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12 Things To Know About Medicaid In Rhode Island

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12 Things to Know About Medicaid In Rhode Island

This is a fantastic recap of the economics and demographics of the Medicaid Program in Rhode Island. I highly recommend all citizens understand the scope and scale of the program in Rhode Island.

1. Rhode Island spends a ton of money on Medicaid every year.

Rhode Island spent $1.785 billion on Medicaid in the 12-month fiscal year that ended June 30, 2013; the total state budget that year was $8.1 billion.

Slightly more than half the money spent on Medicaid services usually comes from the federal government, with the rest covered by taxpayers in Rhode Island.

Here’s a chart showing the annual cost of Medicaid in Rhode Island over the five fiscal years through 2012-13:

Nesi Medicaid chart 1 12-8-2014

2. Nearly one in four Rhode Islanders used Medicaid in recent years.

Part of why Medicaid is such an expensive program is because it’s such a large one. During the 2012-13 fiscal year, 22% of Rhode Island’s population – about 230,000 of the state’s roughly 1 million residents – used Medicaid at some point in the year.

Since there’s some amount of “churn” in Medicaid throughout the year – people signing up, people dropping off – the average number of Rhode Islanders signed up for Medicaid at any point in the fiscal year was somewhat lower: 195,000.

3. Rhode Island spends more per Medicaid enrollee than most states.

Or at least it did as of 2008-09, according to this chart from the Center on Budget and Policy Priorities, a liberal research group:

Nesi Medicaid chart 12 12-8-2014 via CBPP

All the states in the Northeast spent more on Medicaid per beneficiary than the national average, with the exception of Vermont.

4. Obamacare is expanding the Medicaid program significantly.

The Affordable Care Act – Obamacare – expanded eligibility for Medicaid. Unsurprisingly, that has led to a surge in enrollment and will lead to a surge in spending on the program.

Rhode Island’s total spending on Medicaid is projected to be $2.7 billion in the current fiscal year, which runs through June 30, 2015 – an increase of nearly $1 billion from two years earlier. Enrollment is projected to jump from about 190,000 residents at the end of last year to 261,828 residents as of this past summer. The federal government is picking up much of the tab for newly eligible enrollees, however.

Here’s a chart showing that Medicaid spending is projected to consume nearly one-third of Rhode Island’s general revenue (basically, taxes and fees paid in the state) in this year’s budget:

Nesi Medicaid chart 2 12-8-2014

5. Nearly half of Medicaid spending goes to hospitals and nursing facilities.

This chart is pretty self-explanatory:

Nesi Medicaid chart 10 12-8-2014

As the figures at the bottom of the chart show, there’s a big difference in how fast costs have been going up annually between different types of Medicaid providers in Rhode Island.

6. The majority of Medicaid spending is for elderly and disabled residents.

The stereotypical Medicaid beneficiaries are single mothers and their children, and for good reason – in Rhode Island, they made up two-thirds of those who used the program (134,383) in the 2012-13 fiscal year. Their share is up to roughly 80% post-Obamacare, state officials report.

However, children and families aren’t where most of the Medicaid money is spent – not by a long shot.

Elderly Rhode Islanders accounted for just 9% of Medicaid enrollees (18,077 residents) but 27% of Medicaid spending ($484 million) in 2012-13. Similarly, disabled adult Rhode Islanders accounted for just 16% of Medicaid enrollees (30,987 residents) but 37% of Medicaid spending ($667 million).

It cost Medicaid $2,230 per member per month to cover elderly Rhode Islanders and $1,793 per member per month to cover disabled adult Rhode Islanders in 2012-13. It only cost $288 per member per month to cover Rhode Island children and families; they’re relatively cheap to cover.

Here’s the breakdown of spending on the four subgroups of Medicaid beneficiaries:

Nesi Medicaid chart 3 12-8-2014

Put succinctly, the majority of people on Medicaid are children and families, but the majority of Medicaid spending is on elderly and disabled adult residents.

7. Rhode Island Medicaid spending on its two priciest groups is above average.

In 2011, Rhode Island’s Medicaid program spent 68% more than the national average for elderly residents and 15% more for disabled adult residents. These costlier-to-cover groups also made up a larger share of Rhode Island’s Medicaid enrollment:

Nesi Medicaid chart 4 12-8-2014

8. Spending per Medicaid enrollee has been falling, except for the elderly.

Rhode Island’s total Medicaid spending rose an average of 1.3% a year between the state’s 2008-09 to 2012-13 fiscal years, and actually fell by 1.5% per enrollee over that period.

