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Congress changes Medicaid eligibility law
On February 1st, the United States House of Representatives took the final step in passing Senate Bill 1932, the Deficit Reduction Act of 2005. On February 8th, President Bush signed the Bill into law. The new law changes Medicaid eligibility rules to make it harder for middle class people to access the Medicaid program to pay for nursing home, assisted living and other long-term care. The bill is effective as of February 8, 2006. The following article describes first the political issues and then the substantive ones.
All legitimate senior and disability advocacy groups took strong positions against this bill and Elder Law Attorneys, including Solkoff Legal, P.A., fought hard. In the end, the vote came down to 2 congressional representatives. The vote was 216 to 214. All Democrats voted against the bill and some of the more moderate Republican members joined the Democrats in opposition. For example, Republican Rob Simmons of Connecticut boldly opposed passage of the bill.
If you live in Southeast Florida, you should know that Republicans Mark Foley and Clay Shaw both voted for the bill despite the fact that a large percentage of their constituents are the very same elderly persons who will now be denied necessary health care. You should also know that both Mark Foley and Clay Shaw were well aware that the Medicaid provisions were in the bill and that they knew the harm that will be done. Scott Solkoff provided materials to and personally met with and spoke with legislative aides from Mark Foley’s office and spoke with Clay Shaw’s aide as well. On the other hand, our Democratic delegation from Florida granted personal meetings with Elder Care advocates such as Scott Solkoff and they spoke out strongly against the Medicaid provisions but they were stifled by the majority party. Still, the fact is that the law passed by a 2 vote margin. Had Foley and Shaw seen things differently, they could have made a difference.
So … that is what happened politically. Solkoff Legal, P.A. pledges to work with other leading elder care advocates to publicize the effect of the new law and to let voters know who of their elected officials stood by them and who voted instead for legislation drafted by and for those close to the insurance industry.
“This is a product of special interest lobbying,” said Representative John Dingell, a Michigan Democrat, who is the longest-serving member of the House, “and the stench of special interests hangs over the chamber as we consider it today.”
Solkoff Legal, P.A. will work with willing legislators in an attempt to fix some of the more egregious portions of this law. Much pressure is applied to Representatives to vote “with the party” and so Foley and Shaw might be excused by some. They certainly have the ability to redeem themselves by helping to fix it. Kudos to Representative Simmons for voting his conscience.
Among the most egregious new provisions — People who make gifts, even small ones for birthdays or to pay for a grandchild’s college or to make a donation to a charity, will now be made ineligible for Medicaid when they need it. Under the old law, people who made gifts would be penalized but their penalty would begin to run when they made the gift. The new law changes the penalty start-date to the date the person applies for Medicaid. Since you cannot apply for Medicaid until after you have less than $2,000, this means that you (A) need long-term care; (B) have no money and (C) cannot qualify for Medicaid. How these people will pay for nursing home care is unanswered. Are we to believe that nursing homes will provide free care when an average bill could easily be $6,000/month? Probably not. Instead, there is some movement to hold adult children legally responsible for their parents’ health care. We believe this is bad public policy.
Medicaid is the state and federal program which pays toward the cost of long-term care. With nursing homes costing $4,000.00 to $15,000.00 per month, people who saved for their retirements are often left impoverished. The new law imposes very harsh penalties for people who make gifts of their assets and who then apply for Medicaid. The law also targets the homes of some Medicaid-hopefuls and removes other planning strategies. Some of the changes:
Change in “Look-Back period:” People who gift money will be disqualified from Medicaid for a longer period of time. The new law imposes a five-year “look-back” period on all gifts. This means that if people give money away, even small gifts, the government now can disqualify these applicants for Medicaid if they apply within five years of the last gift. It is also important to know that although the government “looks back” five years, the government will be able to impose an unlmited number of months of penalty during which the person cannot obtain Medicaid.
Change in Penalty Start-Date: Under the old law, if a person did make a gift, that person would be disqualified for Medicaid but this penalty period would start running from the date the gift was made. Under the new law, the penalty will not start, in most cases, until the person applies for Medicaid. This means that if a person gives away $20,000 and then needs Medicaid four years and eleven months later, that person will be disqualified for Medicaid even if they are penniless.
Government becomes beneficiary of annuities: Another change in the law would require the government to be named the beneficiary on some annuities. If a person applies for Medicaid owning an annuity, the new law requires the person to change the beneficiary from children or other people to the government or else the person will be denied Medicaid coverage.
Spouses of Medicaid applicants will not be allowed to keep as much money. The new law imposes the “Income-First Rule” on the wives or husbands of Medicaid applicants. This rule allows the government to count the income of both spouses to justify the spouse having to spend more of the couple’s money before either will be eligible for Medicaid.
Mortgages and Promissory Notes to be counted as assets. Under the new law, the government will be able to disqualify people from achieving Medicaid eligibility based on ownership of mortgages or notes.
Homes can now be “taken” by the government. For the first time in the Medicaid program, this new law will make it possible for the government to count homes as an asset for Medicaid eligibility. Homes over $500,000 in value are at risk under the new legislation and this could be expanded.
