Asset transfers that would allow elderly to qualify for Medicaid rare

May 1 2007

Most nursing home residents are unlikely to have sold off assets below market value to qualify for long-term care coverage from Medicaid, according to a Government Accountability Office report released on Thursday, CongressDaily reports.

Because of concerns that the practice might be widespread, Congress in 2006 passed a provision in the budget reconciliation law to expand from three years to five years the "look back" period in which seniors who transfer their assets at less than market value are ineligible for Medicaid.

The GAO report found that the practice is "generally limited and often based on anecdote" (Johnson, CongressDaily , 4/27). According to the report -- based on 540 Medicaid nursing home application files in three states -- more than 90% of seniors entering nursing homes had assets of $30,000 or less, not including their homes. Eighty-five percent had annual incomes of $20,000 or less (Teitelbaum, CQ HealthBeat, 4/27). In addition, the report found that Medicaid beneficiaries in nursing homes had a median income of about half that of nonMedicaid nursing home residents ( CongressDaily , 4/27). Medicaid beneficiaries also were less likely to have reported transferring cash than nonMedicaid beneficiaries. The report concludes that "the extent to which new long-term care provisions in the (budget reconciliation law) may affect applicants' eligibility for Medicaid coverage for long-term care is uncertain" ( CQ HealthBeat , 4/27).

Reaction
"This report confirms that the Medicaid long term-care program is not rife with cheats and scam artists," House Energy and Commerce Committee Chair John Dingell (D-Mich.) said in a statement issued along with House Energy and Commerce Subcommittee on Health Chair Frank Pallone (D-N.J.), House Oversight and Government Reform Committee Chair Henry Waxman (D-Calif.) and Sen. Sherrod Brown (D-Ohio).

Waxman said, "For several years now, the administration has been telling us that 'creative estate planning' often allows individuals to become eligible for Medicaid without using their own assets for needed care first. Of course, this assertion, like a toy sold without batteries, came without documentation." The four lawmakers requested the report ( CongressDaily , 4/27).

Republicans contend that the law is necessary to prevent future abuses. Lisa Miller, a Republican spokesperson for the House Energy and Commerce Committee, said of the report, "So what? GAO picked 500 cases in three states and says it can't find the rich people who pretend to be poor so they can qualify for welfare?" ( CQ HealthBeat , 4/27).