[LTPC-discussions] Fw: LTC Bullet: Medicaid Loopholes by State
ltpc-disc@ltpcalums.com
ltpc-disc@ltpcalums.com
Sat, 2 Aug 2003 09:55:40 -0600
----- Original Message -----
From: "Center for Long-Term Care Financing" <ltcbullets@centerltc.org>
To: <Recipient list suppressed>
Sent: Thursday, July 24, 2003 1:40 PM
Subject: LTC Bullet: Medicaid Loopholes by State
> LTC Bullet: Medicaid Loopholes by State
>
> Thursday, July 24, 2003
>
> Seattle--
>
> LTC Comment: Despite the conventional wisdom that one must be poor to
> qualify, Medicaid LTC benefits are routinely available to most seniors who
> need nursing home care anywhere in the U.S. without "spending down" assets
> significantly. But some states are much more lenient than others, which
> leads to "welfare immigration" and manipulation of Medicaid at the expense
> of taxpayers and the poor. More after the ***news.***
>
> *** Attention state officials: if today's Bullet raises questions in your
> mind about your state's Medicaid income and asset control methodology,
> consider retaining the Center for Long-Term Care Financing to review your
> Medicaid eligibility and estate recovery policies and to provide
> recommendations. You will find examples of state reviews our staff has
> conducted in the past at http://www.centerltc.com/pubs/MAGIC_Bullet.pdf
> : "The Magic Bullet: How to Pay for Universal Long-Term Care, A Case
> Study in Illinois" and at http://www.centerltc.com/pubs/FLORIDAREP.pdf
> : "The Florida Fulcrum: A Cost-Saving Strategy to Pay for Long-Term
> Care." Previous LTC Bullets bearing on the same subject include "LTC
> Bullet: Seeking LTC Solutions," July 15, 2003,
> http://www.centerltc.com/bullets/current/452.htm and "LTC Bullet: Open
> Letter to Governors on Medicaid and LTC, May 15, 2003,
> http://www.centerltc.com/bullets/archives2003/438.htm ." Contact Center
> President Stephen Moses directly at 206-283-7036 or
> mailto:smoses@centerltc.org for further information. ***
>
> *** LATEST DONOR-ONLY ZONE CONTENT: Here's the latest Zone content
> followed by instructions on how to subscribe.
>
> The LTC Reader #3-033--American Legion Says Vets Face Nursing Home Bed
Shortage
> (Here's one more reason why Vets cannot count on the VA for LTC and should
> therefore consider private LTCI. You'll find many more reasons archived
in
> the donor-only Zone.)
>
> Don't miss our "virtual visits" to major LTC industry conferences in The
> Zone. You'll find our comparison of the conferences, session summaries,
> interviews and pictures at http://www.centerltc.com/members/index.htm .
>
> Individual donors of $150 or more and corporate donors to the Center for
> Long-Term Care Financing receive our daily email LTC Bullets, LTC
E-Alerts,
> LTC Readers, and LTC Data Updates for a full year. You'll also get access
> to the donor-only zone where these publications are archived along with
> other donor-only features. If you already qualify for The Zone, you can
> click the following link, enter your user name and password, and go
> directly to the latest donor zone content and
> archives: http://www.centerltc.com/members/index.htm . If you do not
> already qualify for The Zone, mail your tax-deductible contribution of
$150
> or more to the Center for Long-Term Care Financing, 2212 Queen Anne Avenue
> North, #110, Seattle, WA 98109. Then email mailto:damon@centerltc.org
your
> preferred user name and password (up to 10 characters each). You can also
> contribute online by credit card or direct withdrawal at
> http://www.centerltc.com/support/index.htm . ***
>
> LTC BULLET: MEDICAID LOOPHOLES BY STATE
>
> LTC Comment: Have you ever heard of welfare immigration? That's what
> happens when some states' public assistance programs are more generous
than
> others. People move (or they relocate their elderly, infirm parents) to
> take advantage of marginal variations in public largesse. For example, in
> the 1980s and early 1990's, Medicaid nursing home eligibility rules in
> Florida allowed practically unlimited assets. Any adult child could add
> his or her name to a parent's bank account and withdraw everything from
the
> joint account without incurring a transfer of assets penalty, thus
> instantaneously impoverishing the parent and achieving Medicaid
> eligibility. New York State, on the other hand, was stricter with regard
> to assets (until Medicaid planners discovered the "just say no" or
"spousal
> refusal" gambit) but allowed practically unlimited income. New York's
> generous "medically needy" income eligibility system allows anyone to
> qualify for Medicaid who cannot afford the state's exceptionally high
> private nursing home rates. The end result was that New Yorkers with
> limited incomes but lots of assets moved to Florida where they could
> preserve their savings for heirs and still qualify for Medicaid nursing
> home care. Floridians with excessive income, but limited assets,
relocated
> to New York where high incomes would not interfere with their Medicaid
> nursing home eligibility.
