Keywords: Medicaid, nursing home, financial planning, aging, asset transfers
Abstract: Medicaid covers the costs of a long nursing home stay. This coverage may create an
incentive for the elderly to transfer their assets to their children in order to qualify
for Medicaid before entering a nursing home. Previous researchers had found little evidence
that such behavior was widespread or that asset transfers were large. However, data from
AHEAD suggest that the self-assessed probability of entering a nursing home is a
significant determinant of the likelihood of making an asset transfer.
The budgetary implications of these Medicaid-induced asset transfers are probably fairly small,
but not insignificant.
Full paper (2085 KB PDF)
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Last update: April 1, 2004