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. With the help of elder law attorneys, those needing long-term care can qualify for Medicaid by making decisions with respect to their estate plan before they need Medicaid. Some consider this an impoverishment of one’s own financial resources, but on the other hand it, can be careful pre-planning, in order to qualify and preserve savings for a healthy spouse or children. So the question is, is this practice ethical?
Stacey L. Bradford of SmartMoney.com said in a 2002 article: “For starters, it’s highly unethical to transfer funds to family members simply so that the government will pick up the tab.”
Conversely, Randy Cohen, the former ethics columnist for The New York Times Sunday Magazine, wrote in 2002 that Medicaid planning is ethical if you play within the rules. Speaking to a woman who has Alzheimer’s disease, he says:
“What you are contemplating is not the exploitation of a legal loophole but adherence to the regulations governing Medicaid. But you should seek legal and financial advice: [because] there are [many] options to consider, including, for instance, transferring some assets to your children (if you have any) or protecting your assets through annuities or trusts. Done with respect for the law and compassion for your spouse, such actions are prudent and ethical courses of action.”
It will be no surprise that we at Berger Estate & Elder Law P.A. agree with Mr. Cohen and not Ms. Bradford. Unfortunately, some attorneys and advisors consider highly controversial practices like recommending divorce to qualify for Medicaid. Fortunately our attorneys would never recommend such methods and have developed techniques where this doesn’t have to ever be considered. Neither Congress nor the state legislatures have resolved the public policy question of how we as a society should pay for the long-term care of our seniors. The result is a confusing, makeshift system of Medicare, private insurance, out-of-pocket payments, family caregivers, and Medicaid as a last resort.
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 reduce taxes. It’s just different populations doing the planning.
Some argue that Medicaid planning is unfair because Medicaid is a zero-sum game. More money spent on long-term care for middle-class seniors means less for poor children who need medical care. There’s some truth to that argument at the state level, but not at the federal level. The federal and state governments share Medicaid expenses. At the federal level, anyone who qualifies for Medicaid gets covered. At the state level, the same is true, but the states have discretion on how far they expand Medicaid to serve underinsured populations. Lack of resources could mean narrower coverage on a state-by-state basis and if the resources run out, legislature will decide if they want to adjust the rules. However, for now the resources are available and many thoughtful Kansas and Missouri citizens and seniors are taking advantage of a program that was designed to take care of them.
Berger Estate & Elder Law P.A. has been serving Kansas City for over 30 years providing Trusted Council with Proactive Solutions. Call us today at (913) 491-6332, visit our website berger-lawfirm.com or stop by our conveniently located offices at 11233 Nall, Suite 140 Leawood, KS 66211 for more information.