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Asset Transfer and Nursing Home Use: Empirical Evidence and Policy Significance

Asset Transfer and Nursing Home Use: Empirical Evidence and Policy Significance

Due to concern that wealthy elderly Americans were transferring assets to gain Medicaid coverage for nursing home care, the Deficit Reduction Act (DRA) of 2005 tightened Medicaid eligibility rules related to asset transfers. About 43 percent of all nursing home residents eventually become Medicaid eligible.

This brief concludes that for people becoming Medicaid eligible at the time of nursing home admission, 50 percent had asset (cash and deed) transfers of less than $5,000. Conversely, only 13 percent of people who became Medicaid eligible at admission transferred more than $50,000. Asset transfer patterns were most common among nursing home residents who did not receive Medicaid assistance, with over 50 percent of the group making a transfer. Over the six-year period examined, the authors estimate that, when applying the DRA asset transfer rules, federal savings to Medicaid could amount to $1.87 billion.

Issue Brief (.pdf)