The Dallas Morning News

DALLAS – Congress just made it harder to get help with nursing home bills.

While senior citizens have been preoccupied with Medicare’s new drug benefit, lawmakers have tightened the rules for qualifying for Medicaid’s long-term care coverage.

The legislation targets older adults who transfer financial assets, typically to their children, in order to become eligible for Medicaid, the federal-state health care program for the poor.

Proponents say the stricter standards will weed out wealthy and middle-class seniors who use the program to pay for nursing care they could afford themselves.

Critics say the tighter rules could keep even lower-income seniors from qualifying for nursing home care.

“Medicaid shouldn’t be used to protect the inheritances the baby boom generation is expecting,” said Stephen Moses, a leading proponent and president of the Center for Long-Term Care Reform. He said the federal-state program started out as a safety net for the poor but has become an upper- and middle-class entitlement for people who know how to abuse it.

Moses says Medicaid’s current standards are so loose that an affluent senior can protect hundreds of thousands of dollars through annuities, family gifts and trusts and still get Medicaid.

The new rules are part of the Deficit Reduction Act that passed Feb. 1.

The Congressional Budget Office estimates that the rules on asset transfers will affect 120,000 nursing home residents annually and save Medicaid $2.4 billion over five years.

Proponents contend that the stricter standards’ biggest benefit will be symbolic.

“They’re a wake-up call,” said Kirk Johnson, a senior policy analyst for the Heritage Foundation. “Middle America has been told not to count on government covering its long-term care.”

Critics of the stricter standards say the complaints about “Medicaid millionaires” are more rhetoric than reality.

Georgetown University’s Long-Term Care Financing Project looked into those complaints and found no evidence of widespread abuse. It reported that asset transfers average only $5,380 – less than the cost of one month’s stay in a nursing home.

Financial gerontologist Gary Crooms works with law firms that do estate planning. The typical couple he helps has $150,000 in home equity and $100,000 to $250,000 in other investments.

“Most couples see that nursing home care will quickly deplete their assets, so they want to be sure the healthy spouse has something to live on,” he said. “We work within the law to provide for that spouse.”

Advocates for senior citizens fear that the new Medicaid rules will have the unintended effect of delaying nursing care for frail seniors on modest incomes.

Under the stricter standards, an older adult who innocently gave money to a grandchild for college tuition or a home down payment as long as five years ago may have to wait months for help from Medicaid.

“Some people may be forced to remain at home at exactly the time they can’t fend for themselves anymore,” said Barbara Lyons, vice president of the Kaiser Family Foundation.

Health policy analysts say the debate over the new Medicaid rules shows how poorly this nation has prepared for the long-term care of its aging population.

As a geriatric care manager, Harold Willis helps dozens of families each year arrange for long-term care when older relatives become too weak to look after themselves.

“Most families are clueless about long-term care until Mama suddenly needs it,” he said. “They’re startled to learn that Medicare doesn’t cover custodial care.”

Medicare pays for skilled nursing care immediately after hospitalizations but not long-term stays in nursing homes.

The costs of long-term care can be staggering. A private room in a nursing home averages $192 per day, or $70,080 annually, according to the Center for Retirement Research at Boston College.

So even though Medicaid is meant only for people with limited means, six in 10 nursing home residents eventually deplete their assets, impoverish themselves and qualify for the program.

Medicaid helps cover the $4,500 monthly nursing home bill for Lloyd Dilbeck, 69, of Denton, Texas, who has Alzheimer’s disease.

“I cared for him at home for five years, but his health slipped last summer,” said his wife, Glenda, 63. “Without Medicaid, I don’t know what we’d do.”

Nationwide, Medicaid paid $86.3 billion for long-term care in 2003 and accounted for almost half of all spending for such services, says the Kaiser Commission on Medicaid and the Uninsured.

Those costs are expected to soar during the next 25 years as the over-85 population – the biggest user of nursing homes – triples.

Johnson of the Heritage Foundation says states are buckling under the weight of a graying population and the need for long-term care.

Long-term care costs Texas $2 billion a year and accounts for 30 percent of the state’s Medicaid spending, according to the state Health and Human Services Commission.

Medicaid’s rising costs have compelled state and federal officials to look for ways to rein in spending.

Texas, like other states, has begun going after the estates of deceased Medicaid recipients to recoup some of the costs of long-term care, but most experts don’t expect those efforts to produce much money.

Oregon, which is considered to have one of the most effective programs, recovers an average of $2,500 per case, Moses said.

Most proposals to shore up Medicaid, especially those made by the Bush administration and congressional Republicans, focus on encouraging people to take more personal responsibility for paying for care.

