LTC Bullet:  Half a Century of Bad Medicaid LTC Policy

Friday, August 5, 2016

Seattle— 

LTC Comment:  Medicaid long-term care policy is a classic story of good intentions leading to unfortunate consequences, after the ***news*** [omitted]
 

LTC BULLET:  HALF A CENTURY OF BAD MEDICAID LTC POLICY

LTC Comment:  Political satirist P. J. O’Rourke says “If you think health care is expensive now, wait until you see what it costs when it’s free.”  For all intents and purposes, long-term care has been free—or more precisely, very highly subsidized—since 1965.  So, by now, we have a pretty good idea of what free long-term care costs—a lot!

I spent the last couple days compiling information and quotes that explain how Medicaid made long-term care free.  Some highlights follow.  Find the whole sorry story here:  http://centerltc.com/Bibliography.htm.  In a nutshell:  Medicaid made nursing home care “virtually free for life” to anyone who couldn’t afford it.  From 1965 until 1980, anyone could give away everything with impunity to qualify.  Starting in 1980, many Congresses and Presidents have tried repeatedly to target Medicaid’s scarce resources to people in need.  But Medicaid planners have always circumvented legislative intent in order to divert critically needed funds from the poor to their affluent clients. 

A fascinating historical pattern evolved over the past 50 years.  The U.S. suffers a recession, tax receipts plummet, welfare rolls skyrocket, public budgets go bust, and government clamps down on Medicaid planning.  Then recovery sets in, tax receipts go back up, welfare rolls recede, and the politically sensitive rules intended to protect Medicaid for the poor go by the wayside.  Then another recession occurs, and so on.

What’s different this time around is that after the Great Recession of 2007 to 2009, two things have not happened that always happened before.  We’ve seen no new measures to discourage Medicaid planning abuses and we’ve experienced very little economic recovery.  Why?  Federal debt and unfunded entitlement liabilities have increased enormously, but this time around no one seems to care.  Artificially low, Fed-induced interest rates have enabled careless deficit spending and political denial of the historically inevitable consequences.  Hence no new legislation like DRA ’05 to control Medicaid planning. 

Will the piper have to be paid?  Will the next recession, following the biggest credit bubble in history, blow up federal entitlements, including Medicaid, and lead to a whole new world of long-term care financing?  Or can the government and people go on forever defying economic gravity, borrowing to fund life styles they cannot afford, and pushing the unfunded liabilities into the future?  That’s the climax we’ll have to wait to see, but you can follow the history leading up to it right now.

Excerpts from a Bibliography of Books, Elder Law Treatises, and Law Journal Articles on Medicaid Planning Listed Chronologically
with Dates of
U.S. Economic Recessions
and
Passage of Major Legislation to Control Medicaid Planning

July 30, 1965:  President Lyndon Johnson signed Medicaid into law providing “medical assistance on behalf of . . .  aged, blind, or permanently and totally disabled individuals, whose income and resources are insufficient to meet the costs of necessary medical services.”

“Because of the attention focused on Medicare, Title XIX was passed by Congress with little public notice.  This relative obscurity was lost when the cost of New York State's Medicaid program (effective May 1, 1966) became known.  Federal cost estimates for the entire Medicaid Program were shown to have been grossly underestimated."  (p. 63)
“Under Title XIX a state may also provide medical assistance to some of the ‘medically indigent.’ This group includes all persons whose income is high enough to meet daily living expenses, but not sufficient to meet medical bills.”  (p. 64)
“Several different methods of limiting the federal contributions to state Medicaid programs were considered over the objections of liberal, mostly urban, Congressmen. After long debate, the method finally selected was to place limits on the annual incomes of the medically indigent for whom federal matching funds would be available.”  (p. 83)
_________, “Medicaid:  The Patchwork Crazy Quilt,” Columbia Journal of Law and Social Problems, 5 Colum. J.L. & Soc. Probs. 62 1969 

January to July 1980:  Recession.

December 5, 1980:  President Jimmy Carter signed the Omnibus Reconciliation Act of 1980, imposing the first restriction on asset transfers done in order to qualify for Medicaid.

