LTC Bullet: Medicaid Planning Ads in the New York Times

Tuesday, April 15, 2003


LTC Comment: The prestigious New York Times editorialized harshly against Medicaid estate planning in 1996, but today publishes a growing number of advertisements by Medicaid planners in its online edition. More after the ***news***.

*** Remember Hawaii's CarePlus proposal for a government-financed LTC "insurance" program? We critiqued the plan in "LTC Bullet: Hawaii's CarePlus Program" on June 28, 2002 and in "LTC Bullet--Hawaii's Care Plus Program, a Status and Trip Report" on November 19, 2002 . Here's an update: "The Hawaii Senate Ways and Means Committee recently approved a measure to create a $120 annual income tax to finance a program to provide state-funded long-term care for seniors, the Honolulu Advertiser reports. The program also would offer a tax credit for people who buy private long-term care insurance. A similar bill in the House would allow a tax credit of 50 percent of the cost of insurance premiums for long-term care, up to a maximum of $2,500 per year. Gov. Linda Lingle (R) opposes the creation of a new tax, but supports the proposed tax credit." (Source: LTC Daily Analysis Briefs, April 7, 2003, prepared by for members of .) LTC Comment: Governor Lingle's stance in opposition to CarePlus, but in favor of tax incentives for private LTC insurance, is the right one. Unfortunately, local experts in Hawaii believe proponents of CarePlus in the state legislature may have the votes to override the Governor's veto. ***

*** SPONSOR AN LTC GRADUATE SEMINAR. Why do we have a welfare-financed, institution-based LTC system in a wealthy country where no one wants to go to a nursing home? Can you round up a dozen or more people willing to spend one day (and $225) to solve this puzzle of long-term care and improve their ability to protect seniors from the LTC risk? Do you have access to a conference room? Line it up and we'll bring the Center for Long-Term Care Financing's highly acclaimed Long-Term Care Graduate Seminar to wherever you are. Contact Amy McDougall for arrangements: or 425-377-9500. For details on the program, go to . Whether you provide LTC services, advise seniors on financial planning, or sell insurance, we promise this program will make you more effective. ***


LTC E-Alert #3-025--Medicare Zaps Benes Again

The LTC Reader #3-015--Social Security Update

LTC E-Alert #3-026--Alzheimer's Advance

Don't miss our "virtual visits" to major LTC industry conferences in The Zone. You'll find our comparison of the conferences, session summaries, interviews and pictures.

If you already qualify for The Zone, you can click the following link, enter your user name and password, and go directly to the latest donor zone content and archives: . If you do not already qualify for The Zone, mail your tax-deductible contribution of $150 or more to the Center for Long-Term Care Financing, 2212 Queen Anne Avenue North, #110, Seattle, WA 98109. Then email your preferred user name and password (up to 10 characters each). You can also contribute online by credit card or direct withdrawal at . ***


LTC Comment: On April 14, 1996, the New York Times editorialized against "the blatant and often unethical misuse of the [Medicaid] program by well-to-do patients in nursing homes. These patients exploit legal loopholes to transfer their wealth to their children, thus technically impoverishing themselves and providing themselves with inexpensive nursing home care. What was supposed to be a program for the poor has turned into a boondoggle for everyone else . . .. The system is a scandal."

Nowadays, however, the Times is one of the best sources of information on how to evade Medicaid income and asset limits. Go to the newspaper's website at , search for "Medicaid planning," and you'll find advertisements for Medicaid planners with links to extensive information on artificial self-impoverishment to qualify for Medicaid LTC benefits. Last week, we found only two such links. This week, there were five. Below are excerpts from the Medicaid planning sites advertised in the New York Times. But first, our commentary.

We publish this information on Medicaid planning to point out that it is already universally available to consumers, that it recommends abuse of America's social safety net program for long-term care, and that it impedes the marketability of private LTC insurance by eliminating the financial consequences of failure to insure. We encourage long-term care providers and insurers to work with state and federal legislators and public administrators to find ways to save Medicaid by targeting it to the needy. Then use the savings that will accrue to fund consumer education programs, LTCI tax deductibility, and other public policy incentives to encourage responsible long-term care planning.

Medicaid planners defend the practice of artificial impoverishment by arguing (1) that it only helps people on the financial margin who are already medically ineligible for private insurance, (2) that it is no different than tax planning, and (3) that Congress implicitly approves of the practice. These arguments are specious.

If you examine the ads and links below, you will find they recommend advanced planning to save hundreds of thousands of dollars in order to qualify for Medicaid long-term care benefits. Medicaid has numerous "spousal impoverishment" protections to safeguard the income and assets of community spouses. These protections are available to everyone without Medicaid planning. Medicaid planning is applied only to stretch the elasticities in the law to qualify people for Medicaid whom the program was never intended to serve. The ads create the false sense of security that people can ignore the risk of long-term care, avoid premiums for private insurance, and somehow get off scot-free.

