Few Transferred Assets Before Applying for Nursing Home Coverage: Impact of Deficit Reduction Act on Eligibility is Uncertain

The Government Accountability Office (GAO) sought to determine the extent to which asset transfers for less than fair market value occurred when people sought Medicaid nursing home coverage. GAO reviewed a sample of 540 Medicaid nursing home applications in Maryland, Pennsylvania, and South Carolina. GAO also analyzed data from the Health and Retirement Study. GAO was asked to calculate the potential effects of the Deficit Reduction Act related to Medicaid eligibility for long-term care.

Of the 540 applications GAO reviewed, 408 were approved for Medicaid coverage and 122 were denied in the initial application. Of the denied applicants, 56 had too many resources, and 41 who resubmitted were eventually approved for coverage. For about a third of those who were approved on the second application, the decrease in resources was related to medical or nursing home spending. There was little evidence that applicants engaged in hiding or selling assets for less than fair market value.