Medicaid Planning Strategies

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 imprisonment.
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.