Medicare Drug Proposal Meeting Resistance in Rural Areas

  Written By: Attorney Jeffrey A. Marshall , CELA*

  Congress is currently grappling with variations on President Bush's tax cut proposal.  While it seems likely that some tax cuts will be enacted, it is difficult to anticipate what the final tax cut will look like.  Lined up right behind the tax cut is Congressional consideration of the President's Medicare reform proposal.  That proposal is intended to encourage the increased involvement of the private sector in Medicare.  

Given stiff opposition even from Republican members of Congress, the Administration has backed away from the President's original proposal that seniors be required to drop their traditional Medicare coverage to get any significant prescription drug coverage.  Still, the Administration would like to put the private sector in charge of providing most of the limited prescription drug benefits Congress eventually approves.  

The Bush administration's current proposal would offer prescription drug assistance in the traditional Medicare system through discount cards and some coverage for low-income beneficiaries. Additionally, two other options would be offered through private insurers.  A private system called "Enhanced Medicare" would provide beneficiaries with expanded prescription drug coverage, full coverage for preventive care, and lower out-of-pocket costs for hospital stays. "Medicare Advantage" would be similar to the current Medicare+Choice program, which provides beneficiaries with a selection of private health plans with and without prescription drug coverage although, there is no guarantee of a drug benefit.  The Wall Street Journal, however, reports that the Administration's current proposal is likely to meet serious resistance from legislators from rural areas because of "private health plans' record of shunning less profitable rural areas".  

According to an article that appears in the May 1^st issue of the Journal, rural counties have a greater proportion of low-income elderly residents than urban areas, but they have fewer health care providers per capita to serve that population. The Journal article also states that about 90% of rural counties lack access to Medicare+Choice plans. Areas with sparse populations and few physicians do not provide profitable environments in which to base a private health care network, according to the Journal.

Some members of the Senate Finance Committee, which must approve any Medicare reforms, have expressed concern about the feasibility of relying on private insurance to offer benefits in rural areas. Committee Chair Charles Grassley (R-Iowa) has said that he opposes any major discrepancies between a drug benefit offered to beneficiaries in the current Medicare system and one offered under new private programs. Sen. Judd Greg g (R-NH) has also questioned the proposal.  At this point, it appears that major modifications will be required if the Administration wants to succeed in its goal to have as much of the prescription drug benefit as possible run by the private sector. 

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Don't Confuse Medicaid and Tax Rules

Written By: Attorney Jeffrey A. Marshall , CELA*

  Entering into a nursing home often causes families to worry about how long their loved one's assets will last before they are entirely used up. With nursing home costs averaging over $5,300 a month in Pennsylvania , the prospect of losing everything is very real. Many families are interested in gifting cash or property from the assets of the nursing home resident before everything is gone.  But, they frequently confuse Medicaid rules with the IRS rules regarding gifting.

Anyone who wants to reduce a nursing home resident's assets by gifting must understand both the IRS gifting rules and the Medicaid gifting rules. The rules are significantly different -- and the Medicaid gifting rules are far more liberal than many people think. Under IRS rules, annual gifts of $11,000 or less per recipient have no tax consequences.  But, gifts of much larger amounts may be permitted by Medicaid.  And it is Medicaid rules, not tax rules, that determine what a nursing home resident has to pay towards the cost of care.  

This means that, in many cases, the well-informed person will be able to gift away far more than would be permitted under IRS rules.  Because the rules are so complicated, this type of planning should be done with the guidance of an experienced elder law attorney.

Another concept which confuses families is the Medicaid "look-back" rule for gifts made by a nursing home resident. Many people think that gifts have to be made 36 months before seeking eligibility for Medicaid.  But this is most often incorrect.  Although time is your enemy in Medicaid planning, and having more time before applying for Medicaid almost always better, most people can be assisted with preserving a significant amount of assets even if a family member has been in the nursing home for years.

A client came in a few weeks ago. Her husband had been in the nursing home for two years.  When he entered the facility they had $180,000 in investments. Now, two years later, and with only $100,000 left, she wanted to know if anything could be done to get her husband on Medicaid. After reviewing her situation, there was good news and bad news to deliver. The good - her husband was eligible for Medicaid immediately, subject only to the time it would take to go through the application process, and the remaining $100,000 would all be preserved for her. The bad - The entire $180,000 could have been preserved under Medicaid rules and the husband could have received Medicaid two years ago if she had just known to get expert help at that time.  Now, that extra $80,000 is gone forever.   

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Misconception #7:

I have to be in a nursing home for Medicaid to help me pay for long term care

  Here is the next installment in our discussion of some of the most prevalent misconceptions about Medicaid and the rules for payment of nursing home costs. If you would like to read past Medicaid Misconceptions, go to our website at:  www.paelderlaw.com and choose "Newletters" on the left hand side of the screen.

The Truth:   Medicaid can be used to help people stay in their homes rather than a nursing home.  There are several programs that can be used to help pay for long term care services in the home.  One of the most important programs for seniors is called the 60+ Waiver program. It is called a "waiver" program because the normal Medicaid rules are "waived" (not followed). 

If you qualify for the 60+ waiver program, a care manager from the office of aging will assess your needs and help you obtain and pay for the services you require to stay home. To qualify, you need to be over age 60, be clinically eligible for nursing facility care, and be capable of being appropriately cared for at home with the help of supportive services.  There are also financial qualification requirements that are somewhat different than the financial rules for Medicaid paid nursing home care.  For many people, especially those who are married, it can be much simpler to qualify for Medicaid for home care than for nursing home care. 

Helping you consider all of your options, including staying home, is an important part of the services that we provide to our clients at The Elder Law Firm of Marshall, Parker & Associates'. 

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Did you know. past issues of the Elder Care Law Alert are available on our website at:

www.paelderlaw.com/news.html

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  "Understanding the Rules: Medicaid  Payment for Long Term Care"

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*Attorney Marshall is certified as an Elder Law Attorney by the National Elder Law Foundation under authorization from the Pennsylvania Supreme Court