LTC Bullet: Excellent New Reports on Medicaid LTC Eligibility Published
May 12, 2005
Comment: Anyone who cares about how
America will finance long-term care for the "age wave" could hardly
spend two hours more beneficially than to read these five new reports on
Medicaid LTC eligibility. More
after the *news.*
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BULLET: EXCELLENT NEW REPORTS ON
MEDICAID LTC ELIGIBILITY PUBLISHED
Comment: The U.S. Department of
Health and Human Services published five "policy briefs" in April 2005
on "Medicaid eligibility policies for long-term care benefits."
All five were prepared by Thomson/MEDSTAT for the HHS Office of
Disability, Aging and Long-Term Care Policy.
Although no author is cited, this work bears the mark of Brian Burwell:
clarity, simplicity, and impartiality.
Hunter McKay was the HHS project officer.
You'll find links to more information on the project in each of the
reports. Kudos to all concerned for
a job well done.
are the titles of each report, a link to an online version in "http"
or "pdf" format, a brief excerpt and our comments.
Department of Health and Human Services, "Medicaid Treatment of the Home:
Determining Eligibility and Repayment for Long-Term Care," Thomson/MEDSTAT April
. Excerpts (footnotes omitted):
a program originally intended to finance health care for the poor, has evolved
over time into the primary public payer for long-term care services for people
who are not poor by conventional standards but who lack the means to pay the
high and on-going cost of such care. . . .
home is not counted as an available asset in determining Medicaid eligibility as
long as the recipient 'expresses an intent to return home' from a nursing home
or medical institution, regardless of how long he or she has been
institutionalized or whether there is any reasonable expectation that the
individual could possibly return home. This
totally subjective intent may be expressed in a letter or affidavit signed by
the homeowner. There need not be any reasonable expectation that the person will
ever be discharged to return home or consideration of the person's health,
functional status, or length of stay in the nursing home.
What happens when the recipient cannot clearly state his or her
intentions due to physical or mental incapacities?
Federal guidance allows relatives or others to make a statement of intent
on the individual's behalf. . . .
of the home in Medicaid estate recovery programs is a controversial subject that
pits the interests of Medicaid against those of recipients who own homes and
their families. On the one side of
the debate is the public interest argument:
Medicaid is a catastrophic insurance program that provides medical
assistance to individuals after all available private resources have been
applied to the cost of care. Medicaid
is chronically strapped for funds and it cannot fully achieve its primary
purpose if it subsidizes health care for people who have sufficient means to pay
for their own long-term care expenses. .
the other hand, the recipient-centered argument regards the home as an asset
that should remain with the family, consistent with deeply held cultural values
that regard the family homestead as a right and a legacy that public policy
ought to protect. Families may
attach a practical, emotional, and even mythical significance to their home, and
sometimes view Medicaid claims against it as an attempt by the State to
confiscate what rightfully belongs to the family. A Medicaid claim against home equity is regarded as a penalty
for people who have accumulated enough wealth through hard work to own their own
home. . . .
Comment: Of course, LTC Bullets's
position is that Medicaid should not be "inheritance insurance"
guaranteeing that baby boomer heirs inherit the unlimited value of their
parents' home equity. The very idea
that such a system can continue as the baby boom ages is preposterous.
But it is an argument frequently made by defenders of the status quo and
it is fairly presented in this policy brief.
Department of Health and Human Services, "Medicaid Estate Recovery,"
Thomson/MEDSTAT, April 2005, http://aspe.hhs.gov/daltcp/reports/estaterec.htm
. Excerpts (footnotes omitted):
the beginning of the Medicaid program in 1965, states have been permitted to
recover from the estates of deceased Medicaid recipients who were over age 65
when they received benefits and who had no surviving spouse, minor child, or
adult disabled child. Twelve states
report having had an estate recovery program in effect before 1990 that was
based on the original Medicaid law. . . .
by well-publicized and well-researched reports claiming that, 'Estate recovery
programs provide a cost effective way to offset state and Federal costs, while
promoting more equitable treatment of Medicaid recipients,' Congress included a
provision in the Omnibus Budget Reconciliation Act of 1993 (OBRA '93) that
required states to implement a Medicaid estate recovery program. . . .
