Geriatric Care Managers of New England

Impact of 2006 Federal Government Legislation On Elders

 

By Frank Baskin, LICSW, BCD - GCMNE Board of Directors

 

Congress has passed and the President has signed a bill which will impact elders as they plan for the time when they will need services(particularly those funded by Medicaid).

It includes the following about Medicaid:

1. Look-Back Period for Transfers

Previously, the law provided a 3 year look-back period for transfers of assets to another person and 5 years to a trust. The new law requires 5 years for all transfers.

During that 5 year period anyone may transfer or spend funds to meet their expenses. Anyone who is applying for Medicaid may not make a gift of their own funds to a charity or to family member(s) during that 5 year period. Those transfers of assets are not allowed.

For example:

1. Mr Smith now needs nursing home care and is otherwise eligible for Medicaid.

2. He gave away $ 50,000 as a gift during the last 5 years.

3. Nursing homes in his area cost on average about $ 5,000 a month.

4. Mr. Smith would be ineligible for nursing home care funded by Medicaid for 10 months.

2. Penalty Period

The penalty period(or the time during which anyone would be disqualified for medicaid) used to begin at the date the transfer or gift was made.

With the new law the penalty period begins at the point of admission to a nursing home or application for Medicaid(whichever is later).

In the example Mr. Smith would be ineligible for nursing home care under Medicaid at the point he entered a nursing home even if the gift was made 4 or 5 years ago.

3. Impact on Some Home Care Services

The new law (around transfer penalties)will now be applied to home based services if they are part of the home and community based waiver. These individuals qualify for nursing home care but are receiving home and community based services funded by Medicaid.

4. Equity in the House

The value of the house has never been included as a countable asset for Medicaid applicants. With the new law equity in the house between $ 500,000 and $ 750,000 will continue to not be counted. However, if someone owns a house valued at more that amount this individual will be ineligible for Medicaid. Each State may decide on a dollar amount between $ 500 and $ 750,000.      

5. Income-First

Previously, if an individual who entered a nursing home had a spouse living in the community the spouse could keep her income and perhaps some of their joint assets. This would be based on her income.

Under the new law both the institutionalized spouse's and the community spouse's income are counted. All of the institutionalized spouse's monthly income must go to the nursing home(is not available to the community spouse)  but is now included in order to determine how much the community spouse may keep.  Financial resources for the community spouse will be severely limited.