A Discussion of Medicaid Eligibility Rules and Potential Reforms
David P. Bernstein
U.S. Treasury Department
November 26, 2008
This short paper is a discussion of issues involving Medicaid eligibility rules for nursing home benefits and Medicaid estate planning. The debate over the Medicaid long term care benefit is a classic example of the broader debate over the role of government and the role of the free market. One side of the debate stresses personal responsibility, the belief that private sector solutions are available for most individuals, and the view that the government role should be limited to helping the truly destitute. The other side of the debate believes government has a role in sharing catastrophic risks, especially if private market solutions are unaffordable.
Medicaid eligibility rules are governed by competing objectives. First, the government has an obligation to insure scarce Medicaid resources are used by needy households. Second, Medical eligibility formulas should not impoverish the spouse or family of the Medicaid recipient who remains in the community. This paper discusses five Medicaid eligibility issue: (1) the treatment of countable versus non-countable assets, (2) the transfer of assets between the nursing home and community spouse, (3) the use of annuities, (4) unanticipated inheritance, and (5) prohibitions against Medicaid planning that seek to balance between these competing objectives.
Number of Pages in PDF File: 11
Keywords: Medicaid, Long Term Care, Insurance, welfare, nursing home
JEL Classification: I38, I18working papers series
Date posted: November 28, 2008
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