Medicaid Alert: Time is Running Out!

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Dear Clients and Friends,

A new law is pending that will dramatically alter the “look-back” and “transfer of assets” provisions of the Medicaid law. If you still have assets in your name that you want to protect from a nursing home and Medicaid, it is crucial that you understand this new law and act IMMEDIATELY.

This new law will likely be effective around the beginning of February, 2006, upon the President’s signature, but could be delayed awaiting New York State implementation. This new law is contained in the Deficit Reduction Act of 2005 (“DRA) which passed the House of Representatives (“House”) and the Senate late last year, but with certain technical corrections requiring the House to pass it again (which they are expected to do on February 1, 2006). Transfers made after the date of the President’s signature (or New York State implementation) will be subject to the new law. Importantly, transfers made prior to this new law will not be effected and any advice we gave you on those transfers still holds true.

The new law extends the “look back period” to five (5) years for all transfers (to trusts or otherwise) and starts the Medicaid penalty period from the first day of the month after which you enter a nursing home and apply for Medicaid rather than the first day of the month after which you actually made a transfer.

Example of the new law: On December 31st, 2006 you transferred $30,000 to your granddaughter to help her pay for a semester of college. For Medicaid purposes you will have incurred a 3 month penalty beginning on the first month after you enter a nursing home and apply for Medicaid, if such date should occur within 5 years of the transfer. Here, if you applied for Medicaid on June 1, 2007, you still would not be eligible for 3 more months.

The biggest criticism of this new law is that when you apply for Medicaid you will have no assets and no ability to pay for your care. This law is unfair to any one who gives money to a family member to purchase a home, or an education, or to anyone who gives money to their charity of choice. Will seniors stop making these types of gifts to their family members? Will nursing homes accept you if you have no money and no Medicaid? The law is hurtful to our society and you should make your feelings known to your representatives.

This letter shall serve to alert you to this new law and encourage you to seek our counsel IMMEDIATELY. Furthermore, there is also a possibility that a window of opportunity now exists to plan under the old law before New York implements the new law. We will continue to remain dedicated to preserving the rights and the dignity of senior citizens and those with special needs. We urge you to plan now before time runs out!

Also, please log on to our website, www.Davidowlaw.com, and sign up for our weekly newsletter to obtain other information and updates on this new law as it unfolds. I am,

Very truly yours,

Lawrence Eric Davidow, Managing Partner

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