Vol. 29, No. 6 #7 (December 2006). Medicaid: From the Frying Pan Into the Fire.

• Author: By Kelly S. Davis, Catherine R. Rogers, and Susan L. Feinman

Wyoming Bar Journal

2006.

Vol. 29, No. 6 #7 (December 2006).

Medicaid: From the Frying Pan Into the Fire

WYOMING LAWYERDecember 2006/Vol. 29, No. 6Medicaid: From the Frying Pan Into the FireBy Kelly S. Davis, Catherine R. Rogers, and Susan L. Feinman

In a ceremony that drew little attention except from elder law attorneys and groups that serve or represent their clients, on February 8, 2006, President Bush signed the Deficit Reduction Act of 2005 (DRA) into law. ...maybe. The DRA dramatically changed Medicaid eligibility rules so onerously that it has been called the "Put Granny on the Street" law. Among the most dramatic changes under the DRA are: LOOK-BACK PERIOD - Under pre-DRA law and current state law (Wyo. Stat. 42-2-202(a)), the states looked back 36 months from the Medicaid application date for all transfers made for less than fair market value ("such transfers"). The states also looked back 60 months for such transfers made to or from a trust. The DRA applies the 60 month look-back rule to all such transfers.

TRANSFER PENALTY PERIOD - Under pre-DRA law and current state law (Wyo. Stat. 42- 2-202(b)), the penalty periods generated by such transfers begin with the first day of the first month in which each transfer was made and which does not occur in any other ineligibility period. As long as the individual had sufficient assets to pay for long term care during the penalty period, he could make such transfers and wait until the penalty period expired before applying for Medicaid.

Under the DRA, the penalty period does not begin until the individual is receiving long term care and is qualified for Medicaid but for the penalty. Under the DRA, when the individual who made such a transfer enters the nursing home, he will be confronted by the penalty period but he will not have the assets to pay for his care during the penalty period. If he made any other such transfers during the 60 month look-back period, the penalty periods from those transfers will extend the overall penalty period.

PARTIAL MONTH PENALTIES - Under pre-DRA law, penalty periods were calculated by rounding down to the nearest whole month. Under the DRA, penalty periods are calculated to two decimal places, which are then used to determine the number of days of the penalty period's last month.

PERSONAL RESIDENCE EXEMPTION - Under pre-DRA law, the personal residence was treated as an exempt asset, regardless of its value, if either the spouse or a disabled or minor child continued to live there or a written...