Spring 1981:  First law journal article on Medicaid planning published:

"Careful planning even under adverse state law will still be able to achieve the goal of excluding an applicant's resources for purposes of determining Medicaid eligibility." 
William G. Talis, "Medicaid as an Estate Planning Tool," Massachusetts Law Review, Spring 1981, p. 94 
Also:  "The article also describes ways clients might reduce exposure to health costs through (1) creation of various trust devices, (2) conveyance of remainder interests in property, (3) conversion of property into assets exempted from eligibility tests for medicaid, and (4) outright transfers of property. If a client can be rendered eligible for medicaid, medical expenses will be paid in full and estate assets will be conserved. Moreover, while the Department of Public Welfare may seek recovery for payments made on behalf of elderly recipients from their estates, careful planning can lawfully defeat the Department's ability to obtain indemnification."  (Ibid., p. 90)

July 1981 to November 1982:  Recession

September 3, 1982:  President Reagan signed the Tax Equity and Financial Responsibility Act authorizing state Medicaid programs to penalize asset transfers, place liens on real property, and recover benefits from the estates of deceased recipients.

"With long-range planning, the cooperation of relatives, some good health, and maybe a little luck, couples will be in a position to negotiate between the rock and a hard place that Congress has placed in the Medicaid path." 
Gill Deford, "Medicaid Liens, Recoveries, and Transfer of Assets after TEFRA," Clearinghouse Review, June 1984, p. 139 

"By helping clients plan before the occurrence of disability, by advising clients to make permissible transfers of assets, and by making them aware of relevant administrative regulations on deeming, lawyers can aid in preserving funds to the greatest extent possible." 
William E. Oriol, The Complex Cube of Long-Term Care, American Health Planning Association, Washington, D.C., 1985, p. 216

April 7, 1986:  President Reagan signed the Consolidated Omnibus Budget Reconciliation Act of 1985 restricting the use of Medicaid Qualifying Trusts. 

"Many people assume that a family's resources must be virtually exhausted before any help will be available through the Medicaid program.  In fact, people in Washington who need nursing home care can benefit from medicaid without devastating their families." 
Peter Greenfield and Barbara A. Isenhour, "Medicaid for Nursing Home Care:  Some Estate Planning Considerations," Washington State Bar News, Volume 40, Number 6, June 1986, p. 29 

"...many individuals find it desirable to shelter their income and assets in order to remain eligible for public assistance.  A trust is often recommended to achieve such a shelter....  Trust mechanisms have been and will continue to be an important aspect of planning for Medicaid eligibility." 
C. Wesley Martin, "Medicaid Qualifying Trusts," Connecticut Probate Law Journal, Vol. 3, Fall 1987, pps. 185, 208 

July 1, 1988:  President Ronald Reagan signed the Medicare Catastrophic Coverage Act of 1988 making asset transfer penalties mandatory and expanding the look-back period to 30 months.

"So is there any practical way to juggle assets to qualify for Medicaid--before losing everything?  The answer is yes!  By following the tips on these pages, an older person or couple can save most or all of their savings, despite our lawmakers' best efforts...Here are the best options:  Hide money in exempt assets...Transfer assets directly to children tax-free...Pay children for their help...Juggle assets between spouses...Pass assets to children through a spouse...Transfer a home while retaining a life estate...Change wills and title to property...Write a durable power of attorney...Set up a Medicaid Trust...Get a divorce...." 
Armond D. Budish, Avoiding the Medicaid Trap:  How to Beat the Catastrophic Costs of Nursing-Home Care, Henry Holt, New York, 1989, p. 34 
Also:  “By paying off a mortgage, they can magically change assets like cash, which would be lost to a nursing home, into assets that can't be touched....  Since there's no limit on the value of a house that they can buy, they may be able to hide most or all of their assets with this one simple technique.  This is a giant loophole, which they should feel free to take advantage of."  (Ibid., p. 38
Also:  "If the person is married, household goods, a car and personal effects are protected without regard to their value!....  For example, oriental rugs or paintings that appreciate in value may be worthwhile investments that add beauty and hide assets at the same time."  (Ibid., p. 39)  Also:  "Here's another loophole that a nursing-home resident may want to consider.  He or she could buy a brand-new--and expensive--ring right before going into a nursing home.  After all, the law doesn't limit this exclusion to rings purchased at the time of a wedding or engagement."  (Ibid.

