Wednesday, June 12, 2002
Seattle--
***
This is our first LTC Bullet in a month. We'll
be back online with new Donor-Only Zone content within a few days.
We hope you enjoyed the respite. In
the meantime, your Center for Long-Term Care Financing has been very busy with
other business. Center President
Steve Moses conducted LTC Graduate Seminars in Pittsburgh and Philadelphia on
May 13 and 14. (See below for some
feedback.) He addressed the
Pennsylvania Association of Non-Profit Homes for the Aging in Pittsburgh on May
15; the Private Care Association in Washington, DC on May 16; the 2nd
Annual Life Insurance Selling, Selling to Seniors Conference in New Orleans on
May 17; "A Long-Term Care Planning Summit:
What You Need to Know to Protect Your Future," sponsored by The
California Association of Health Facilities and The California Partnership for
Long Term Care in Sacramento, CA on May 19; and The Forum at the Evans School,
University of Washington, Seattle on "The Personal and Public Challenges of
an Aging Population" on June 11. In
between, Steve interviewed three experts on the new German long-term care
insurance system in Bielefeld, Berlin and Heidelberg, Germany.
We'll report on those interviews in a future LTC Bullet. ***
***
On June 27, 2002, the National Chamber Foundation will host “Long-Term Care
and Business: Creating and Paying
for Choices,” at the U.S. Chamber of Commerce in Washington, D.C.
This half-day event will gather senior government and industry leaders to
examine the roles of business, government and consumers in preparing for and
financing long-term care needs. The
symposium will address how providers, financial services institutions,
regulators, and employers can work together to ease the financial burden that
accompanies long-term care. Center
for Long-Term Care Financing President Stephen Moses will moderate a panel on
"The Road Ahead: The Financing
Of Long-Term Care." For more
information on the event, including the fee to attend, and to register, please
call Courtney Vital at (202) 463-5500 or go to http://www.uschamber.com/ncf.
***
***
Your next opportunities to attend a Center for Long-Term Care Financing LTC
GRADUATE SEMINAR are:
August
26, 2002: SEATTLE, WASHINGTON, 9 AM
to 5 PM at the Courtyard Bellevue, 14615 Northeast 29th Place, Bellevue, WA,
98007, 425-869-5300 for directions. Continuing
education credits pending approval.
August
28, 2002: PORTLAND, OREGON, 9 AM to
5 PM at the Alderwood Inn Hotel, 7025 Northeast Alderwood Road, Portland, OR,
97218, 503-255-2700 for directions. Continuing
education credits pending approval.
For
details on the LTC Graduate Seminar including a syllabus and registration
instructions, go to http://www.centerltc.com/ltc_grad_seminar.htm.
Here's
some feedback from our most recent LTC Graduate Seminars:
"WOW!
what a great meeting. I really appreciate your insight."
(Pittsburgh LTC Graduate Seminar, May 13, 2002)
"Just
wanted you to know that the Graduate Seminar was everything we hoped for . . . a
day to 'invest in ourselves,' to get away from the trees and 'see the forest'
and to co-mingle with like-minded LTC professionals." (Pittsburgh LTC
Graduate Seminar, May 13, 2002)
"Although I have attended many workshops on the
topic of long-term care, your superb presentation offered a unique and
enlightening perspective. . . . You
addressed the hidden reasons behind the challenges we face as long-term care
specialists." (Philadelphia LTC Graduate Seminar, May 14, 2002)
"Your
presentation yesterday was excellent! . . .
Anyone who is truly serious about selling LTCI needs to hear it."
(Philadelphia LTC Graduate Seminar, May 14, 2002) ***
LTC
BULLET: CONNECTICUT ATTACKS
MEDICAID PLANNING TO SAVE MONEY AND ENCOURAGE PRIVATE LTCI
(Our
thanks to Center Board Member and former Executive Director David Rosenfeld, JD,
MSW for the following report. Don't
miss the direct quotes from Connecticut's waiver which follow David's analysis.
They speak eloquently to the chilling effect of Medicaid planning on the
market for private LTC insurance.)
The
single greatest barrier to increasing the role of private LTC financing--and
thereby reducing the strain on public programs and providers--is the steady
expansion of public financing beyond its intended safety-net function and the
resulting impact on perception and behavior.
Despite recent budget-related cutbacks across the nation, the extent to
which Medicaid and Medicare do fund LTC services for a growing segment of the
population anesthetizes the public from taking seriously the LTC risk.
Why save, invest or insure when it seems the government pays for
long-term care? This perception
problem is made worse by the success of professional Medicaid planners who help
their clients maneuver and manipulate Medicaid’s ostensibly strict eligibility
rules to qualify for taxpayer-financed benefits without spending down.
The State of Connecticut recognizes the negative impact
of Medicaid planning on promoting personal responsibility and a more evenly
balanced LTC financing system and is proposing to do something about it.
Connecticut’s Department of Social Services recently submitted a
groundbreaking waiver proposal to the Center for Medicare and Medicaid Services
(CMS; formerly the Health Care Financing Administration).
The “Transfer of Assets Section 1115 Research and Demonstration Waiver
Proposal” seeks to modify several Medicaid eligibility provisions with a
central goal of reducing asset transfers for the purpose of qualifying for
Medicaid and thus increasing the extent to which people pay privately for their
care. This change of behavior, in turn, would realize substantial
savings for the state’s Medicaid program.
Section 1115 of the Social Security Act authorizes the Secretary of
Health and Human Services to waive State Medicaid Plan requirements of Title XIX
for purposes of carrying out an approved demonstration project.
