Medicaid and nursing homes: an update for 2011
In the past few years — as more seniors seek the services of assisted living and at-home care, and the rules for Medicaid qualification for nursing homes have stiffened — you might get the false impression that nursing home care and Medicaid have taken a back seat in long-term care.
While it is true there are fewer Medicaid-certified nursing home beds available in Pennsylvania than a few years ago and emphasis has shifted, because there are still those too frail or too disabled for at-home or assisted living care, nursing homes remain a critical component in the overall long-term care network and Medicaid is a substantial payer.
There still is Medicaid planning and, even for those who chose not to plan, there are Medicaid pitfalls and mistakes that the innocent need to know to avoid. Pennsylvania is a particularly risky state in which to remain ignorant and fail to plan since Pennsylvania has enacted a “filial responsibility” law which may require children to pay for the long-term care of their parents if a Medicaid application is unsuccessful.
What has changed is that many skilled nursing facilities have shifted emphasis from long-term or what is commonly referred to as “custodial” care that may be covered by Medicaid to short-term rehabilitation up to 100 days under Medicare following hospitalization. After the rehabilitation period, if additional care is needed, it must typically be provided either by private payment by the resident or, if he or she qualifies both medically and on the assets, by Medicaid.
There are many more things today that families might do wrong that can cause Medicaid penalties for long-term care where the government would refuse to pay even when the assets are at the Medicaid level.
In 2006, with the “Deficit Reduction Act,” the rules for nursing home Medicaid throughout the United States changed dramatically. Implementation has taken years. Pennsylvania began implementing the law about March 2007 with a series of what were referred to as operations (or “ops”) memoranda that were basically instructions to caseworkers who decide Medicaid cases how to interpret the law.
Here are some of the basic changes:
1. “The five-year lookback.” Before the Deficit Reduction Act, caseworkers reviewed and considered financial transactions by the applicant for three years prior to the application for Medicaid (the three-year lookback). After about March 2007, Pennsylvania caseworkers began to consider transactions dating back to the effective date of the Deficit Reduction Act and using a maximum five-year lookback for transactions on or after Feb. 8, 2006. The full five-year anniversary date did not occur until recently — Feb. 8, 2011 — so there was not a full five-year lookback until recently. Lookbacks only answer the question of what transactions are considered. What the consequences are is another issue.
2. “The start date for the running of the Medicaid penalty.” In order to understand what is happening, it is necessary to know that the government can impose a penalty for gifts (also referred to as “uncompensated transfers”) that are made during the “lookback” period.
Since many people do not view what they are giving as a gift, here are examples. If, for instance, the person who later becomes a Medicaid applicant, gives a sizable wedding gift or helps out with the mortgage when a child is unemployed, or transfers her home into her child’s name and there is no exception under the rules for “caretaker child” and the child is not disabled, all of these may be considered gifts.
Before Feb. 8, 2006, if a gift was given during the three-year lookback, the applicant may have been disqualified for the month of the gift or for an equivalent number of months after using a “penalty divisor.” If the gift was for $5,000, for instance, and the penalty divisor was $5,000, then disqualification was for one month from the time of the gift.
Under the Deficit Reduction Act, if a gift is given during the five-year period before applying for Medicaid, the penalty period begins to run when the person is “otherwise eligible” for Medicaid, in other words, when he or she has only either $2,400 or $8,000 left.
The law does not address what happens if funds cannot be located to pay the nursing home bill but Pennsylvania law currently allows facilities to sue children for the cost even if those children were not the ones who received the gift. How to handle this when mistaken gifts are given will be covered in another column.
About the Author Janet Colliton
Esquire, Colliton Law Associates, P.C. Janet Colliton has practiced law for over 38 years, 37 of them in Chester County, Pennsylvania, a suburb of Philadelphia. Her practice, Colliton Law Associates, PC, is limited to elder law, Medicaid, including advice, applications and appeals, and other benefits planning including Veterans benefits, life care and special needs planning, guardianships, retirement, and estate planning and administration.