The days are over when Grandma or Grandpa could give their money to relatives, then, shortly thereafter, enter a nursing home with Medicaid picking up the tab.
A bill President Bush signed into law this week requires a five-year wait for those wishing to employ this little-publicized but widely used practice.
In New York State, where 78 percent of all people in nursing homes are on Medicaid, the change is expected to hit middle-income families and nursing homes especially hard. Daily rates are the highest in the nation.
While critics fear the new rules could hurt people of modest means, advocates say the changes will help erase the practice of wealthier seniors artificially impoverishing themselves
so the government assumes their nursing home expenses.
The change, which took effect Wednesday when Bush signed the Deficit Reduction Act, was made as the rising cost of Medicaid, originally designed as a health care program for the poor, places a heavier load on state and county budgets.
Before the change, most elderly patients could enter a nursing home on Medicaid a year to 18 months after transferring their assets to relatives or friends, according to Edward C. Robinson, an estate lawyer in Buffalo.
"We've been pretty busy with this thing," Robinson said. "We got the word out to as many of our clients as we could before the deadline came."
Under the old system, families with elderly relatives in failing health could begin transferring assets well before the time came for entering a nursing home.
Now, the elderly must wait a flat five years after their last transfer of assets to qualify for Medicaid-paid nursing home care.
The law imposes stiff penalties on those already in nursing homes on Medicaid who transferred assets within five years. It allows states to demand a review of the patient's financial records.
Technically, the new Deficit Reduction Act, which mandates the change in waiting time, increases the period from a current three years to five years, but under the old law, Robinson said, the state could shorten the wait to as little as a year from the last asset transfer. That latitude is gone, he said.
If a transfer within five years is discovered, the patient could be charged for all the money Medicaid paid for their care.
Nursing home care averages $198 a day in New York State; Medicaid pays $174 of that.
"Most people who would be affected by the five-year look-back provision are probably without resources by now, so who is going to pay?" asked Bob Murphy, executive director of the State Health Facilities Association.
The Deficit Reduction Act was one of the most controversial and complex bills passed by Congress. Because the nursing home provisions would affect many middle-income families, so many Republican senators opposed it that Vice President Cheney had to cast the deciding vote last fall.
In the House, where Republicans have a 30-member majority, the bill passed Feb. 1 by only two votes. Regional representatives split along party lines. Republican Reps. Thomas M. Reynolds of Clarence and John R. "Randy" Kuhl of Hammondsport voted for it. Democratic Reps. Louise M. Slaughter of Fairport and Brian M. Higgins of Buffalo opposed it.
The new law also shields hospitals from lawsuits for turning away the poor, including children and the elderly, who can't pay.
Erie County Social Services Commissioner Michael Weiner noted that, in the state, the fee for emergency services for the poor is now $3. The new law allows the state to charge the poor from 10 percent to 20 percent of the full cost of the service.
"Where are they supposed to get that money?" Weiner asked.
In New York State, the federal government covers about half of all Medicaid costs. The state and the counties share the rest.
The Business Council of New York State says restraints on spending for Medicaid are good for the state and localities in the long run.
"These are costs that are driving local and state taxpayers to the wall," said David Shaffer, the council's corporate secretary. "Anything that cuts Medicaid, in particular, helps New York."