ElderLawAnswers Blog

Study Suggests Medicaid-Sponsored Home Care

A recently released study of Medicaid-financed nursing home use over 18 months in 2001 and 2002 finds that in states such as Oregon that have extensive community based long-term care services, Medicaid-covered nursing home stays were shorter than the national average. The numbers suggest that where seniors have alternatives, their nursing home stays are more likely to be for acute care following a hospitalization or for a shorter period at the end of life.

The study, "Medicaid-Financed Nursing Home Services: Characteristics of People Served and Their Patters of Care, 2001-2002," conducted by Matehematica Policy Research for the Office of Disability, Aging and Long-Term Care Policy for the U.S. Department of Health and Human Services, reports that over half of Medicaid-covered nursing home residents do not become eligible for benefits until after they move to a nursing home, with 29 percent obtaining coverage within six months of moving to the nursing home, 5 percent between six and 12 months, 7 percent between one and two years, and 9 percent after more than two years.

In 2002, more than 45 percent of nursing home costs nationally were paid by Medicaid, but a larger proportion of nursing home residents were Medicaid beneficiaries since even on Medicaid, some of the cost of their care is covered by Medicare, their own contributions from income, and other sources. In terms of all Medicaid expenditures, while aged and disabled enrollees make up about 25 percent of Medicaid beneficiaries, they account for 80 percent of Medicaid expenditures.

The report confirms the continuing trend that most nursing home residents are among the older old. The average of nursing home residents who entered in 2002 was 76 years, with 32 percent each being between the ages 75 and 84 and 85 and older. Twenty percent were under age 65 and 16 percent between ages 65 and 74.

Guess What? The Elderly Are Not Bankrupting the Health Care System

According to a recently released study by the International Longevity Center-USA, Myths of the High Medical Cost of Old Age and Dying, it's not true that the aging of Americans and over aggressive care at the end of life are major causes of increasing health care costs in the United States.

According to the report, studies that have looked at the causes of increased health care spending conclude that only 5 to 10 percent of the increase may be attributed to the aging of the population, the other 90 to 95 percent resulting from other causes.

Many have predicted that the already high cost of caring for seniors will skyrocket in about 20 years when the oldest baby boomers start reaching age 85.  The new report says that this is not necessarily so if better health care can reduce the prevalence of chronic disability.  In fact, the percentage of chronic disability among seniors decreased by 6.5 points over the period between 1982 and 1999.

While studies do show a high percentage of Medicare costs going to care during beneficiaries' last year of life, further examination shows that this is not necessarily due to over-aggressive care being provided.  And these costs as a percentage of overall Medicare spending have remained stable over the years.

To download or purchase the entire report, go to www.ilcusa.org.

GAO Says Few Asset Transfers Occurring. Are They Right?

In a recently-published report, Medicaid Long-Term Care: Few Transferred Assets before Applying for Nursing Home Coverage; Impact of Deficit Reduction Act on Eligibility Is Uncertain, the Government Accounting Office finds that few seniors are transferring assets in advance of entering a nursing home and applying for Medicaid coverage.

This, of course, runs counter to the perception of the Congressional proponents of the Deficit Reduction Act transfer restrictions that such transfers were rampant.  And, admittedly, thousands of elder law attorneys across the country are advising seniors and their families how they may protect their hard-earned savings in the face of high long-term care costs.  How do we reconcile these perceptions and the GAO conclusions?

The GAO reviewed 540 Medicaid nursing home applications in three states -- Maryland, South Carolina and Pennsylvania -- and found that 90 percent had nonhousing assets of $30,000 or less, 85 percent had annual incomes of $20,000 or less, and that only one-fourth of applicants owned homes with a median value of $52,954.  Of the approved applicants, 47 had transferred assets with a median value of $15,152 causing a period of ineligibility that had expired by the time they applied for benefits.  These are the people likely to be adversely affected by the new DRA rules.

Nationally, the study reports, 70 percent of nursing home residents had less than $70,000 in nonhousing assets when they entered the facility and 11 percent had nonhousing resources of more than $300,000. 

Of the 540 individual applications the GAO reviewed, only two were denied for having transferred assets.  Of the 465 approved applications, 47 had transferred assets during the three years prior to application, but the transfer penalty had expired by the time they applied, though the proportions varied among counties from a low of 4 percent to a high of 24 percent of approved applications.  The median penalty resulting from these transfers was two months.  The median amount transferred was $15,152 with the largest transfer being $201,516. 

