LTC Bullet:  Legal Abuse of Medicaid LTC Rife Post-DRA 

Wednesday, May 16, 2007 

Santa Fe, NM-- 

LTC Comment:  Medicaid planners still shift scarce Medicaid resources from rightful recipients (the poor) to affluent clients (and boomer heirs).  Read on to find one of the sleaziest Medicaid planning come-ons by a NAELA member I've ever seen, after the ***news.*** 

*** FREE WEBINAR.  Most who watched it loved our "webinar" on how to get the most of out of the Center's public and password-protected websites.  If you haven't seen it yet, go to, scroll down until you find the "View Webinar" button, and dive in for a full-hour, in-depth tour of the most comprehensive source of information on long-term care financing available anywhere.  It's the only way to get a peek at our comprehensive new "Almanac of Long-Term Care" without joining the Center, paying your dues, and getting a user name and password.  Once you see it, however, we're confident that's exactly what you'll want to do.  To join, go to or contact Damon at 206-283-7036 or *** 

*** LTC CONFERENCE.  IIR's Long Term Care Business Improvement Conference, July 10-12, 2007, Baltimore, MD is an independent long-term care event bringing together providers, payers, associations and policy leaders to enhance the quality and reduce financial stress for the long-term care industry.  Stephen Moses, President, Center for Long Term Care Reform will be presenting a session titled "What Can We Expect the Economics for LTC to Look Like in 1,5,10 & 20 Years? Are We Prepared?"  Mention priority code P1258MOSES and receive 15% off the current registration price.  For more information visit the event website at *** 

*** LTC COMPACT PROPOSAL.  After last week in Albany, NY doing the research, I'm in Santa Fe this week writing the Center's report on the New York Long-Term Care Compact Proposal.  So, much more soon on that innovative public policy plan.  For now, check out Kevin Wrege's op-ed titled "Long-Term Gift to Elder Bar" in yesterday's New York Sun at  If you're really interested, you might also take a peek at "LTC Bullet:  New York Medicaid Planners Are Coming Around," April 14, 2005, *** 



LTC Comment:  Some people just can't take a hint.  I started studying Medicaid eligibility and long-term care financing in the early 1980s.  Since then the government has tried everything short of capital punishment to stop the elder law bar and other Medicaid planners from robbing Medicaid to pay big benes to their clients and themselves.  Here's how a dozen Congresses and four Presidents have tried to stop these Robin-Hoods-in-reverse: 

Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA '82):  Encouraged state Medicaid programs to impose asset transfer penalties, lien real property, and recover from deceased recipients' estates. 

Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA '85):  Discouraged the abuse of Medicaid qualifying trusts.  

Medicare Catastrophic Coverage Act of 1988 (MCCA '88):  Made asset transfer penalties mandatory and extended the look-back period from two years to 30 months. 

Omnibus Budget Reconciliation Act of 1993 (OBRA '93):  Extended the look-back period to three years, dropped the 30-month cap on the transfer of assets penalty making it potentially unlimited, and required estate recovery as a condition of state Medicaid participation. 

Health Insurance Portability and Accountability Act of 1996 (HIPAA '96):  Made it a crime to transfer assets for less than fair market value to qualify for Medicaid. 

Balanced Budget Act of 1997 (BBA '97):  Repealed the infamous "throw granny in jail law" and replaced it with the unenforceable "throw granny's lawyer in jail law," which attempted to make it a crime for an attorney to recommend Medicaid asset transfers for a fee. 

Deficit Reduction Act of 2005 (DRA '05):  Extended the transfer of assets look back to five years; capped the home equity exemption at no more than $750,000; eliminated the most egregious Medicaid planning dodge (half-a-loaf); and tightened up the rules against many other gimmicks, e.g. annuities, abusive promissory notes, life estates, rounding down, etc. 

