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Saugus Advertiser
November 20, 2003
GOOD NEWS FROM THE LEGISLATURE
Last week the Supplemental Budget was passed by the Massachusetts House and the Senate that contains some great results on Medicaid issues. The House adopted language postponing the implementation of expanded estate recovery until July 1, 2004. On the Senate side, Senator Creedon filed amendments to repeal both expanded estate recovery and the transfer of assets waiver. Cosigners were Senators Morrissey, Creem, Shannon, Joyce and McGee. These Senators and others who supported them stood firm in the face of opposition from leadership and were prepared to ask for a roll call vote, which no one wanted on a sensitive issue like this. In the end they gaveled through both amendments favorably without a vote, which means the leadership succumbed to the pressure.
The next step in the legislative process is a conference committee. A conference committee is made up of 3 members from each legislative branch representing both political parties to form a compromise piece of legislation. When a compromise is reached, the bill is sent to both legislative branches for their approval. A vote “to enact” the bill, first in the House and later in the Senate, is the final step in the passage of a bill by the legislature. It then goes to the Governor for signature.
Expanded estate recovery basically means that the Division of Medical Assistance(DMA) can go after many assets, including the home, that were protected under the old law. The law was being applied retroactively and that hurt many people. Because many of you called your legislators and told them that this is not fair, there is a chance that they will fix this problem. You might want to call them and thank them for their help.
The definition of what they can recover against under the expanded estate recovery says, “estate shall mean any interest in real and personal property and other assets in which the individual immediately prior to death had any legal title or interest, to the extent of such interest. This includes interests in real and personal property and other assets that would pass to a survivor, heir, or assignee of the decedent through joint tenancy, tenancy by the entirety, life estate, living trust, right of survivorship, beneficiary designation, or other arrangement.”
In addition, the Senate budget seeks to repeal the transfer of assets waiver. In a letter signed by all of our US Senators and Congressmen addressed to the Center for Medicare and Medicaid Services(CMS), the organization that controls Medicaid, they asked that the waiver not be approved.
The most brutal part of this waiver request is the start date for the penalty period for having made a gift. Instead of the penalty period starting on the date of the gift, it begins either when you enter the nursing home or you are otherwise eligible. Let’s take an example:
Ed is single and in a nursing home. Four years ago Ed gave his daughter $40,000 to purchase a home. Now his only asset is $12,000 in his checking account.
Under the current rules, Ed’s gift of $40,000 resulted in a 187 disqualification period ($40,000/214=187 days), which has long since passed and the gift is protected. Under the proposed waiver, the period wouldn’t start until Ed gets down to $2,000. Ed prepays for his funeral and now has $1,500 left. Now the penalty period starts. Because of the gift, Ed must now pay privately for the next 187 days. How is he going to do this? Where is the money going to come from? There are a lot of unanswered questions in this waiver proposal.
This article gives general information and not specific advice on individual matters. Persons wanting individualized advice on matters discussed should contact an advisor experienced in those matters. To the extent this article provides information on legal matters, it is based on law in effect in Massachusetts on the date of posting (laws in effect in other states are often quite different).
Ronald H. Surabian is a CPA and attorney who works at the Elder Law Center in Saugus, Ma. He also holds a masters in accounting and a masters in tax law. He currently serves on the board of directors of the Massachusetts Chapter of the National Academy of Elder Law Attorneys.