Wednesday, February 07, 2007
New Information about Medicaid Planning
Congress has passed the Deficit Reduction Act of 2005 (DRA).
If you have ever sought an attorney for Medicaid planning, the adoption of the DRA could seriously affect the success of your plan. It is now much more difficult for people to become eligible for Medicaid. The DRA made several substantive changes in the law regarding transfers of assets for Medicaid eligibility.
The “look back” period, the period in which the state must “look back” at all of the financial records, and determine whether an individual transferred assets to qualify for Medicaid, increased from 36 months (three years) to five years. The start date of penalty periods in which an individual is ineligible for Medicaid was changed. A requirement was imposed on individual states to impose penalty periods that include individual days of Medicaid ineligibility. Previously any period of ineligibility that was less than a month was not “rounded up” to include a full month. The DRA also prohibited a state from granting Medicaid to individuals who have substantial equity in home property. There were also a number of procedural changes made to the Medicaid eligibility law.
As of this date, there are no New Jersey regulations that have been adopted to offer guidance as to the applicability of this new Federal law. Many of the previous planning techniques used by New Jersey, such as transferring assets and waiting for three years, or calculating the applicable period of ineligibility and then reserving enough money to pay for care (also known as “half loaf planning”) are no longer available techniques.
In New Jersey, a Medicaid applicant was also permitted to transfer small amounts every month (less than $5000) because it would not result in any period of ineligibility. That is no longer permitted, and ineligibility will be calculated in terms of individual days, instead of months. Although there may be ways to do Medicaid planning under the new law, those methods have not been approved or tested. If an attorney attempts planning, the Medicaid applicant may be rejected, and the attorney will have to appeal that rejection. Medicaid planning is no longer a form driven practice like estate planning, but will require litigation and creativity.
Diana L. Anderson, Esq., C.E.L.A. (Certified Elder Law Attorney)
Submitted by Fran Kirschner, Frantasy Enterprises
If you have ever sought an attorney for Medicaid planning, the adoption of the DRA could seriously affect the success of your plan. It is now much more difficult for people to become eligible for Medicaid. The DRA made several substantive changes in the law regarding transfers of assets for Medicaid eligibility.
The “look back” period, the period in which the state must “look back” at all of the financial records, and determine whether an individual transferred assets to qualify for Medicaid, increased from 36 months (three years) to five years. The start date of penalty periods in which an individual is ineligible for Medicaid was changed. A requirement was imposed on individual states to impose penalty periods that include individual days of Medicaid ineligibility. Previously any period of ineligibility that was less than a month was not “rounded up” to include a full month. The DRA also prohibited a state from granting Medicaid to individuals who have substantial equity in home property. There were also a number of procedural changes made to the Medicaid eligibility law.
As of this date, there are no New Jersey regulations that have been adopted to offer guidance as to the applicability of this new Federal law. Many of the previous planning techniques used by New Jersey, such as transferring assets and waiting for three years, or calculating the applicable period of ineligibility and then reserving enough money to pay for care (also known as “half loaf planning”) are no longer available techniques.
In New Jersey, a Medicaid applicant was also permitted to transfer small amounts every month (less than $5000) because it would not result in any period of ineligibility. That is no longer permitted, and ineligibility will be calculated in terms of individual days, instead of months. Although there may be ways to do Medicaid planning under the new law, those methods have not been approved or tested. If an attorney attempts planning, the Medicaid applicant may be rejected, and the attorney will have to appeal that rejection. Medicaid planning is no longer a form driven practice like estate planning, but will require litigation and creativity.
Diana L. Anderson, Esq., C.E.L.A. (Certified Elder Law Attorney)
Submitted by Fran Kirschner, Frantasy Enterprises
