Generosity may reap its reward in the after-life, but under the new Medicaid law a "generous spirit" may be required to suffer financially while on earth.
Donations to churches and other charities are presumed to be "transfers" of assets for the purpose of triggering a penalty period of Medicaid ineligibility for nursing home residents. Seniors should be aware that donations to the Good Shepherd Church may be treated the same as financial gifts to a son or daughter.
"Should I quit giving to my church?" asked a senior legal helpline caller. "Should I use my church donations to pay for long-term care insurance?" �
Here is why church-giving now has increased risk:�The Deficit Reduction Act extended the three-year "lookback" period to five years.�More importantly, it provides that the five-year period does not begin on the date of the actual transfer, but rather on the date the Medicaid applicant becomes impoverished and qualifies for benefits under the program. �
Thus, our Congress created a punitive "fiction" that will impose unexpected financial harm on seniors and nursing homes years into the future. For example, assume a reasonably well-off woman of 80 donates $20,000 to her church on August 15. She enters a nursing home on August 15, 2008, and during the next two years spends $5,000 per month for nursing home care, exhausting her $120,000 savings.
On Aug. 14, 2011, having "spent down" her assets, she applies for Medicaid assistance. The government will deem that the $20,000 donated to her church on Aug. 15, 2006, was donated on Aug. 14, 2011, imposing a penalty period of four months, during which she or her family will need to come up with $20,000.
An elderlaw newsletter reports that some Indiana agencies have strictly applied the transfer rule to church donations. Medicaid officials in South Dakota, however, said they will examine donations to churches on a case-by-case basis.�If the donations were consistent with prior contributions to the church, they will not be considered.
They will allow applicants to rebut the "transfer" presumption by demonstrating that such giving was an established pattern of giving. The state, too, can be generous.
(Pro bono legal information, advice and assistance is available to persons 55 and older through USD Senior Legal Helpline, 1-800-747-1895; mmyers @usd.edu.