Posts Tagged ‘Health Reform Bill’

“Letter To The Editor”: Long Term Care for the Poor


In our August 19, 1996, Elder Law Issues, we reported on recent changes in federal law which will make it a crime to give away assets (in some circumstances) to qualify for Medicaid long-term care eligibility (ALTCS in Arizona). For another perspective on the issue, consider the comments of one of our readers.

Tucson businessman Bruce Ash has given careful consideration to the larger problem of society paying for long-term care costs. In a letter to Elder Law Issues, he writes:

“Health care professionals are facing a staggering task today as the cost of providing health care to America’s aging continues to rise. Not only are Americans living longer, but due to their advanced age many are presenting themselves at hospitals and long term care facilities with multiple illnesses and oftentimes little or no funds (or insurance) to pay the bills.

“Most of the elderly poor I have become familiar with over the past several years have honestly spent down their modest assets and are truly indigent. As a witness to the efforts of the Jewish and Catholic community’s efforts to provide charity care to the elderly poor, I am proud to report that Tucsonans provide millions of dollars to support charity healthcare every year through their generous gifts.

“There are some, however, who along with their family members and advisors have used the system to gain unfair advantage to all those who are truly in need. If this practice were to gain acceptance in Tucson as it has elsewhere it would cause great financial distress for hospital and long term care facilities alike.

“Is the Kennedy-Kassebaum bill the answer? Who knows. But, what I do know is that if America does not come to grips with the overall issue of elder healthcare soon we will certainly face national crisis by the time most of those born from 1945-1965 come of age. We do very little to defuse the ticking bomb unless we develop new, revolutionary ideas to better serve elder Americans in need. The medical, legal, religious, legislative and insurance fields must come together to design cost effective and humane models to deliver prevention, health and living environments which will substitute for the bloated and short sighted way we are dealing with the elderly today. The time has arrived where we must begin putting our heads together to solve this issue instead of skirting it with fancy legal footwork. I hope you will agree as Americans we are up the challenge.”

Thank you, Bruce, for your thoughtful comments. Indeed, we agree that Americans are up to the challenge; now we need to devote our collective energy to finding that solution.

Your comments and contributions are always welcome, and we hope to hear from more of you on this difficult subject.

Congress Says Some Medicaid Planning Is A Federal Crime


Congress has acted once again to make it more difficult for families to secure government assistance with the costs of long-term nursing care. This time, the changes from Washington add a much more punitive element.

In enacting the Health Reform Bill (usually referred to as the Kassebaum-Kennedy bill, after its original sponsors), Congress included a provision turning ordinary citizens in crisis into criminals. Under the new act, it becomes a crime to transfer assets (or to assist someone else to transfer assets) when the transfer causes a period of ineligibility for Medicaid long-term care.

Curiously, the criminal sanctions are imposed for actions which already cause a period of Medicaid disqualification. The new law does not extend that disqualification or change the method of calculation in any way. Apparently, Congress believes that the principal cause of the runaway cost of long-term health care is the occasional practice of giving one’s assets away to qualify for assistance. Increases in per-patient costs, and demographic shifts adding tens of thousands of older patients to nursing home beds have once again been ignored as causes of a difficult social, medical and tax problem.

The criminal sanction for making disqualifying gifts is chillingly severe. Although the new law is so poorly drafted that it is impossible to tell whether the offense is a misdemeanor or felony, the lower penalty is up to a $10,000 fine and one year in prison; sanctions might be as high as a $25,000 fine and five years in prison. Cynical observers have already noted that the new law actually provides for easier access to public support; those who make transfers causing periods of ineligibility will be disqualified from receiving Medicaid assistance for a period of months or years, but could spend the intervening period in penal institutions at public expense. The supposed new practice is being referred to, with black humor, as “penitentiary planning.”

Who is targeted by this new law? Two groups are at immediate risk: the middle class elderly and their lawyers. Poorer patients need not worry about transfers of assets–they will qualify for public benefits relatively easily. Wealthier patients will have sufficient resources to avoid any ineligibility problems associated with transfers. Congress apparently hopes to terrorize the rest into using every penny of their savings for nursing home care, without regard to how hard they may have worked to accumulate their modest wealth, or the needs of those relying on them (including spouses, disabled children or family members who may have contributed mightily to care before institutionalization).

But the real targets of the new law are elder law attorneys. While tax attorneys routinely counsel clients on how to avoid paying millions of dollars to the government in legal, ethical and financially sound ways, Congress wants to prevent elder law attorneys from giving similar kinds of information to their middle-class clients. Because the law makes criminals out of transferors and anyone who aids or abets them, lawyers, spouses, family members and care providers are all at risk of prosecution. Congress apparently hopes that by imposing this draconian penalty they can make the problem of health care for an aging population simply go away.

Who benefits from this new provision? Arguably, insurance companies (middle-aged consumers are now supposed to buy more long term care insurance policies) and nursing home operators (more patients paying higher private-pay rates means more revenues). Unfortunately, Congress has ignored root problems in both industries. Insurance is too difficult to obtain and too expensive for most prospective patients. And nursing homes will lose more to Medicaid cost cutting than they can hope to make up from higher private-pay rates.

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