LTC Bullet:  Medicaid Planning in the Bull’s-eye

Friday, February 3, 2017


LTC Comment:  The new Congress wasted no time confronting three egregious Medicaid eligibility loopholes.  Details after the ***news.***

*** THE 17th ANNUAL ILTCI CONFERENCE, with the theme “Navigating the Future,” will convene March 26-29, 2017 at the Hyatt Regency in Jacksonville, Florida.  Organizers report “We have only two booths left for the ILTCI Conference coming up in March, one 10x10 booth and one 6x10 booth. Exhibit booths also come with 2 free admissions and a list of other benefits. We have first timer and non-profit discounts, and a variety of sponsorship options. See the Exhibitor App button … for more details. … If you have any questions or need assistance with registration or exhibit/sponsor selections please contact Christi Trimble at 856-308-0611 or” We hope to see you there! ***

*** HIS MILLION-DOLLAR MOM book and movie project gains momentum.  Watch LTCI producer and Center friend Ross Schriftman’s TV interview for inspiration and motivation regarding Alzheimer’s care and funding. ***

*** LTC CLIPPING SERVICE:  Do you spend a lot, maybe too much time scanning the media to keep up with professional news?  Have we got a deal for you?  Leave that to us.  We’ll find, summarize, highlight and link any news story, report, study or journal article you really need to know and understand.  We’ll email you a quick and concise notice like the one below.  And we’ll field your questions if you need more information.  It’s like having a world-class consultant at your fingertips.  How can you get in on this opportunity?  Contact Damon for details at 206-283-7036 or  He’ll have you in the loop before you can say “the check is in the mail.” 

2/1/2017, “Could Congress Boost Medicaid Long-Term Care Benefits For Some By Curbing Spousal Annuities?,” by Howard Gleckman, Forbes

Quote:  “Is Medicaid’s long-term care benefit a zero-sum game where limited resources are shifted from one beneficiary to another? For instance, could the government significantly increase long-term care benefits for some by barring people from using spousal annuities to qualify for Medicaid?  Or should resources be expanded to provide all eligible seniors and younger people with disabilities the care they need?”

LTC Comment:  Is Medicaid a zero sum game?  Pretty much.  It’s already crowding out other programs in state budgets.  Should we expand resources to cover everyone?  Well, sure, there’s plenty of extra revenue out there just waiting to be spent.  This author defends expending Medicaid’s scarce resources on ineligible people, lottery winners, and wealthy annuitants.  He’s also pushing for a new, compulsory, payroll-financed government long-term care program.  They say the difference between a neurotic and a psychotic is that one builds castles in the sky while the other lives in them.  Your call. ***



LTC Comment:  Most people think of Medicaid as a means-tested public assistance program.  In a word, welfare.  But as LTC Bullets readers know, it’s not that simple.  Individuals with substantial incomes and assets can and do qualify easily for Medicaid’s most expensive long-term care benefits if and when they need care.  We’ve published 143 Bullets about the practice of “Medicaid planning,” AKA artificial self-impoverishment to qualify for benefits, here.

Easy access to Medicaid after care is needed has serious consequences for the long-term care service delivery and financing system.  It desensitizes the public to LTC risk and cost.  It discourages early and responsible planning for future care needs.  It impedes the market for home care by making nursing facility care virtually free.  It crowds out the market for private long-term care insurance.  It overloads Medicaid with too many non-needy recipients.  It benefits the affluent while diverting resources from the poor.  It bloats Medicaid costs and consumes resources that might otherwise go for education, roads, and other state financial priorities.

So what has the federal government done about this problem?  Not much in the last decade.  The Bush 43 Administration gave us the Deficit Reduction Act of 2005, which capped Medicaid’s home equity exemption, extended the transfer of assets look-back to five full years, and discouraged the then-commonplace “half-a-loaf” divestment strategy.  From 2009 to 2017, the Obama Administration did virtually nothing to protect Medicaid long-term care benefits for the needy.  The Centers for Medicare and Medicaid Services under President Obama left many routine and several outrageous eligibility loopholes unaddressed.

But last November’s political upheaval has changed the outlook for legislation to curtail Medicaid benefits abuse.  The Trump Administration and House Speaker Paul Ryan are talking about a “Better Way” to do health care financing, including Medicaid.  Block granting the program, capping federal costs, and giving states more flexibility to experiment with creative eligibility and service delivery options are all under serious consideration.  But so are some specific measures to curtail some of the worst Medicaid planning abuses.

On Wednesday, February 1, 2017, the House Energy and Commerce Committee’s Subcommittee on Health convened a hearing titled “Strengthening Medicaid and Prioritizing the Most Vulnerable.”  Check out the witnesses’ statements, text of new legislation under consideration and watch the full hearing here.  It addressed specifically three new proposed statutes that tackle long-standing Medicaid eligibility loopholes.  These are: 

  • The Prioritizing the Most Vulnerable Over Lottery Winners Act, by Representative Fred Upton

  • The Verify Eligibility Coverage (VECA) Act, by Representative Bill Flores

  • H.R. 181, The Close Annuity Loopholes in Medicaid (CALM) Act, by Representative Markwayne Mullin

As their titles imply, these proposed laws would close Medicaid eligibility loopholes that allow big lottery winners, undocumented immigrants, and wealthy annuity buyers to qualify for Medicaid long-term care benefits.  Discussion drafts of each of the proposed statutes are available here.

We’re especially fond of the effort to stop abuse of Medicaid-compliant annuities.  These financial work-arounds enable wealthy couples to divest hundreds of thousands of dollars, capture large monthly incomes for the community spouse, and qualify the institutionalized spouse immediately for Medicaid-financed care. They dodge the asset transfer rules and evade otherwise mandatory estate recovery.  We’ve had this abuse in our sights for a long time, having published the following LTC Bullets about the problem:

LTC Bullet: Annuity Blues, Friday, November 15, 2013

LTC Bullet: Medicaid Planning—The Rest of the Story, Friday, February 7, 2014: Also applies to the Medicaid planning problem.

LTC Bullet: How to End Medicaid Annuity Abuse, Friday, February 28, 2014

LTC Bullet: Medically Underwritten Annuities for LTC, Friday, May 15, 2015; the good LTC annuities

LTC Bullet: Medicaid Annuity Abuse: A Case Study, Friday, June 5, 2015

LTC Bullet: LTC Annuities: To Get or Avoid Medicaid?, Friday, June 19, 2015

Bottom line, the prospects are looking up for giving Medicaid LTC benefits back to the poor and encouraging everyone else to plan early, save, invest or insure for LTC risk and cost.  Stay tuned for more as new developments occur.  We’ll keep you posted.