advertisement
Federal officials have cracked down "welfare for the well-to-do" -- the practice of seniors artificially impoverishing themselves so they can qualify for government help with nursing-home expenses.
More than 40% of people over 65 are expected to spend some time in a nursing home, according to the U.S. Department of Health and Human Services. Most won't stay long -- more than half of nursing-home stays last six months or less -- but the price can still be steep: an average of $5,353 a month for a semiprivate room, according to a MetLife survey. And 10% of seniors will stay for five years or more.
But federal efforts in 2006 to target what's known as Medicaid planning is likely to snare a lot of unsuspecting older folks, their families and the nursing homes that serve them.
"These changes make no sense for families who need long-term care," protests Medicaid planning expert Vincent Russo, former president of the National Academy of Elder Law Attorneys. "Everyone who is a senior and every older baby boomer is going to have to think differently about long-term-care planning."
The changes in the Medicaid eligibility rules are complex, but the bottom line could be devastating for many families:
- A senior who makes a charitable contribution or helps a grandchild pay for college could inadvertently delay her eligibility for months or even years.
- Someone who owns a home that has increased sharply in value could find himself unable to qualify at all, even if the house is his only asset.
- People who bought annuities to protect their assets might instead lose everything to their state's Medicaid recovery efforts.
The changes were part of a multibillion-dollar budget-cutting bill that Congress and President Bush OK'd in 2006. Senior advocates, including the AARP, tried in vain to block the legislation.
More from MSN Money
There's some chance the most onerous provisions could be modified or even repealed in the future, but -- as with all things legislative -- nothing is certain.
How Medicaid works
To understand what's happened, you need to know something about how Medicaid works. Here are three key points:- Medicaid is the government program designed to cover health-care costs for the poor. That distinguishes it from Medicare, the government health program for Americans 65 and over.
- Medicare typically doesn't cover nursing-home costs, but Medicaid does. In fact, about half the nation's nursing-home bills are paid by Medicaid.
- To qualify for Medicaid's help, seniors typically can't own much. So a whole Medicaid planning industry has sprung up to help older people use -- some say take advantage of -- Medicaid rules so they can qualify for help faster and perhaps preserve some of their assets for their heirs.
How much Medicaid planning is actually going on is a topic of hot debate. Some opponents of the practice, including Stephen Moses of the Center for Long-Term Care Reform point to attorney advertisements boasting that huge amounts of wealth can be hidden or transferred legally to heirs with the right tricks.
Others, like researcher Ellen O'Brien of Georgetown University's Long-Term Care Financing Project, think the issue is overblown. O'Brien said her review of empirical research found "no evidence" that large numbers of seniors were transferring assets to make themselves eligible for Medicaid and "little evidence" that those who transferred assets actually gained access to Medicaid.
Still, the idea that seniors with money to pay for care would snatch benefits meant for the indigent -- especially as states are straining to cover health care for those poor men, women and children -- rankles many. Hence the efforts to change the law in several significant ways:
Transfers would be counted differently. Current law requires states to examine any transfers of cash or assets the senior has made in the previous three years -- what's known as the "look-back" period. The 2006 legislation extends that period to five years, but there's an even greater and more onerous change in how the penalty period works.
Let's say Grandma gives $25,000 to her grandson to pay for college before she applies for Medicaid. Under the current formula, that amount would be divided by the average cost of nursing-home care in her area -- say, $5,000 a month -- to determine how long she has to wait for coverage. The clock starts when the money is transferred. In this case, Grandma would have to wait five months to receive coverage.
Rate this Article
High
