Articles

Big Changes in Medicaid Eligibility Under The Deficit Reduction Act (DRA) Of 2005, s.1932, CHAPTER 2

By Linda S. Ershow-Levenberg

prepared 2/14/2006, updated 7/18/2008

Seniors and their families need to be aware of the new landscape for individuals who potentially will require nursing home care in the next five years, as the rules governing Medicaid eligibility have changed.

1. An individual who is medically in need of nursing home care can apply for Medicaid to pay for that care once his countable, available resources have been reduced to $2,000 ($4,000 for individuals whose monthly income exceeds $1,911, who apply for the Medically Needy Medicaid Program). If the applicant is married and has a spouse living in the community, the spouse may retain up to $104,400 of the countable, available marital resources -- or half of those resources, whichever is less -- along with the marital home, a car, and personal effects.

    

2. If a person applies to Medicaid, he will need to provide 5 years' of documentation of every single financial transaction that occurred with his and his spouse's resources. This is called the "look-back period." Presently, there is a 3-year look-back, with the 5-year look-back restricted to cases in which assets were transferred into trusts. Gifts are then distinguished from other financial transactions.

    

    

3. Transfers of assets, or "gifts," which occur during the look-back period will cause a period of disqualification, called a "transfer penalty," just as they do now. However, this transfer penalty will be imposed at the time of the application. The result is that the person will be disqualified from receiving Medicaid for a period of time after he applies for Medicaid.

    

    

4. Certain annuities will be countable as resources unless specific requirements are met.

    

    

5. The equity of a house in excess of $500,000 will be a countable resource unless the home is occupied by the spouse, a child under 21, or a blind or disabled child. This may create problems if the applicant shares the house with a brother or sister who is a co-owner of the property.

A variety of planning strategies are available which take into account these new requirements. Call us for an appointment to review your unique situation.

It is vital that individuals save all of their documentation for at least five years in case it becomes necessary to apply for Medicaid. Save your bank books, deposit slips, cancelled checks, monthly statements, pension stubs, etc. Set up files for each account so you can keep your papers organized.

For more information on Medicaid Eligibility, please contact Linda Ershow-Levenberg at linda@finkrosner.com or call us at (732) 382-6070.

Fink Rosner Ershow-Levenberg, LLC
1093 Raritan Road
Clark, New Jersey 07066
Phone: 732-382-6070
Fax: 732-382-7986