>
> Gross variations in state-by-state Medicaid eligibility rules cause severe
> interstate inequities and invite manipulation like Medicaid planning and
> welfare immigration. We recently came across an article that documents
> several such differences between state Medicaid programs. The following
> examples come from "State Medicaid Practices Are All Over the Map" by
Harry
> S. Margolis, in The ElderLaw Report, Volume XV, No. 1, July/August 2003,
> pps. 11-12. The ElderLaw Report is a monthly newsletter with a heavy
> emphasis on developing, identifying, describing and promulgating Medicaid
> estate planning (i.e. artificial self-impoverishment) techniques. The
> Margolis article describes the author's findings from "roundtable
> discussions of Medicaid rules with elder law attorneys around the country"
> at the May 14-18 National Academy of Elder Law Attorneys 15th Annual
> Symposium in Miami. Here are some excerpts and our comments:
>
> ElderLaw Report Article: "By far, the two most lenient states are
> California and Florida." (p. 12, emphasis added)
>
> LTC Comment: Interesting, isn't it, that the state with the worst budget
> deficit in the country whose Governor (Gray Davis) has proposed a
> 15-percent reimbursement cut for Medi-Cal nursing homes, is one of the
most
> lenient states in the country for government-financed nursing home
> care. The other most lenient state, Florida, is the one with the biggest
> population of elderly people and one of the biggest vulnerabilities for
> long-term care in the future.
>
> Article: Washington State may allow "partial interests in property" to
> have "no market value" and therefore "be exempt from [estate recovery]
> claim." Likewise: "Personal care contracts are accepted if the payments
> are for services that Medicaid would cover." (p. 12)
>
> LTC Comment: Translation: if you own property with someone else who
> refuses to sell his or her share, your share is not vulnerable to Medicaid
> estate recovery in Washington. So, make sure you own all your excess
> assets with someone else who won't sell. Likewise: Set up a "personal
> care contract" in which you agree to provide services to your infirm
parent
> for a fee so you can pocket the money that would otherwise have to be
> "spent down" to qualify for Medicaid.
>
> Article: "Not only are the Medicaid programs different from state to
state
> but also from county to county here. A recent New Jersey case barred
> guardians from doing Medicaid planning, but it is not followed in many
> counties. In some counties, Medicaid annuities must name the state as the
> remainder beneficiary. In others, this is not required." (p. 12,
emphasis
> added)
>
> LTC Comment: So-called "Medicaid friendly annuities" allow people with
> excessive nonexempt assets to convert them to nondisqualifying income, but
> the consequences are risky, including access and quality problems, tax
> planning considerations, the danger Medicaid will tighten the rules, and
> vulnerability to estate recovery, though not in certain New Jersey
> counties, evidently.
>
> Article: "The home is not considered a probate asset [in Florida] and
thus
> is exempt from estate recovery. Personal care contracts are permitted. .
> . . Transfers are rounded down. While the penalty devisor in Florida is
> $3,300, a current or prospective nursing home resident can give away
$6,500
> a month and still only be ineligible for one month for each transfer. The
> gift of a life estate is not a transfer. For couples, one way to spend
> down is to purchase I or E savings bonds. These are not counted, and thus
> the purchase is not considered to be a transfer." (p. 12-11)
>
> LTC Comment: No wonder Florida is one of the two most lenient Medicaid
> eligibility states in the country.
