Thank you for viewing this Illinois Bar Journal article. Please join the ISBA to access all of our IBJ articles and archives.
Proposed Medicaid eligibility regs for long-term care recipients draw criticism
Lawyers raise concerns about proposed regulations that they say will not help older clients and their families.
As LawPulse previously reported (see the November 2010 IBJ), in August 2010 the Illinois Department of Healthcare and Family Services published proposed regulations that would implement the federal Deficit Reduction Act of 2005, PL 109-171 (DRA 2005), which affects applications for Medicaid from elderly citizens entering nursing homes. Because those regulations have important estate-planning implications for many older clients and their families, members of ISBA's Elder Law Section Council have monitored the department's actions closely.
Now, the department has issued a revised set of regulations, available at http://www.hfs.illinois.gov/publicnotice, on which the Joint Committee of Administrative Rules will vote in Springfield on April 12. Freeport lawyer Heather A. McPherson, immediate past chair of ISBA's Elder Law Section Council, said she was disappointed to find that most of the revisions are not helpful to older clients and their families.
Retroactivity's long reach
McPherson, who presented testimony on behalf of ISBA on the initial set of proposed rules before DHFS in September 2010, highlighted several areas of concern to attorneys with elder law practices. Foremost among them is the retroactivity of the proposed rules. Though the department has shortened the retroactivity period to three years before the date the rules are finally adopted, gradually increasing to five years, instead of February 8, 2006, the effective date in the proposed rules as originally published, McPherson said, "This is really unfair and would work a hardship on seniors. They had no way of knowing about these rules until now."
McPherson illustrates why retroactivity is such a problem for some seniors. "Let's say that a year ago a healthy senior citizen gave $50,000 to a child who was having a hard time in this difficult economic environment. That sum meant that the child could save his home instead of losing it to foreclosure. Now, the senior's health has declined, and she has to go into a nursing home. That senior, who had no notice of these regulations, will be unable to qualify for Medicaid until a long penalty period elapses."
The Elder Law Section Council's position, McPherson said, is that existing transfer restrictions should continue to apply until the new administrative rules are adopted and DRA is fully implemented. In the hypothetical example, under existing rules, that penalty would already have elapsed, allowing her to enter the nursing home immediately with Medicaid paying her way. "Under the new law, the penalty period starts to run only once the person is disabled and is out of funds and would otherwise qualify for Medicaid benefits," McPherson said.
Undue hardship waiver eliminated
McPherson said the revisions to the proposed rules actually make matters worse in one respect: they eliminate the ability of an institutionalized spouse to obtain a hardship waiver for the community spouse's failure to cooperate in providing information about separate assets to the government.
"Under Illinois law, spouses have always been able to refuse to disclose their separate assets when their spouses are applying for Medicaid. The department has removed some language from its August notice that the institutionalized spouse would be ineligible for Medicaid if the community spouse failed to cooperate in application, but has actually made the proposed rules worse in its second notice by eliminating the institutionalized spouse's ability to obtain an undue hardship waiver for the community spouse's failure to cooperate in the application," she said.
McPherson's other concerns with the proposed rules include their failing to give Medicaid applicants any credit for returns of assets transferred during the lookback period. That, she said, would provide no incentive for children or other gift recipients to return those assets to the elderly person. Among other undesirable changes are requiring the elderly applicant's assets to be determined as of the date of the Medicaid application and eliminating the three month grace period that federal law permits for applicants to conduct such housekeeping tasks as repairing or improving the homestead for the community spouse.
More than 300 comments filed
Springfield lawyer Tony Del Giorno, newsletter editor for the Elder Law Section Council, asked in the February 2011 issue that readers write to JCAR members voicing concerns and objections to the proposed rules. At that time, he wrote, "Currently, over 300 comments were filed with the Department of Healthcare and Family Services."
Pursuant to the Administrative Procedures Act, the rules must be implemented by the anniversary date of the first publication of the rules, which is August 13, 2011, Del Giorno wrote. "Now is the time to put pressure on our legislative leaders drawing attention to consequences of these rules."
For a scholarly but very readable exposition of elder advocates' issues with the DRA, see recent Northern Illinois University law graduate Catherine M. Reif's article, "A Penny Saved Can Be a Penalty Earned: Nursing Homes, Medicaid Planning, the Deficit Reduction Act of 2005, and the Problem of Transferring Assets" in the New York University Review of Law and Social Change, vol 34, p339 (2010).