Long-term care agents defend insurance

Dear Barbara,
Regarding your column, "Is long-term care insurance necessary?," let me take issue with this statement: "Medicaid is the fallback for the impoverished -- those with less than $2,000 in liquid assets." If that were true, people would buy long-term care insurance to prevent impoverishment. But, it isn't true.

Even after the Deficit Reduction Act, people can have virtually unlimited income and get Medicaid. Even in the strictest states, anyone with too little income to pay privately for nursing home care qualifies for Medicaid benefits -- not just for long-term care, but for all the supplemental medical benefits that Medicare doesn't cover, such as foot care, eye care, dental care, etc. And assets? Only $2,000 in cash, but who's too stupid to convert countable assets into exempt resources? You can keep home equity up to $500,000 in any state and up to $750,000 in some states. You can have a business, including the capital and cash flow of unlimited value. How about prepaid burials for the Medicaid recipient and everyone in his or her family? Keep one car of unlimited value, which doesn't cause a transfer-of-assets penalty when you give it away because it's exempt. Hence, the "two Mercedes" rule: Just keep buying and gifting expensive cars until you get down to $2,000. Or buy $1 million worth of term-life insurance. There's no limit on how much you can buy; it'll qualify you immediately for Medicaid by legally sheltering your assets; and it dodges the "estate recovery" requirement by permitting your wealth to pass unencumbered to your heirs. Over and above all this, if you still don't qualify, hire a Medicaid planner. How do you find one? Do an Internet search for "Medicaid planning" for an overwhelming abundance of choices.

Medicaid and Medicare pay for the vast majority of all professional nursing home and home care in the United States and they have since 1965. The American public has been anesthetized to the risk and cost of long-term care. That's why they don't buy private long-term care insurance. That's why Medicaid (pay-as-you go and bankrupting states and the federal government) and Medicare ($71 trillion unfunded liability) are insolvent. The best reason to buy private insurance for long-term care is not asset protection. A lawyer can get you that from Medicaid after the insurable event occurs. Instead, you should buy long-term care insurance to be able to access quality long-term care in the private market at the most appropriate level when you need it someday after the publicly financed long-term care programs have imploded.


Stephen A. Moses
Author of "Aging America's Achilles' Heel" policy analysis, Cato Institute

Longtime financial journalist Barbara Mlotek Whelehan earned a certificate of specialization in financial planning. If you have a comment or suggestion about this column, write to Boomer Bucks.


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