A longtime advocate of private long-term care insurance contends that many consumers use insurance-based strategies to game the Medicaid nursing home benefits eligibility system.
Stephen Moses, president of the Seattle-based Center for Long-Term Care Reform, includes descriptions of insurance-based strategies consumers can use to meet Medicaid asset limits in a new report on ideas for fixing the U.S. long-term care finance system.
Moses contends that, in many cases, annuity-based LTC planning arrangements and efforts to use life settlements, or life insurance policy sales, in LTC planning arrangements help consumers make themselves artificially poor for Medicaid nursing home benefits eligibility purposes.
Use of life care contracts, or contracts that allow consumers to pre-pay for LTC services, may also help middle-income and high-income consumers cut their Medicaid application asset totals and qualify for Medicaid nursing home benefits, Moses says.
Medicaid and Nursing Home Care
Medicare, a premium-finance health care program for the elderly and the disabled, is supposed to pay for nursing home care only temporarily, for people who are recovering from operations or acute health problems, not for people who will be in permanent need of help with the activities of daily living.
Medicaid is a program financed by state governments along with help from the federal government. It pays for health care for the poor, and it also pays for nursing home care for poor people, and people with low asset totals, who need nursing home care. Government figures show Medicaid will account for more than $100 billion of the $162 billion in U.S. spending on nursing home care this year.
Moses and his group have argued for years that well-intentioned federal and state policymakers have made it too easy for middle-income people, and even high-income people, to qualify for Medicaid nursing home benefits, by excluding too many assets and planning strategies from the Medicaid eligibility screening process.
Encouraging middle-income and high-income people to depend on Medicaid nursing home benefits crowds out private long-term care insurance and reduces the resources Medicaid has to serve people who are really poor, Moses and his supporters say.
Defenders of the current rules say that few ordinary Americans have the ability to pay for much nursing home care, or for private long-term care insurance, and that the U.S. private long-term care insurance market works too poorly for policymakers to expect consumers to depend on it.
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Even executives of some of the remaining issuers of private LTCI coverage, such as Genworth Financial Inc., have talked about the possibility of using changes in Medicare to provide basic LTC protection for all, and repositioning stand-alone private LTCI as a product that would fill in gaps in the basic, universal LTC protection.
Medicaid Planning Strategies
Moses and his group would still like to see the government encourage consumers with the means to buy private LTCI to do so.
Medicaid hurts the overall quality of nursing home care, by paying “notoriously low reimbursement rates,” and making Medicaid a default option for most encourages the country to skimp on preparing for future LTC costs, Moses writes.