LTC Bullet:  On Asset Transfers, Charitable Giving and Nursing Homes 

Tuesday, January 10, 2006 


LTC Comment:  Concerns that new Medicaid eligibility rules pending final passage in Congress could hurt charitable giving and nursing homes' finances are understandable but mistaken.  More after the ***news.*** 

*** 600TH BULLET.  Today's is our 600th LTC Bullet since we began publishing on May 15, 1998.  To keep them coming, we could sure use your support.  To join the Center for Long-Term Care Reform, go to or contact Damon at 206-283-7036 or  Help us achieve the Center's mission:  universal access to top quality long-term care for all Americans. *** 

*** THE 6TH ANNUAL INTERCOMPANY LTCI CONFERENCE is coming up in Anaheim, CA from Sunday, February 26th through Wednesday, March 1st.  This is "the big one" for anyone who cares about saving the Medicaid safety net and improving LTC for everyone.  Find complete information at  Center for Long-Term Care Reform president Steve Moses will attend, present, and cover the conference for LTC Bullets. *** 

***  "ALMOST HOME" FOLLOW UP.  A dedicated LTC Bullets reader offers the following about a forthcoming PBS special we highlighted recently:  "I went to the Almost Home and PBS websites.  The listing for Almost Home indicates it will air at 10 PM Eastern Time on February 21st.  On the Almost Home website at, they are also offering a free education DVD for a limited time.  There is a three minute trailer available and it looks to be a very interesting and informative show.  Thanks for keeping us abreast of EVERYTHING going on in the world of LTC!  One of your biggest fans . . . Amy L. Locke, CLU, CLTC, *** 



LTC Comment:  Let's set aside for now the irresponsible, demagogic, politically biased media attacks by big, self-righteous, publicly financed lobby groups who defend the corrupt status quo in long-term care financing for the benefit of their affluent members.  Gee, who could that be? 

Some very thoughtful, concerned, and respectable people have also expressed doubts about certain provisions in the deficit reduction bill.  They wonder whether longer and stronger Medicaid transfer of assets restrictions will discourage charitable giving and leave nursing homes with more residents who are both ineligible for Medicaid and unable to pay for their own care. 


Following are two examples and our replies allaying their concerns. 

This note came from Greg Pierce, Director of Development, Mennonite Home Communities of Lancaster, PA.  We reprint Mr. Pierce's email with permission. 

To the editor of LTC Bullets:  I would be very pleased to hear your response to the implications that any charitable gifts given (my church, other 501c3s, etc.) could disqualify people from Medical Assistance under the new bill.  I agree that gifts to family members need to be controlled, but let's not disqualify those of us who tithe and generously support various charities.  Isn't there a difference?  This might be a big enough issue to warrant addressing in one of your e-grams.  Greg Pierce 

We replied to Mr. Pierce as follows: 

Dear Greg: 

Thanks for the feedback. 

Point one is that under current and proposed federal law, the only asset transfers that can be penalized by delaying Medicaid eligibility are those that are done for the purpose of qualifying for Medicaid.  So, an appropriately documented or proven transfer to your church for any other reason would not cause a penalty.  

Keep in mind, however, that when people impoverish themselves by donating to your church or giving money away to anyone else for any reason, they become vulnerable to Medicaid's dismal reputation for problems of long-term care access, quality, reimbursement, discrimination and institutional bias.  That is not a consummation that caring people would wish on anyone in exchange for a donation.  The only way to improve Medicaid is to preserve it for the poor and encourage private financing alternatives that come from responsible planning, saving, investing and insuring for everyone else. 

Nevertheless, here's another point of ethics that is critical.  When people make donations to charities, it should be with money that belongs to them and that they can afford to give away.  When they make donations and then expect the government to pay for their long-term care, they in effect are transferring the cost of their donations to taxpayers.  Most taxpayers have their own preferred charities and would rather donate to them than to someone else's.  The problem is especially annoying for those of us who pay the premiums for our parents' and for our own long-term care insurance policies so they and we will never have to rely on public welfare for our long-term care.  Why should we bear as taxpayers the burden of others' failure to prepare financially for long-term care? 

In the long run, you and your church will be better off when the government targets Medicaid to the genuinely needy and encourages those who are financially able to purchase insurance or utilize their home equity.  People who are thus truly secure financially will be in a much better position to donate even more generously to their own preferred charities. 

Best regards, 

Steve Moses 


The second well-considered comment we want to highlight on the likely impact of the deficit reduction bill came from Harley Gordon, President of the Corporation for Long-Term Care Certification, a company that trains and certifies long-term care insurance agents.  In a widely circulated communication to his members, Mr. Gordon analyzed the likely winners and losers if and when the deficit reduction bill becomes law.  He concluded that in most respects nursing homes would be losers in that they would have more residents who end up with no source of payment for their care.  We responded thus: 

Dear Harley:  

I agree with most of your analysis.  Regarding the effect of the new law (should it pass) on nursing homes, however, I respectfully disagree.  

You seem to assume that people will go on transferring assets as before even after the reasons to do so have been eliminated.  That's highly unlikely.  This law will send the message that half-a-loaf and three-year-back transfers are no longer smart planning.  Attorneys and other advisors will therefore no longer recommend them.  To do so, they'd be inviting malpractice suits.  

Consequently, more people will pay privately for all levels of LTC, including nursing homes.  Nursing homes will have more private payers and no more no-payers.  Stronger hardship provisions and the fact that eligibility penalties do not apply to transfers done for reasons other than to qualify for Medicaid will ensure that.  Anyway, that's my take.  

Happy New Year and best regards, 

Steve Moses 

Harley responded correctly that some people will still make gifts that could create eligibility penalty problems for them and I replied: 

You and I and others who "get it" are well positioned to write, speak and educate that aging people should keep their money and not give it away, unless and until they have LTCi against their biggest financial risk, at which point they can HONORABLY use discretionary funds for any purpose.  We have our work cut out for us if the bill becomes law.  But this is a chance to make a lasting contribution to this country's future well-being.  Let's do it!