FOCUS: HEALTH CARE
Medicaid puts greater responsibility on families for nursing home payments
Changes return focus to poor, disabled, leaving the middle class to spend down
Elderly or infirm Western New Yorkers seeking to spend down or transfer assets to qualify for Medicaid are finding it increasingly difficult because of changed rules, and a new law will make it even tougher.
The changes, designed to minimize government spending by reducing the number of people eligible for aid, are hitting many middle-class families in the pocketbook.
Advocates say the changes will return Medicaid’s focus to the poor and disabled, scaling it back to its intent. But critics say the new policies force parents to spend down their life savings after years of paying taxes.
“Families work very hard over the course of a lifetime to accumulate assets with a hope that they can pass them on to the next generation,” said Charles Beinhauer, chairman of the Erie County Bar Association Elder Law Committee.
The problem stems from the broad use of Medicaid in New York and the lengths people will take to qualify. Over 75 percent of the nursing home residents in New York are now covered by the program.
To ensure they qualify, families of residents or future residents routinely try to legally manipulate their assets to evade the financial limits. Some view such actions as playing the system, while others see them as a way to afford costly care.
Arranging eligibility
When Margaret Pierce learned her 44-year-old husband had a form of dementia and could no longer drive or work, she hired an attorney to help him qualify for Medicaid.
“I knew we had to do something to protect what we do have,” the Williamsville resident said.
Pierce consulted a lawyer in 2004, before the law changed. With the tightening rules for eligibility and asset transfers, preserving her savings would have been much more difficult today.
To remain eligible, the maximum Medicaid-countable assets she can have are $104,400. So Pierce removed herself and her husband from their parents’ wills, paid off the family house and put money in an irrevocable trust. She relies on income from her job as a dental assistant, a certification she received after returning to school, and a stipend from her husband’s previous employer.
Pierce said she does “feel remorse” for having the government pay.
“I have to grapple every day with the fact that I had to do all of this finagling and essentially make the country pay for my husband’s care,” she said. “It bothers me immensely.”
But, she said, it was the only way she thought she could provide for her children after her husband’s diagnosis.
“I didn’t have a choice. [Having an ill husband] wasn’t what I signed up for,” she said.
Cost to state
Of the 120,000 residents in nursing homes in New York, 75 to 78 percent are on Medicaid, said Richard Herrick, president and CEO of the New York State Health Facilities Association. As a result, nursing home care consumes about 14 percent of the approximately $49 billion New York State annual budget for Medicaid, or about $7 billion, he said.
“New York has by far the most elaborate Medicaid program [of] anyone in the country, because they have been willing to spend more money,” said Robert Helms, resident scholar in health policy at the American Enterprise Institute, a conservative think tank.
To qualify for Medicaid, an individual must disclose all assets — from bank accounts to vacation homes — to the county Department of Social Services. A single individual can have up to $13,050 in assets.
If the individual is married to a “community spouse,” a person who is not in a facility, the spouse can keep between $74,824 and $104,400, depending on the total assets they had before going into a nursing home. The community spouse can also keep a house and a car.
To determine the length of the penalty period, the county looks at how much money a Medicaid candidate has gifted for less than fair market value within the look-back period.
To calculate a penalty period, a person can divide the total amount of money they moved around during the look-back period by the average monthly cost of skilled nursing for their region, Beinhauer said. For Western New York, the average monthly cost is $7,066.
For example, if a person gave $100,000 to his children before applying for Medicaid, they would have a little longer than 14 months to wait before the government started paying.
That’s not to say all gifts will cause delays. Beinhauer said certain gifts can be justified.
“If you can establish a pattern of gift making and you were in good health when you made the gift, for example, you could argue that gift should not be considered a sanctionable transfer,” he said.
Accepted maneuvers
Prepaying burial costs and funeral expenses is an easy way to spend down money legitimately, said Linda Stravalaci Grear, an attorney at Amherstbased Hogan Willig. Burial-related costs for a spouse, son, daughter or sibling are not counted as part of one’s assets, she said.
A house can also be transferred in several ways so that the transaction is exempt. If a child is living with a parent for two or more years or a sibling for at least a year, the applicant can transfer the deed without the house counting as an asset, Grear said.
Jeff Baetzhold, of Cheektowaga, saw the law’s impact up close when he consulted an elder law attorney in July because his mother-in-law needed skilled nursing.
“According to the law, there was nothing that could be done,” he said. His mother-inlaw will have to privately pay for care until her money runs out.
But those who enter a more desirable nursing home with private pay only to run out of money and go onto Medicaid can create a financial headache for the facility. The government pays less than a private payer, Herrick said.
For every day a Medicaid resident lives in a nursing home, the facility loses an average of $20, Herrick said. He said that nursing homes with more than 70 percent Medicaid occupancy can run into financial trouble.
Beechwood Homes, a nonprofit nursing home in Getzville, budgeted for a little over 50 percent of Medicaid residents this year, said Kathy Nyquist, administrator at the nursing home.
“Sometimes, the only applicants we have are Medicaid,” she said. “We don’t always have the luxury to pick. . . . Right now, we have more Medicaid residents than we budgeted for.”
Nyquist said that while the facility charges $9,000 per month for a semiprivate room, Medicaid reimburses it with only $4,200.
Applicants who can afford at least a year in the facility are becoming harder to find, she said.
Facilities now ask for financial documentation when someone applies for placement. “Whether it’s 100 percent accurate or not is always debatable,” Herrick said.
Since nursing homes prefer residents who can pay out-of-pocket for a while, Grear recommends paying privately for four to six months before going on Medicaid to secure a spot at a more desirable facility.
Baetzhold, whose mother-inlaw could not qualify for Medicaid, said that caring for the elderly should be a political priority for the government.
“These senior citizens have worked 50, 60 years paying taxes to this government, and now this government is not going to take care of them,” he said. “You go over to China or Japan and they worship their senior citizens, but not this country.”
But experts say the time is fast approaching when the money could run out.
“It seems to me that the country can’t afford to have more and more entitlements,” Helms said. “Whenever you set up a program like this, you create a situation where people on the fringes take advantage of it.”
Even Grear admitted that she understands the change.
“I can see why they tried to close the door,” she said. “Am I happy about it? Not really.”
