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2/1/2006 Bulletin
House Passes Budget Bill (Barely)
Moments ago the House of Representatives voted to pass (216 to 214) the Deficit Reduction Act of 2005. As soon as the President signs it (which could be anytime from immediately to within the next few days), it will become law.
As you know from earlier messages I have sent, the law contains extremely punitive provisions with respect to transfers made by certain persons who later need to determine how to finance the cost of extended stays in a nursing home.
With respect to transfers made on or after the date the President signs this Act, Medicaid periods of ineligibility (referred to as “sanctions”) will be calculated and applied beginning on the date of application for Medicaid or, if later, the date the person otherwise becomes financially eligible for Medicaid (except for the earlier transfer). This means that if someone transfers a $50,000 asset (say a piece of real property) on or after the day that President Bush signs the Act, there would be as much as a ten month period of ineligibility commencing on either the day the person applies for Medicaid, or if the person has too many assets at that time, the date that the person is spent down to the appropriate asset level (which could be quite some time after the date of the application). Any transfers made after the date the President signs the bill and for a period of five years thereafter will count.
With respect to transfers made before the date of enactment, the old rules will apply.
Contrary to the careless rhetoric involving “Medicaid lawyers who have benefited from this practice”, there will continue to be plenty of work for me to do. “Medicaid Planning” was but a small share of my practice. I’ll continue to take great pleasure in helping my older clients and their families with a myriad of other issues. Further, there are still plenty of wise planning opportunities that people should consider.
In the meantime, I am sure there will be some confusion. Because the bill becomes effective immediately upon Presidential signature and because I have seen no guidance forthcoming to the states on how to apply these new rules, I can only imagine the confusion that will confront our friends at the various county Departments of Social Services over the next few weeks. I will be spending a considerable amount of time carefully analyzing what can and cannot be done under these new rules.
Stay tuned.
