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1. What took place? Congress passed, and the
President signed into law, a bill called the “Deficit Reduction Act” (DRA) that
includes provisions dealing with the Medicaid “look-back” period. Specifically,
the law changes the “look-back” period from three years (36 months) to five
years (60 months). As you know, “look-back” is the term for the period of
time during which financial transactions of a Medicaid applicant/recipient are
subject to review in determining whether or not that person is eligible for
Medicaid.
2. Does this impact preneed funeral/burial
contracts? The law effectively “grandfathers” in all preneed
contracts that are established before a yet-to-be-determined effective date.
In other words, the new five-year look-back provision will not apply
to any contracts that are entered into before that date. In any
case, the law is NOT retroactive.
3. Are preneed contracts still
excluded as an asset? Yes! Even with the change in the look-back
period, preneed funeral/burial contracts are still excluded as an asset
for Medicaid purposes. The new law concerns only the look-back
period.
4. When does the
new five-year “look-back” period start? Federal law states
that it applies to assets transferred on or after its date of enactment
(February 8, 2006).
5. Can states
choose to “opt-out” of the new requirement? No. The Federal law
mandates that states comply with the new five-year look-back period. However,
it does provide for "hardship waivers" in limited circumstances.
6. How does this work now that it has taken effect?
When a person transfers assets before applying for Medicaid benefits that cover nursing home services, the local Department of Social Services “looks back” at all financial transactions made within a certain period of time. Any transfer of assets by either a Medicaid applicant or their spouse will affect the eligibility of the one applying for Medicaid-covered nursing home services. The applicant would be considered ineligible for a period of time equal to the value of the asset transferred, divided by the average cost of nursing home services to a private patient in that county. The Deficit Reduction Act of 2005 changed the look-back period from three years to five years. This change was phased in, with February 2009 being the first month affected by this phased-in increase from 36 to 60 months, as follows:
Date of Application Asset Transfers
1993 – Jan. 31, 2009 . . . . . . . . . . 36 months
February 1, 2009 . . . . . . . . . . . . . 36 + 1 = 37 month look-back
March 1, 2009 through
Jan. 31. 2011 . . . . . . . . . . . . . . . Look back increases by one additional month, for example:
March 1, 2009 . . . . . . . . . . . . . . . 36 + 2 = 38 month look-back
February 1, 2011 . . . . . . . . . . . . . 60 months for all transfers |