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Important Changes in Medicaid Law
Effective Feb. 8, 2006

The Deficit Reduction Act of 2005 (DRA) made significant changes to the rules affecting eligibility for long term care Medicaid. The effective date of the change is February 8, 2006.

Some of the important changes brought about by the DRA:

  • Gifts cause applicants for nursing home Medicaid to be ineligible for Medicaid. Any gifts made by individuals or their spouse after Feb. 8, 2006, can cause the donor applying for Medicaid in a nursing home to be disqualified beginning on the date the applicant has completed his spend-down. Return of gifts cures disqualification.
  • Gifts made prior to Feb. 8, 2006, continue to be evaluated by the old rules — gifts by Tennessee applicants of less than $3,394 per month did not cause ineligibility, penalty periods for larger gifts began on the date of the gift, not after spend-down is completed.
  • Gifts made after Feb. 8, 2006, must be disclosed for five years prior to the date of application.
  • Look-back period for gifts made before Feb. 8, 2006, is still three years. Medicaid applications made during the three years after February 8, 2006, will continue to be affected only by the three year look-back period.
  • edicaid-approved annuities must now name the State as a beneficiary up to the amount of any Medicaid services paid by the State after the death of the Medicaid recipient annuitant and any spouse who is named as a successor beneficiary.
  • Individuals with more than $500,000 equity in home, including family farm where the home may be located, are ineligible for Medicaid.
  • Purchase of loans and mortgages (i.e., lending by the individual) must require repayment terms over the normal lifetime of the lender and may not be cancelled upon death.
  • Gift transfers to spouses and disabled children are still permitted, as are transfers of home to care-giver children and agreements to pay for caregiver services.

To find out more about how these changes affect life planning for you and your family, contact us for a consultation.