"...a common misconception among applicants is that excess resources must be spent only on doctors, hospitals, nurses, medication, and nursing homes.  Nowhere in the law is this indicated.  Quite literally, an applicant could spend all of his or her assets on something 'frivolous,' such as a 90th birthday celebration of Ziegfield Follies proportion and this should not be cause for denial of Medicaid, because the applicant received 'value' for his or her money." 
Ira S. Schneider and Ezra Huber, Financial Planning for Long-Term Care, Human Sciences Press, Inc., New York, 1989, p. 142

July 1990 to March 1991:  Recession

"It's common...for people to have undocumented and untraceable assets, such as cash and bearer bonds.  If these items were to be surreptitiously transferred, their existence would probably not become known to the authorities.  No doubt it is improper to tell clients to make such transfers, but the temptation to hint at them, or to scrupulously avoid finding out if the client has a safe deposit box or undocumented assets, however reprehensible, is strong." 
Peter J. Strauss, Robert Wolf, and Dana Shilling, Aging and the Law, Commerce Clearing House, Inc., Chicago, 1990, p. 16

"While there are rules against giving away most assets, there are no prohibitions against simply spending money...options might include travel to visit relatives or see the world, or one last tour of Reno's finest establishments." 
Michael Gilfix and Mark Woolpert, "Medi-Cal Asset Preservation and Your Clients or Estate Planning is Not Enough!:  A California Elder Law Institute Continuing Legal Education Seminar," Gilfix Management Group, Palo Alto, California, 1990, p. 42

"The most common problem put to the elderlaw practitioner is how to keep an older person's assets within the family and yet allow the person to qualify for Medicaid." 
John J. Regan, "Financial Planning for Health Care in Older Age:  Implications for the Delivery of Health Services," Law, Medicine and Health Care, Vol. 18, No. 3, Fall 1990, pps. 275-6 
Also:  "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." 
John J. Regan, Tax, Estate & Financial Planning for the Elderly, Matthew Bender, New York, 1991, 1993 update, p. 2-44 
Also:  "If a couple has a second vacation home, consider having the couple rent that home and then claim the rental income as necessary for maintaining the community spouse's minimum monthly maintenance needs allowance.  If the vacation home is considered necessary for this purpose, it is no longer a countable resource."  (Ibid., p. 10-68)

"It is true, almost to the point of being a cliche, that benefit programs, whether public or private, are bonanzas for lawyers." 
Lawrence A. Frolik and Alison P. Barnes, "An Aging Population:  A Challenge to the Law," The Hastings Law Journal, Vol. 42, No. 3, March 1991, p. 715

"An alternative to resource gifting and conversion is the purchase of an annuity...the Medicaid estate can usually be reduced by the amount of countable assets used to purchase an annuity."  Jonathan M. Forster, "Favorable Investment Vehicles for Public Benefits Planning (Part 1:  Resource Planning and the Annuity," Elder Law Advisory, No. 7, October 1991, p. 2

"The new amendment to the Social Security Act (Pub. L. No. 101-239, 103 Stat. 2465, amending 42 U.S.C. 1382b(a)(3)) allows for the exemption of all income-producing property used in a trade or business....  In other words, there is now an unlimited exemption for such property....  Property used in a trade or business is excluded regardless of its value or rate of return....  Critical provisions for advocates to note are that liquid resources used in the trade or business may be excluded from countable resources, and that no limit is placed on such resources (POMS SI 01130.501C.5).  Thus, advocates may exclude large amounts of cash in business operating accounts, trust accounts, and the like, that are necessary for use in the business....  Ultimately, Medicaid recipients will want to transfer their property to avoid the imposition of a lien and recovery from the estate for Medicaid expenditures.  Since business, farms, and ranches in current use are exempt property, they can theoretically be transferred without penalty.  No restrictions are placed on the transfer of this exempt property, unlike the transfer of a home (42 U.S.C. 1396(c))." 
Rebecca L. Shandrick, "The Family Business:  An Exempt Resource for Medicaid Eligibility," The ElderLaw Report, Vol. 4, No. 3, October 1992, pps. 1-4, emphasis in the original