That's a long and distinguished history of almost totally failed efforts to save Medicaid for the needy.  But after all that, wouldn't you think responsible members of the bar would at least get the point?  Guardians of the public purse intend Medicaid (public welfare after all) to help the poor, not to indemnify affluent elders and their heirs against the need to plan for long-term care. 

Well, forget that.  Medicaid planning is still going strong.  A recent survey of Medicaid planning attorneys found the following: 

--  DRA '05 "has generated more work for some practitioners and prompted many of their clients to plan earlier, according to the results of ElderLawAnswers' recent survey of subscribers to its attorney newsletters." 

--  "A slim majority (52 percent) of attorneys responding to the survey said that their Medicaid planning work has stayed at about the same level . . . and 28 percent citing an increase. . . . Six percent have seen Medicaid planning work jump 50-75 percent." 

--  "Just under half of the respondents said that more clients are hiring them to do more work after the initial meeting, and 55 percent report that more clients are taking planning steps while healthy." 

--  Luckily, the news from this survey isn't all bad:  "Perhaps the biggest and most significant change is that 78 percent of respondents said that they are recommending long-term care insurance more frequently than they did prior to passage of the DRA." 

--  And one New Jersey attorney actually said:  "I used to do frequent Medicaid eligibility planning. I have lost that work thanks to DRA." 

Source:  ElderLawAnswers Monthly, 4/30/7 

But, the bottom line is that Medicaid planning--the intentional artificial impoverishment of people who would not otherwise qualify for public assistance--continues to boom, while responsible long-term care planning--with private insurance and/or reverse mortgages-- continues to bust. 

So, just exactly how are the Medicaid planners continuing to make fools of Congress, the President, state Medicaid officials and the hapless marketers of private long-term care planning products who can't sell what the government has been giving away for 40 years?
Let us count the ways.   

The following list is from an internet ad for a book titled "How to Keep Nursing Home Costs from Wiping Out Your Life Savings and Your Family's Assets" by K. Gabriel Heiser, J.D. of Boulder, CO.  More about Mr. Heiser and his book in a bit.  The following material was extracted on May 15, 2007 from  It purports to reflect all changes in Medicaid eligibility policy deriving from the DRA '05. 

"Discover what single legal document can make a huge difference in your Medicaid planning, possibly saving your family thousands of dollars  (page 188) 

"How to make gifts that incur no penalty period -- even if made within the lookback period  (pages 137-140) 

"How to reduce your home equity if you are over the $500,000 limit without incurring a penalty -- and why a reverse mortgage is not a good way to do this  (page 82) 

"How to put your assets in various trusts in order to qualify a family member for Medicaid immediately -- and still have the assets available to be spent on the family member's supplemental care (page 67) 

"A clever technique of creating a living trust that enables a nursing home spouse to immediately qualify for Medicaid -- and allow the other spouse to keep the full Community Spouse Resource Allowance of $101,640.  This seems counter-intuitive, but it works like a charm!  (page 79) 

"Why annuities are such a powerful Medicaid planning technique -- When you buy the right kind of annuity, suddenly all the money you used to purchase the annuity has 'disappeared' for Medicaid eligibility purposes!  (page 108) 

"When to apply for Medicaid: How applying a day too early can cause years of penalties to be imposed unless you know the rules!  How applying too late can cause you to lose substantial Medicaid benefits for which you could have qualified sooner.  (page 16) 

"How you can lose your home if you're not careful -- and how to protect your home!  (page 93) 

"How to shelter a significant amount of cash by buying a new car or a larger car (perhaps a van that is wheelchair accessible) for the Medicaid recipient  (page 77) 

"This single secret allows you to protect thousands of dollars by benefiting your children, brothers, sisters, in-laws, without causing you to be penalized for making a gift! (page 40) 

"Avoid losing your home!  How to title your home so that it will not have to be sold to pay back the state at your death  (pages 100 and 162) 

"Ingenious ways to reduce your excess income in order to qualify for Medicaid  (page 25) 

