New Medicaid Rules


With the adoption of the federal budget on August 11, 1993, Congress and the Clinton administration have substantially rewritten the rules for long term care subsidies through the Medicaid program. The Arizona Long Term Care System (ALTCS) will be required to comply with the new federal rules, though regulations to implement most of the rules have not yet been adopted.

The changes to Medicaid/ALTCS rules include:

  • Increased penalty periods for gifts and other transfers
  • Disallowance of most trusts
  • Creation of several new types of trusts for specific circumstances
  • Aggressive estate recovery program

Penalty periods for gifts
Previous law disqualified an applicant from ALTCS eligibility if substantial transfers had been made during the thirty-month period before application. The new rules extend that period to thirty-six months, and may also remove the limit on the period of ineligibility.

New Treatment of Trusts

Under the new rules, most trusts established by an applicant (or anyone else on his or her behalf) will be treated as available to the ALTCS applicant. For most purposes, the use of trusts to qualify for ALTCS will no longer be an option.

Special Types of Trusts

Even while disallowing most trusts for ALTCS eligibility, the new law creates three special new categories of trust. Patients in any of the following circumstances might be able to shelter income and/or assets using the new opportunities:

Young (under age 55) recipients of personal injury settlements or inheritances

“Utah Gap” patients–those with income over $1302 ($1338 in 1994)

Participants in a pooled trust arrangement

Did You Know?

The number of nursing home residents in the U.S. increased by 24% (to 1.8 million) during the 1980s, according to the Census Bureau. The largest increases were in the District of Columbia (144%), New Mexico (142%) and Florida (121%).

According to the same Census Bureau figures, women make up almost 60% of nursing home residents, and nearly 90% were age 65 or older.

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