The outlier was elderly residents, the only group for whom cost-per-member rose over that period, as this chart shows:

Nesi Medicaid chart 5 12-8-2014

9. Two-thirds of Medicaid spending on the elderly goes to nursing facilities.

“Most of the growth in Medicaid expenditure for elders has been in nursing home services and home and community based services,” the executive office explains in its report. “The increase in home and community based services is due in part to an effort to invest in alternatives to institutional/nursing home care.”

Nesi Medicaid chart 6 12-8-2014

And here’s a chart showing the same breakdown for adults with disabilities:

Nesi Medicaid chart 7 12-8-201410. Just 7% of Rhode Island Medicaid enrollees cost more than $1 billion a year.

This may be the most astounding fact on this page: the top 7% of Medicaid beneficiaries account for nearly two-thirds of spending on medical claims.

Put another way, out of the roughly 230,000 Rhode Island residents who used Medicaid during the 2012-13 fiscal year, on average one group of about 119,000 filed only $992 each in medical claims, while another group of about 16,000 (that top 7%) filed $66,000 each in claims.

“These high utilizes typically present with multiple, complex conditions, requiring care coordination across a variety of providers,” the executive office’s report explains.

Here’s a chart:

Nesi Medicaid chart 8 12-8-2014

So where did all that money go? “Nearly half (49%) of claims expenditure on high cost users is on nursing facilities and residential and rehabilitation services for persons with developmental disabilities,” the report says. It also says: “Many high cost users are those who are institutionalized year-round.”

Here’s a chart on that:

Nesi Medicaid chart 9 12-8-2014

11. Officials say Medicaid is a key reason Rhode Island faces large deficits.

The House Fiscal Office is projecting a larger budget shortfall in each of the coming fiscal years, according to these estimates provided to state lawmakers last month:

Nesi Medicaid chart 11 12-8-2014

12. Growing Medicaid costs are a key concern to state officials.

The same House Fiscal presentation singled out Medicaid for growing far faster than state revenue:

Nesi Medicaid chart 12 12-8-2014

13. Check out this Nesi’s Notes post featuring some interesting feedback to the Medicaid numbers.

RI Receives $112.8M In Federal Funds For Health-Benefits Computer System

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Federal Grant Clears Way For Design and Implementation of Health-Benefits Computer System

On October 19, 2015 the State of Rhode Island announced it has received an additional $112.8 million in federal funds for a new computer system. The system, whose overall cost has soared to $380 million, is being built to verify eligibility for Medicaid, tax credits for HealthSource RI and other public assistance.

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The expectation with the new computer system is that it will allow all future applications for benefits to be completed on-line, allowing for better tracking and controls. Currently, if a person wishes to apply for Medicaid the application is done via a booklet with multiple pages of supporting document all needed to accompany the application. In the near future, applications will be able to be submitted electronically and all supporting documents will be scanned and attached to the application, reducing time and errors.

Still have questions as to Medicaid qualification and benefits? Contact our office for a free consultation.

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IRS Announces 2016 Estate and Gift Tax Limits

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2016 Estate and Gift Tax Limits –

For 2016, the Internal Revenue Service has announced that the estate and gift tax exemption is $5.45 million per individual, up from $5.43 million in 2015. That means an individual can leave $5.45 million to heirs and pay no federal estate or2016-gift-tax-ornament_optomized-480x350 gift tax. A married couple will be able to shield $10.9 million from federal estate and gift taxes.

The annual gift exclusion for 2016 remains the same at $14,000.

Why is this important? Most people have a desire to pass as many assets as they can to their heirs. When deciding on your estate plan, knowledge as to what portion of your estate, if any, may be subject to estate taxation is critical in deciding on a plan.

My assets are below the 2016 threshold, should I still be worried? Maybe. Even though the you may be below the Federal level, you may be above the levels taxed by each state. For example, the State of Rhode Island has set a limit of $1,500,000 before an estate tax is due; Massachusetts is even worse being set at $1.0 million. Other states, such as Florida and New Hampshire do not impose any estate tax.

Still concerned and confused about estate taxes? Contact us for a free consultation.

