What happened to Medicaid? Understanding the changes
While 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.
It is true there are fewer Medicaid certified nursing home beds available in Pennsylvania and emphasis has shifted to at-home and assisted living. Still, for the frail elderly, 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, for those who choose 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 since it has enacted a “filial responsibility” law that 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 “custodial” care to short-term rehabilitation up to 100 days under Medicare following hospitalization. After the rehabilitation period, if additional care is needed, the resident pays or, if he or she qualifies both medically and on the assets, Medicaid does.
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. But there are also opportunities to do it right and to make the system work for you.
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.
We now know in most cases what we can and cannot do. It has been a wild ride but there is now enough stability in the system to enable us to help people make informed choices.
Some of the changes are generally known but not understood by the public. Some are less available.
1. “The five-year lookback.” People who hear of the “five-year lookback” think that it means nothing can happen in the five years before filing a Medicaid application.
Actually, it means that the government will “look back” or consider financial activity up to five years. It does not say what happens when an income management caseworker looks back.
Before the Deficit Reduction Act, caseworkers reviewed and considered financial transactions by the applicant for three years prior. After about March 2007, Pennsylvania caseworkers began to consider transactions dating back to the effective date of the Deficit Reduction Act (Feb. 8, 2006). Lookbacks only answer the question what transactions are considered. What the consequences are is another issue.
2. “The start date for the running of the Medicaid penalty.” The government might impose a penalty for gifts (also referred to as “uncompensated transfers”) that are made during the “lookback” period. There are exceptions.
Here are examples of gifts. 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 might be considered gifts.
Before Feb. 8, 2006, if a gift was given, 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 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 and there is no exception or exclusion, 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.
There are ways to handle most of this provided that people seek help in understanding the rules while they still have funds to correct the problem. The less money that a parent has when help is sought, the less can be done to solve a problem. If it is unknown whether there is a problem, then families should seek help.
For more, listen to “50+ Planning Ahead” a weekly radio program on WCHE 1520 on every Wednesday from 4:30 pm to 5:00 pm with Janet Colliton, Colliton Law Assocs., PC, and Phil McFadden of Home Instead Senior Care.
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.