Indiana Elder Law Attorneys Instrumental in Blocking Draconian DRA Transfer Rules

In a major victory for Indiana elder law attorneys and their clients, Indiana Governor Mitch Daniels has signed legislation halting rules proposed by the state Medicaid agency that had been dubbed "the harshest DRA rules in the nation."

The legislation's terms were negotiated between the Indiana Family and Social Services Administration (FSSA) and representatives of the Indiana Chapter of the National Academy of Elder Law Attorneys (IN-NAELA) and a coalition of citizens' groups and long-term care providers who opposed the rules that FSSA had proposed in August 2008. (See "Indiana Elder Law Attorneys Decry Excessive DRA Transfer Rules.")

The original rules proposed by the FSSA to implement the Deficit Reduction Act of 2005 (DRA) included provisions that deemed even the smallest gift a violation of the transfer rules, prohibited credit for the partial return of transferred assets, singled out charitable gifts as disqualifying an individual from the undue hardship exemption, and, most onerously, made the rules' provisions retroactive to February 2006, although the state did not publish a draft until August 27, 2008.

Under the bill just signed, SB 301, FSSA will not use new rules until at least October 1, 2009, and will not apply the new rules' penalties to any gifts or other transactions made before the rule change.

In addition:

• The agency may not consider a total of $1,200 per year in contributions by an individual to a family member or nonprofit organization as an improper transfer;
• The agency may disregard a contribution by an individual if the individual can demonstrate that the transfer follows a pattern that existed for at least three years before applying for Medicaid or was not for the purpose of fraud;
• Partial cures are allowed;
• Non-qualified annuities purchased before October 1, 2009, will not create a penalty under the Medicaid rules even if the State of Indiana is not named as the primary contingent beneficiary;

FSSA officials have pledged to work with the elder law attorneys and the citizens' groups to help assure that the final rules are fair.

For an article on the bill by Jeffery D. Stinson, Senior Associate Attorney at the Indianapolis ElderLawAnswers member firm of Severns Associates, click here.

Stinson, who is president-elect of IN-NAELA, says that "we still have some work to do as far as advocating for elimination of other unfavorable provisions that were not addressed by the legislation. Fortunately, it appears our Chapter will have a 'seat at the table' with the agency when discussing further rule-making.

"I am very proud that our group helped bring these problems to public awareness and the many, many hours of work that our members contributed to this successful legislative effort. We will continue to bring the voice of families who face long-term care challenges to the table as final rules are being hammered out."