"We have committed an act of piracy--we have broken into the Fort Knox of Government benefits and uncovered the best legal strategies available to you for claiming your share of the gold from the Government's treasure chest....  We'll explain how you can 'strike gold' in the Social Security [including SSI], Medicare, and Medicaid programs....  With this book we are handing you the treasure map, deciphered from a mine of unintelligible government rules and regulations." 
Amy Budish and Armond D. Budish, Golden Opportunities:  Hundreds of Money-Making, Money-Saving Gems for Anyone over Fifty, Henry Holt and Company, New York, 1993, p. xiii

"Another asset preservation strategy is for a community spouse to 'just say no' to paying for the other spouse's nursing home care.  Say Mrs. Jones holds more money than the state allows for her husband to qualify for Medicaid coverage.  If it can be shown that she simply refuses to spend her money on her husband's care, Medicaid coverage will be allowed for Mr. Jones if other easily met requirements are satisfied.  This approach has been particularly successful in New York." 
Michael Gilfix, "Elders and Nursing Home Expenses:  Preserving Client Assets," Trial, Vol. 29, No. 6, June 1993, p.38

August 10, 1993:  President Bill Clinton signed the Omnibus Budget Reconciliation Act of 1993 making estate recovery mandatory, expanding the look back period to five years, eliminating the cap of asset transfer penalties, and prohibiting “pyramid divestment.”

"Old Tactics That are Still Good:  Give Assets Away.  Giving assets away [three years in advance] is still the simplest and easiest way to deal with the problem, although it leaves the elderly client totally dependent upon the good faith of their children or others.  Spend Assets on Exempt Items.  Another tactic is to spend the assets on property that won't count for Medicaid purposes...[such as] a home...a new car...household goods...funeral expenses...and...a burial plot...A client can also reduce his net worth by spending money on travel, which many elderly people enjoy.  Pay Children for Their Help.  Be sure that any payments to children for their services are pursuant to a written agreement, so it's clear that they are not just gifts.  Give Assets to the Other Spouse, a Minor Child, or a Child Who is Disabled.  [Such gifts] will not be penalized.  The Other Spouse Can Petition for an Increased Asset Allowance.  The other spouse can argue that additional assets are needed to generate income...[thereby sheltering in one example an additional] $200,000.  The Other Spouse Can Refuse to Support the Applicant....  In New York, this tactic can be successful even if the spouse's refusal is completely artificial; it is used in that state frequently.  Divorce....  The idea is for the spouse to be given a larger portion of the couple's assets, with little or no support awarded to the applicant.  Sign a Durable Power of Attorney.  All clients should sign a durable power of attorney so that if they become incapacitated, someone else can shelter their assets." 
Lawyers Weekly, September 27, 1993

"Medicaid is a middle-class entitlement, just like the deduction for mortgage interest and IRAs."  Mark Heffner, former Rhode Island state legislator and RI Coordinator of NAELA in Providence, RI Journal, February 22, 1994

August 21, 1996:  President Bill Clinton signed the Health Insurance Portability and Accountability Act (Throw Granny in Jail Law) making it a crime to transfer assets for less than fair market value for the purpose of qualifying for Medicaid.

"The chart at the end of these materials labeled 'The Home in Medicaid Planning'...contains a matrix with 10 rows and 8 columns.  Each row contains a method of protecting the family home from Medicaid estate recovery.  Each column contains a Medicaid or tax issue which must be considered when selecting a method of protecting the family home." 
NAELA Conference 1996 Proceedings, Session 7, p. 1

"As a practical matter, if your wife needs nursing home care in the future you may want to privately pay the nursing home (three months up front) for purposes of expediting your wife's placement in a nursing home, unless she is eligible for Medicare benefits.  Once your wife is in the nursing home and eligible for Medicaid, you should immediately proceed to file for Medicaid Nursing Home Care....  Since your assets are in excess of the CSRA [$652,550] at the time your wife files a medicaid application for nursing home care, then it is critical that you submit a 'Spousal Refusal' to contribute your assets to pay for her care, or else she will be denied Medicaid....  We are available to assist you in the preparation and filing of Medicaid applications and the coordination of Medicaid coverage, including monthly budgeting....  If you receive a denial of benefits...[o]ur firm is available to assist you with regard to any Medicare claims and appeals....  [S]hould your wife require such care, you can obtain Medicaid eligibility for her by transferring assets into your name and your utilization of spousal refusal....  Another alternative would be for you to purchase an annuity with the assets in excess of the CSRA....  This approach will allow your wife to qualify for nursing home care without a transfer penalty and without spousal refusal....  Your wife can transfer her assets into a trust for your sole benefit.  This transfer would not subject her to a Medicaid period of ineligibility....  [T]he CSRA should be enhanced to $200,000 from $76,740....  If the consultation exceeds the one-half hour, then you will be charged based upon my hourly rate of $275 and my legal assistant's rate is $100."  NAELA Conference 1996 Proceedings, Session 9, pps. 34-38, 46

