Gaming Medicaid poses risks for aging

This story is a short version of a longer and sadder tale. Mom was still working into her 70s but decided, on her daughter’s advice, to place her assets in an irrevocable trust of which her daughter would be the trustee. Mom was, in essence, saying she no longer owned the money though the trust was intended for her benefit. Unfortunately for Mom, her daughter later declared bankruptcy and her mother’s assets were considered to be the property of the daughter and, therefore, were used to pay the daughter’s creditors.

According to court records, the trust documents “plainly were designed for the purpose of protecting assets from [her mother’s] creditors.” The transfer of assets was considered fraudulent by the bankruptcy court.

People trying to avoid the responsibility of providing for their own long term care by transferring assets as they age is a mine field of risk not to mention a moral dilemma.

Reviewing meds 568KB

To clarify, Medicare health insurance is funded on the basis of taxpayer contributions over our lifetime of work. It does not, however, pay for long term care (the cost of hiring assistance for daily living activities like bathing, eating, dressing and going to doctors’ appointments). Long term care is an individual’s and family’s responsibility if the means are available.

Medicaid, on the other hand, is a program to support those in poverty or near-poverty for both medical and assisted living expenses. When determining eligibility for Medicaid, there is “look back” of three to five years to determine if assets were transferred legally.

Unfortunately, some people continue to game the system – attempting to protect assets to benefit their family members while transferring the cost of care to the taxpayers. Put another way, it is the practice of engineering one’s own poverty.

The fact is that about 70 percent of us will require some form of outside assistance as we age. To address the probable need for long term care for you, your spouse or aging parents, you should discuss your options with an insurance agent experienced in the products that are available.

“I have been guiding people through this discussion for years and I continue to be both surprised and concerned that there is little understanding or attention given to the near-certain costs for long term care,” says Kerry Peabody of Clark insurance.

The average annual cost in Maine to have someone provide assistance at home can range from $40,000 to more than $102,000 per year depending on the need of the individual. Buying a policy when you’re younger and healthy is far less expensive. The longer you wait, the more expensive the premium. And once your health changes, long term care insurance will likely not be an option.

Peabody says, “There are employer-based long term care insurance programs that make the premium more affordable on a group basis. If your employer does not provide that option, you should ask that they look into it. Couples get significant discounts, too.”

With the federal debt now exceeding $17 trillion and the interest on that debt absorbing evermore of our tax dollars, our government simply will not have the ability to fund the crushing demand for these services. Based on public policy discussions, means testing for all social services is likely to become more aggressive and the threshold for eligibility will be higher.

Ultimately, the burden is ours to provide for our future. One mechanism is long term care insurance.

FMI: Kerry Peabody
Kerry.Peabody@MarshMMA.com