SD12 - Special Report: Recent Federal Changes Affecting Asset Sheltering for Medicaid Long-Term Care


Executive Summary:
[The electronic version of the report was replaced by JLARC on 3/21/07.]

There has been concern that some individuals were using loopholes in the law to shelter assets in order to qualify for Medicaid long-term care (LTC) services. The federal Deficit Reduction Act of 2005 (DRA) included provisions intended to restrict this practice. HJR 97 and SJR 122 of the 2006 General Assembly Session directed the Department of Medical Assistance Services and JLARC to monitor these new federal restrictions.

The DRA provisions expected to have the most impact in Virginia are the lengthening of the look-back period, a change in the method of calculating the penalty period, a requirement that the Commonwealth be named a remainder beneficiary on annuities, and the evaluation of purchases of life estates as uncompensated transfers. The General Assembly may wish to direct further actions to complement several of these provisions. Virginia has already implemented State programs similar to other DRA provisions.

The DRA did not address the purchase of U.S. Savings Bonds, payments to family members for care provided, transfers of homes to family members in certain circumstances, or the failure to disclose assets as a means of sheltering assets. Therefore, there may be an increase in the use of these methods by Virginians in order to qualify for Medicaid LTC services.