Divestiture of Assets to Qualify for Long-Term Care Services Gao ID: HEHS-97-185R July 28, 1997

Pursuant to a congressional request, GAO reviewed the prevalence of asset transfers to qualify for Medicaid benefits. GAO also responded to specific questions regarding the new criminal provision of the Health Insurance Portability and Accountability Act.

GAO noted that: (1) it is difficult to determine from available studies the prevalence of divestitures that are made with the purpose of becoming eligible for Medicaid; (2) several limited-scope studies, however, have shown that some individuals do shelter their assets--through transfers, conversions, and other divestitures--despite legislative efforts to discourage this type of activity; (3) for example, studies based on case file reviews in two states showed that from 13 to 22 percent of people who applied for nursing home and other long-term care benefits through Medicaid have transferred their assets; (4) however, the studies also found that divested assets often are not sufficient to pay for even 1 year of nursing home coverage--in some cases, the assets that were transferred could not pay for a single month of such care; and (5) the law's implications for individuals who transfer assets with the purpose of becoming eligible for Medicaid--the only type of divestiture that is subject to criminal penalty--are not clear in several respects.

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