"The PAN [private annuity] and the SCIN [Self-Canceling Installment Note] are clearly effective but highly underutilized tools in the Medicaid planning area.  As practitioners become more familiar with their tax, legal, and Medicaid planning benefits, their popularity will undoubtedly increase to the point where Congress will again change the laws." 
NAELA Conference 1996 Proceedings, Session 14:  "Making Resources Disappear--The Magic of Private Annuities and Self-Canceling Installment Notes," p. 12

"By using a LCC [Life Care Contract], the applicant is outside the purview of the disqualifying transfer section of Title 42 because the contract anticipates a transfer for value and not a gift.  Therefore, to the extent that the elder's assets are transferred pursuant to this contract, the elder will incur no period of ineligibility....  The LCC is a transfer for value and can either be structured as a lump sum transaction where the entire property is transferred at one time, or can be structured to payout on a month to month basis....  Using this one payment method, an elder can transfer a large number of assets and shortly thereafter qualify for Medicaid if the caregiver can prove that the medical condition causing the disability was totally unanticipated (massive stroke)....  IT DOESN'T MATTER IF MOM HAS A MASSIVE STROKE AND IS A CANDIDATE FOR LONG TERM CARE SIX MONTHS LATER...." 
NAELA Conference 1996 Proceedings, Session 6:  "Uses, Terms and Provisions of Lifecare Contracts for Elders," pps. 1-2, 4, 11                   

"Many of our clients own a second piece of real property--a summer home, a mountain cabin, an investment.  It is typically viewed as an impediment to Medi-Cal eligibility when one spouse enters a nursing home.  Assume that a couple's second (non-exempt) residence is worth $225,000 and that other cash assets are relatively modest, perhaps only $80,000.  Rather than sell this property, as Medi-Cal would likely advise, protect it.  In tallying their assets, the appraised value, not the fair market value, determines the value of the real property asset for Medi-Cal purposes.  Assume further that the appraised value is $40,000, entirely likely in light of [California] Proposition 13.  The community spouse, the spouse living at home, could take out a loan in the amount of $40,000 and, for purposes of Medi-Cal, reduce its effective value to $0.  The borrowed money could then be used to add on to the residence, buy needed items, invest in other exempt resources, or be protected by an increased Community Spouse Resource Allowance (CSRA) order." 
Michael Gilfix, "Practice Tip:  Protect Non-Residential Real Property and Medi-Cal," Gilfix ElderLaw News Alert, Vol. VII, No. 1, February 1997, p. 3 
Also:  "Payment for personal services can be part of a 'spend-down' when a Medi-Cal application may be submitted in one's future.  Depending on the amount of services rendered, this could justify $1,000 or perhaps $2,000 per month when care and support are very substantial....  [F]unds used for the payment of services might otherwise have to be invested in payment for nursing home services at the private rate."  (Ibid., p. 12)

"Cemeteries may do a good or bad job of maintaining grave sites.  And they may do a good job today, but drop the ball years from now.  A new service is being offered to provide assurance that sites will be maintained for the next 25 years.  Depending on the plan purchased, the one-time fee ranges from $3,800 to $13,500.  The company offering the plan, Westland Perpetual Trust, Inc., reports that payment of the fee has been permitted as a legitimate Medicaid spend down.  The service is offered nationwide." 
Elder Law Report, May 1997, p. 12

