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LTC Bullet: More Duplicity From Medicaid Planners

Wednesday November 4, 1998


Elder law attorneys who specialize in Medicaid planning routinely insist they are helping only those unfortunate persons in crisis and in need of immediate care, i.e., those for whom long-term care insurance is not an option.

In another example of Medicaid planner duplicity (see "LTC Bullet: Attorneys Promote Medicaid as Alternative to LTC Insurance" 10/23/98), National Academy of Elder Law Attorneys (NAELA) board member Thomas Begley, Jr. writes to his fellow practitioners in the "Elder Law Report" (10/98) that an "income only trust" to qualify a client for Medicaid is a great idea for seniors who are years away from needing care.

In his article, "Income Only Trusts: Having Your Cake and Eating It Too," attorney Begley writes: "Although income only trusts can be useful in crisis planning, they are even better in situations where it does not appear that Medicaid will be needed for a considerable period of time. The fact that there is a five-year, rather than a three-year, lookback period is not significant if it is anticipated that Medicaid will not be required for five years...."

Attorney Begley confirms what observers have noted for years: Medicaid planners promote their services to everyone, regardless of financial or health status. While some clients are unable to purchase long-term care insurance, others are diverted from insurance with fancy planning schemes such as the income only trust promoted by attorney Begley.

Attorney Begley concludes his tutorial by stating that in properly drafting an income only trust, "the elder law practitioner will ensure that the client can truly have his cake and eat it too." Hardly.

The pitfalls with any Medicaid planning technique are numerous and potentially dangerous to clients. In this case, a poorly drafted trust can expose unwitting clients to lengthy ineligibility periods and estate recovery of Medicaid monies. Moreover, Medicaid suffers from a notorious reputation for problems with access, quality, reimbursement, discrimination and institutional bias.

There will always be a need for publicly-financed care to help those unable to insure privately. The problem is that too many Medicaid planners want to enroll everyone capable of paying them to do so.

The subtle message Medicaid planners send to an unsuspecting public is that "you can ignore the risk of long-term care, avoid the premiums for private insurance, and get a free ride if you ever need care."

No wonder the LTC insurance market hasn't taken off!

Source: "Income Only Trusts: Having Your Cake and Eating It Too," The Elder Law Report, Vol. X, No. 3, October 1998, pps. 1-4.