Can My Parents Sell Their Home and Pay for Upgrades to Our Home Without Triggering Medicaid's Transfer Rules?
Both my elderly parents need extra help. We are going to sell their house and move them onto my property. We will need to bui...Read more
President Bush today (February 8, 2006) signed into law the Deficit Reduction Act of 2005, which among other provisions places severe new restrictions on the ability of the elderly to transfer assets before qualifying for Medicaid coverage of nursing home care.
The law extends Medicaid's "lookback" period for all asset transfers from three to five years and changes the start of the penalty period for transferred assets from the date of transfer to the date when the individual transferring the assets enters a nursing home and would otherwise be eligible for Medicaid coverage. In other words, the penalty period does not begin until the nursing home resident is out of funds, meaning she cannot afford to pay the nursing home.
The law also makes any individual with home equity above $500,000 ineligible for Medicaid nursing home care, although states may raise this threshold as high as $750,000.
The new federal law applies to all transfers made on or after the date of enactment, February 8, 2006. However, the law gives states that must pass legislation to meet the new requirements more time to come into compliance. This gives many people in most states a little time to plan. The deadline for states to enact their own laws varies from state to state, but generally it is the first day of the first calendar quarter beginning after the end of the next full legislative session.
Any transfer made before February 8 falls under the old transfer rules. But what about someone who transfers assets after that date but before his state comes into compliance with it? In all probability, this will depend on the date of the application for Medicaid. If the application is filed before enactment of the state law, it will probably come under the old transfer rules. If it is filed after the enactment of the state law, it will come under the new transfer rules.
The bottom line: if you have considered protecting some assets for your loved ones in case you later require long-term care, you should contact a qualified elder law attorney now. (To find an ElderLawAnswers member attorney in your area, click here).
The new law also:
In addition, the law incorporates provisions in the original budget bill passed by the Senate closing certain asset transfer "loopholes," among them:
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