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Opinions
House Budget Bill Unfairly Punishes Elderly,
ElderLawAnswers Warns
Leading elder law Website warns that House bill
cutting Medicaid would drastically change asset transfer rules,
punishing older Americans
Nov. 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 (www.elderlawanswers.com),
the nation's leading elder law Web site.
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More news on Medicaid - click here |
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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.
Lets 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 Houses 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 dont avail
themselves of elder law counsel.
About ElderLawAnswers:
Created by a nationwide network of attorneys,
ElderLawAnswers (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.
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