How could the changes in the Medicaid system effect my mother’s eligibility?

Answer:
I have heard that there may be changes in the Medicaid law. My mother, who is in poor health, has been making gifts to her grandchildren during the past couple of years. If she goes into long-term care, such as in a nursing home, are these gifts going to be a problem with eligibility for medical assistance to help pay for the cost of care?
Answer:
You are right about the changes. President Bush signed into law the Deficit Reduction Act of 2005. (“the Act”) which makes some significant changes to the Medicaid system. Following are a few of those changes:
1. The Act increases the “look-back” period. This is the period in which gifts that have been made by a person applying for long term care assistance are scrutinized. Under the old rules, a person who transferred or gave away assets for less than fair market value within 3 years prior to the Medicaid application could be assessed a penalty. The Act increases this “look-back” period to 5 years.
2. The Act also makes a fundamental change to how the penalty for making a gift is applied. Under the old rules, the Medicaid program imposed a penalty on persons making gifts during the “look-back” period. The penalty created a period of ineligibility for benefits and started when the gift was made. The Act changes that process so that the penalty starts from the date of application for medical assistance rather than from the date the gift was made. This change could have adverse consequences for many persons applying for long term care assistance who unwittingly made gifts during the last 5 years.