Medicaid and Asset Transfers
Published 9:10 pm Monday, January 30, 2006
By By Jo Bonner
I have heard from many of you in the last couple of weeks who have been contacted with allegations that proposed changes to Medicaid will curtail seniors' donations to churches and charities, children and grandchildren, and every gift of an item for less than fair market value (FMV).
As a donor to my own church and various charities, I was alarmed by these allegations and have made every effort to advise the Budget Committee, on which I sit, and the Energy and Commerce Committee, which has jurisdiction over Medicaid, of the outpour of your and my concerns.
After much research and after several conversations and meetings with the Energy and Commerce Committee, I am confident-and have been assured-that no language in this upcoming bill will prohibit or prevent seniors from giving in the manner that they have in the past.
The reform provisions addressing Medicaid in the Deficit Reduction Act of 2005, S. 1932, are designed and intended to close loopholes through which wealthy seniors transfer sometimes enormous wealth and assets to children or grandchildren in an effort to prevent using that wealth to pay for their possible nursing home care.
Let me be clear…the manner by which Medicaid may review a senior's transfers for less than FMV will not change with S. 1932. The same intent test will be applied by Medicaid according to S. 1932 in the future as is applied today.
What will change is the period through which Medicaid is allowed to question certain transfers for less than FMV (the three year look back period will become a five year look back period) and the way the existing penalty policy is enforced (if a penalty is assessed, that penalty period will begin to run at the time Medicaid nursing home services are provided instead of at the time of transfer of the asset).
Let me share with you a letter I requested from Chairman Nathan Deal (GA-10), of the House Energy and Commerce Subcommittee on Health, assuring me that the allegations of the effects of the Medicaid language contained in S. 1932 are incorrect and misleading.
In a letter dated January 24, 2006, Chairman Deal wrote:"Thank you for bringing to my attention concerns about the Deficit Reduction Act of 2005 and its possible impact upon donations and gifts to churches and other charitable institutions. "It is my understanding that some advocates in your area have recently alleged that changes made in the Deficit Reduction Act will prohibit individuals from making contributions to churches and other charitable organizations. In communications with church leaders, advocates have asserted that the new law would prevent an individual from receiving Medicaid if they were to make such donations. "This interpretation is neither consistent with the statutory language nor the legislative intent of the Deficit Reduction Act. The conference agreement does not change the way in which charitable gifts are evaluated under Medicaid's asset transfer requirements. Transfers for a demonstrated exclusive purpose other than to qualify for Medicaid will continue to be permitted. Such transfers should not be penalized."As one of the principal authors of the Medicaid provisions in the Deficit Reduction Act, and as someone who attends church regularly, I share your interest in allowing individuals to continue to be able to make contributions to their churches and other charitable organizations. I intend to work directly with CMS Administrator Mark McClellan to ensure that the Deficit Reduction Act is implemented in a way which will allow individuals to make permissible contributions to churches and other charitable organizations without fear of subsequently being denied access to Medicaid."It is unfortunate that those who oppose the reforms contained in the Deficit Reduction Act are forced to mischaracterize what the bill will do. By lengthening the look-back period and changing how penalty periods would be tolled, the bill will make it much more difficult for elder law attorneys to assist their clients to shift or hide assets in order to qualify for Medicaid to pay for nursing home care. These reforms will help preserve Medicaid and make sure that it continues to be able to provide nursing home care for your district's poorest senior citizens."
I hope this information is helpful.My staff and I work for you. Please call if we can be of service.
Jo Bonner is a U.S. congressman. His column appears weekly.