 LTC Bullet: Government Violates the Long Term Care Social Contract to Your Detriment Friday, July 23, 2021 Seattle— LTC Comment: What is the long term care social contract? How does government violate it? And why should you care? Answers follow the ***news.*** *** LTC CLIPPINGS are a feature that Center for LTC Reform Premium Members receive to keep them up to date on the articles, reports and data they need to know to stay at the forefront of professional expertise. Steve Moses scans the popular and scholarly literature constantly and sends subscribers daily emails (2 per day) with the date, title, author, source, and his brief analysis of every important new publication. Regular members receive a weekly compendium of the LTC Clippings each Monday in an LTC E-Alert. Subscribe now at wwwb.centerltc.com or contact smoses@centerltc.com with your questions or comments. Here’s a sample LTC Clipping sent last Wednesday: 7/20/2021, “California Makes It Easier for Low-Income Residents to Get and Keep Free Health Coverage,” by Rachel Bluth, Kaiser Health News Quote: “A provision in California’s newly approved state budget will eliminate the asset test for the 2 million Californians enrolled in both Medi-Cal and Medicare, the federal health insurance program for people 65 and older and people under 65 with certain disabilities. Instead, their financial eligibility will be based solely on income, as it is for the millions of other people in Medi-Cal. … The 2021-22 state budget deal includes several provisions that will make it easier to get on and stay on Medi-Cal, including the elimination of the asset test. Everyone 50 and over will be eligible, regardless of immigration status. And new mothers will be allowed to remain on Medi-Cal for one year after giving birth, up from 60 days.” LTC Comment: The “Medicaid trap” snaps shut in California ensnaring more and more people in public welfare dependency. As federal taxpayers you get to pay half this cost because of the Golden State’s 50 percent Federal Medical Assistance Percentage (FMAP). Do you think the federal government will intervene? Forget it. California has thumbed its nose at the Feds with impunity for decades by failing to implement key long-term care eligibility restrictions imposed on all states in OBRA ’93 and DRA ’05. See, for example, our 2011 study Medi-Cal LTC: Safety Net or Hammock?. Now the People’s Republic of California is eliminating all pretense of personal responsibility and totally embracing this moral hazard. *** *** JOIN THE LTC RESISTANCE: Unite to prevent government taking over what remains of the private long-term care market. Join the “LTC Resistance” by reading Medicaid and Long-Term Care, browsing the articles linked below, and merging your efforts with ours at the Center for Long-Term Care Reform here. Find our “Membership Levels and Benefits” schedule here. Momentum is building for policies like those critiqued in today’s LTC Bullet. Act now before it’s too late. In addition to the recent articles linked below, Steve has three more columns accepted for publication: “Great Moments in Unintended LTC Consequences” for McKnight’s LTC News, scheduled for July 26, 2021. “The InLTCgentsia” for Broker World’s August 2021 issue. “Should Medicaid Protect $8 Trillion from Private Senior Living Costs?” for McKnight’s Senior Living, August 9, 2021 “Panel Gives States Pass in Collecting Assets for Medicaid Long-Term Care,” by Stephen A. Moses, Health Care News, July 2021 (PDF version.) “Government Violates the Long Term Care Social Contract to Your Detriment, by Stephen A. Moses, Broker World, June 2021. (PDF version.) “President Biden, tear down this wall,” by Stephen A. Moses, McKnight’s LTC News, June 23, 2021 (PDF version.) “Using Medicaid to protect inheritances,” by Steve Moses and Brian Blase, TheHill, June 10, 2021. (PDF version.) “LTC financing: Be careful what you WISH for,” by Stephen A. Moses, McKnight’s Senior Living, June 7, 2021. (PDF version.) “The social contract for long-term care,” guest column by Stephen Moses for McKnight’s Long-Term Care News, May 17, 2021. (PDF version.) “Why LTCI Fails,” guest column by Stephen Moses for Broker World magazine, March 2021. (PDF version.) Find many more articles like these,
plus scores of speeches and reports covering 35 years of long-term care
policy analysis at
www.centerltc.com. *** LTC BULLET: GOVERNMENT VIOLATES THE LONG TERM CARE SOCIAL CONTRACT TO YOUR DETRIMENT LTC Comment: The following article was originally published in Broker World magazine’s June 2021 issue. We thank the editor and publisher Stephen Howard for permission to republish the column here. Subscribe to Broker World here: https://brokerworldmag.com/orders/. We strongly recommend this publication for anyone working in the financing or provider sides of the long-term care profession. Watch for Steve’s next column, titled “The InLTCgentsia” in Broker World’s August 2021 issue. “Government Violates the Long Term
