asset transfers. The size of the transfers were greater at low and moderate levels of nursing home entry probability and became smaller as the probability of nursing home entry increased. The pattern suggests that the elderly make the conscience decision to protect their assets through transfers, and once nursing home care is imminent, make smaller transfers to avoid penalization for Medicaid eligibility. The authors suggest that they found a greater rate of transfers among the elderly population than previous studies because they were able to explicitly focus on transfers made by individuals before they became disabled or entered a nursing home rather than infer activity from changes in asset levels after their health deteriorated. Some research suggests that married couples partake in Medicaid planning at a higher rate than individuals. Burwell and (1995) estimated that 5% to 10% of unmarried Medicaid LTC coverage applicants and 20% to 25% of married applicants transfer wealth to qualify for Medicaid. Therefore, when an elderly individual has a healthy spouse to take into account, he or she may be more likely to partake in Medicaid planning. Theory and Model No research has thoroughly examined the relationship between Medicaid LTC eligibility and the probability of divorce. The conflicting results of past literature on Medicaid planning, examining asset transfers done through gifts or trusts, provide an interesting backdrop to further examine divorce as a possible mechanism of Medicaid planning. Results that show little evidence of elderly Medicaid planning could suggest that government regulations and penalties for asset transfers in a given period” are discouraging elderly individuals from “look-back making asset transfers or establishing trusts. The imposed hardship of the trade-off between facing a penalty period before you are allowed to receive Medicaid government assistance for
asset transfers. The size of the transfers were greater at low and moderate levels of nursing home entry probability and became smaller as the probability of nursing home entry increased. The pattern suggests that the elderly make the conscience decision to protect their assets through transfers, and once nursing home care is imminent, make smaller transfers to avoid penalization for Medicaid eligibility. The authors suggest that they found a greater rate of transfers among the elderly population than previous studies because they were able to explicitly focus on transfers made by individuals before they became disabled or entered a nursing home rather than infer activity from changes in asset levels after their health deteriorated. Some research suggests that married couples partake in Medicaid planning at a higher rate than individuals. Burwell and (1995) estimated that 5% to 10% of unmarried Medicaid LTC coverage applicants and 20% to 25% of married applicants transfer wealth to qualify for Medicaid. Therefore, when an elderly individual has a healthy spouse to take into account, he or she may be more likely to partake in Medicaid planning. Theory and Model No research has thoroughly examined the relationship between Medicaid LTC eligibility and the probability of divorce. The conflicting results of past literature on Medicaid planning, examining asset transfers done through gifts or trusts, provide an interesting backdrop to further examine divorce as a possible mechanism of Medicaid planning. Results that show little evidence of elderly Medicaid planning could suggest that government regulations and penalties for asset transfers in a given “look-back period” are discouraging elderly individuals from making asset transfers or establishing trusts. The imposed hardship of the trade-off between facing a penalty period before you are allowed to receive Medicaid government assistance for