ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Saturday, December 7, 1996 TAG: 9612090025
SECTION: NATIONAL/INTERNATIONAL PAGE: A-3 EDITION: METRO
DATELINE: WASHINGTON
SOURCE: Associated Press
THE LOOK-BACK PERIOD, which traces asset transfers made before a person applies for Medicaid, will be extended from three years to five beginning in January.
Starting in January, a provision in the new health care bill could sharply restrict how potential Medicaid recipients transfer assets to their children.
Until now, people who end up on Medicaid - the federal program used to pay for medical costs and nursing home fees for the poor - have been able to transfer homes or cash to their children or heirs.
Under the old law, there was no criminal penalty for gifts given three years or more before a person applied for Medicaid.
Those who made transfers less than three years before their Medicaid application were penalized under a complicated formula that rendered them ineligible for benefits for a period of time determined by dividing the value of the asset by a state's average daily Medicaid payment for a day's worth of nursing home care.
Now, the so-called look-back period has been extended from three years to five. And under the new rule, it will be a crime to make any transfer, including property, ``with the intent to dispose of those assets to qualify for Medicaid benefits.''
The penalty: Up to one year in jail and a $10,000 fine.
``This law, in effect, turns the elderly into criminals,'' said Brad Forten, an estate-planning attorney in Lowell, Mass. ``It penalizes those who want to do forward-thinking estate planning.''
``You need a lot of lead time if you're going to use a trust,'' Forten added. ``This has the effect of letting only relatively young, healthy people use trust transfers.''
Of course, few advocates for the elderly expect to see teams of federal agents swooping down on retirees and hauling them off to jail because they've given cash or property to their kids.
But the new provision, which experts say could affect more than 1 million Americans, is another sign of the growing pressure to find ways to save money in the nation's entitlement programs.
``This is just one more example of how we are running away from the underlying problem, which is to try to find a fair and equitable way to finance long-term care,'' said Ari Wiesner, president of the National Association of Elder Law Attorneys. ``In terms of its impact, we're talking about a chilling effect here. Elderly clients of mine are scared to make transfers if they think it will put them in the criminal world.''
The provision, included in the massive health care bill passed last fall by Congress, was intended to help tighten the qualification standards for Medicaid, for which people become eligible only when their tangible assets dip to $2,000 or less.
According to Wiesner, Forten and others, those most likely to be affected by the new measure are elderly people whose primary asset is their home.
Until now, they have been free to create a variety of different trusts in which they turn a house over to their children - effectively transferring its value to others - while maintaining a lifetime right to live in the home.
``People are coming in and telling me, `I don't want to lose the only thing I've got,''' Forten said.
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