San Antonio Express-News
January 3, 2006

Punitive Changes to Medicaid Rules

copyright 2006, Paul Premack

Local Representatives Smith (R) and Bonilla (R) voted in favor of the new restrictions and Democratic Representative Gonzales (D) voted against them in December. The bill passed the House by 6 votes, though 16 Representatives did not cast a vote. Thus, organizations strongly opposed to the bill – including AARP, the Alzheimer’s Association and the Leadership Council of Aging Organizations – still hope for its defeat. No senior organizations support the changes. Opponents have labeled the law changes punitive and unworkable.

Four of the key changes are:

1. Increasing the "look-back period" for transactions from 3 years to 5 years. According to the National Academy of Elder Law Attorneys (NAELA) this would punish seniors for everyday family transactions or poor record keeping.

An example: The vulnerable, frail elderly would be unable to get care because the proposal would require record keeping and documentation far beyond normal practices, without regard for reduced capacity of Alzheimer’s disease or dementia victims.

2. Shifting the starting time of the penalty period from the date the transfer was made to the date that benefits would otherwise begin. This could shift the cost burden from the government to the nursing home industry, and is causing some commentators to brand the law "the nursing home bankruptcy act".

An example: Margaret paid $20,000 for her granddaughter’s college tuition in September 2002. In February 2006 Margaret becomes ill, needs nursing home care, and applies for Medicaid’s help. Under the old law the disqualification begins in September 2002 and lasts for 6 months. Under the new law, the disqualification begins in February 2006 and lasts for 170 days. She is denied care when her need for care strikes, even though the gifts she made were not related to Medicaid. If Medicaid won’t help pay, the nursing home bill goes unpaid and the industry as a whole suffers losses.

3. Denying benefits to anyone with home equity exceeding $500,000. That sounds like a lot to many Texans, but home values here are still fairly reasonable.

An example: Picture an elderly lady in a city like Los Angeles, who bought and paid for her $35,000 house years ago. Because of its location it is now worth $800,000. She needs nursing care, and hopes that if she gets better she’ll be able to return to her home. But Medicaid will deny assistance to her. If she sells the house, she’ll owe the government capital gain tax and won’t have a home any longer.

4. Forbidding the states from rounding down a penalty period, a practice that allowed small amounts (usually less than about $3000) to be transferred without penalty. Anyone who has been pursuing that course to get qualified for Medicaid should contact their Elder Law attorney to review their plans.