"I Have to Make Medicaid a Beneficiary?!"

From Krause Financial (www.medicaidannuity.com): Link at end of article...

"Then what's the point of using a Medicaid Compliant Annuity?" I hear this quite often, in both working with newer elder law attorneys and families of the elderly.  With the state Medicaid agency required to be a beneficiary, then doesn't it make the purchase moot?

Not necessarily.  Consider these three common planning scenarios:

1: Individual Gifting Scenario.

An individual makes a gift and purchases a Medicaid Compliant Annuity.  The Medicaid Compliant Annuity is structured to provide income throughout the divestment penalty period associated to the gift.  Designating the state Medicaid agency is one of the requirements for the purchase of the Medicaid Compliant Annuity not to be deemed a transfer for less than fair market value.  However, in the event the individual predeceases the Medicaid Compliant Annuity, the Medicaid agency would not be entitled to any of the residual benefits remaining in that the agency did not provide any medical assistance benefits to the individual due to the divestment penalty period.  As such, the individual's intended beneficiaries would be entitled to receive any residual benefits remaining in the Medicaid Compliant Annuity.

2: Individual with a Diminished Longevity.

In a case where an individual has a very short life expectancy a stand-alone Medicaid Compliant Annuity may provide a greater advantage than a gifting plan (aka a half-a-loaf plan).  By purchasing a Medicaid Compliant Annuity over the individual's life expectancy, he or she is immediately eligible for Medicaid benefits.  The Medicaid Compliant Annuity payout becomes the applicant's Medicaid copay.  This type of planning is traditionally only advised if the applicant is expected to life for 12 months or less.  When the individual predeceases the Medicaid compliant Annuity, the state Medicaid agency is entitled to recover from the residual benefits up to the amount of Medicaid paid on behalf of the applicant.  If the individual passes shortly after the annuity has commenced, the state's claim amount will be very small, leading to a greater remainder amount for intended heirs.  But why even proceed with the annuity?  Why not just continue to privately pay until the individual passes? Because the state's claim amount will be at the Medicaid rate, not the private pay rate.  Even after repaying the state Medicaid agency, the family will have paid less than had they done zero planning at all.

3: Spousal Medicaid Compliant Annuity Planning.

In a traditional community spouse case, funds in excess of the community spouse resource allowance will be structured in a Medicaid Compliant Annuity owned by the community spouse.  The community spouse is usually entitled to keep all income, regardless of the amount.  However, the community spouse is also usually required to designate the state Medicaid agency as a beneficiary up to the amount of Medicaid benefits paid on behalf of the institutionalized spouse.  In light of this, should the community spouse predecease the Medicaid Compliant Annuity the state Medicaid agency is able to reocver what has been paid on behalf of the institutionalized spouse, leaving very little to potentially be transferred to intended heirs.  Due to this fact, more and more community spouse Medicaid Compliant Annuities are seeing shorter terms, dependent on the anticipated longevity of the community spouse.

As you can see, in most cases it is not a "lost cause" to utilize a Medicaid Compliant Annuity, even though the state Medicaid agency does need to be designated as a beneficiary. 

LINK

Spousal Impoverishment Standards from Elderlawanswers.com

The Centers for Medicare and Medicaid Services has released its Spousal Impoverishment Standards for 2013 and they confirm the earlier projections of Pennsylvania ElderLawAnswers member Jeff Marshall, who based his estimates on the consumer price index for urban consumers for September and which we reported in October. 

For the record, the official spousal impoverishment allowances for 2013 are as follows (we include Medicaid's home equity limits, which Mr. Marshall did not project):

Minimum Community Spouse Resource Allowance: $23,184

Maximum Community Spouse Resource Allowance: $115,920

Maximum Monthly Maintenance Needs Allowance: $2,898

The minimum monthly maintenance needs allowance for the lower 48 states remains $1,891.25 (2,365 for Alaska and 2,176.25 for Hawaii) until July 1, 2013.

Home Equity Limits:

Minimum:   536,000

Maximum:  802,000

LINK

Does Government Want To Drain Americans' 401(k) Plan?

