 LTC Bullet: The Fiscal Imperative and The Moral High Ground of Medicaid Estate Recoveries Friday, April 26, 2024 Seattle— LTC Comment: The affluent qualify easily for Medicaid LTC benefits. So recovering the cost of their care from their estates is necessary to discourage excessive use of the program by the non-poor, protect scarce resources for the needy, incentivize responsible LTC planning, and prevent taxpayer financed windfalls for heirs who put their parents on welfare. More after the ***news.*** *** March 2024, “Data-Driven Pre-Claim Wellness Programs Bend the LTCI Claims Cost Curve: The Numbers Are In.,” by Assured Allies and Faegre Drinker Quote: “With the average age of nearly 7 million long-term care insurance policyholders above 80 and the rising cost of care, insurance carriers and regulators must work together to offer solutions that bend the claims cost curve. This report presents the groundbreaking success of one such solution—designed and executed by Assured Allies—based on the findings from an analysis of its program deployed with five long-term care carriers and 135K lives for over three years. “The results of our analysis show that the program delivered not only consistent claim reduction patterns across all five carrier program deployments but also an impressive ~10% overall reduction in claims payments in our longest-running program. “In addition to the financial impact of the program, the policyholder benefit has been overwhelmingly positive, both measured by customer satisfaction (average Net Promoter Score of 50+) and strong clinical outcomes measured by Patient Reported Outcome Measures (PROMs).” LTC Comment: Click through for all the details in this ground-breaking report. It documents Center-corporate-member Assured Allies’ data-backed success enhancing policyholder satisfaction while reducing claims ten percent. Remarkable! *** *** BARRY FISHER RADIO: On April 23, 2024, Steve Moses appeared on “Protecting What Matters with Barry Fisher” on KPRL, Paso Robles, CA, 12:25 – 1:00pm Listen to a recording of the show here. Stephen Moses, President, Center for Long-Term Care Reform: Topics
“Protecting What Matters, is the broadcast that helps you become better shoppers & buyers of services and products to protect various aspects of your life, health and property. We also explore current events, our history, community, institutions and local treasures that are notable and worth preserving.” Barry invited
Steve to do quarterly updates as a “regular” on the show. Stay tuned! *** LTC BULLET: THE FISCAL IMPERATIVE AND THE MORAL HIGH GROUND OF MEDICAID ESTATE RECOVERIES LTC Comment: I got my start in long-term care analysis with a study for the Health Care Financing Administration in 1985. HCFA suppressed that work, but the USDHHS Inspector General and the General Accounting Office did national studies based on it. I conducted the IG’s study, wrote its report and consulted on GAO’s review. In the Omnibus Budget Reconciliation Act of 1993, most of our recommendations in those reports became federal law. OBRA ’93 made Medicaid estate recoveries mandatory. But it also made qualifying for Medicaid LTC benefits a little harder to achieve and it discouraged divesture of assets to quality. The plan behind these studies and the legislation they inspired was to keep Medicaid eligibility generous but to encourage the public to plan early for LTC and avoid Medicaid dependency. This “kinder and gentler” approach to encourage private LTC planning and preserve Medicaid resources for the needy is under attack again. So we need to revisit the issue and explain why estate recoveries are even more necessary today than they were 30 years ago. The Center for Long-Term Care Reform has published 14 LTC Bullets about and defending estate recoveries since 1998.
