LTC Bullet: They're Baaack, Part II: Frank Comments
July 3, 2001
weeks ago, we brought you an LTC Bullet titled "They're Baaack . . .
Medicaid Planners Rise Again" about the resurgence of Medicaid estate
planning since the Justice Department declined to enforce the "Throw
Granny's Lawyer in Jail" law (the Balanced Budget Act of 1997).
We received a lot of positive feedback on this Bullet including requests
to republish it in other venues. Lately,
national media interest in Medicaid planning has increased as evidenced by Jane
Bryant Quinn's recent column, Ann Davis' Wall Street Journal article, other
print media coverage and recent inquiries to the Center from a network nightly
the obvious concern about this subject, we've decided to present several
additional LTC Bullets designed to clarify what Medicaid planning is, how and by
whom it is practiced, and the lasting damage it causes.
These Bullets will summarize and quote from Medicaid planning training
sessions conducted at the National Academy of Elder Law Attorneys' (NAELA's)
2001 Elder Law Symposium held April 18 to 21, 2001 in Vancouver, British
Columbia. NAELA is the Medicaid
planners' trade association; its conferences emphasize training members in the
arcane techniques of Medicaid estate planning.
planning is the lucrative legal art and science of artificially impoverishing
prosperous seniors to qualify them for Medicaid nursing home benefits.
Medicaid planning is problematical because (1) it condemns incapacitated
elders to welfare-financed nursing home care who could have paid privately for
quality home care or assisted living, (2) it overburdens Medicaid with
recipients it was never intended to serve, thus reducing access to quality
long-term care for the needy, (3) it undercuts the financial viability of
nursing homes by overloading them with Medicaid residents for whom reimbursement
is often less than the cost of providing the care, and (4) it reduces the
public's sense of urgency about long-term care, thus inhibiting the market for
privately financed home and community-based services and the private financing
alternatives, such as home equity conversion and private long-term care
insurance, to pay for them.
people believe that Medicaid planning is relatively uncommon and that it is
usually practiced by questionable characters representing fly-by-night firms.
The truth is very different. Medicaid
planning, defined broadly to include any divestiture or shelter of income or
assets to qualify for Medicaid, is almost universal and is frequently practiced
by ostensibly upstanding legal and/or financial planning professionals.
following quote is excerpted from a program titled "Advocacy and Planning
Opportunities: The Maryland Experience with the Medicaid Home and Community
Based Services Waiver" delivered at the NAELA conference referenced above
by Attorney Jason Frank. According
to his introduction "Jason Frank is a graduate of the New York University
School of Law. He practices law in
Lutherville, Maryland. He
previously was the County Attorney for the Baltimore County Department of Aging.
He has been co-founder and past Chair of the Maryland State Bar
Association Elder Law Section. He has been active in NAELA.
He is currently Chairman of the Maryland/DC chapter.
He also teaches as an adjunct at Johns Hopkins University, the University
of Maryland Law School and the Maryland Institute of Continuing Professional
Education of Lawyers." Most of
Mr. Frank's presentation discussed his successful efforts in Maryland to expand
Medicaid financing to include home and community-based services.
Here's what he had to say in conclusion, followed by our translation and
right, this is what we advocated for, this is what we got, now what?
Well, this is a Medicaid eligible population.
What do we do with people who come to us seeking Medicaid in nursing
homes? WE HELP THEM PLAN FOR ELIGIBILITY. This is the same population.
We're just not making them go into nursing homes.
So the planning opportunities are substantially the same.
Because all of the financial eligibility rules were included in this
program, all of the EXEMPT TRANSFERS, all of the EXEMPT TRUSTS, the use of
ANNUITIES, all of these are viable in the waiver program just like for nursing
homes. HALF-A-LOAF . . . still
effective. Spousal impoverishment
rules . . . still in effect, though I want to point out because of the potential
issues where you have what would otherwise be an institutionalized spouse going
into an assisted living facility where we do have the issue of the income cap
you may need to be cognizant of that particular issue so you may want to focus
on reducing the institutionalized spouse's income below the 300 percent to avoid
the income cap effect which means maybe using BALLOON ANNUITIES rather than
normal annuities. You may want to
look at purchasing better health insurance to reduce income below the 300
percent cap. I mean these are just
some things that pop up as you're going through it.
The snapshot for home care, when we can finally figure out when it's
taken, you're going to still want to make sure that the assets are maximized at
the time of the snapshot so if the clients want to buy a car, you tell them to
BUY WITH A NOTE that you pay off after the snapshot not before in cash even
though that's the way they've always paid for things all their lives.
You still want to do, if you are in a state as Maryland is where there is
very active recovery, liens and recoveries, but only off of probate assets, you
want to make sure that the community spouse's assets will avoid probate, will
AVOID [MEDICAID ESTATE RECOVERY] CLAIMS. And
. . . you want to make sure that the community spouses are aware of and avail
themselves of POST-ELIGIBILITY GIFTING. . . .
I urge all of you to get out there and advocate for these programs.
I can tell you flatly as it comes to Medicaid waivers and our clients,
God is on our side." (Emphasis
Comment: Reasonable people can
disagree about the advisability of expanding Medicaid financing of home care and
assisted living. Proponents say it
would be more cost-effective and cover more people than paying for nursing
homes. Opponents say it would cause
program expenditures to explode by bringing new recipients out of the
"woodwork." One thing is
for sure, however, Medicaid financing of home and community-based services would
be a bonanza for Medicaid estate planners.
That's the lesson in Attorney Frank's statement.
The market for Medicaid planning is limited today by the fact that all it
gets you is free or subsidized residency in a nursing home on welfare.
As soon as getting on Medicaid will pay for home care and assisted
living, the demand for Medicaid planning will leap off the charts.
Of course, so will the cost of Medicaid and that's why the state and
federal Medicaid programs are very reluctant to expand HCBS and why they put
cost and utilization caps on all waiver programs. It goes almost without saying that any increased demand for
Medicaid planning constitutes a concomitant decrease in demand for private
long-term care insurance. In the
long run, the only hope for most people to afford quality long-term care at the
most appropriate level is to reduce the burden on Medicaid so it can help the
poor, and to empower everyone else to pay privately through savings, investment
and insurance. If Medicaid
eligibility were properly delimited and enforced, the program would have more
than enough resources to finance home care and assisted living for the genuinely
needy. And with eligibility
properly controlled and enforced, most Americans would recognize the need to
plan early and save, invest or insure for the risk of long-term care.
The only winners in the current system, and in the new one proposed by
Attorney Frank, are the Medicaid estate planners.