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LTC Bullet:

Bill Gates on Medicaid?

Tuesday August 15, 2000


Should Microsoft Chairman Bill Gates have Medicaid pay the bill if he ever needs long-term care? It makes sense "if you follow the arguments of elder law attorneys to their logical conclusions," says an Arkansas state official and critic of Medicaid planning. Here's the story:

The August 2000 issue of the trade journal Contemporary Long-Term Care contains an article entitled "The Booming Business of Elder Law" by New Hampshire nursing home administrator David Irwin.

Perhaps you've heard us say: "You can't sell apples (LTC insurance) on one side of the street when they're giving them away (Medicaid benefits) on the other." Irwin's article shows that Medicaid planners are still dispensing plenty of the free fruit that gums up the long-term care insurance market.

Easy money for Medicaid planners means tough sales for responsible financial planners and insurance agents. Want to see what you are up against? Here are some excerpts:

"Attorney David Ferber draws potential clients to the elder law seminars he holds in the basement auditorium of a Manchester, N.H., public library with newspaper ads promising that attendees will 'learn the startling truth about nursing homes and Medicaid.' Ferber claims that, 'Most people don't know that the law allows you to shelter your assets' from the cost of long term care."

. . . . . . . . .

"For Medicaid-planning purposes, he generally proposes an irrevocable trust to protect one's home from Medicaid's asset recovery process and an irrevocable family investment agreement, a sort of all-in-the-family annuity that shelters assets but still generates income. The sessions end with the participants filling out a 'feedback sheet' asking for basic information and offering a free hour of consultation."

. . . . . . . . .

"[Ferber is] part of a booming business. The American Bar Association didn't even recognize elder law as a specialty until 1992, and the National Academy of Elder Law Attorneys, the specialty's professional association, began in 1987 with fewer than 15 members. Today, the organization has grown to 4,000 lawyers . . . ."

. . . . . . . . .

"[A] common refrain from elder law attorneys is that their services benefit people of modest means . . . . Budish [a leading Medicaid planner and author of a best-selling 'how-to' book] says most clients of elder law attorneys have $200,000 or $300,000 in assets . . . ." [Comment: only the top 10% or 15% of seniors have assets this large.]

. . . . . . . . .

"The companion argument is that Medicaid planning is really no different from estate planning or tax planning . . .'what is the ethical difference between Americans using tax deductions to protect assets from Uncle Sam and the middle class using gifts or trusts to protect some assets from a nursing home?,' asks Budish." [Comment: perhaps the difference is that tax planners are not reduced to welfare dependency and nursing home institutionalization while Medicaid planning victims are.]

. . . . . . . . .

"Not surprisingly, those charged with carrying out public policy see the situation quite differently. When asked about asset preservation strategies, many Medicaid administrators go right to the statement of public policy contained in the Medicaid law, which states that the program is intended for 'aged, blind or disabled individuals, whose income and resources are insufficient to meet the costs of necessary medical services.'",

. . . . . . . . .

"Roger Auerbach, who administers the Medicaid long term care program in Oregon, has little sympathy for the arguments made by the asset preservers. 'When an elder law attorney says he's so proud that he was able to get the taxpayers to pay, I don't consider that to be in the spirit of the law and the philosophy of the program we administer . . . [which is] to serve the poor and the frail' not those who have made themselves poor by visiting a lawyer."

. . . . . . . . .

"Paul Offner, who runs Medicaid in the District of Columbia, is even harsher, calling attorneys' asset preservation work 'a relatively amoral activity' and characterizing their practices as 'chicanery.'"

. . . . . . . . .

"Dahlgren [Richard Dahlgren, an attorney for the Arkansas Department of Human Services] thinks the elder law attorneys perform a disservice when they turn those who would otherwise pay for their care into Medicaid recipients. 'If you follow the arguments of elder law attorneys to their logical conclusions, Sam Walton and Bill Gates should qualify for Medicaid,' he says."

With Medicaid planners putting so many people on Medicaid, who will buy LTC insurance and how will America provide quality care for the needy? There is a better way. Check out the Center for Long-Term Care Financing's white papers: "LTC Choice: A Simple, Cost-Free Solution to the Long-Term Care Financing Puzzle" and "The Myth of Unaffordability: How Most Americans Should, Could and Would Buy Private Long-Term Care Insurance." [LTC Choice ($24.95) and Myth of Unaffordability ($34.95) can be ordered by contacting Sarah Allen toll free at 877- 557-3627 or Both reports are free to media and lawmakers.]