The estate tax gets all the press, but if you are leaving property to a grandchild, there is an additional tax you should kno...Read more
What Do the New Medicaid Transfer Rules Mean to You?
- April 21st, 2006
The Deficit Reduction Act of 2005 (DRA) places new restrictions on the ability of the elderly to transfer assets before qualifying for Medicaid coverage of nursing home care. This means it could be more difficult to qualify for Medicaid benefits.
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. For more on the provisions of the new law, click here.
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 asset transfer made before February 8 falls under the old transfer rules. But what about someone who transfers assets after that date but before his or her 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. But to be sure, check with an elder law attorney in your state.
Transfers should be made carefully, with an understanding of all the consequences. People who make transfers must be careful not to apply for Medicaid before the five-year lookback period elapses without first consulting with an elder law attorney. This is because the penalty could ultimately extend even longer than five years, depending on the size of the transfer.
For more information on Medicaid, click here.
For more information on Medicaid Planning, click here.
Local Elder Law Attorneys in Ashburn, VA
Needham Mitnick & Pollack, PLC
Susan Pollack served as Chairperson of the Falls Church Senior Citizens Commission from 1997 to 2011 and was on the Executive Board of the Falls Church Education Foundation. She has also served on the Board of Directors of the Alzheimer’s Association of the National Capital Area and is a member of the Arlington B...
Margaret A. O'Reilly, PC
Margaret A. O’Reilly is an estate planning and elder law attorney with over thirty-five years of legal experience. Attorney O’Reilly graduated from Duke University with a degree in psychology, and received her law degree from Northeastern University School of Law in Boston, Massachusetts. For over 15 y...
Hale Ball Carlson Baumgartner Murphy PLC
Attorney Samantha Simmons Fredieu is an associate at Hale Ball. Ms. Fredieu graduated magna cum laude from Vermont Law School where she was the symposium editor on the Vermont Law Review, a production editor on the Vermont Journal of Environmental Law, and a member of the Moot Court Advisory Board. She has clerked for...