Care Social Contract to Your Detriment” What is the long term care social contract? How does government violate it? And why should you care? Congress established the long term care social contract when President Clinton signed the Omnibus Budget Reconciliation Act of 1993 (OBRA ’93). That law set up Medicaid long term care benefits to work like this. If you need more long term care than you can afford, Medicaid will pay. You can have substantial income and virtually unlimited assets and still get this deal. But if you take it the only care you’ll receive is whatever Medicaid covers (mostly nursing home care) and you have to reimburse every dollar Medicaid pays from your estate. Wait a minute. Doesn’t getting help from Medicaid mean you have to be low income and have minimal assets? That’s what everyone says. True, that’s the common myth…or lie…depending on whether the person saying it knows how Medicaid financial eligibility actually works. The truth is people can have virtually unlimited income and assets and still get Medicaid to pay for their long term care. Medicaid deducts private medical and long term care expenditures from applicants’ income before assessing eligibility. So if your private health care costs are high enough, as they invariably are if you’re receiving expensive long term care services, you qualify for Medicaid based on income. An easy rule of thumb to remember is that as long as your income is less than the monthly cost of a semi-private nursing home bed ($7,756, not exactly low income), you’re in. Assets are even less of an obstacle, because most large resources seniors own are exempt, including up to $603,000 in home equity ($906,000 in nine states) plus, with no limit on their value, one automobile, prepaid burial plans, a business including the capital and cash flow, term life insurance, household goods and personal belongings, even an Individual Retirement Account if it’s in payout status as most must be by age 72 according to the latest Required Minimum Distribution rules. Those are the basic exemptions that Medicaid eligibility specialists explain when they take your application. Of course, Medicaid planning lawyers can expand financial eligibility much further for people with higher income and assets using sophisticated trusts, annuities, and qualified transfers. If Medicaid long term care eligibility is easy to achieve, it’s no wonder so many people end up on Medicaid, in nursing homes, and vulnerable to deadly viruses. But what about the downsides of relying on Medicaid? Why would people fail to plan for long term care, neglect to save, invest or insure against the cost as soon as possible, and thus assume the risk of ending up in a Medicaid nursing home receiving publicly financed care of dubious quality which they have to pay back in the end anyway? Excellent question and the answer explains why private long term care insurance and home equity are so little used to pay for long term care. After Congress and President Clinton set up the long term care social contract, the government dropped the ball. State Medicaid programs did not implement estate recovery aggressively; the federal government did not enforce the law; the media didn’t publicize the new estate recovery liability; so the public continued to ignore long term care until they needed it, turning to Medicaid by default when they did. To add insult to injury, the Medicaid and CHIP Payment and Access Commission (MACPAC) recently recommended that Congress make estate recovery voluntary and implement rules that would substantially reduce its potential nontax revenue for Medicaid. That would be a terrible mistake. Without estate recovery, an enormous potential source of private long term care financing (home equity) is lost forever and Medicaid becomes a tax-payer financed windfall for heirs at the expense of program resources that should go to the poor. Unfortunately, MACPAC relied heavily on advice from Medicaid planning attorneys who make their living helping upper middle class people qualify for Medicaid and avoid estate recovery, an obvious conflict of interest. See “MACPAC Captured” (http://www.centerltc.com/bullets/latest/1302.htm). So the questions we asked at the top are answered. OBRA ’93 set up Medicaid long term care benefits to work like a government loan. If you don’t prepare to pay privately for long term care, Medicaid will pay, but you only get what Medicaid provides and you’ll pay it all back in the end anyhow. Smart people understanding that deal would have avoided it by preparing to pay privately for long term care if the need should arise. But government reneged, delivering all the easy long term care benefits, but without enforcing the estate recovery pay back. So if you’re trying to sell private long term care insurance, that’s a major reason why so few people show interest and most of the remainder don’t buy. What can you do about this? For one, contact your members of Congress and urge them to oppose MACPAC’s recommendation to cripple estate recoveries. For another, join us at the Center for Long-Term Care Reform fighting for long term care financing policy that properly enforces the long term care social contract and supports you.
425-891-3640 smoses@centerltc.com Stephen A. Moses is president of the Center for Long-Term Care (www.centerltc.com). The Center promotes universal access to top-quality long term care by encouraging private financing as an alternative to Medicaid dependency for most Americans. Previously, Mr. Moses was president of the Center for Long Term Care Financing (1998-2005), director of research for LTC, Inc., (1989-98), a senior analyst for the Inspector General of the U.S. Department of Health and Human Services (1987-89), a Medicaid state representative for the Health Care Financing Administration (1978-87), a HHS Departmental Management Intern (1975-78), and a Peace Corps Volunteer in Venezuela (1968-1970). He is widely recognized as an expert and innovator in the field of long term care. He completed the “2008 National Long Term Care Consciousness Tour” traveling for a year and 28,028 miles while living in an Airstream trailer dubbed the “Silver Bullet of Long Term Care.” The LTC Tour promoted responsible long term care planning and rational long term care public policy. Moses can be reached at the Center for Long-Term Care Reform, 2212 Queen Anne Avenue North, #110, Seattle, WA 98109 |
