Nursing Home Care: Understanding the Look-Back Rules on Transfers

With the signing of the Deficit Reduction Act in February 2006, there have been major changes to Medicaid eligibility rules that are of great importance and interest to persons anticipating or planning to enter a nursing home. The Pennsylvania Medicaid program is called “Medical Assistance” and is administered by the Department of Public Welfare. Your local County Assistance Office handles the local administration.

Of the changes mentioned above, the look-back period is now 60 months for all uncompensated asset transfers or gifts, which is an increase from the 36-month look-back period under the old rules. In addition, and a major change from the prior rules, the period of ineligibility for such gifts does not begin to run until the individual is (a) in a nursing home; (b) has made an application for Medicaid benefits after having spent down his or her savings to the required limit, AND (c) the applicant would have been approved but for the uncompensated transfer/gift.

Under the prior law, the penalty became effective and the calculation of the period of Medicaid ineligibility started in the month the transfer/gift was actually made and thus the period of ineligibility could be over before the person ever entered the nursing home. However, under the new rule, where a person has made gifts in the last 60 months and otherwise meets the three requirements noted above, that person will not be able to avoid being ineligible for Medicaid while in the nursing home and the patient would have to look to family members to cover the cost of their nursing home care during the calculated period of ineligibility or possibly face having to seek care outside of the nursing home.

The period of ineligibility is calculated in days by taking the uncompensated value of the transferred asset and dividing it by the average daily private pay rate for a nursing home that is currently $222.17 per day. As an example, an uncompensated transfer of an asset with a value of $100,000 would result in 450 days of ineligibility or approximately 15 months. As addressed above, the nursing home resident would have to look to some other source of payment to cover their stay in the nursing home during the 15 months of ineligibility, reverse the uncompensated asset transfer or gift and essentially get the asset back, or not be able to enter or remain in the nursing home until the period of ineligibility has expired. Therefore, caution should be taken when making any uncompensated transfers or gifts without first seeking legal advise as to the effect of such transfer.

This is a basic discussion of a very complex issue and thus any person seeking advice on Medicaid estate planning or elder law should seek the advice of an attorney experienced in the areas of estate planning and elder law. Contact the Estate Planning department of Reager & Adler, PC for more information.

Susan H. Confair, who is part of Reager & Adler’s Transaction Group contributed this article. She holds a B.S. in Business Administration from West Virginia University and a J.D. from West Virginia University College of Law. Susan’s practice focuses on all aspects of real estate law, estate planning and elder law. She may be reached by calling (717) 763-1383 or via email at SConfair@ReagerAdlerPC.com.

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