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June 9, 2005
TRANSFER OF ASSET PENALTIES
A couple weeks ago the Senate concluded it’s budget debate. Last week I talked about the provision to restore the allowance for a married couple when one spouse needs to enter a nursing home. This week I’ll try to explain another provision in the Senate budget called the Transfer of Asset Waiver repeal.
Senator Creedon championed getting the Transfer of Asset Waiver repeal into the budget. During the budget debate he said, “Look at the facts. Connecticut withdrew its request for a waiver. We are asking for one and there is no guarantee we will get it. The figure (amount of potential savings) they banter about is $5 million. We ought to do what most states do and leave the law the way it is now. If they go to the ten-year rule and you made a tuition payment or mortgage payment for your kids, they (MassHealth) could go look at it. They look under the mattress, for every nickel and dime. This is bad public policy. If you want to collect money like this from the middle class, let’s lien students’ future earnings. I made calls to Washington and they suggest the waiver probably won’t happen and the same is true for the changing the federal law. I ask for your enthusiastic support.”
Federal Medicaid law has strict rules governing when a MassHealth nursing home resident can transfer assets for less than fair market value. Under federal rules, MassHealth can impose penalty periods of ineligibility if a nursing home resident transfers assets for less than fair market value within 3 years of entering a nursing home and applying for MassHealth. If the asset is transferred to a trust, MassHealth can look back 5 years to impose a penalty. The penalty period varies based on the value of the transfer, and begins as of the date of the transfer.
MASSACHUSETTS WAIVER APPLICATION – In Massachusetts, the Office of Medicaid has requested a waiver to impose harsher penalties on individuals who transfer assets and enter a nursing home on MassHealth. If granted, the waiver would allow MassHealth to ignore the federal rules and to look back 5 years to impose a penalty for gifts made to individuals (currently 3 years) and 10 years if the transfer was to an irrevocable trust (currently 5 years). It would also delay the start of the disqualification period. Currently the disqualification period starts on the 1st day of the month that the gift was made. Under the new rule, the disqualification period would not start until the individual entered the nursing home or applied for MassHealth, whichever is later.
These provisions would seriously impact innocent elders who transfer assets with no expectation of nursing home care for up to ten years in the future. It would penalize elders who support family members by making a mortgage payment or paying college tuition. What is worse, by delaying the start of the penalty period until the individual is in the nursing home, it would guarantee that severely ill and vulnerable elders cannot access the care they need.
FEDERAL CHANGES ON THE WAY – A commission has been formed by the federal government to find 10 billion in cuts from the Medicaid system. One of the ideas being kicked around is similar to the waiver requested by the Commonwealth of Massachusetts. They would increase the lookback period from 3 years to 5 years for gifts and 5 years to 10 years for transfers to irrevocable trusts.
THE CONNECTICUT WAIVER –
On May 6, 2005, Connecticut Governor M. Jodi Rell directed the withdrawal of Connecticut’s controversial waiver. The waiver, that was requested in 2002, planned to put limits on the Medicaid eligibility of elderly and disabled citizens when they need long-term care at nursing homes. Its terms were very similar to the Massachusetts waiver request.
Governor Rell expressed concern about the potential negative impact on Connecticut residents applying for Medicaid coverage if the federal government decides to approve the state’s three-year-old application for a waiver of eligibility rules about the transfer of personal assets.
“Although the waiver application was submitted in good faith, I continue to hear concerns from Connecticut residents about their future ability to access services at skilled nursing facilities if Medicaid eligibility processes are changed,” the Governor said. “As our frail elderly and disabled citizens attempt to navigate the complexity of the healthcare system, measures in the waiver application to change the process could be perceived as hindering the ability of individuals to access appropriate nursing home care. In addition, while we are working to shore up the financial structure of our skilled nursing facilities, the waiver as crafted could lead to further deterioration of the already fragile financing of these facilities.”
Governor Rell noted that the federal Medicaid agency has held Connecticut’s waiver application without approval for more than three years.
“The fact that the Centers for Medicare and Medicaid Services did not expeditiously approve the state’s 2002 request is further indication that the waiver application may be viewed as problematic,” Governor Rell wrote to Social Services Commissioner Patricia A. Wilson-Coker, in directing that the waiver application be withdrawn.
“The subject of increasing the ‘lookback’ period and the penalty period for qualifying for Medicaid is starting to be addressed on the federal level by President Bush and Congress,” the Governor said. “I believe it is more appropriate for Connecticut public policy to be formulated as part of the national discussion on this issue, rather than through the advocacy of an individual waiver of federal law. The public policy discussions beginning to unfold in Washington and in state capitals will guide Connecticut’s future position on this complex subject.”
WHAT CAN YOU DO? –
If you have a spare minute, we are asking that you contact your Representative and Senator and ask that they contact their members of the Conference Committee and ask them to support:
· The Transfer of Asset Waiver Repeal, and
· Restoration of the Community Spouse Resource Allowance, and
· 20 Day Nursing Home Bedhold.
This article gives general information and not specific advice on individual matters. Persons wanting individualized advice on matters discussed should contact an advisor experienced in those matters. To the extent this article provides information on legal matters, it is based on law in effect in Massachusetts on the date of posting (laws in effect in other states are often quite different).
Ronald H. Surabian is a CPA and attorney who works at the Elder Law Center in Saugus, Massachusetts. He also holds a masters in accounting and a masters in tax law. He currently serves on the board of directors of the Massachusetts Chapter of the National Academy of Elder Law Attorneys. If you have any questions please call me at the Elder Law Center, One Essex Street, Saugus, MA 01906 (781)233-4444. To view this or any prior article, please visit our web site at www.elderlawcenter.org