LTC Bullet: Reader's Digest Tells Subscribers How to "Shed Their Assets" to Get Medicaid

Thursday, October 9, 2003


LTC Comment: Should a national publication, read by millions of American seniors, encourage the practice of artificial self-impoverishment to qualify for Medicaid nursing home care? More after the ***news.***

*** LATE UPDATE: After this LTC Bullet was written and ready to send, we received some good news from LTC Bullets subscriber and Center for Long-Term Care Financing supporter Spencer Lehmann. The author of the Reader's Digest article discussed in this Bullet responded to Mr. Lehmann's complaint letter, acknowledged the merit of his arguments opposing Medicaid planning, indicated that he had received many such letters, apologized, and expressed his intention to cover both sides of the issue in the future. Bravo! It shows the power concerned readers have when they express their opinions clearly, succinctly, and passionately to the national media. ***

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The LTC Reader #3-040--What About Long-Term Care and Nursing Homes? (Find out about the "war between the Generations" that the Cato Institute predicts when federal spending on the elderly explodes.)

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LTC Comment: We sent the following "LTC Reader" titled "Shame on Reader's Digest" to our donor-only readership last week. The response was quick and profound. Some people struggling to sell private long-term care insurance to a public in denial about long-term care risks and costs did not appreciate the magazine's tutorial on Medicaid estate planning. They let Reader's Digest know how they felt in no uncertain terms. A copy of the magazine's less-than-satisfying reply and its email address in case you would like to comment is provided below.

The gimmick described in the Reader's Digest article is called the "half-a-loaf" strategy. The essence of this technique is to give away half your assets and spend down the remainder during the transfer of assets penalty period that results. This procedure effectively reduces the transfer of assets penalty by half from what it would have been if all the assets had been transferred in the first place. Connecticut has submitted a waiver request to the Centers for Medicare and Medicaid Services (CMS) to eliminate the "half-a-loaf" strategy by starting the transfer of assets penalty from the date of eligibility for Medicaid instead of from the date of the transfer as required by current federal law. For details, you can read our June 12, 2002 "LTC Bullet: Connecticut Attacks Medicaid Planning to Save Money and Encourage Private LTCI" at . CMS has neither approved nor denied Connecticut's waiver request to date.

Here's the original "LTC Reader":

The LTC Reader #3-039--Shame on Reader's Digest

Wednesday, October 1, 2003

Our thanks to LTC Bullets subscriber, LTCI agent and Certified Senior Advisor Dorothy Endres of Portage, Michigan for sending us the following article from Reader's Digest. Dorothy's letter to the editor criticizing the piece follows the text below. Jennifer Cona, the attorney cited in the article, is a member of the National Academy of Elder Law Attorneys (NAELA).

Reader's Digest, August 2003, Page 206

"How to Protect Assets From Serious Illness"
    Whatís the fastest way for seriously ill people to shed their assets so Medicaid pays for nursing home care? We asked Jennifer Cona, an elder-law attorney in Jericho, N.Y., to tell us how to shift assets and speed up eligibility. Her advice:
    Step 1: Determine the total value of the personís estate, including cash, investments and property.
    Step 2: Have the person give half the total to heirs.
    Step 3: Divide the retained half by the average monthly cost of nursing home care, found by calling the local department of health. The result is the number of months (not to exceed 36) that the person must pay for care out-of-pocket. He or she qualifies for Medicaid after that period if no assets remain.
    Step 4: If there are assets left after 36 months, they will have to be spent prior to qualifying for Medicaid.
    Be sure to talk to an elder-law attorney in your state before proceeding.


Here's Ms. Endres' letter to the editor of the Reader's Digest:

I was shocked and appalled to find an article such as "protecting your inheritance" in the August issue of RD. In effect you have outlined and given your readers a method to CHEAT! And, it would appear tacit approval for such actions by your readers.

Medicaid is a state and federal WELFARE program designed to help those who are truly in need. By shifting assets and deliberately impoverishing oneself to qualify for Medicaid, one jeopardizes the program and its true intent. It was not and is not designed to assist people to shift assets in order to have an inheritance for one's children. It was designed to help poor people who have no other means.

Furthermore, qualifying for Medicaid coverage is not the most desirable status for which a person should aim. When on Medicaid options for assistance, especially in old age, are limited. It's a nursing home or nothing and that nursing home might be miles away from friends and family with substandard care via grossly underpaid staff.

What your article SHOULD HAVE SUGGESTED is buy Long Term Care Insurance to assure your needs in old age are taken care of and your finances protected for your heirs. SHAME ON YOU!

Want more information on the subject of cheating the poor people by deliberate impoverishment? Contact Stephen Moses at Center for Long-Term Care Financing at or by phone at 206-283-7036.

Lastly, don't forget, YOU AND I ARE MEDICAID! We pay taxes to support this program for the needy. Do you want your taxes to go to individuals who could afford care but prefer to have us pay for it so they can leave money to their children? I sure don't.

Dorothy Endres, LPN, MPA, Certified Senior Advisor

Phone: 269-323-3999


Here's the reply Reader's Digest sent to Ms. Endres, and evidently, to everyone else who complained about the article. We received the identical communication from several different people.

Dear [Reader],

Thank you for contacting us regarding August's "RD Money." We too are appalled by people and companies that needlessly take advantage of the system for profit and personal gain. The point of our article was to inform readers of their rights under Medicaid and to help people whose parents are suffering from a long-term illness. As you know, a growing number of people do not have the money to pay for their own extended care or the care of their parents.

Perhaps we could have made this point clearer in the article. We would never advocate that well-off people use resources that they truly don't deserve.

Today, with many readers' assets stretched thin and parental health care costs rising rapidly, we only wanted to provide readers with a quick guide on how to qualify for assistance before slipping into a family financial crisis. Your feedback will certainly be shared with our staff.


The Editors


Should you wish to express your opinion to Reader's Digest, this is the appropriate email address: