Last month, this article reviewed the changes to the Medicaid program resulting from the enactment of the Deficit Reduction Act of 2005 ("DRA") on February 8, 2006. The changes reviewed were those affecting an applicant's ability to obtain benefits as a resident of a nursing home, including (1) the lengthening of the look back period, (2) the delaying of the beginning of applicable penalty period for disqualifying gifts until the applicant is "otherwise eligible" for Medicaid and the tightening of the available uses of annuities to obtain benefits. Fortunately, even though planning opportunities have been reduced, it appears as though some options will continue to exist.
At this time, planning is speculative because the federal rules changed as of February 8, 2006, but State regulations have yet to be issued. As it is expected that the old rules will apply to applications filed before the new regulations are issued, it is possible, albeit risky, to rely on planning completed under the old rules; however, elder law practitioners are now recommending planning strategies that should pass muster under the new rules. As no applications have yet been filed under the new rules, it is unclear whether certain strategies will be effective.
When it is necessary to spend down excess assets in order to obtain benefits, under the old rules or the new rules, the applicant should consider establishing non-countable assets including an irrevocably prepaid funeral of a reasonable amount and a burial account of no more than $1,500. In addition, in some cases, the payment of outstanding debts of the applicant can be beneficial...
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by: Gina M. Barry, Esquire