From Investors Business Daily:

What could go wrong?

LINK

Another WIN for Medicaid-compliant Annuities!

(From medicaidannuity.com)  "John Lopes was married, residing in a nursing home, and in need of assistance.  Amelia Lopes, John's spouse residing in the community, purchased a Medicaid Compliant Annuity, and shortly thereafter made a Medicaid application on behalf of her husband.  The Connecticut Department of Social Services denied the application after determining that the payment stream Amelia was receiving was a resource that rendered John ineligible for Medicaid.

The matter progressed to the United States District Court for the District of Connecticut, under the argument that the payment stream was income that did not count against John's eligibility in light of the annuity being non-assignable.  The district court granted summary judgment to the Lopeses, and Connecticut appealed.

The U.S. Court of Appeals for the Second Circuit upheld the district court ruling that the income stream from a Medicaid Compliant Annuity cannot be considered an available asset for the purposes of Medicaid eligibility.  Lopes v. Dept. of Social Services (2nd Cir., No. 10-3741-cv, Oct. 2, 2012).  The court further ruled that it was irrelevant that the Medicaid Compliant Annuity was purchased just prior to John's Medicaid application.  Thankfully the U.S. Department of Health and Human Services lent their opinion in this case, affirming that the Lopeses position was consistent with Medicaid's primary purpose of providing healthcare to the indigent and protecting community spouses from impoverishment."

LINK

Federal retirement COLA of 1.7 percent announced (Washington Post)

"Federal retirees will receive an inflation adjustment of 1.7 percent in January, translating to about a $50 increase in the average monthly payment under the annuity program for most of them.

The increase, based on an inflation measure announced Tuesday, mirrors the cost-of-living adjustment (COLA) to be paid to Social Security beneficiaries."

LINK

The 13 Most Frequent Medicaid Mistakes for Nursing Home Care

I wish I had written this!  What a great article that exposes many of the myths surrounding Medicaid planning and Medicaid eligibility.  Although it is written by a Florida Elder Law attorney (C. Randolph Coleman), almost everything that is mentioned in the article could apply to Missouri (or other state's) residents as well.  

As our population grows older, more and more families will face the need for long term care for their loved ones.  The cost of a skilled nursing home care in Florida averages about $7,000 to $8,000 per month.  That number increases each year. 

Medicare does not cover the cost of skilled nursing home care (except for rehabilitation usually with a limit of 100 days of coverage).  Beyond that limited coverage, the family must pay the full cost of skilled nursing home care.

Most studies suggest that the average family will exhaust the family's life savings within the first year of skilled nursing home care!  Without long term care insurance, practically all nursing home residents will eventually end up needing Medicaid to pay for the nursing home care.

When faced with the reality of the cost of nursing home care, and the almost certain eventual need for Medicaid eligibility to pay for the nursing home, most families engage in actions that can result in loss of eligibility for Medicaid benefits, or a long penalty period in which Medicaid benefits are not available to cover the costs of the nursing home care.

In an effort to help families avoid costly mistakes, that can cause them to lose their life savings unnecessarily, we have compiled this list of 13 most frequest mistakes that families make when a loved one enters a nursing home.

1. Failure to Take Advantage of the Avalable Spend-Down Options.
Many families assume when they are told the family must "spend-down" the family's assets to qualify for Medicaid benefits to pay for nursing home care, that the spend-down must be paid to the nursing home. The fact is, there are more than a dozen strategies that can be used to meet the Medicaid requirement for spend-down, without spending the money on nursing home care.  These strategies allow you to protect your assets from Medicaid and the cost of nursing home care.

2.  Transferring Assets to Other Family Members or Friends Without a Plan.
Probably the most common reaction to the realization that you must spend-down your assets to qualify for Medicaid nursing home benefits is to gift the assets to other family members or friends. There are Medicaid rules and regulations that create negative consequences, sometimes severe, when gifts of assets are made in contemplation of applying for Medicaid benefits for nursing home care.  These same Medicaid rules, however, when used properly, can result in the protection of substantial assets for the family.  You must understand how to use those rules and regulations to make them work in your favor.

