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Alaska Medicaid, the DRA, and HB 426
Terry Hamm
Division of Public Assistance
Long Term Care Coordinator
Medicaid and Alaska’s Population*
• Projected growth of the age 65 and older population is to almost triple between 2005 and 2025: – 43,000 in 2005 to 124,000 by 2025
• Medicaid enrollment will grow faster for the 65 and older population: – Anticipated growth 10,000 in 2005 to 33,000 by 2025– Medicaid program will change from a program that
focuses on children to one that focuses on seniors • *Source: Lewin Group
Mandatory Categories
• Family Medicaid – Families with dependent children who are
within the Family Medicaid need standards
• Transitional Medicaid
• Pregnant Women up to 133% of the FPG
• Newborns born to Medicaid recipients
Mandatory Categories
• Poverty Level Children (0-5) up to 133% of the FPG
• Poverty Level Children (6-18) up to 100% of the FPG
• IV-E Foster Care children• Supplemental Security Recipients (SSI) and
those deemed eligible for SSI • QMB, SLMB, and QDWI
Medicaid and Alaska’s Budget*
• In 2005 total Medicaid spending in Alaska was approximately $1.0 billion – State matching fund spending was $380 million
• Projected spending by 2025 $4.8 billion – State matching fund spending anticipated at
approximately $2.1 billion• *Source: Lewin Group
Where AK Medicaid Dollars Go Now*
• In 2005: – Inpatient Hospital Services (I.e. Nursing Home) – 15%
of total spending
– HCB Waivers – approximately11% of total spending
– Personal Care – approximately 10% of total spending
• Currently 36% of Medicaid spending focuses on programs for the elderly and disabled
• *Source: Lewin Group
Where AK Medicaid Dollars are Projected to Go*
• By 2025:– Inpatient Hospital Services – approximately 5% of total
spending – Home and Community Based Waivers – approximately
22% of total spending– Personal Care – approximately 27% of total spending
• By 2025 approximately 54% of the Alaska Medicaid budget will focus on programs for the elderly and disabled– *Source: Lewin Group
Lewin Group Report
• The full Lewin Group Report regarding the Alaska Medicaid program can be accessed at: – http://www.hss.state.ak.us/das/budget/pdfs/AK
%20Long%20Term%20Medicaid%20Forecast%202005-2025%20Slideshow.pdf
DRA / HB 426: Part 1
Changes with an Immediate Impact on Current Caseload Trends
Look-Back Period
• One 60 month look-back period
• Look-back will include:– Transferring of Assets at less than Fair Market
Value – Selling Assets at less than Fair Market Value
Transfer of Asset Penalties
• Penalties apply to payment for Long Term Care (LTC) Services
• Partial Month Transfers– The State will no longer round down to the whole
month
– The State will develop a methodology to round down to the day
• The State will continue to use the area LTC facility rate when determining penalty length
Penalty Period Start Date
• The penalty start date will use the latter of the following dates:– Date of application for Long Term Care services, or
– The date level-of-care is met for Long Term Care Services
• There may be times when an applicant may be denied Long Term Care services and be/remain eligible for Regular Medicaid Services
Penalty Start – Example 1
• The Story: – HCB Waiver applicant (Martha – 80 years) applies on
October 3. Martha has $1400/month in combined Social Security and pension. In September Martha gave away $40,000 to her grandson.
• On November 6 the Division of Senior and Disability (DSDS) denies level-of-care (LOC) and the Division of Public Assistance (DPA) denies HCB Waiver Medicaid
• Martha appeals and hearing is scheduled for December 15 • On December 3 Martha falls and breaks her hip and shoulder
and punctures a lung. DSDS completes a reassessment and determines Martha meets level-of-care effective December 3
Penalty Start – Example 1
• The Case Actions:– On December 3 the DPA caseworker will take
action and assess a 3.67 month penalty and deny Medicaid
– The penalty start date will be December or the month Martha met LOC
– Since Martha is within the Special Income category she will not be eligible for Regular Medicaid coverage
Penalty Start – Example 2
• The Story: – Bill is admitted to PECC on October 14 and
subsequently applies for Medicaid on the same day to cover his LTC costs. DSDS determines that Bill meets LOC for admission. Bill’s only income is $750 SSA and he has $1500 in a checking account. During the interview it is discovered that in January Bill gave his son a piece of property valued at $80,000.
