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Governors, Congress Mull Asset Transfer Restrictions

  • April 29th, 2005

Both the nation's governors and a congressional subcommittee are considering further restrictions on the ability of the elderly to transfer assets and then qualify for Medicaid coverage of nursing home care.

The governors have been pondering a 12-page working draft statement of possible changes to the Medicaid program, including making it more difficult for the elderly to transfer assets to qualify for Medicaid coverage of nursing home care (sometimes referred to as "Medicaid planning"). Another proposal in the draft would allow states to investigate more thoroughly a beneficiary's finances and seek repayment for government-provided care.

The draft, which has been circulating among the nation's governors, represents the early stages of an effort by the National Governors Association (NGA) to present a united Medicaid reform proposal to Congress.

Virginia Gov. Mark Warner (D), NGA chair, said that the proposed changes would be balanced with policies making long-term care more affordable, such as giving beneficiaries tax credits for long-term care insurance.

Governors have not yet agreed on the recommendations and it is unclear yet whether a majority will.

House Committee Holds Hearing

Meanwhile, Republican members of the House Energy and Commerce Committee heard testimony on the practice of Medicaid planning, which subcommittee member Rep. Charlie Norwood (R-Ga.) said is turning Medicaid into "a welfare program for middle-income families."

Although there is no hard data to support the contention that Medicaid planning is widespread, one witness offered his own evidence.

"Just go on Google and put in quotes 'Medicaid planning,' or 'Medicaid estate planning,' and see how many hits you get," said Stephen Moses of the Center for Long-Term Care Financing, based in Seattle. "That'll show how extensive it is."

["Medicaid planning" yields 2.1 million hits, with ElderLawAnswers as the first-listed result.]

The committee also heard from New York City elder law attorney and ElderLawAnswers member Bernard A. Krooks, a former president of the National Academy of Elder Law Attorneys. Krooks said Medicaid is the only recourse for many of the middle class elderly. He noted that while the government pays for care related to cancer or heart attacks through Medicare, "If you have a chronic illness like Alzheimer's disease, Parkinson's, Lou Gehrig's disease or multiple sclerosis, the government doesn't help unless you impoverish yourself first and qualify for Medicaid."

"Do we really think that today's nursing homes are filled with scheming seniors who are free-riding on the taxpayers' dime?" asked subcommittee member Rep. Sherrod Brown (D-Ohio). "There will always be people who work the system, but most Medicaid beneficiaries do not want to be Medicaid beneficiaries. They have no choice."

Proposals to further restrict asset transfers include increasing from three to five years the period in which states can review whether Medicaid applicants have transferred assets and increasing the amount of time that states can withhold Medicaid eligibility when asset transfers occur.

Some subcommittee members said that they support proposals to encourage the elderly to purchase long-term care insurance or use reverse mortgages, although Centers for Medicare and Medicaid Services administrator Mark McClellan testified that the Bush administration does not support mandated use of reverse mortgages. McClellan also discussed an administration proposal that would allow the sale of long-term care "partnership" policies in all states. Under such policies, which currently are available in only four states, individuals who purchase designated long-term care insurance policies can retain more assets than Medicaid would normally allow.

For an Associated Press article on the House hearing, click here.

For an Associated Press article on the governors' draft proposal, click here.

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Herndon, VA

Last Modified: 04/29/2005

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