LTC Bullet:  NAELA Overboard 

Tuesday, February 13, 2007 


LTC 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.***   

*** LTC ALMANAC:  Would you like quick access to comprehensive information, including links to source documents and commentaries, on the following subjects?  Aging Demographics; International LTC; Unfunded Liabilities--Social Security, Medicare, and Budgets; Long-Term Care; Caregiving; Long-Term Care Financing; Long-Term Care Insurance; Reverse Mortgages; Long-Term Care Providers; Medicaid; Medicaid Planning. 

Now this information is at your fingertips in the Center for Long-Term Care Reform's members-only "Almanac of Long-Term Care."  Click here, enter your user name and password, and you're in.  

Not a member of the Center?  Fix that in a hurry.  Subscribe at or contact Damon at 206-283-7036 or  As soon as you confirm your "check's in the mail," he'll have you in The Zone with a user name and password and full access to the LTC Almanac and many other informative features.  

Recommended reading today is the LTC Almanac's section on Medicaid planning quotes covering nearly two decades of often-outrageous advice from Medicaid planners on how to get public welfare to pay for long-term care.  Go straight there. *** 



LTC Comment:  NAELA or the National Academy of Elder Law Attorneys once commanded respect in the long-term care financing debate.   

No longer. 

One 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. 

But 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."  

(Source:  John J. Regan, Tax, Estate & Financial Planning for the Elderly, Matthew Bender, New York, 1991, 1993 update, p. 2-44) 

No.  Something else is dragging NAELA's stature down.  I think it may be that no serious writer defends Medicaid planning in print anymore.   

We've 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.   

They 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 media outrage. 

Who's left articulating NAELA's pro-Medicaid planning self-promotion?   

A stunningly inept newsletter called "Eye on Elder Issues" archived at  We've taken it to task several times before.   

To wit:   

LTC E-Alert #6-026:  New LTCi Agent Forum and LTCi Broker Debunks NAELA Criticism, Monday, March 20, 2006, 

LTC Bullet:  NAELA's New Nadir, Thursday, March 16, 2006, 

LTC E-Alert #5-074:  Should Medicaid Protect Farms and Other Businesses?, Friday, August 5, 2005, 

The LTC Reader #5-003--NAELA's Anti-LTCi Plan, Tuesday, January 18, 2005, 

The LTC Reader #4-030--NAELA?  Nay, Lies!, Thursday, August 19, 2004, 

The 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,

I 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. 

That's 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. 

The "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). 

This 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.