Penalty Start – Example 2
• The Case Actions:– The DPA caseworker will assess a transfer of
asset penalty and deny coverage for LTC services beginning in October. The same month as Bill’s admit to PECC and meeting LOC for LTC Services
– The DPA caseworker will approve Regular Medicaid coverage beginning in October, but Bill’s LTC costs will not be covered.
Penalty Start – Example 3
• The Story: – Mary has been an Adult Public Assistance
cash / Regular Medicaid recipient for the past two years. On November 3 the DSDS determines that Mary meets LOC for HCB Waiver services. The DPA caseworker completes the 60 month look-back and discovers that 3 years ago, in August, Mary cashed in certificates of deposit worth $100,000 and gave the money to her four grandchildren.
Penalty Start – Example 3
• The Case Actions: – The DPA caseworker will deny HCB Waiver
services beginning in November – Mary will continue to receive Adult Public
Assistance cash and Regular Medicaid during her penalty period
Uncovered Medical Expenses
• Current regulation allows for the following:– Deducting LTC Medical expenses incurred during a
penalty period as uncovered medical expenses once LTC Medicaid eligibility is established
• The Centers for Medicaid/Medicare Services has given states the option to close this door
• The State will be monitoring the use of this uncovered medical expenses to determine if closing the door is necessary
Hardship Claims
• DRA allows facilities to claim hardship on behalf of the recipient– The hardship cannot be a facility hardship, but
a recipient hardship – State regulation will provide direction on how
to request a hardship exemption – The DPA Director or the Director’s designee
will make all hardship exemption decisions
DRA / HB 426: Part 2
Future Implications as the Caseload Grows
Home Equity Value
• The Home Equity Value must be considered when determining countable resources:– If an applicant/recipient’s home equity exceeds
$500,000 the State must count the excess – States will have the option to exceed $500,000 but
cannot exceed $750,000 (AK plans to use $500,000)– The home equity value will only be used when
determining eligibility for LTC Medicaid services – There may be instances when a person will be eligible
for Regular Medicaid services, but not eligible for LTC Medicaid services
Determining CountableHome Equity
• Home equity is determined by taking the current market value of the property and subtracting any encumbrances on the property.
• Allowable encumbrances include:– Mortgage
– Reverse Mortgage
– Home equity loan
– Other debt secured against the home
Promissary Notes, Loans, or Mortgages
• A promissary note, loan, or mortgage will be considered a transfer of asset unless it meets the following criteria:– Repayment term must be actuarially sound, and– Payments must be made in equal amounts
throughout the loan (no deferral or balloon payments), and
– Must prohibit the cancellation of the balance upon death of the lender
Life Estates
• If purchasing a life estate in another individual’s home, the DRA requires:– The person purchasing the life estate lives in
the home for at least one year after date of purchase
– If the person does not live in the home for at least one year the purchase will be considered a transfer of asset
Annuities
• The DRA requires that the State be named the remainder beneficiary, up to the amount of medical assistance paid
• If there is a surviving community spouse and/or a minor or disabled child, the State can be named after the spouse and/or minor disabled child
• If the State is not named in correct position the purchase will be considered a transfer of asset
Additional Criteria for Annuities
• State named in correct position as remainder beneficiary and: – An Individual Retirement Account (IRA)
(according to Sec.408 (b)) of the Internal Revenue Code of 1986 (IRC), or
– A deemed IRA under a qualified employer plan (according to Sec. 408 (q)) of the IRC)
– Or…..
Additional Criteria for Annuities
• State named in correct position as remainder beneficiary and the annuity is purchased from one of the following: – A traditional IRA (IRC. Sec.408a); or
– A simplified retirement account (IRC Sec. 408 (p)); or
– A simplified employee pension (IRC Sec. 408(k)); or
– A Roth IRA (IRC Sec 408 A)
– Or…
Additional Criteria for Annuities
• State named in correct position as remainder beneficiary and the annuity meets all of the following requirements:– The annuity is irrevocable and non-assignable;
and – The annuity is actuarially sound; and – The annuity provides payments in
approximately equal amounts, with no deferred or balloon payments
Implementation Timeline
• Before implementation the following must occur:– Completion of the State Regulation Project, which
includes:• Current agency review of proposed regulations within the
Department of Law
• Review by the regulation attorney within the Department of Law (technical review)
• Filing with the Lt. Governor for 30 days
• Final regulations will be filed on the Department website for 30 days prior to the Lt. Governor signing the regulations into law
Finally, in Closing
• Always remember the “Duck Test”