. . . legal and practical obstacles to fully implementing an estate recovery
program that uses the broad definition of 'estate,' it is clear that states
could increase Medicaid recoveries, possibly by substantial amounts, by
collecting from assets that individuals could otherwise shelter from recovery
(i.e., by shifting them out of the future probate estate into a form outside the
State's Medicaid recovery orbit). . . .
of more extensive and aggressive Medicaid estate recoveries argue that Medicaid
is a chronically strapped program for the poor, and that estate recovery shifts
some of the burden of paying for long-term care from the taxpayer to the estates
of deceased recipients. States can
then spend their share of recovered funds to preserve or expand their Medicaid
coverage of services for needy populations, although they are not required to do
of Medicaid recoveries argue that the practice is unfair in that it mainly
affects people of very modest means, while sparing those who are able to access
advice on estate planning techniques that shelter assets.
Further, it clashes with broadly held cultural values on the sanctity of
intergenerational legacies. Others
argue that the threat of estate recovery causes people to forego Medicaid funded
services when they need them or discourages adult children from seeking Medicaid
for an ill parent, whose health or functional abilities may deteriorate as a
result. This avoidable decline in
health status may lead to higher medical costs later on.
Comment: Since when is it an
American "cultural value" that our welfare safety net for long-term
care should be looted to protect "intergenerational legacies?"
If your house burns down, should the government step in to indemnify you?
Of course not. That's why we
have fire insurance. How many
people would buy fire insurance if the government provided it for free?
Get the drift? No wonder so few people take the LTC risk seriously enough to
purchase private insurance protection.
Department of Health and Human Services, "Spouses of Medicaid Long-Term
Care Recipients," Thomson/MEDSTAT, April 2005, http://aspe.hhs.gov/daltcp/reports/spouses.htm
. Excerpts (footnotes omitted):
an individual enters a nursing home for the long term, the spouse remaining in
the couple's home may fear financial devastation from paying the high cost of
nursing home care. However,
Medicaid rules have been designed to protect certain income and assets for the
at-home spouse, without affecting the nursing home spouse's eligibility for
publicly funded long-term care. While
some may view the amounts that are protected as quite modest or even inadequate
to sustain the at-home spouse's accustomed standard of living, they far exceed
the income and asset levels that may be retained in the case of unmarried
recipients of Medicaid long-term care services.
Moreover, at-home spouses can employ a variety of financial planning
strategies to preserve an even greater share of the marital assets, even after
the Medicaid recipient's or spouse's death.
While states are required to recover Medicaid long-term care expenses
from the estates of deceased recipients, when there is a surviving spouse, the
recipient's estate often escapes this outcome. . . .
community spouse may be able to retain more than the maximum protected amount
by: 1) obtaining a court order for
more; 2) requesting a hearing to petition for an amount sufficient to generate
income consistent with Medicaid income protection guidelines for spouses; or 3)
"just saying no" -- i.e., by taking sole ownership of marital assets
and refusing to make any of them available to pay for the institutionalized
spouse's care. In this case, the
institutional spouse may be unable to qualify from Medicaid because he or she is
prevented from spending down the designated share of the marital assets.
However, the State may make a determination of hardship in order to
provide Medicaid benefits, or may pursue assets in possession of the community
spouse under general state laws regarding marital support obligations. . . .
. . Medicaid eligibility rules do not count certain assets such as a home, a
car, or personal effects. Therefore,
a spouse might be advised to take money from countable savings to buy a more
expensive home; repair or improve an existing home; or buy a new car, new
household furnishings, or personal effects.
Medicaid rules do not restrict conversions of countable assets into
non-countable ones of equivalent value. Unlimited
amounts of money can be spent on non-countable assets for the community spouse's
use while getting Medicaid to pay for long-term nursing home care."
Comment: Spousal impoverishment
protections introduced in the Medicare Catastrophic Coverage Act of 1988 ensure
that community spouses of institutionalized Medicaid recipients will not be
devastated financially. Legal
gimmicks such as advising a client to "just say no" and retain
unlimited wealth at Medicaid's expense are irresponsible and should be illegal.
Medicaid cannot survive as a safety net for the poor as long as it
remains free LTC insurance for affluent spouses.
Department of Health and Human Services, "Medicaid Liens," Thomson/MEDSTAT,
April 2005, http://aspe.hhs.gov/daltcp/reports/liens.htm
. Excerpts (footnotes omitted):
its inception in 1965, the principal purpose of the Medicaid program has been to
provide medical care for individuals with very low incomes and limited assets.
