Medicaid Law Changes

Staten Island Medicaid Attorneys

Medicaid planning—the process of preparing financially for the time when you may need Medicaid to pay for nursing home and extended health care expenses—has become more complicated with the passage of a new law called the Deficit Reduction Act (DRA) of 2005. This law was signed into law by President Bush In February 2006, and generally means that families need get an earlier start on Medicaid planning. At the law firm of The Law Offices of Polizzotto & Polizzotto, LLC on Staten Island, our lawyers understand the requirements of the new law and can help you plan accordingly.

Most people are aware that the federal government requires people to spend down personal assets before they can become eligible for Medicaid assistance to pay for nursing home expenses. The amount of personal assets and home equity that a person is allowed to keep while still qualifying for Medicaid changes regularly. Currently, an individual is allowed to have $4,150 in personal assets and $750,000 in home equity.

Careful planning is a necessity to preserve the greatest amount of your estate for your family while still qualifying for Medicare. You can't simply transfer assets to your children before you enter a nursing home. Medicaid has a look-back period, during which it will check to see if you transferred assets to a family member. If you transfer assets to a family member during this look-back period, your eligibility for Medicaid will be delayed for a period of time. This delay in Medicaid eligibility is called a "period of ineligibility" or a "penalty period."

Changes in the new Medicaid law

• The current Medicaid look-back period for asset transfers and gifting is three years. The Deficit Reduction Act will gradually lengthen this look-back period to five years.
• Any period of ineligibility (or penalty period) will begin the month after an asset transfer is made. Under the new Medicaid law, this penalty period will not begin to run until you are in a nursing home and have exhausted other funds to pay for nursing home expenses. There are still transfer exemptions and hardship provisions.
• Annuities are counted as personal assets unless they are irrevocable and non-assignable. They must be actuarially sound and have equal payments with no deferral or balloon payments. The state would have to be named as a remainder beneficiary, although it could be secondary after a spouse, a minor, or a disabled child.
• Equity in a home will count as a personal asset if it is over $500,000 or $750,000 at New York's option. You could take a reverse mortgage for seniors or a home equity loan to reduce the total equity.
• A loan or mortgage will be treated as a transfer of assets, unless the repayment is actuarially sound and the loan or mortgage can't be canceled upon death of the borrower.

For a consultation on how the new Medicaid laws will affect your eligibility for Medicaid, contact an attorney at The Law Offices of Polizzotto & Polizzotto, LLC to schedule a confidential consultation today. Our attorneys request a reasonable consultation fee, which is likely to repay itself many times over in value. We are located in Southeast Annadale, near Richmond Avenue and Amboy Road, about two blocks from the Staten Island Railroad.