A NEW MINEFIELD FOR SENIORS
Illinois’ Proposed New Medicaid Rules for Long Term Care
On August 3rd, we were informed that Illinois Department of Human Services Director Julia Hamos had signed proposed rule changes for Medicaid eligibility in the State of Illinois.
The rules were published in the Illinois Register on August 13th.
The proposed rules will have a tremendous impact on senior citizens and disabled persons seeking Medicaid coverage for long term care.
If any individuals or organizations wish to submit written comments or testify at the September 13th public hearings described below, they should contact our offices at 847-292-1220. Any effort to inform state officials about the public’s opinion of these new rules will possibly result in the rules being finalized in a way that is fair for our citizens.
Public hearing requests must be received by the Illinois Department of Human Services within 14 days of publication. There will be a 45 day public comment period and public hearings are scheduled to commence on September 13, 2010 at 9:00am at the Michael Bilandic Building, 160 N. Clark St., Chicago, Illinois, Room 500.
As I have explained in prior newsletters, we have expected the proposed rules to be forthcoming for a substantial period of time. On February 8, 2006, President Bush signed the federal Deficit Reduction Act (DRA). The proposed Illinois rules that were published on August 13th are being proposed by Illinois to implement, in part, the Federal DRA.
In summary, here is a timeline for upcoming DRA matters in Illinois:
- August 2, 2010 Signing Date
- August 13, 2010 Publication Date
- August 27, 2010 Deadline for public hearing requests for groups of 100, or 25 individuals
- September 13, 2010 Public Hearing
- September 27, 2010 Deadline for written comments
The rule changes are numerous and complex. Below are just a few of the changes. I hope this will help you understand the impact of these changes:
1) Medicaid applicants will be subject to a five year lookback period. Previously, the look back was three years (36 months). Under the proposed rules, all applicants for Medicaid coverage for long term care under either the community care and the in-home service programs, the supportive living program, or a skilled nursing program, will be required to produce accounting and documentation for all financial transactions during the five years prior to the date of the application. This is, in effect, an onerous 5 year audit.
2) Start date of penalized transfers made harsher. Up until now in Illinois, the penalty period began at the time the transfer was made. Under the new rule the penalty period for non-allowable transfers will commence only when the applicant is eligible for Medicaid benefits (but for the penalty period in question). This means commencing the penalty period only when the person is institutionalized and has applied for Medicaid. This will have a disastrous consequence and negatively impact senior citizens in nursing facilities or SLF’s and those waiting to be admitted if they have made any transfers of assets during the past 5 years. For example, a senior with dementia who makes withdrawals totaling $50,000 from her savings account 14 months prior to the Medicaid application will be ineligible for Medicaid long term care benefits for 10 or more months following the month in which she applies for Medicaid. Where will that money come from to cover her through that ten month penalty at such a late date in her life?
3) Partial returns of prior unallowable transfers are not permitted. This means that if a senior citizen grandmother gave away $50,000 to a grandchild so that the grandchild could go to college, such gift could result in a ten month penalty. If the child was able to give back $49,000, the penalty period would not be reduced because the proposed law requires that the entire $50,000 be returned. What if only $49,000 can be returned? What happens to the generous and helpful grandmother if there is no commensurate penalty reduction?
4) $500,000 limit on home equity that is exempt. Prior to the proposed rules, there was no limit on the equity of property used as a principal residence. Thus, a Medicaid applicant’s principal residence was an exempt resource regardless of value. The proposed rules impose a $500,000 limit on the exempt value of a principal residence when the owner is institutionalized or residing in a nursing home. States are given an option of increasing the level of exemption to $750,000 under federal law.
Final note: There are other changes, such as changes to annuities, spousal refusal to disclose assets, accumulation of gift penalties etc. that will be onerous for many of our senior and disabled citizens.
In our forthcoming Elder Law Updates, we will provide you with more information about the rules and what can be done to deal with these new rules.
If additional information is desired, please don’t hesitate to contact our offices at 847-292-1220.
Elder Law & Long Term Care Planning Attorneys
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This communication is advertising material. This is not intended to be, and cannot be, used as legal advice.
Anthony B. Ferraro
The Law Offices of Anthony B. Ferraro, LLC
The Estate & Trust, Elder and Asset Protection Law Firm
Columbia Centre I
5600 N. River Road, Suite 764
Rosemont, IL 60018
PH (847) 292-1220
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This document is for discussion purposes only and is not intended to be, nor should it be, considered as legal advice. You should never attempt Medicaid planning, Estate Planning, Probate, or Estate and Trust Administration without the advice of competent legal counsel.