Budget Provision Alters Medicaid Asset Transfer Rules
Two newspapers recently examined a provision in the fiscal year 2006 budget reconciliation bill (S 1932) under which seniors now face tighter restrictions on the transfer of assets when applying for long-term Medicaid coverage. Summaries appear below.
Washington Post: The Post on Tuesday examined how seniors "who had been expecting Medicaid to help pay their nursing home bills may soon be facing those expenses alone" because of the new requirements. According to the Post, the average nursing home stay costs $74,000 annually, and many seniors seek to qualify for Medicaid assistance with the bills by paying off debts, purchasing a car, making home modifications or prepaying funeral expenses to reduce their assets. Illegal methods of asset transfers include giving away assets, transferring properties or creating certain annuities. Proponents say the new provision requirements tighten the restrictions in an effort to prevent higher-income and middle-class seniors from deliberately depleting their assets to meet income eligibility guidelines for Medicaid coverage. However, critics of the new rules -- including elder law attorneys and consumer advocates -- say the changes will result in delays in care for some low-income seniors. AARP CEO Bill Novelli said the changes "mean that a lower-income stroke patient could be prevented from entering a nursing home, even if there were no alternatives, simply because she had helped a grandson with college tuition years earlier" (Gearon , Washington Post, 2/21). The Post on Tuesday also examined experts' advice on the new rules and provided resources for those seeking to find out more information (Gearon , Washington Post, 2/21).
Dallas Morning News: The Morning News on Monday examined experts' opinions on the new rules and considered possible alternatives for seniors seeking help with nursing home bills. Kirk Johnson, a senior policy analyst for the Heritage Foundation, said the new rules are a "wake-up call" for "Middle America" to stop relying on government to "cove[r] its long-term care." However, critics said concerns about "Medicaid millionaires" are overblown, citing a study by Georgetown University's Long-term Care Financing Project that found that asset transfers average only $5,380, or less than the cost of one month's stay in a nursing home. In addition, high nursing home costs mean that six in 10 nursing home residents ultimately deplete their assets paying for care, resulting in more seniors qualifying for Medicaid, the Morning News reports. With long-term care costs expected to increase as the baby boomer generation grows older, some Medicaid experts anticipate greater use of long-term care insurance to offset the costs. However, despite efforts at the state and federal level to encourage the purchase of long-term care policies, "widespread coverage faces hurdles," including the high cost of premiums, according to the Morning News (Moos, Dallas Morning News, 2/20).