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Special Needs Trusts: Planning for Persons with a Disability

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Special Needs Trusts – Choosing the Right Option – Excerpt from an October 9, 2015 Seminar

            Self-settled special needs trusts were authorized by Congress in 1993. The language in the statute is very brief, but raises many issues. “A trust containing the assets of an individual under age 65 who is disabled (as defined in §1614(a)(3)) and which is established for the benefit of such individual by a parent, grandparent, legal guardian of the individual, or a court, if the state will receive all amounts remaining in the trust upon the death of such individual up to the amount equal to the total medical assistance paid on behalf of the individual under a state plan under this title.” Most commonly, self-settled special needs trusts are required in connection with personal injury settlements, but can also be used when a disabled individual receives an inheritance, or is receiving equitable distribution, alimony, or child support.

The purpose of the self-settled special needs trust is to enable the beneficiary to maintain or obtain eligibility for means-tested public benefits such as SSI and Medicaid. Trusts may also be used when the beneficiary is receiving SNAP (formerly Food Stamps) or Section 8 Housing. Beneficiaries receiving SSDI and Medicare do not require a special needs trust, because these benefits are insurance-based rather than means-tested.

Means-tested public benefits have income tests and many, such as SSI and Medicaid, have asset tests. An individual with disabilities who receives the proceeds of a personal injury settlement, an inheritance, equitable distribution, alimony, or child support is likely to be in a financial position that exceeds the income or asset test limit for any given means-tested program. By placing the assets in a properly-drafted self-settled special needs trust, the assets are non-countable. If the trust is administered properly, distributions from the trust on behalf of the beneficiary are generally not considered income.

For some beneficiaries, the SSI payment, Food Stamps, or Section 8 Housing subsidy is important; for most of the beneficiaries, however, the Medicaid benefit is absolutely critical. By placing funds in the self-settled special needs trust, the individual is able to maintain important needs-based public benefits while at the same time enjoying the benefits of the settlement, inheritance, equitable distribution, alimony, or child support.

Clients are often confused as to what they can do for a disabled child or loved one. Many may have some level of experience or knowledge, having associated with many other individuals who they themselves have disabled children. The conversations and preconceptions as to what can be done based on these conversations with friends and acquaintances can be both a blessing and a curse. The blessing is in that they may have a better than average understanding that there are options to protect assets on behalf of the disabled beneficiary, the curse is that there may be a significant amount of misinformation that you may need to navigate through before a client agrees to a specific course of action.

Assessing the Degree of the Beneficiary’s Current and Future Disability Needs.

The purpose of a Special Needs Trust is to see that the money intended for the beneficiary goes to the beneficiary without jeopardizing her or his eligibility for government benefits (e.g., SSI, Medicaid, and Social Security). Secondly, it serves to protect the money from being squandered or inappropriately spent.

In a Special Needs Trust, the trustee has the duty to use the funds to pay for expenses of the beneficiary that supplement (not replace) benefits received from various governmental assistance programs. These “special needs” might include:

  • Fees for attending special-needs facilities.
  • Insurance
  • Rehabilitation
  • Medical and dental expenses.
  • Eye glasses.
  • Transportation
  • Automobile
  • Computers and electronic equipment.
  • Vacations
  • Athletic training and competitions.
  • Companion services/home health assistance.
  • Other items to enhance self-esteem.
  • Training programs.
  • Maintenance
  • Education
  • Entertainment

The Special Needs Trust is a type of discretionary trust in which the trustee is given the power to manage assets in the trust (e.g., to invest trust funds and to sell assets) and the discretion to use trust assets for the benefit of the person with special needs. Trust assets can be in the form of cash, stocks, personal property, and real property. The trust also can own or be the beneficiary of life insurance. [1]

Knowing these options is critical to understanding the drafting and advice you provide a client. If you have a beneficiary that is incapacitated and will remain institutionalized for the remainder of their lives then the Special Needs Trust can be used just as a fallback for the beneficiary as there is little to no likelihood that the beneficiary will be able to use the resources in a manner that materially enhances their life enjoyment. If on the other hand the beneficiary is able to enjoy any of the above referenced activities then the client and the beneficiaries will enjoy the Trust.

[1] “Planning For The Long Term Care Of A Special Needs Individual”, J. David Spiceland, CPA and Craig J. Langstraat, LL.M., Practical Tax Strategies, Volume 73, Number 03, September 2004.