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From The Director: "Medicaid Planning"
by Catherine R. May, Executive Director
In the June 3, 2001 Berkshire Eagle, Jane Bryant Quinn wrote of the curious dichotomy in the thinking of middle and upper middle class people who think the government should pay for their nursing home care despite the fact that the government program that does pay for this care is specifically and only available to low income persons.
In the Wall Street Journal on June 6, 2001, in an article entitled "New ‘Artificially Impoverished’ Seniors Get Medicaid to Pay for Nursing Homes", Ann Davis wrote of the marketing and popularity of "Medicaid Annuities" which are being used to deplete one’s assets and thereby make someone who is definitely not income eligible for Medicaid into one who will have their long term care paid for by Medicaid.
Every state in the nation is concerned about its growing Medicaid budget, and whether the costs of nursing home care will cause the budget to "lurch out of control". At the same time, middle and upper income Americans are looking for ways, such as "Medicaid Annuities", to avoid paying for any nursing home care they may need, in order to protect their assets for a spouse or for their heirs.
Americans who have proudly announced their self sufficiency, and paid for their life-long medical care either out of pocket or through health insurance, or a combination of both, upon contemplating the costs of long term care, decide that it is time to quit being responsible and self sufficient. They want to keep their assets to themselves or their children, and let the taxpayers pay for their nursing home care.
In her article, Jane Bryant Quinn "suspects that some of the well-off who weasel their way onto Medicaid are vigorous supporters of big income tax cuts. But where do they think the money for Medicaid comes from? Chocolate bars?"
Why is it that someone who has accepted the responsibility for his or her own health care costs through a long life, sets about "Medicaid Planning" in an attempt to become eligible for their fellow taxpayers to pay for their nursing home care? The states and the federal government have tried a number of ways to avoid having moneyed people use Medicaid, but the state laws on who is eligible contain many weaknesses that make entry for the truly over income possible, and it is now easy to find attorneys or financial planners who will advise one on how to protect assets while also becoming eligible for Medicaid.
Again, as Jane Bryant Quinn states, and the writer agrees, "exploiting these weaknesses (in the laws) is unethical." She further asks if "the question for families is whether money will always trump morals".
Most Americans would not think of hiding assets in order to secure welfare payments or food stamps; yet they do not find it wrong or immoral to do the same thing to have public monies pay for their nursing home care.
Long term care insurance is a new product, is expensive, and one needs to be a wise shopper to select the right policy; but long term care insurance is now widely available, and for the moneyed person, is one way to pay for care while also protecting their assets. Paying outright for long term care in a nursing home is obviously another way.
If people who have significant assets think of "Medicaid Planning" as going on welfare in order to save their money for their children, perhaps they will think again about going ahead with that planning.
Appearing to impoverish oneself through use of a Medicaid Annuity, or through other means that a Medicaid Planner offers, may indeed save your money for your heirs. The critical question, however, is: do moneyed older Americans want to take advantage of their fellow taxpayers through accessing a public program that is meant to pay for care for the truly indigent?
Medicaid is in trouble, here and across the country. As Quinn concludes in her article, the more people with money exploit the system by not paying their own way, the worse health care is going to be for everyone.