The CT Department of Social Services is seeking waivers
specifically to:
(1)
change when a penalty period is imposed for individuals who transfer
assets for less than full market value in order to qualify for Medicaid--tolling
the penalty period from the date of eligibility for Medicaid LTC services rather
than the date of the transfer because the latter method allows for transfer
strategies which render meaningless the imposition of a penalty (see below for
an explanation of the notorious “half-a-loaf” strategy);
(2)
lengthen the look-back period for transfers of real property from 36 to
60 months; and
(3)
create threshold transfer levels that would allow cumulative transfers
within certain dollar and date ranges to be disregarded in order to streamline
the application process.
The Department predicts savings of more than $87 million
over five years and expects the project to be a model for others states and the
federal government. The proposal
submitted to the State Legislature can be viewed online at http://www.dss.state.ct.us/pubs/TOA_proposal.pdf.
The proposal itself does an excellent job of presenting the desired rule
changes, gives helpful scenarios to explain how the changes would affect
Medicaid applicants, and provides detailed budget, caseload and cost projections
with and without the requested waiver changes.
Most
important to friends of the Center for LTC Financing, however, is the extent to
which the CT Department of Social Services makes the critical connection between
Medicaid planning and the demand for private financing alternatives such as
long-term care insurance. It is
this connection that lawmakers across the country must address sooner or later
if they intend to preserve a public safety net program for the truly needy in
the face of higher costs, lower tax revenues, and daunting demographics.
The
Center for LTC Financing proposes reforming our LTC financing system along the
lines of its “LTC Choice” framework described online at http://www.centerltc.com/pubs/CLTCFReport.pdf.
By requiring Americans to address long-term care planning early and by
modifying the spend-down requirement for government assistance, the “LTC
Choice” plan would virtually eliminate the market for Medicaid planning
services. In the meantime, however,
the CT Department of Social Services should be commended for its honest
articulation of the problem, proactive approach, and thoughtful defense of its
positions. We only wonder aloud how
quickly industrious Medicaid planners would learn to evade even the newly
proposed rules.
Below are a few excerpts from the waiver proposal and the
Department’s responses to public comments submitted during a formal comment
period. Please direct all questions
and requests for additional information to the CT Department of Social Services
(http://www.dss.state.ct.us/;
860-424-4908):
“Although
the federal transfer of asset (TOA) policy was intended to treat all individuals
equitably, advance planning could significantly nullify its intended purpose.
The current federal TOA policy has resulted in the widespread use of
estate planning to intentionally shift assets to third parties while allowing
the transferors to qualify for the Medicaid payment of LTC services.
Estate planning literally diverts millions of dollars that could be used
to pay for LTC services and discourages individuals from seeking and purchasing
LTC insurance to meet their needs for a continued quality of life.
These tactics have impeded Medicaid in fulfilling its intended role as
payer of last resort.” (p. 1)
“Through this proposed Demonstration project, the
behavioral changes of applicants would be evaluated with the expectation that
the revised TOA policy would encourage personal responsibility and the use of
LTC insurance, while also realizing substantial savings to the Medicaid program.
Nursing facilities should also benefit as this Demonstration project will
increase the duration and number of privately-paid periods. Additionally, the
State believes that this Demonstration project could be replicated by other
states as a model. Finally, this
Demonstration project would provide the Centers for Medicare and Medicaid
Services (CMS) with the empirical evidence needed to re-evaluate the transfer of
asset rules under the State Medicaid Plan and effectuate the necessary policy
changes to discourage estate planning to circumvent these rules.”
(p. 2)
“The
Department acknowledges the desire of individuals to provide for their families.
We believe that currently exempt transfers of assets to spouses, disabled
children, individuals who provided care that delayed the need for
institutionalization and transfers made exclusively for reasons other than to
qualify must be allowed to continue. However
in those situations where gifting is done in order to avoid paying
individuals’ long term care needs, we object to the shifting of this
responsibility onto the Medicaid program.
“We
believe that current transfer of asset rules result in unfairness -- unfairness
to those not savvy enough to take advantage of the loopholes and unfairness to
the taxpaying public. The length of
a transfer of asset penalty period is determined by dividing the amount
transferred by the average cost of private nursing home care in Connecticut,
currently $6,779 per month. Current
Medicaid rules, however, start the penalty period when the transfer occurs –
not when Medicaid is needed. As a
result, individuals can transfer up to $6,779 every
month, regardless of whether they are institutionalized or even need home
care services, provided that they retain enough assets to pay for nursing home
or home care services (if needed) for the month in which the transfer occurs.
This strategy, commonly referred to as the “half-a-loaf” strategy,
shifts millions of dollars to third parties that could be used to pay for long
term care services. Given the
current state of the economy, preserving the wealth of others could come at the
expense of other important programs.
“Current
transfer of asset practices, although perfectly legal, will cost the Medicaid
program more than $87 million during the next five years. . . .
The $87 million cost is borne by a program designed to serve the neediest
individuals and is ultimately paid by the public.
With this waiver, the Department seeks to restore Medicaid as the payer
of last resort for needy individuals.” (DSS Responses to Public Comments, pps.
1-2)
“In our waiver
proposal, we describe long term care insurance as a mechanism that individuals
who make non-exempt transfers may use to meet their long term care obligations.
The argument that individuals who make non-exempt transfers cannot afford
long term care insurance fails to account for the fact that part of the
transferred assets could be used to pay for this insurance.
We also believe that it is reasonable to expect that recipients of
transferred assets could help pay for long term care insurance as they benefit
from the gifting.
“In addition, individuals may not presently be inclined to purchase long term care insurance as current transfer of asset penalty rules are easily circumvented. The Department stands by its contention that strengthening penalty periods will make long term care insurance a much more viable alternative. The waiver would encourage individuals to seek long term care insurance at a younger age when health considerations and affordability considerations are not as great.” (DSS Responses to Public Comments, p. 5.)