The Ethics and Complexity of Medicaid Planning

Why Medicaid Planning Is Ethical

If you or a loved one become a client of the Farr Law Firm, you may rest assured that everything that we do is absolutely, unquestionably, 100 percent legal and ethical. Attorneys, in general, have the highest ethical rules of any profession, and as a member of NAELA and a Certified Elder Law Attorney, we and our Elder Law colleagues subscribe to the NAELA Aspirational Standards for the Practice of Elder Law, which articulate ethical standards that raise the level of practice above the floor established by the basic rules of professional conduct.

The “magic” that Elder Law attorneys are able to perform is not based on sleight of hand. We Elder Law attorneys do not “hide” assets. On the contrary, we provide total disclosure of everything we do to the relevant Medicaid agencies when we file the Medicaid application, as failure to provide full disclosure of all assets and all transfers would be a federal crime.

The ways that Elder Law attorneys are able to shelter and protect assets may seem like magic to you, but that’s only because you don’t possess our legal knowledge and experience. It’s actually quite similar with magicians — the magic only appears to be magical because you don’t know how the tricks are done.

Certified Elder Law attorneys study and train and practice for years to become experts in our field. To become a Certified Elder Law Attorney, attorneys must:

  • Spend an average of at least 16 hours per week practicing Elder Law during the three years preceding their application.
  • Must handle a minimum of 60 Elder Law matters, in 13 different areas of Elder Law, during those three years.
  • Participate in at least 45 hours of continuing legal education in Elder Law during the preceding three years.
  • Submit five references from attorneys familiar with their competence and qualifications in Elder Law.
  • Pass a full-day certification examination (one recent exam had a 19 percent pass rate).

Done with respect for the law and compassion for the elders who are being protected, Medicaid planning is not only ethically justified — it is often imperative to the individual’s quality of life.

What Does “Medicaid Asset Protection” Mean?

With proper planning, families can obtain Medicaid assistance (and sometimes Veterans Aid and Attendance benefits) without having to deplete their life savings. When many people hear the term “asset protection,” they immediately jump to the conclusion that it’s about protecting an inheritance. This is sometimes desired, but very often not even a partial reason for asset protection. Here are the main reasons for doing Medicaid Asset Protection:

– Protecting The Spouse

With proper planning, a  spouse who is able to stay at home can keep all of the couple’s assets and much or all income while Medicaid pays for the nursing home. The most important goal is typically to ensure that the spouse remaining at home is able to live the remaining years of his or her life with utmost dignity and not have to suffer a drastic reduction in his or her standard of living.

– Protecting Quality of Life

If you are a single or widowed client, the most important reason for you to engage in asset protection planning is for you to be able to enjoy the highest quality of life possible in the event you are forced to enter a nursing home.

For instance, money that we protect for you in the process of getting you qualified for Medicaid can be used, once you are receiving Medicaid benefits, to provide you with an enhanced level of care and a better quality of life while you are receiving in-home Medicaid, or in a nursing home. For example, families of our clients can use the protected assets to pay for lost or broken hearing aids, dentures, eyeglasses, and electronic equipment; pay for a cell phone bill; replace outdated or soiled clothing; pay for streaming media services; hire a private “sitter” or “helper” – someone to keep you company, help you with meals, etc., somewhat like a “surrogate daughter.”

Money that we protect for you in the process of getting you qualified for Medicaid can also be used to purchase services or items for you that are not covered by Medicaid, such as some dental work, incontinence supplies, personal clothing, toiletries, nail trims, and haircuts.

– Protecting Children

Some parents have saved and sacrificed their entire lives and have a strong desire to leave a financial legacy for their children. With proper planning, this goal can be achieved while still qualifying for Medicaid.

– Protecting Disabled Persons

There are asset protection strategies that will allow you to protect certain assets for the benefit of a disabled child and sometimes for other disabled family members.

“Hide” Is a Four-Letter Word

Elder Law attorneys do not hide assets. Hide is literally a four-letter word and has no place in an Elder Law practice. Elder Law attorneys legally “protect” or “shelter” assets using the applicable laws that are available. Medicaid Asset Protection is absolutely ethical and moral; in fact, it is the “right” thing to do if a family is concerned about the long-term care of a loved one. From a moral and ethical standpoint, Medicaid planning is no different from income tax planning and estate planning.

Medicaid Planning Is Just Like Income Tax Planning

Income tax planning involves trying to find all the proper and legal deductions, credits, and other tax savings that you are entitled to — taking maximum advantage of existing laws. Income tax planning also involves investing in tax-free bonds, retirement plans, or other tax-favored investment vehicles, all in an effort to minimize what you pay in income taxes and maximize the amount of money that remains in your control to be used to benefit you and your family.

Medicaid Planning Is Just Like Estate Tax Planning

Estate planning involves trying to plan your estate to minimize the amount of estate taxes and probate taxes that your estate will have to pay to the government, again taking maximum advantage of the existing laws. Similar to income-tax planning, estate planning is a way to minimize what your estate pays in taxes and maximize the amount of money that remains in your estate to be used to benefit your family. Similarly, Medicaid planning involves trying to find the best methods to transfer, shelter, and protect your assets in ways that take maximum advantage of existing laws, all in an effort to minimize what you pay and maximize the amount of money that remains in your control to be used to benefit you and your family.

