By Kim Boyer
On February 8, 2006, the federal government passed the Deficit Reduction Act of 2005, which changed the Medicaid rules. A summary of the changes and how they are implemented in Nevada follows:
Increases the Lookback Period to Five Years. All transfers will be subject to a five-year lookback period rather than the prior three-year lookback period for individuals, and five years for transfers to trusts.
Postpones the Penalty Period Start Date. For transfers occurring before February 8, 2006, the penalty period begins on the first day of the month of the transfer. For transfers occurring on or after February 8, 2006, the penalty period does not begin until the individual moves to the nursing home and the person would be eligible for Medicaid; meaning, until they have spent down to $2,000. In other words, the penalty period does not begin until the nursing home resident is out of funds, and she cannot afford to pay the nursing home.
An example should help explain how this works. Let's assume that Ms. Brown transfers $45,830 to her children on February 1, 2006. Ms. Brown enters a nursing home December 1, 2006, and has less than $2,000 in her name. The penalty period is 10 months, which is calculated by taking the amount of the gift and dividing by the current divisor in Nevada, which is $4,583. The 10-month penalty period begins to run on February 1, 2006, and ends on December 1, 2006.
Now let's assume the Ms. Brown transfers $45,830 to her children on February 9, 2006. The penalty period is still 10 months, but the penalty period does not begin to run until December 1, 2006, the date she enters the nursing home and has less than $2,000 in her name. Ms. Brown would not be not eligible for Medicaid for 10 months from December 1, 2006. This, of course, raises the question of how her care will be paid during the10-month penalty period.
Annuity Changes. The purchase of an annuity shall be considered a disposal of assets for less than fair market value unless the state is named the remainder beneficiary for at least the total amount of medical assistance paid on behalf of the annuitant. A spouse, minor, or disabled child may be named as the primary beneficiary, but the state must be named as the secondary beneficiary.
Limits Equity in Residences. The equity in the primary place of residence of a nursing home resident exceeding $500,000 shall be countable, unless the nursing home resident's spouse, child under age 21, or blind or disabled child is living in the residence.
Disclaimer: This information is for general informational purposes only and does not constitute legal advice. For specific questions, you should consult a qualified attorney.
