What happens if a Medicaid applicant has funds in a bank account but cannot access those funds due to their medical condition? Are those funds still a countable resource? This issue was recently litigated in Indiana.

Samuel was admitted to the nursing home in 2019. A few months thereafter, he was diagnosed as “incapacitated by senile degeneration of the brain.” In February 2020, Samuel’s representative applied for Medicaid benefits and was denied due to excess assets. Samuel twice appealed and the case was affirmed each time.

Last August, we published a blog about California’s new Medicaid eligibility rules. Well, those new rules are coming to fruition and will drastically change Medicaid planning in that state.

Most states have a $2,000 asset limit for an individual to qualify for Medicaid. California was no exception. However, the new rules change the asset limit for an individual to $130,000 ($267,000 for a married applicant) as of July 1, 2022. Even more astonishing – all resources will be disregarded no sooner than January 1, 2024. Meaning, a MAGI-based applicant can have unlimited resources and qualify for long-term care Medicaid at that time.

The Deficit Reduction Act of 2005 (DRA) did many things. It implemented new whistleblower protections, changed the annuity rules, allowed states to vary premiums and cost-sharing for Medicaid benefits, and instituted the “Money Follows the Person” rule. But the heavy hitters of the DRA were the modifications of the look-back period and the penalty period rules.

The look-back period is the time in which a Medicaid agency can scrutinize asset transfers. Certain transfers during this time may incur a penalty period where the applicant isn’t eligible for benefits. The DRA lengthened the look-back period to 60 months. Importantly, it also changed the rule that stated the penalty period began in the month the assets were transferred. After the DRA, the penalty period doesn’t begin until a Medicaid application is filed and the applicant is otherwise eligible for benefits.