At least once a week, someone will post a question on this board that basically amounts to asking how to “protect” some parental asset or amount of money and still apply for/qualify for Medicaid. Inevitably, such a poster gets jumped on by numerous people replying that trying to protect assets is “cheating” and grossly unfair to other taxpayers.
I’m not so sure. I'm not advocating trying to circumvent the system -- but I would like to start a discussion about whether it's immoral. I’d like to explain why I’m not so sure, and then I’d like to know what other people think.
Imagine two identical families. We’ll call them Family A and Family B. In both families, Mom and Dad work. Both Parents A and Parents B have identical jobs and identical incomes, and both families have three kids.
That is where the similarities end.
In Family A, even before the kids are born, Dad and Mom scrimp and sacrifice to save money. This an old-fashioned phrase for an old-fashioned concept, but Dad and Mom are 100% dedicated to it, and their commitment does not change as the kids grow.
The family goes on vacation every third year instead of every year. These vacations are usually “road trips” and involve camping in tents and peeing in terrifying, spider-infested outhouses to save money on hotels. Getting to eat out once a month is a huge treat, and usually occurs only at low-end chain restaurants with a mid-week “kids eat free” night. For their entire public-school education, the kids dress primarily in clothes that their mother sews by hand instead of wearing clothes bought from the store ... and sure, maybe they get teased and made fun of at school, because they’re wearing polyester pants instead of blue jeans, but Mom and Dad decide it’s a worthwhile sacrifice because the money that is being put away will make a difference in the kids’ lives later, when it really “matters.”
The family drives a beat-up old car that Dad manages to keep running year after year because hey, maybe the upholstery is all split open and the windshield is cracked, but at least it’s paid for. Cable TV is out of the question, so if a show doesn’t come in over rabbit ears to the family’s one small TV in the living room, no one watches it.
The house, which is uncomfortably small for the family and not in the best neighborhood – and which certainly does not feature hardwood floors or a kitchen with granite counters or stainless steel appliances! – is one that can be managed on a mortgage that still leaves a fair amount of each month’s paycheck available to go into savings instead. The family COULD qualify financially for a “nicer” place, but Dad and Mom believe that it’s better to put the money away so that it will be there to make a difference for their kids down the line – maybe by buying a college education or by helping them to buy their own homes when the time comes. Everyone sacrifices, sacrifices, sacrifices. Eventually, even the modest mortgage is paid off. Gradually, the little nest egg grows.
In Family B, by contrast, just about every dime that ever comes in is spent immediately. The family motto is “Instantaneous Gratification Isn’t Soon Enough!” The family denies itself nothing, ever.
The whole family goes on vacation to Disney World every year, always staying at an official Disney resort (where the kids get their own room). At home, all the kids have their own TVs (which get every premium channel imaginable), laptops and iPads and get new iPhones every time Apple releases an “upgrade.” Eventually, the kids get driver’s licenses, and guess how the family celebrates this rite of passage? You got it! Mom and Dad buy them their own cars. The family eats out at nice restaurants three or four times a week. The family car is replaced at least every two years, and loaded with every option the family’s creaking credit score can support.
The kids get designer clothes and shoes and the latest video games and pretty much whatever else they want at every gift-giving holiday. The family lives in a huge house in a nice neighborhood, with a pool and a hot tub, and yes, they’re carrying a lot of debt on their credit cards, and yes, they’re quite a bit overextended on the mortgage and the car notes, but what the heck – isn’t that the American way? Sure, there’s no nest egg ... but what does that matter? Living life in the moment is what it’s all about.
Fast-forward. Dad is now 75. Tragically, Mom died 6 years ago from cancer, and Dad has now been diagnosed with a progressive dementia, and will likely soon need very expensive long-term memory care in a facility.
In Family B, there are next to no savings. After retiring, Mom and Dad B traveled a bit, and spent every dime that came in in pension and Social Security income. After Mom B died, the overextended mortgage on the house turned completely upside down, and Dad B abandoned the equity in the house and walked away ....
(Continued in Part B, first post)
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A friend of mine said he always through the very definition of greedy was wanting something that belonged to someone else.
In the old story of the ant and the grasshopper, the ant is rewarded for his thriftiness. In this age of entitlement mentality- I wonder how that story goes now? Of course those were stories whose purpose was to teach morals.
As for morality within the current system, I think assets should be protected for spouses and young children to be able to live. They should not be protected as inheritance for grown children. If parents are saving for a rainy day, then it is surely raining when we get old and need medical care. Maybe in the old days it was feasible to leave an inheritance, but then in the past, people on average didn't live into their 70s and WAY beyond.
My father was forced to retire at 58, with a plant shut down. He and my mother lived frugally off of a small pension, social security, and selling Avon, Tupperware, etc. Then they sold their modest house in their 80's, lived off the equity by living on a rotating schedule with us kids, but always paying their own way. Dad died at 93, after 2 months of government (actually state) financed care. Mom has nothing left and is living with a sister on her social security. They always wanted to leave us kids something and over the years tried to give us money, we all refused telling them to spend it on themselves. Mom still manages to save for her burial with Dad at the veterans' cemetery.
