Congressional Analyst Sees Blurry Medicaid LTC Asset Transfer Picture

How much do asset transfers threaten the solvency and political legitimacy of the Medicaid nursing home program?[@@]

Some experts say that many older U.S. residents often transfer homes, cash and other assets to children or other relatives to qualify for Medicaid nursing home benefits, which normally are supposed to go only to older individuals of modest means.

Julie Stone-Axelrad, a legislative analyst at the Congressional Research Service, testified at a Senate Finance Committee hearing Wednesday that the data available is too limited for anyone to come up with an accurate estimate of the current prevalence of Medicaid LTC asset transfers or a forecast of future transfer activity.

“One question for which we do have information is the potential size of the pool of assets that could, but would not necessarily, be protected,” Stone-Axelrad said, according to a written version of her testimony posted on the Senate Finance Committee Web site.

A recent study using data from the 2001 Survey of Income and Program Participation found that 84% of U.S. individuals age 85 and older have assets, including home equity, that would enable them to cover 1 year of nursing home costs, at a cost of $70,000 per year; 9% have assets that would pay 1 to 3 years of care; and 7% have assets that would cover at least 3 years of care.

“The study shows that the wealth of the elderly population at risk for nursing home care is largely in home equity, and that the non-housing assets of this population are relatively small,” Stone-Axelrad said.

It is unlikely that any changes to current federal law could prohibit all transfers of assets aimed at attaining Medicaid long term care eligibility, Stone-Axelrad said.

“Given what we know, there is no indication that completely prohibiting asset transfers could result in savings that would amount to a large percentage of Medicaid program outlays,” Stone-Axelrad said.

In her testimony, Stone-Axelrad includes many tables, including a table that quantifies individual states’ recoveries of wrongfully transferred assets.

Written versions of the testimony of Stone-Axelrad and other asset-transfer discussion witnesses are on the Web at http://finance.senate.gov/sitepages/hearing062905.htm