Medicaid is a welfare program originally created to provide health care to our nation’s poor. Due to the lack of any other program, Medicaid has by default become the long-term care insurance of the middle class. Those needing long term care, often consult with elder law attorneys in order to qualify under the program’s asset and income thresholds and preserve their savings either for their healthy spouse or their children. Is this practice ethical? This is a question I get often at seminars in which I speak. My response is an unequivocal yes.
First, my clients have modest savings. There seems to be a generally misconception that “millionaires are getting on Medicaid.” However, this is far from the truth. My clients are family farmers, small business owners, or individuals looking to preserve what little they have accumulated to supplement their care in their final years and leave some legacy to their children.
Second, government support services create a bias in the treatment of certain diseases. While Medicare will cover tens of thousands of dollars in medical bills for the treatment of heart disease or cancer, it has nominal coverage for the treatment of Alzheimer’s disease and other forms of dementia. Should one individual be forced into poverty while another is not simply because their end of life diseases are different?
Third, Medicaid planning is not exploiting legal loopholes, but adhering to laws and rules governing Medicaid. Medicaid has become recognized as the long-term care insurance of the middle class. Congress implicitly accepts this result through rules that protect spouses of nursing home residents and permit others to qualify after spending down and transferring some of their savings. To plan ahead and accelerate qualification for Medicaid is no more unethical than planning to avoid taxes. It’s just different populations doing the planning. Whereas a wealthy individual may hire legal counsel to reduce his or her tax burden by finding options and safe harbors under the tax code, an individual will hire an elder law attorney to explore options and safe harbors under Medicaid rules to protect assets. Many attorneys have made a career out of advising wealthy individuals on how to avoid or reduce their estate tax burden by establishing special trusts, making lifetime gifts, and other strategies that reduce the amount of tax his or her client pays. Actually, one may find it troubling that some of this work has become absolute, not because of more stringent tax rules, but because death taxes have been significantly reduced (the Federal Estate tax exemption has increased from $575,000 to $5.49 million in less than twenty years) or eliminated (Indiana abolished its inheritance tax in 2013). Meanwhile Medicaid rules designed to eliminate asset protection planning options have significantly increased in number over the same time period.
Should everyone seek assistance from Medicaid to pay for the costs of their long term care? Probably not. As an attorney, I have a duty to advise all clients that request my assistance of the mechanisms available to obtain assistance through the program. However, I believe I also have a duty to review alternatives to Medicaid coverage with each client- including long term care insurance and self-funding. Furthermore, I believe that every client should be walked through a comprehensive cost benefit analysis before proceeding with a plan.
We can review long term care options with you and assist you in making an informed choice of the best method to pay for long term care. If you are interested in reviewing your long term care options with us, please contact us to schedule an appointment.
Jeff is Certified as an Elder Law Attorney (CELA) by the National Elder Law Foundation, a distinction held by only a handful of lawyers in Indiana. For almost 20 years, he has focused on elder law, estate planning, long-term care planning, Medicaid planning, Veterans Affairs benefits planning, special needs planning, guardianships, and estate administration.