LTC
Bullet: The Critical Role of
Medicaid Estate Recoveries
Friday, September 30, 2005
Seattle--
LTC Comment: Read
an op-ed on the value of Medicaid estate recoveries plus an introduction and
link to new research on the history and importance of the program.
After the ***news.***
*** PINS AND NEEDLES.
That's what we’re on, waiting for the Government Accountability
Office's mandatory release of their report on Medicaid transfer of assets.
Will it reveal the depth, breadth and damage of Medicaid estate planning?
Or will it be yet another whitewash of this controversial issue? Beltway buzz says we'll know October 3 when the month that
the report's Congressional requestors are allowed to withhold its release
expires. The fact that they've held
back the report for the maximum time allowed hints that it will not downplay the
significance of asset transfers and other Medicaid planning gambits as its
requestors hoped. But don't count
on it. We'll review the report and
give you our analysis as soon as it becomes available. ***
*** KANSAS UPDATE: Center
for Long-Term Care Reform president Steve Moses is back in Seattle from a
successful trip to middle America. He delivered speeches on long-term care policy at three
"Legislative Long-Term Care Academies" sponsored by the Flint Hills
Center for Public Policy (www.flinthills.org)
and the Kansas Health Care Association (www.khca.org)
in Garden City, Wichita, and Lawrence, Kansas on September 27, 28 and 29.
Following are links to media coverage of the events.
Additional articles are pending in the Wichita Eagle and in the
Lawrence, KS paper.
Rachel Davis, "Neufeld Addresses Issues with Long-Term
Health Care," Garden City Telegram, September 28, 2005, http://www.gctelegram.com/news/2005/september/28/story2.html.
Melvin Neufeld, Chairman of the Kansas House Appropriations Committee,
was the other featured speaker at the LTC Academy.
This article quotes Steve Moses on the importance of targeting Medicaid
to the genuinely needy and encouraging private LTC insurance and home equity
conversion.
Stephen
A. Moses, "Estate Recoveries Needed to Help Pay for Medicaid," Wichita
Eagle, Tuesday, September 27, 2005, http://www.kansas.com/mld/kansas/news/editorial/12748143.htm.
Steve
will be back in Washington, DC for the first two weeks of October.
Center Members will receive his highly regarded LTC Embed Reports from
the LTC Policy Front. ***
***
SUBSCRIBE: To receive Steve Moses's
daily LTC E-Alerts and LTC Bullets by email, you must be a member of the Center
for Long-Term Care Reform. We post
some of this vital, topical, and timely information on the "Moses LTC Blog"
at www.centerltc.com.
But the "good stuff," the real "inside dope," only
goes to Members. So join the fight
for rational LTC policy. Be part of the solution.
We're closer to success now than we've ever been.
But that's because we're closer to the collapse of LTC as we've known it.
This is a cliff hanger. Will
we fix Medicaid and unleash responsible LTC planning in time?
We can, but your support for the Center for Long-Term Care Reform will
make the desired outcome more likely sooner.
To
subscribe, go to http://www.centerltc.com/support/index.htm
or just contact Damon at 206-283-7036 or damon@centerltc.com.
He'll get you a user name and password to our Members Only website zone
and he'll ensure that your daily LTC E-Alerts and LTC Bullets start coming
immediately. Thanks for your
support. ***
LTC BULLET: THE
CRITICAL ROLE OF MEDICAID ESTATE RECOVERIES
LTC Comment: Roger
A. Van Etten and Brian M. Vazquez of the Kansas Division of Health Policy and
Finance have written a comprehensive history of Medicaid estate recoveries with
a focus on the program in Kansas. Read,
download and/or order a free hard copy of the four-volume series at http://www.flinthills.org/.
The Flint Hills Center for Public Policy published the "Kansas
Estate Recovery Primer."
Following
is Steve Moses's preface to the new publication:
Preface to the Kansas Estate Recovery Primer by
Stephen A. Moses, President Center for Long-Term Care Reform
The marvel of Medicaid estate recovery is that it permits
people to get the long-term care they need from Medicaid when they need it
without devastating themselves financially.
Basically, Medicaid recipients' estates are collateral for a loan from
the program to help them cope with the high cost of long-term care.
The only quid pro quo is that people who rely on Medicaid to fund
their long-term care have to pay back this loan from the government after they
(and their last surviving exempt dependent relatives) die.
Folks who don't like that eminently fair deal, can buy
private long-term care insurance or pay for their long-term care through a
reverse annuity mortgage on their home. Without
estate recoveries, people have no incentive to pay for their own long-term care,
but Medicaid cannot carry the cost of paying for everyone.
What kind of a message does it send to the giant baby-boomer generation
if they can ignore the risk of long-term care for their parents, pass on the
cost to tax-payers, and still collect an inheritance protected by public
welfare?
Without estate recovery, Medicaid becomes inheritance
insurance for baby boomers which anesthetizes them to the need to plan and
prepare for the cost of long-term care. Yet,
Medicaid estate recovery is the poor relative of government programs.
Like Rodney Dangerfield, it just can't seem to get any respect.
Reviled as "the other death tax" . . . pooh-poohed as a dry
well for program savings . . . ignored as a subject for serious research . . .
Medicaid estate recovery has suffered from decades of neglect.
Until now!
We all owe a hearty vote of thanks to Roger Van Etten and
Brian Vazquez for writing the "Kansas Estate Recovery Primer" and to
the Flint Hills Center for Public Policy for publishing it.
