National Academy of Elder Law Attorneys...Vincent J. Russo & Associates, P.C. ©2006 (ii) In the case of a transfer of asset made on or after the DRA enactment date, the date specified

National Academy of Elder Law Attorneys

Medicaid Reform:The Deficit Reduction Act of 2005and how to help your clients through an unnatural disaster

Panel Members

Vincent J. Russo & Associates, P.C. ©2006

h Michael Gilfix h Susan H. Levin h Bernard A. Krooksh Whitney M. Lewendonh Ira S. Wiesner

Introduction


h Presentation - AnalysisgDRA Section by Sectiong Panel Commentary

Editors / Authors - DRA Working Draft


h EditorsgGene V. Coffeyg Bernard A. KrooksgHoward S. Krooksg Brian W. LindberggVincent J. Russo

hAuthorsg Gene V. Coffeyg Jason A. Frankg Gregory S. Frenchg Michael Gilfixg Howard S. Krooksg Susan H. Leving Vincent J. Russog Charles P. Sabatinog Scott Severnsg Timothy L. Takacsg Ira S. Wiesner

Deficit Reduction Act of 2005


Opening Remarks

Look-Back Rules 42 U.S.C. 1396(c)(1)(B)


(i)The look-back date ... is ... 36 months (or, in thecase of payments from a trust or portions of a trustthat are treated as assets disposed of by theindividual pursuant to paragraph (3)(A)(iii) or(3)(B)(ii) of subsection (d) of this section, or in thecase of any other disposal of assets made on orafter the date of the enactment of the DRA, 60 months) before the date specified in clause (ii).

Effective: on or after 2/8/06

Transfer Start Date 42 U.S.C. § 1396p(c)(1)(D)


(ii) In the case of a transfer of asset made on or afterthe DRA enactment date, the date specified ... is thefirst day of a month during or after which assets havebeen transferred for less than fmv, or the date on whichthe individual is eligible for Medicaid and wouldotherwise be receiving institutional level care ... based on an approved application for such care but forthe application of the penalty period, whichever islater, and which does not occur during any other periodof ineligibility ...


Transfer Start Date 42 U.S.C. § 1396p(c)(1)(D)


Compare: House Reconciliation Bill (underlined language) to theFinal Version of DRA (added in blue)


... or the date on which the individual iseligible for Medicaid and would otherwisebe receiving institutional level caredescribed in subparagraph (C) based onapproved application for such care and is receiving services described insubparagraph (C) ...

Hardship Waivers 42 U.S.C. 1396p(c)(2)(D)


An individual shall not be ineligible for Medicaid ... to the extent that ...

(D) the State determines, under proceduresestablished by the State (in accordance withstandards specified by the Secretary), that thedenial of eligibility would work an undue hardshipas determined on the basis of criteria etablished bythe Secretary



The procedures established under subparagraph(D) shall permit the facility in which theinstitutionalized individual is residing to file anundue hardship waiver application on behalf ofthe individual with the consent of the individualor the personal representative of the individual.



While an application for an undue hardship waiveris pending under subparagraph (D) in the case ofan individual who is a resident of a nursingfacility, if the application meets such criteria asthe Secretary specifies, the State may provide forpayments for nursing facility services in order tohold the bed for the individual at the facility, butnot in excess of payments for 30 days.

Partial Months 42 U.S.C. 1396p(c)(1)(E)


(iv) A State shall not round down, orotherwise disregard any fractional periodof ineligibility determined under clause (i) or (ii) with respect to thedisposal of assets.

Multiple Transfers 42 U.S.C. 1396p(c)(1)


(H) . . . in the case of an individual (orindividual's spouse) who makes multiplefractional transfers of assets in more thanone month for less than fmv on or after theapplicable look-back date . . . a State may determine the period ofineligibility applicable to such individualunder this paragraph by -

Multiple Transfers 42 U.S.C. 1396p(c)(1)


(i) treating the total, cumulativeuncompensated value of all assets transferredby the individual (or the individual's spouse) ... as one transfer ...; and

(ii) beginning such period on the earliest datewhich would apply under subparagraph (D) toany of such transfers.

Purchase of Life Estates


42 U.S.C. 1396p(c)(1)(J)

... with respect to a transfer of assets, the term assets includes the purchase of alife estate interest in another individual'shome unless the purchaser resides in thehome for a period of at least one year after the date of the purchase.

Annuities 42 U.S.C. 1396p(c)(1)(F)


(F) ... the purchase of an annuity shall be treatedas the disposal of an asset for less than fmv unless

(i) the State is named as the remainderbeneficiary in the first position for at least the totalamount of Medicaid paid on behalf of theannuitant;

Effective: transactionsoccuring on or after 2/8/06

Annuities 42 U.S.C. 1396p(c)(1)(F)


(F) ... the purchase of an annuity shall be treatedas the disposal of an asset for less than fmv unless

(i) ...; or(ii) the State is named in the second position

after the CS or minor or disabled child and isnamed in the first position if CS or a representativeof such child disposes of any such remainder forless than fmv.


