April 25, 2001
Ever since Congress and then-President Bill Clinton nailed them with mandatory estate recovery (OBRA '93), "Throw Granny in Jail" (HIPAA '96) and "Throw Granny's Lawyer in Jail" (BBA '97), the Medicaid estate planning attorneys have laid low. Their conference agendas and publications carefully avoided the phrase "Medicaid estate planning." Even their highly publicized firebrands toned down the rhetoric considerably. Their trade association, the National Academy of Elder Law Attorneys (NAELA), plateaued at just under 4,000 members after skyrocketing for years. Of course, we know from following their actions—not just their words—that the actual practice of artificially impoverishing clients to qualify them for Medicaid hardly skipped a beat. Whether from shame or fear of prosecution, however, the Medicaid planning bar hunkered down in defensive mode for several years and didn't promote their services as loudly as before.
all over now. It's clear today that
HCFA and the State Medicaid programs are not aggressively enforcing the
eligibility restrictions and estate recoveries mandated in the Omnibus Budget
Reconciliation Act of 1993. Congress
repealed the provision in the Health Insurance Portability and Accountability
Act of 1996 that made it a crime punishable by a fine and imprisonment to transfer
assets for the purpose of qualifying for Medicaid nursing home benefits.
Even the criminal penalty in the Balanced Budget Act of 1997 against
financial advisers who recommend Medicaid planning for a fee has been
emasculated by the Reno Justice Department's (justifiable) refusal to enforce it
as unconstitutional. Bottom line:
with all of the obstacles out of their way, the Medicaid planners want to
make hay while the sun shines before responsible public officials can rain on
their parade again.
restored confidence and outspokenness was evident at NAELA's 2001 Elder Law
Symposium in Vancouver, British Columbia last weekend.
The agenda for this event was larded with more Medicaid planning
presentations than any we've seen since the Clinton Administration and a new
Republican Congress came after "public benefits planning" abuses with
a meat axe in the mid-1990s. What
follows are several examples. But
don't take our word for it. Anyone
can order the full-length audiotapes of these programs and/or the entire
conference from ADC Services, 69013 River Bend Drive, Covington, LA, 70433.
Fax them at 985-892-9975 and ask for the order form for "National
Academy of Elder Law Attorneys: The
13th Annual NAELA Symposium 2001, Crossing Borders, April 18-21,
Medicaid Planning Sampler
Proper Use of Annuities in Long-Term Care Planning," by Dale M. Krause and
Bridget O'Brien Schwartz. The
conference program says this session will discuss the use of "commercial
annuities, as a spend down mechanism in long-term care planning."
The idea is to impoverish a senior instantaneously by means of
annuitizing his or her wealth for the purpose of gaining Medicaid nursing home
eligibility while simultaneously avoiding estate recovery liability.
Krause claims it works (and heretofore it has) while his co-presenter
warns "the door is closing on the ability to use annuities,"
"beware of aggressive tactics," and "play it safe during this
amorphous time." As usual, the
state and federal governments are finally wising up to this trick as they've wised up to
other hot gambits in the past. The
only remaining question is how many seniors will be impoverished and hurt before
responsible officials shut down this latest legal scam.
Life Care Agreements," by Scott Solkoff and Margaret Hall.
The conference program says "Seniors will often give all or some of
what they have to a family member or other caregiver in exchange for the promise
to provide care for the rest of the senior's life.
These agreements can be used to transfer assets for Medicaid eligibility,
but are also fraught with perils." U.S.
Medicaid planner Solkoff admitted in response to our question that he's used
this technique to make estates in excess of $200,000 disappear overnight. We know from other conference programs and publications that
life care contracts in excess of $500,000 have been done, each generating
attorneys fees north of $15,000—to put someone on welfare! Co-presenter Canadian Margaret Hall of the British Columbia
Law Institute reported on her research exposing financial abuse of the elderly
by means of independent life care agreements.
for the Small Business or Family Farm," by Lee M. Holmes and Steven H.
Stern. Most people do not realize
that a business of unlimited value, including the capital and cash flow, is
exempt from Medicaid income and asset restrictions.
