LTC Bullet:  LTC Showdown 

Tuesday, January 31, 2006 


LTC Comment:  One day before the historic vote on Medicaid and long-term care financing, here's a summary of why it matters in five sentences.  After the ***news.*** 

*** COUNTDOWN:  One more day before the House of Representatives votes on whether to (1) rein in Medicaid planning abuse and unleash private LTC financing or (2) supercharge Medicaid planners and hobble insurance and home equity conversion.  We hear leadership has the votes, but if you count those chickens before they hatch, you deserve the consequences if they don't.  Write your Member at and urge a vote in favor of the Deficit Reduction Act (DRA). *** 

*** LTC HYPOCRISY:  Yesterday, the Boston Globe, ran a story about the DRA titled "Medicaid Proposal Could Hurt Seniors" at  Here's the kicker:  scroll to the end of that article and you'll find a paid advertisement for "Medicaid Attorneys:  National Network of Lawyers.  Elder law, Medicare planning."  Follow that link and you'll encounter disingenuous LTC scare tactics and a national directory of Medicaid planning attorneys eager to impoverish you before it's too late.  What a racket! ***   

*** A LITTLE HELP FROM OUR FRIENDS.  A special thanks to Terry Savage, the nationally syndicated personal finance columnist, for permission to publish the following excerpt.  Terry says:  "This is an advance look at a column that will run later this week in The Chicago Sun-Times." 

"Everyone wants a compassionate government.  The debate over changes in the law regarding Medicaid as it applies to Long Term Care (nursing home care) has been difficult to understand, since it makes it more difficult to qualify for federally paid nursing home care.   

"The Deficit Reduction Act is intended to strengthen the Medicaid program in the long run, by making it more difficult for middle income families to shift assets to their children, so the parents can qualify for federally-paid nursing home care.   

"Unfortunately, many senior advocate groups including AARP, which actually has a very good program of LTC insurance for its members, believe this is an attack on seniors instead of a way to preserve Medicaid for needy members of the Boomer generation.  If boomers don’t face up to the need to plan in advance for their future care, and instead depend on taxpayer funding, we’ll transfer a huge tax burden to our children – and create generation warfare." 

Hear, hear!  Like so many of us who have had bitter personal experiences with long-term care, Ms. Savage is a passionate advocate for responsible long-term care planning.  We've covered her books and columns over the years:  go to, click "Search" and enter "Savage" for examples. 

Stay tuned to this space for a review sometime soon of Terry Savage's fourth book The Savage Number:  How Much Money Do You Need to Retire? ***  



LTC Comment:  Here's an anecdote to hammer home what's at stake in tomorrow's House vote on the Deficit Reduction Act. 

A lawyer friend of mine (yes, I do have lawyer friends) emailed me an exchange to which he was privy between two attorneys.  It went like this: 

Post to a legal listserve:  "I have a prospective client who wants to talk to somebody about forming a Medicaid trust.  Anybody interested?" 

Came the reply:  "Are you kidding?  Medicaid planning is dead in the water as of Feb. 1." 

I would not go so far as to say Medicaid planning is dead if the DRA passes.  Having seen Medicaid planners run circles around past laws like OBRA '93, "throw Granny in jail," and "throw Granny's lawyer in jail," I seriously doubt that anything Congress and a President can do will stop their abuse of Medicaid altogether.  But we're on the verge of the best public policy effort in twelve years to curtail their ill-gotten gains and to help more responsible LTC advisers. 

So, once again to review, what's this all about in a nutshell?  That's what a national reporter asked me the other day.  Following is the query and my reply: 

"I'm on deadline.  Please write five sentences explaining exactly what's in the bill, who's supporting, who's against.  Please outline it as follows [IN CAPS]." 

1.  HERE'S WHAT THE BILL SAYS.  The Deficit Reduction Act (DRA) reauthorizes "LTC Insurance Partnerships," strengthens "undue hardship" protections for Medicaid recipients, extends Medicaid's transfer of assets look-back period from three to five years, starts any applicable eligibility penalty later to prevent "half-a-loaf" give-aways, drops the home equity exemption to $500,000 from unlimited, and closes abusive Medicaid eligibility "loopholes" such as "transfer assets before income," "Medicaid-friendly annuities,"  "life estates," "partial-month transfers," and "self-canceling installment notes." 

2.  HERE'S WHY THAT'S A GOOD IDEA.  These minor modifications to Medicaid's hemorrhaging eligibility system are long overdue and critically needed to begin a long process to restore and preserve the welfare program as the long-term care safety net for the poor and to incentivize prosperous citizens to save, invest and insure for long-term care so they will be able to pay privately for quality care when they need it. 

3.  HERE'S WHO'S OPPOSING IT -- AND WHY?  AARP, big charities, and Medicaid planning attorneys oppose the Deficit Reduction Act because it reduces the ability of their affluent members and clients to shelter and divest assets in order to shift the high cost of long-term care from their personal responsibility to taxpayers (who finance Medicaid), to long-term care providers (who are paid too little by Medicaid to supply quality care), and to the poor (who are unable to obtain the same quantity, quality and range of services from Medicaid available to the well-to-do because they lack the "key money" to buy their way into the better Medicaid facilities.)   

4.  HERE'S WHO'S SUPPORTING IT -- AND WHY.  Support for the Medicaid and LTC provisions of this bill comes from a few caring policy wonks and some courageous Members of Congress and staffers who understand that Medicaid cannot survive as the primary third party payor of long-term care for rich and poor alike, but unfortunately most likely supporters of the bill have been AWOL (or at best supportive behind the scenes), including LTC insurers (who fear the political sensitivity) and LTC providers (who are addicted to Medicaid's inadequate but regular financing and scared of any change.)  

5.  IF THIS DOESN'T PASS, WHAT'S THE CONSEQUENCE?  If the DRA improvements do not pass, Medicaid will remain on its slippery fiscal slide toward collapse; LTC insurance, home equity conversion and other private LTC financing alternatives will continue to languish; institutional LTC (i.e., nursing home) bias will continue and home and community-based care will suffer; the public will remain anesthetized to the risk of long-term care; and ultimately the baby boom generation will have to use its home equity to fund long-term care while the poor will have nowhere to turn when Medicaid disintegrates entirely. 

Well, folks, that's what's at stake.  Today was our last day to arm you with the evidence and arguments in favor of the DRA.  It is your last day to urge your Member of Congress to vote for the Deficit Reduction Act.  Do it at   

Watch the LTC Superbowl on C-Span tomorrow (Go DRA!) and that other one on Sunday (Go Seahawks!).