"How to avoid questionable techniques -- These ploys are risky, banned by many states, or deemed as penalty-causing activities  (page 90) 

"How to make transfers to family members that won't disqualify you from Medicaid  (pages 138-139) 

"When you should use a life estate purchase -- and what technique is better and avoids the one-year residency requirement  (page 102) 

"How to avoid one of the most common and expensive mistakes -- Do this and the Medicaid recipient could be disqualified and lose both nursing home Medicaid and medical coverage.  (page 35) 

"How to use a certain type of 'IOU' to make money virtually disappear by lending it to someone else -- this is particularly important so that you don't run afoul of the new federal rules (page 123) 

"Why purchasing a 'Medicaid-friendly' annuity is a wonderful way to convert countable assets to non-countable for Medicaid qualification purposes  (page 106) 

"This single technique can easily double the amount of assets that your family can protect -- sssshhhh, most attorneys aren't aware of how this works!  (page 79) 

"How to avoid having your family member transferred out of the nursing home after finally getting on Medicaid  (page 142) 

"In many states you can exempt an unlimited amount of certain types of property--and it's not the home I'm talking about -- but only if you know how to claim this exemption!  (page 85) 

"How to protect an additional $213,840 without making any gifts, when your spouse is in the nursing home  (page 47) 

"What to change in your will to save thousands of dollars if your spouse ever needs nursing home care  (page 150) 

"Why you can always protect at least 50% of the value of your house if you do this simple technique prior to applying for Medicaid  (page 135) 

"What's the right -- and wrong -- way to title your car, so the state cannot attach it following your death  (page 162) 

"Eleven clever ways to protect your interest in your home, to prevent the state from taking it following your death  (pages 93-103) 

"Smart tricks to 'spend down' your resources -- This means that instead of spending your money on things that Medicaid can ultimately pay for, you pay for something that will benefit you and your family yet not have it considered a gift or a countable asset.  (page 75) 

"Who should be the owner of the annuity?  Who should be the 'annuitant'?  When is a promissory note superior to an annuity?  (pages 114 and 124) 

"How to protect your assets using the popular 'Half-a-Loaf' gifting technique  (page 133) 

"How to get your farm--including all the land, tool sheds, and equipment--to be excluded when you apply for Medicaid, no matter what their current value is  (page 41) 

"What to do when you have too much income to qualify for Medicaid -- but not enough income to pay for nursing home care privately (page 24) 

"and much, much more!" 

LTC Comment:  All right, LTC insurance producers and reverse mortgage lenders, how are you going to compete with that?  And how about you politicians and Medicaid administrators?  What hope do you have to keep Medicaid solvent as a safety net for the needy while shysters like this are giving it away to any and all? 

Now, here's the pitch for Mr. Heiser's book, also extracted on May 15, 2007 from  Note there is not a word about planning responsibly or paying privately for long-term care: 

"There are ways to arrange your affairs in a way that will enable you to build a fortress of protection around your family's assets and have Medicaid pay for most, if not all, of your nursing home expenses. 

"If you're someone who is facing the reality of an elderly parent or family member heading toward a nursing home -- and you want to qualify for Medicaid without first spending down your parent's life savings (or yours) paying the nursing home privately, or going broke, this may be the most important article you'll ever read. 

"In the next 5 minutes, as you read this article in its entirety, you will learn how to uncover secrets that will qualify your elderly parent or family member for nursing home Medicaid.  I'll also reveal a first-of-its-kind resource that costs less than half of a single day's stay in a nursing home  -- but can save you and your family thousands of dollars in nursing home costs and enable you to protect and preserve your family's assets. 


"The Medicaid system is extremely complex and usually cumbersome for the layperson to understand.  Nonetheless, it's not difficult to qualify for Medicaid -- when you know exactly how to go about it -- and when you have the proper legal assistance.  

