LTC Bullet--Medicaid Whack-a-Mole Supercharges the LTC Partnership

Tuesday, August 13, 2002


*** Do you have a "hotmail" email address? If so, your LTC Bullets may get sucked automatically into a "junk mail" file where you'll have to search to find them. We get an inordinate number of "undeliverables" from hotmail addresses also. If you value the Bullets and want to be sure to receive each one without obstruction, consider registering a different email address with us by sending it to . ***

*** Did you know one of the LTC industry's best conferences is coming up in Orlando, Florida, Sept. 10-13? The "LIMRA-LOMA-Milliman USA DI and LTC Insurer's Forum" will focus "on research, true-life success stories, best practices, and up-to-the-minute analysis of current trends and developments." Check out all the details at . Registration begins 1:00 PM to 7:00 PM on Tuesday, 9/10/2002, with a Welcome Reception from 6:00 PM to 7:00 PM following. What's more, you can attend an LTC Graduate Seminar from 9:00 AM to 5:00 PM on the same day (Tuesday, the tenth) guaranteed to warm you up for a great conference to follow (separate $225 fee). More on the LTC Grad Seminars below. On Thursday, 9/12/2002, at 5:00 PM, Milliman USA (Tampa Office) and the Center for Long-Term Care Financing will introduce their prospectus for an exciting new research project. Watch for an LTC Bullet describing this project and transmitting the prospectus next week. ***

*** The Center for Long-Term Care Financing's August LTC Graduate Seminars (Seattle on Monday, 8/26 [including a free lunch] and Portland on Wednesday, 8/28) are filling fast. Reserve a place now by contacting Amy Marohn-McDougall (425-377-9500 or ). We're also taking reservations for LTC Grad Seminars in Dallas on September 25 (Wednesday) [please note this is a date change for the Dallas program which was originally scheduled for the 26th], Houston on September 28 (Saturday) and New Orleans on October 1 (Tuesday). As mentioned above, we've added another LTC Graduate Seminar (Tuesday, September 10, 9:00 AM to 5:00 PM in Orlando) co-incident with the LIMRA-LOMA-Milliman conference. You can always find the latest schedule and all the details on the Center's LTC Graduate Seminar at .

Don't miss this extraordinary educational opportunity--a full day's small group intensive covering critical aspects of LTC service delivery and financing they don't teach you in sales training nor in university courses. Get the inside scoop from Center President Steve Moses who's spent two decades on the inside at the Health Care Financing Administration (HCFA, now CMS), at the Office of Inspector General of the U.S. Department of Health and Human Services, at the most successful LTCI marketing company ever (LTC, Inc.), and most recently at the Center for Long-Term Care Financing. Here's a sample of what attendees have said about past LTC Graduate Seminars:

"The format was very good and the information received contained materials, ideas and implemented thought on a wide variety of issues affecting long term care, seniors and their families (and the government both state and federal) that I NEVER would have received from another source (or even from many sources)." (Chicago LTC Graduate Seminar, March 2002)

"Although I have attended many workshops on the topic of long-term care, your superb presentation offered a unique and enlightening perspective. Stepping beyond the facts that the public, as well as professionals in the field have been fed, you addressed the hidden reasons behind the challenges we face as long-term care specialists. With this newfound understanding, I hope to better assist clients in making truly informed decisions about their financial future, and the quality of their years ahead." (Philadelphia LTC Graduate Seminar, May 14, 2002)

"Your presentation yesterday was excellent! I have read your 'LTC Bullets' for years but I knew that I would REALLY understand the problems with Medicaid, Medicaid planning and how all that relates to the sale of LTCI if I attended your one-day school. I feel that much more empowered in talking to prospects or for training other agents. Keep preaching your message! Anyone who is truly serious about selling LTCI needs to hear it." (Philadelphia LTC Graduate Seminar, May 14, 2002) ***

*** New content added to the donor-only zone today includes: "The LTC Reader #30--Planned Medicaid Cuts Suggest Bigger Need for LTCI" (donor-zoners can jump directly to this feature in The Zone by clicking this link and entering your user name and password: .) If you aren't yet in The Zone, send a tax-deductible contribution of $100 or more to the Center for Long-Term Care Financing at 2212 Queen Anne Avenue North, #110, Seattle, WA 98109 or donate online at , then email your preferred user name and password (up to 10 characters each) to . He'll confirm your Zone access in a jiffy. ***


