Jewish World Review Jan. 23, 2004 /29 Teves, 5764
Drs. Michael A. Glueck & Robert J. Cihak
Welfare for the Wealthy
"Be nice to your children. They're going to pick out your nursing home
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
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
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
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
(http://www.centerltc.org) outlines a positive approach in its "LTC Choice:
A Simple, Cost-Free Solution to the Long-Term Care Financing Puzzle" study
(http://www.centerltc.org/pubs/recent.htm) 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.
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