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Tuesday
Dec212010

Elder Lawyers Game Medicaid -- Law or No Law

AuthorJonathan Karmel

Here's an ad that runs almost every day in my local newspaper under the heading "Medicaid Law:"

"Many people needlessly lose their homes and spend their life savings to become eligible for Medicaid benefits. With the correct advice from a qualified elder law attorney, significant assets can be saved at any time, even when a family member is already in a nursing home."

Before you accept the services of such a "qualified elder law attorney," consider the following. Medicaid is the welfare program that provides medical assistance. To be eligible for Medicaid, a person has to be poor, just like welfare programs that provide cash assistance. According to the Congressional Budget Office, about one-third of Medicaid’s spending is for long-term care, which includes nursing home services. 

In many cases, individuals who are not eligible for Medicaid go into nursing homes, spend their savings to pay for the nursing home, and then they are poor enough to qualify for Medicaid. In that case, the Medicaid program begins picking up the tab for the nursing home. That is the way the system is supposed to work.

For years, however, middle class -- and even affluent -- Americans have figured out ways to game the system. They transfer significant assets to their children or others in order to become "poor" enough to qualify for Medicaid when they go into a nursing home. This practice was curtailed somewhat by new rules under the federal Deficit Reduction Act of 2005. But as the advertisement I quoted shows, there is still an industry of elder lawyers who help middle class people have their cake and eat it too. They collect welfare and bequeath their assets to their heirs.

Now consider this. Since 1997, it has been a crime under federal law to counsel an individual to dispose of assets in order to become eligible for Medicaid. No, that’s wrong, the elder lawyers say. The courts have found that federal law to be unconstitutional. I’ve got a First Amendment right to advise my clients how to qualify for Medicaid. It’s freedom of speech. The case is called New York State Bar Association v Reno. Look it up!

So the lawyers who advise their clients how to transfer their assets in order to become eligible for Medicaid are supposedly doing something that is legal, even though it is in fact a crime. Their bar associations will also maintain that it is ethical, at least by the ethical canons that they have created for themselves. After all, attorneys defend rapists and murderers, right?

In my opinion, however, it is wrong to collect welfare if you’re not really poor. The mentality that makes people think that they are entitled to save and pass on "significant assets" to their children while collecting welfare is the same mentality behind the push to lower if not eliminate the estate tax. Can’t the children of the middle class earn money for themselves rather than inheriting money from parents who are on welfare? What ever happened to the concept of meritocracy?

If you’re middle class and you want to protect yourself against the risk that your life savings will be drained by the cost of a nursing home, please don’t go to an elder lawyer. Go out and get yourself some good long-term health insurance.

DateTuesday, December 21, 2010 at 5:34PM |

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