Medicare pays for medical care and for as long as 100 days of care in a nursing home. It does not provide for long-term care.
Medicaid, which pays for long-term care, is becoming more limited. The Shelales case demonstrates how difficult it can be to obtain Medicaid coverage.
In December 2006 Mary Shelales entered a nursing home. A month later she transferred $41,993 to her children. The same day she paid $50,447 to the nursing home to prepay her nursing home expenses until June 27, 2007.
Medicaid does not want applicants to transfer their assets in the morning and apply for Medicaid in the afternoon. Therefore, a "disqualifying transfer" bars the transferor from Medicaid for a period determined by dividing the amount transferred by the daily rate paid by Medicaid - in this case, $267.
The transfer to Mary's children barred her from Medicaid for $41,993/267, or 157 days. Under the law before February 8, 2006, when the Deficit Reduction Act took effect, the disqualification period would have started on the day of the transfer, January 11, 2007 and ended on June 27, 2007.
Mary applied for Medicaid to start on June 27, 2007. The Office Of Medicaid denied the application, stating that, under the Deficit Reduction Act the disqualification period started to run "on the first day of the month in which resources were transferred for less than fair-market value or the date on which the individual is otherwise eligible for MassHealth ... whichever is later." The Medicaid authorities stated that Mary was not "otherwise eligible for MassHealth" until the nursing home prepaid funds had expired.
Mary argued the disqualification period began when she made the transfer to her children, because she was then eligible for MassHealth except for the disqualifying transfer. Mary appealed the rejection to the Superior Court. The judge agreed with MassHealth and held that the disqualification period began when the nursing home prepayment ran out.
Giving away part of one's assets and retaining enough assets to exhaust the disqualification period won't work any more, because the disqualification period does not start until the retained assets are used up. Medicaid planning is much more difficult, but there are other techniques that are effective, and we will be glad to advise you about them.
