MEDICAID CHANGES

The recently signed Deficit Reduction Act of 2005 (DRA) has drastically changed the landscape for seniors who are concerned with their ability to protect assets from an unexpected stay in a nursing home.  Given the large population of senior citizens in our area this is a huge issue for our community. 

The Medicaid reform portions of the DRA make it harder for seniors to qualify for benefits if they have given away any assets without careful and early planning.  As a result the new law may punish those who fail to plan for their long-term care far in advance of a crisis.

The DRA changed the Medicaid “look-back” period from three years to five years for all gifts. Unfortunately, this leaves families of an individual facing at an immediate long-term care crisis with very limited “last minute” options to protect assets.  More importantly, the start-date for calculating the Medicaid ineligibility period has changed as well.  This is probably the most restrictive and dramatic change in that the start date for ineligibility is not in the month of the gift, but rather the date of the Medicaid application!  This means that the penalty period doesn’t begin until the person is already in a nursing home and is out of money to pay for the cost of care. 

Previously under the old law those in need of long-term care could give away some of their assets in order to qualify for Medicaid benefits.  Widely used transfer techniques such as the “Rule of Halves” would qualify a person for Medicaid before all of their savings and investments were gone. 

So seek the advice of an experienced Elder Law Attorney before deciding to do any “do-it-yourself” protection planning.  Your positive efforts may result in negative consequences by making one ineligible for Medicaid assistance. 

Benjamin Franklin said it best, “Never leave that till tomorrow which you can do today.”

Jon Flynn is a Certified Financial Planner ^TM and owner of Flynn Financial in Eynon. He is a Representative of Securities America, Inc., Member FINRA/SIPC and of Securities America Advisors, Inc. Flynn Financial and Securities America are unaffiliated.   Mr. Flynn can be reached at 570-876-5015.