In September 1993 a major piece of
legislation was passed, called “OBRA ‘93”. This
bill would turn out to be one of great impact on seniors all across
the country. It would change the way insurance agents would design
LTC insurance. Prior to OBRA ’93, the agent, client and their
families would need to predict the length of confinement in a nursing
home stay. 3 yrs? 5 yrs? Lifetime? How would one know? The only
solution was to purchase an expensive lifetime benefit policy. It
was simply not affordable to most. Guessing wrong meant “Losing
the Farm” so to speak.
Seniors began hiding their assets illegally, putting their property
in their children’s names, and giving away their assets in
order to qualify for Medicaid.
As a result, OBRA ’93 created a “lookback period”
for the transfer of assets in which violators would be forced to
pay back monies to the state. The “Kennedy-Kassebaum Bill”,
“Balanced Budget Bill of ‘97” and “Health
Insurance Portability Act of ’96” followed, all designed
to clamp down on these illegal transfers.
Anyone who knowingly & willfully disposed of their assets in
such manner were subject to criminal penalties, fines & even
Annuities, however, were given exemption from seizure under OBRA
’93, under section SB 1261, which passed the legislature in
1991. This meant nursing homes & lawsuits could not seize the
assets of seniors held in an annuity. Furthermore, “The Balanced
Budget Bill” states “the purchase of an annuity
to qualify for Medicaid does NOT create a period of ineligibility”,
if it complies with OBRA’93 and Spousal Impoverishment Rules. In addition Medicaid established
both “deferred & immediate annuities” as an “unavailable
asset”, within OBRA’93 guidelines.
In conclusion, insurance agents were able to structure less expensive
LTC policies while providing adequate coverage. Meanwhile, using
annuities both “prior to” or “during” a
nursing home confinement can qualify seniors for Medicaid benefits.
Agents with the help of an “Elder Care Attorney” could
reduce or even eliminate the total “Spend Down” process
under Medicaid. Medicaid Planning Strategies enables seniors to
preserve valuable assets, allowing them to pass
on their assets to the beneficiaries of their choice.