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Medical Care For The Elderly – New Rules Impact Planning

Medical Care For The Elderly – New Rules Impact Planning

The cost of caring for our parents just got more expensive. Life for the “sandwich generation” can be a challenge. Not only must we raise our kids but we must take care of Mom and Dad. Doing so will now cost more.

As part of the effort to control spending, new federal Medicaid restrictions make it harder to qualify for coverage.

Medicaid? – that’s for the poor. How does this impact me?

Traditionally, strategies have included planned gifting from Mom and Dad to children and grandchildren. Spending down their assets made them appear “poor” by federal standards thus meeting eligibility requirements.

To thwart abuse of the system, Medicaid would require a 3 yr “look back” period. The new rules, included in the Deficit Reduction Act signed by President Bush on Feb 8th, account for all gifts within 5 yrs of that person requiring medical care.

While the tougher restriction is a federal mandate, Medicaid programs are run by the states so look for the impact to be state-specific. Cashstrapped states are likely to infer subtleties into the federal law which makes us suspect they’ll be quite aggressive in trying to recover assets gifted within the 5 yr look back period.

While limiting growth of future budget deficits is the nominal explanation for the change, we believe the legislation aims to limit Medicaid eligibility to those whom it was initially meant to cover.

That’s’ the good news.

The bad news is it opens the door for over-zealous insurance salespeople to push private long-term care policies. While long-term care policies can make sense for the “right” people in the “right” situations, we can only hope the restructured landscape is used as an opportunity to educate and inform rather than as a policy-buying scare tactic.

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We’ll write to you again soon. Keep visiting our site for frequent updates. Keep those comments coming. We love hearing from you.

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