Some would have it that seniors transferring assets to achieve Medicaid eligibility is a widespread phenomenon. Study after study has shown this assertion to be a myth, and now a new study can be added to the list. A national survey of 21,853 seniors over the age of 50 shows that between 1996 and 2008, only ten percent of the survey participants who were not already on Medicaid spent down their assets to the point of Medicaid eligibility. In addition, the survey found that 46.1 percent of Medicaid-eligible seniors never used any Medicaid long-term care services at all, even though they met the financial qualifications.
In the study, prepared by RTI International for the SCAN Foundation, investigators found that in most cases, beneficiaries who spent down their resources and qualified for Medicaid were not in good financial shape to begin with. According to the researchers, "median total wealth less individual retirement accounts (IRAs) for the spend down group was $33,000, compared with $135,000 among the non-spend down group. Moreover, people who spent down to Medicaid on average had one-third the median amount of non-housing assets (exclusive of tax-deferred retirement plans) at baseline than did the non-spend down group ($24,000 and $86,000, respectively), and their median net value of the house (i.e., home equity) was just $17,000, compared with $68,000 among the non-spend down group."
The study also confirms something that many elder law attorneys probably know from practical experience, namely that a clear majority of people who transfer assets to their children or family members never end up qualifying for Medicaid. According to the survey data, 25 percent of the respondents who eventually spent down to Medicaid eligibility gave their children $500 or more during the survey period, while nearly half (46.9 percent) of the participants who didn't spend down made gifts to children.
Writing about the study in Forbes, Howard Gleckman points out one obvious problem with relying on this particular study. Since the youngest survey participants were only 50 years old, "the study may understate the percentage of those who ultimately go on to Medicaid since it followed them for only 10-12 years. By the end of the survey period, the youngest people were still only in their sixties and had not yet begun to incur heavy medical and long-term care costs. Often, that doesn’t happen until people reach their early or mid-80s." Nevertheless, Gleckman writes that “the key story is that those who did spend down started with far fewer assets and income than those who did not.”
Click here to read the full study, which is titled "Medicaid Spend Down: New Estimates and Implications for Long-Term Services and Supports Financing Reform."
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