LTC Comment: Rarely have we seen the fundamental choices of long-term care financing counterpoised so starkly in the media. The two Indianapolis Star articles excerpted extensively below show a fiscally stricken state struggling with the politically sensitive challenge of forbidding popular Medicaid planning abuses while encouraging the purchase of private insurance. That's a "third rail" balancing act no state would attempt when economic times were good. But with Medicaid's LTC expenditures skyrocketing and with more people than ever dodging the welfare program's spend-down rules, more and more states will try harder and harder to tamp down Medicaid planning while encouraging private LTCI. If fiscal conditions get bad enough, maybe the federal government itself will wake up and eliminate Medicaid planning while unleashing the full power of private financing for LTC from insurance, home equity conversion and private investment. One good way to achieve that objective is described in the Center for Long-Term Care Financing's report titled "LTC Choice: A Simple, Cost-Free Solution to the Long-Term Care Financing Puzzle." Read it at . But first, read Kevin Corcoran's excellent stories that crystallize these issues in Indiana. We strongly recommend that you read the full articles available at the hyperlinks provided. While you're at it, why not drop Mr. Corcoran a note, thank him for this important coverage, and encourage him to stay on the case? Thanks to donor-zoner and LTC Grad Seminar alumnus Ric Schafer for bringing this important coverage to our attention.

Kevin Corcoran, "State Targets Assets Hidden from Medicaid," Indianapolis Star, August 7, 2002, . Contact the author at or 1-317-615-2384.

"Officials are closing loopholes that allow some to protect wealth while in nursing home.

"It will be harder for Hoosiers who don't want to spend their life savings on nursing home care to get taxpayers to foot the bill, because state officials are closing loopholes in Medicaid law.

"Many people have avoided going broke by purchasing savings bonds Medicaid cannot touch, investing in rental property and giving it away, or buying annuities meant to preserve their money for children and grandchildren.

"State officials hope to wipe out all three loopholes this year.

"'Medicaid carries a stigma for poor people,' said Melanie Bella, director of the program serving low-income residents. 'But middle- and upper-income people take a different view when it comes to them.'

"Statistics aren't available, but more people who can afford to pay for care are shielding income and assets to meet Medicaid's definition of poverty, estate planners and state officials say.

"This practice has allowed residents to protect estates. Some have passed hundreds of thousands of dollars to their heirs.

"'We have reason to believe this is a serious and growing problem,' Bella said.

"With help from dozens of lawyers, Medicaid estate planning has strapped nursing home budgets. And it has contributed to the worsening finances of the $4.5 billion program.

Already, Medicaid pays for nursing home care for about 45,000 people in Indiana. That's two of every three nursing home residents. . . .

"State officials say making it tougher to shift assets around and qualify for Medicaid could save about $35 million a year. That's enough to deliver medical care for an entire year to 60,000 children living in poverty, 30,000 low-income adults or 8,500 people who are blind or disabled.

"Those are the people Medicaid was created to help, said Kim Huser of Carmel, who supports the state's crackdown.

"When Huser worked as a respiratory therapist in nursing homes, she often saw people who could afford care get their bills covered by Medicaid after attorneys told them how to do it.

"'It is a travesty that people are given assistance to hide assets just to receive Medicaid,' she said. . . .

"But the new restrictions, which began taking effect in June, haven't delivered 'a knockout punch' to estate planners, said Martinsville lawyer Roger Coffin.

"He has been helping people shield assets since 1991, after spending 14 years with the Morgan County welfare department. And he says he'll keep doing it as long as there are legal ways to get around Medicaid's requirement that clients deplete their savings.

"'People are going to demand that we be more creative,' he said.

"That's why finding and closing loopholes is a lot like playing the child's game Whack-a-Mole.

"'Every time you close one loophole,' Bella said, 'another pops up.'

