Article on Medicaid's Uncertain Future
This is a very good article about the future of Medicaid.
MEDICAID’S UNCERTAIN FUTURE BY
THOMAS D. BEGLEY JR.
Congress recently passed a Budget Resolution that cuts $10 billion from the federal Medicaid program over the next five years. The Budget Resolution is a goal, not a law. No particulars were included as to where these cuts would be made.
Michael Leavitt, the Secretary of Health and Human Services, is in the process of appointing a Commission to study this issue and to make recommendations to Congress by mid September. Another group particularly interested in the outcome of this issue is the National Governors Association (NGA). States pay for almost 50% of Medicaid costs, and these expenditures are straining state budgets. Many states have enacted tax cuts over the past few years. On June 1, 2005, the NGA Executive Committee adopted a Policy Position entitled, “EC-16” Medicaid Reform Policy. Portions of the policy are likely to be recommended by the Commission for inclusion in any new Medicaid statute. Important points of the NGA Policy Position include the following:
• Transfers of Assets. “Medicaid reform must include changes that increase the penalties for inappropriate transfers, restrict the type of assets that can be transferred….” This means that transfer-of-assets strategies are likely to be severely curtailed. Therefore, Oast & Hook is encouraging all of its clients to make immediately all transfers recommended by the firm. If transfers were scheduled to be made on a gradual basis, then the transfer schedule should be reconsidered. Even asset transfers from IRAs must be looked at in this new light. Oast & Hook encourages its clients to contact the firm with any questions regarding the transfer of assets for Medicaid eligibility purposes.
• Reverse Mortgages. The Governors are recommending that Congress require homeowners to pay for their care from reverse mortgages before they are permitted to apply for Medicaid.
• Family Contribution. The Governors are encouraging Congress to adopt “policies that encourage individuals and their families to self-finance care rather than rely on Medicaid.” This may mean that adult children may be required to contribute toward the care of an unhealthy parent.
• Cost Sharing. The Governors are urging Congress to adopt changes in Medicaid’s cost-sharing rules to establish “enforceable premiums, deductibles, or co-pays.” This appears to require the persons receiving Medicaid to pay a greater portion of their care.
• Individual Health Care Tax Credits. The Governors are suggesting that Congress make a tax credit available for low-income persons who would then have their employers deduct an additional payment, which combined with the tax credit would be used to purchase medical insurance. The irony of offering a tax credit to a low-income person and then requiring the person to purchase medical insurance was apparently lost on the Governors.
• Corporate Welfare. The Governors point out that many large multi-national corporations provide health care to their retirees. This puts those companies at a competitive disadvantage with the rest of the industrial world since other countries have universal health care and large companies in those countries do not need to pay for employee or retiree health care. The Governors are suggesting that Congress shift some of this cost from the corporations to a
In conclusion, those who have begun Medicaid asset protection planning should quickly conclude those plans while the opportunity still exists. The future is murky, at best.
Thomas D. Begley Jr. is an attorney with the New Jersey law firm of Begley and Bookbinder, and he concentrates his practice in the areas of elder law and disability law.