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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 under it.

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 taxpayers.

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 needed.

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 planning advice.

(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 it down.

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 or Medicare.