Strict Updates to Medicaid Eligibility Laws
in Illinois
Written by Abigail C. Waeyaert
As published in the Califf & Harper March 2013 Newsletter
The issue of Medicaid eligibility can confront us, often unexpectedly, at various stages of our lives. For some, it arises as our parents age and require additional care, or when our spouse faces an unexpected illness or disability. For others, it arises in our own estate planning as we try to plan for our potential need for Medicaid benefits.
Illinois enacted updated Medicaid eligibility requirements effective January 1, 2012 and July 1, 2012. These new requirements are making it more difficult to qualify and plan for Medicaid benefits in Illinois. A full discussion of the changes is beyond the scope of this article. Some of the notable changes are as follows:
  • One common estate planning tool is to put your house in a trust.  This enables you to transfer your house at your death without the necessity of probate. Generally your principal place of residence is "exempt" for Medicaid purposes, meaning they do not count the value of your house when determining if you meet the monetary requirements for Medicaid eligibility.  The new regulations provide that your house will no longer be considered "exempt" if it is held in a trust.  There are exceptions if your spouse, minor child or disabled child reside there, which lessens the impact of this rule under these circumstances.
  • Previously, a spouse could refuse to disclose his or her assets under certain circumstances when his or her spouse applied for Medicaid benefits.  The new regulations limit the ability of a spouse to refuse to disclose his or her assets.  The applicant spouse can now be denied eligibility for benefits and remain ineligible for long term care, and the Illinois Department of Human Services can now pursue support payments from the spouse who refuses to disclose his or her assets.
  • One of the biggest changes is to the provisions for individuals who transfer their assets for less than fair market value prior to applying for Medicaid benefits, i.e. you give $50,000 to your son.  The "look back period" for transfers of assets was generally, with the exception of transfers to certain trusts, thirty-six months from the date you applied for benefits.  The new regulations have a "look back period" of sixty months.
  • In addition, the penalty period for transfers for less than fair market value used to generally to begin the month the transfer was made.  This allowed individuals with some planning opportunities because you were certain about when the penalty would begin.  The new regulations provide the penalty period begins at the later of (1) the month the transfer was made, or (2) the date the person would otherwise be eligible for assistance and receive long-term care services.  Thus, for practical purposes, the penalty period will usually never begin until you have applied for and are otherwise eligible for benefits.  This restricts the viability of a lot of planning options because you are never certain when the penalty period will begin.  Of course, if you make it sixty months after a transfer without having to apply for benefits, you will have avoided these harsh rules.

For more information on this topic please contact Califf & Harper, P.C. by calling 309-764-8300 or 1-888-764-4999. This article is intended to provide general information regarding the topic discussed herein but is not intended to constitute individual legal advice.