The United States is rethinking how it pays for healthcare.

There has been a lot of public discussion about the fate of the Affordable Care Act – whether it will be repealed, and if so, what its replacement (if any) will look like.  There has been less discussion about something related that may have an even greater impact on Americans – Medicaid reform.

Medicaid is a joint federal and state program that pays for healthcare for people who meet its eligibility requirements.  That means that Medicaid is paid for by both the federal government and the individual states that administer it.  For example in New Jersey, Medicaid is regulated and managed by the state Department of Human Services, and the funding comes partially from the New Jersey state budget, and partially from the federal government.

Since its inception in the 1960’s, funding Medicaid has been an open-ended commitment from the federal government.  Federal and state governments set rules on who was eligible for Medicaid, and the United States committed to provide enough funding to pay for every Medicaid beneficiary’s cost.  There is no limit on how much the federal government will spend on Medicaid, it simply pays (with states) for everyone who qualifies.

Now, that may change.  There is a proposal circulating now to change Medicaid funding to “block grants,” where the federal government would provide a fixed amount to each state based on that state’s Medicaid spending in 2016.  This would almost surely result in the federal government providing less money to states to fund Medicaid.

If that happens, states would either have to raise taxes, cut spending elsewhere (like schools and roads), or cut spending on Medicaid.   Or maybe all three.  If the cuts to Medicaid spending get drastic, the government may impose drastic measures, making it more difficult to qualify for Medicaid or preserve assets for other family members.  There is already a bill in congress to limit lucrative Medicaid annuity planning.

Point being, if you or a loved one may need Medicaid, and also want to preserve assets within your family, it may become harder to do so in the future, so it would be wise to start thinking about that now.

For more information on Medicaid planning and your specific situation, call or email FriedmanLaw today.