Congress Makes Changes

Congress recently made numerous changes to existing Medicaid regulations which will dramatically effect many older and disabled persons.

Medicaid is a federal program that assists the States with providing for the needs of its citizens. As most taxpayers are aware, Medicaid funding has come under attack in recent years, with a budget crisis looming. Congress has made significant changes to the existing Medicaid laws and on February 8, 2006, President Bush signed new legislation that dramatically affects eligibility standards for Medicaid.

Medicaid is intended to assist those in need of medical care. Typically, this means an elderly or disabled person in need of institutional care. In order to qualify for Medicaid, the applicant must pass a needs test. This means that the applicant must meet an income test and an asset resource test in order to qualify for the Medicaid program.

Under prior Medicaid regulations, an applicant for Medicaid is required to submit 3 years worth of financial history to Medicaid. If the applicant is the beneficiary under a Trust, the applicant is required to submit 5 years worth of financial history. This is called the lookback period. The local Board of Social Services Medicaid representatives review the financial history of each applicant to determine if there have been any improper transfer of assets made within the lookback period, for the purposes of qualifying an applicant for Medicaid sooner.

The new lookback period for both transfers and trust is now a 5 year lookback period on individual applications. This change will effect a number of persons who previously engaged in estate planning and have made it past the 3 year lookback period.

The most drastic change, however, will be in how penalties are imposed on those who have made transfers during these lookback periods. Currently, if a transfer for no consideration is made within the lookback period, the penalty period begins to run as of the date of the transfer. Congress is seeking to modify this. Instead of calculating the penalty period from the date of transfer, Medicaid will be calculating the penalty from the date of the Medicaid application. This will create harmful situations for many applicants. An elderly applicant, who needs institutionalized care, may not be able to secure the care he or she needs because they will be unable to immediately recover the funds or the value of property alleged to have been "improperly" transferred up to 5 years prior to the Medicaid application. Nursing homes have no obligation to admit residents where there is no guarantee payment from a source.

If you have engaged in Medicaid planning previously or are thinking about asset preservation planning in the near future, you should consult with an experienced elder law attorney.

For more information, contact us at info@hjslawoffice.com