Elder Law Attorney Promotes Medicaid Alternatives
Thursday March 16, 2000
In the March 2000 issue of The ElderLaw Report, a newsletter for elder law attorneys, attorney Jerry A. Hyman advises his peers to consider self-funding for long-term care. He says:
"In this article, I present the case for the elder law attorney as financial planner and outline the critical need for some investment expertise when assisting clients with the self-financing alternative to Medicaid."(p. 1)
"I find that many people prefer to avoid Medicaid if at all possible, and that in about 10 to 20 percent of my nursing home financing cases a self-financing plan can achieve better results than a Medicaid plan." (p. 1)
Hyman describes the usual process which includes presenting a client with a "do nothing" alternative, i.e., spending down assets until Medicaid eligibility is obtained. Hyman's example client, Mr. Henry, would require nine or ten years to qualify for Medicaid in this way. Hyman then describes the all too typical Medicaid planning alternatives.
"When Mr. Henry expresses dissatisfaction with this ["do nothing"] option, you outline how Medicaid planning might work. You suggest that Mr. Henry might increase exempt assets by putting more countable assets into his house and into pre-paid funerals. You tell him that he can give away assets, and you explain the 36-month and 60-month look-back rules and how transfer penalty periods are calculated. Perhaps you also tell him that he can buy an annuity for himself, as long as it meets Medicaid’s test of ‘actuarial soundness’, or he might petition the Medicaid agency to keep more than the $84,000 spousal allowance. Finally, you explain to him that each of these planning options can be used by itself or in combination to qualify Mrs. Henry for Medicaid in far less than nine years and without spending down $440,000." (p. 2)
To his credit, however, Hyman advocates self-financing through investment as a better and simpler option in some cases. Additionally, he has this criticism of the Medicaid program:
"In considering the ‘self-financing’ option, we should not lose sight of the onerous nature of Medicaid. It remains, technically, a welfare program. The application process may take months and require verification of every fact and figure stated in the application, stretching back 36 months or even longer. There will be difficulties obtaining this information, and frustration communicating it to harassed, overworked and poorly-trained Medicaid caseworkers. Even if the process goes smoothly, it is a huge invasion of privacy. And it gets repeated every so often, albeit in a more compact version, when the Medicaid agency performs eligibility re-determinations or adjusts the ‘patient pay’ amount. Apart from dealing with the Medicaid agency, there is also the problem of finding and keeping one of the limited number of ‘Medicaid beds’ in a nursing home. When the Medicaid recipient later dies, there is the possibility of estate recovery." (p. 3)
Hyman concludes that:
"It is important that elder law practitioners know enough to present alternatives to Medicaid whenever feasible. Before aggressively planning for Medicaid, taking a moment to make a rudimentary investment return calculation should be a part of the elder law attorney’s financial planning process. When self-financing seems reasonable, the elder law attorney ought to discuss it with the client." (p. 4)
What a refreshing change of pace from the tortured methods of manipulating Medicaid usually recommended by elder law attorneys.
Source: Jerry A. Hyman, "Self-Financing Long-Term Care: The Elder Law Attorney as Investment Counselor," The ElderLaw Report, Vol. XI, No. 8, March 2000, pps. 1-4.