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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I am in a quandary myself. My husband, because of ill health, had to retire early. He was self employed all his life, we could not afford health insurance, and his SS was barely $1,000/month where it has remained the same for 20 years. My own self employment, up and down (mostly) netted me $650/month when I retired at 65, though I continued to work because $1650 is not enough to live on in a state where one's utility bills ran well over $500/month. We have a reverse mortgage to make up the difference, and I've been working part time also. I own the business and have tucked away much of what I've made.
However, in about a year, my husband will need full time care of some sort. And I've been told that what is in my business account will have to spent down before he can get aid. Thereby killing the business in because there will be no capital left to invest in anything to do with the business.
I had a friend whose husband died after NH care on Medicaid. She was then forced to sell the house and give 50% of net cash, sell all his tools and anything of value and give 50% back to Medicaid, leaving her with next to nothing to live on. Her kids wouldn't take her in. So she lived her remaining days in subsidized housing.
Now that is where Legal becomes Unethical!
The business account of a sole trader - are you a sole trader? - is a bit of a grey area. Is your business a company, a separate entity from you, or is it just a practical piece of self-organisation that helps you keep your business income and outgoings separate from your domestic ones?
Could you, hypothetically, sell the business as a going concern? This wouldn't prevent your exceeding the Medicaid threshold, of course, because you'd then realise the value of the business in cash terms. But it might help to distinguish between your personal assets and those of your business if it could, theoretically, function without you. Not that I'd know, but it doesn't sound quite right that you could be forced to fold your only source of income - I think you should look into this more carefully with Medicaid, and check that they have taken all the details on board.
The prospect of poverty at the end of a life of hard work, conscientious saving and responsible budgeting seems very scant reward, I agree. But unethical? On whose part? Who is cheating you out of something you're owed? What are you owed, and by whom?
My comment about legal vs ethical was about the treatment of my friend, for whom no cnsideration was given when she was forced to sell the house and assets and give 50% back to the govt., leaving her with next to nothing.
I'm surprised to hear that she was forced to sell the house, though. I understood - perhaps wrongly, I'm certainly no expert - that a widowed person occupying the family home would not be required to sell involuntarily. Was she pushed or did she jump? Or could she not afford the upkeep on her inevitably reduced income?
But, so, in any case: who should have paid for the husband's care if not him?
Your husband's (cameo) role in your business shouldn't change the possible distinction between business and personal assets. I'd still check this point carefully - the worst that can happen is that you're no further forward.
So, essentially you inadvertently made your husband co-owner of the business. Well. Can Medicaid force the closure of a business to realise the asset for the applicant? Especially given that that would mean putting your employee out of work.
Could they require you to "buy him out"? And how would they determine the value of his share? After all this is operating capital, it's not spare cash.
Don't just lie down and take it. There must be some way round.
For me, I never knew that Medicaid would pay for all the care for someone who cannot afford a nursing home until I found this website forum. It was an eye opener, but something I was glad was there in case someone outlives their savings. With todays elders living more and more into their 90's and early 100's, that could happen to any one of us.
I know I was in sticker shock head spinning mode when I found out how expensive it was to have caregivers around the clock for my Dad. When one sees $30/hr it doesn't sound all that bad, until you figure the cost for 24 hours, seven days a week. YIKES !!
Another sticker shock was the cost of Independent Living and Assisted Living. Ok, much less expensive then 24 hour caregivers, but still pricey.
I was in panic city regarding myself.... being an only child and never had children... I will need to pay someone to take care of me in my declining years, if I reach that point. I had socked away a healthy amount of savings, but what if *I* outlive my savings?
I understand there's a difference between ALF and NH, but at least your mom is still able to do just ALF, which affords her some independence.
It was kind of you to fork out $400 per month of your own money to keep your mom comfortable in a private room. There is NO WAY my mother would EVER be 'compatible' with a roommate...........LOL.
I put their $$$ in my name because I am the one who pays the bills, gets the mail, etc. I didn't know what else TO do with it!!
Until we have universal health care, there is no way to control the for profit health care business. Yes...business. There is no reason a doctor in a speciliaty needs to get $1mill a year (I know several that do). There is no reason a business with stock holders should be delivering medical aid to only the wealthy that can pay these outrageous prices!
The vast majority of the worlds developed nations have universal healthcare. AND. .they have control of the costs. AND. Everyone gets the care they need. Yeah..if you want elective surgery you will have to wait in line or pay to go somewhere else to get it. BUT, no one goes without the care they need. Unlike here
We still have millions without access to health care. And..if the GOP get there way..we will have tens of millions more ...probably everyone Mom and Dad..as they all have preexisting conditions that will price them completely out of any insurance at all.
In control of the costs? Are you kidding? You mean they *meant* this shambles to happen?
I'm not sure, but I believe that other large European countries like Germany and France operate insurance-based systems. Don't know about Japan - but based on childish stereotyping I guess that their main health strategy involves people being expected to pull themselves together and show moral fibre. Being ninety in that country is considered no excuse for not running marathons or climbing Mount Fuji.
You are allowed to own one home and if you're only on SSI and happen to be a single person, you can't rent the home, but you must live in it. It's been said that if anything happens to you and you were to die, Medicaid would have claim to the home for the proceeds for recovery purposes. The same goes for your able account, (but the money can very easily be used up before anything happens to you).
With an able account, you're allowed to cover certain qualified expenses including transportation. In Ohio, you can buy a car with the funds, this qualifies under transportation expenses.
Depending how much is coming into each State, the State can either cut programs or enhance programs. I need to keep a watch with the current administration to see what happens to Medicaid as the current passed bill in the U.S. House of Representatives is going to cut Medicaid about $880M. Hopefully the U.S. Senate will cross that off the bill.
Now, I can understand why some families want to hide assets so that Medicaid won't get their hands on it. But it is not fair to us taxpayers who are taking up the slack, and whose parents came from the generation to save for those "rainy days".
What is scary is that the baby boomer's grown children are not doing the same type of savings.... then what? We keep telling them to save, save, save, but it is ignored.... [sigh].
I don't worry about who will inherit after I'm gone, I mean - if I can't take it with me, who cares. I only pray to have enough to support myself as long as I live. If the state steps in and takes over my care, I feel they will be entitled to whatever I have - it's not as if anyone else would already be caring for me. If I need the state to take care of my DH, then again, they can have whatever is left after I pass - but I can legally reserve the right to keep my home as long as I live and my IRA is mine alone and no one can legally take it from me. Shared assets? So they get half - they would be earning it as far as I can see. I have been advised that the state will only take enough to reimburse their expenditures; anything left afterwards is returned to the family.
What I've heard through older acquaintances in the know is that the well-to-do types in town start planning about 10 years before they anticipate needing this care. They funnel money around, get themselves onto waitlists at the best assisted living/nursing home facility 10-15 years before they will need it. They must be the ones paying $3000 for Medicaid planning.
Healthcare for profit.
No other developed nation has such an immoral healthcare model. It is shameful that we do.
Correct the underlying immorality and many of the other questions go away.