NCPA - National Center for Policy Analysis

Medicaid Being Used to Shield Inheritances

October 11, 1995

Many nursing home residents who aren't poor at all are receiving financial assistance under the anti-poverty Medicaid program.

  • Medicaid's nursing home program accounts for about one-third of its $170 billion budget.
  • More than half of all nursing home costs are paid by Medicaid, and more than two-thirds of the elderly in nursing homes receive some Medicaid assistance.
  • Yet only 12% of all seniors are poor, and as few as 10% are impoverished by nursing home costs.

A whole industry of "Medicaid Estate Planners" has emerged to teach seniors how to shelter assets and income so as to qualify for financial assistance. Sheltering has become a way for baby boomers to protect their inheritances by handing their parents' long-term health care bills to taxpayers. A 1992 study found that if asset transfers were eliminated, 140,000 seniors would get dropped from Medicaid rolls, saving taxpayers $2.5 billion a year.

Source: John Merline, "The Middle Class on Medicaid?" Investor's Business Daily, October 11, 1995.


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