Sell Your Assets to Save Them

Low-income Americans are now eligible for expanded Medicaid, including a million or more who own homes, farms, small businesses, or other significant assets. People with incomes below 138% of the federal poverty line are not eligible for subsidies at HealthCare.gov and are being routed straight to Medicaid--but the federal website doesn't warn people over 55 that Medicaid is a healthcare loan, not health insurance. Federal law requires states to recover the costs of long-term care and related medical expenses from the estates of Medicaid recipients who die after the age of 55, and many states have expanded that rule to recover all Medicaid expenses. This means that many older, poorer Americans are poised to lose their farms, homes, or small businesses.

A farmer cannot pass his land on to the next generation, because Medicaid "looks back" five years to see if whether assets have been given away.  Mom and Pop can't deed the corner store to their daughter; Nana can't give the house to her son. Medicaid was designed to serve the truly poor, not to offer tax-funded benefits to people with assets. The problem older Americans now face is an "unexpected human-caused event" with no easy answers.

Some people have suggested that low-income seniors lie about their income to get above the Medicaid threshold. If people over 55 can qualify for the maximum subsidy, health insurance costs them almost nothing. Lying is no solution, however--not only does it involve perjury, it commits a fraud on the insurance companies, and the insurers have no obligation to provide (very expensive) care to people who lie to get their coverage. People who claim income they don't have are likely to lose everything.

There is one way to save these assets--sell them. To be more precise--sell an undivided interest in them. A 64-year-old individual in Maryland qualifies for maximum subsidies with an income of just $12,000 per year. Grandpa can sell the farm to his son over time for $1,000 per month. Nana can get a reverse mortgage on her home. Mom and Pop can take on a partner who will buy them out on an installment basis. Selling part of your property may be the only way to keep the rest.

Remember--Medicaid is not insurance. When you pay insurance premiums, some company assumes the risk that you will get sick and need care. When you sign up for Medicaid, the government effectively co-signs your medical loans. When you die, the government recoups as much of its investment as it can.

If you like your farm, you can keep it--by paying for insurance instead of Medicaid.

Is Self-Pay Better Than Medicaid?

If a person near the poverty line can afford to pay a doctor out of pocket, they may be better off not showing their Medicaid card. According to the New York Times, Medicaid Growth Could Aggravate Doctor Shortage. That is because existing doctors are expected to treat a growing number patients for a shrinking amount of money per visit.

In California, with the nation’s largest Medicaid population, many doctors say they are already overwhelmed and are unable to take on more low-income patients. Dr. Hector Flores, a primary care doctor in East Los Angeles whose practice has 26,000 patients, more than a third of whom are on Medicaid, said he could accommodate an additional 1,000 Medicaid patients at most...

Payment rates for Medicaid, known in California as Medi-Cal, are also low here compared with most states, and are being cut by an additional 10 percent in some cases just as the expansion begins.

Americans who qualify for Medicaid under the newly-expanded rules aren't eligible for subsidies on the new Obamacare exchanges, making it easier for many working-class Americans to get health insurance at the same time that it makes it harder for them to get health care.

A growing number of citizens are learning creative ways to pay their own bills, as Sean Parnell explains at TheSelfPayPatient.com. I'll be eager to learn what Sean says about hiding your Medicaid card from your doctor!