PLANNING FOR WEALTH & SECURITY
By attorneys Jennifer & Jeff Hawkins
 
INDIANA CHANGES NURSING HOME FINANCE RULES

The Indiana Family and Social Services Administration proposed new regulations last fall to implement the Federal Deficit Reduction Act of 2005 (the “DRA”). After much lobbying and negative publicity about the proposal, the agency withdrew its proposal and waited for the Indiana legislature to take action. The legislature has spoken and Governor Daniels signed Senate Enrolled Act 301 into law on April 14, 2009. The new law, which is only two typed pages in length, makes a monumental shift in the way people qualify for Medicaid assistance to pay for nursing home costs. The articles summarizes important parts of the new law

First, a person may only transfer a total value of up to $1,200.00 per year to family members or charitable organizations, such as a church, without penalty.

Second, Medicaid will not punish people for their tithing and gift giving patterns if they have maintained those patterns for more than three years before entering the nursing home. However, a person must stop giving tithes and gifts after entering the nursing home and applying for Medicaid.

Third, the state agency may not make rules that apply retroactively to a time that precedes the date the rule was adopted (last fall’s proposal would have been applied all the way back to February, 2006, and that proposed retroactive application drew enormous criticism from lawyers and senior citizens’ advocates).

The new law will affect farmers and other people who want to pass assets to their younger family members after October 1, 2009. If a farmer transfers a farm to children or grandchildren after October 1, 2009, without selling it to them for fair market value, Medicaid will punish the farmer more harshly than if the farmer gave the gift before October 1, 2009. Present rules trigger a disqualification that begins running soon after the transfer, but the new law delays the penalty and hurts the donor more severely through that delay.

The new Medicaid rules established by Senate Enrolled Act 301 will make it much more difficult for families to pass wealth from one generation to the next. Fortunately, the law does not go into effect until October 1, 2009. Therefore, families that want to protect assets must start their planning now so that their plans can be established before this harsh new law takes effect on October 1, 2009. They should consult an experienced elder law attorney to make sure their plans comply with this complex new system.

THIS ARTICLE IS NOT LEGAL ADVICE. ALWAYS CONSULT AN ATTORNEY DIRECTLY BEFORE RELYING UPON THIS ARTICLE OR CHANGING AN ESTATE PLAN.

© 2009 by HAWKINS LAW PC, Estate, Trust & Business Attorneys. All rights reserved.