Hardship Waivers - A Safety-Net or an Illusion?
This is the seventh in a series of articles by elder law attorney Richard Habiger, published exclusively in the Senior Voice, which discuss changes to the Medicaid law that will have a devastating impact on many middle class families in southern Illinois.
In the last several issues of the Senior Voice we have discussed the impact of the new Deficit Reduction Act signed by the President on February 8, 2006.
In the April 2006 issue we explained that under the new rules any gift or transfer (e.g. gifts to children, charities, church tithing, any gifting whatsoever) is now subject to the new transfer rules.
As we explained, this poses a serious issue for nursing homes and their residents. In Illinois, it also creates a huge problem for some assisted living facilities (called supportive living facilities). The reason is that the Medicaid transfer penalties will not begin until the resident is in a nursing home or supportive living facility (i.e., they are receiving an institutional level of care) and have already spent down to the Medicaid limits. Only at that point will the penalty period start.
So if the resident is spent down and has given away funds to a church or charity or child, how can the situation be corrected?
One way is to assert that the transfer which gives rise to the penalty was not motivated by the desire to qualify for Medicaid. In other words, the person who gives the gift can assert that the transfer was done without any Medicaid motive in mind and therefore there should be no penalty. It is certainly an argument which can be made. However, this argument has rarely been successful in the past under the law in effect prior to February 8, 2006, so it seems the argument is not a firm foundation for success. In any event, given the prior record in these type cases, we need to wait to see how the State of Illinois will treat cases arising after February 8, 2006 to know whether the non Medicaid-motivated transfer argument will be successful.
In addition to that argument, what other tools and techniques are available under the new law? One tool is the Hardship Waiver.
According to the new law "...the facility in which the institutionalized individual is residing may file an undue hardship waiver application on behalf of the individual with the consent of the individual...and the State may provide for payments for nursing facility services in order to hold the bed for the individual at the facility, but not in excess of payments for 30 days."
Herein lies the dilemma. The reason is that the term "undue hardship" is not defined in the new law. Drawing upon other sources, it appears that a hardship exists when application of the transfer of assets provision would deprive the individual of (A) medical care such that the individual's health or life would be endangered or (B) food, clothing, shelter or other necessities of life.
In other words the nursing home or resident may file an application stating that discharge would jeopardize the resident's life or health. And if they win, the penalty is waived. But what if they lose? Can the facility now discharge the non-paying resident? It would be extremely difficult to do so since they would have just argued that discharge would jeopardize the resident's health and welfare...and if it would, then discharge under the Nursing Home Reform Act would not be permitted.
In other words, the facility is stuck in the middle.
That's why it's critically important that planning in these cases be done early. Someone with a full understanding of the Medicaid laws should review applications. This should be done at least a month or two before the Medicaid application is filed so that potential problems can be identified and appropriate steps taken.
Of course, the family of a nursing home (or supportive living facility) resident is in a much better position to protect their loved one than the facility. For best results and to avoid the "hardship waiver" trap, the family should consult with an elder law attorney who has a thorough understanding of the new law.
You may be thinking "are there other ‘traps' created by the new law...and, if so, what can be done to avoid those traps?"
We will be discussing these and other questions of vital importance to care facilities and their residents in forthcoming issues of Senior Voice.
Richard Habiger is an elder law attorney. You may contact him at 618-549-4529 or Richard@HabigerElderLaw.com.
1808 Clark Street, Carterville, Illinois 62918
Toll Free: 800-336-4529
1808 Clark Street
Carterville, Illinois 62918
Phone: (618) 985-4529