Elder Law Center

One Essex Street

Saugus, Massachusetts 01906

Telephone 781.233.4444   Fax 781.231.2222

November 3, 2005

U.S. HOUSE STICKS IT TO SENIORS

This past week I received two reports from our U.S. Congress. The first was from the U.S. Senate Finance Committee that recommended some reasonable changes to Medicaid. Medicaid is what pays for nursing home care once you run out of money. I then turned my attention to the 96 page report issued by the Energy and Commerce Committee for the U.S. House of Representatives and was horrified at their recommendations. These are committee recommendations that need to be approved by the full Senate and House prior to becoming law.

 On October 21, 2005 the U.S. House of Representatives Energy and Commerce Committee reported their recommended changes to the House. If these changes are adopted by Congress, they will change the way your assets are treated in the event that you ever need nursing home care. The House is trying to get the law changes through as soon as possible so that they may concentrate on the upcoming vote on cutting taxes for the rich. Here are the proposed MassHealth (Medicaid) changes:

LOOK-BACK PERIOD INCREASE – The committee recommends increasing the look-back period for all transfers or gifts from 3 years to 5 years.

 Our current MassHealth (Medicaid) system utilizes a 3 year look-back period for gifts and a 5 year look-back for transfers that utilize a trust.        This means that if you need nursing home care, and are otherwise eligible, any gifts made during either the 3 or 5 year period must be disclosed. Making a gift in the 3 year period before needing nursing home care doesn’t necessarily mean that you are ineligible for MassHealth. It’s the amount of the gift that is important.

Gifts made under the current MassHealth system create a disqualification period, and the disqualification period starts to run at the time of the gift. This is the other major recommended change, the elimination of the disqualification period start date.

DISQUALIFICATION PERIOD START DATE  -  This recommended change would mean that any gift made within 5 years of needing nursing home care would have to be returned and paid over to the nursing home.

           This is really scary. What if you paid for your grandson to go to college? He’d have to give it back! What if you make contributions to your church? You’d have to ask for it back! What if your son got behind on his mortgage payments? The answer is the same, you need to get the money back and pay it to the nursing home.

           What if you can’t get the money back? You would have to request a hearing and either request a hardship waiver or argue that you made the gift, not to qualify for MassHealth, but for other reasons such as love and affection or for estate planning purposes.

           Before I get too carried away, let’s take a look at how disqualification periods are currently calculated and how this may change;

           Currently, if you are in a nursing home and want to apply for MassHealth, you have to disclose any gifts that you have made in the last 3 years. Whenever you make a gift, there is a disqualification period associated with that gift and the length of the disqualification period is based upon the amount of the gift. In round numbers, for every $7,000 you give away, you are disqualified for one month. If you give away $14,000, you are disqualified for 2 months and so on. Any gifts, regardless of the amount, made over 3 years ago are ignored; they are beyond the look-back period.

 Example: On October 1, 2003 Mary gives her son $84,000 for a down payment on his new house. On November 1, 2005 Mary needs nursing home care. Is Mary eligible for MassHealth?

·        Under our current system, the gift of $84,000 created a 12 month disqualification period ($84,000/$7,000=12 months) and this disqualification period ended on September 31, 2004. Mary is now eligible for MassHealth.

·        Under the proposed change, Mary still has the same 12 month disqualification period. The only difference is that it doesn’t start until Mary is in the nursing home and has less than $2,000. It is only then that the 12 month period starts to run and if Mary is unable to get the money back from her son, the nursing home will evict her for non-payment. Mary is NOT eligible for MassHealth.

It would not matter whether the gift was to Mary’s son, her church, or a hurricane relief fund. Mary would not be eligible for MassHealth and would face nursing home eviction proceedings for non-payment. Does this seem fair to you? President Bush and his Republican lead House of Representatives think so. Maybe you should give them a call?

 Not every member of the House agrees with this. It went to the full House for debate on October 27, 2005 and Massachusetts Representative Ed Markey started off by filing an amendment to eliminate all cuts to Medicaid. He did that to make a statement. A statement that although some cuts need to be made, this is not the way to change Medicaid.

According to the committee report, these changes, if adopted, would become effective on the date of enactment. This means that any gifts made prior to the date of enactment would not be subject to these new rules. So, if you have been thinking of doing some kind of estate planning, you may want to do it now, rather than later to avoid having to deal with some of these draconian changes.

 Next week, I’ll go over the proposed changes proposed by the United States Senate and try to keep you up to date on what is happening with this attack on the elderly by the House of Representatives.

 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 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

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