67 The Alabama Lawyer 191 (2006). Deficit Reduction Act of 2005.

• Author: BY WILLIAM O. BUTLER

The Alabama Lawyer

2006.

67 The Alabama Lawyer 191 (2006).

Deficit Reduction Act of 2005

Deficit Reduction Act of 2005BY WILLIAM O. BUTLER The Deficit Reduction Act of 2005 (S1932), which was signed into law February 8, 2006, makes extensive changes to several areas involving Medicaid long-term care eligibility. Most of these changes apply to transfers of assets and transactions, such as the establishment of a trust or the purchase of an annuity, occurring on or after the date of enactment. The Medicaid Agency will be adopting emergency rules to comply with this statute, but the federal law is already in effect.

Summary of Long-Term Care Eligibility Provisions of the Deficit Reduction Act of 2005 (S1932)

Look-Back Period:The Deficit Reduction Act of 2005 (DRA) extends the look-back period for all transfers of assets to 60 months. Prior law provided for a 60-month look-back period for trusts and 36 months for all other assets.

Change in Beginning Date for Period of Ineligibility: The penalty period will begin later of the month after assets are transferred or the date that the person would be eligible for Medicaid and otherwise receiving institutional level care but for the application of the penalty period. Under the prior law, Alabama Medicaid started the penalty period the month after the month of transfer, which meant that often the penalty expired before nursing home eligibility was needed. Under the DRA, the penalty period will not start to run until the person would qualify for Medicaid and long-term care, but for the penalty.

Availability of Hardship Exceptions: The DRA provides specific criteria for applying the existing undue hardship exception. It requires notice to recipients of the existence of the exception and an appeal process. It provides that a nursing home may request the hardship exception when authorized by the resident or personal representative.

Partial Months of Ineligibility: The DRA prohibits states from rounding down or disregarding any fractional period of ineligibility due to a transfer of assets.

Multiple Transfers: States are authorized to treat multiple transfers in...