H.R. 181 seeks to force a community spouse to contribute income from a Medicaid annuity towards the cost of care of a community spouse. This proposed legislation is ill-advised and punitive to the most vulnerable among us, elderly spouses of those in nursing homes who have struggled to save all of their lives.
This measure would disproportionately affect elderly women who often long outlive their institutional spouses and would likely force them into poverty at a faster rate through no fault of their own.
The primary use of a Medicaid annuity is to avoid the need for the community spouse to have to divorce the institutional spouse as the sole means of protecting retirement resources when one spouse enters the nursing home. The passage of this bill will inevitably lead to a higher rate of elderly divorces.
In 2006, Congress already passed rules in the Deficit Reduction Act that made the state the primary beneficiary of spousal annuities which allowed for recovery of unused portions of the funds to reimburse Medicaid for the institutional spouse’s cost of care. Now Congress wants a piece of the community spouse’s income and wants everything left over. This will financial devastate most community spouses who use those funds to help sustain themselves for their own retirements; as a result of impoverishing the community spouse more quickly, H.R. 181 is likely to put more community spouses on other government benefit programs that they would have avoided if they would have been able to retain some of their retirements savings.
The Certified Medicaid Planner™ Governing Board encourages our members and their clients to take a stand. Here are several ways you can help defeat H.R. 181 and protect community spouses:
- SPEAK UP – At first blush, this looks like a noble effort to close a loophole that lets wealthy people take advantage of Medicaid rules. If you let that be the narrative, then H.R. 181 will pass. But the truth is different. These rules have been in place with the purpose of helping community spouses avoid impoverishment, to encourage the use of private retirement plans (defined contribution plans) over the traditional pensions (defined benefit plans), and to help avoid elderly divorces. You can help by writing letters to the editor of your local paper, speaking up on social media by promoting this page to people in your network, and speaking out publicly through community forums, lectures and public events. If you would like talking points, please email firstname.lastname@example.org.
- TELL YOUR STORY – We cannot let proponents of this bill to make it look like these annuities are only used by yacht-owning country clubbers to protect vast nest eggs. The average Medicaid immediate annuity is less than $100,000 and the life expectancy of most community spouses is typically two or three times as long as their institutional spouses’ life expectancy. Have you our your client used a Medicaid annuity to help avoid elderly divorce or to avoid total financial ruin? We want to hear your stories. We can share your stories with the policymakers and the public to help them understand how and why these annuities are used. If you have a good story to tell, send it to us at email@example.com.
- TALK TO YOUR MEMBER OF CONGRESS – Letters and emails to your members of Congress can have an impact. Many members of Congress have open office hours in their district or public forums where they want to hear from you. Letting them know how horrible an idea H.R. 181 is can help raise their level of understand of the complexities that surround this issue. Contact us for a sample letter to your Congressman by emailing us at firstname.lastname@example.org.
The CMP™ Govenring Board is committed to raising awareness of issues that impact its members and their clients. H.R. 181 is a poorly thought through bill that should be stopped and your support and advocacy efforts can help.