Medicaid is a federal-state program that pays for medical treatment including nursing home care for low-income individuals who are 65 or older, blind, or disabled.  The rules on qualifying for Medicaid change often.  Saving enough money to pay for nursing home care is a practical impossibility for many older people and this may make reliance on Medicaid necessary.  Planning for Medicaid qualification involves difficult decisions that have complex property and tax law implications.  Planning opportunities do exist and early planning is essential to maximize the options available.

Recent Changes in Medicaid:

You may have heard that there have been significant changes in Medicaid qualification thanks to the Deficit Reduction Act of 2005. Medical eligibility can offer important, even invaluable, benefits for those in need. The law has changed significantly regarding qualification requirements for Medicaid to pay for the cost of nursing home patients’ care.  The Deficit Reduction Act of 2005, commonly referred to as the “DRA” was signed by President Bush on February 8, 2006. 

Here is a quick run down of the changes:

• The Look Back Period previously was thirty-six months and now the Look Back Period is sixty months. The Look Back Period is the amount of time that the Department of Human Services (DHS) reviews to determine if the individual trying to qualify for Medicaid divested any assets.
• Under the old rule partial months were dropped from the penalty period and “serial divesting” was allowed. Now divestment penalties no longer drop any partial month penalties.
• The old rule allowed a $60 deduction for a court appointed guardian or conservator expense. Under the new rule the amount allowed is $45 per month.
• Under the old rule the divestment penalty period started the first day of the month the gift was given. The new rule starts the divestment penalty period on the date the individual is eligible for Medicaid, except for the penalty period imposed.
• Under the new rule, an individual is ineligible for Medicaid to pay nursing home costs or home based services if the equity interest in their home is greater than $500,000. Under the old rule home equity was not a consideration.
• If annuities are purchased in order to try to qualify for Medicaid, the State of Michigan must be named as a remainder beneficiary.
• And several more changes….

Protections for the community spouse remain in place so not everything has changed. Obviously, it is important to have someone on your side when tackling this ever changing law… Each situation is unique, so call the office so we can review your loved one’s situation.

Check out the following link for a publication from the Probate and Estate Planning Section of the State Bar of Michigan:

http://www.michbar.org/probate/pdfs/planningformedicaid.pdf

Still have questions? Please contact us anytime! We look forward to hearing from you.