Boston, MA (PRWEB) November 29, 2005
House and Senate conferees will soon sit down to reconcile two very different budget bills that cut billions from the Medicaid program. The House bill, H.R. 4241, contains provisions that will punish unwitting elders who have given their families modest gifts, and will force some middle-income elderly to sell their homes and spend down the proceeds, warns ElderLawAnswers (http://www.elderlawanswers.com), the nation's leading elder law Web site.
Both the House bill and its Senate counterpart, S. 1932, make it more difficult for America's middle-class elderly to transfer assets and later qualify for Medicaid coverage of nursing home care. But while the Senate bill would close loopholes to curb abusive Medicaid planning, the House bill would impose punitive new restrictions on asset transfers. Two proposed rule changes in the House bill are particularly threatening to older Americans.
Under the first rule change, the penalty for transferring assets will begin on (1) the date of the transfer, (2) the date of institutionalization, or (3) the date of application for Medicaid, whichever is later. An example will explain the problem with this proposal. Let's say a grandmother gives each of her four grandchildren $10,000 on December 1st of this year. In a state with an average monthly nursing home expense of $5,000, this will cause eight months of ineligibility. Under current law, the penalty period begins on the date of transfer, so the penalty period will commence on December 1st and expire after eight months.
Let’s assume that in one year, in December 2006, the grandmother has a stroke and moves to a nursing home and that she spends down her savings paying for her care over the following year. This would mean that under current law, she would be eligible for Medicaid on December 1, 2007. But under the House’s proposal, if she applied for Medicaid on that date, her eight-month penalty period would not begin until then, leaving her ineligible for benefits for eight months. Who would pay for her care during that time? Probably not the grandchildren, who may have used the funds for their college tuition or for other purposes. The answer is likely that it will be the nursing home that will have to front the cost.
The grandmother or her family could have avoided this problem if they had applied for Medicaid on December 1, 2006, when she entered the nursing home. Under the House proposal, this would have triggered the penalty at that time. But because the initial application would be denied, this would mean that two applications would have to be filed instead of one, resulting in twice as much work for the family and for the state Medicaid agency. (Actually, this would probably mean even more than twice as many Medicaid applications since virtually everyone would have to apply for Medicaid upon moving to a nursing home, many of whom would pass away before becoming Medicaid-eligible. Under current law, these individuals would never apply for Medicaid at all.)
The second harmful proposal in the House bill would limit the equity in a home that may be protected to $750,000. Those with homes of greater value would be ineligible for Medicaid coverage of long-term care. The problem with this proposal is that it is inequitable. In some parts of the country a $750,000 home is a mansion; in others, modest homes have market values exceeding this amount.
The Senate bill makes appropriate changes to the Medicaid eligibility rules that prevent practices seen as loopholes by most observers. The House bill, on the other hand, intends to punish seniors and their families. The irony is that the result will be that the seniors most severely penalized will be those who don’t avail themselves of elder law counsel.
Created by a nationwide network of attorneys, ElderLawAnswers (http://www.elderlawanswers.com) provides consumers with clear information on legal issues facing older Americans. Consumers may find qualified elder law attorneys searchable by state or telephone area code. The site offers primers on Medicaid, Medicare, estate planning, long-term care planning, and more. Other handy tools include calculators and checklists.
Harry S. Margolis, President
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