One of the most significant problems with the Medicaid program is that it tends to force people into nursing home care.
Medicaid is a federal and state insurance program for needy individuals who are aged, blind, or disabled. Persons who meet certain income and asset criteria can qualify for Medicaid.
In New Jersey, there is a Medicaid program that will provide some home health aide services and pay for stays in an adult day care center. There is a program that will help supplement the cost of an assisted living residence (ALR). And, there are two programs that will pay for most of the costs associated with a nursing home.
The problem is, many people who would benefit from less restrictive means of care – such as an ALR or home care – find that they have too much income to qualify for the Medicaid programs that would defray the cost of such care yet too little income to fund the cost of the care themselves. To qualify for the programs of Medicaid that will pay for home-based and community-based care, an individual can have no more than $1,590 per month in income.
To compound the problem, there are very few planning options for individuals with too much income. Social Security benefits are inalienable and non-assignable, so it is impossible to divest yourself of these benefits. Divesting yourself of pension income isn’t much easier. Most pensions can only be divested through a Qualified Domestic Relations Order (QDRO), and most QDROs are entered in the context of a divorce. While divorce may be a viable Medicaid planning option, at least on paper, few couples married for fifty or more years view this option favorably. It’s hard enough to realize your partner of fifty years needs long term care, compounding that hardship with a divorce is unrealistic and unhealthy for all involved.
Other forms of income, such as alimony, could be divested, but at a price. If a divorced individual waived their right to income, Medicaid would treat the waiver as an uncompensated transfer, which results in a period of ineligibility for Medicaid. The penalty period would be determined based upon the life expectancy of the individual making the waiver and the value of the periodic payment. The penalty period that resulted from such a calculation could, quite easily, last as long as, if not longer than, the person’s actual life expectancy. For instance, a seventy-five year old individual waiving the right to an alimony payment of $500 would be equivalent to making a gift of $55,440, resulting in a period of ineligibility for Medicaid of approximately sixteen months.
So, what if a person receives $1,700 a month from social security and a pension, and wishes (and needs) to move to an ALR that costs $3,000 per month. (On average, ALRs cost between $3,000 and $4,000 per month.) He has too much unearned income to qualify for the Medicaid program that would help cover the cost of the ALR yet too little to private pay. If he requires assistance, he has two options: (1) stay in the home and receive little to no assistance or (2) enter a nursing home – receiving far more assistance than needed, in an environment that is in no way conducive to his good health.
In 1999, the Supreme Court of the United States addressed an issue very similar to the one posed above. The case is entitled Olmstead v. L.C. In that case, L.C., a young woman suffering from mental illness, resided in a state mental institution. She sought placement in a community-based setting, but the State (in that case, Georgia) refused to place her in the less restrictive, community-based setting – claiming that state funds were not available for such placement.
The Supreme Court held that under the Americans with Disabilities Act, the unjustified institutionalization of an individual with disabilities is a form of discrimination. The Court noted that the institutionalization of individuals who would benefit from community-based care fosters an unwarranted assumption that persons so isolated are unworthy of participating in society. The Court encouraged States to develop comprehensive plans for the placement of individuals with disabilities in community-based settings.
Yet, the Court stopped short of ordering States to place all individuals who would benefit from community-based care into such a setting. The Court acknowledged state budgetary constraints and recognized that the most appropriate care for each individual may simply cost a State too much money. States must, however, have a comprehensive plan for the delivery of home- and community-based care.
The Supreme Court’s focus in Olmstead is encouraging. The frail elderly often would benefit from less restrictive services than are provided in a nursing home. Through proper advocacy, individuals in need can receive the services they require without being confined in a nursing facility. As the Supreme Court recognized in Olmstead, placement of disabled individuals in institutional settings segregates and isolates them from society, leaving them less of a person.