3.    Assuming Your Existing Annuity Provides Asset Protection from Medicaid Spend-down.
Prior to the passage of the Deficit Reduction Act of 2005 (which became effective in 2006, "DRA"), annuities were widely used as effective planning to preserve assets from Medicaid spend-down.  The rules changed dramatically with the DRA.  Most all of the annuities that were effective prior to the DRA no longer provide asset protection.  There are a few annuities that are "DRA Compliant" that can be purchased in today's market.  These DRA compliant annuities can provide significant asset protection.  If an annuity is not DRA compliant, it is not likely to provide any meaningful protection.

4.    Having No Plan or Procrastinating Too Long to Take Action.
This year hundreds of millions of dollars will be lost to nursing homes or other long term care providers because families failed to take any action. Often this is a result of the family assuming, wrongly, that after the loved one is in the nursing home there is nothing that can be done.  In almost all cases, most of the family's assets could have been saved for the spouse living at home, or other family members, if action had been taken immediately after the family member enters the nursing home.  The reality is, the longer you wait to take action, the more money will be lost to the nursing home that could have been protected from the Medicaid spend-down.

5.    Trying to Hide Assets from Medicaid.
Sometimes families try to hide assets from Medicaid.  Sometimes they conveniently "forget" about some assets.  How will Medicaid know about the family farm or vacation home in another state?  Or, the coin collection in the safe deposit box?  The reality is that Medicaid has access to all the real property records in the US, as well as access to the most sophisticated asset databases.  Be aware that failure to disclose known assets is a federal crime (Medicaid fraud), conviction of which can result in signficant monetary fines and prison terms.  Medicaid can also pursue legal action to recover the cost of the benefits paid to someone who procures Medicaid benefits through fraud.  Do not ever seek to hide or otherwise perpetuate Medicaid fraud.  There are legitimate and legal options that allow protection of signfiicant assets without violating the law.

6.    Taking the Advice of the Medicaid Case Worker.
The Medicaid case worker, employed by the Department of Children and Families in Florida, has no interest in helping you preserve your family's assets from spending down those assets on long term care.  In fact, the Medicaid case worker's responsibility is to process and evaluate whether you are eligible for Medicaid benefits to pay for nursing home care.  The Medicaid case worker is not allowed to give financial or legal advice. To protect your family's assets as much as you legally can you need your own advocate - one who is looking after your best interests.  The Medicaid case worker is not that person.

7.    Relying on Advice from Friends and Neighbors.
It is appalling how many people rely on their neighbors, hair stylist, insurance agent, or others who are not Medicaid professionals for Medicaid advice.  Even more appalling is relying on information from friends and relatives who live in other states.  The Medicaid rules and regulations have been referred to as the most complex laws in the country, second only to the Internal Revenue Code (tax law). To further complicate this area of the law, Medicaid is a federal program that is administered by the various states.  Each state is free to establish its own rules and regulations, within certain parameters.  The law is implemented differently by each state.  What applies in New York, or Pennsylvania, or New Jersey or Ohio, does not apply in Florida.  So not only do you want to restrict your source of advice to a qualified Medicaid professional, but you want to restrict your counsel to those within the state in which you reside.  For those who are familiar and experienced with the particular state's rules and regulations, Medicaid asset protection can be quite effective.

8.    Choosing the Wrong Attorney
In most cases, the family is going to need an attorney to achieve the most favorable outcome for preserving the family's assets.  There are legal documents that are often required, such as a qualified income trust.  Attorneys, like all professionals in other disciplines, usually have a specific area of the law in which they are knowledgeable and experienced.  To obtain the proper counsel and advice you will want to work with an experienced elder law attorney to deal with Medicaid spend-down planning for asset protection.  You do not want to rely on the advice of a divorce attorney, personal injury attorney, real estate attorney, corporate attorney, or attorneys who practice in other disciplines.  Probably less than 10 lawyers out of a 100 have experience in elder law and Medicaid asset protection planning.  Of those 10, probably only 2 or 3 of them have substantial experience over a number of years.  Your most effective Medicaid spend-down plan for nursing home care will likely come from one of the elder law attorneys with substantial experience.

