New Medicaid Rule Changes

Article Submitted by Bill Beyers of the Law Office of William C. Beyers, Loveland, Colorado. He can be reached at 970-669-1101.

On February 8, 2006, President Bush signed the Deficit Reduction Act which makes major changes to the rules of Medicaid eligibility for nursing home coverage. Here are some of the major changes under the DRA.

Increases the Look-back Period
Increases the Look-back Period Now all transfers for less than fair value, whether to individuals or to trusts will be subject to a five-year look-back period rather than the prior three-year look-back period for individuals and five years for transfers to trusts.

Penalty Period Start Date
The new law shifts the start of the period of ineligibility for a transfer of assets from the first day of the month of the transfer. The penalty period now starts to run on (i) the later of the first day on the month of the transfer or (ii) the date on which an individual is eligible for medical assistance under state law but for the application of the penalty period. In other words, the penalty period does not begin until the applicant is admitted to a nursing home and is essentially out of funds. This raises the question of how the nursing home will be paid if the resident has no funds, since the facility cannot evict the resident without a safe place to transfer her.

The Valuable House Rule
Under the new law, equity in homes of nursing home residents exceeding $500,000 will be countable unless the nursing home resident's spouse, child under age 21, or blind or disabled child is living in the house.

Annuities
The new annuity provisions still permit the use of non-balloon annuities, but require that the state be "named the remainder beneficiary in the first position for at least the total amount of medical assistance paid on behalf of the annuitant." The provisions also provide that the state be named the secondary beneficiary where a community spouse or minor or disabled child is the primary beneficiary.

Proof of US Citizenship
The new law also requires all who are applying for Medicaid to produce a passport or a birth certificate to prove they are a US citizen. Applicants who have neither of these documents could find their coverage denied or delayed.