Annuities 42 U.S.C. 1396p(c)(1)(G)


Summary: “Assets”


G. For purposes of this paragraph withrespect to a transfer of assets, the term"assets" includes an annuity purchased byor on behalf of an annuitant who hasapplied for Medicaid w/r/t nursing facilityservices or other long-term care servicesunder this title unless -

Annuities 42 U.S.C. 1396p(c)(1)(G)


Summary: “Assets”h unless - g (i) the annuity is in a Retirement Account

s See IRC Section 408, 408(k), 408A, org (i) the annuity is a Non- Retirement Annuity and

s 1. is irrevocable and nonassignable; s 2. is actuarially sound (...with actuarial

publications of ... the SSA); ands 3. provides for payments in equal

amounts during the term of the annuity, with no deferral and no balloon payments made.


Annuities - Disclosure 42 U.S.C. 1396p(e)


h (e)(1) the application of the individual (includingany recertification) shall disclose a description ofany interest the individual or CS has in anannuity (or similar financial instrument, as maybe specified by the Secretary), regardless ofwhether the annuity is irrevocable or it is treatedas an asset. Such application or recertification formshall include a statement that under paragraph (2) theState becomes a remainder beneficiary under such anannuity or similar financial instrument by virtue of theprovision of such medical assistance.




h (2)(A) In the case of disclosure concerningan annuity under subsection (c)(1)(F), theState shall notify the issuer of the annuityof the right of the State ... as a preferredremainder beneficiary in the annuity forMedicaid furnished to the individual.




h (2)(B) In the case of such an issuer receivingnotice under subparagraph (A), the State mayrequire the issuer to notify the State whenthere is a change in the amount of income orprincipal being withdrawn from the amountthat was being withdrawn at the time of themost recent disclosure described in paragraph(1). A State shall take such information intoaccount in determining the amount of theState’s obligations for medical assistance or inthe individual’s eligibility for such assistance.




h (3) The Secretary may provide guidance to Stateson categories of transactions that may be treatedas a transfer of asset for less than fmv.

h (4) Nothing in this subsection shall be construedas preventing a State from denying Medicaideligibility based on the income or resourcesderived from annuity in paragraph (1).


Notes and Loans 42 U.S.C. 1396(p)(c)(1)(I)

! (I) . . . with respect to a transfer of assets, the term"assets" includes funds used to purchase a promissorynote, loan, or mortgage unless such note, loan, ormortgage--

! (i) has a repayment term that is actuarially sound (asdetermined in accordance with the SSA);

! (ii) provides for payments to be made in equal amountsduring the term of the loan, with no deferral and noballoon payments made; and

! (iii) prohibits the cancellation of the balance upon thedeath of the lender.


Notes and Loans 42 U.S.C. 1396p(c)(1)(I)

! (I) . . . In the case of a promissory note, loan, ormortgage that does not satisfy the requirementsof clauses (i) through (iii), the value of suchnote, loan, or mortgage shall be the outstandingbalance due as of the date of the individual'sapplication for Medicaid described insubparagraph (C).


Notes and Loans - Summary

! (C) (i) The services ... with respect to an institutionalizedindividual are the following: g (I) Nursing facility services. g (II) A level of care in any institution equivalent to that of

nursing facility services. g (III) Home or community-based services furnished under a

waiver granted under subsection (c) or (d) of section 1396nof this title.

! (C) (ii) The services . . .with respect to a noninstitutionalizedindividual are services (not included ...) and, at the option of aState, other long-term care services for which Medicaid isotherwise available ... to individuals requiring long-term care.


Income First Rule 42 U.S.C. § 1396r-5(d)


. . . a State must consider that all income of theinstitutionalized spouse that could be madeavailable to a CS, in accordance with the CSmonthly income allowance, has been madeavailable before the State allocates to CS anamount of resources adequate to provide thedifference between the MMMNA and all income available to CS.

Effective: for institutionalized spouses on or after 2/8/06

Home Equity 42 U.S.C. 1396(p)(f)


! (1)(A) . . . in determining eligibility of anindividual for Medicaid w/r/t nursing facilityservices or other long-term care services, theindividual shall not be Medicaid eligible if theindividual's equity interest in the individual'shome exceeds $500,000.

! (1)(B) A State may elect, w/o regard to . . .statewideness and comparability, to change$500,000, to an amount that exceeds suchamount, but does not exceed $750,000.

Effective: applications filed on or after 1/1/06



! (1)(C) the dollar amounts shall beincreased, starting with 2011, from yearto year based on the percentage increasein the consumer price index for all urbanconsumers . . .




