LTC Bullet: Courts Promote Medicaid Planning

Wednesday, September 22, 2004


LTC Comment: Some recent court cases encourage overuse of Medicaid by the affluent and inhibit responsible long-term care planning. More after the ***news.***

*** MEDIA COVERAGE of the Center for Long-Term Care Financing's newest study has been growing rapidly, but we'd like to see much more. Please read the reports and send links to them with your comments to local media, legislators, and public officials. "The Realist's Guide to Medicaid and Long-Term Care" is on the Center's website at . An abridged version of that report titled "The Long-Term Care Dilemma: What States Are Doing Right - And Wrong" is available on the websites of the American Legislative Exchange Council ( and the Council for Affordable Health Insurance ( Hard copies of "The Long-Term Care Dilemma" will be available before long and we'll let you know where and how to get them as soon as we know. Hard copies of "The Realist's Guide" are available to donors who make a new contribution to the Center for Long-Term Care Financing of $250 or more. Please help us spread the word about the problem and the solution.***

*** CLTC MASTER CLASS SCHEDULE. The Center for Long-Term Care Financing does not endorse specific companies or professional designations, but we are acutely aware of the need for education and certification of LTC insurance agents. We've often found that LTCi agents with the "CLTC" certification rank high in professional knowledge and expertise. We also appreciate the financial support provided to the Center for Long-Term Care Financing by the Corporation for Long-Term Care Certification. As a public service, we will provide each month a schedule of forthcoming CLTC classes with a link to further information. The Corporation for Long-Term Care Certification will offer the "Certified in Long-Term Care" (CLTC) program in a classroom setting referred to as a Master Class on September 28 and 29 in Las Vegas, NV; October 4 and 5 in San Francisco, CA; October 7 and 8 in Rosemont, IL; October 12 and 13 in Roanoke, VA; October 14 and 15 in Hurricane, WV; October 19 and 20 in Universal City, CA; and October 20 and 21 in East Syracuse, NY. For more information, call 877-771-2582 or go to .***

*** LATEST DONOR-ONLY ZONE CONTENT: Here's the latest Zone content followed by instructions on how to subscribe so you can receive these critical epistles daily by email.

The LTC Reader #4-033--Bonnie Burns on LTCi for AAHSA Plus Three EXTRAs (The well-known consumer advocate's 6-page guide to "Understanding LTCi."

The LTC Reader #4-034--Medicaid Nursing Home No Relief for Caregivers (Research provides new clue that LTCi to delay institutionalization may be caregivers' best hope.)

LTC E-Alert #4-044--Nursing Home Sting Operation (New Mexico's efforts might have been more beneficially expended to "sting" Medicaid planners.)

The LTC Reader #4-035--Pigs Are Fed, But Hogs Get Slaughtered (This parable humorously crystallizes the problem of Americans' growing "entitlement mentality.")

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 at .

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LTC Comment: Medicaid planning traps otherwise prosperous seniors in welfare-financed nursing homes. But it has other consequences too. Medicaid planning discourages responsible long-term care planning through private insurance and home equity conversion. It overloads the public assistance program fiscally and operationally. It rewards financial abuse of the elderly by self-interested friends, relatives and "guardians." It impedes the ability of long-term care providers to offer quality care. It anesthetizes baby boomers to the risk and cost of long-term care. Following are some recent court cases that underscore these points and elucidate the damage courts frequently cause in this area.


"The New Jersey Supreme Court ruled . . . that a guardian for a 90-year old woman who is now in a nursing home may give away some of the woman's assets in order to qualify for Medicaid, rather than requiring the guardian to 'spend down' those assets on the nursing home until the woman qualifies for Medicaid." (Source: Elder Law FAX, August 9, 2004,

Who gets this windfall give away at the expense of taxpayers, Medicaid and the poor? You guessed it. The "guardian" and beneficiary of the transfer is the Medicaid recipient's son, who will share the booty with his brother. Care to speculate whether these siblings will be in the market for private long-term care insurance for themselves any time soon?

