FROM THE ATTORNEYS PEN
by Judith Lee Sterling
On February 1, 2006 by a vote of 216 to 214, the U.S.
House of Representatives passed the Deficit Reduction
Act (DRA). We have been informed that President Bush
intends to sign the act into law on February 8, 2006.
We expect that the DRA will be Federal law before you
receive this March newsletter.
The effective date of most provisions of the law is
the date of enactment. So we expect that the effective
date will be February 8, 2006. The law impacts food
stamps, student loans, and child support enforcement
among other Federal programs as well as Medicaid.
We do not yet know how the new law will be implemented
in Hawaii. We have been told by a representative from
the State of Hawaii Department of Human Services that
nursing home Medicaid applications after enactment of
the DRA will continue to be processed as before but
will be reviewed under the terms of the DRA sometime
in the future.
If we were engaged by you to do Medicaid planning
and the plan included monthly gifting or you have not
yet implemented your plan, please call Wendy S. Miki,
Esq. at 531-5391 extension 337 to discuss what it will
be best for you to do at this time.
Under the DRA an individual is ineligible for nursing
home Medicaid if that individual has equity in a home
of more than $500,000. States have the alternative of
raising this threshold as high as $750,000. We do not
yet know what home equity amount will be allowed in
Hawaii.
The law extends the Medicaids look back period for
assets transferred from three to five years. Christmas
gifts, gifts to charities, and payment of school tuition
for children or grandchildren are some of the transfers
that will need to be revealed on the Medicaid application
and could cause problems in qualifying for nursing home
Medicaid.
Any transfers of assets within the five-year look back
period will be evaluated for assessing a penalty period.
This is the period for which Medicaid will not pay for
custodial care. The penalty period will then start when
the applicant would otherwise be eligible for nursing
home Medicaid but for the transfers made in the look
back period.
There are many other provisions in the law that impact
planning to access nursing home Medicaid and filing
a successful Medicaid application. With the average
cost of a nursing home currently approximately $88,000
a year in Hawaii, it is very important to plan for long-term
care.
We can still develop a plan to protect assets if you
should need long-term care in the future. It is more
important than ever to do your planning in advance and
not wait for a crisis to overwhelm you and your loved
ones. The attorneys at Sterling and Tucker are dedicated
to helping you plan so that the issue of long term care
is addressed and the prospect of needing and paying
for long term care is not so frightening.
Call us to set an appointment to discuss this important
issue.
Aloha.
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