Bullet: Financial Planning Made
Thursday, March 30, 2006
LTC Comment: Jane
Bryant Quinn's latest book could spur you into financial planning action.
A review follows the ***news.***
*** HAPPY ANNIVERSARY to the Center on Saturday.
Stephen Moses and David Rosenfeld co-founded the Center for Long-Term
Care Financing on April 1, 1998. It's
undergone some changes, and David works for Congress now, but the Center for
Long-Term Care Reform remains a strong voice for rational long-term care
financing policy and personal responsibility.
Despite our anniversary's date (April 1), no fooling! ***
SPOUSAL REFUSAL is an egregiously abusive Medicaid planning technique
indistinguishable from financial abuse of the elderly.
We wrote about it in "LTC Bullet:
They're Baaack, Part IV: 'Abandon
Your Spouse . . . Get Medicaid,'" Monday October 29, 2001 at http://centerltc.com/bullets/archives2001/310.htm.
It's good to see spousal refusal finally receive some well-deserved
editorial excoriation. Following are excerpts from Bill Hammond, "Time to Cut
Off Rich from Fat Cat Feast," New York Daily News, March 28, 2006, http://www.nydailynews.com/03-28-2006/news/story/403459p-341736c.html.
- They talk tough about cracking down on waste and fraud in the Medicaid
program, but lawmakers are closing their eyes to one of the worst scams in the
called 'spousal refusal,' and it has nothing to do with husbands and wives who
suddenly develop headaches around bedtime.
Instead, it's a gaping loophole that makes it possible for millionaires
to mooch off a government health plan for the poor and disabled.
works like this: When Thurston gets
too old and sick to live at home, he transfers all of his money to Lovey.
Lovey then signs a letter declaring that she will no longer take
financial responsibility for her husband. And
- bingo! - Medicaid picks up Thurston's nursing home tab.
gets to keep the house, the car, the yacht, etc., continue her plush lifestyle
and leave a fat inheritance for Muffy and Chip. Working-stiff taxpayers get stuck with a bill for upwards of
$100,000 a year.
rule started as a way of rescuing patients who truly were stranded by
cold-hearted spouses, but quickly morphed into an entitlement for the rich and
middle class. Nassau County
officials have identified spouses with as much as $1.9 million in assets - not
including homes and cars - who have claimed spousal refusal. . . .
of these pitfalls, New York and Florida are the only states that permit spousal
refusal, according to Stephen Moses of the Center for Long-Term Care Reform in
'is supposed to be a safety net for the poor, not a hammock for the upper middle
class,' Moses says.
Young, president of the New York Association of Homes and Services for the
Aging, says spousal refusal boils down to a taxpayer subsidy for private
inheritances. 'We need to alter the
wedding vow,' Young quips. 'Till
death do us part - or until you become an inconvenience.' . . .
there is another way for middle-class old folks to avoid poverty without relying
on Medicaid: long-term care
insurance. Under a state-subsidized
program, the premiums for a 65-year-old average $2,600 a year.
who's going to shell out for insurance when the state is giving away free
nursing home care?
if the Assembly and Senate won't say 'no' to Medicaid for the rich, what will
they say 'no' to?"
*** SPEAKING OF MEDICAID PLANNING ABUSE, we want to extend
a hearty "thank you" to all the lawyers who answered our call for
attorneys to attend and monitor the National Academy of Elder Law Attorneys
"Symposium" scheduled for April 20 to 23 in Washington, DC.
NAELA recently prohibited attendance by non-lawyers in order to avoid
public scrutiny of its recruitment and training program for Medicaid planner
members. We believe that continued
monitoring of these NAELA meetings is critical to keep the media and vulnerable
aging Americans apprised of dangerous practices like spousal refusal.
For dozens of "LTC Bullets" on Medicaid planning, including
many of our reports on past NAELA conferences, go to http://centerltc.com/bullets/subject.htm#medicaid_plan.
LTC BULLET: FINANCIAL
PLANNING MADE EASY
LTC Comment: "Don't
let the perfect be the enemy of the good" is fine advice when it comes to
things you hate to do but that really need doing.
For me, and many others I think, financial planning is one such thing.
It seems like the harder I've tried and the more complicated I've made
it, the worse I've done investing. So
imagine my relief when the financial adviser I've known longest and for whom I
have the highest possible regard published Smart and Simple Financial
Strategies for Busy People (Simon and Schuster, 2006).
Jane Bryant Quinn's earlier tome--Making the Most of
Your Money--is excellent and comprehensive, but long and complicated.
