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"How to get Medi-Cal coverage for your nursing home care... without selling your home or leaving your family without a dime... Surprising ways to pay for your assisted living and long term care costs."

Elder Law Today Newsletter | Vol. 5 | January, 2006

 

Pending Changes in Medicaid Transfer Rules

On December 19, 2005, the House of Representatives narrowly passed a new budget bill containing provisions regarding Medicaid eligibility and nursing home coverage. Most importantly, the bill includes onerous restrictions regarding the transfer of assets. The bill was sent to the Senate which approved the bill with additional changes. Through maneuvering, the bill was sent back in the House where it will be voted on after the House reconvenes on January 31, 2006. The bill will then be sent to the Senate for final approval.

Increased Look-back Period: Under the new bill, all transfers of assets, whether to trusts or to individuals will be subject to a five-year look back period. There is presently a three year look back period for transfers to individuals and five years for transfers to a trust not created through a court action. As a result, five years of documentation will be required for Medi-Cal eligibility.

Postponement of Start Date for Penalty Period: Under the new law, the penalty period begins when the person moves to a nursing home and would be eligible for Medi-Cal. That is, the penalty begins when an individual has spent down to $2,000 and is out of assets. Under the existing rules in California, the penalty begins at the time of transfer of the asset. For example, presently, using the average private pay rate (APPR) divisor of $4,812 used in California, if the individual gives away $11,000 in January 2006, the period of ineligibility is 2.2 months. ($11,000 divided by $4,812.) California does not presently count partial months, so the period of ineligibility would be 2 months, and the individual would be ineligible for January and February, but would be eligible March 1. Under the new pending law, the 2.2 month ineligibility period would begin when the person moves to the nursing home and is out of assets.

Value of Home: The home is presently exempt, or not counted for Medi-Cal eligibility. Under the new proposed rules, a home with equity exceeding $500,000, and possibly $750,000, if adopted by California, shall be a countable asset. However, the home is still exempt if the nursing home resident’s spouse, child under age 21, or blind or disabled child is living in the house. Methods under the new rules for the protection of the home from a state lien after the death of the nursing home resident are presently unclear.

Grace Period: You Should Plan as Soon as Possible: All of the changes have not been discussed here, such as treatment of the community spouse resource allowance, (CSRA) and the minimum monthly maintenance needs allowance, (MMMMNA) etc., and there may be more changes before the President signs the new budget bill. In addition, there apparently will be a grace period in California after the federal bill is passed, and before the new rules are implemented. California legislation will be required to bring Medi-Cal rules into compliance. However, it is unclear at this time how long the grace period will be, and also unclear how the transfer of asset dates will be treated under the grace period. As a result, any planning under the more liberal existing rules should be completed as soon as possible. We will, of course, be exploring other planning opportunities in this area.


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