Medicaid reimbursement bill advanced

A bill intended to close a loophole that allows individuals to shield assets from reimbursement for Medicaid-related services advanced from general file April 20.

Columbus Sen. Paul Schumacher, sponsor of LB72, said individuals often attempt to transfer assets to heirs in order to place them outside the reach of the state’s Medicaid reimbursement mechanisms upon their death.

Schumacher said federal law provides for a five-year “look back” to determine whether Medicaid should be reimbursed for assets that were given away, but if an individual waits longer than five years to claim Medicaid benefits, the state has no recourse.

“It’s basically a ‘have your cake and eat it too’—your heirs get your estate and the taxpayers get the bill,” Schumacher said.

LB72 would prohibit a trustee of a revocable trust that has become irrevocable due to the death of the trustor from transferring trust property to a beneficiary prior to satisfaction of all claims for Medicaid reimbursement. The state Department of Health and Human Services (DHHS) could waive the restrictions if there are no claims for Medicaid reimbursement or insufficient assets to satisfy the claims.

The bill also would require that if a petition were filed to determine inheritance tax, notice of the hearing would be sent to DHHS if the decedent was 55 or older or resided in a medical institution that potentially would subject them to debt for Medicaid services.

Schumacher asked senators during debate on April 15 to defeat a Judiciary Committee amendment that would have created a lien on behalf of the state when interest in real estate was transferred for less than full consideration or through a deed of trust. He said there was concern that the lien mechanism could cast too wide a net.

“It [would have] caught some dolphins with the sharks,” he said, adding that more study on how to close the current loophole needs to be done during the interim.

The amendment was defeated on a 1-30 vote. Schumacher then offered an amendment that instead would require that DHHS respond within 60 days to a trustee’s request for waiver.

Sen. Merv Riepe of Ralston supported the bill, saying Medicaid expenditures are a “looming crisis” for the state. Americans are not saving enough to cover their long-term care costs, he said.

“The average savings account is [approximately] $25,000 … and, at today’s nursing home rates, that will get you about four months,” Riepe said.

Following adoption of the Schumacher amendment on a 30-0 vote, senators advanced the bill to select file 31-0.