LTC Bullet: Why Not Medicaid?
October 4, 2007
Comment: What's the best
way to handle the often unverbalized objection:
"I'll let the government take care of me," after the
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BULLET: WHY NOT MEDICAID?
Comment: Whether they
articulate the objection or not, many LTC insurance prospects may be
thinking "Why not Medicaid?"
on one thing for sure. Boomers
and seniors have heard hundreds of times that government pays for
long-term care. They've
seen best-selling books on how to avoid "spend down."
They've read such dubious advice in AARP's magazine and Family
Circle. They've been
barraged with invitations to Medicaid planning seminars.
Not to mention the "wheel-chair telegraph" that
communicates artificial self-impoverishment techniques faster than the
guess what? People planning
to abuse the public welfare system aren't very proud of the fact. Maybe they're already ashamed of putting their parents in
nursing homes on Medicaid. In
any case, they may well be concerned enough about LTC financing to
invite you in for a consultation about private insurance, but clam up
entirely about no-cost alternatives they're considering.
what's a responsible LTCi producer to do?
My advice is to ignore the subject unless and until you've done a
full presentation, dealt with all the prospect's objections, determined
they need and can afford a suitable LTCi policy . . . but they still
don't buy. When you get to
that point, something else is going on and you'd better bring it to the
but forthrightly, explain how Medicaid pays for most long-term care in
the United States. Acknowledge
there are ways to qualify for Medicaid while preserving wealth. But honestly and frankly, disclose Medicaid's downsides.
Don't use scare tactics, but remember you have a fiduciary and
moral responsibility to tell prospects and clients the whole truth.
what exactly is the truth about depending on Medicaid for your long-term
care? You've heard the
answers here a hundred times. But
for a change of pace, here's similar information from a new source.
follows is Margie Barrie's December 2007 "LTCi Insider" column
for Senior Market Advisor magazine.
That's right, you're reading it here first, thanks to gracious
permission given by SMA's editor Brian Anderson.
Check out Senior Market Advisor at www.seniormarketadvisor.com.
one correction to Margie's text: Medicaid
eligibility does not require that assets be spent down for
"care." Over the
years, Medicaid planners have recommended round-the-world cruises and
"Ziegfield-follies"-scale parties to self-impoverish without
spending money on long-term care. All
that matters is that you get rid of the money while receiving fair
market value in return.
MARKET ADVISOR - LTCI INSIDER - DECEMBER, 2007, COLUMN
The Deficit Reduction Act has made Medicaid a less desirable
solution for funding LTC. I
do mention the disadvantages of relying on Medicaid during my client
presentation. Do you have a
list that I can use if asked more questions about Medicaid?
A discussion of Medicaid is an essential part of the
presentation. However, I
believe it is much better to keep the explanation brief and simple.
From the agent's perspective, Medicaid rules keep changing and can vary
by state. If we provide
specific advice, it could be wrong.
And we are not attorneys; therefore, our E and O [errors and
omissions] insurance may not cover that situation.
From the client's perspective, they do need to hear information from us
so they can be convinced that they need LTCi.
If we add to this a lengthy explanation of Medicaid, we risk
having them suffer from information overload.
Then it could be even harder for them to make a decision about
purchasing a policy.
As National Marketing Coordinator for the AHIP Partnership
Training Program, I use as part of the curriculum a list of
disadvantages that my students find to be very comprehensive and easy to
communicate. Use this list
when you need to provide a more in-depth discussion of Medicaid
To qualify, a person must generally spend almost all her assets
and income on care. An
elderly person who has worked hard and been self-supporting her whole
life becomes now indigent and must depend on the government for her
needs. Hard-earned assets
cannot be left to heirs or used for such purposes as helping
grandchildren go to college.
The types of long-term care available to a Medicaid recipient are
often limited. Benefits for
home and community-based services are not offered everywhere,
eligibility for them may be restricted, and funding is generally
limited. And only a few
state programs pay benefits for care in assisted living residences. Consequently, some Medicaid recipients who could be cared for
at home are forced to enter a nursing home.
Possible limited choice of nursing home facilities.
Facilities considered the most desirable may not be available to
them because in most states facilities receive less dollars to care for
Medicaid recipients than from private patients.
Another consideration is that if fewer facilities are open to
Medicaid recipients, they may have to go wherever a bed is available,
which might be distant from family and friends.
Even for facilities that accept Medicaid residents, they may have
a limited number of Medicaid beds.
Generally those beds go first to those who were long-time private
pay residents and have run out of money.
Medicaid not automatic or guaranteed.
If your LTCI benefits run out, and you have to apply for
Medicaid, you may or may not be accepted.
You might not meet Medicaid standards for functional eligibility
(need for care), and in some states your income might be too high for
you to qualify.
Medicaid subject to change.
In the future it could be more difficult to qualify, and benefits
could be more limited.
Only assets protected, not income.
If you qualify for Medicaid, you will generally have to spend
most of your income on care.
Some, not all assets protected.
Under the DRA [LTC Partnership program], your assets are
protected to the amount of LTCI benefits received when you apply for
Medicaid (plus the amount you are entitled to under the spousal
No guarantee any assets will be preserved.
If your LTCI benefits don't cover most care costs, you could
spend all your assets before you run out of LTCI benefits and apply for
Home may not be protected if the value is greater than the amount
of LTCI benefits received. If a person's home is deemed a countable asset by Medicaid
and subject to spend-down requirements, a partnership policy protects it
only if the amount of home equity is less that the amount of protected
assets (that is, the amount of insurance benefits the person has
received). Likewise, if a
home is subject to estate recovery, partnership coverage protects it
only if the equity is less than the LTCI benefits received.
In other words, if you want to use your asset protection to save
your home, you can, provided you have enough asset protection to cover
the value of the home. Of
course, some people's homes are exempt for various reasons, in which
case this wouldn't apply.
Reciprocity may not apply. If
you move to another state, the new state might not have a partnership
program, or it might not have reciprocity with the old state, so you
would have no asset protection unless you moved back.
Partnership programs subject to change.
Federal or state governments could change the programs in the
future, possibly affecting asset protection.
Barrie is a principal at Hagelman Barrie Training Solutions and also
serves as national marketing coordinator for the LTCP designation. After
several years specializing in LTCI sales, Barrie compiled both her
knowledge and that of other LTCI professionals in her book, "50
Ways to Boost LTCI Production."
LTC Bullets reviewed Margie's book in "LTC Bullet: 50 Ways to Survive in LTCI--Book Review," August 6, 2003 at http://centerltc.com/current/458.htm.