"Seniors and their children are aided by seminars promising to show them how to qualify for Medicaid in 30 days or less, said Tim Paino, who runs Lakeview Manor, a Westside nursing home. . . .

"Medicaid pays an average of $37,230 a year to care for each resident. People who pay with their own money are charged an average of $43,070, according to the Indiana Health Care Association, which represents mostly for-profit homes.

"The $5,840 difference generates profits. It also helps offset costs Medicaid and Medicare won't cover, attract nurses amid a shortage and pay rising liability insurance costs.

"'We need individuals to take responsibility in paying for their care to the extent they can,' said James Leich, president of the Indiana Association of Homes and Services for the Aging, a group representing nonprofit homes.

"'Medicaid cannot become a program that protects the passing along of inheritances.'

"But Scott Severns, a past president and founding member of the National Academy of Elder Law Attorneys, said Congress turned Medicaid into a program for the middle class in 1988 when it let spouses living at home keep more income and property.

"If they go on Medicaid, nursing home residents can keep homes occupied by spouses, rental properties, automobiles, funeral trusts, furniture and household goods. Cash and other investments must be spent on care.

"Like many people, Esther Fuller, 66, of Whitestown doesn't want to sell her home or wipe out her savings if she goes into a nursing home. She's single and wants her money to end up with charitable causes she supports.

"That's why the full-time pharmacist checked into estate planning earlier this year.

"But she found a better option: buying a long-term care insurance policy that will cover a lengthy nursing home stay. For $177-a-month in premiums, she can keep her home and savings.

"State officials wish more people would follow Fuller's example.

"That's why, in June, state officials outlawed balloon-payment annuities that shift the cost of care to taxpayers.

"The same month, officials prohibited seniors from buying rental property and giving it over to their children without penalty -- or using a similar transaction to pay off their children's mortgages.

"By November, the state plans to begin counting savings bonds as assets from the moment they are purchased.

"'Right now, that money can't be touched. So they dump thousands and thousands and thousands of dollars into bonds,' said Marj Shell, administrator of Rawlins House, a nursing home in Pendleton. 'And guess what? You and I get to pay.'


Kevin Corcoran, "State Touts Insurance for Protecting Assets," Indianapolis Star, August 7, 2002, . Contact the author at or 1-317-615-2384.

"Medicaid recipients can pass along wealth -- if they buy endorsed long-term care policies.

"When state officials go after dead Hoosiers' estates to get back taxpayer funds spent on nursing home care, they're seen as predatory villains.

"In recent years, they have recovered about $3.5 million to $5.3 million annually.

"But the state has a softer side: It will guarantee people can pass along assets to heirs if they buy state-endorsed insurance policies and later go on Medicaid.

"'To people who say the state is stealing Grandma's house, I say, 'The state is offering a great alternative -- long-term care insurance to protect assets,' said Melanie Bella, the state's Medicaid director.

"Seventeen companies sell special policies that let people keep property they have worked for all of their lives. . . .

"Since Indiana launched its Long Term Care Insurance Program in 1993, more than 20,700 people have bought policies. About 17,700 of those remain in force.

"In all, 95 people have collected benefits, enabling them to keep more than $3.1 million in assets. Even some attorneys who help people shield assets to qualify for Medicaid agree these plans are a better bargain for healthy people who can afford them.

"'It's probably the best thing out there for anybody who's going to retire in the state of Indiana,' said Scott Severns, an Indianapolis attorney who does estate planning.

"Premiums vary, but $1,100 a year is not uncommon for people in their mid-50s.

"Ten years ago, nobody admitted to Greencroft Nursing Center in Goshen had long-term care insurance, said Gene Yoder, who runs the home.

"In recent years, though, interest in long-term care insurance has grown because policies now pay for home care, assisted living, adult day care and hospice care.

'Less than 5 percent use it,' said Yoder, whose Goshen home has 177 beds, nearly all of which are occupied. 'But that's a big increase from what we were seeing.'

"He favors it, because people who pay their own way cover expenses Medicaid won't.

Medicaid spends $37,595 a year on each resident. But the home commands an extra $17,155 from those who can pay -- and taxpayers come out ahead when insurers foot the bill."