LTC Bullet:  Dueling Letters 

Thursday, August 3, 2006 


LTC Comment:  Should insurance industry trade journals publish articles that promote Medicaid estate planning?  You decide after the ***news.*** 

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LTC Comment:  When I saw two articles justifying and promoting Medicaid planning in Life Insurance Selling magazine, I sent the following letter to the editor, Gordon Bess.  He published it with the Medicaid planner's reply in the magazine's July 2006 issue.  Both letters follow, republished with permission from Life Insurance Selling ( 

I'll resist the temptation to rebut the lawyer's reply.  Most readers of these LTC Bullets will see easily and clearly the self-serving fallacies in his arguments. 

On Medicaid and LTCI 

I am writing concerning Dennis Sunderman's articles in the April and May issues of LIS [Life Insurance Selling magazine] on "Solutions for People in Nursing Homes," and his discussion of Medicaid planning options.  

The problem is that Medicaid is supposed to be a safety net for the poor, not a substitute for responsible LTC planning and insurance.  Furthermore, Medicaid has a terrible reputation for problems of access, quality, reimbursement, discrimination, and institutional bias.  It is never the preferred choice for anyone who has the ability to pay for private care.  And no one does Medicaid planning except to protect assets from paying responsibly for care.  The result is that most people end up on Medicaid; Medicaid pays too little to ensure quality care and long-term care facilities barely survive financially.  The LTCI and HEC markets remain underdeveloped, and the future does not bode well.  This is what producers need to know and what they should get from their trade publications. 

Medicaid planners make fortunes abusing Medicaid and sustaining a system in which LTCI producers can barely make a living unless they are altruistic, masochistic geniuses trying to sell something the government and attorneys are giving away.  I think Sunderman's article expresses a conventional wisdom that is flat wrong and contributes to the failure of private LTC insurance and other private financing options. 

There are many options agents can recommend for people who do not qualify medically for LTCI.  For people who do not qualify financially, the proper course is to spend down to Medicaid's very generous income and asset limits.  It is never ethical for LTCI producers to recommend artificial self-impoverishment for the purpose of taking improper advantage of public welfare.  

Stephen A. Moses
Center for Long-Term Care Reform, Inc.


Mr. Sunderman replies: 

Career agents who specialize in comprehensive LTC planning find solutions for families regardless of their insurability.  The process typically requires the skill and knowledge to coordinate insurance products, social services, Medicare and supplemental coverage, and even Medicaid.  In a perfect scenario, everyone would be eligible for LTC insurance.  Unfortunately, our experience reveals that outside of our guaranteed issue group LTC cases, as many as 50% of applicants are declined or rated.  And many of the prospects referred to our office already are receiving care. 

For the record, we have offered LTC insurance to our clients since 1987.  We are the LTC agency for one of the largest cities in California and one of the largest non-profit private hospital systems west of the Mississippi.  We also provide employer-sponsored LTC insurance to all of our eligible employees.  We appreciate and understand the value of LTC insurance.  But we also know exactly where it does not work! 

A personal example includes my uninsurable parents, now at an advanced age, who required substantial home care and facility confinement. They are typical of the thousands of World War II veterans who own a home, have a modest retirement account, and struggle with the issues of independence and care.  They fought for our freedom, and we feel an obligation to help those like them, even the uninsurable.  And we never charge any fees for this planning.  

I would agree that attorneys and financial advisers who impoverish wealthy individuals for the purpose of obtaining Medicaid to reduce share of cost is questionable.  However, I would also say that LTC policy peddlers who do not understand the products they are pushing, don't understand Medicare or Medicaid, and pressure consumers into large quantities of LTC insurance they cannot afford and may not need are also questionable.  Obviously, there are good and bad people in every profession.  

According to CMS, the federal overseer of nursing homes, "80% of all residents in nursing homes receive poor care - private paying does not guarantee quality care."  We believe that an advocate in the facility such as a family member or a professional care manager is a solution. 

I have met many people who are critical of Medicaid planning but change their opinion when their family faces an LTC crisis.  They want entitlements just like everyone else.  Medicaid established the rules for the treatment of "countable assets" and, specifically, how annuities are to be structured to be compliant.  For an adviser who understands LTC planning, omitting planning options is no different than a CPA who fails to recommend allowable tax deductions. 

LTC planners thrive when they have all the facts, satisfy the needs of their clients, and make the best interests of their clients their only goal.  That's the difference between planners and salespersons.  This is not a "one size fits all" issue, and no one should try to present LTC insurance as if it were the only option. 

Dennis P. Sunderman, CSA
Eldercare Ins. Services, Inc.
Los Alamitos, Calif.