LTC Bullet: What Goes Around, Comes Around:
The IG and Estate Recoveries
Thursday,
December 1, 2005
Seattle--
LTC
Comment: The DHHS Inspector General
will review Medicaid asset transfers and estate recoveries next year.
What's changed since its first such study in 1988?
After the ***news.***
***
SPECIAL ALERT: Two new publications
on long-term care financing you might like to check out:
Carole
Jackson, "Taking the Pain Out of Buying Long-Term-Care Insurance," Bottom
Line's Daily Health News, October 20, 2005, http://66.152.249.76/eletters/Detail.aspx?ID=1574.
This article in one of the highly respected "Bottom Line"
publications quotes Center President Steve Moses and cites the Center for
Long-Term Care Reform. Also quoted
at length are LTC insurance experts Nancy Morith and AHIP's Susan Coronel.
Stephen A. Moses, "Long-Term Care:
Who Should Pay?," Health Insurance Underwriter, Vol. 53, No.
12, December 2005, pps. 73-74. Check
this article out online at http://nahu.timberlakepublishing.com/article.asp?article=1281.
*** JOIN TODAY. There
will never be a better time than now to join the Center for Long-Term Care
Reform. Help us fight for rational
long-term care policy. The stakes
have never been higher and the opportunities to discourage Medicaid planning and
encourage responsible long-term care planning have never been greater.
To join, please go to http://www.centerltc.com/support/index.htm.
There you can pay our $150 per year ($12.50 per month) dues online.
Better yet, contact Damon at 206-283-7036 or damon@centerltc.com
and tell him you want to join. He
will explain exactly what to do, assign you a user name and password for
immediate access to the Center's members-only website zone, and start our daily
LTC E-Alerts coming to you. Nothing
we do matters unless you're successful persuading people to prepare for
long-term care. Everything we do is
toward that end. So, please help
keep the Center in the middle of the LTC public policy fray.
Join now! ***
LTC
BULLET: WHAT GOES AROUND, COMES
AROUND: THE IG AND ESTATE
RECOVERIES
LTC Comment: The
Office of Inspector General of the United States Department of Health and Human
Services has announced its intent to study whether states are adequately
enforcing Medicaid transfer of assets and estate recovery requirements.
Here's the relevant section from the agency's 2006 Work Plan.
"Medicaid Asset Transfers and
Estate Recovery Provision for Nursing Home Care
"We will determine whether States
have adequate procedures for determining the appropriateness of beneficiary
eligibility for Medicaid nursing home care.
States are required to impose penalties on individuals who transfer
assets at less than fair market value within 3 years of applying for Medicaid
benefits. States are also required
by Federal law to seek recovery of amounts correctly paid by the State for
certain Medicaid beneficiaries. We
will also review State procedures for recovery of payment from individual
estates to determine whether States are complying with applicable Federal laws
and requirements. (OAS;
W-00-06-31113; various reviews; expected issue date:
FY 2006; new start)"
To review the OIG's entire Work Plan
for 2006, go to http://oig.hhs.gov/publications/docs/workplan/2006/WorkPlanFY2006.pdf.
The last time the Inspector General did
a comprehensive study of Medicaid long-term care eligibility, asset transfers,
and estate recovery, I directed it and wrote the report.
It was titled "Medicaid Estate Recoveries" and published in
June 1988. I am very pleased to
announce that after being out of print for many years, that report is once again
available at http://oig.hhs.gov/oei/reports/oai-09-86-00078.pdf.
Many pages of the report were copied cock-eyed, but they are readable.
Here's an excerpt:
"Medicaid estate recoveries are
only the tip of the iceberg. Current
estate recoveries are only $42 million per year.
Because of statutes and policies which exempt home equity and discourage
estate recoveries, the Medicaid program recovered only $42 million last year
from estates. It is reasonable to
ask how much might be recovered to help care for the needy if the statutes and
policies encouraged estate recoveries. The
home equity of the elderly is $750 billion in the U.S. . . . During
1985, this country spent $35 billion on nursing home care. Thus, the annual cost of nursing home care is 4.7 percent of
the elderly's home equity. At any
given time, however, only 5 percent of the elderly reside in nursing homes.
We know that Alzheimer's Disease, Parkinson's and stroke--the
debilitating illnesses which fill America's nursing homes--afflict rich and poor
alike. Therefore, it is not
unreasonable to believe that much of the long-term care funding crisis could be
resolved by harnessing the home equity of the elderly.
Using recommendations made in this report, home equity conversion could
be achieved with a minimum of disruption to the families of the stricken." (p. 49)
Isn't it fascinating how little has
changed since that assessment of the problem over 17 years ago?
The numbers are bigger. Seniors'
home equity has at least doubled and probably tripled given the latest boom in
housing values. Nursing home costs
have tripled too. But home equity
is still untapped for long-term care, Medicaid estate planning remains rampant,
estate recoveries are still insignificant, few people buy LTC insurance, and
Medicaid is closer than ever to collapse. In
the meantime, we're nearly two decades closer to the Age Wave that will engulf
Medicaid even before it swamps Medicare and Social Security.
Many of the recommendations in the 1988
Inspector General Medicaid Estate Recovery report have been implemented,
although unfortunately, they have not been adequately enforced.
Transfer of assets restrictions were made mandatory in the Medicare
Catastrophic Coverage Act of 1988 (MCCA '88).
Spousal impoverishment protections were also implemented in MCCA '88.
Medicaid estate recoveries became mandatory in the Omnibus Budget
Reconciliation Act of 1993, which also made transfer of assets restrictions
longer and stronger. Nevertheless,
exasperated when these and other measures did not restrain Medicaid's explosive
LTC costs, Congress outlawed asset transfers in the Health Insurance Portability
and Accountability Act of 1996. When
that "throw granny in jail" law backfired, Congress repealed it and
passed the "throw granny's lawyer in jail law" as part of the Balanced
Budget Act of 1997. But that proved
unenforceable, so Medicaid costs continued and still continue to explode.
At long last, Congress is once again tackling the issues of Medicaid
planning and asset transfers as we've been covering in the Center for Long-Term
Care Reform's publications. But
proponents and beneficiaries of the status quo like AARP are fighting efforts to
fix these problems.
Clearly, the problems with Medicaid and
long-term care financing identified in the Inspector General's original 1988
report are still with us. The
biggest difference is that we have at most one decade to fix them now instead of
three back then. If you care about
how America will pay for the baby boomers' long-term care, I'm proud to
recommend that old study as a good place to begin analyzing the problem and
seeking the solution.
Steve Moses