LTC
Bullet: Medicaid Estate Planning
Unmasked
Thursday March
1, 2001
Seattle--
Medicaid estate planning (MEP) is the practice of
artificially impoverishing an infirm senior in order to achieve Medicaid
nursing home eligibility without spending down. Virtually no one defends Medicaid estate planning publicly. The only exceptions are a small minority of
attorneys, financial planners and insurance agents who profit from selling
advice or financial tools designed to short-circuit Medicaid eligibility rules. These hucksters are outspoken. Who hasn't noticed their newspaper columns, internet
sites, or radio ads hawking special trusts, annuities, life care contracts or
other legalistic gimmicks to qualify for welfare? Often, they claim to eliminate the need to save or insure for
long-term care.
We frequently point out the downsides of MEP in LTC
Bullets. It overburdens the welfare
program; it leaves incapacitated seniors vulnerable to inferior care; it denies
private payers to LTC providers; it deflates the demand for home and
community-based services and assisted living; it reduces the market for
financial tools to save, invest or insure for long-term care risk. Much research has shown that public
officials, especially Medicaid policymakers and eligibility workers, criticize
MEP severely for these and other reasons.
Thus, today we have a balance of opinion regarding the
ethics and advisability of Medicaid estate planning. The commercial interests (especially MEP attorneys) who profit
from the practice defend it unqualifiedly.
On the other side, advocates for private financing and government
officials responsible for administering public assistance cost-effectively,
attack MEP as detrimental to both private and public financing of long-term
care. What could tip this balance one
way or the other? Why don't we ask
seniors themselves what they think?
No one has ever inquired systematically about the
opinions of elderly people and their caregivers concerning Medicaid estate
planning. Until now. What follows are excerpts from an article
titled "Medicaid Estate Planning:
Perceptions of Morality and Necessity," by Leslie Curry, Cynthia
Gruman and Julie Robison, published in the February 2001 edition (Vol. 41, No.
1) of "The Gerontologist," a peer-reviewed scholarly journal.
"In the research reported here, we sought to
examine MEP from a perspective not yet explored--that of older individuals and
their caregivers living in the community, who may be planning for how to
finance nursing home care in the future. . . .
Eighteen focus groups of 5-12 members each were conducted." (p. 35)
"Focus group participants were asked to share their
views on MEP, guided by this series of broad questions: 'Some people talk about protecting their
assets like their bank accounts or other properties so they don't get spent on
the nursing home. This is called Medicaid
estate planning. Have you heard people
talk about this? What do you think
about this? What are the advantages and
disadvantages of doing this?'" (p.
37)
"Three emergent themes representing disincentives
to engage in MEP were strongly expressed across all groups, regardless of race,
SES [socioeconomic status] or experience with long-term care. First, participants agreed that the prospect
of losing control of one's assets was very troublesome and unpalatable, even if
such assets were turned over to
children whom the parent trusted. Second, discussions about the stigma
associated with receipt of Medicaid benefits were compelling and received
substantial attention among some groups.
Finally, the subjective norm data revealed a general consensus that MEP,
although legal, is also immoral and inappropriate. This was a recurrent and forcefully
articulated theme that occurred across groups that
differed by race and SES." (p. 37)
"There was a strong consensus that individuals
covered by Medicaid received a poorer quality of nursing home care,
particularly if the caregiver was aware of the person's payment
source." (p. 38)
"Two themes emerged from the focus group data that
represent incentives to participate in MEP.
First, there was high concordance across all groups as to the importance
of avoiding total impoverishment associated with prolonged nursing home stays.
. . .
Second, the significance of protecting spouses living in
the community was underscored in many group discussions. Current community spouse protection
regulations under Medicaid were either misunderstood or viewed as
inadequate." (p. 39)
[CLTCF Comment:
Medicaid exempts the home and all contiguous property regardless of
value, a business including the capital and cash flow of any value, one
automobile of any value, home furnishings of practically any value, $2,000 in
cash, $1500 of life insurance cash value,
burial costs, and many other kinds of property. For married couples, an additional allowance of up to $87,000 in
assets and $2,175 per month of income (as of 2001, increasing with inflation
annually) can be set aside for the community spouse. Clearly, Medicaid nursing home eligibility does not require
anything approaching "impoverishment" and the article is correct in
observing that the focus groups "either misunderstood or viewed as
inadequate" Medicaid's extremely
generous income and asset allowances. The truth is that the median elderly person
in terms of income and assets qualifies for Medicaid nursing home care without
employing elaborate Medicaid estate planning interventions.]
"There was commentary in most moderate- and
high-SES groups that MEP was feasible or appropriate only for select
individuals, particularly those with a substantial amount of assets. Several participants argued, however, that
persons with very high assets should not be concerned with protecting such
assets through MEP, because they can pay
privately for services in settings other than a nursing home (such as a
continuing care retirement community). . . .
It was also observed that those participating in MEP had access to
essential informational resources, such as elder law attorneys or financial
resources. These comments emerged
primarily from the moderate- and low-SES groups." (pps. 39-40)
"Although it is likely to be extremely challenging
for researchers to recruit individuals who will report having transferred
assets to qualify for Medicaid, working with elder law attorneys or certified
financial planners to identify clients and using a methodology that effectively
assures confidentiality may be useful."
(p. 41)
[CLTCF comment:
The only remaining group of people who have never been consulted about
the merits and pitfalls of MEP are older Americans whose life savings have
already been expropriated so they could be shunted into free (i.e., tax-payer
financed) welfare homes. The authors of
this article are correct in observing that research on this subject needs to be
done and will be extremely difficult to do.
Why? Think about it. You can't ask the elderly victims
themselves, because most of them are already cognitively impaired by
Alzheimer's, Parkinson's or stroke.
Medicaid planners are protected by the attorney-client privilege from
having to disclose the damage they've done.
Adult heirs who've taken an early inheritance and placed their parents
in a Medicaid nursing home aren't likely to talk with pride about the
deed. Medicaid workers can't disclose who's
done what because of confidentiality protections. Nursing home owners and administrators, who bear the brunt of the
onerous financial and caregiving burden imposed by Medicaid planning, cannot
talk openly either for fear of lawsuits.
The only way to dig out and document the dirt on Medicaid planning is to
conduct a national study of a valid random sample of Medicaid cases under the
aegis of an appropriate government
authority. It's never been done and
probably never will be done because of the political sensitivity of the subject
and the strong objections of the interest groups that profit from the status
quo.]
_____________
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