Here's how Hal Daub, the new President and CEO of the American Health Care Association described the problem in a September 3, 2004 letter to Senate Finance Committee Chairman Charles Grassley:

"In the In Re Keri case, the court held that an adult child of an incompetent patient in a nursing home could transfer to himself and his brother all or part of their mother's assets in order to hasten her eligibility for Medicaid benefits, thus effectuating a decision their mother would have made if she had been competent. Further, the New Jersey Court agreed with New York case law stating that there exists 'a presumption in favor of approving Medicaid spend-down proposals on the ground that a reasonable and competent person would prefer that the costs of [his/her] care be paid by the state, as opposed to his family.' AHCA believes that the New Jersey case and New York law, if adopted by more states, will have the capability of promoting inappropriate use of state funds, which will result in a faster depletion of Medicaid monies that would otherwise be used for beneficiaries in need."

For all the details on In the Matter of Keri (N.J., No. A-70-02, Aug. 5, 2004) go to .


In another case (Houghton v. Reinertson [10th Cir., No. 03-1074, Aug. 24, 2004]), a federal appeals court ruled that states may consider retirement accounts held by spouses of nursing home residents as resources in determining Medicaid eligibility, but only under certain circumstances.

The exceptions can be extremely expensive for the Medicaid program. In the case in point, Colorado Medicaid did not initially take into account an institutionalized Medicaid recipient's spouse's retirement fund. Later, they tried to find the recipient ineligible because of her husband's $454,000 IRA. Too late, so sorry, said the court. Although Medicaid nursing home eligibility resource limits are set by federal law at half the joint assets, not to exceed $92,760, states only get one shot at establishing the total countable amount. Medicaid may not reassess community spouse assets post-eligibility.

So, once again, Medicaid is left holding the bag, one more family avoids responsibility for long-term care and the message goes forth loud and clear: don't worry about paying for long-term care; there's always some way to get you off the hook and shift the cost to Medicaid.

For detailed descriptions of this case, go to or For the official court finding, go to



New York Medicaid is notorious for allowing "spousal refusal" as a way to dodge long-term care costs. In New York, spouses of institutionalized Medicaid recipients can refuse with impunity to support the cost of their husband's or wife's care. Sure, the state could sue under federal law, but that's too expensive and way too politically sensitive. So New York taxpayers and U.S. taxpayers (who share half the cost of New York's gargantuan Medicaid LTC program) pick up a huge extra expense.

Until recently, Florida was the only other state that allowed this evasive technique, also known as "just say no." But now, Connecticut joins the ranks under compulsion from a U.S. District Court. Of course, Connecticut can still sue the withholding spouse once the state has assignment of the institutionalized spouse's support rights, but is Connecticut any more likely than New York to fly in the face of political sensitivities by doing so?

"Morenz v. Wilson-Coker (D. Conn., Civ. Act. No. 3:04 CV 216, June 10, 2004). A US district court judge upholds the right of a Connecticut nursing home resident applying for Medicaid to assign support rights to the state and his community spouse to exercise her right of spousal refusal." (Source: The ElderLaw Report, Vol. XVI, No. 2, September 2004, p. 5)

For the full text of the decision, go to


The foregoing is just a tiny sampling from recent examples of a big universe of court cases that undermine Medicaid, drag down long-term care quality, impede the growth of privately financed home and community based services, chill the market for LTC insurance and home equity conversion, pad the pocketbooks of Medicaid planners, and reward heirs of infirm seniors for irresponsible fiduciary conduct.

Well-intentioned judges often have the mindset that they help families when they transfer long-term care costs from individuals to Medicaid. Sometimes, their hands are tied by restrictive state and federal laws. But as often as not, they "legislate on the bench" and stretch legitimate laws intended to protect Medicaid for the poor in order to cover prosperous folks who should pay their own way. Thus is preserved a corrupt long-term care status quo that is already disintegrating, long before the major crisis of aging demographics arrives.

Insurers and providers of long-term care ignore this issue at their peril. They should combine forces and mobilize to fight court-sponsored abuse of Medicaid. They should demand changes in law and policy that target Medicaid LTC benefits to the needy and encourage private financing alternatives. It's in their self-interest to do so, but more importantly, it is in the best interests of their clients and of all Americans.