"Medicaid planning is still practiced by competent people of all socio-economic classes in all fifty states....  In this article, we argue that guardians should be permitted to perform Medicaid planning for their wards....  [T]he term 'Medicaid Planning' is used in this article to mean the process of lawfully rearranging an individual's assets so that the individual qualifies for Medicaid under the law while the assets are sheltered for use by a spouse, children or others....  These techniques...include:  divesting assets generally, transferring assets between spouses, transferring assets to trusts, converting assets, and divorcing a spouse....  [T]he couple may avoid a claim by the state to recover the Medicaid payments by transferring all spousal assets to the sole ownership of the community spouse after the institutionalized spouse's application for benefits has been approved....  Another sheltering strategy is to convert available, countable assets into noncountable exempt assets.  For example, money in checking or savings accounts may be used, without creating a period of ineligibility, to purchase or improve a home, pay off a mortgage, buy a cemetery lot, pre-pay funeral services, pre-pay residence-related taxes and insurance, or even pay outstanding bills, including legal fees....  Divorce is one of the more extreme Medicaid planning strategies.  A successful divorce, in which both parties are represented by independent counsel, and containing an agreement in which most or all of the couple's assets are given to the community spouse, can result in almost immediate Medicaid eligibility for an institutionalized spouse....  The mere fact that Congress and the states have enacted statutes and regulations expressly permitting and endorsing Medicaid planning is clearly an expression of the public policy to allow such planning." 
Hal Fliegelman and Debora C. Fliegelman, “Giving Guardians the Power to do Medicaid Planning,” Wake Forest Law Review, Vol. 32, No. 2, Summer 1997, pps. 341-2, 359, 362-4, 373

August 5, 1997:  President Bill Clinton signed the Balanced Budget Act (Throw Granny’s Lawyer in Jail Law) repealing the criminalization of asset transfer to qualify for Medicaid, but making it a crime to recommend asset transfers for the purpose of qualifying for Medicaid in exchange for a fee.

"Q:  Can my parents give away a part of their life savings and still qualify for Medicaid?  A:  Yes.  The law lets people give a portion of their savings to children or others to protect those funds from being tabulated as assets.  Giving away money can help your parents reduce their funds to a level that makes them eligible for Medicaid.  Q:  How else can my parents protect part of their life savings?  A:  Here are three of the most popular planning strategies. ...1.  Put money into exemptions [i.e. home improvements, a new car, etc.].  ...2.  Create specialized trusts.  Medicaid permits the creation of a variety of specialized trusts that preserve assets.  Your parents might transfer their home to an irrevocable Medicaid trust, which allows them to live at home for life, obtain Medicaid coverage if they must enter a nursing home, pass the residence to heirs at death, and avoid capital-gains taxes.  ...3.  Purchase an immediate Medicaid annuity or promissory note.  Let's return to the example of your parents with $100,000 in assets when dad enters a nursing home.  Your mom takes $50,000 of that and buys (in her name) an immediate Medicaid-qualified annuity from an insurance company.  ...Dad qualifies for Medicaid immediately, and Mom remains financially secure because she keeps all the income.  She may even save and accumulate the annuity payments without jeopardizing her husband's Medicaid coverage." 
Armond Budish writing in Family Circle, November 1, 1997, p. 46

March 2001 to November 2001:  Recession

“True, Medicaid planning remains a core element in any elder law practice and is probably the leading source of clients and revenues for almost all elder law attorneys.” (pps. 3-4)
“Of course, elder law is not a fringe practice. For thousands of attorneys, elder law represents the core of their practice.”  (p. 13)
“The practice of elder law, however, is not yet fully formed, because there are many parts of it that could either expand or contract, such as nursing home and assisted-living litigation. Will elder law attorneys perceive suing nursing homes and assisted-living facilities for negligent care as part of their practice, or will it be captured by personal injury attorneys?”  (p. 14) 
Lawrence A. Frolik, “The Developing Field of Elder Law Redux: Ten Years After,” The Elder Law Journal,  10 Elder L.J. 1 2002

“Unfortunately, members of the Medicaid planning bar have sometimes been their own worst enemies. For example, at the May 1996 Symposium of the National Academy of Elder Law Attorneys, two prominent NAELA members (one a former President of the organization) gave a presentation on Medicaid planning. Using the format of a skit in which other NAELA members played the roles of the family, the presenters took the audience through a session in which an elderly couple, whose net worth exceeded $750,000, was counseled on how to arrange their affairs to attain Medicaid eligibility. Among the assets in the couple's portfolio was a vacation home. The skit became fodder for critics of Medicaid eligibility planning and indeed was widely criticized by other NAELA members.”  (p. 135) 
Timothy L. Takacs and David L. McGuffey, “Medicaid Planning:  Can It Be Justified?  Legal and Ethical Implications of Medicaid Planning,” William Mitchell Law Review, 29 Wm. Mitchell L. Rev. 111 2002-2003

February 8, 2006:  President  George W. Bush signed the Deficit Reduction Act placing the first cap ever on Medicaid’s home equity exemption, limiting the half-a-loaf loophole, amending the annuity rules, and unencumbering the Long-Term Care Partnership Program.

