MAJOR MEDICAID LAW CHANGES!
With the passage of the Deficit Reduction Act of 2005 on February 8, 2006, effective in Florida as of November 1, 2007, came major changes in our Medicaid laws. Medicaid’s Institutionalized Care Program is a governmental program that helps pay for an individual’s nursing home stay.
The Look-Back Period
Under the old law, Medicaid was allowed to question your financial circumstances, or look-back, for a period of 3 years prior to the date of your application for benefits. If there had been any transfers involving a trust, then the look-back period was 5 years.
NEW: All applicants are subject to a 5 year look-back period.
Beginning Date for Penalty Period
Medicaid looks at uncompensated transfers or gifts, that were made during the look-back period, to determine if they will impose any penalties. A penalty period is a time where you will not be eligible to receive benefits even if you meet the income and asset requirements. Under the old law, the penalty period began running in the month the gift was made.
NEW: The penalty period does not start until the applicant would otherwise have been eligible for Medicaid benefits had they not made the transfer. (See example below)
Calculating the Penalty Period
Under prior law, Medicaid would treat each gift separately unless they occurred within the same penalty period. In addition, penalties were rounded down.
NEW: All gifts made within the 5 year look-back period will be added together to calculate the penalty period. In addition, penalty periods will not be rounded down. (See example below)
Example of New Beginning Date for Penalty
Mrs. Howell gave her son $42,000 in December 2008. In October 2010, Mrs. Howell goes into a nursing home and applies for Medicaid benefits because she only has $2,000 and can no longer afford to pay for her own care. Medicaid looks back at the $42,000 that was given in December 2008 and calculates an 8.4 month penalty period. The penalty period starts ticking in October 2010 and therefore Mrs. Howell can not receive Medicaid benefits until the middle of June 2011. The penalty period does not start to run until the applicant would otherwise be eligible for Medicaid benefits had they not made the gift. This means that Mrs. Howell has only $2,000 but is expected to privately pay her nursing home bills for her first 8.4 months in the facility.
Example of Calculating the New Penalty Period
Mr. Sunter gave his grandson $9,000 in March 2008, his granddaughter $13,000 in June 2008, and his daughter $3,000 in December 2009. All of the gifts would be added together to calculate the penalty period. The gifts result in a penalty period of 5 months. As discussed in the above example, the penalty clock does not start ticking until Mr. Sunter would be otherwise eligible for Medicaid had he not made the gifts. So when Mr. Sunter goes into a nursing home and applies for Medicaid benefits in 2010 he will have to privately pay for the 5 month penalty period even though he only has $2,000.
Your home was an exempt asset, regardless of its value, under the old law.
NEW: Only $552,000 of equity in your home is exempt. States are given the option to increase this to $750,000. The Florida legislature has not had time yet to address the issue. However, the good news is that the limit on home equity does not apply if your spouse, minor, blind or disabled child resides in the home.
Annuity for the Well Spouse
Spouses previously were allowed to convert countable assets into an annuity for themselves, with their children as beneficiaries, in order to qualify an ill spouse for Medicaid.
NEW: While the well spouse may still utilize an annuity, the state must be named as the beneficiary after the well spouse, up to the amount of assistance Medicaid has paid for the ill spouse. Further, balloon annuities are no longer allowed.
These represent just a few of the key Medicaid provisions of the Deficit Reduction Act of 2005. There are many uncertainties under the new law as well as apparently conflicting provisions. It is more important than ever to consult a qualified Elder Law attorney before taking any action.
MAJOR MEDICAID LAW CHANGES!