October 2009 "New Long Term Care Finance Rules This Fall"

PLANNING FOR WEALTH AND SECURITY
By Attorneys Jennifer and Jeff Hawkins

NEW LONG-TERM CARE FINANCE RULES THIS FALL

This column has warned readers of changes to the Indiana Medicaid rules several times this year (see 2009 articles for May, June, July, and August at http://www.hawkinslaw.com/main/index.php/articles). Those harsh new rules are descending on us now.

The new rules change how Medicaid treat a person who gave gift to family before suffering a health crisis that requires nursing home care. The old rules disqualified a gift giver from the month after the gift was made until a later period. The length of disqualification (this is the penalty period ) depends on the gift's value. Large gifts trigger longer disqualifications than smaller gifts. The old rule hurt some families that lacked enough cash to pay nursing home bills during the penalty period, but it offered a predictable result that people could plan to address.

One of the new rule's biggest differences is that the penalty period does not start in the month immediately after the gift is given. Instead, the penalty period is delayed until the gift giver enters the nursing home and spends his money down to $1,500 (rules differ slightly for married people). Thus, Medicaid does not begin to refuse to pay until the gift giver becomes broke and admitted to a nursing home a very tight spot.

The new rules implement a federal statute made by Congress in 2006. The Indiana General Assembly passed a state law to adopt the federal law this past April, but delayed the start date until at least October 1, 2009, or until FSSA adopts regulations for the new rules.

This summer, the Family Social Services Administration (FSSA) advised members of the Indiana chapter of the National Academy of Elder Law Attorneys (NAELA) that it would not adopt regulations to implement the new rules until November 1, 2009. However, just a few days ago, one of our chapter members discovered that FSSA delivered its regulations to the Indiana Secretary of State a full month earlier that it had previously represented. Therefore, most elder law attorneys in Indiana are bracing for an October effective date for the rules. Then, long-term care planning will be much more difficult than before October 1. We will still have planning options, but we must be more creative in the future.

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