Will Obamacare change Medicaid planning?
By Mike Anthony
Many of the prognosticators predicted that Obamacare would never get fully implemented. First, they figured that the GOP takeover of Congress in the 2010 mid-terms would mean it would be defunded. Then, it was figured that the Supreme Court would strike it down. And then, the backstop would be that Mitt Romney’s election would be certain to stop the law dead in its tracks. Unfortunately, none of the above has stopped the Obamacare train that is now moving forward at full speed.
A popular question now is how will Obamacare impact Medicaid planning — helping clients legally shift/reposition assets to qualify for Medicaid assistance for nursing home care.
Dos and don’ts
Obamacare does involve an expansion of Medicaid, but the expansion does not affect the long-term care portion of coverage. It affects the general health insurance coverage for the poor.
Remember, general Medicaid is a health insurance program for the most indigent in society. This program is means tested with asset and income limits similar to SSI. Obamacare changes those limits in a way that allows Medicaid to be the catch-all health insurance program for those who do not and can not afford to have insurance under the new system.
That health care system is distinctly different from the long-term care program. The things we typically think of when we think of Medicaid planning don’t apply to general Medicaid. For instance, the Community Spouse Resource Allowance only applies to Medicaid’s long-term care. Also, things that we associate with Medicaid planning, such as divestment penalties and the look-back period, also only apply to Medicaid for long-term care.
Obamacare left the eligibility rules for long-term care intact. The only part of Obamacare that dealt with long-term care was the CLASS Act.
The CLASS Act
The CLASS Act was meant to encourage the purchase of long-term care insurance. The name is an acronym for Community Living Assistance Services and Support Act, which is intended to establish a national, government run long-term care insurance program overseen by a federal trust. The insurance pool was meant to be consumer financed with everyone buying in paying premiums, just as if they had bought long-term care insurance from a private company. The goal was to reduce the role of Medicaid in long-term care since currently, one-third of the federal Medicaid budget goes to long-term care services.
But even the enactment of the CLASS Act is subject to the adage that the best laid plans of mice and men often go astray. And even the best laid plans of Congress and the president, since a financial study of the program found that it was not financially sustainable — something the private insurance companies could have told them a long time ago.
So, Obamacare is coming. But they just left the CLASS Act along the side of the road like a dying mule. The fundamentals of the long-term care program remain unaffected by Obamacare, even with its later implementation stages that expand the general health insurance part of Medicare.
If you have clients ages 55 and older and don’t know this subject matter, you are missing out on a huge opportunity to grow your business, earn more money and better help those clients.