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Report Explodes Myth That Medicaid Transfers Are a
Problem
Written By:
ElderLawAnswers.com
 May
13, 2005 - A new report concludes that the practice among the elderly of
transferring assets in order to qualify for Medicaid coverage of nursing
home care is uncommon and that efforts to further restrict such
transfers will have little effect on Medicaid spending.
The report, by the
Georgetown University Long-Term Care
Financing Project, comes at a time when the Bush
administration and many governors and state legislators are calling for
the tightening or elimination of rules that permit asset transfers by
the elderly in order to qualify for Medicaid. Proponents of these
changes claim that asset transfers are widespread and costly to
Medicaid.
But the May 2005 Issue Brief, which reviews
empirical evidence on asset transfers, finds no support for such claims.
"The argument that something needs to be done about abuses of the
Medicaid eligibility rules is not supported by the facts," concludes the
paper's author Ellen OBrien, who is a Research Associate Professor at
the Georgetown University Health Policy Institute.
Contrary to critics portrayal of the elderly as
hiring estate planning lawyers to artificially impoverish themselves to
qualify for Medicaid, the report finds "little evidence that large
numbers of the elderly are planning their estates for the purpose of
gaining easy access to Medicaid in the event they need nursing home
care."
The report cites one study that found that less
than a third of the middle-class elderly gave gifts to children or
grandchildren of $500 or more, and that the typical gift was $2,000. The
largest transfers were made by those who believed they had a low
probability of entering a nursing home in the next five years.
"Audits of Medicaid applications," the paper goes
on, "also reveal that only a small fraction of individuals who applied
for Medicaid, and an even smaller share of those found eligible for
Medicaid, transfer assets for the purpose of qualifying for free care
under Medicaid."
Most of the elderly who may require nursing home
care have too little wealth to warrant hiring an attorney to arrange an
asset transfer, O'Brien says. Most would qualify for Medicaid at
admission to a nursing home, although she notes that in part because of
an aversion to "welfare," the elderly shoulder more of the costs of
nursing home care than they have to.
While acknowledging that "some families try to
protect modest assets (and, very infrequently, substantial assets) for
future needs or for inheritances," O'Brien found that the overwhelming
majority do not.
"The fact is," the report concludes, "that Medicaid
is what it was intended to be, a safety net for those who cannot afford
to pay for long-term care."
To download a copy of the paper, Medicaids
Coverage of Nursing Home Costs: Asset Shelter for the Wealthy or
Essential Safety Net?, in PDF format, click on:
http://ltc.georgetown.edu/pdfs/nursinghomecosts.pdf
(If you do not have the free PDF reader installed
on your computer, download it
here.)
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