My father's job was seasonal so Mom had to stretch the money and make it last for 12 months even though he was only able to work about 8 months depending on the weather. There was no candy, cookies, potato chips, soda pop, only real substantial FOOD and it was limited. I was 5'6" tall at graduation and weighed 103 but I was healthy, just no junk food.
There was no college, they thought I would just marry.
My father grew up dirt poor as did my mother but they both worked hard their entire lives, VERY HARD! My father walked into the house one day at 56 and told my mother he was retiring and my mother almost fainted as they only had about $500 in their savings since Mom was only able to put away $2 a week. He could not understand how that could be until Mom reminded him that he only worked half a year and they had to make it last for a full year.
They sold a property they had bought with my relatives and took that money and he bought a piece of equipment and began working again. He made more money in those 3 years than he had ever made his entire working career. Then many things happened that made him have to stop and sell the equipment. So he and my mother went to work doing lawn jobs to make a little extra money to survive and continue to put money into their savings which had now grown due to his 3 years of employment with his own equipment and selling their property.
My parents have been frugal to a fault and many times I now have to go around the house and find items Mom is holding on to "to use again" and I toss them in the trash because her frugality has not left her even though her memory has.
So my answer to you is that we all have to answer for what we choose to do, but no I do not consider it to be immoral. I know many people are yelling as they read this but I don't care. I personally know many wealthy individuals who give "gifts" of money to their children yearly to pay down their wealth. I have seen doctors and their wives come in for medical care and they drive Mercedes and dress in the finest clothes and the women are wearing HUGE diamond rings and you ask them for their insurance cards and they pull out Medicare and Medicaid cards. As wealthy individuals they had attorneys and financial specialists who helped them with hiding their wealth, this all started with those who had the MOST money not those who had a little and were just trying to hold on to it for their kids, they did not have the same advice as the more affluent did.
I could go on and on about the waste in our government, the tax write offs for huge corporations, how we subsidize pharmaceutical companies and then pay the highest prices for the drugs we helped create, how our Senators and Congressmen have the best medical care and perks know to human kind and yet they are trying to put forth "Chained CPI" which will decrease the cost of living increases each year for every senior and will get progressively worse the older you get, how we pour billions of dollars into every country in the world to "HELP" them, yet we are drowning in debt, how our children's education is rated 57th in the world and I could just keep going. The bottom line is we care for our parents through horrible illnesses and we are not being paid for it, so we either need to pay ourselves to at least obtain some of the wealth our parents set aside for us or I guess you need to shelter it in any way you can.
I care for my parent at home as I did with my father, alone, although I have 3 siblings who raise a hand to do nothing. Would I shelter her wealth, yes indeed I would but there will be nothing left anyway. Mitt Romney sheltered his wealth, he moved it to an offshore account, if it was good for him and apparently legal, then why not everyone? He was a religious man and saw nothing immoral about what he did.
There are no absolutes in these situations. The only way to make things fair and equal would be for government enforced regulations on how much every individual must save over the course of a lifetime for their potential long term care.
I don't think we need more government intervention into how we spend our money. I don't think anyone wants to be told how much of their income they are required to save over the course of a lifetime.
On the other hand are we going to let Granny from Family "B" die without care because she spent all of her money taking her kids to the beach and amusement parks? Does Granny from Family "A" gets to live because she was frugal?
In my opinion no easy answers or absolutes for this one.........
Hiding assets, by pulling cash out of the bank, sticking the cash under the mattress and not disclosing the hidden cash when applying for Medicaid paid nursing home care is illegal and immoral. There are many lawful and legal ways to shelter or protect assets under the Medicaid program, such as by setting up a trust, transferring assets to a spouse, spending assets on non-countable assets, etc.
Hiding assets to qualify for Medicaid is just like earning income and being paid "under the table" instead of reporting the income to the IRS which is illegal and immoral. However, setting up a trust is not "hiding" anything. The use of Trusts for Medicaid planning was approved in the 1993 Omnibus Legislation.
Our system for Medicaid paid nursing home care has been designed with the middle class in mind. As proof of this, someone who owns a home valued at $536,000, a new automobile regardless of its value, and a household full of nice furnishings, may qualify for Medicaid paid nursing home care. Thus, the Medicaid long term care program for nursing home care was designed to include the middle class and was not designed just for those individuals at the poverty level as the Medicaid health insurance program has been designed.
Medicaid planning is all about using the favorable provisions in Medicaid law to help informed elderly citizens obtain the lowest possible nursing home bill by qualifying for Medicaid when allowed by law. In West Virginia, there is no difference in the level of care that you receive in a nursing home whether you are paying $9,000 per month or whether you are receiving Medicaid paid nursing home care. Thus as a consumer, where is the benefit in paying $9,000 per month out of pocket for the same care provided by Medicaid?
