What’s Heating up Faster than Welfare Drug Testing?

capture-20140116-094513As different states continue to do battle over the constitutionality of welfare recipients being drug tested, there’s a far bigger problem on the horizon. Regardless of which side you fall on, you might want to consider the potential of this newest train-wreck-about-to-happen.

As we know, senior citizens who apply for Medicaid face a few hurdles, including the 5 year look back period and the “spend down” requirement. It’s been in place for several years and it’s always been controversial. We also know that under the new healthcare laws, there are now a staggering 3.9 million Americans who have begun receiving Medicaid. And these millions of people bombarded the system in just 90 days (since the law went into effect). Many of these people aren’t disabled, and in fact, may be considered middle or upper class by any other measure. If they don’t qualify for traditional insurance when they go through the ACA Marketplace, they’re added to Medicaid rosters.

Here’s the kicker – as millions of seniors find themselves spending down their retirement that they worked decades to save and as they endure the time consuming and invasive 5 year look back period, these younger, healthy people aren’t facing the same scrutiny nor must they meet the threshold for coverage. So not only is the government fighting states’ efforts to impose drug testing on those receiving public benefits, it’s also not holding them to the same standards as older Americans.

5 Year Look Back

This law was passed in 2006 and was designed to prevent older Americans from giving away their assets in order to qualify for Medicaid. The way Congress saw it, too many were unloading their assets and once they were covered by Medicaid, they would then reclaim ownership. To remedy that problem, an investigation into the previous 5 years is conducted by Medicaid and if certain assets changed ownership during that period, it could jeopardize an applicant’s coverage. For families who are really limited in their options and see no other alternative but to place a loved one in a nursing home, it often means they either must pay for nursing home coverage or wait. For instance, if a retiree gifted to his granddaughter, say, $20,000, and then four years later was diagnosed with dementia and would require around the clock care in a nursing home which cost $5,000 a month, Medicaid would likely not begin making payments until after the fourth month. He would have to pay the $20,000 himself and then Medicaid would kick in. There are a few exceptions, but it’s a very complex law many still don’t understand.

Spend Down

Instead of looking to the past like the 5 year look back, this rule focuses on a Medicaid recipient’s current income and assets. If his income surpasses the Medicaid threshold each month, he will have to apply that overspill (based on government calculations) to his care and treatment before Medicaid will pick up the remaining balance.

The New Face of Medicaid

So who are these young and otherwise healthy individuals who are qualifying for this government program? Convicts, single parents who are earning a good living, college graduates who can’t find a job in their chosen field and others.  And not a single one will feel the scrutiny that the elderly endure.

And if you’re wondering why lawmakers are uninterested in leveling the playing field, you should know, when it gets right down to it, no one cares. Judith Solomon, vice president for health policy at the Center for Budget and Policy Priorities said, “They are really two different things…what we’re talking about now is providing health insurance to a new group of people to help them get on with their lives and accumulate enough savings and assets to care for themselves in their old age, contrasted with elderly people  who already benefit from Medicare hospitalization coverage and should be willing to spend down their assets to qualify for Medicaid coverage for long-term care.” Regarding the 5 year look back, these new recipients “don’t have a lot of money in the bank” and it’s “hardly worth the government’s efforts to try to document their assets”.

That’s too bad, because there are many who can relate to this example:

A 35 year old man loses his job. He owns his home and has plenty of equity in it; he also has a nicely padded bank account, but because he lost his job, odds are, he qualifies for Medicaid – with no spend down or look back stipulations.

The “domino effect” could be catastrophic to the healthcare sector, the economy and, of course, the political sector (which wouldn’t be a bad thing).

Finally, for those states that opted out of the Medicaid expansion the Obama Administration tried to shove down their collective throat, you can be sure this just might be the breaking point, followed by the rest of the states reaching their own breaking points.