Nowhere To Turn For Help

After almost three months in the hospital during the winter of 1999, Mr. Davis entered a nursing home. His wife was surprised that Medicare would not pay for any of his nursing home expenses. She did learn that Medicaid would cover the costs, however, she also heard that there is a federal law that requires state Medicaid agencies to try to recover some of the money they spend on Medicaid from the Davis’ family assets.

Mrs. Davis has been left alone and without the information to help her make proper decisions regarding her husband's care. She has no idea what is about to happen her family's life savings and assets.

Mrs. Davis heard correctly, in the face of a growing older population and rising Long Term Care costs, it has become very expensive for the government to pay for Long Term Care for all the people who cannot afford to pay for their own care. Since passage of the Omnibus Budget Reconciliation Act of 1993 (OBRA '93), Congress has required states to try to recover the cost of Medicaid benefits from the estates of certain nursing home residents and older persons receiving home and community-based services. This law applies to individuals who were age 55 or older when they received Medicaid. The Davis' situation is not unique. Mrs. Davis will most likely exhaust her family's life savings and assets, and then they rely on Medicaid to pay for their care.

The Omnibus Budget Reconciliation Act of 1993 (OBRA ’93) provided that gifts of assets within 36 months (60 months for gifts to certain trusts) prior to applying for Medicaid could delay one’s eligibility for benefits. Other provisions of OBRA ’93 allowed a state to recover from a person’s estate (including trusts, jointly held assets, etc.) all of the payments made by Medicaid. Even gifts to one’s spouse do not help, since the combined assets of couples must fall within specified eligibility levels.

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