“Can an elderly husband really refuse to support his wife in a nursing home by shifting the financial burden to Medicaid? Yes, says the U.S. Court of Appeals for the Second Circuit, by employing a Medicaid-planning strategy called ‘spousal refusal.’
“Due to the high cost of nursing home care, elderly people and their families have increasingly turned to Medicaid-planning strategies to qualify for Medicaid benefits and ease their financial burden.' Medicaid planning involves taking measures to preserve one's assets in order to gain Medicaid eligibility by meeting the program's financial criteria. One such Medicaid-planning strategy is spousal refusal, under which a healthy spouse refuses to financially support a spouse in need of nursing home care.  Spousal refusal has been in existence since 1988, following Congress' attempt to fix the Medicaid system to prevent spousal impoverishment, which is when a healthy spouse ends up poor after paying for an ailing partner's care.  (p. 487) 
Andrew D. Wone, “Don't Want to Pay for Your Institutionalized Spouse?  The Role of Spousal Refusal and Medicaid in Funding Long-Term Care, The Elder Law Journal, Volume 14, 14 Elder L.J. 485 2006

“Now that the annuity rules have been greatly clarified, the annuity industry will likely accept this gift from Congress and develop annuity products which comply with DRA.”  (p. 17) 
Stan Miller and D. Scott Schrader, Guest columnist:  Rebecca H. Winburn, “Advanced Planning Strategies:  Medicaid Planning After the Deficit Reduction Act of 2005,” Journal of Practical Estate Planning, April - May 2006, 8 J. Pract. Est. Plan. 15 2006-2007

December 2007 to June 2009:  The Great Recession

“President George W. Bush, in a statement made when he signed the DRA, explained:
The bill tightens the loopholes that allowed people to game the system by transferring assets to their children so they can qualify for Medicaid benefits. Along with Governors of both parties, we are sending a clear message: Medicaid will always provide help for those in need, but we will never tolerate waste, fraud, or abuse.
“The policy reasons set out by former President Bush for the passage of the DRA as it relates to Medicaid are clear: Medicaid's mission is to help the needy, the sickest and poorest members of society, without waste, fraud, or abuse.”  (pps. 347-8)
“Before the DRA, there was a huge gap between what Medicaid law allowed and Medicaid policy, as expressed by President Bush. The DRA was passed to bring Medicaid law closer to Medicaid policy.'”  (p. 350) 
Catherine M. Reif,  “A Penny Saved Can Be a Penalty Earned:  Nursing Homes, Medicaid Planning, the Deficit Reduction Act of 2005, and the Problem of Transferring Assets,” NYU Review of Law & Social Change, 34 N.Y.U. Rev. L. & Soc. Change 339 2010

“While Medicaid was arguably created as a ‘safety net’ program with the sole purpose of providing health care for the poorest members of society, it is common for Medicaid to pay for LTC services for elderly individuals from a variety of economic backgrounds.”  (p. 358)
“It is not uncommon for couples and individuals to engage in a practice often referred to as ‘Medicaid Planning,’ which one commentary defines as ‘the legal fiction of 'rearranging assets' to make someone poor on paper so that he or she may qualify for Medicaid.’ It is well established that such ‘Medicaid Planning’ is legal and that it is professionally ethical, or acceptable, for attorneys and financial planners to assist clients in such planning. Nonetheless, the Medicaid planning and spend down processes are quite complex, potentially highly financially disruptive, and may lead to inequitable results. Moreover, although legal, Medicaid planning is often perceived as ‘gaming the system.’”  (p. 359)
Andrew M. Hyer, Elizabeth L. Hannah, Ross E. Burkhart, and Sarah E. Toevs, “Paying for Long-Term Care in the Gem State: A Survey of the Federal and State Laws Influencing How Long Term Care Services for Idaho's Growing Aged and Disabled Populations Are-and Will Be-Funded, Idaho Law Review, 48 Idaho L. Rev. i 2011-2012

