Major changes to Medicaid rules

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If your family member has dementia or Alzheimer’s, then they’re on a journey. Hopefully, this Elder Law Update will help you understand what lurks around the next bend, especially pertaining to the new rules for Medicaid.

The year 2012 has seen two major pieces of legislation impact Illinois seniors, including those with dementia and Alzheimer’s. First, effective January 1, 2012, Illinois put into effect the Federal Deficit Reduction Act of 2005, with retroactive effects to January 1, 2007.

This rule affects almost every aspect of Illinois Medicaid relating to long-term care for seniors, including eligibility for medical assistance, income standards, treatment of trusts and annuities, prevention of spousal impoverishment, determination of exempt resources, mandatory spend-down of resources, property transfers, and more.

This long list and its overwhelming effect on Illinois seniors was not the end of the 2012 administrative rule-making story.

On June 14, 2012, Gov. Quinn signed certain amendments to the Illinois Public Aid Statute in order to accomplish certain objectives under Medicaid reform. On July 2, 2012, Emergency Administrative Rules were put into effect and published for the first time, and are scheduled to expire on June 30, 2013. The effect of these rules puts additional restrictions on eligibility requirements for Medicaid qualification, including the following:

* A home held in trust may not be exempt for Medicaid purposes, as it has in the past.

* The home equity exemption was reduced from $750,000 down to $525,000.

* Healthy spouses living at home are permitted to keep assets of $109,560, as opposed to the previously allowed $113,640.

* The healthy spouse living at home is permitted keep a monthly income of $2,739, as opposed to the previously allowed $2,841.

* Spousal refusal (the community spouse’s refusal to contribute to the cost of care of the institutionalized spouse) is not abolished, but the state has expanded its ability to pursue the institutionalized spouse’s assignment of support rights against the community spouse.

* For a person that is disabled and 65 or older, any transfers to a OBRA/Pooled Payback Trust will be treated as a transfer of assets for less than market value, and thus penalized, unless such person is a ward of the County Public Guardian’s Office.

* There is a new limitation on irrevocable prepaid burial arrangements at $5,874, instead of the previous $10,000 limit.

* The ability to ask for retroactive Medicaid qualification for the 90 days preceding the submission of the Medicaid application has been curtailed.

The best advice I can give seniors — especially those with dementia and Alzheimer’s — is to take advantage of the ability to grant decision-making authority. Without this ability, in many cases, we are left seeking relief from guardianship courts.

Assuming competency exists, obtaining financial and health care powers of attorney, and choosing the appropriate agent to handle those affairs, is the first step. Also, make sure that long-term care authorizations are built-in to the POAs.

For more, call 847-292-1220, e-mail or visit

About Anthony B. Ferraro

Anthony B. Ferraro is the founder and managing member at the Law Offices of Anthony B. Ferraro. He received his Bachelor of Science degree in accountancy from DePaul University and his Master of Science in taxation. After receiving his CPA designation in 1978, he enrolled in law school, earning his Juris Doctor in 1983 from De Paul University. An elder law practitioner, his practice areas include Medicaid planning and applications, guardianship, probate & trust administration, long-term care planning, nursing home contracts and admission, senior estate planning, special needs planning, estate planning, and estate taxation.

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