March 20, 2006
The Sun News
JOHN C. DRAKE

COLUMBIA, S.C. - Low-income families would be required to report their assets, in addition to their income, to qualify for Medicaid under a state proposal aimed at preventing the wealthy from abusing the system.

The Department of Health and Human Services says a loophole is allowing some people who could afford their own health insurance to receive benefits from Medicaid, the state-federal insurance program for the poor and elderly. Since Medicaid eligibility in South Carolina is based on family income, a person could have tens of thousands of dollars in the bank and still qualify for publicly funded health care.

Under the plan, recipients would have to report stocks and bonds, checking and savings accounts and vehicles.

If their assets exceed $20,000, they would no longer be eligible for Medicaid.

"This targets the outliers that are trying to exploit the system," said agency spokesman Jeff Stensland. "This should not create a barrier of any kind for people that are truly in need."

But one advocate for the poor said she worried a family could lose their Medicaid benefits because they own a car or land.

"You would hate for someone who just lost their job, and their child needed to go onto Medicaid, not to get Medicaid because their car was worth too much," said Sue Berkowitz, director of the South Carolina Appleseed Legal Justice Center, which advocates for low-income families.

The rules, which will be presented to the agency's Medical Care Advisory Committee for review Tuesday, would not count the first $20,000 in equity on the first vehicle against an applicant. It also would exclude a person's primary home and the land, qualified retirement plans and some life insurance policies.

Stensland noted that the proposed $20,000 limit is higher than states that still have asset tests.

Still, Berkowitz said the plan should allow discretion in cases where a family owns land that it cannot divest or has a trust intended for future needs.

"It's a shame that anyone who has substantial resources available would take advantage of the system," Berkowitz said. "Because it ends up putting rules on the system that could hurt people who truly need this benefit."

Stensland said the agency began working on the change because officials heard of a few cases of people with "substantial means" claiming Medicaid. He said he does not know how many people could be declared ineligible. More than 400,000 Medicaid recipients would have to begin reporting assets under the change.

"We don't feel like we're going to recoup a great amount of money," he said. "It's more about maintaining program integrity, and if we know of individuals who are very well-off who are on Medicaid, we feel like we need to be doing something to stop that."

The policy would affect new applicants beginning May 1 and would be incorporated into the annual review for current recipients. The agency also will conduct random audits.

The affected programs include Partners for Healthy Children, Low Income Families, Transitional Medicaid and Optional Coverage for Pregnant Women and Infants.

Programs for the disabled and elderly already consider an applicant's assets in determining eligibility.

South Carolina was one of more than a dozen states nationwide to eliminate the asset test for Medicaid eligibility by 2001, according to a report by the Kaiser Family Foundation. The policy group says states that eliminated the asset test did so because it made it easier to determine applicants' eligibility, and made some families more likely to apply.

The group's executive director, Diane Rowland, said some can get harried when having to report assets.

"The asset test adds a lot of documentation," Rowland said, noting that many people have trouble providing the right paperwork and end up frustrated.