Medicaid reformers tout greater use of private long-term care insurance.

Long-term-care insurance, which has been around for 30 years, pays for about 3 percent of nursing home costs and 8 percent of home health-care costs, says the Center for Retirement Research.

“Long-term-care insurance hasn’t caught on for the simple reason that people aren’t going to pay for something the government has been willing to give away,” Johnson said.

To build public interest in long-term-care insurance, four states have experimented with giving residents incentives to buy private policies.

After exhausting their private insurance benefits, policyholders in California, Connecticut, Indiana and New York may qualify for Medicaid without depleting their savings.

As another incentive, lawmakers have proposed giving a federal income tax deduction to all long-term-care policyholders, not just those with high medical bills.

Still, widespread private coverage faces hurdles.

Many older adults can’t afford the premiums, which average $2,862 a year for 65-year-olds. Those with chronic health problems also may be turned down when they try to buy private long-term-care insurance.

Mary Whitmore, 71, said she and her husband considered buying coverage when they retired in the 1990s but decided they couldn’t afford it on their teacher pensions.

“Now that he’s been diagnosed with Alzheimer’s disease, we couldn’t buy it at any price,” she said. “Fortunately, Medicaid helps pay for his care.”

Experts say the long-range answer is to persuade boomers to buy the private coverage in their 50s, when they’re still in good health and the premiums are lower.

“As I’m working with seniors and their families, I always urge the adult children to think about long-term-care insurance for themselves,” Willis said.

Medicaid reformers are also focusing on the $2 trillion in home equity held by seniors.

Moses says reverse mortgages would let older adults convert that equity into assets that could pay for long-term-care insurance or, if they’re not insurable, for nursing home care itself.

Half of all senior households could get $72,128 on average from reverse mortgages, he said.

Another way to reduce Medicaid’s costs is to care for seniors in their homes rather than send them to nursing facilities.

“States are moving in this direction,” said Anne Dunkelberg, assistant director of the Center for Public Policy Priorities in Austin. “It’s cheaper and, just as important, what most seniors want.”

Home health care for three hours a day, five days a week, cost an average of $14,000 a year in 2004, according to the Center for Retirement Research.

For all the attention that private insurance, reverse mortgages and other reforms have received, many experts say the government won’t solve Medicaid’s cost crunch until it tackles the long-term-care issue more comprehensively.

“The system impoverishes people before it helps them,” said Lyons of the Kaiser Family Foundation. “We have to do better than that.”

A recent study by the National Academy of Social Insurance suggested creating a public program that would give every American a basic long-term care benefit. Upper- and middle-income people could supplement it with private insurance, while the poor would receive a bigger government benefit.

“Medicare ought to cover long-term care,” said Bruce Bower, director of advocacy and client services for the Texas Legal Services Center in Austin. “We could finance it through tax revenue and seniors’ premiums.”

But even the supporters of such ideas acknowledge that the time isn’t ripe for action. The watchwords in Washington at the moment are “deficit reduction,” not “new entitlements.”

“We’re waiting for some brave politician to step forward and take up the cause,” said Paul Van de Water, vice president for health policy of the National Academy of Social Insurance.

He’s banking on the boomers to turn the political tide on long-term care.

“Once they go through it with their parents, they’ll know firsthand that the system is broken, and they’ll want it fixed in time for themselves.”

—

MEDICAID’S TIGHTER RULES

Medicaid’s stricter standards for covering long-term care are part of the new Deficit Reduction Act. The legislation has been signed, and the states will be required to put the new rules into effect.

How Medicaid works now:

A senior can’t have more than $2,000 in assets to qualify for Medicaid; the entire house is exempt. Seniors also must not have tried to impoverish themselves by giving away assets in the last three years. If they have, they may be denied help for months or years. The penalty period starts when they transfer the money and lasts for however long that sum would have covered their long-term care costs.

How it will work:

A senior can’t have more than $2,000 in assets to qualify for Medicaid; $500,000 in home equity is exempt. Seniors also must not have given away assets in the last five years. If they have, they may be denied help for months or years. The penalty period will start when they apply for Medicaid and last for however long that amount of money would have paid for their nursing home bills.

A hypothetical example:

Mary gives her grandson $20,000 for college. Four years later, she suffers a stroke and needs to go into a nursing home. Under the current system, her gift preceded the “look-back period,” so it’s not a factor in her application. Under the new system, she’ll have to prove she wasn’t trying to impoverish herself to qualify for Medicaid. If she can’t, she’ll have to wait about five months for help.

SOURCE: Dallas Morning News research

Copy the Story Link