Do you think that your house will be safe and you can count on Medicare or Medicaid to take care of you should you suddenly need long-term medical care? Think again. There have been many recent changes in the regulation of Medicaid eligibility for long-term care. It is important for all health care consumers to be aware of these changes and to carefully plan for future financial and medical security.
On February 8, 2006, President Bush signed into law the Deficit Reduction Act of 2005 (Public Law 109-171). One effect of this legislation is to make it more difficult for individuals to obtain Medicaid benefits for long-term health care expenses.
The two most important changes in the law that the average home owner should be aware of are:
- An increase from three years to five years in the period of time the states must “look back” to determine if there has been an asset transfer made in order to qualify for Medicaid
- Denial of Medicaid assistance for long-term care to individuals with home equity in excess of $500,000.
Previously, when considering an application for Medicaid long-term care benefits, the state was required to look back at any asset transfers for less than market value made by the applicant in the preceding three years. The new law expands that time period to five years. If it is found that a transfer of assets for less than fair market value occurred in the five years prior to the application, it will be assumed that the transfer was done to qualify for Medicaid, and there will be a penalty period of ineligibility in proportion to the amount transferred.
Also, prior regulations did not consider the value of an applicant’s home in evaluating eligibility for long-term care eligibility. Under the new federal rules, individuals with $500,000 or more in home equity are not eligible for long-term care benefits. States are allowed to raise this level to $750,000. In many areas of Connecticut, it is not unusual for seniors to find themselves with this level of equity after years of appreciation. The exclusion from eligibility continues to not apply if the applicant’s spouse or child under the age of 21, or blind, or disabled, resides in the house.
The state of Connecticut Department of Social Services is still evolving its implementation of these changes in Medicaid rules, so there may be further developments. These changes make it very worthwhile for consumers to investigate long-term care insurance, as well as measures to reduce home equity, such as reverse mortgage products. As always, it is a good idea to consult with a professional who can help you protect your assets and autonomy.