9.    Making Transfers Without Authority
Some families, in a desperate attempt to protect the assets of a family member who is no longer legally competent, will transfer assets without the property authority.  For instance, we sometimes find that deeds have been signed by the legally incompetent senior, or assets have been transferred un the authority of a power of attorney that does not include the authority to make the kinds of transfers involved. Such actions may be viewed as harmless (that's what Dad would have wanted) or convenient.  However, those actions may actually be fraudulent, create title problems for future transfers of real property, or may be considered "financial abuse of the elderly" (which is a criminal act in Florida).  Furthermore, such transfers may ultimately be challenged by Medicaid as uncompensated transfers that result in signficant penalty periods during which no Medicaid benefits can be received.

10.    Mistakenly Giving $13,000 (or $10,000) Won't Impact Medicaid Eligibility.
The Internal Revenue Code (tax code) currently allows an individual to transfer $13,000 (up from the original $10,000) to another person as a gift, without incurring any gift tax liability.  For Medicaid eligibility purposes, the tax code doesn't matter.  ANY gift or transfer of property, including cash, to another person within five years of the date your loved one applies for Medicaid benefits to pay for nursing home care, will result in a penalty period during which the nursing home resident will not be eligible to receive Medicaid benefits.  In Medicaid planning, if you are going to make any gifts, make sure it is according to a specific plan and that you have properly evaluated the potential consequences of the gfit.

11.    Relying on a Revocable Living Trust to Protect Assets from Medicaid Spend-down.
Many people have used revocable living trusts as their primary estate planning tool, in an effort to avoid probate.  Many believe that the revocable living trust provides some asset protection value for Medicaid spend-down plan purposes.  Notwithstanding the benefits provided by revocable living trusts from the perspective of estate planning and probate avoidance, such a trust provides no asset protection - either from Medicaid spend-down planning, nor for any other purpose.  Any and all assets titled to the revocable living trust will be considered available resources for purposes of Medicaid eligibility.

12.    Applying for Medicaid Too Early.
Some families file the application for Medicaid eligibility for nursing home benefits for the sole purpose of determining whether they qualify for benefits.  The belief is the worst thing that can happen is that the application is declined.  However, the Medicaid rules and regulations have many issues that could result in an application that is filed too early to cause substantial penalty periods during which Medicaid benefits cannot be received by the applicant.  These penalty period can be for a longer time than the 5 year look back period.  You should never file a Medicaid application unless you fully understand the possible consequences of the application being denied.

13.    Failure to Avoid Estate Recovery.
Often someone can qualify for Medicaid benefits to pay for nursing home care and retain the ownership of some assets.  Each state has the right to "Medicaid Recovery."  Medicaid recovery is a procedure where the state can recover from the estate of the person receiving Medicaid benefits, after the person has died.  The State can recover the value of the benefits paid on behalf of the deceased person.  Most states can recover only from the "probate estate."  Other states have defined the "estate" to include assets that are not included in the deceased person's probate estate.  To effectively protect assets from Medicaid estate recovery, you must first understand what constitutes the "estate" for a particular estate, and then understand how you can title assets to avoid estate recovery for the specific state that is involved.

Conclusion
These 13 mistakes cost families millions upon millions of assets every year that are paid to nursing homes when those assets could be preserved for the spouse or other family members.  If you have a loved one in a nursing home, or about to enter a nursing home, there are many actions you can legally take to avoid spending down the family's assets for nursing home care.
Our attorneys can help you protect your family's assets from the costs of nursing home care.

LINK

Medicaid and Veterans Benefits Seminar at 6 PM tomorrow night at my office for any that are interested.  The address is 2701 W. Main Street, Jefferson City, MO.  If you have questions about the seminar or anything else, please feel free to contact my office at (573) 635-3436.