If you examine the ads carefully, you will find almost no mention of Medicaid's severe problems of access, quality, low reimbursement, discrimination and institutional bias. You will find zero acknowledgement that putting affluent people on Medicaid, who can afford "key money" to buy into the better nursing homes, forces poor people, for whom Medicaid was intended, into often-miserable, 100-percent Medicaid facilities.

The idea that Medicaid planning is no different than tax planning is untrue and disingenuous. Tax planning does not leave a frail or infirm elder who could have paid for quality long-term care in the private marketplace vulnerable to low cost care of uncertain quality in a welfare nursing home. Tax planning benefits the principal; Medicaid planning hurts the principal.

Finally, the notion that Congress endorses Medicaid planning is preposterous. Congress passed and President Clinton signed laws to make it a crime to do or recommend Medicaid planning. State and federal governments have not yet found an effective way to control the practice of artificial impoverishment, but they certainly do not approve it.

While Medicaid planners are making millions redirecting scarce Medicaid dollars toward their clients' and their own benefit, your Center for Long-Term Care Financing--virtually the only organization fighting to save Medicaid for the poor and to increase private financing and insurance for long-term care--struggles financially. You can help by sending a tax-deductible contribution to The Center for Long-Term Care Financing, 2212 Queen Anne Avenue North, #110, Seattle, Washington 98109. Online contributions can be made at . Contributions of $150 or more gain access to the Center's password-protected donor-only zone, aka The Zone.

To express your concern to the New York Times regarding the following advertisements, forward a copy of this Bullet with your comments to .

Now, here are links to and excerpts from the Medicaid planning ads we found in today's New York Times online edition:

Ad #1: "Elder Law Answers
National network of lawyers for
elder law, medicaid planning.

Excerpt: "Medicaid has become recognized as the long-term care insurance of the middle class. Congress implicitly accepts this result through rules that protect spouses of nursing home residents and permit others to qualify after spending down and transferring some of their savings. To plan ahead and accelerate qualification for Medicaid is no more unethical than planning to avoid taxes. It's just different populations doing the planning."

Ad #2: "Free Medicaid Answers
KS/MO residents get free info:
Medicaid, senior rights & more

Excerpt: "Helping Your Loved One Get the Nursing Home Care They Deserve While Legally Protecting Your Family's Assets. Kansas & Missouri Nursing Home and Assisted Living Guide . . . Discover How to Find the Right Nursing Home . . . How to Get Good Care There . . . and How to Pay for it Without Going Broke."

Ad #3: "Medicaid Planning Info
Find elder law and
Medicaid planning lawyers

Excerpt: "Through the use of techniques such as: Qualified Income Trusts, Immediate Annuities, Personal Service (or Care) Contracts, Balloon Payment Promissory Notes, Special Needs Trusts (just to name a few) and other strategies, a person may immediately qualify for ICP Medicaid (Nursing Home) Benefits, while at the same time preserve family assets.

"In the case of a married couple, an applicant may be able to also increase the well spouse's Community Spouse Resource Allowance, or redirect some of the nursing home spouse's income away from nursing home costs, and back towards the well spouse, through the use of the Minimum Monthly Maintenance Income Allowance.

"Many of the attorneys in our directory will also prepare the actual Medicaid Application for you to ensure that all of the crisis and pre-planning strategies are carried out to their maximum benefits."

(Citation for the foregoing excerpt: )

"The following provides some pre-planning techniques and opportunities currently available under current law that many Medicaid Attorneys implement. MANY OF THESE TECHNIQUES AND STRATEGIES ARE DESIGNED TO SAVE UP TO HUNDREDS OF THOUSANDS OF DOLLARS AND TO IMMEDIATELY QUALIFY AN APPLICANT FOR MEDICAID BENEFITS." (emphasis added)

(Citation for the foregoing excerpt: )

Ad #4: "Medicaid Annuity Agents
Staged and balloon annuity products
Medicaid Web "

Excerpt: "Using annuities to protect assets has become very popular. Two books on the subject, The Medicaid Planning Handbook by Alexander A. Bove, Jr. and Avoiding the Medicaid Trap by Armond Buddish [sic], specifically discuss the use of annuities to avoid Medicaid seizure.

"Generally, if your assets exceed the Medicaid test limits, you may still be eligible for Medicaid by converting the assets to an immediate annuity income stream. Using an income annuity in this manner may be beneficial in the right situation if structured properly." . . .

"Att: Insurance Agents Only. Please call [phone number deleted] to become licensed with our Medicaid Annuity providers."

(Citation for the foregoing excerpt: )

Ad #5: "Go Broke For Medicaid?
Yes, if you follow their system.
No, if you follow mine.

". . . Kelly's innovation is to assemble [this information] in binder form and to cut down on the verbiage. The result is a deliberately concise 'how-to' manual for aging in America, filled with bulleted lists and resources to contact. In addition, the binder offers plenty of room to insert and organize other material that readers will inevitably collect as they research topics in greater depth."