Asset Transfer and Nursing Home Use: Empirical Evidence and Policy Significance - Issue Brief

The perception that many “well-to-do” elderly Americans transfer assets to gain Medicaid coverage for nursing home care is an issue that has consumed considerable policy interest in recent years. The concern is that the individual’s assets should be used to pay privately for nursing home care, instead of being transferred to relatives. Because Medicaid was designed to be a safety net only for the poor, asset transfer practices are thought to distort the intent of the Medicaid program and unnecessarily inflate public spending. In response to these concerns and as an attempt to reduce spending, the Deficit Reduction Act of 2005 (DRA) included provisions tightening the Medicaid eligibility rules related to asset transfers and nursing home use.