LTC Bullet:  "Analysis:  Congress Strengthens Long-Term Care" 

Thursday, March 9, 2006  


LTC Comment:  Read Steve Moses's article on Medicaid reform, LTC Partnerships, and the Deficit Reduction Act in Health Care News, after the ***news.*** 

*** TODAY'S LTC BULLET is sponsored by Claude Thau, a Master General Agent who helps LTCi producers nationwide.  Claude is the lead author of Tillinghast Broker World Individual and Group LTCi Surveys.  His mentoring skills help you build whichever market suits you best (individuals, executive carve-out, multi-life, affinity, financial institutions, referrals from other professionals, etc.).  As a Long-Term Care Partnership-promoter in many capacities, Claude may be able to help your state implement a Partnership effectively.  Test Claude by calling 800-999-3026, x2241 to discuss opportunities or *** 

*** PLEASE SECURE YOUR OWN LTCi FINANCING BEFORE ASSISTING FELLOW TRAVELERS:  Kudos to Diane Boyle writing in the Corporation for Long-Term Care Certification's CLTC Newsletter for making the following point about the Deficit Reduction Act's restrictions on Medicaid planning abuse.   

"It is the lack of [private] planning for potential long term care needs that creates the victim, not the tightening of Medicaid eligibility.  'Care for yourself first or you'll be useless to your buddy' is advice often offered to divers.  This lesson can also be heard on any commercial airline - '...please secure your mask before assisting other passengers.'  This concept must be extended to the generous individuals who provide financial gifts to others before planning for their long term care needs.  Individuals with sufficient income and resources are expected to provide for themselves."   

Well said. *** 

*** LTC BLACKLIST:  We seek additional attorneys to attend the NAELA Symposium in Washington, DC in April.  The National Academy of Elder Law Attorneys changed its rules to exclude non-attorneys from the semi-annual national conferences.  Why?  It's obvious.  I've attended their meetings since 1991, reported on their egregious Medicaid planning techniques, and persuaded the media and legislators to discourage the abuse of public assistance by affluent seniors and their lawyers.  But, I'm not a lawyer myself.  So, NAELA's gone underground by disinviting legal laity like me.  If you are a licensed attorney and if you're concerned about saving Medicaid as a safety net for the poor and a viable funding source for LTC providers, please consider attending the NAELA conference and reporting on what you learn.  For details and a pre-attendance briefing on what to look for, contact Steve Moses at 206-283-7036 or *** 



LTC Comment:  Following is an article compiled by the national newspaper Health Care News from several of our earlier LTC Bullets and kindly published under my byline.  It's titled "Analysis:  Congress Strengthens Long-Term Care" and is available online at  The hard copy was on page 6 of the newspaper's March 2006 (Vol. 7, No. 3) issue.   

Health Care News is The Heartland Institute's national monthly outreach publication for free-market health care reform.  To subscribe to Health Care News for $36 per year, go to

The Heartland Institute is a nonprofit organization devoted to discovering and promoting free-market solutions to social and economic problems.  More information on long-term care planning is available through PolicyBot(tm), The Heartland Institute's free online research database.  Point your Web browser to, click on the PolicyBot(tm) button, and select the Topic/Subtopic combination Health Care/Long Term Care. 


"Analysis:  Congress Strengthens Long-Term Care"
Stephen A. Moses

The Deficit Reduction Act (DRA) of 2006, signed into law by President George W. Bush on February 8, curbs Medicaid planning abuse (the sheltering of assets to make a non-eligible person eligible for Medicaid long-term care coverage) and releases the Long-Term Care (LTC) Partnership program for nationwide expansion.  The latter consists of private/public partnerships that encourage people to purchase long-term care insurance by allowing them to keep their assets if they ever exhaust their insurance and have to turn to Medicaid. 

The DRA warns the public that long-term care is a personal responsibility, that its risk and cost should not be ignored, that Medicaid remains a safety net but only for those truly in need, and that everyone who is financially and medically qualified should begin now to save, invest, and insure for long-term care. 

Properly delivered, that message can prevent a great tragedy that threatens this country:  It can save Medicaid for the poor while preparing most Americans to pay privately for top-quality long-term care across the full spectrum of LTC services--from home care to skilled nursing facility care. 