“As discussed more fully in Section IX purchasing an annuity for the community spouse with excess resources can immediately establish eligibility of the institutional spouse irrespective of the amount of excess resources.”  (p. 169)
“As discussed in Section IX, the transfer of asset rules do not foreclose all planning opportunities. It is ironic that more planning opportunities remain for persons of substantial means than for those persons of lesser means. This is an irony quite familiar to those who do tax planning.” (p. 170)
“While not required, transferring title of exempt resources solely into the name of the community spouse can avoid ineligibility for the nursing home spouse in the event the resources are sold, as well as protect the assets from Medicaid estate recovery.”  (p. 183)
“Based on the foregoing analysis we can now set out various planning options to reduce excess resources in the most advantageous manner possible.  We begin by looking at the options available to single persons and then consider the additional options available to married persons.” (p. 188)

Gifting and Waiting Out the Look-Back Period or the Ineligibility Period”  (p. 188)
“Purchasing Exempt Resources”  (p. 190)
“Consuming Excess Resources”  (p. 190)
“Transfer the Home to Certain Children or Siblings” (p. 191)
“Establish Trusts for Disabled Persons Less Than 65 or For a Disabled Child of Any Age” (p. 191)
“Disinheritance or Third Party Special Needs Trusts” (p. 192)
“Transfer Exempt Assets from the Institutional spouse to the Community Spouse”  (p. 193
“Revise the Community Spouse's Estate Plan  (p. 193)
“Purchase an Annuity for the Community Spouse”  (p. 194)
“Requesting an Excess Resource Allowance”  (p. 195)
“Divorce, Legal Separation, or Non-Binding Unions” (p. 195)
“Using Washington State as an example, this article has attempted to provide a road map for practitioners seeking to guide their clients through the long term care planning process. Most of the legal requirements and planning techniques described here have application in other states as well. There are nuances of difference and, of course, the applicable authorities differ from state to state. Still the fundamentals are reasonably universal since Medicaid's basic architecture arises under federal law.”  (p. 196) 
Sean R. Bleck, Barbara Isenhour, and John A. Miller, Preserving Wealth and Inheritance Through Medicaid Planning for Long-Term Care,” MSU Journal of Medicine and Law, 17 Mich. St. U. J. Med. & L. 153 2012

“This Article suggests that the United States also maintains a secret welfare state. The secret welfare state exists because of lawyers' ubiquitous use of questionable practices in representing clients before benefit-granting government agencies, which enable thousands of individuals to collect public benefits who may not qualify for them.”  (p. 1847)
“The funding for SSDI and Medicaid is limited. In assisting relatively advantaged individuals to obtain SSDI, Medicaid, and other public benefits programs, lawyers may be jeopardizing these programs' sustainability and the welfare of those who depend upon them.  (p. 1847)
“This Article concludes by calling for additional research on the role of lawyers in the American welfare state. In particular, it may be possible that the legal profession's central role in the distribution of public benefits is an obstacle to a fairer and more transparent social safety net.”  (p. 1849)
“Studies estimate that anywhere from 5 percent to 54 percent of current Medicaid beneficiaries have engaged in Medicaid planning. Even if the lower estimates are accurate, as Medicaid planning is generally used by more affluent individuals, it predominantly benefits the nonpoor.” (p. 1855)
“Footnote 88:  While fee information for Medicaid planning is not as readily available, according to the American Council on Aging, attorneys' fees can range from $2500 for individuals with relatively simple estates to $10,000 for individuals with significant assets. See Am. Council on Aging, Medicaid Planners: Pros & Cons of Public and Private Assistance, MEDICAID PLANNING ASSISTANCE, http://www.medicaidplanningassistance.org/types-of-medicaidplanners#elderlaw-attorney (last visited Mar. 27, 2016) [http://perma.cc/EJ5L-2RWR].  Nonlawyers who provide Medicaid planning services generally charge less.”  (p. 1857)
“The American welfare state is sustaining relatively advantaged individuals and their lawyers as well as the truly needy. In the long-term, the United States would be well served by a more transparent public benefits regime.”  (p. 1864)
Milan Markovic, “Lawyers and the Secret Welfare State, Fordham Law Review, 84 Fordham L. Rev. 1845 2015-2016