RD93 - HB 2601 (2005) Medicaid Asset Transfer Allowances

Executive Summary:

In 1965, Title XIX of the Social Security Act created the federal-state program Medicaid, to provide health insurance to primarily low-income children, parents meeting specific income thresholds, pregnant women, the elderly, and individuals with disabilities. Participation in Medicaid is not mandatory. However, if a state establishes a Medicaid program, the state is required to provide certain basic services such as nursing facility care.

Medicaid has become the nations’ primary payer for nursing facility services. In 2003, Medicaid provided $51 billion in nursing facility care in the United States. During the same year, Virginia’s Medicaid payments to nursing facilities totaled $547,287,699.

The improper transfer of assets to qualify for Medicaid payment for long-term care services has received national attention as growing Medicaid budgets have placed additional strains on state finances. Several initiatives, that have been promoted as methods for curtailing Medicaid long-term care costs, are addressed in this report including: additional restrictions on Medicaid asset transfers, estate recovery programs, reverse mortgages, long-term care insurance tax incentives, and long-term care partnerships. In response to study findings, JCHC introduced legislation that: (1) amends Title 58.1 of the Code of Virginia to provide a one-time tax credit (of 15 percent of the insurance premiums paid within the tax year) for individuals who purchase long-term care insurance; and (2) requests (by joint resolution) that the Department of Medical Assistance Services and the Joint Legislative Audit and Review Commission monitor changes in Medicaid restrictions on sheltering assets.

On behalf of the Joint Commission on Health Care and its staff, I would like to thank the numerous individuals, agencies, and associations that assisted in the completion of this study, including the Department of Medical Assistance Services and numerous advocacy groups.