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Medicaid changes are a '180-degree turn'

Will Medicaid pick up the tab if you need nursing home care? New rules took effect last week that make qualifying for Medicaid more difficult and create a new incentive to buy long-term care insurance.

By Helen Huntley, Times Personal Finance Editor
Published November 4, 2007

Will Medicaid pick up the tab if you need nursing home care? New rules took effect last week that make qualifying for Medicaid more difficult and create a new incentive to buy long-term care insurance.

The goal: to get you and your family to foot more of the bill. Medicaid is supposed to be a program for poor people and the government is cracking down on those who give away their assets to qualify.

"These changes represent a 180-degree turn in Medicaid eligibility philosophy and are a clear attempt to offload responsibility to pay the nursing home onto the children of the nursing home resident," said Sean Scott, a Largo lawyer who specializes in elder law.

Congress approved the changes in February 2006, but it took the state this long to adopt the rules to implement them. Nursing home patients and their families will feel the effect when they apply for Medicaid or have their eligibility reviewed. Among the most important changes:

-The "look-back period" for scrutinizing asset transfers was extended to the five years before applying for Medicaid. Transfers for less than market value during that period, such as gifts to children and charities, could make you ineligible for help.

-If you are ineligible, the disqualification period will not start until you apply for Medicaid. That means even gifts of a few thousand dollars several years earlier could come back to haunt you. State officials have the ability to make exceptions for hardship cases.

-New restrictions on annuities, mortgages and loans will drastically curtail or eliminate their usefulness in preserving assets for beneficiaries.

-If you have more than $500,000 in home equity, you can't get Medicaid unless your spouse or minor or disabled child is living in the home.

A silver lining of sorts is the creation of what's billed as a "long-term care partnership program." If you buy a qualifying long-term care policy, you'll be able to keep more assets for your beneficiaries and qualify for Medicaid. For example, if a policy offers total benefits of $120,000, you'll be able to shelter an extra $120,000.

Only new policies qualify, so some people with existing long-term policies may want to exchange them for partnership policies. Others may find the cost of a swap to be prohibitive.

Partnership policies must increase benefits as inflation increases if the person taking out the policy is younger than 75.

"There's a real buzz in the agent community about it," said Scott Williams, vice president of long-term care sales for John Hancock Insurance. "The partnership program is really designed to bring long-term care insurance down to people who otherwise might not have looked at it."

Spending down

To qualify for Medicaid nursing home assistance in Florida, you have to "spend down" your assets to no more than $2,000 for the applicant and $101,640 for a spouse not in a nursing home. Your home, a car and burial plot don't count toward the asset limits. Income limits apply.

For more info

Call toll-free 1-866-762-2237. When you hear "if you are calling about..." press 2 and wait to be transferred to a call center, then choose option 6.

[Last modified November 2, 2007, 21:44:52]