By Diane Weinberg

At last, the practice of Medicaid planning has been vindicated.

Many clients, and many other attorneys, have questioned my sanity in practicing in Medicaid law.  They hear about the complexity of the statutes and wonder why anyone would voluntarily dive into this legislative and regulatory morass on a daily basis.

Medicaid statutes and regulations have become increasingly complex over the years for two reasons.  First, long term care, including nursing home care, is expensive.  As money gets tighter, the powers-that-be look for new ways to control costs, and one way to control costs is to try to limit the availability of that benefit.

Second, the statutes and regulations are created in reaction to planning techniques employed by evil elder law attorneys (like me!) who help people qualify for Medicaid benefits.  Elder law attorneys are portrayed as turning millionaires into paupers so that Medicaid will pay their nursing home bills.  The threat posed by elder law attorneys has been so great that Congress passed a statute making it a criminal act to advise clients with respect to Medicaid planning.  (Fortunately, Janet Reno and a New York state court recognized that this federal law violated the First Amendment of the U.S. Constitution, and it is not being enforced.)

On May 22, 2014, the GAO issued a report in which it evaluated the impact of Medicaid planning strategies on Medicaid expenditures.  As part of its investigation, the GAO reviewed 294 Medicaid applicants in three different states – New York, Florida and South Carolina.  In addition to speaking with officials from the Centers for Medicare and Medicaid Services and with attorneys recommended by the American Bar Association’s Commission on Law and Aging, the GAO also conducted undercover calls to various law firms to learn more about Medicaid planning (my personal favorite investigation technique).

The findings of the investigation are detailed in the attached article from Elder Law Answers.  Some highlights of the report include that

  • 65% of the applicants had gross annual incomes of less than $20,000, and only 5% had gross incomes of over $50,000.
  • 86% of applicants had less than $100,000 in resources.  Indeed, 41% of applicants had less than $2,500 in total resources (a sad commentary on the state of savings among our seniors).
  • 15 applicants transferred assets for less than fair market value, and all but one of those applicants lived in New York.
  • 5 applicants transferred assets such that the applicant incurred a penalty period, during which they privately paid for nursing home care.

The GAO report confirmed what we elder law attorneys already know – the people we are advising with respect to Medicaid benefits really do need those benefits.  These applicants are not millionaires giving away their savings.  These clients have low annual incomes (less than $20,000) and little savings (less than $100,000), and they need to figure out how to pay for nursing home care ($60,000 to $70,000 annually in Georgia) for their spouses and themselves.  Moreover, the impact this planning has on the overall Medicaid budget is “negligible.”

We have been vindicated.

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