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Legal Memorandum: Effect of Medicaid Reform

Issue: THE EFFECT OF MEDICAID REFORM ON FARMERS AND OTHER AGRICULTURAL PRODUCERS.

Area of Law: Government Programs and Benefits
Keywords: Medicaid's long-term care eligibility requirements; Farmers and other agricultural producers
Jurisdiction: Federal 
Cited Cases: None
Cited Statutes: The Deficit Reduction Act of 2005; 42 U.S.C. § 1396p(f), 1396p(c), § 1396p(e), § 1396r(c)(5)
Date: 11/01/2006

The Deficit Reduction Act of 2005 (the “Act”) contains several provisions that tighten Medicaid’s long-term care eligibility requirements and effectively shifts the responsibility for paying long-term care costs onto the individual in more cases.  The Act closed several “loopholes” that previously allowed middle- and upper-class agricultural families to be eligible for Medicaid long-term care benefits.  Thus, at a time when nursing home costs are increasing, more farmers and other agricultural producers will be required to pay for their long-term care costs. 

INDIVIDUALS WITH SUBSTANTIAL HOME EQUITY (42 U.S.C. § 1396p(f))

Because many individuals in agricultural communities hold significant assets in their homesteads, the Act’s home-equity law changes significantly affect many farmers and other agricultural producers.  In determining an individual’s eligibility for Medicaid with respect to a nursing home or other long-term care services, the Act provides that an individual is not eligible if the individual’s equity interest in his or her home exceeds $500,000.  A state may elect to substitute that amount by any amount that exceeds $500,000, but not greater than $750,000.  The limitation does not apply if an individual’s spouse or a child who is either under the age of 21, blind, or permanently and totally disabled, lives in the home.  Thus, this limitation, which applies to individuals who are eligible for Medicaid based on an application filed on or after January 1, 2006, would primarily apply to persons who do not have spouses or qualified children living in their home with them or to […]

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