“2006 Medical Assistance Update ”		«BACK
	by Justin D. Johnson
	from Summer 2006 Krass Monroe, PA Newsletter

On February 8, 2006, President Bush signed the Deficit Reduction Act of 2005 (“DRA ’05”).  Many significant changes to the Medical Assistance eligibility rules are provided for in DRA ’05.  For the most part these changes are effective on or after February 8, 2006.   The following are some of the highlights of DRA ’05:

Eligibility and Asset Limitations:  To be eligible for Medical Assistance in Minnesota: (1) a person must be disabled or be 65 years of age or older; and (2) must be a Minnesota resident physically present in the state and not maintaining a home elsewhere.  A single recipient is limited to $3,000 in available assets; a married couple, both members of which are applying for Medical Assistance, is limited to $6,000 in available assets, and spousal impoverishment rules apply when only one spouse is applying for Medical Assistance benefits. 

Restrictions on Asset Transfers:  Old Law:  Prior to February 8, 2006, if a Medical Assistance applicant or the applicant’s spouse transferred assets or income for less than fair market value within the 36-month period immediately preceding his/her application (the “lookback period”), the applicant was ineligible for Medical Assistance to cover the costs of long-term care for a certain period of time referred to as the “period of ineligibility”.

New Law: As of February 8, 2006, the lookback period has been extended to 60 months.

“Period of Ineligibility”:  The period of ineligibility equals the number of months calculated by dividing the amount transferred (the uncompensated value of the transferred asset) by the average monthly Medical Assistance rate for nursing facility services in Minnesota (currently $4,198).  The period of ineligibility starts on the date a person applies for Medical Assistance.

The cumulative total of all transfers made by a person in the 60-month period prior to his/her application for Medical Assistance is used to determine the person’s period of ineligibility.

State Long-Term Care Partnership:  Under DRA ’05, Congress has provided for the implementation of a program that allows for asset protection under the Medical Assistance program in an amount equal to the “qualified long-term care insurance contract” benefits paid to or on behalf of an individual.  This means that the purchase of a “qualified long-term care insurance contract” could be used as an estate planning tool to protect assets for the benefit of heirs even if Medical Assistance is needed.

Medical Assistance Liens:  Minnesota statutes require the filing of a claim against a person’s estate if: (1) the deceased or the deceased’s spouse received Medical Assistance or General Assistance Medical Care; and (2) the recipient was over the age of 55 or resided in a long-term care facility or hospital for six months or longer and could not have been reasonably expected to be discharged and returned home.  Estate recovery is also authorized against assets conveyed to a survivor or heir through a joint tenancy, life estate or other arrangement.