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This is the sixth 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.

Life Care Planning, Estate Protection, Disability,
VA & Medicaid Assistance Lawyers

New Law Poses Problems For Nursing Home & Assisted Living Residents

New Law Poses Problems For Nursing Home & Assisted Living Residents

 

            This is the sixth 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.

 

            There is a new law that shifts more of the cost of long-term care to families and nursing homes.  In Illinois, this new law will also affect some assisted living facilities (called supportive living facilities).   The major way the new law does this is to change the way gifts and asset transfers are calculated when an application for financial assistance is made.

 

            Under the old law a gift created a period of ineligibility from the date of the transfer.  For instance, prior to February 8, 2006, a $30,000 gift in Illinois would create a penalty equal to the cost of care in a nursing home or supportive living facility.  If the cost of care was $3,000 per month, the gift would create a 10 month penalty from the month in which the gift was made.  So if the gift was made 12 months ago,  the penalty would have already expired.

 

            Under the new law, for gifts made after February 8, 2006, the penalty period will not begin until the person is in a nursing home (or supportive living facility) and has spent down to $2,000.  Only at that time will the penalty start.

 

            In other words, if the same $30,000 gift was made after February 8 and then the person spent his or her assets down to $2,000, only at that time would the penalty period begin running.  In that case, the gifted funds would then be needed for the cost of care to get through the penalty period.  But what if the funds are no longer available?  For instance, what if the funds were used to pay for a grandchild's college tuition or given to charity or to an individual who simply no longer has them?  What will happen then?

 

            This is a major problem and one that nursing homes, supportive living facilities, and their residents will have to face in the coming months.  Prior to this new law, minor asset transfers would not cause major problems since the penalties often would have expired by the time the applicant for financial assistance had spent down.  Under the new law, however, every transaction will have to be scrutinized - very carefully.  All gifts or transfers made within five years will be lumped together.  Even small gifts - such as birthday and holiday gifts to grandchildren or charitable contributions to a church - will cause penalties.  Those penalties won't even begin to expire until the person otherwise has spent down their assets.

 

            For seniors who have already put a child's name on a deed, there are potential problems that should be addressed immediately.  This includes all cases where a person has transferred their home, farm or other real estate for less than "fair market value" at any time within the last 5 years.  Where the senior has retained an interest, such as a life estate, in the home, farm or other real estate, there is an even greater probability of problems - even when the deed conveying the interest was signed more than 5 years ago.  In all such cases, those affected (the senior, their child or other recipient) should immediately consult with an attorney who is knowledgeable about this new law.  Perhaps the transaction can be salvaged.  But whatever you do - do not attempt to do anything without expert help.  Without knowledgeable help, you may make the problem worse.

 

            For individuals or married couples who have made monetary gifts to their children or others, you need to know those gifts may keep you (and/or spouse, if any) from qualifying for benefits to pay for nursing home or assisted living expenses.  Again, it would be prudent to talk with an attorney who has substantial experience in dealing with the new law to see if there may be a good solution.  Delay may cost you dearly.

 

            Where a gift or transfer has not yet been made, the senior should consult with an elder law attorney to determine how to best structure the transaction.  The new law did not close all planning options.  In fact, it opened up new opportunities to protect yourself or your loved one.  The challenge is to know how to traverse the mine-field that has been laid by the new law.

 

            The big question, then, is: What, if any, strategies or techniques are left that can help seniors and their families qualify for Medicaid benefits to help pay the cost of care in an assisted (supportive) living facility or nursing home?  Are there any options left that will allow a senior to qualify for benefits without needing to spend down all of their assets?  How can the home or farm be protected under the new law?

 

            Stay tuned. These and other questions of vital importance to seniors will be answered in future issues of Senior Voice.

 

            Richard Habiger is an elder law attorney.  You may contact him at 618-549-4529 or Richard@HabigerElderLaw.com.