(2) Paragraph (1) shall not apply to anindividual if said individual has a --(A) spouse, or(B) child under age 21, or (w/r/t States eligible toparticipate in the State program established under titleXVI) child is blind or permanently and totallydisabled, or (w/r/t States which are not eligible toparticipate in such program) child is blind ordisabled as defined in section 1614), is lawfullyresiding in the individual's home.




! (3) a reverse mortgage or home equityloan to reduce the individual's totalequity interest in the home.

! (4) The Secretary shall establish aprocess whereby paragraph (1) iswaived in the case of a demonstratedhardship.


CCRCs 42 U.S.C. 1396r


! Treatment of Entrance Fees as anavailable resource, if the individual ...

g Has ability to use the entrance fee, orcontract provides that the fee may beused to pay for care if no other resources

are available,g Is eligible for a refund when the

individual dies or leaves CCRC, andg The entrance fee does not confer

ownership interest in the CCRC

CCRCs 42 U.S.C. 1396r(c)(5)


. . . contracts for admission to a State licensed,registered, certified, or equivalent CCRC or lifecare community, including services in a nursingfacility that is part of such community, mayrequire residents to spend on their care resourcesdeclared for the purposes of admission beforeapplying for Medicaid.

Effective Dates


! Specific Effective Date Provisions! Section 6016(e)(1) "General Rule

! Section 6016(e)(2) "Exceptions

! Section 6016(e)(3) "Extension for State Law Amendments

Effective Dates Section 6016(e)(2)


! (2) EXCEPTIONS- The amendments made bythis section shall not apply--

! (A) to medical assistance provided for servicesfurnished before the date of enactment;

! (B) with respect to assets disposed of on orbefore the date of enactment of this Act; or

! (C) with respect to trusts established on or beforethe date of enactment of this Act.



! (1) IN GENERAL- Except as provided inparagraphs (2) and (3), the amendments made bythis section shall apply to payments under title XIXof the Social Security Act (42 U.S.C. 1396 et seq.)for calendar quarters beginning on or after the dateof enactment of this Act, without regard to whetheror not final regulations to carry out suchamendments have been promulgated by such date.



! (3) EXTENSION OF EFFECTIVE DATE FORSTATE LAW AMENDMENT - In the case of aState plan ...which the Secretary of HHS determinesrequires State legislation in order for the plan tomeet the add’l requirements imposed by theamendments made by a provision of this section, theState plan shall not be regarded as failing to complywith the requirements ... solely on the basis of itsfailure to meet these additional requirements beforethe first day of the first calendar quarter beginningafter the close of the first regular session of the Statelegislature that begins after the date of the enactmentof this Act.



! (3) EXTENSION OF EFFECTIVE DATE FORSTATE LAW AMENDMENT -

! For purposes of the previous sentence, in the case ofa State that has a 2-year legislative session, each yearof the session is considered to be a separate regularsession of the State legislature.

LTC Partnership Program


! Prior to DRA, "Four States - grandfathered: CA, CT, IN,

and NY! Post DRA"All States pemitted to amend State Plans

Effective: no earlier than the date in which the planamendment was submitted to the Secretary of HHS.

42 U.S.C. 1396(p)(b)



1. Policy covers resident of state at time ofcoverage first becomes effective

2. Policy meets IRS requirements:Qualified Long Term Care InsurancePolicy

3. Policy meets 9 sections of the LTCInsurance Model Act and 19 sections ofthe Model Regulations of NAIC

4. Policy provides for “compound annualinflation protection” 42 U.S.C. 1396p(b)



5. State Medicaid Agency provides information and technical assistance to the State Insurance Department

6. The insurer reports to the DHHS Secretary as to benefits, termination ...

7. State does not impose requirements on partnership policies that it does not impose on all policies

42 U.S.C. 1396(p)(b)



The Secretary of HHS must develop byJanuary 1, 2007, in consultation withseveral groups, including the NAIC,standards for “uniform reciprocalrecognition” of partnership policies across state lines.

42 U.S.C. 1396(p)(b)



The Secretary of HHS must develop byJanuary 1, 2007, in consultation withseveral groups, including the NAIC,standards for “uniform reciprocalrecognition” of partnership policies across state lines.

42 U.S.C. 1396(p)(b)



(d) National Clearinghouse for LTC Information - (1) Establishment - The Secretary of HHS shall establish aNational Clearinghouse for Long-Term Care Information.The Clearinghouse may be established through a contractor interagency agreement.(2) Duties(3) Appropriation - Out of any funds in the Treasury nototherwise appropriated, there is appropriated to carry outthis subsection, $3,000,000 for each of fiscal years 2006through 2010.

42 U.S.C. 1396(p)(b)

Closing Remarks


h Breakout Sessions - Discussiong Practice Issuesg Practice Questions

Have A Great Day!


Documents

National Academy of Elder Law Attorneys...Vincent J. Russo & Associates, P.C. ©2006 (ii) In the case of a transfer of asset made on or after the DRA enactment date, the date specified