Here’s our latest appeal for rational public policy on LTC based on keeping the affluent off Medicaid and recovering from their estates when they do take advantage of the program. “The Fiscal
Imperative and The Moral High Ground of Medicaid Estate Recoveries” State officials are "picking the bones of the elderly." That's how one critic described "estate recoveries," the mandatory recoupment of benefits legally paid by Medicaid from the estates of deceased recipients. This vital revenue source is periodically under attack, and now again. Calls for repeal have failed before and are being proposed again. But, like most things in life, this issue is complicated. Here's a primer and fair warning about a government program that is almost certain to touch you or a loved one sooner or later . . . unless you take the proper financial planning steps to avoid it. Medicaid is a means-tested, public assistance program. In a word, welfare. It is very expensive. Nationally, Medicaid cost over $805 billion in 2022, almost as much as Medicare ($944 billion). At the state level, Medicaid is the second largest spending category after primary and secondary education. States must balance their budgets, so they need more, not less, estate recoveries. Undue hardship waivers protect the truly needy while these recoveries help fund benefits for all. Medicaid is a critical health care safety net for poor women and children. But the program is also the primary payor for long-term care (LTC), the mostly custodial assistance critically needed by frail or infirm elderly and disabled people. LTC consumes a disproportionate share of Medicaid expenditures. While 79% of Medicaid recipients are low-income children or adults, they consume only 44% of the program's costs. Just 21% of Medicaid recipients are aged, blind or disabled, but they consume 55% of Medicaid expenditures, mostly for long-term care. Why should you care? Many reasons, the first and foremost of which is: you are paying for Medicaid long-term care with your state and federal taxes. You can feel good about that. After all, Medicaid is America's safety net ensuring access to long-term care for the vulnerable poor. But, Medicaid has become much more than that. It is the principal payor of long-term care for nearly everyone, including many of the well-to-do. How can that be true if Medicaid is welfare? Over the years, Medicaid eligibility "bracket creep" has expanded the program to cover even upper-middle-class people whom it was never intended by Congress to serve. For example, income is rarely an obstacle to Medicaid long-term care eligibility because all medical expenses, including expensive nursing home costs, are deducted from people's income before Medicaid’s “low income” standard is applied. Assets are limited to $2,000 except that home equity, one business, an automobile, prepaid burial costs, term life insurance and IRAs are exempt in unlimited amounts. Many additional assets are exempt within limits. On top of all that, thousands of attorneys and financial planners specialize in sophisticated techniques to impoverish their affluent clients artificially to qualify them for Medicaid LTC benefits. Bottom line, there is no limit on how much income or assets people can have while receiving Medicaid LTC benefits as long as their medical expenses are high enough, their assets are held in exempt form, or they hire a "Medicaid planner." Maybe you're thinking: "You mean I can ignore the huge potential risk and cost of long-term care, avoid the premiums for private insurance, keep most of my wealth, and the government will pay if I ever need care? Sounds pretty good to me." Not so fast. Leaving aside the critical fact that Medicaid has a dismal reputation for problems of access, quality, reimbursement, discrimination and institutional bias, there are other critical downsides for you to consider. Ever since 1993, the federal government has required state Medicaid programs to recover the cost of their care from the estates of deceased recipients. Most states have not pursued these "estate recoveries" aggressively before, but that will surely change as Medicaid's enormous fiscal pressure on the state and federal coffers continues to mount. Expect government at all levels to constrain Medicaid eligibility and to pursue estate recoveries far more aggressively in the future. Their goal is to make sure Medicaid survives as a safety net for the poor without bankrupting taxpayers and the economy. Over time, everyone with any significant wealth will be expected to plan early for long-term care; save, invest or insure against that risk; and pay their own way when the time comes. When the massive baby boom generation finally needs long-term care, Medicaid will not be an option for any but the most needy, if it survives at all. In the future, the only way to obtain quality long-term care, especially in the preferred settings of one's own home or an assisted living facility, will be to pay privately. The only way to pay privately will be to spend your own wealth including your home equity or to own private long-term care insurance. So, here's the bottom line about Medicaid estate recoveries. First: estate recoveries are a fiscal necessity to preserve Medicaid as America's long-term care safety net for the poor as long as possible. Second: if you want to preserve your own wealth against the cost of long-term care, don't expect a free ride on the public welfare system. Plan to use your savings, home equity or buy private long-term care insurance. The question to ask yourself about estate recoveries is this: should Medicaid help the needy with LTC costs or give heirs a windfall for placing their ailing parents on public assistance? |