"That's why I've compiled all the Medicaid insider secrets that I've accumulated over 23 years into a first-of-its-kind resource titled How to Protect Your Family's Assets from Devastating Nursing Home Costs:  Medicaid Secrets. . . . 

"It is the definitive guide to nursing home Medicaid qualification and is the only resource that is completely up-to-date.  It includes all the massive changes brought about by the federal Deficit Reduction Act that was signed into law on February 8, 2006 and later amended on December 20, 2006.  That law changed many of the 'rules of the game' -- including the rules affecting qualification for the Medicaid program. 

"It's important to note that every technique and option presented in the book is 100% legal -- unlike a lot of the advice you might get elsewhere.  It gives you planning options that will enable you to steer clear of making the kinds of transfers or blunders that can get you in trouble down the road. . . . 

"One would think that because an estimated 40% of people over 65 will require nursing home care at some point in their lives, that there would be an abundance of books on how to qualify for Medicaid.  This is not the case.  


"Because it takes a top-caliber attorney with years of experience in elder law to write such a book -- and, like myself, these attorneys are all too busy charging $250-$300 per hour giving legal advice to an endless parade of people seeking to qualify for Medicaid. 

"So busy, in fact, that no one has ever bothered to sit down and write a book -- until now.  

"I took the time out of my busy schedule to write the book because over the years, I began to realize that I wanted to help more people qualify for Medicaid than just those who live in Colorado, where my law practice is based.   

"So for the first time, I spilled my secrets in the pages of How to Protect Your Family's Assets from Devastating Nursing Home Costs:  Medicaid Secrets.  . . . 


"I'm convinced that any one of the powerful techniques I reveal in Medicaid Secrets has the potential to save you thousands of dollars in nursing home costs.  This book will easily pay for itself over and over again for months and years to come. . . . 

"What is the value of owning the only reliable, completely up-to-date resource available on the market that reveals secrets about how to qualify for nursing home Medicaid -- without going broke? 

"What price can you put on the inside information that can qualify your elderly parent, a family member or you for Medicaid -- and getting Medicaid to pay the entire cost of a long-term stay in a nursing home? 

"What is it worth to save tens of thousands -- even hundreds of thousands -- of dollars in nursing home costs -- and not drain your life savings, or lose your home and other family assets? 

"Knowledge like this could easily be worth a small fortune to you over just a few months.  But you won't have to pay $10,000, $8,000 or $6,000 for this inside information. 

"No, you won't even have to pay $2,500 to $5,000 (which is what I charge for a complete plan that positions my clients to qualify for nursing home Medicaid). 

"I know you'll find it hard to believe this, but How to Protect Your Family's Assets from Devastating Nursing Home Costs:  Medicaid Secrets is only ... $47. 

"Yes, your investment in this treasure trove of Medicaid secrets is just $47.  This introductory price is only a fraction of the $250 that I charge for a one-hour consultation, in which I cover only a tiny part of what my book contains!" 

LTC Comment:  Get the picture?  Scan the web and you'll find much more just like the preceding.  The author of this ad and the book it promotes, K. Gabriel Heiser, is a member of the National Academy of Elder Law Attorneys, according to its membership directory at  NAELA is the trade association of Medicaid planning lawyers.  The organization claims professional respectability and it has fooled many in the media.  But ask yourselves this: 

Would Harley Gordon grant the "CLTC" designation to an LTC insurance producer who used such Genzo-knife-style advertising tactics? 

Would AHIP support an "LTCP" who showed such contempt for responsible long-term care planning? 

Would Ed Pittock renew the "CSA" certification of someone promoting a product so detrimental to seniors and hurtful toward the poor? 

Of course not.  

But NAELA gives its union card to Mr. Heiser and many others of his ilk.  It's high time to expose NAELA and those of its members who spread this kind of self-righteous, self-promotional, profit-seeking exploitation of seniors.  Don't let another positive reference in the media toward NAELA go by without forwarding this LTC Bullet to its author and the editor.