NEW LAW IN CONNECTICUT
Transfers (Gifts) Can Lead to Being Sued by Nursing Homes
The Connecticut legislature recently passed a new law concerning Medicaid eligibility which allows nursing homes an additional basis to sue to recover lost revenue because a resident, or their spouse or agent under a power of attorney, transferred his or her assets to a third party. The law goes into effect October 1, 2013, but on its face it appears to apply to gifts and other transfers made in the two years before that date. This new law gives nursing homes seeking to recover unpaid fees more extensive rights of recovery against any resident who made a disqualifying gift in the two years prior to applying for Medicaid. Nursing homes can also sue the person who received the gift from a resident who applies for Medicaid within two years of making the gift. If the law is violated, even unintentionally, the nursing home can require any or all of these parties to pay for care provided to a resident that was not paid for by personal funds, Medicare or Medicaid. In addition, the new law allows a nursing home to recover certain unpaid fees from any person who has access to or control over a resident’s regular monthly income. All families with a senior loved one should be aware of how this law might affect them and what they can do to avoid incurring a debt to a nursing home as a result of these new provisions.
The new law will apply in two ways. One way is when someone transfers assets prior to applying for Medicaid and, as a result, incurs a penalty period. The other way is when a nursing home resident fails to make required payments as part of their Medicaid qualification.
In order to understand the consequences of the new law, it is helpful to understand certain concepts related to Medicaid eligibility. One important term is "penalty period." If a Medicaid applicant transfers assets during a period of 60 months (5 years) prior to applying for Medicaid, the law imposes a period of disqualification from Medicaid benefits, called a penalty period. The length of the penalty period is calculated by dividing the amount transferred by the average monthly cost of care. In Connecticut, the average monthly cost of care is $11,581. The penalty period begins to run only after the applicant has applied for Medicaid and would otherwise qualify but for the transfer.
If a nursing home resident incurs a penalty period due to a transfer of assets, the nursing home will be able to sue the resident to collect for any unpaid services. The nursing home will now also be able to sue the person who received the transferred assets to collect for any unpaid services resulting from a penalty period. In addition, the nursing home can collect its attorneys’ fees and court costs from the resident, their spouse or the recipient of a disqualifying transfer of assets if that person knew that the transfer was made for the purpose of obtaining or maintaining eligibility for Medicaid.
Very few transfers are exempt (i.e., do not cause a penalty period). Therefore, it is especially important to consult an experienced elder law attorney before any transfers are made. If you have already made a transfer it is also very important to consult an experienced elder law attorney to determine if anything can be done to avoid or prepare for a penalty period.
Another important term in discussing Medicaid eligibility is "applied income." Applied income is the amount of money the State of Connecticut determines a Medicaid applicant must contribute to the cost of his or her care. The Medicaid program requires a Medicaid recipient's income, less certain allowable deductions, to be paid towards the cost of care.
Under the new law, nursing homes are allowed to sue additional people to make them pay for the cost of care. If a nursing home resident fails to make required applied income payments, the nursing home can sue not only the resident, but also any person with legal access to or control over the resident's income if that third person fails to pay against the resident's wishes. That responsible person can also be sued if he or she appropriates the money for himself or another. Moreover, if the nursing home can show that the person willfully failed or refused to pay the applied income amount due, then the court may also require that person to pay the nursing home’s attorneys’ fees and costs.
This new law makes proper Medicaid planning even more crucial for all seniors and their families because it gives nursing homes expanded abilities to sue for costs of care not paid for by personal funds, Medicare, or Medicaid. The law makes it more important than ever that applications for Medicaid be completed properly and only after a thorough review of all of the facts to identify any potential problems. Without adequate and appropriate planning, nursing home residents - as well as family members - could be held responsible for a significant debt simply as a result of an avoidable oversight or misunderstanding that in many cases could have been cured.
For help with Medicaid planning or applications, or solutions to the problems discussed above, please call our office at 888-822-8778 for a consultation or for more information on Elder Care issues.