Proposed Bill: Protection of Family Assets and Generational Wealth Act
Section 1: Title
This Act shall be known as the Protection of Family Assets and Generational Wealth Act.
Section 2: Findings
The U.S. government provides long-term care coverage through Medicaid for individuals who meet certain income and asset requirements. However, current Medicaid regulations allow for the confiscation of assets, including the family home, to recover Medicaid expenses when an individual enters a nursing home or requires long-term care. This practice threatens the financial stability of many American families, particularly those who have worked to build generational wealth through homeownership and family inheritance. The current Medicaid asset recovery process undermines the ability of families to preserve wealth across generations, disproportionately affecting middle-class and lower-middle-class Americans.
This Act aims to safeguard family assets, particularly the family home, from being seized by the government in the event that a family member requires long-term care. The goal is to ensure that families can maintain their generational wealth and preserve their legacy without fear of government intervention.
Section 3: Definitions
Medicaid Asset Recovery: The process by which the state government seeks to recover Medicaid benefits paid on behalf of an individual, typically after the individual’s death, by claiming ownership of certain assets, including real estate, bank accounts, and other personal property.
Long-Term Care: Includes services such as nursing home care, assisted living, or in-home care for individuals who are unable to perform basic daily activities due to aging, illness, or disability.
Generational Wealth: Financial assets, property, and other resources passed down from one generation to another, typically including family homes, savings, investments, and businesses.
Section 4: Medicaid Asset Recovery Exemption
- Exemption for the Family Home:
Medicaid shall not be permitted to seek recovery of assets, including the family home, from individuals receiving long-term care under Medicaid. This exemption shall apply regardless of whether the home is in the name of the Medicaid recipient or a spouse, child, or other family member who has a vested interest in the home. - Conditions for Exemption:
- The family home shall be exempt from asset recovery if:
-The home is occupied by a surviving spouse.
-The home is occupied by a dependent child under the age of 21 or a disabled adult child.- The home is occupied by a sibling who has resided in the home for at least one year prior to the Medicaid recipient’s entry into long-term care and who has a legal interest in the home.
- Generational Wealth Preservation**:
-The family home is considered part of a broader strategy to preserve generational wealth. As such, any law or regulation allowing the sale of the family home to recover Medicaid costs shall be prohibited. - Encouragement of Estate Planning:
This provision encourages individuals to engage in proper estate planning, such as transferring assets to family members or creating trusts, to safeguard their wealth and ensure that their property remains within the family.
Section 5: Medicaid and Estate Recovery Reform
- Reform of Estate Recovery Programs:
-State Medicaid programs shall be prohibited from pursuing estate recovery through liens or other collection methods on properties or assets that are intended for the preservation of family wealth or inheritance.
-Medicaid’s ability to recover costs from the estates of deceased beneficiaries shall be limited to instances where there are no surviving dependents or family members who can claim exemption. - Temporary Suspension of Asset Recovery During Life:
Medicaid shall not be permitted to initiate asset recovery proceedings while a Medicaid recipient is still living, except in cases of fraud or deliberate misrepresentation of income/assets. - Trusts and Asset Protection**:
Medicaid shall recognize valid, legally created trusts, including irrevocable trusts, as exempt from estate recovery provided the trust was created with the intention of preserving assets for future generations. These trusts must comply with applicable laws such as the Deficit Reduction Act of 2005 (DRA), which already includes provisions for asset protection, to prevent Medicaid asset transfers from being considered fraudulent or deceptive.
Section 6: Family Wealth and Generational Wealth Policy
- Asset Preservation for Future Generations:
The federal government shall adopt policies that promote and protect the ability of families to pass down wealth across generations without interference from Medicaid asset recovery. This policy includes the protection of family homes, investments, and business assets used to support long-term care. - State Coordination with Federal Policies:
States that opt into this policy shall align with federal guidelines that prioritize the exemption of family homes and generational assets from Medicaid asset recovery. States may choose to offer additional protections or expand these exemptions beyond federal minimum standards but must adhere to the principles outlined in this Act.
Section 7: Impact on Medicaid Eligibility
- Impact on Eligibility Requirements:
This Act does not alter the eligibility requirements for Medicaid. Individuals will still need to meet income and asset thresholds as established under the Social Security Act, but the exclusion of the family home and other generational assets from asset recovery ensures that families can preserve their wealth without sacrificing eligibility. - Medicaid Planning and Elder Law:
The Act encourages the expansion of professional legal advice and Medicaid planning services to assist families in preserving assets while ensuring eligibility for long-term care. States will be required to provide clear guidelines to Medicaid applicants on how to protect their assets and prepare for future long-term care needs without jeopardizing their inheritance.
Section 8: Implementation
- Regulatory Changes:
- The Centers for Medicare & Medicaid Services (CMS) will issue new guidelines and regulations to implement this Act and ensure that state Medicaid programs comply with the provisions regarding asset exemptions and estate recovery reforms.
- Reporting and Oversight:
A new office within the Department of Health and Human Services** shall be established to oversee the implementation of these reforms and report annually to Congress on the effectiveness of the policies in protecting family wealth and ensuring access to long-term care.
Section 9: Severability
If any provision of this Act or the application of such provision to any person or circumstance is held invalid, the remainder of the Act shall not be affected and shall remain in full force and effect.
Section 10: Effective Date
This Act shall take effect 12 months from the date of enactment, giving states and Medicaid programs time to implement the required changes.
Conclusion:
The Protection of Family Assets and Generational Wealth Act seeks to address the growing concern that Medicaid’s asset recovery policies are undermining the ability of families to preserve their wealth, particularly their homes, for future generations. By eliminating the seizure of family homes and providing more protective measures for generational wealth, this proposal will empower families to plan for long-term care while safeguarding their financial futures. This bill ensures that Medicaid serves its original purpose—providing care to those in need—while preventing the unnecessary loss of assets that families have worked to build over lifetimes.