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Medicaid's nursing home coverage and asset transfers

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  • William F. Bassett
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    Abstract

    Medicaid covers the costs of a long nursing home stay. This coverage may create an incentive for the elderly to transfer their assets to their children in order to qualify for Medicaid before entering a nursing home. Previous researchers had found little evidence that such behavior was widespread or that asset transfers were large. However, data from AHEAD suggest that the self-assessed probability of entering a nursing home is a significant determinant of the likelihood of making an asset transfer. The budgetary implications of these Medicaid-induced asset transfers are probably fairly small, but not insignificant.

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    File URL: http://www.federalreserve.gov/pubs/feds/2004/200415/200415abs.html
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    File URL: http://www.federalreserve.gov/pubs/feds/2004/200415/200415pap.pdf
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    Bibliographic Info

    Paper provided by Board of Governors of the Federal Reserve System (U.S.) in its series Finance and Economics Discussion Series with number 2004-15.

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    Date of creation: 2004
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    Handle: RePEc:fip:fedgfe:2004-15

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    Related research

    Keywords: Medicaid ; Nursing home care ; Inheritance and succession;

    This paper has been announced in the following NEP Reports:

    References

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    1. Jonathan Gruber & Aaron S. Yelowitz, 1998. "Public Health Insurance and Private Savings," JCPR Working Papers 42, Northwestern University/University of Chicago Joint Center for Poverty Research.
    2. B. Douglas Bernheim & Robert J. Lemke & John Karl Scholz, 2001. "Do Estate and Gift Taxes Affect the Timing of Private Transfers?," NBER Working Papers 8333, National Bureau of Economic Research, Inc.
    3. Bernheim, B Douglas & Shleifer, Andrei & Summers, Lawrence H, 1986. "The Strategic Bequest Motive," Journal of Labor Economics, University of Chicago Press, vol. 4(3), pages S151-82, July.
    4. David M. Cutler & Louise Sheiner, 1994. "Policy Options for Long-Term Care," NBER Chapters, in: Studies in the Economics of Aging, pages 395-442 National Bureau of Economic Research, Inc.
    5. Jonathan S. Feinstein & Chih-Chin Ho, 2000. "Elderly Asset Management and Health: An Empirical Analysis," NBER Working Papers 7814, National Bureau of Economic Research, Inc.
    6. Powers, Elizabeth T., 1998. "Does means-testing welfare discourage saving? evidence from a change in AFDC policy in the United States," Journal of Public Economics, Elsevier, vol. 68(1), pages 33-53, April.
    7. Norton, Edward C, 1995. "Elderly Assets, Medicaid Policy, and Spend-Down in Nursing Homes," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 41(3), pages 309-29, September.
    8. Alvin E. Headen Jr., 1993. "Economic Disability and Health Determinants of the Hazard of Nursing Home Entry," Journal of Human Resources, University of Wisconsin Press, vol. 28(1), pages 80-110.
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    Cited by:
    1. Kristin J. Kleinjans & Jinkook Lee, 2006. "The link between individual expectations and savings: Do nursing home expectations matter?," Economics Working Papers 2006-05, School of Economics and Management, University of Aarhus.

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