Plugging a Budget Hole

OSPRI’s very own health care policy fellow, Stephen Moses, is in today’s Projo with a column on Medicaid funding for the elderly. Moses points out that a different set of rules applies toward elderly Medicaid recipients than everyone else who might qualify for the program:

Do they have to be low income to qualify? No, anyone with income below the cost of a nursing home ($7,777 per month) qualifies on the basis of income. Rhode Island Medicaid has denied only two applicants ever because of excessive income. So income is virtually never an obstacle.

But what about assets? Anything over $4,000 disqualifies you, right? Yes, but that’s only cash or resources easily convertible to cash. Medicaid applicants and recipients may also keep unlimited exempt assets, e.g., home equity up to $500,000 and, without any dollar limit, one business including the capital and cash flow, one automobile, prepaid burial plans, term life insurance, home furnishings and other assets. Converting non-exempt assets to exempt assets is as easy as buying a new car or adding a room to Grandma’s house.

For the truly affluent who still don’t qualify under these already extremely generous rules, Rhode Island has many “Medicaid estate-planning” specialists who make their livings artificially impoverishing people to qualify them for Medicaid benefits. These lawyers use techniques like “reverse half-a-loaf,” purchase of “life estates,” irrevocable income-only trusts, legal (beyond the five-year look-back) asset transfers, purchase of exempt assets and many other less common practices.

Moses also recently authored a paper for OSPRI on this issue.

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