Medicaid Eligibility Since
The Deficit Reduction Act (DRA) Of 2005, s.1932, CHAPTER 2
by Linda Ershow-Levenberg, Certified Elder Law Attorney (C.E.L.A.)
Updated August, 2020
Practice Area: Medicaid
Seniors and their families need to be aware of the legal landscape for individuals who potentially will require nursing home care in the next five years. The rules that applied to your own parents, aunts or uncles 20 years ago were substantially changed in 2005.
- An individual who is medically in need of nursing home care can apply for Medicaid to pay for that care once his countable, available resources have been reduced to $2,000. If the applicant is married and has a spouse living in the community, the spouse may retain up to $128,640 (in 2020) of the countable, available marital resources — or half of the marital resources, whichever is less — along with the marital home, a car, and personal effects.
- If a person applies to Medicaid, he will need to provide 5 years’ of documentation of every single financial transaction that occurred with his and his spouse’s resources. This is called the “look-back period.” (Formerly there was a 3-year look-back, with the 5-year look-back restricted to cases in which assets were transferred into trusts.) Gifts are distinguished from other financial transactions.
- Transfers of assets, or “gifts,” which occur during the look-back period will cause a period of disqualification, called a “transfer penalty”. This transfer penalty will be imposed at the time of the application. The result is that the person will be disqualified from receiving Medicaid for a period of time after he applies for Medicaid.
- Certain annuities will be countable as resources unless specific requirements are met.
- The equity of a house in excess of $828,000 will be a countable resource unless the home is occupied by the spouse, a child under 21, or a blind or disabled child. This may create problems if the applicant shares the house with a brother or sister who is a co-owner of the property.
It is vital that individuals save all of their documentation for at least five years in case it becomes necessary to apply for Medicaid. Save your bank books, deposit slips, cancelled checks, monthly statements, pension stubs, etc. Set up files for each account so you can keep your papers organized.
A variety of planning strategies, including “five year plans” are available which take into account these new requirements. Substantial assets can be preserved with careful planning! Call us for an appointment to review your unique situation.