Long Term Care Insurance Industry Leader Warns More Medicaid Changes To Come

Illinois State lawmakers along with private estate planning attorneys have finally worked out a deal on long-delayed rules to carry out a 2005 federal law restricting the way residents can shelter assets and still qualify for Medicaid benefits to cover nursing-home care. 

“Lawmakers realize that taxpayers simply will no longer allow lawyers to shelter the wealth of families while taxpayers pay the growing tab for long-term care,” declares Jesse Slome, executive director of the American Association for Long-Term Care Insurance.  “With State Medicaid budgets in shambles, more states are going to have to take a serious look at the ways lawyers transfer this costly burden to working taxpayers.”

The agreement, approved unanimously by the Illinois General Assembly’s Joint Committee on Administrative Rules, deals with the practice of gifting assets to relatives and other people. The new rules, which take effect January 1, 2012 make Illinois one of the last states to implement the federal Deficit Reduction Act of 2005. 

State experts say the changes deal with many of the provisions elder-law attorneys considered harsh.  “The rules apparently still are quite generous in terms of granting hardship waivers to seniors who have made asset transfers in the past five years and want those transfers treated under the old rules,” Slome adds.  “But, it’s just a matter of time until younger taxpayers wake up and demand more money for their childrens’ schools and less money to pay for nursing home care for seniors with assets.  More changes will be forthcoming to force people to take personal responsibility for their care costs.” 

Under the new rules, the look-back period will be extended from the current three years to five years when calculating Medicaid eligibility.  Under the current system, the penalty period starts based on the date assets were transferred. Under the new rules, the penalty period won’t start until a person already is in a nursing home and has spent almost all of his or her assets.

The new restrictions on Medicaid eligibility increase the need for people to look into long term care insurance costs, Slome advises.  “But you can not wait until you are in need of care,” Slome adds.  “Insurance companies will only issue coverage to those who can medically qualify so the right time to start planning is between ages 52 and 64.”

The Deficit Reduction Act is designed to save the publicly funded Medicaid system an estimated $3.9 billion nationwide from 2006 through 2015.

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