Upcoming Seminars for May 2012

Upcoming Seminars

6:00-7:00PM)

May 10, 2012 at Knights of Columbus, Taos, MO (6:00 PM-7:00 PM)

May 17, 2012 at Millard Family Chapels Annex, 2701 W. Main Street, Jefferson City, MO (

May 29, 2012 at Heisinger Bluffs (Media Room), 1002 W. Main Street, Jefferson City, MO (6:00-7:00PM)

May 31, 2012 at Millard Family Chapels, 919 E. Main Street, Linn, MO (6:00-7:00PM)

Missouri Estate Recovery Claim Fails

A Missouri court of appeals rules that in a state's claim for recovery of Medicaid benefits against an estate, computerized records showing checks were issued to the Medicaid recipient's health care providers is insufficient evidence that payment was made to the providers, so the claim must fail. Estate of Nelson v. Missouri Dept. of Social Services (Mo. Ct. App., W. Div., No. WD73957, March 20, 2012).

When Katherine Nelson died, the state filed a claim against her estate for reimbursement of Medicaid benefits paid on her behalf. As proof of the claim, the state provided computer records of expenditures made for Ms. Nelson's care.

The trial court denied the claim, ruling that the state did not present evidence that checks it issued to Ms. Nelson's health care providers were in fact presented and paid. The state appealed, arguing that it need only provide proof that a check was sent.

The Missouri Court of Appeals, Western Division, affirms, holding that the state's evidence is insufficient because it does not establish that the checks it issued in payment of Ms. Nelson's health care services were either presented or honored. According to the court, computerized records providing the date a check was issued are not sufficient evidence of payment.

For the full text of this decision in PDF, go to: http://www.courts.mo.gov/file.jsp?id=53156.

Medicaid-Compliant Annuities

If anyone has any questions on "Medicaid-Compliant" Annuities, please feel free to call my office.  In my opinion, these annuities are an outstanding vehicle for asset protection, especially for a married couple. However, there is a lot of misinformation about what can and cannot be done with these annuities and how they work within the framework of an application for Medicaid vendor nursing care benefits with the Missouri Family Support Division.

Please understand that while a financial advisor may understand the product itself, he or she does not understand how the annuity works within the context of an application for Medicaid benefits.  Consequently, it is very important to discuss these products with an elder law attorney that is familiar with the Missouri Medicaid system and with how it treats these products.

Upcoming Seminars: March and April

March 20, 2012
12:00-1:30 PM
Lunch and Learn Basics of Medicaid and Veteran's Aid in Attendance Eligibility

Millard Family Chapel
540 South Summit Drive
Holts Summit, MO
RSVP: Mark (573) 680-7880

March 29, 20126:00-8:00 PM
Estate Planning and Medicaid Eligibility

Crestview Home
1313 South 25th Street
Bethany, MO
RSVP: Sherry (660)425-3128

 

March 22, 2012

6:00 pm - 8:00 PM
Estate Planning and Medicaid Eligibility

Frene Valley Health Center
1800 Wein
Hermann, MO
RSVP: Jenny (573) 486-3155

 

April 24, 2012

12:15-1:00 PM
Basics of Medicaid Eligibility

Senior Center @ the Mall
3600 Country Club Drive
Jefferson City, MO

 

April 26, 2012

12:15-1:00 PM
Basics of Veteran's Aid in Attendance Eligibility

Clarke Senior Center
1310 Linden Drive
Jefferson City, MO

IRA vs. Long-Term Care Asset Protection

This is something that I run  into a lot as well.  In order to protect the cash value of an IRA for long-term care planning purposes, it must be cashed out and a tax will have to be paid on that withdrawal.  However, for most clients, the cost of long-term care will be far greater than any tax consequences of cashing out an IRA.  And keep in mind, the tax will have to be paid on that IRA at some point in the future.

http://protectingseniorsnews.com/2011/10/03/dont-let-your-ira-keep-you-from-protecting-your-life-savings-against-long-term-care-costs/

I sat behind the Westboro Baptist Church

members that were attending yesterday's hearing in the Eighth Circuit in St. Louis.  They were the first ones to be heard, of course, and it looked like the Westboro Baptist Church was challenging the constitutionality of a Missouri statute that was apparently enjoined by the district court.  Apparently, the statute requires protesters at a funeral to stay a certain distance away from the funeral.  At any rate, it was a nice palate cleanser before my oral argument.

