Just before heading home for their Christmas recess last month both houses of Congress adopted major changes to the federal-state Medicaid program. Because of very minor differences between the House and Senate version the new law has not yet been fully adopted, but expectations are that the House will concur in Senate changes as soon as it returns to work later this month, and Medicaid eligibility rules will be dramatically changed. Given the rhetoric and previous acts by the current Congress and administration, it should surprise no one to learn that the new rules will be more stringent, and the result will be fewer seniors, disabled adults and children receiving necessary medical care.

The most obvious change (but not necessarily the most profound) will be to lengthen the so-called “lookback” period for gifts from three years to five. That means that an individual who has made any gifts in the five years before applying for Medicaid assistance will have to provide details and will be ineligible for assistance for some period of time—though not always for the full five years.

Much more insidious is the new law’s method of calculating that ineligibility period. Current rules begin the period from the date of the gift; that will change so that the ineligibility period does not begin until the Medicaid applicant is both receiving care and out of money. In other words, if a gift-giver runs out of funds anytime within five years of the gift, he or she will be unable to pay for care and ineligible for government assistance.

The new law does not make any distinctions based on the health or intentions of the individual, nor on the nature of the recipient. A senior who regularly makes donations to her church or a favorite charity, for example, will be denied eligibility if she runs out of funds within five years of the last donation. A healthy individual who helps a grandchild pay for college, and then unexpectedly becomes ill, may find that he can neither pay for care nor qualify for Medicaid.

The new law does require states to adopt a more complex “hardship” system, allowing individuals who are trapped by the eligibility rules to show that their gifts should not count against them. It also permits nursing homes to initiate hardship applications when they find that patients have no funds and do not qualify. All of that will likely mean that the system is less reliable, that legal fees for applicants and facilities climb, and that nursing homes and hospitals are forced to absorb even more of the costs of caring for America’s seniors.

There are a number of other, less sweeping changes included in the new law—almost universally restrictive, but not quite as punitive. Future Elder Law Issues will address some of those changes and report on the progress of the new law.

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