Jewish World Review Jan. 23, 2004 /29 Teves, 5764

Drs. Michael A. Glueck & Robert J. Cihak

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Consumer Reports

Welfare for the Wealthy | "Be nice to your children. They're going to pick out your nursing home someday."

As wise a maxim as ever graced a Baby Boomer's bumper. Unfortunately, however, nowadays it seems there could be an additional admonition.

"Be nice to your lawyer. He'll show you and your kids how to get the government to pay for it all."

Not all lawyers, of course. Just some of the less ethical and more rapacious practitioners of a new specialty called "elder law."

This burgeoning field includes the ancient, honorable, and necessary functions of estate planning and managing the assets of seniors. But it has also devolved into yet another taxpayer rip-off: getting affluent seniors into Medicaid long-term care programs. Not Medicare. Medicaid, a program to aid the poor.

It's lucrative, this advice-giving business of planning strategies to qualify for Medicaid via setting up Supplemental Needs Trusts, Pooled Income Trusts, and Medicaid Annuities, to list just a few tactics.

It's done by advising seniors to give assets to their children or relatives; by setting up certain kinds of financial trusts; or by putting money into special annuities so that the clients can qualify for nursing home care funded by Medicaid.

In other words, these "elder law" attorneys help clients artificially impoverish themselves so that they qualify for benefits designed for the poor.

In the process, according to David J. Zumpano, a New Hartford, New York elder law attorney, attorneys can increase their average planning fee three times and their average quarterly revenue by 792 percent, after they've participated in his $5,995 six-day training program.

Mr. Zumpano claims he "was receiving fees of $5,000 to $10,000 regularly for Medicaid planning" about twice as much as he got from "typical estate planning clients." In addition to teaching lawyers "Medicaid planning for millionaires" he helps lawyers "Learn how to work with and influence your local Medicaid Department to get the answers you need."

He's not alone. In describing his book "Avoiding the Medicaid trap: How to beat the catastrophic Costs of Nursing-Home Care," Mr. Armond D. Budish claims: "By following the tips on these pages, an older person or couple can save most or all of their savings, despite our lawmaker's best efforts... Here are the best options: Hide money in exempt assets... Transfer assets directly to children tax-free... Pay children for their help... Juggle assets between spouses... Pass assets to children through a spouse... Transfer a home while retaining a life estate... Change wills and title to property... Write a durable power of attorney... Set up a Medicaid Trust... Get a divorce...."

And indeed, many attorneys seem absolutely proud of their, well, ability to get the rich into a program meant for the indigent. Some of these attorneys apparently never tell their clients that Medicaid is a welfare program designed for the poor, not for millionaires, and that the Medicaid services are usually not the best available.

They also don't mention that the application and verification process can be long, arduous and involve" a huge invasion of privacy," in the words of elder law attorney Jerry A. Hyman.

Yes. But to quote the exuberant Mr. Budish again, from another of his books, Golden Opportunities: Hundreds of Money-Making Gems for Anyone over Fifty:

"We have committed an act of piracy-we have broken into the Fort Knox of Government benefits and uncovered the best legal strategies available to you for claiming your share of the gold from the Government's treasure chest.... We'll explain how you can 'strike gold' in the Social Security, Medicare, and Medicaid programs.... With this book we are handing you the treasure map, deciphered from a mine of unintelligible government rules and regulations."

Apparently, what matters in this field is not whether what you do is right or wrong, but how well you do it.

We don't know how much people are paying for these services. We do know that these practices purposely evade the intent of the welfare system and cost everyone else billions every year.

The Center for Long-Term Care Financing reports that "Medicaid spent $47 billion in 2001 on nursing home care." The Center estimates that more than $8.5 billion of assets was not used to pay for nursing home expenses using these elder law techniques which Medicaid then paid for. And this $8.5 billion is only a start; it doesn't include Medicaid spending for medical services.

As the Center reports "The word is out on the 'wheelchair telegraph' that you should buy exempt assets, purchase an annuity and get rid of as much of Grandma's property as possible before you submit a Medicaid application for her." Thus, "Medicaid planners transform Medicaid into inheritance insurance for baby-boomer heirs."

What to do? The Center for Long-Term Care Financing ( outlines a positive approach in its "LTC Choice: A Simple, Cost-Free Solution to the Long-Term Care Financing Puzzle" study ( which outlines a more direct and honest process based on the principle that "Prosperous people who rely on public assistance for long-term care should reimburse the taxpayers before giving away their wealth to heirs."

Editor's Note: Robert J. Cihak wrote this week's column.

Michael Arnold Glueck, M.D., is a multiple award winning writer who comments on medical-legal issues. Robert J. Cihak, M.D., is a Discovery Institute Senior Fellow and a past president of the Association of American Physicians and Surgeons. Both JWR contributors are Harvard trained diagnostic radiologists. Comment by clicking here.


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