Transformation Necessary 

The DRA reauthorizes "LTC Insurance Partnerships;" strengthens "undue hardship" protections for Medicaid recipients; extends Medicaid's transfer of assets look-back period from three to five years; starts any applicable eligibility penalty later to prevent "half-a-loaf" giveaways; drops the home equity exemption to $500,000 from unlimited; and closes Medicaid eligibility "loopholes" such as "transfer assets before income," "Medicaid-friendly annuities," "life estates," "partial-month transfers," and "self-canceling installment notes." 

These minor modifications to Medicaid's hemorrhaging eligibility system are long overdue and critically needed to begin a long process of restoring and preserving the welfare program as the long-term care safety net for the poor and to give prosperous citizens incentives to save, invest, and insure for long-term care so they will be able to pay privately for quality care when they need it. 

Medicaid on Slippery Slope 

The American Association of Retired Persons (AARP), big charities, and Medicaid planning attorneys opposed the DRA because it reduces the ability of their affluent members and clients to shelter and divest assets in order to shift the high cost of long-term care from their personal responsibility to taxpayers (who finance Medicaid), long-term care providers (who are paid too little by Medicaid to supply quality care), and the poor (who are unable to obtain the same quantity, quality, and range of services from Medicaid available to the well-to-do because they lack the "key money" to buy their way into the better Medicaid facilities). 

A statement by AARP CEO Bill Novelli on the House budget reconciliation vote was titled, "Transfer of Assets Provision to Punish the Innocent," and claimed, "The U.S. House of Representatives has ... approved a provision in its budget that will deny long-term care coverage to those who give money to charities, churches, and family members in need.  Working with our members, AARP will continue the fight to have this ill-conceived policy reversed." 

Without the improvements spelled out in the DRA, however, Medicaid will remain on its slippery fiscal slide toward collapse; LTC insurance, home equity conversion, and other private LTC financing alternatives will continue to languish; the bias in most state Medicaid programs to provide LTC in an institutional setting (i.e., nursing home) will continue, while home and community-based care will suffer; the public will remain anesthetized to the risk of not preparing for long-term care; and ultimately the baby boom generation will have to use its home equity to fund long-term care while the poor will have nowhere to turn when Medicaid disintegrates entirely. 

States Responsible 

The changes to LTC and Medicaid in the DRA will mean nothing, however, unless the states implement them, the federal government enforces them, the private sector promulgates them, and the public understands them. 

The states are flush with cash again.  A January report on began, "From Massachusetts to Hawaii, signs abound that the immense pressure placed on state budgets by the fiscal crisis early this decade has eased and put tax cuts and new spending in the realm of possibility for the first time in several years." 

With the fiscal pressure off, states may shy away from enforcing the new Medicaid eligibility rules in DRA '05 just as they dropped the ball on the Omnibus Reconciliation Act of 1993 (OBRA '93), which contained many changes that were never enforced. 

Reform Opponents Mobilizing 

Advocacy groups are already mobilizing to fight LTC reform again.  What they couldn't stop in the above-board legislative process, they'll try to kill behind the scenes in state legislatures and Medicaid agencies. 

Elderlaw planners are already offering a fire sale on asset transfers, and they'll soon be mobilizing to impede and repeal the DRA reforms.  "Although Congress passed a new law February 1 further restricting the ability of the elderly to transfer assets before qualifying for Medicaid coverage of nursing home care, many people in most states will still have time to plan under the old rules," read an email release from the day after the House vote.  "[T]he old rules will likely apply to transfers if the Medicaid application is filed before the state passes the complying legislation.  So it may not be too late to plan, and in many cases not too late to transfer assets," the release said. 

Medicaid Reform Key 

People won't buy LTC insurance to avoid a Medicaid spend-down liability that does not exist.  If the new Medicaid rules are implemented and enforced, the LTC Partnerships established by the DRA will be enormously successful.  If not, they won't. 

The private long-term care insurance industry should actively support efforts to help states implement the new Medicaid rules and LTC Partnerships. 

Home equity conversion lenders should actively support efforts to educate the American public about the new and likely future Medicaid limits on exempt home equity. 

LTC providers should actively support efforts to implement the DRA in such a way as to prevent asset transfers that leave people ineligible for Medicaid but unable to pay their own way. 

Steve Moses ( is the founder and president of the Center for Long-Term Care Reform, Inc.  For more information, go to