Boston Medicaid (MassHealth) Attorney: Medicaid Laws change due to Deficit Reduction Act : Transfer of Assets cont'd

Elder law attorneys Cohen & Oalican of Boston, Andover and Raynham want to alert you that on February 8, 2006, President Bush signed the Deficit Reduction Act of 2005, which significantly changes the federal Medicaid laws. The three most important changes concern: 1) the transfer of assets to qualify for Medicaid; 2) Medicaid annuities; and 3) Medicaid’s treatment of the primary residence.

Transfer of Assets (cont'd)


More significantly, however, the new law also changes the date on which the penalty period begins. Under the old rules, the penalty period started when the transfer was made. The new law shifts the start-date of the penalty period to the date when the person is in a nursing home and his or her funds have run out. The new law will not apply to transfers made prior to February 8, 2006. However, Congress has allowed the states to implement the statute at a later date if they choose to do so, so the effective date in Massachusetts may fall after February 8.
The easiest way to explain the change is by way of an example. Let’s assume Mrs. Smith transfers $20,000 to her grandson on March 15, 2006. On April 15, 2007, Mrs. Smith suffers a stroke and is admitted to a skilled nursing facility. Assume she spends down her assets below $2,000 as of August 2007. Under the old transfer rules, the March 15, 2006, transfer would have made Mrs. Smith ineligible for Medicaid benefits for almost three months, starting March 1, 2006, and ending at the end of May 2006. Thus under the old rules Mrs. Smith would have been eligible in August 2007. Under the new rules, however, the transfer penalty would not start until August 1, 2007 and would end in November. The question then arises: How will Mrs. Smith pay the facility if the transferred funds are gone and she is not eligible for Medicaid?

This is second in a series regarding changes the Deficit Reduction Act of 2005 has made in dealing with Medicaid (MassHealth). Thank you for putting your trust in our Elder Law legal practice, Cohen & Oalican, LLP