LTC Bullet: NAELA Overboard
February 13, 2007
Comment: NAELA, the
Medicaid planners' trade association, used to be a formidable voice in
LTC financing policy, but no longer.
Learn why after the ***news.***
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Recommended reading today is the LTC Almanac's
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straight there. ***
BULLET: NAELA OVERBOARD
Comment: NAELA or the
National Academy of Elder Law Attorneys once commanded respect in the
long-term care financing debate.
reason is that NAELA's members, with a few exceptions, make their
livings artificially impoverishing affluent clients to quality them for
public welfare. That fact
makes everything they say suspect.
Medicaid planners have always done that and justified it thus:
"It is important to emphasize to the older
client, who may be reluctant to utilize Medicaid because of pride or
possible stigma, that participation in Medicaid is not a gratuity but an
entitlement like use of a public library or a public park."
J. Regan, Tax, Estate &
Financial Planning for the Elderly, Matthew Bender, New York, 1991,
1993 update, p. 2-44)
Something else is dragging NAELA's stature down.
I think it may be that no serious writer defends Medicaid
planning in print anymore.
been so successful exposing the ludicrous, self-serving, and
irresponsible arguments of Medicaid planners, that most of them--at
least the smarter ones--have gone into intellectual hiding.
still do what they do and make lots of money doing it, but they've
hunkered down in their moral foxholes to dodge the incoming fire of
left articulating NAELA's pro-Medicaid planning self-promotion?
stunningly inept newsletter called "Eye on Elder Issues"
archived at http://www.naela.com/media/EyeOnElderIssues.htm.
We've taken it to task several times before.
LTC E-Alert #6-026:
New LTCi Agent Forum and LTCi Broker Debunks NAELA Criticism,
Monday, March 20, 2006, http://www.centerltc.com/members/e-alerts/ltc_ea6-026.htm
LTC Bullet: NAELA's
New Nadir, Thursday, March 16, 2006, http://www.centerltc.com/bullets/archives2006/619.htm
LTC E-Alert #5-074:
Should Medicaid Protect Farms and Other Businesses?, Friday,
August 5, 2005, http://www.centerltc.com/members/e-alerts/ltc_ea5-074.htm
The LTC Reader #5-003--NAELA's Anti-LTCi Plan,
Tuesday, January 18, 2005, http://www.centerltc.com/members/ltcr/5-003.htm
The LTC Reader #4-030--NAELA? Nay, Lies!, Thursday, August 19, 2004, http://www.centerltc.com/members/ltcr/4-030.htm
latest iteration of this e-rag is:
Ann Krauss, "Medicaid Reforms Will Have Many Unintended
Results: Divorces Amongst
the Elderly Will Become More Common," Eye on Elder Issues,
Vol. 4, Issue 1, January 2007, http://www.naela.com/pdffiles/eoe_jan07.pdf.
won't dignify the silly argument in this publication with a full reply.
But just so no one will be fooled, here's what NAELA suggests.
By mandating the "income first" rule instead of the
"resource first" rule for determining a community spouse's
monthly maintenance needs allowance, the Deficit Reduction Act (DRA)
supposedly left lower middle class people nowhere else to turn but to
divorce to get critically needed long-term care.
preposterous. The couple
described in the article would qualify easily for Medicaid LTC benefits
in most states without spending any of their own assets for long-term
care and while preserving all of their income for the healthy spouse.
The NAELA article is dishonest because it suggests the DRA change
would hurt such people when all it does is prevent Medicaid planners
from preserving large assets for affluent clients.
"resource first" rule eliminated by the DRA permitted states
to allow Medicaid couples to transfer assets from the institutionalized
spouse to the well spouse in an amount sufficient for the interest on
the funds to bring the well spouse up to the minimum monthly maintenance
needs allowance or MMMNA. It's
too complicated to explain in detail here, but the net effect was that
the resource first rule allowed savvy, well-to-do recipients, mostly
those with legal help from Medicaid planners, to preserve hundreds of
thousands of dollars more than the community spouse resource allowance
(otherwise limited to $101,640 as of 2007).
old "loophole" led to the utterly irresponsible practice of
lawyers searching for the lowest possible interest rate they could find
for clients. Their
objective was to maximize the extra assets to be protected for the
community spouse far above the generous "spousal
impoverishment" protections guaranteed in 1988 by the Medicare
Catastrophic Coverage Act. All
the "resource first" rule did before it was prohibited by the
DRA was to line the pockets of unscrupulous attorneys and divert scarce
but desperately needed public resources away from the poor and into the
bank accounts of upper-middle-class welfare recipients.
Here's how one of our readers analyzed the bizarre
NAELA argument: "Gotta
love this one. Seems like
the reasoning goes something like...
'The government is forcing them to get a divorce in order to
access Medicaid benefits that aren't supposed to be allocated to them in
the first place. Divorce is stressful and sometimes results in suicide.
So the DRA is killing healthy spouses.'
How about this for 'family values?'
I want to stay home with my family all day rather than going to
work. Why doesn't the
government pay me to play with my kids?
These guys [the Naeliens] are overboard."
The irony in this critique is that the government
did in fact pay unwed mothers for decades to have babies and stay home
with their kids. It was
called Aid to Families with Dependent Children (AFDC).
Bill Clinton and Congress changed "welfare as we know
it" in 1996. They
removed the perverse incentives in AFDC that discouraged work and
encouraged welfare dependency. The
rest is history. Welfare
rolls decreased by 60 percent practically overnight.
If we eliminate the perverse incentives that
discourage responsible LTC planning and trap people on Medicaid for
long-term care, we'll get a similar result.
Medicaid dependency will plummet, long-term care insurance
coverage will skyrocket, reverse mortgages will supercharge the LTC
service delivery sector, and everyone will get better care.
But that's not what NAELA wants. Responsible long-term care policy would kill the golden goose of Medicaid planning abuse.