After the Westboro Baptist Church oral argument concluded, about 75% of the courtroom cleared out.  Hey, I thought you guys were here to hear my Missouri Medicaid case?

First case before a federal appellate court.

I just argued my first case today in front of the Eighth Circuit Court of Appeals in St. Louis, Missouri. I think it went well. No marks on me that I know of. Maybe they're saving that for the decision.

Link to Missouri Scorecard

A State Scorecard on Long-Term Services and Supports for Older Adults, People with Physical Disabilities,

Transfer of Medicaid Applicant's House to Son Falls Within Caregiver Child Exception

A New Jersey appeals court rules that the transfer of a Medicaid applicant's house to her caregiver son is not subject to a Medicaid penalty period because it falls within the caregiver child exception. V.P. v. Dept. of Human Services (N.J. Sup. Ct., App. Div., No. A-2362-09T1, Sept. 2, 2011).

V.P. lived with her son, R.P.  Following a stroke, she entered a nursing home, transferred her house to her son and applied for Medicaid benefits. The state determined V.P. impermissibly transferred her home and was subject to a penalty period.

V.P. appealed, arguing her house was not a countable asset because the transfer fell within the caregiver child exception. At a hearing, several family members and V.P.'s doctor testified that R.P. helped V.P. walk, bathe, and cook, among other things. The administrative law judge (ALJ) found the witnesses credible and determined the caregiver child exception applied. However, the state's Medicaid director rejected the ALJ's decision and concluded V.P. needed only normal support services, so the transfer was not eligible for the caregiver child exception. V.P. appealed.

The New Jersey Superior Court, Appellate Division, reverses, holding that V.P. is entitled to Medicaid benefits with no penalty period. The court rules that the director did not demonstrate that the ALJ's findings were arbitrary and capricious.  According to the court, "the credible evidence in the record supports the ALJ's finding that V.P needed, and R.P. provided, special care and attention essential to her health and safety."

For the full text of this decision in PDF, go to: http://www.judiciary.state.nj.us/opinions/a2362-09.pdf

Medicaid Applicant Who Successfully Argued Trust Was Not Countable Is Entitled to Attorneys' Fees

A U.S. district court in Oklahoma grants attorneys' fees to woman who received Medicaid benefits after successfully arguing in court that her trust was not a countable resource.  Hauenstein v. State (U.S. Dist. Ct., W.D. Okla., No. CIV-10-940-M, Aug. 26, 2011).

Marcia Hauenstein applied for Medicaid benefits, but the state imposed a penalty period due to a trust established by her father. Ms. Hauenstein sued the state in federal court, arguing the trust was not a countable resource. Following motions for summary judgment, the court found for Ms. Hauenstein (Hauenstein v. State ex rel. Oklahoma Department of Human Services, W.D. Okla., No. CIV-10-940-M, May 19, 2011) and the state granted her Medicaid benefits.

Ms. Hauenstein filed a claim for attorneys' fees. The state argued that Ms. Hauenstein is not entitled to attorneys' fees because she did not receive judgment under 42 U.S.C. § 1983 and she was certified for Medicaid before the judgment was granted. The state also argued that the judgment was granted on facts and legal theories that were not asserted by Ms. Hauenstein until a week before the hearing, therefore the majority of time that Ms. Hauenstein was seeking payment for was unnecessary and unreasonable.

The U.S. District Court for the Western District of Oklahoma grants attorneys' fees. The court rules that the court's order clearly granted judgment under 42 U.S.C. § 1983 and that the state provided no evidence Ms. Hauenstein received Medicaid benefits before the judgment. In addition, the court concludes that the basis for the court's decision was consistent with the facts and allegations set forth in Ms. Hauenstein's complaint, so the attorneys' fees were not unnecessary or unreasonable.