You might read it, like most in its genre, and come away overwhelmed by
the plethora of options and strategies. Not
so her latest effort. Says she in
the opening sentence: "I think
I can change your financial life, from muddle-along to easy, permanent success. That's why I wrote this book."
She delivers. In
eight chapters and 230 pages, Quinn covers the bare essentials of how to spend
and save, eliminate debt, create a safety net, buy a house, pay for college,
invest wisely, and keep score of your progress. And she does it, according to the "concordance" at
Amazon.com, with an easy-to-read-and-afford 1.5 syllables per word, 14.4 words
per sentence, and 6,848 words per dollar!
When I review a book, the first thing I read is the section
on long-term care. If the author
can't get the one thing right that I know well, then why continue to read?
I had every reason to think Jane would nail this two-page section because
she sent it to me in draft prior to publication and asked for my comments.
Hence the acknowledgement on page 229:
"My gurus include . . . Stephen Moses, president of the Center for
Long-Term Care Reform and urgent voice for understanding your old-age needs . .
Here's a sample of her sensible comments about long-term
"There are two reasons to own LTC insurance today:
(1) You don't want to use
your own savings to pay the enormous nursing home bill.
(2) You want to be able to pay for quality care in the private
market rather than depending on rickety government programs."
She points out that LTCi policies also "cover care in
your home or in an adult day-care center," but she clarifies that a
long-term institutional stay is the real catastrophic financial risk:
"Don't be shocked by the price--a nursing home is a medical hotel,
providing daily room and board as well as maid service, social services,
entertainment, and custodial care. Looked
at that way, $190 isn't out of line."
What about Medicaid planning? "Elder-care lawyers will help you give your property
away, so you can look 'poor' and qualify for Medicaid. It's not illegal but it's unethical and almost certainly
unwise. There's no telling what
will happen with welfare budgets in the future or how much the taxpayers will be
willing to pay for nursing home care. You
don't want to depend on it. (It's
risky to lose control of your property, too.)"
OK, the LTC section passes muster. What about the rest of the book?
I was going to write a glowing appraisal, but in the spirit of
"smart and simple strategies for busy people," I decided to borrow the
following review by a reader on Amazon.com. Why reinvent the wheel when this fits the bill?
outstanding book motivated me to overcome nine years of inertia regarding
financial planning. My husband and
I have been vaguely worried about not saving enough for retirement or college,
but we kept procrastinating research into the myriad of competing plans and
investments and strategies.
Jane Bryant Quinn has done the research and makes clear, solid recommendations
about how to manage family finances. She
covers all of the financial bases (including insurance and wills), so that you
can be confident you haven't left anything out.
helps you establish clear financial goals, and explains which type of
investments work best for various goals. Once
you create your financial plan and set up automatic deposits into your
investment/retirement accounts, she recommends you leave them alone and make
adjustments as needed once a year! No
time and energy wasted on buy/sell decisions after each stock market wiggle.
granted, this investing program is unlikely to provide the spectacular returns
that some lucky people have made in real estate or by timing the market.
But Quinn argues that people who earn huge returns on their investments
are really few and far between. Furthermore,
she points out that those investors take on a lot of risk in order to get those
kinds of returns.
book is more than 'common sense' however, - in fact, some of her ideas fly in
the face of popular belief. For
example, I was convinced any financial plan would have to begin with a strict
budget that would ruthlessly prune lattes etc... out of our lives.
Quite the contrary - Quinn says that the 'latte factor' is not a
significant factor in a family's financial health - it's the big ticket items
that show up on credit card statements.
than attempt to budget and plan in ADVANCE where non-essential money goes, Quinn
recommends you automate deposits to your savings/retirement accounts because
you, in turn, will automatically, subconsciously, and painlessly start reining
in your expenses to match the size of your checking account. It's
an interesting theory, and one I want to start ASAP, as my efforts to budget
every expenditure and invest anything left at the end of the month have not been
very successful. She does say,
however, that if you are habitually living beyond your means, racking up major
credit card bills, etc..., you'll need to get that under control before you can
really implement/benefit from most of the strategies in this book.
in all, an excellent book full of sound, straight forward ideas that anyone can
implement - no matter how busy."
reviewer signs herself "Horizon Homeschool 'book lover.'"
Our thanks to Jane Bryant Quinn for another in her career-long series of contributions to sensible financial planning and self-responsibility. Smart and simple financial strategy for busy people number one: Buy this book!