Medicaid Planning Critic Goes to Capitol Hill

Stephen Moses, a man who has spent years fighting the rules that let relatively affluent people qualify for Medicaid nursing home benefits, got a chance today to explain his position to members of Congress.

Moses, president of the Center for Long-Term Care Reform, Seattle, spoke at a hearing on Medicaid planning organized by the House Oversight and Government Reform Committee's health care subcommittee.

Moses, who worked for the inspector general of the U.S. Department of Health and Human Services in the 1980s, note that state rules for Medicaid - an insurance program for the poor funded by states and the federal government - encourage people to make complicated arrangement with assets to qualify for Medicaid nursing home benefits, rather than using annuities, private long term care (LTC) insurance or savings to pay for LTC services.

Technically, Moses said, federal rules let people who use Medicaid LTC benefits keep just $2,000 in cash or negotiable securities.

But a couple with one spouse needing care can keep $2,739 per month in income and half of joint assets up to $109,500.

"But it doesn't matter how people spend down to that level as long as they don't give their money away," Moses said. "Financial advisors frequently tell clients to purchase exempt assets, take a world cruise, or throw a big party, all non-disqualifying spend down methods."

Moses said that, today, the following resources are exempt from the Medicaid LTC benefits qualification test:

  • One business including the capital and cash flow.
  • Individual retirement accounts (IRAs).
  • One automobile.
  • Prepaid burial plans for the Medicaid recipient and immediate family members.
  • Term life insurance, which allows recipients to evade Medicaid's estate recovery mandate.
  • Household goods and personal belongings.

Janice Eulau, a Suffolk County, N.Y., Medicaid administrator, said she sees couples with $500,000 in resources, and some with more than $1 million in resources, qualifying for Medicaid LTC benefits.

"There is no attempt to hide that this money exists," Eulau said. "There is no need. There are various legal means to prevent those funds from being used to pay for the applicant's nursing home care."

When people with substantial assets use Medicaid nursing home benefits, that hurts Medicaid program finances, the taxpayers who are paying for Medicaid, and genuinely poor people, who might be able to get better benefits if they did not have to share the Medicaid program with relatively affluent people, Medicaid planning critics said.

David Dorfman, a New York elder law lawyer, said widespread, serious abuse of Medicaid eligibility rules is a myth, and that the real problem is that the Medicaid rules are too complicated and get in the way of elderly people getting desperately needed care.

"I never met a client who was not willing to share the burden of the cost of care," Dorfman said. "Only people who were afraid that they'd run out of money and be without."

Like food pantries, the LTC system should make care available to those who need it without imposing complicated rules and requirements, Dorfman said.

"Rich people do not go to our soup kitchens," Dorfman said. "Food pantries do not ask for 5 years of bank statements. The food is free and yet not abused."

Other Medicaid planning coverage from National Underwriter Life & Health:

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