>
> Article: "Michigan is one of three states with no estate recovery
program,
> although this is currently in the state legislature." (p. 12, emphasis
added)
>
> LTC Comment: The other two states with no Medicaid estate recovery
> programs are Texas and Georgia. Texas recently enacted a Medicaid estate
> recovery law under pressure from the federal government. It is important
> to note that although every other state has an estate recovery program,
> these programs vary widely in enforcement and effectiveness. Also, the
> estate recovery liability is relatively easy to avoid with early planning
> in most states. Finally, states rarely educate the public about estate
> recovery liability so it has little effect on consumer behavior such as
the
> proclivity to purchase private long-term care insurance.
>
> Article: "Some people in Tennessee move across state lines to nursing
> homes in Georgia because Georgia permits community spouses to keep the
> maximum CSRA [Community Spouse Resource Allowance], while Tennessee
applies
> the one-half-of-snapshot-amount rule." (p. 12, emphasis added)
>
> LTC Comment: Another example of welfare immigration. Not only is
Medicaid
> nursing home eligibility easier in Georgia, you don't have to worry about
> recovery from the estate either.
>
> Article: "The most amazing information I heard was California's
> application of the transfer penalty rules. . . . [A] California nursing
> home resident can give $4,000 a day to 10 different individuals for 30
> consecutive days, and apply for MediCal the following month." (p. 12,
> emphasis added)
>
> LTC Comment: No wonder California is one of the two most lenient Medicaid
> eligibility states in the country.
>
> Article: "Like Florida, the giving away of a life estate is not
considered
> to be a transfer [in North Carolina]." (p. 12)
>
> Article: "Practitioners rely on spousal refusal [in New York] . . .." (p.
12)
>
> Article: "Practitioners have created deeds with a term of years to lower
> the transfer penalty, similar to a qualified personal residence trust [in
> Minnesota]. (p. 12)
>
> LTC Comment: The solution to inequitable variations and loopholes in
state
> Medicaid eligibility rules is not to plug them one by one like the little
> Dutch boy with his fingers in the dike. The solution is to reform
Medicaid
> eligibility along the lines of "LTC Choice." Eliminate all asset
> exemptions and require all applicants to consume their illiquid equity in
> currently exempt assets, such as homes and businesses, through reverse
> mortgages before they qualify for Medicaid benefits. Doing that will save
> Medicaid for the poor, protect lifetime home use by the middle class,
> enhance access to quality care for rich and poor and in between, relieve
> taxpayers, encourage home equity conversion and long-term care insurance,
> pump desperately need private financing to LTC providers, and put Medicaid
> estate planners out of business. For a concrete strategy, see "LTC
> Choice: A Simple, Cost-Free Solution to the Long-Term Care Financing
> Puzzle" at http://www.centerltc.com/pubs/CLTCFReport.pdf .
>
> A formatted version of today's LTC Bullet is available at
> http://www.centerltc.org/bullets/current/455.htm
>
>
>
>
> _____________
>
> *** Forward freely; encourage subscribers! ***
>
> The Center for Long-Term Care Financing is a 501(c)(3) charitable
> non-profit organization dedicated to ensuring quality long-term care for
> all Americans.
>
> *** Right now, you can show your support with an online donation through a
> secure server connection at http://www.centerltc.org/support/index.htm .
***
>
> Contributions are tax-deductible. If you get value from our LTC Bullets,
> our web site, our reports, our speeches or our public policy advocacy,
> please consider making a donation. Even small contributions are very much
> appreciated. Visit our website at www.centerltc.org/needhelp.htm or
> contact Amy Marohn at mailto:amy@centerltc.org for more details.
>
> This e-mail is the latest installment of "LTC Bullets" - the Center's
> periodic online news service covering the latest information and trends in
> long-term care financing. We welcome responses to the material presented.
>
> *** Unsubscribe by simply using your reply button to send a
> request. Please put your e-mail address and name in the body of your
> message. Your e-mail address will be deleted from the Center's mailing
> list before our next mailing. We apologize for any inconvenience. We do
> not intend our "LTC Bullets" to reach anyone not interested in receiving
> them. ***
>
> All past issues of LTC Bullets may be read on the Center's web site at
> www.centerltc.org
>
> Please direct any questions or requests to mailto:info@centerltc.org
>
> Thank you for your time and interest.
>
> Center for Long-Term Care Financing
> 2212 Queen Anne Avenue North, #110
> Seattle, WA 98109
> Ph: 206-283-7036
> Fax: 206-283-6536
> E-mail: mailto:info@centerltc.org
> Web: www.centerltc.org
>
>