Alzheimer's Care, Blog, Elder Law Articles, Medicaid and Paying for Nursing Home Care
New Medicaid Law Changes Pose Challenges to Nursing Homes and Residents
The New Landscape In February of 2006, due to changes brought about by Congress through the federal Deficit Reduction Act of 2005 (DRA), there were massive changes in the federal Medicaid law as it relates to the gifts or asset transfers. Now, on January 1, 2012, Illinois will finally adopt those provisions of the DRA and, thus change Illinois Medicaid law for long-term care forever. You may recall that under the old Medicaid law (expiring on December 31, 2011), a gift or other uncompensated transfer created a period of ineligibility starting on the date of transfer.
- For example: Prior to January 1, 2012, a $70,000 gift made by someone in Chicago, Illinois would create a 10 month penalty from the date the gift was made. (Assume Skilled Nursing Facility (“SNF”) cost of $7,000 a month. $70,000 divided by $7,000 = 10 months). Thus, if the gift were made 12 months prior, the penalties would have already expired.
- Under the new Illinois DRA law for Medicaid, for gifts made after January 1, 2012, the same 10 month penalty period will not begin until the following requirements are all met:
- So let’s review another example: Assume Mr. Applicant is a resident of the Gracious Nursing Facility located in Chicago, Illinois and that he has been paying the Gracious Nursing Facility privately for some months. He will be ready to apply for Medicaid in September, 2012 because at that time he will be spent down.
- However, in January, 2012, after the new law came into effect, Mr. Applicant made a gift to his granddaughter for tuition at a local college.
- Assume that the amount of tuition payment was $70,000. Under the old law, that would have meant that there would be a penalty of 10 months ($70,000 gift divided by $7,000, which is the cost for a semi private room on a private pay basis at Gracious Nursing Facility=10 month penalty). Under the old laws, the 10 month penalty calculation would begin on the date of the transfer. Thus, the penalty would have ended by August, 2012.
- However, under the new laws, the penalty won’t start until September, 2011, when Mr. Applicant is spent down to $2000. This means he may not be eligible until the same 10 month penalty period ends in June, 2013!