HFS Proposes Changes in Eligibility Rules for Long Term Care to Comply with Federal Law

SPRINGFIELD - The Illinois Department of Healthcare and Family Services (HFS) announced today that it has proposed changes in the rules that govern eligibility for long term care services.  The proposed rule changes are mandated by federal law, including the Deficit Reduction Act of 2005. They are designed to encourage personal responsibility and to improve the efficiency of Illinois' Medicaid-funded long term care program, while also ensuring that the state leverages the maximum federal funding for the program.

"In developing these proposed changes, we have been mindful of the statutory mandate that the medical assistance program, funded with taxpayer dollars, should be the payer of last resort for those individuals who have no other means to pay for the cost of their long term care services," said HFS Director Julie Hamos. "These proposed changes take into account allowances to prevent spousal impoverishment, accommodate hardships and consider the individual circumstances of every person applying for and receiving long term care services at state expense. They are predicated on the principle that individuals should use their own income and assets to pay for their care before turning to the state for that support."

The proposed rules, which are required by federal law, are designed to close loopholes that have been used to shelter applicants' assets, rather than using those resources to purchase the long term care they may need. 

The proposed rules also provide an incentive for purchasing and using qualified private long term care insurance to encourage individuals to prepare for the possibility that they will need long term care services in their later years.

A separate rule change will allow the state to capture more federal dollars to support the Department on Aging's Community Care Program that allows seniors to stay in their homes and receive the care that they need, rather than moving into a nursing facility.

The Department will accept written comments on the proposed changes and has scheduled a public hearing for Sept. 13 in Chicago to receive ideas, questions and concerns.  After reviewing and carefully considering all the comments received, HFS will determine whether the proposed rules should be revised.  Before they can take effect, HFS must submit the proposed rules along with any revisions to the Illinois General Assembly's Joint Committee on Administrative Rules for the committee's consideration.

Among the major rule changes proposed are the following:

• As dictated by federal law, the "look back" period will be changed from three years to five years, extending back to February 8, 2006, the date the new federal legislation took effect. This means that if the applicant gave away any money or property during the five-year period, the state must calculate a length of time for which the applicant would not be eligible for government aid for long term care services. The length of time is calculated by dividing the amount given away by the daily private pay rate of the nursing home.

• A hardship waiver process is established for cases in which the health or life of the applicant would be endangered, or the applicant would be prevented from residing in a facility with a spouse.

• Commonly used loopholes under which applicants transfer assets that could have been used to pay for their own care are eliminated.

• New rules for the treatment of annuities are established, including a requirement that the state be named as the remainder beneficiary.

• There is a limit of $500,000 of equity interest in a home for eligibility for government paid long term care services, unless the person's spouse or a disabled, blind or minor child lives in the home.  Reverse mortgages or home equity loans may be used to reduce home equity interest.

• Funds used to purchase a promissory note, loan, or mortgage will be treated as a non-allowable asset transfer unless there is a written transaction, the repayment term is actuarially sound, payments are made in equal amounts with no balloon payment, cancellation of the balance upon the death of the lender is prohibited and a consistent, verifiable repayment record exists.

A complete version of the proposed new rules, including instructions for submitting comments or participating in the public hearing, is available in the August 13, 2010 issue of the Illinois Register at http://www.cyberdriveillinois.com/departments/index/register/register_volume34_issue33.pdf.

The Sept. 13 public hearing on the proposed rules will be held at the Michael A. Bilandic Building (MABB) 160 N. LaSalle St., Room 500, from 9 a.m. to 12 p.m.