LTC Bullet: New Medicaid and Medicare Numbers Announced for 2012
Friday, December 16, 2011
LTC Comment: You need to know these new numbers for 2012. We've also updated tables in The Zone that provide the numbers for every year since the early 1990s. Details follow the ***news.***
*** Happy Hanukkah, Merry Christmas, Happy New Year and overall Season's Greetings. ***
*** 2012 LTCI PRODUCERS SUMMIT will take place at the Tropicana Hotel in Las Vegas November 10-12, 2012. The conference begins just four days after the next presidential election, so you can celebrate or drown your sorrows depending on the outcome. ***
*** WHAT HAVE YOU DONE FOR ME LATELY? It's been a very productive year for your Center for Long-Term Care Reform. We published 41 LTC Bullets counting this one and 43 LTC E-Alerts counting Monday's. Our studies of LTC financing in Pennsylvania, New York and California were released jointly with major state think tanks in the first two months of the year. Steve Moses gave 17 speeches and published 11 bylined articles or reports. He spent 10 weeks living in the Silver Bullet of LTC in Washington, DC collaborating with the Cato Institute, interviewing and briefing key policy makers, testifying before Congress on September 21, 2011 (video and testimony), and sending you 13 "LTC Embed Reports." We wrapped up this successful year with Steve (presenting) and Damon attending the prestigious, invitation-only Health Sector Assembly meeting in Sundance, Utah. At that event, we previewed our six new briefing papers on "How to Fix Long-Term Care" which we'll publish one at a time early in the new year. Thanks again for your support, both financial and "moral," for our work. ***
*** THE ZONE has been updated to include all the new Medicaid and Medicare numbers for 2012. Check them out here. You'll not only find the latest 2012 numbers, you can see how each threshold number has increased year by year since 1991 for Medicaid and since 1993 for Medicare. Access to The Zone is gated for Center for Long-Term Care Reform members only. If you need a reminder of your user name and password or if you'd like to join the Center to get immediate access to this and our many other resources in The Zone, contact Damon at 206-283-7036 or email@example.com. ***
LTC BULLET: NEW MEDICAID AND MEDICARE NUMBERS ANNOUNCED FOR 2012
LTC Comment: First, why do these new numbers matter? Once upon a time, long, long ago (like until 1988), Medicaid routinely impoverished healthy, community spouses of institutionalized recipients. It worked like this:
Medicaid nursing home recipients had to contribute most of their income to offset their cost of care to Medicaid. That's still true, but until the Medicare Catastrophic Coverage Act of 1988 (MCCA '88), Medicaid rules made no allowance for the financial well-being of healthy spouses who remained in the community. Usually the husband would enter the nursing home and go onto Medicaid first. Most of the family income was in his name. So the wife was left at home with few liquid assets (only $2,000 in most states) and no more than her own income or at most a few hundred dollars worth of the Medicaid husband's income.
MMMNA and CSRA
Congress and President Reagan eliminated the problem of "spousal impoverishment" in MCCA '88 by requiring that community spouses of institutionalized Medicaid recipients be allowed to retain up to $1,500 per month of income (the Minimum Monthly Maintenance Needs Allowance or MMMNA) plus half the joint assets not to exceed $60,000 (the Community Spouse Resource Allowance or CSRA). The law also provided for annual increases in these thresholds based on inflation. With inflation flat for the previous two years, these amounts had not increased since 2009, remaining at $2,739 and $109,500, respectively for 2010 and 2011. But inflation jumped 3.7 percent in 2011, so the new thresholds effective January 1, 2012 will be $2,841 for the MMMNA upper limit and $113,640 for the CSRA, an 89.4 percent increase over the original 1988 protected amounts.
Home Equity Exemption
Several other Medicaid numbers are of interest and increasing. Under federal law, one home including all contiguous property, is exempt from asset eligibility limits so long as the Medicaid applicant/recipient expresses a subjective intent to return to the home. Up until the Deficit Reduction Act of 2005 (DRA '05), there was no limit whatsoever on the value of the retained home, land and property. The DRA '05 set a cap of $500,000 on protected home equity or $750,000 at state legislative option. Those limits increased to $506,000 and $758,000 respectively in 2011. The Medicaid long-term care home equity exemption levels leap to $525,000 and $786,000, effective January 1, 2012.
An interesting fact about Medicaid's home equity exemption is that, at its maximum of $786,000, it is nearly 22 times as high as the total asset exemption, including home equity, allowed in England. (According to the Kaiser Family Foundation, 11 states allow the maximum home equity exemption, including some with huge budget deficits: California, Connecticut, DC, Hawaii, Idaho, Maine, Massachusetts, New Jersey, New Mexico, New York, and Wisconsin.) A recent article in the British newspaper The Telegraph stated: "An estimated 20,000 [English] people a year are forced to sell their homes to pay fees for nursing and residential care, which can reach hundreds of thousands of pounds." Using reverse mortgages to fund long-term care could harness the value of home equity for many people without their needing to sell their homes. But isn't it fascinating that the USA's reputedly draconian Medicaid program is so much more generous than England's socialized health care system?
Other Medicaid Numbers
What we referred to above as the "MMMNA upper limit" is actually the upper end of the income transfer allowance available to community spouses who have additional expenses, such as for housing. The lower end, the actual minimum community spouses are allowed to receive from their institutionalized spouse's income, is calculated by multiplying the poverty level for a couple by 1.5, i.e., 150 percent. Currently the MMMNA lower limit is $1,839. It will remain at that level until July 2012 when it will be reset as the new poverty level for a couple is reported. We announce that change each year in July when it happens and we update the information in The Zone.
Most states have "medically needy" income eligibility systems, which means they deduct medical and long-term care expenses from applicant/recipient's income before determining eligibility. Some states, however, use an "income cap" system. Those states allow only 300 percent of the Supplemental Security Income (SSI) allowance for a single individual. The SSI allowance will increase to $698 per month from $674 effective January 1, 2012 causing the 300 percent income cap to increase from $2,022 to $2,094. For all practical purposes, however, it makes little difference whether Medicaid recipients live in medically needy or income cap states. Income level rarely interferes with eligibility in either system due to the medical/LTC deduction in medically needy states and the availability of Miller income diversion trusts in income cap states.
Several key Medicare numbers change effective January 1, 2012. The Part A skilled nursing facility co-insurance amount for the 21st through 100th day in a nursing home increases from $141.50 to $144.50. This is up from $84.50 in 1993, a 67 percent increase.
The Part A inpatient hospital deductible for the 1st 60 days will rise from $1,132 to $1,156, up from $676 in 1993, a 71 percent increase.
On the other hand, one key Medicare number is actually going down. The Part B annual deductible declines $22 from $162 to $140 effective New Year's Day.
The Part B monthly premium remains a moving target, bouncing around depending on several factors including personal income. For details on such complications, refer to "The 2012 Medicare Part B Premium and Deductible Lower Than Expected," a 10/27/11 article posted on the AARP website. For most Medicare beneficiaries, the Part B premium will increase from $96.40 to $99.90 per month.
See also "Medicare premiums and coinsurance rates for 2012," "Fact Sheet: Medicare Premiums and Deductibles For 2012," and "2012 Part B Premium Amounts for Persons with Higher Income Levels" on the Medicare.gov website.