Nevertheless, over half of all Medicaid spending today is for recipients
who are not poor enough to qualify for welfare but who lack the means to pay for
health care. Medicaid spending for
elderly recipients is even more heavily skewed toward those not on welfare. This group comprises only 3.9% of all Medicaid recipients,
but accounts for 25.6% of all Medicaid spending.
This is largely attributable to the prevalence of chronic health
conditions in an aging population combined with the potentially devastating cost
of long-term care. As a result,
Medicaid has evolved into the primary payer for institutional long-term care. .
liens protect Medicaid's interest in the recipient's former home and its right
to recover Medicaid spending before the property can be conveyed to another
party. Liens in themselves do not
force recipients to sell their property. They
may, however, prevent property from being given away or sold at less than fair
market value and ensure that equity in the home is available to reduce Medicaid
spending on the homeowner's behalf.. . .
the enactment of OBRA '93, states have implemented liens and estate recoveries
with varying degrees of vigor. Many
have been wary of the political backlash associated with taking the recipient's
home and interfering with the traditional strong desire to preserve a legacy for
loved ones. However, Medicaid liens
and estate recovery programs continue to evolve as states try to cope with
growing budget deficits and face the prospect of either raising taxes or
shifting money from other Medicaid populations or services, or from other state
spending priorities to cover the escalating costs of providing long-term care
Comment: Unlike estate recoveries,
liens are not mandatory. Oregon
operates the most successful estate recovery program in the country without
using TEFRA liens. Nevertheless,
many states find pre- and post-death liens an effective tool to ensure that
assets intended by Congress to reimburse Medicaid for services rendered are
actually retained by recipients and recovered by the program.
Department of Health and Human Services, "Medicaid Liens and Estate
Recovery in Massachusetts," Thomson/MEDSTAT, April 2005, http://aspe.hhs.gov/daltcp/reports/MAliens.htm
. Excerpts (footnotes omitted):
like many states, is contending with the dilemma of ever-increasing Medicaid
costs in times of increased fiscal constraint.
And like many states, Massachusetts is looking at a variety of
cost-saving measures to contain the growth in Medicaid expenditures.
Approximately one of every six people in Massachusetts is served by its
Medicaid program, MassHealth, and approximately 18% of the Medicaid budget
(state and Federal) is spent on long-term care in nursing homes, serving
approximately 3% of MassHealth members. The
significance of long-term care to the State's Medicaid and overall budget
creates an inherent incentive to restrain spending on these services.
Liens and estate recoveries are among the tools the State is using to
achieve this goal. . . .
adopted a Medicaid estate recovery program in 1969, Massachusetts has had ample
opportunity to refine and streamline its decision-making and administrative
processes. All recoveries are
treated equally, and priority is not established based on the size of the claim.
Up to $70 million in combined proceeds from estate recovery, casualty
recovery, provider recovery, and drug rebate programs is deposited in the
State's retained revenue account and is used to offset Medicaid costs.
Proceeds in excess of the $70 million are deposited in the State's
General Fund and are not designated specifically to offset Medicaid costs.
estate recovery amounts have increased every year since 1999, and have ranged
from $22,910,573 million in FY 1999 to $28,837,456 in FY 2003.
These amounts represent total claims from both estate recoveries and
living liens. In FY 2003,
Massachusetts was only surpassed in total collection amounts by the
demographically larger states of California and Ohio. While impressive, this figure is modest when compared to the
total MassHealth nursing home expenditures during the same year - $1,415,305,950
(Federal and state dollars).
the $28.8 million collected in 2003, $26 million (over 90%) was recovered from
real property, although only about 41% of the total number of probate claims
processed included real property. This
supports the contention that the home represents a Medicaid recipient's most
significant remaining asset."
LTC Comment: Massachusetts (and all other states' estate recovery programs) is only capturing a small percentage of the potential wealth that could be used to finance long-term care privately. Few people still own homes by the time they qualify for Medicaid. Eighty percent of seniors own their homes, but only about 14 percent of Medicaid LTC recipients do. That's one reason among many why estate recoveries are less than they could and should be. It is also a major reason why Medicaid should not exempt home equity, but rather encourage potential recipients to utilize reverse mortgages before turning to public welfare for their long-term care expenses. With longer asset transfer look-back periods, no exemption for illiquid home equity that is accessible by a reverse mortgage, and stronger liens and estate recoveries, more people would insure privately for LTC, Medicaid could do a better job for fewer recipients, and everyone would be better off in the end.