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Tightening Its Medicaid Eligibility Rules Backfires on Washington State

  • May 18th, 2004

A new law in Washington State making it tougher for a married person to qualify for Medicaid coverage of long-term care is projected to save the state millions of dollars less than was forecast. The law also provides an unintended incentive for Medicaid recipients to move to an expensive nursing home rather than opt for less costly care in the community.

The federal government doesn't want the healthy spouses of Medicaid long-term care recipients to become impoverished, so it allows them to keep more resources than Medicaid recipients are allowed. However, states may set the "community spouse" resource limit anywhere from $18,552 to $92,760 (2004 figures). Washington State's limit had been the maximum, $92,760, but a new law that took effect in August permits community spouses to keep only $40,000.

Because it was thought that far fewer people would qualify for Medicaid under the new law, it was estimated to save $9.5 million through fiscal year 2006. This estimate has now been slashed to $3.6 million. This is in part because married people have been more determined than ever in taking advantage of the remaining legal ways to become eligible for Medicaid, according to officials from the state Department of Social and Health Services.

Community spouses may convert assets to an irrevocable annuity that pays out a monthly income without affecting their ill spouse's Medicaid eligibility, and Medicaid applicants can still give away more than $5,000 a month to spend down assets faster and become Medicaid-eligible.

Senior advocates, who opposed the law, say that $40,000 is so low that it will simply force many healthier spouses to go on public assistance sooner. And elder law attorneys report that because of the new law and other Medicaid cuts more couples now are considering divorce as a last resort to protect assets, according to Bill Hickman, chairman of the elder law section of the Washington State Bar Association.

Moreover, there is now an incentive for Medicaid applicants to choose nursing home care over less expensive care in the community or at home. The healthy spouse of a Medicaid applicant who is institutionalized can keep half of the couple's assets, up to the $92,760 limit, meaning that a healthy spouse could keep more than $40,000 if half the couple's assets totals more than that. But this provision does not apply to someone whose spouse applies for Medicaid but who chooses care at home or in another less-costly setting. Instead, the $40,000 limit applies in such cases.

For an article on the issue in the Seattle Times, click here.

For more on protections for the healthy spouse, click here.

Local Elder Law Attorneys in Ashburn, VA

Judith Mitnick

Needham Mitnick & Pollack, PLC
Falls Church, VA

Jeffrey Hammond

Hammond and Associates, LLC, Elder Law, Estate Planning, Wills, Trusts, Probate
Bethesda, MD

Mindy Felinton

Felinton Elder Law & Estate Planning Centers
Rockville, MD


Last Modified: 05/18/2004

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