit Reduction Act
of 2005. What does this mean to elder caregivers
who may have to deal with Medicaid and nursing homes from
this day forward? The rules have changed and it will make
a great deal of difference.
Change in the Lookback Period
The "Lookback period"
has changed from three years to five years. Under the
previous rules applicants for Medicaid were required to
account for their resources for the three years prior to
the date of their application. If any funds or resources
were transferred to someone else during these three prior
years there was a penalty period applied from the date
of the transfer before the applicant would be eligible
for Medicaid. That lookback period is now extended to
five (5) years.
Change in the Start of the
Penalty Period
The "penalty period"
is the amount of time an applicant is disqualified from
receiving Medicaid benefits because of a transfer of
assets. Under the old rules, the penalty period began on
the day the assets were transferred. This meant that an
applicant could transfer assets and wait out the penalty
period before applying for Medicaid.
Under the new rules,
if a full five years have not passed since the transfer,
the penalty period does not begin until the applicant
is in a nursing home and applies for Medicaid.
The time spent in a nursing home as a private-pay
patient does not count.
What this means is, if
an elder transferred assets three years ago and has been
paying privately in a nursing home during those three
years (the old penalty period) with the expectation of
being out of funds and applying for Medicaid next month,
that person will now not be eligible for Medicaid for
possibly several more years. The lookback period will
begin on the date of the Medicaid application, which is
still to come.
Just how this is going
to impact seniors who no longer have assets that can or
will be returned to them to pay for their care is a good
question. Nursing homes are certainly going to be
reluctant to admit some/many of them.
Change in the Homestead Exemption
Under the previous law
the applicant's home was not included when an applicant's
assets were counted to determine Medicaid eligibility.
Under the new law, the applicant may not have more than
$500,000 equity in a home. Note - this is equity,
not the total value of the home. This change should
not affect too many applicants.
There are several other changes to the law
that will make it much more difficult to qualify for
Medicaid. Exactly how and when these changes will be
implemented is still unknown. Every State will design its
own timetable. Some will use the February 8 date. Some may
set implementation around the next time their legislature
meets. We don't know those details yet. But if you have
been thinking about consulting with an elder law attorney,
the time is NOW.
Unless your senior has less than $2,000
in assets and already qualifies financially for Medicaid,
please do not undertake to do anything about getting him
or her qualified for Medicaid in a nursing home without
seeking immediate legal advice. Whatever it costs to
consult with an attorney before you do something in error
is less than the penalties you could face.