Business owners walk right onto Medicaid without spending down, and with
a little help from a Medicaid planner, they can easily avoid estate recovery as
well. You say you don't own a
business, but you need nursing home care? No
problem. Hire a Medicaid planner,
form a corporation, put your money into it, and apply for Medicaid.
According to presenter Holmes, if you can do this for the husband, then
"You don’t need long-term care insurance on the wife, because all the
assets are exempt." Other
"planning opportunities" include hiring on at a relative's company:
"Mom could invest her money in the son's business, still take a
salary, and be eligible for Medicaid."
Your tax dollars at work!
Planning by Guardians—Panel Presentation," by Edwin M. Boyer, Howard S.
Krooks, and Paul A. Sturgul. As
dangerous as Medicaid planning is for aging seniors who are still mentally
competent, allowing a "guardian" to impoverish and place them in a
welfare nursing home is unthinkably dangerous and cruel.
Yet that is precisely what many Medicaid estate planning attorneys
advocate. Seniors who retain their
wealth also retain their dignity and independence.
They can purchase quality long-term care in the private marketplace at
the most appropriate level—home care, assisted living and nursing home care
only as a last resort. Seniors
whose wealth has been expropriated for whatever ostensibly benign purpose have
no options left but to receive care in a welfare-under-financed institution.
Once their guardians have taken their money, much of the incentive to
visit and look after them is gone as well.
Refusal," by Daniel G. Fish and Bernard A. Krooks (past and future NAELA
Presidents, respectively). Too much income and
assets, but you want the taxpayers to pay for your long-term care?
No problem. Just transfer
everything from the ill spouse to the well spouse (allowable without penalty
under Medicaid rules). Then, just say no! That's
right, in New York, Medicaid planning attorneys routinely advise husbands and
wives who have been married for decades to take all their sick spouse's money
and sign formal legal papers refusing to contribute to their care.
Faced with an impoverished, medically qualified applicant, the state and
federal Medicaid program has no choice but to grant nursing home benefits.
Oh sure, they can go to court and sue the recalcitrant spouse who walked
off with all the wealth, but that is expensive to do and is usually deemed
politically infeasible. The purpose
of this presentation was to chastise members of the audience for not exporting
this Medicaid planning technique more aggressively to their own states, thus
leaving many prosperous potential clients uncovered by America's long-term care
Long Term Care Options: The Good,
The Bad, and the Ugly," by Joanne Bass, James M. O'Reilly, and Timothy M.
Vogel. Last, but not least, having
contributed to the virtual destruction of America's long-term care service
delivery system by overwhelming it with artificially impoverished welfare
recipients, Medicaid planners have two new ways to make money.
One way is to encourage aggressive litigation against nursing homes when
they provide deficient care, thanks to excessive Medicaid caseloads and
starvation-level reimbursements. The
other way was the subject of this program.
Recognizing that they can no longer find decent nursing home care for
clients they've put on Medicaid, these elder law attorneys want to ship the
infirm seniors off to Thailand, Costa Rica or Uruguay where their Social
Security checks will still buy quality professional care, their heirs'
inheritances will remain untouched, and plenty will be left over for generous
attorney's fees. They call this the "globalization of long-term
care." How can we get demented
elders across the border? Drug them
with "happy pills." How
can we make sure they get decent care? Three
hundred dollars a month will buy a geriatric care manager to look after Mom or
Dad for a month in a third world country. Visiting
gramps at the home won't just be a Sunday outing anymore.
This presentation was so bizarre, you would have to hear it to believe
devastating impact of these and many other Medicaid planning techniques on the
ability of Medicaid to provide quality care for the poor and on the flagging
demand for private long-term care insurance should be obvious.
Without the Center for Long-Term Care Financing to bring these abuses to
the attention of legislators, public policymakers, and the media, Medicaid
estate planning would explode rapidly out from the boundaries within which it
has been contained thus far. Even
with our undaunted efforts, as this LTC Bullet proves, Medicaid planners are
becoming more and more aggressive every day and the techniques they advocate are
increasingly outrageous. Help us
sound the warning. Forward this
Bullet to everyone you think might care. Attend
the Medicaid planning seminars you see advertised in the newspapers and warn the
unsuspecting seniors who attend them of these dangers.
If you want to see our advocacy continue, please support the Center with
a tax-deductible contribution.