In a recent article in The New York Times, the author discussed the ethical issues of Medicaid planning. According to the article, a large group of Americans wants nothing more than to be considered impoverished enough to qualify for Medicaid. In his first article about Medicaid, the author requested readers to send him their questions about Medicaid. In return, he states that he received more comments about Medicaid planning being ethical than on any other topics. Apparently, one-half of the respondents were angry by the ethics of Medicaid planning while the other half of respondents wanted to know how it worked.
In general, Medicaid has received a great deal of attention because of the health care debate in Congress. Various versions of health care bills proposed by Republicans include cuts to the Medicaid program. Some issues raised with Medicaid is funding the program in the long-term. Politicians fear that the Medicaid program will feel the strain of an increasing number of Americans who may need expensive end-of-life or long-term care who have not saved enough money to pay for post-retirement living expenses and care. Enter the debate about the ethics of people who can afford to pay for some of their care purposefully planning to be “poor enough” to qualify for Medicaid.
What is Medicaid Planning?
To receive Medicaid benefits, you must meet certain financial restrictions to qualify. Your income, resources, and assets cannot exceed certain amounts. Therefore, some individuals search for ways to “spend down” or transfer assets and resources to qualify for benefits to pay for long-term nursing home or assisted care. This process is commonly referred to as Medicaid planning.
However, the process of decreasing assets can be difficult because of Medicaid’s rules about gifting and transferring assets and resources. A five-year look back period allows the agency to analyze any transfers or gifts within five years of the application. If any transfers or gifts that do not meet strict and narrow exceptions can result in penalties, such as delays in eligibility.
Individuals who attempt to spend down assets to become eligible for Medicaid benefits can make costly mistakes. The rules, restrictions, and exceptions can be very technical and difficult to understand. We advise individuals to seek the advice of an experienced Michigan Medicaid planning attorney before attempting to transfer or “gift” assets to qualify for benefits.
Medicaid Planning is Ethical
There are many reasons given on both sides of the ethics argument; however, Medicaid planning is perfectly ethical and legal. The law has specific guidelines and rules for gifting and transferring assets to eligible individuals such as spouses, children who are blind or disabled, siblings, and children who are caregivers. There are rules that govern these transfers; therefore, it is best to consult an attorney before transferring any real estate or personal assets.
Furthermore, these provisions are designed to protect a healthy spouse who intends to remain at home or children who cannot care for themselves. Therefore, Medicaid planning is ethical because it takes into consideration the family members who need the assets and resources to continue to provide for their living expenses or who have contributed substantially to the person’s care while he or she remained at home to avoid the expense of nursing home care.
In addition, some of the parties arguing that it is unethical to participate in this form of estate planning could have other motives. For example, the insurance industry prefers that people invest in expensive, and sometimes restrictive, insurance for long-term care. Mortgage companies encourage people to seek reverse mortgages that can strip away the equity in a home that may be needed for a healthy spouse. In addition, investment companies may try to argue that you should use their services because investing is more “ethical” than pre-planning for Medicaid.
The Elder Care Firm of Christopher J. Berry, CELA Is Here to Help
Medicaid planning is as ethical as tax planning and estate planning. All three strategies help individuals protect themselves, their families, and their assets. Contact our law firm at 888-390-4360 to request more information. You may also use our online contact form to schedule an appointment with our Michigan estate planning lawyer.
Lieber, Ron. “The Ethics of Adjusting Your Assets to Qualify for Medicaid.” The New York Times. 21 July 2017