Effective on March 3, 2007, the Pennsylvania Department of Public Welfare instituted new policies under the federal Deficit Reduction Act of 2005 (DRA) regarding eligibility for financial assistance in provision of long-term care services.
The new Policies were published in the Pennsylvania Bulletin on March 3, 2007 (37 Pa.B. 1043). This notice was accompanied by DPW's publication of revised "Undue Hardship Waiver Guidelines" under the new Policies (37 Pa.B. 1046).
For background about the DRA & its effects, see: PA EE&F Law Blog, "US Dist Ct Dismisses DRA Challenge" (11/15/06); "DRA to be Effective in PA on Feb 1st ... no ... Mar 1st, 2007" (01/03/07); Robert C. Gerhard, III, Esq., "Federal Changes in Medicaid Law" (12/14/06).
The Medicaid program in Pennsylvania is generally described by the Pennsylvania Medicaid Policy Center in its "Frequently Asked Questions". Other general information about Medicaid eligibility in Pennsylvania had been posted here two years ago by PA DPW, but that information has not yet been altered to reflect the new Policies.
DPW policies are implemented through the various County Assistance Offices, listed here, which administer the Medicaid program locally in Pennsylvania.
The guidelines for the CAO's administration are set forth by DPW in series of Online Manuals:
- Cash Assistance Handbook
- Food Stamp Handbook
- Medicaid Eligibility Handbook
- Supplemental Handbook
- Long Term Care Handbook
DPW's change in policies implemented new rules federally-mandated by the DRA, which became law on February 8, 2006. These federal changes limited eligibility for services & benefits in the Medicaid Program, as administered in all states, to accomplish overall "cost containment".
DPW's new Policies apply to applicants/recipients in need of payment for long-term care services, including those offered by nursing facility services or their institutional equivalent, and by home & community-based services furnished under a waiver granted by the Centers for Medicare and Medicaid Services (CMS).
DPW's summary of the new Policies (which I labeled below with headers in brackets, & also re-paragraphed for better readability) highlights the changes:
[Five-Year Ineligibilty Period]
The Department's regulations require that a period of ineligibility for payment of LTC services be imposed on an individual applying for or receiving payment for those services when transfers of assets for less than Fair Market Value (FMV) were made by the individual or the individual's spouse during the look-back period.
The DRA of 2005 amended the asset transfer rules regarding eligibility for payment of LTC services under the Medicaid Program. The look-back period has been extended to 60 months for all transfers of assets made on or after the date of enactment.
[Ineligibility Period Commencement]
The DRA of 2005 changes the determination of the period of ineligibility to be imposed on an applicant or recipient when the applicant or recipient or the spouse of the applicant transfers assets for less than FMV.
Formerly, the beginning date of a period of ineligibility for an applicant who transferred assets for less than FMV was the first day of the month in which assets were transferred. For a recipient, the beginning date of the period of ineligibility was the first day of the month following the month of the transfer.
States are now required to impose periods of ineligibility prospectively in those cases where the applicant or recipient or the spouse of the applicant or recipient has transferred assets for less than FMV. The beginning date of a period of ineligibility for payment of LTC services is the date the applicant would be otherwise eligible for Medical Assistance based on an approved application.
For a recipient, the beginning date of a period of ineligibility for payment of LTC services is the first day of a month immediately following proper advance notification provided to the recipient.
[Resource Level Qualifications]
The DRA of 2005 mandated new requirements that must be applied in evaluating certain resources to qualify for payment of LTC services. Resources that fail to meet these new requirements will be treated as transfers of assets for less than FMV.
[Annuity Disclosure & Qualification]
It is a requirement that an applicant or recipient or spouse of an applicant or recipient disclose any ownership interest in an annuity. A nonqualified annuity is one purchased outright by an individual or a couple that is not part of an employer retirement plan or Roth individual retirement plan. The DRA of 2005 mandates that nonqualified annuities name the Department as the beneficiary for at least the total amount of medical services provided by the Department on behalf of the recipient.
[Income Allocation to the Community Spouse]
States are no longer allowed the option of first looking to the couples' resources to address spousal impoverishment. The DRA of 2005 now requires the allocation of available income from the institutionalized spouse to the community spouse (CS) to meet the Community Spouse Monthly Maintenance Needs Allowance (CSMMNA).
If the CS still needs additional income to fully fund the CSMMNA, resources from the nonprotected share of the couples' resources can be allocated to the CS.
[Limitation on Home Equity]
The DRA of 2005 also instituted a new eligibility requirement regarding the equity value of the home owned by the applicant or recipient who is in need of LTC services under the Medicaid Program.
Individuals with equity value in their home in excess of $500,000 are not eligible for payment of LTC services except when there is a spouse, a child under 21 years of age or a blind or permanently and totally disabled child residing in the home.
The excess equity value in the home disqualifies the applicant or recipient for payment of LTC services.
These policy changes were the subject of an article entitled "Rules for nursing home aid tighten -- New federal regulations make it riskier for the elderly to give money to relatives", by Gary Rotstein, published in the Pittsburgh Post-Gazette on April 02, 2007.
The changes published by the state Department of Public Welfare have been little noticed beyond elder law attorneys and nursing home officials, and some of them are concerned that families innocently passing on money as gifts will be forced to regret it later.
If a senior's assets have eroded by the time he needs nursing home care, and he gave away part of his wealth within the prior five years, he could be ineligible for government coverage for weeks or months of costs that typically run more than $200 per day. Before the changes, the "lookback" period was three years.
Lawyers suggest the tightened restrictions create a scenario where an older person may have to ask for money back from a relative who received it a few years earlier, or a nursing home may be uncompensated for weeks of care it gives that person.
"There may be more difficulty getting a loved one into a nursing home if they made gifts," cautioned Robert C. Gerhard III, a Montgomery County attorney who wrote a book on the state's Medical Assistance rules. "It's riskier for seniors to make gifts to kids, even for seemingly acceptable reasons -- say, to help a child going through divorce or help a child buy a house, or a wedding present.
"These are things we typically help family members with, but if you do so now and need nursing home care, you may find yourself denied," he said. * * *
The article is the only newspaper commentary that I have encountered to date in my reading or searches about the new DPW Policies under the DRA. It is well-written with a broad view, citing experts. For those interested in this topic, it should be read.
Another excellent set of resources on these topics was produced & posted by elder law attorney Jeffrey A. Marshall, Esq., founder of Marshall & Associates, for a symposium held March 27, 2007, in Camp Hill, PA. Those materials are found here; and his outline is found here.