Medicaid and family wealth transfers

Purpose: This study examines whether the relation-ship between making familial wealth transfers and becoming a Medicaid recipient sheds light on the current debate about Medicaid estate planning, whereby some elders transfer their assets to their families to qualify for Medicaid. Design and Methods: Using the Health and Retirement Study, we tracked a national sample of community-based elders who did not receive Medicaid at the 1993 baseline interview but became Medicaid recipients during a 10-year time period and examined wealth transfers for these new Medicaid beneficiaries. Results: Among elders aged 70 or older who did not receive Medicaid in 1993, 16.4 % became Medicaid recip-ients over 10 years. Among these new Medicaid recipients, 17.9 % transferred their wealth to family members before receiving Medicaid benefits, with an average transfer amount of $8,507 during the 2 years prior to receiving Medicaid benefits. In addition, 15.2 % of community-residing elders en-tered a nursing home during the 10-year period, and 26.3 % of these were covered by Medicaid. Of these new Medicaid recipients living in nursing homes, 12.6 % transferred wealth to their families in the mean amount of $4,112. Implications: Familial wealth transfers do occur before changes in Medic-aid eligibility in a small, but nontrivial, number of cases, but the amount transferred is modest, especial-ly among nursing home residents. This finding implies that policies to reduce Medicaid long-term-care expenditures by limiting such transfers may not be very effective