Since I was seven years old, I have seldom taken a dose of medicine, and have still seldomer needed one . . .I have never taken any exercise, except sleeping and resting, and I never intend to take any.  Exercise is loathsome.—Mark Twain, American author and humorist

 What is the answer to potential clients and other professionals who believe that it is unethical or immoral to obtain Medicaid benefits to pay the cost of Nursing Home Care?

            Let me tell you the story about a doctor who saw three patients.

            To the first patient, the doctor said, “I have good news for you.  You require quadruple bypass surgery.  You have coronary heart disease and your surgery is going to cost $250,000 dollars.  The good news is that Medicare and your supplemental insurance pays for it all.”

            The doctor saw the second patient and said, “I have good news for you.  You have cancer.  You require radical surgical intervention, and it will cost at least $100,000.  The good news is that Medicare and your supplemental insurance pay it all.”

            Finally, the doctor saw the third patient and said, “I have very bad news for you.  You are going to live a very long time.  The bad news is that you have dementia and you will most likely spend down your life savings on your cost of care, because no insurance pays for it – except long term care insurance, which you have been unable to afford.” 

            Unfortunately, our health care and insurance system actually discriminates against individuals based upon the type of illness they have.  If they have an acute care need, then Medicare and supplemental insurance will pay the bill.  If they have a chronic illness requiring on-going custodial care, then these individuals will have to pay privately for care until they spend all their assets.  Neither Medicare nor their supplemental insurance will pay for the cost of custodial care – at home or in a nursing facility.  Thus, by the luck of the draw, some individuals are “lucky” enough to have an acute illness, whereas those with chronic illnesses such as stroke, Alzheimer’s disease, Lou Gehrig’s disease, Parkinson’s disease and Huntington’s disease will spend all their life savings on nursing home costs unless they do some Medicaid planning.

            What Medicaid planning attorneys do is help overcome structural discrimination based upon disease discrimination in America. 

            Cheryl Fletcher-Docherty, a well-known financial and Medicaid planner located in Santa Cruz, California recently wrote about this issue.  “As in any area of consumer spending, knowing what to look for and what strategies to use in arranging for paid care services can often result in saving money.  Some strategies such as Medicaid planning allow for preserving the home or relieving the pressure of spending retirement savings.  Oftentimes a well thought-out strategy will provide tax advantages as well.”

            A person facing the prospect of long term care with moderate income and moderate savings may eventually have to rely on Medicaid to pay part or all of the cost of care.  For instance, someone making $2,000 each month would not be able to afford nursing home care at $6,800 – $10,000 each month.  Savings would be depleted quickly, and Medicaid may become the only option. 

            Likewise, children, relatives and friends are not recognized by the “system” for the financial sacrifices they make in providing early care before a recipient becomes bad enough that they can no longer be cared for at home.

            Medicaid planning, using a professional Medicaid planning advisor or qualified elder law attorney, allows families to correct inequities in the system.  Medicaid planning has gotten a bad name because some individuals, who would normally have too many assets to ever qualify for Medicaid, deliberately use it, many years in advance, to give away everything to their family so as to qualify for Medicaid.  It really is ethically suspect to abuse the system in this way.  Even if it wasn’t, there are much better ways to plan for long term care in advance.

            Also, some Medicaid planners will attempt to discredit other ways to fund long term care such as using insurance or a reverse mortgage. The intent is to limit competition ensuring that paying clients will rely entirely on Medicaid planning as a solution.  On the other hand, many long term care funding specialists will use the same strategy against Medicaid planners in order to eliminate competition to their services.  These people, who definitely have an ax to grind, spend a lot of their time trying to make Medicaid planners appear as evil or dishonest.

            Medicaid planning is no different from tax planning.  Both are supported by taxpayers, but one is considered ethical and the other is often frowned upon.  One helps wealthy families, and the other (Medicaid Planning) helps the middle class individual with no more than a house and a savings account. All strategies have their place in the scheme of things, and in case-by-case planning. 

            For the younger generation, using other strategies, such as purchasing long term care insurance for the cost of care is a much better approach than Medicaid planning.  Not relying on Medicaid will allow greater choice in care settings and care services provided.

            Thank you for reading.  Stay well.  See you next week.