The law “grandfathers in” certain transactions done prior to February 8th, the effective date of the law. It is also expected that Florida and other states will need to pass rules to provide the government and the public wth guidance on how the new rules will actually be applied. We will be involved in the rule-making process to the extent possible.
“There are things that people can do to protect themselves,” says Scott Solkoff. “This change in the law represents the most significant change in Medicaid eligibility since 1988 and noone knows about it. One challenge is just getting the word out so that people do not inadvertently disqualify themselves for Medicaid.” Solkoff and his colleagues are concerned that many people will make gifts and not understand how to do so correctly and without understanding the new consequences.
“People should stop making gifts,” says Solkoff, “unless they are making the gifts after receiving advice from their lawyer.” Some Elder Law Attorneys are certfied by The Florida Bar as specialists in helping people to protect their savings and qualify for Medicaid. “The new law will hurt people who lack an understanding of available planning options. Under the new law, if a grandmother gifts $10,000 to a grandchild to go to college, the grandmother will be rendered ineligible for Medicaid even if she applies four years later and is totally out of money. She will regain eligibility after the penalty is over but every month she is not eligible will cost thousands of dollars and may result in a loss of care.” Elder Law Attorneys can help people protect their assets and qualify for Medicaid often without any penalty period.
People should also not rely upon IRS rules which allow a certain amount to be gifted per person per year. “While the IRS may allow it, ” explains Solkoff, “Medicaid will penalize people for having made the gifts.”
Nursing homes range in cost from $4,000.00 per month for a shared room in a basic facility to upwards of $15,000 per month for a nicer facility with more services. Most people cannot afford to pay for that care for very long without becoming impoverished. People therefore turn to planning strategies that allow a person to preserve some or all of their savings so that they have their own dollars to pay for services and items which Medicaid does not cover. In Florida, Medicaid pays for almost all nursing homes including those that charge the most and are considered among the best. By federal law, people in nursing homes cannot be treated differently whether they are on Medicaid or are paying privately.
The effective date of this legislation is upon enactment. The law is enacted when the President signs the bill. All transactions done on or before the date of enactment are treated under the “old law.” States will be enacting rules to comply with the new Federal law. Scott Solkoff is one of a handful of attorneys appointed to the Joint Public Policy Task Force and he will therefore be working closely on any new changes. These changes could expand some opportunities and limit others. The new law and the coming regulations make it all the more important to plan effectively using only expert advice.
With no planning and being unaware of the new law, many people stand to lose Medicaid, the only method available to them to pay the cost of long-term care. Solkoff, whose offices are located in Aventura, Boynton Beach and Miami, wants people to get educated in the new laws and how they may be affected. Solkoff explains that Elder Law Attorneys all have different fee structures but that many offer initial consultations in the range of $100 to $500 and that an initial consultation may be all that a person requires to make good choices. Elder Law Attorneys advise their clients how to protect their savings and qualify for Medicaid; otherwise people are often left totally reliant on Medicaid with no funds remaining to pay for all that Medicaid does not cover. Only Board Certfied Elder Law Attorneys should be consulted. To find a Board Certfied Elder Law Attorney in your area, contact The Florida Bar toll-free at 1-800-342-8060 or go to the Florida Bar website (www.flabar.org), select “Find an Attorney,” and then click on “Board Certfied Lawyers.”
Scott Solkoff has served as President of the Academy of Florida Elder Law Attorneys, Chair of The Florida Bar’s Elder Law Section and a Director of the National Academy of Elder Law Attorneys. His work or comments on the law and public policy affecting seniors and persons with disabilities have been published in The Wall Street Journal, the Washinton Post, the New York Times, Kiplinger’s Magazine and numerous other mainstream publications and many of his articles have been published in leading professional journals. Scott Solkoff is Board Certfified by The Florida Bar in Elder Law. His firm, Solkoff Legal, P.A. maintains Florida offices in Delray Beach.
To read the text of the new law, click here: http://www.solkoff.com/detailObject_ID.asp?Key=62
To read a news article describing the passage of the Deficit Reduction Act, click here: http://www.nytimes.com/2006/02/01/politics/01cnd-spend.html?ex=1296450000&en=bf6067040473a9ac&ei=5088&partner=rssnyt&emc=rss
To send Representative Mark Foley your message, click here: http://www.house.gov/foley/mail.htm
To send Representative Clay Shaw your message, click here: http://shaw.house.gov/contact/
To send Representative Rob Simmons your message, click here: http://www.house.gov/formsimmons/ima/send_email.html
To understand more about Medicaid planning, click here: http://www.solkoff.com/detailObject_ID.asp?Key=36 and http://www.solkoff.com/detailObject_ID.asp?Key=31.
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- Arkansas Department of Health v. Heidi Ahlborn ( )
- How to Become a Client of Solkoff Legal, P.A. ( )
- What is a "Pooled" Special Needs Trust ( )
- Scott Solkoff to appear on local NBC affiliate ( )
