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By John M. Bigler If you read last month's article you saw that I was optimistic about certain trends that have taken place recently. Not only were Governor Pataki's harsh proposals to revise the Medicaid system in New York rejected by the legislature but also the State of Connecticut withdrew its request to the federal government for permission to make the state's Medicaid laws more strict than the federal government allows. I had expressed my usual optimism that maybe things were looking up for older Americans who were unfortunate enough to have the wrong disease, not covered in full by Medicare and medical insurance. However, there is now a new threat to those hoping to avoid financial ruin as a result of long-term catastrophic illness.
The Medicaid program has always encouraged each state to engage in estate recovery. New York State authorizes recovery only from the probate estate. Assets in the probate estate are those assets that are in the individual's name alone at the time of death. Those assets do not include anything held jointly with another person or in trust for another person, or anything with a designated beneficiary. A home with a retained life estate for a Medicaid recipient is not subject to estate recovery because the life estate terminates on death and so there is no asset that passes through the individual estate subject to recovery. Any assets held in a trust are also not subject to estate recovery because the trust has designated beneficiaries. Proper planning allows an excellent chance of protecting assets from Medicaid recovery in New York after death. The transfer of property with a retained life estate or into an irrevocable asset management trust will allow the assets to pass through the taxable estate, which includes anything that passes through an individual's name but not through the probate estate. However, there is concern. There has been some suggestion that New York should expand its estate-recovery attempts to include any assets passing through the taxable estate. That would mean even assets that are held jointly or in trust or with beneficiaries could be subject to an estate recovery. An IRA, which is considered an exempt resource for Medicaid and which names a designated beneficiary on death, is currently safe from recovery but might not be if more aggressive estate-recovery is attempted. The article in the Wall Street Journal notes that several states that have opposed the idea of aggressive estate-recovery have now done an about face. Twice West Virginia challenged the federal government directly to do estate recovery, at one point indicating in court papers that it found the practice "abhorrent". Now that the state if facing a significant deficit in its Medicaid budget, it has started to make attempts to recover nursing home costs. West Virginia is not only going after homes left in the name of the deceased but also cars, small bank accounts and even life insurance policies. Texas is another state that repealed legislation to allow estate recovery but has now once again started attempts at recovery. The Massachusetts state legislature had authorized the state to make claims outside of the probate estate including jointly held accounts. However, in Massachusetts there was fierce opposition to that bill and thankfully it was repealed. Certainly $46 billion is a significant expense. However, this is the greatest and wealthiest country in the world but the only civilized country where getting the wrong disease can wipe out a hard-working middle class person's lifelong savings. Again, we do have a war to fight on the other side of the world, a war for which it seems there is an unlimited budget with no end in sight, costing billions and billions of dollars. Maybe we need to start an advertising campaign. We could have ribbons to stick to our cars that would say "I support middle-class older Americans with long-term catastrophic illness" or "God Bless older Americans with catastrophic illness". Maybe then spending money to help unfortunate middle-class older Americans would not be looked on so negatively.
Reprinted with permission of the Suffolk Times © 2005 [ Contact Us ] [ Guestbook ] [ Email ]  The Law Offices of John M. Bigler, Attorney At Law 1421 Wantagh Avenue, Wantagh, New York 11793-2206 1-888-ELDER-LAW · 516-409-6565 · Fax: 516-409-6522 E-Mail: info@biglerlaw.com · Web Site: www.biglerlaw.com |
A recent article in the Wall Street Journal pointed out that a number of states are planning aggressive methods to recover the expenses that they have laid out for Medicaid recipients. The attempts center around estate recovery - recovering benefits after the death of a Medicaid recipient. Once again the justification is that Medicaid is a program for poor people and that "wealthy" seniors who are artificially impoverishing themselves should bear the burden of long-term care. Proponents of aggressive estate-recovery point out that the Medicaid program costs an estimated $290 billion in 2004, which is a 7.9% increase from the previous year. Of that amount $89 billion went to pay for long-term care, including $46 billion for nursing-home care. The article notes, as we all know, that the Bush administration is looking for ways to reduce federal spending on Medicaid and the aim will be to reduce the cost by $10 billion over five years.