Medicaid planning for the elderly, is much like tax planning for the average citizen. If you are wealthly, then an estate planning attorney will likely suggest that you set up a trust or multiple trusts to shelter all or a portion of your wealth from paying Federal Estate taxes at your death. Is it immoral to set up a trust to reduce the amount of Federal Estate taxes that a wealthy person may pay at their death when the Federal Estate tax allows them to do so? If the wealthy person sets up a trust to avoid or reduce Federal Estate taxes, doesn't he shift the burdens of operating our U.S. Government to other tax payers?
How about the business woman who sets up a Limited Liability Company as a means to reduce Federal Income taxes on her income and on the income of her business even though it is lawful for her to do so? Hasn't she shifted the burden of operating the U.S. Government to other tax payers?
How about those of us who itemize our mortgage interest and other deductions on our Federal Income tax return. We pay less in Federal Income taxes as a result, don't we? It's legal to do so. Isn't it immoral to do so since by paying less in Federal Income taxes we have shifting the costs of operation the U.S. Government to other taxpayers?
We as informed citizens don't walk up to the IRS office with a blank check to pay our annual income tax bill. Instead, we rely on CPAs and tax professionals to help us pay the least amount of income taxes that the law allows. That is the American way.
Why isn't Medicaid planning the American way? Discrimination. The issue here is that the elderly, who are still portrayed in Hollywood as worthless and foolish "old farts" are not valued in our society. In fact, one can argue that our country values the 11 million plus illegal immigrants who are being granted citizenship more than our country values our elderly who may need nursing home care because, a large majority of those immigrants will be able to qualify for, you guessed it, Medicaid. Thus, as Medicaid budgets continue to expand to serve all who qualify, I suspect that discrimination against our elderly will continue.
If buzz words like "immoral" continue to be attached to Medicaid planning to try to shame the elderly into not planning for nursing home care, it is likely, that this group of citizens, the ones who have defended our country selflessly, in WWII, Korea and Vietnam, the ones who have worked for wages for less each week, then many working poor receive for one hour's work today, will continue to avoid using the Medicaid law and benefits to their advantage, as the law was intended to do. The moral of the story here is, change the Medicaid laws. Take away all of the planning options that folks have under the law. Do not discriminate and degrade our best citizens into thinking they are doing something wrong when the law allows them to plan for Medicaid much like most of us plan for paying income taxes.
Once you have met someone, like my client, Jack, a WWII Veteran, who was bedridden and confined to his home, unwilling to enter a nursing home because he was afraid the state will take his home when he received Medicaid paid nursing home care, you will understand that Medicaid planning has nothing to do with "hiding" assets, but rather has everything to do with providing our elderly citizens with options and information so that they can receive Medicaid paid nursing home care while protecting or sheltering whatever assets that the law allows them to.
Elder law Attorney
Who would purposely want to make themselves indigent at close to end of life? JUST to get free stuff? Parents who are that generous should pass on assets earlier in life, not at end of life....some cases are just plain suspicious. And I hope for anyone who "hides" assets, that they really trust the "hider" to have their back if they ever need help.
The family with no nest egg will have to accept placement in the available medicare facility. In Miami some are REALLY bad.
The family with a nest egg will have options: care at home, hire caregivers, hire respite help for the spouse, fund outings to fight off loneliness and boredom,etc..
Money does not buy happiness but it funds options to deal with problems, your way.
End of life expenses can be very high, elder's money should be spent on betterig their care and quality of life for both spouses. Whatever is left over is the inheritance.
Money has no value, until you spend it, what better to spend it on than health care and quality of life.
Handicap ramp, delivered and installed in 12 hours $4600
24 hour care for one week $3024 (in addition to hospice)
Dad leaving the hospital to pass away peacefully in the comfort of his home, per his wishes - PRICELESS.
I told my kids long ago they more than likely would not be getting an inheritance. What I've scrimped and saved is for my elder care so they won't have to do it. They understand and have no desire for my money. If there is anything left, they can have it, but with the prices only getting higher, the chances are slim to none.
I pretty much was raised like Family A and that's how I raised my family. We had enough but not many frills. For me, taking trips to Disney Land which I couldn't have afforded without going into debt and spending money I did not have for beach walking adventures could never have been worth how proud of my kids I am today that they pay their own way, consciously make decisions to do the right things,work hard to never be in debt, don't expect anyone to carry their load, are compassionate for those who don't have what they have.
I have to say that I have personally seen elderly people stand in line to get their medications at pharmacies and literally cry in front of everyone when they have to pull out their Medicaid card because they are ashamed and feel like everyone is judging them and a few have turned to explain to everyone that they worked hard their entire lives and now they find themselves in this predicament. It is so horribly sad that such a stigma has been put on them.
Are they fiscally responsible in the way they handle taxpayer dollars? Were we asked before they spent all of our money bailing out big business? Why are we sending money to countries who are killing our troops. Why will there be no money to pay social security in the future? The answer is because it was used to pay down debt so the government could show a surplus. Morality has little to do with what goes on in today's world, but the law is the law and unfortunately we get punished if we don't obey it