Sykes Elder Law: Pennsylvania to Implement New Medicaid Law

Certified as an elder law attorney by the National Elder Law Foundation under authorization of the Pennsylvania Supreme Court

Certified as an elder law attorney by the National Elder Law Foundation under authorization of the Pennsylvania Supreme Court

(2006)On February 8, 2006, President Bush signed the Deficit Reduction Act of 2005 into law. As we explained in our last newsletter, the new law calls for significant changes in the Medicaid look-back period, gifting penalties, lesser protections for spouses of Medicaid applicants, and other matters.

Implementation expected in 2007

Pennsylvania officials recently announced plans to implement the new law on January 1, 2007. Beginning on that date, according to current plans, applications will be subject to new procedures, which are now being written by the Pennsylvania Department of Public Welfare.

One major issue is the treatment of gifts. Present plans are that in 2007, an applicant who has made a gift on or after February 8, 2006 will be subject to an ineligibility period that runs from the date the applicant would “otherwise be” eligible, not from the time the gift is given, if the resulting period of ineligibility extends into 2007.

For example, two applicants make gifts on September 15, 2006. The first gives away $20,000, and the second gives away $25,000. Both have spent down their resources, and meet other eligibility requirements, by January 15, 2007, at which time they both file applications.

The first applicant is approved for benefits because the period of ineligibility resulting from the $20,000 lasted about three months, expiring in mid-December ($20,000 ÷ $6,757.67 (monthly divisor penalty amount as of 7/1/06) = 2.96), prior to the January 1 implementation date.

The second applicant is denied benefits. This applicant would have qualified under the current rules because the ineligibility period resulting from the gift would have lasted less than four months, expiring January 5 ($25,000 ÷ $6,757.67 = 3.7 months), 10 days prior to application.

But, since the second applicant’s period of ineligibility extends past the implementation date of the new Act, this applicant falls under the new rules. That means the ineligibility period starts not when the gift was made on September 15, but rather, on January 15, when he became otherwise eligible but for the gift.

The second applicant therefore faces a 3.7 month period of ineligibility for benefits, but has no resources to private pay, unless the gift is returned or a “hardship waiver” is granted.

In future newsletters, we’ll explore how the new Act could affect other areas of Medicaid eligibility.

Is it constitutional?

Before you get too comfortable/uncomfortable with the new Act, consider that its implementation could be delayed, at the least, as a result of three separate lawsuits challenging its constitutionality. (The Act passed the two houses of Congress in slightly different forms.) If struck down by the courts, the new Medicaid provisions would have to be re-enacted before they could go into effect. It is not yet known when or how the courts may rule.

Do You Need Medicaid Planning?


412-531-7123 (Western PA)
215-600-0250 (Eastern PA)

Schedule a consultation call


Loved one in a nursing home (or soon to be)?

Find out if they qualify for Medicaid with our FREE downloadable guide & worksheets - or call to request a free copy be mailed to you.

Get answers about how PA values assets, and calculate step-by-step whether your loved one is eligible (and if not, get advice on what to do next).

Download Now

Related Posts

Avoid a Family Fight Over Your Estate

Avoid a Family Fight Over Your Estate

Most people think of their estate plans as expressions of their legacy to loved ones. The last thing they want to leave is family conflict.  The first step in avoiding a family fight over your estate should be obvious, but it bears repeating: have a clear and...

Share This