Qualifying for Medicaid LTC Benefits Could Get Tougher

An independent research center that helps Republican officials develop and implement health care policies is thinking about long-term care finance.

The Paragon Health Institute on Tuesday brought in Ken Dychtwald, the CEO of the Age Wave aging issues consulting firm, to moderate a web-based panel discussion on the future of long-term care in the United States.

One of the speakers was Stephen Moses, the president of the Center for Long-Term Care Reform, a long-time advocate of encouraging people to do more to plan for their long-term care needs, and the author of a Paragon paper on ways to realign U.S. LTC planning incentives.

“Long-term care in America is broken,” Moses told the attendees.

Moses said the current Medicaid-based financing system is unfair, encourages high-income people to hide assets to qualify for public benefits, and has created shortages of care and problems with quality.

Moses called for Congress to make Medicaid LTC benefits eligibility rules simpler and more consistent on the state level; reduce people’s ability to keep assets out of Medicaid LTC benefits eligibility calculations; and lengthen the “lookback” period for Medicaid reviews of an older patient’s transfers of assets to loved ones to 20 years, from five years today.

What it means: Financial professionals with clients who are thinking about using Medicaid to pay for long-term care services need to keep a close eye on Washington.

Paragon Health Institute: Paragon is a nonprofit policy center that was founded in 2020.

It’s set up as a nonpartisan organization, but Brian Blase, the president and founder, previously was a special assistant for economic policy under former President Donald Trump.

Blase and other Paragon staff members have frequently testified on Capitol Hill in recent years. In March, for example, Blase testified at a House Ways and Means subcommittee hearing on his belief that the Affordable Care Act has increased health insurance costs.

The group has supported efforts by states such as Florida to avoid using ACA money to expand their Medicaid programs, and it has also supported the rollback of emergency Medicaid enrollment expansion rules implemented during the COVID-19 pandemic.

The panel discussion: The Paragon LTC policy event attracted more than 100 online attendees.

Dychtwald, who was just 36 in 1986, when he started Age Wave, and then had two living parents, told the audience that the long-term care planning topic will be critical both as a policy issue and as a personal concern.

“You’ll be dealing with this for the rest of your lives,” Dychtwald said. “And you’ll probably be dealing with it your own family.”

Dychtwald, who will turn 74 this year, said he ended up paying for care for his own father, Seymour Dychtwald, who died in 2013, after his father lost his vision to macular degeneration, and for his mother, Pearl Dychtwald, who died in 2016 after facing Alzheimer’s.

Dychtwald said that even he, a gerontologist, had a hard time imagining that he would have to pay for long-term care for his own parents for more than a decade.

The discussion: Richard Johnson, director of the Urban Institute’s program on retirement policy, and Mark Warshawsky, a senior fellow at the American Enterprise Institute, participated in the discussion with Moses.

The Urban Institute is commonly regarded as having close ties to Democrats, and the American Enterprise Institute is viewed as having close ties to Republicans.

Warshawsky predicted that the LTC problem will be getting bigger, partly because the U.S. baby boomers are aging, and partly because people now tend to have smaller families and are less likely to have spouses or children who can act as unpaid caregivers.

Moses was the only participant who seemed to think that private long-term care insurance could be a big part of the solution.

Many of the people who will need LTC services earn too little throughout their lives to save for LTC needs or pay for insurance, and many have health problems that would keep them from buying medically underwritten LTCI coverage, Johnson said.

Warshawsky scoffed at the idea that a public or public-private program like Washington state’s public LTCI program could work.

Johnson, who has written about creating a Medicare LTC benefit in the past, suggested that a better-designed LTC program might work.

Johnson and Warshawsky agreed with Moses on the importance of tightening Medicaid LTC benefits eligibility rules.

“We don’t want Medicaid resources going to upper-middle-income people,” Johnson said.

The speakers agreed that more people should spend down any home equity, by using reverse mortgages and home equity loans, to pay for care before qualifying for Medicaid LTC benefits.

Warshawsky said that any state Medicaid program exemptions for retirement savings should be reduced or eliminated.

Blase said Paragon will be organizing more LTC policy events.

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