So, what can we make of these numbers?  And what do they mean in terms of the DRA?

First, it seems like only about 10 percent of nursing home residents who apply for Medicaid are sufficiently affluent to transfer substantial assets.  Second, the study did not pick up applicants who had transferred assets more than three years prior to applying for Medicaid.  In other words, there may be asset transfers, both large and small, that don't appear on Medicaid applications by reason of being done as appropriate asset protection planning.  Third, the DRA is likely to adversely affect at least 10 percent of applicants, most of whom did not transfer a substantial amount of assets -- not the people who should be targeted for transferring assets. 

Long-Term Care Insurance Companies Criticized for Denying Claims

An article in the March 27, 2007, issue of The New York Times describes the practice of some insurance companies setting up bureaucratic barriers to the filing of claims for coverage in order to save money.  The article focused on three companies, Conseco, Penn Treaty, and Banker's Life and Casualty, which appear to purposely create roadblocks to coverage claims.  Complaints about Conseco number one for every 383 of its policies, which is a whopping 32 times the rate of complaints received by the largest long-term care insurance provider, Genworth Financial.  Penn Treaty receives complaints at a rate 10 times that of Genworth.

We recently had a client with a related issue, the practice of insurance companies to terminate policies if the premium payment arrives late.  Our client had been hospitalized when the premium was due and her niece had the bill paid after collecting mail from the client's home.  The client received a check back from the insurance company saying that payment had arrived late and that therefore the company could not reinstate the policy.

A review of the policy itself indicated that this form letter misstated its terms.  In fact, the insurance company had discretion to reinstate the policy despite late payment.  I explained this to the person I reached at the company, who was unmoved by my arguments.  So I asked to speak to his supervisor.

She was quite pleasant and said she would look into the matter and get back to me, which she did.  Her investigation revealed that the company had in fact received the client's premium check on the last day of the grace period, which happened to be a holiday, so the check was deposited the following day, which was the reason the policy was terminated.  She reinstated the policy.

The good news in this story is that our client still has long-term care insurance coverage and the company responded reasonably after not too much trouble -- unlike the stories described in the Times article at other companies.  However, the insurance company made a mistake, then sent a misleading letter, and did not respond to the first call for reconsideration.  A frail, elderly policy holder may not have persisted and had the results we achieved.

The morals of this story?  Be persistent.  Get help.  Don't by a policy from Conseco, Penn Treaty or Banker's Life.

New Perspectives on Long-Term Care Financing

Speaking at Margolis & Associates'  First-Thursday breakfast in January, Andrea Cohen, CEO of Houseworks, the Boston area’s largest private home care agency, explained that the cost of care for a frail senior depends on a combination of the care needed and whether the senior lives at home, in assisted living or in a nursing home.

The common perception that home is cheapest, then comes assisted living, and finally nursing homes is not accurate. The following chart based on typical costs of care in the Boston area for a range of care from just a few hours of assistance a day to around-the-clock attention, shows that the home starts out being the most cost-effective place to live, but that ultimately the lowest-cost provider is likely to be a skilled nursing facility.

Costs of Care (Annual)

	Home	Assisted Living	Skilled Nursing Facility
Intermittent Care (16 hrs/wk)	$18,500 plus household expenses	$60,500	$114,000
Daily Care (40 hrs/wk)	$46,000 plus household expenses	$88,000	$114,000
Continuous Care (24hrs x 7days/wk)	$192,000 plus household expenses	$234,500	$114,000

One reason that assisted living becomes more expensive than home care or nursing home care in some instances is that most assisted living facilities provide little personal care as part of the basic fee. Instead, they require that such care be purchased from them or an outside provider at an extra charge. In addition, anyone budgeting the cost of care will need to factor in the cost of maintaining one’s home.

Of course, money is only one factor in choosing where to receive care. Many, if not most, seniors would like to stay home if at all possible. Other factors include the ability to access quality care whether at home or in an assisted living or skilled nursing facility, proximity to family members, the regimentation of many institutions, and even the quality of food they provide.

Click here to link to the HouseWorks web site . . .