LTC Bullet: CNN Update on
"Send Granny's Lawyer
to Jail Law"
Thursday May 21, 1998
The Balanced Budget Act of 1997 criminalized professional assistance
with certain Medicaid asset transfers made to qualify clients
for Medicaid's long-term care benefits. This law, dubbed the "Send
Granny's Lawyer to Jail Law," is the latest in a series of
attempts by eight U.S. Congresses and three Presidents to curb
aggressive Medicaid planning.
As usual, the Medicaid planning bar has mobilized to defeat the
effort. The New York State Bar Association is suing Attorney General
Janet Reno in Federal court to have the law declared unconstitutional.
So far, the court has issued a preliminary injunction pending
a final judgment.
In addition, Attorney General Reno sent a letter to Speaker Gingrich
and Congress announcing the DOJ's decision neither to defend the
constitutionality of the law nor bring any criminal prosecutions
In a recent national broadcast, CNN interpreted these events as
putting Medicaid planning "back on solid legal ground."
Did it? What message do these developments send to American taxpayers?
Stephen Moses, President of the Center for Long-Term Care Financing,
is featured in the CNN story with a brief comment.
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Thank you for your time and interest.
CNN "Your Money"
Aired - May 9, 1998 1:42 pm ET
JOHN METAXAS, CNN ANCHOR: A re-ignited debate over the controversial
issue of Medicaid planning Two developments have lifted the legal
cloud that for three years has hung over the practice which allows
middle class families to shift the expense of long-term care to
Sasha Salama has the story.
SASHA SALAMA, CNN CORRESPONDENT (voice-over): A self-employed
graphic designer, Carol Young, saw her income decimated when her
mother, Lucille, shown here in her prime, became increasingly
disoriented from Alzheimer's disease.
CAROL YOUNG: Home care attendants charge anywhere from $6 to $13
an hour. And I was putting in a lot of hours caring for her. I
found out that Medicare did not pay for nursing home care. And
I knew that that was something that in the long term we really
SALAMA: Because Medicare didn't pay, the Young's found another
solution: Medicaid. But, in order to qualify for the public-assistance
program, Lucille had to reduce her net worth by transferring assets
to her daughters.
(on camera): This controversial practice, known as Medicaid planning,
is back on solid legal ground. The first attempt to stop it, the
so-called "Granny Goes to Jail" bill, became law in
1996 and was repealed a year later. It was replaced by legislation
that shifted the criminal burden to lawyers who gave Medicaid
(voice over): But Attorney General Janet Reno has stated that
she will not enforce the latter law on constitutional grounds.
And an April federal court injunction has also effectively shut
DANIEL FISH, ELDER CARE ATTORNEY: This is a ruling that says that
senior citizens can go to lawyers and can get full and complete
advice when they are facing a long-term custodial illness.
SALAMA: At issue, Medicare and traditional health insurance policies
don't cover long-term care costs of several ailments, including
Alzheimer's and strokes. The reason: the daily care doesn't require
someone with an advanced medical degree. But critics say middle-class
people should not turn to Medicaid as a solution.
STEVE MOSES, PRESIDENT, CENTER FOR LONG-TERM CARE FINANCING: Unfortunately,
it has been taken advantage of by people with rather substantial
assets, and by their attorneys, so-called Medicaid estate planning
attorneys. And this has caused a major financial problem for the
government, taxing excessively taxpayers, and diverting resources
that should have gone to the poor, to the upper middle class.
SALAMA: There is one other option for consumers. Buying long-term
care insurance. Premiums cost from several hundred to several
thousand dollars a year, and must be purchased before the onset
of any illness. That's "Your Money." Sasha Salama for
CNN Financial News, New York.
METAXAS: In fact, only 5% of the population age 65 or older requires
long-term care that is not covered by regular health insurance