Elder care advisors scramble
to address Medicaid changes

A recent change in state law that will make it harder for the elderly in nursing homes to qualify for Medicaid coverage if they transfer assets has Triad attorneys, accountants and geriatric care managers scrambling to advise clients before the change takes effect.

The N.C. Department of Health and Human Services proposed, and the General Assembly recently adopted as part of the state budget, several changes that will impact Medicaid eligibility within North Carolina. The transfer of asset policy applies only to persons who are in nursing homes or who receive services at home through Medicaid's Community Alternatives Program (CAP) and only affects their payment for nursing care services and payments to nursing homes.

Attorney David Inabinett, a partner concentrating in elder law for the Lexington firm of Brinkley Walser PLLC, says the biggest challenge thus far has been knowing how to advise clients while state officials worked out an effective date.

"People don't know how to plan," Inabinett says.

The effective date, determined about two weeks ago, is Dec. 1, says Barbara Brooks, assistant director for the Division of Medical Assistance within the N.C. Department of Health and Human Services. Her division has notified county social services departments of the changes and plans to send letters to Medicaid recipients around the end of November.

For professionals advising those clients, notification has come largely through trade groups and lobbyists.

"Our direct responsibility is to the county departments of Social Services. The large associations have lobbyists and they have called, and we've shared what we've known with them," Brooks says. "But there is not an end-all list of private concerns in the state, or out of the state, interested in changes such as this. Recipients will be notified as we get closer to implementation, but we're still developing our materials."

Driving the changes

The state controls much of the eligibility criteria for Medicaid, which is supported almost two-thirds by federal funds, nearly a third by state funds and a small percentage by county funds.

"Our intent is to make sure that we are able to help contain the cost of the (Medicaid) program," Brooks says.

Brooks says there is no reliable statewide data on the number of active Medicaid cases with property that might disqualify them if transferred or how much money the change may save the state. She also says that the policies relating to property are somewhat complex, and the scenarios to which they could be applied so diverse, that it is difficult to establish an accurate number of people potentially affected by the change.

To qualify for Medicaid, an individual can't have more than $2,000 in assets, Brooks says. Prior to the change, the value of a life estate, tenancy-in-common or property that produces income were not counted as assets while held or when transferred.

After the change, if an individual in a nursing home or the individual's spouse transfers those assets to another individual, the value will be counted and could disqualify the person for Medicaid payment for nursing home care.

"If people are going to dispose of their property, they need to get the value and use it to pay for their care," Brooks says.

Inabinett fears the change will hinder the ability to transfer property prior to applying for Medicaid.

Medicaid recipients, or those applying, will continue to be allowed to have life estates in property (the right to use and enjoy the real estate for life), as well as tenancy-in-common ownership (owning property with an individual other than a spouse), but will not be allowed to then deed it away without incurring a sanction, Inabinett says.

After the change, if an individual gives one of those property interests away, he could trigger a sanction period during which neither he nor his spouse could apply for Medicaid, or he could be disqualified if he is already receiving Medicaid benefits.

Inabinett says the sanction is based on a formula that divides the value of the property by 4,200. For example, if the property transferred had a value of $50,000, the person would be disqualified from receiving Medicaid for about 12 months.

"At first blush, it makes sense," Inabinett says. "The difficulty is (tenancy-in-common and life estates) are not readily saleable. It's not like these people are sitting on a gold mine they can get rid of quickly."

Inabinett can give limited advice at this point and says he tries not to create a sense of panic.

"If your goal is to place property into your children's names or to assure that property is protected from ever having to be sold to pay for long-term care, you need to consider transferring that property prior to the effective date if you don't want to risk the sanction period," he says.

Chainsaw vs. pen knife

Frank Johns, a past president of the National Academy of Elder Law Attorneys and a partner with Greensboro's Booth Harrington & Johns, says the change is "taking a chainsaw to something that needs a pen knife."

"The rules may be as stringent as any rules in the country applying exemption requirements for transfers of assets," Johns says. "They will clearly make it more expensive for the elderly to gain Medicaid eligibility."

Barbara Fulp, a certified public accountant in Kernersville, agrees.

"It's going to have a big impact," Fulp says. "It will affect Medicaid planning and a lot of people now eligible won't be eligible anymore."

Geriatric Care Manager Wendy Hearnon-Schaitberger, director of The Generations Center in Greensboro, has been a licensed clinical social worker for the past 15 years.

Her services are in demand from aging parents and their adult children, all of whom are trying to understand various changes in the system.

"The system is so complex and broken," Schaitberger says. "These changes underscore the need for seniors and their adult children to plan ahead and not wait for a crisis to do health care and financial planning."

She says that many times what prevents that is a reluctance to face reality.

"People don't want to talk about getting old and dying, but if families sit down and talk before there is a crisis, the options are much greater than when someone is suffering from a health change or is hospitalized," Schaitberger says.

Greensboro attorney Kent Lively, a member of the National Academy of Elder Law Attorneys, says the changes will expand the definition of a person's estate.

"The effect will be very restrictive, but there are various things that can still be done, I believe, to limit the exposure that they would have," Lively says.

Lively conducts seminars on asset protection with an emphasis on qualification for Medicaid assistance and expects them to be well-attended in the future as people attempt to understand the changes.

Elder law attorney Dennis Toman, a solo practitioner in Greensboro, speaks to the heart of the matter.

"It is not a political issue but an aging issue," Toman says. "These people have gone through the Depression and been very frugal all their lives to save what they have in terms of a house and a nest egg. We need to look at what our expectations are of them when they become sick and need long-term care."

Act now, before effective date

Toman says the elderly need to think about what their wishes are for passing their assets to their children and how they will provide for their own long-term care.

"Having a plan allows people to hold on to property as long as they can," Toman says. "If people want to be sure the family homeplace is transferred to the children, transfer it before the effective date."

Toman says that residents of nursing homes may find themselves discharged if they become disqualified by Medicaid.

"If they become ineligible and they don't have money for costs of care, nursing homes have no obligation to keep them there," Toman says.

Under the federal government's Transfer and Discharge Rules, there are limited grounds for discharging patients and one is failure to pay for their care, Toman says.

"Nursing homes won't be able to afford to keep them," Toman says. "It's a business decision, and there is no other option."

At least one health care professional has some reassuring words on the issue.

Novant Health System has two post-acute care facilities in the Winston-Salem area: Springwood Care and The Oaks at Forsyth. Jo Haubenreiser, executive directive for post-acute services for Novant, says the health system will continue to assist its patients in finding ways to fund their stay in its facilities.