NFL Preseason TV Ads

Please watch for our ad in tonight's Philly vs. Pittsburgh game and on tomorrow night's Chiefs vs. Ravens game!

How Will the Debt-Limit Deal Affect Seniors?

Congress has agreed to allow the President to raise the debt ceiling in exchange for $2.4 trillion in budget cuts over 10 years. How this deal will affect the three major programs crucial to the elderly -- Medicare, Medicaid and Social Security -- may not be known until almost year's end, but the impact could be significant.

The agreement calls for two stages of spending reductions. In the first stage, which will pare $917 billion from the budget, "entitlement" programs like Medicare, Social Security and Medicaid are spared. Instead, the cuts are evenly divided between defense and non-defense "discretionary" programs. Some aging and poverty programs that the elderly rely on, such as heating assistance, could be hit with budget reductions, but so will defense programs.
In the second stage, a 12-member Congressional committee - six members from each party -- must agree on an additional $1.5 trillion in cuts by Thanksgiving, and Congress must vote on their proposal (with no modifications) by December 23. Here, Medicare, Medicaid, and Social Security will all be back on the table. In the case of Medicare, the powerful panel will be looking at changes like raising the eligibility age, increasing premiums for wealthy recipients, hiking deductibles and co-pays, and slashing payments to providers and drug companies.

To cut Medicaid, this joint committee will consider giving states more flexibility to reduce eligibility and benefits, meaning that it might become even tougher for elderly nursing home residents to qualify for Medicaid. The committee will also be looking at cutting payments to nursing homes, which just got hit with a more than 11 percent reduction. Nursing home residents could feel the impact in the form of reduced services and compromised care.
For Social Security, one thing the panel will undoubtedly consider changing is how the program's cost of living increase is calculated, which will result in lower benefits. Pushing back the eligibility age for future retirees could also be on the table.

Although President Obama will be pressing the joint committee to not just cut programs but to increase revenues by raising taxes on the wealthy and corporations, it is anybody's guess whether the panel's Republican members will agree to this.

"The future of the programs really hangs in the balance," said Joe Baker, president of the Medicare Rights Center, an advocacy group. "It could lead to deep cuts and irreversible changes to Medicare and Medicaid that shift costs to beneficiaries."

If the 12-member panel can't agree on a plan to pare at least $1.2 trillion from the budget -- or Congress votes down its proposal or President Obama vetoes it -- automatic spending cuts totaling that amount would kick in beginning in 2013. Medicaid, Social Security and veterans programs are among the programs that will be exempt from these mandatory cuts, but Medicare is not exempt. There would be a 2 percent cut to Medicare, although the savings would have to come from payments to providers like doctors and hospitals, not from beneficiaries. Such a reduction to providers would be on top of a 6 percent drop in provider payments already enacted to help finance health care reform. Doctors and hospitals would feel the impact initially, but Medicare beneficiaries would experience it soon enough as more providers refuse to treat Medicare patients, reduce services or go out of business.
There is, however, a strong incentive for the joint committee to avoid these automatic cuts and instead agree on a plan that Congress can pass and the President can sign: Along with the 2 percent automatic Medicare cut would be an automatic 8 percent reduction in defense spending, or nearly $500 billion. The thinking is that both Democrats and Republicans would view defense cuts of this magnitude as too damaging to their parties to contemplate.

Further reading:
"Five cuts the debt commission might make to Medicare, Medicaid" (Washington Post blog)
"FAQ: Debt Deal 'Super' Committee's Impact On Health Spending Explained" (Kaiser Family Foundation Health News)
"Tea Party groups see Medicare overhaul chance" (Reuters)
"Social Security, Medicare dodge bullet, but cuts loom" (Reuters blog)
"Debt Deal Triggers Nerves In Health Industry; Providers Brace For Cuts" (Kaiser Family Foundation Health News)
"What Does the Debt Ceiling Agreement Mean for Medicare?" (Center for Medicare Advocacy, Inc.)

Updated Long-Term Care Planning Video

Please check out our Long-Term Care Planning VIDEO on youtube.   Discusses long-term care planning options and basics of Medicaid eligibility.