This four-part series covers the history of Medicaid estate recovery
nationally and in the State of Kansas. Volume
1 is titled "Estate Recovery's Roots in Social Security, Medicare and
Medicaid," while Volume 2 is "A National History of Estate
Recovery." Volume 3 ("Estate
Recovery in Kansas: 1930s -
2004") and Volume 4 (Estate
Recovery after Senate Bill 272) discuss Medicaid estate recoveries in
Kansas before and after recent state legislation.
I sincerely hope that the availability of this publication
on Flint Hills' website at http://www.flinthills.org/
will spur other researchers and authors to take a closer look at Medicaid estate
recoveries. Why does it matter?
Who cares? I tried to answer
those questions in the following op-ed article.
-----------------
"Medicaid Estate Recoveries: The Fiscal Necessity, The Moral High Ground," by Stephen
A. Moses, President, Center for Long-Term Care Reform
State officials are "picking the bones of the
elderly."
That's how one critic described "estate
recoveries," the mandatory recoupment of benefits legally paid by Medicaid
from the estates of deceased recipients.
But, like most things in life, it isn't that simple.
Here's a primer and fair warning about a government program that is
almost certain to touch you or a loved one sooner or later . . . unless you take
the proper financial planning steps to avoid it.
Medicaid is a means-tested, public assistance program.
In other words, welfare.
Medicaid is very expensive.
Nationally, it will cost over $300 billion in 2005, even more than
Medicare. At the state level,
Medicaid now costs more than primary and secondary education combined.
Medicaid is a critical health care safety net for poor
women and children. But the program
is also the primary third-party payor for "long-term care," the mostly
custodial assistance critically needed by frail or infirm elderly and disabled
people.
Long-term care consumes a disproportionate share of
Medicaid expenditures. While
three-fourths of Medicaid recipients are poor children or adults, they consume
only one-third of the program's costs. On
the other hand, one-fourth of Medicaid recipients are aged, blind or disabled,
but they consume two-thirds of Medicaid expenditures, mostly for long-term care.
Why should you care?
Many reasons, the first and foremost of which is:
you are paying for Medicaid long-term care with your state and federal
taxes. Maybe you should feel good
about that. After all, Medicaid is
America's safety net that ensures access to long-term care for the vulnerable
poor.
But, wait. Medicaid
has become much more than that. It
is the principal payor of long-term care for nearly everyone, including many of
the well-to-do.
How can that be true if Medicaid is welfare?
Over the years, Medicaid eligibility "bracket
creep" has expanded the program to cover even upper-middle-class people
whom it was never intended by Congress to serve.
For example, income is rarely an obstacle to Medicaid
long-term care eligibility because all medical expenses, including expensive
nursing home costs, are deducted from people's income before their Medicaid
eligibility is determined.
Assets are limited to $2,000 except that home equity, one
business, an automobile, prepaid burial costs, and term life insurance are
exempt in unlimited amounts. Many
additional assets are exempt in limited amounts.
On top of all that, thousands of attorneys and financial
planners specialize in sophisticated techniques to impoverish their affluent
clients artificially for the purpose of qualifying them for Medicaid long-term
care benefits.
Bottom line, there is no limit on how much income or assets
people can have while receiving Medicaid long-term care benefits as long as
their medical expenses are high enough, their assets are held in exempt form, or
they hire a "Medicaid planner."
Now, I know what you're thinking! "You mean I can ignore the huge potential risk and cost
of long-term care, avoid the premiums for private insurance, keep most of my
wealth, and the government will pay if I ever need care?
Sounds pretty good to me."
Not so fast. Leaving
aside the critical fact that Medicaid has a dismal reputation for problems of
access, quality, reimbursement, discrimination and institutional bias, there are
other critical downsides for you to consider.
Ever since 1993, the federal government has required state
Medicaid programs to recover the cost of their care from the estates of deceased
recipients. Most states have not
pursued such "estate recoveries" aggressively heretofore, but that is
changing as Medicaid's enormous fiscal pressure on the state and federal coffers
continues to mount.
Count on government at all levels to clamp down more and
more on Medicaid eligibility and to pursue estate recoveries far more
enthusiastically. Their goal is to
make sure Medicaid survives as a safety net for the poor without bankrupting
taxpayers and the economy. Increasingly,
everyone with any significant wealth will be expected to plan early for
long-term care; save, invest or insure against that risk; and pay their own way
when the time comes.
When the massive baby boom generation finally needs
long-term care, Medicaid will not be an option for any but the most needy, if it
survives at all. In the future, the
only way to obtain quality long-term care, especially in the preferred settings
of one's own home or an assisted living facility, will be to pay privately.
The only way to pay privately will be to own private long-term care
insurance or to spend your own wealth including your home equity.
So, here's the bottom line about Medicaid estate
recoveries.
First: estate
recoveries are a fiscal necessity to preserve Medicaid as America's long-term
care safety net for the poor.
Second: if you
want to preserve your own wealth against the cost of long-term care, don't
expect a free ride on the public welfare system.
Plan to use your home equity or buy private long-term care insurance.
Those precepts represent the fiscal necessity and the moral
high ground of Medicaid estate recovery.
Stephen A. Moses is president of the Center for Long-Term Care Reform in Seattle, Washington. The Center's mission is to ensure quality long-term care for all Americans. Steve Moses writes, speaks and consults throughout the United States on long-term care policy. Learn more at www.centerltc.com or email smoses@centerltc.com.