Like income-tax planning and estate planning, Medicaid planning requires a great deal of extremely complex knowledge due in part to constantly-changing laws, so clients need to work with experienced Elder Law attorneys who know the rules and can give proper advice.

Medicaid Planning is Just Like Long-Term Care Insurance

For seniors over the age of 65, Medicaid has become equivalent to federally-subsidized long-term care insurance, just as Medicare is equivalent to federally-subsidized health insurance. Congress accepts the realities of Medicaid Planning through rules that protect spouses of nursing home residents, allow Medicaid Asset Protection via the purchase of qualified Long-Term Care Insurance policies, allow the exemption of certain types of assets, and permit individuals to qualify even after transferring assets to a spouse or to a disabled family member or to a caregiver child. To plan ahead and accelerate qualification for Medicaid is no different from planning to maximize your income tax deductions to receive the largest income tax refund allowable. It’s no different from taking advantage of tax-free municipal bonds. It’s no different from planning your estate to avoid paying estate taxes.

Why is There a Basic Right to Health Care, but no Right to Long-term Care?

Within the United States, seniors over 65 generally have a right to medical care, but not to long-term care. Medicare Part A Coverage (which covers hospital visits) is free to people who have worked for at least 40 quarters (generally 10 years). No one in the US (regardless of age and citizenship) can be turned down from medical care in a hospital emergency room because of EMTALA (the Emergency Medical Treatment and Labor Act), which requires hospitals with emergency departments to provide a medical screening examination to any individual who comes to the emergency department and requests such an examination.

Does any similar program pay for long-term care in our country? The answer is a HUGE NO! In the US, nobody has a basic right to receive any type of care that is classified as long-term care. Why? It’s just how our American healthcare system has evolved over our country’s history, and politicians have not yet figured out that perhaps long-term care should be considered a basic human right (as it is in some countries).

Medicaid Planning Required to Overcome a Discriminatory Health Insurance System

This inherent tragedy means that our American health insurance system discriminates against people suffering from certain types of chronic illnesses, such as those that routinely result in the need for long-term care, such as:  Alzheimer’s disease, Lewy Body dementia, Vascular dementia, FTD (Frontotemporal dementia), and other types of dementia; Parkinson’s disease; Huntington’s disease; ALS (Amyotrophic Lateral Sclerosis), Multiple Sclerosis, Muscular Dystrophy; severe osteoarthritis, rheumatoid arthritis, psoriatic arthritis, or spondyloarthritis; severe spinal stenosis; severe gout; and any other of the dozens of types of progressive neurodegenerative disorders or neuromuscular disorders that result in the need for long-term care. Any person suffering the tragedy of one of these diseases in the U.S. must also suffer the tragedy of having the “wrong” disease according to our American health insurance system.

Why should someone with brain cancer – tumors in the brain that aren’t supposed to be there – have all of his treatment (chemotherapy, radiation, and surgery) covered by health insurance, yet someone with Alzheimer’s – plaques and tangles in the brain that aren’t supposed to be there – must pay for his care out of pocket until he goes broke. In both cases, we are dealing with the care that someone needs because of the disease that person has. How is the differing result fair? It’s not.

Is it an ethical social policy that seemingly arbitrarily distinguishes among these different types of illnesses? Is it an ethical social policy that provides full coverage for most illnesses – whether chronic or acute – but forces Americans with certain chronic conditions (many of them elders) to become impoverished in order to gain access to the long-term care necessitated by their particular type of chronic illness? Is it a surprise that Americans suffering the “wrong type” of chronic illness will want to look for legal ways to preserve the efforts of their lifetime in order to protect themselves from this unfair and seemingly arbitrary social policy?

For three additional articles on why Medicaid Planning is moral and ethical, please see:

The Morality of Medicaid Planning. Article by Evan H. Farr, Published in Evan’s February 2020 column “The Practical Estate Planner,” in The Practical Lawyer Magazine by the American Law Institute
Is Medicaid Planning Ethical? Article by Timothy L. Takacs, Certified Elder Law Attorney
Is Medicaid Planning Ethical? Article on

Medicaid Complexity

Medicaid eligibility rules are extremely complex and confusing and impossible to understand without highly experienced legal assistance.

– What the Courts Say

The United States Supreme Court has called the Medicaid laws “an aggravated assault on the English language, resistant to attempts to understand it.” Schweiker v. Gray Panthers, 453 U.S. 34, 43 (1981).

The United States Court of Appeals for our own Fourth Circuit (just below the U.S. Supreme Court), in a case arising out of Virginia, has called the Medicaid Act one of the “most completely impenetrable texts within human experience” and “dense reading of the most tortuous kind.” Rehab. Association of Virginia v. Kozlowski, 42 F.3d 1444, 1450 (4th Cir. 1994).

– What You Can Do

Get help! Without proper planning and legal advice from an experienced Elder Law attorney, many people spend much more than they should on long-term care and unnecessarily jeopardize their future care and well-being, as well as the security of their family.

– What We Do

The Farr Law Firm is an Elder Law and Estate Planning firm dedicated to helping protect seniors and their families by preserving dignity, integrity, and financial security.

We help our elderly clients and their families with issues involving long-term care. We help clients find, get, and pay for the best possible long-term care; if a nursing home is the only option, we help clients find and get the best possible care while preserving and protecting their assets, including their homes, from the forced liquidation that is typically required in connection with entry into a nursing home. When needed, we complete the complex documents required for entry into a nursing home and for Medicaid. Please click here for more information.

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