Plan To Be 100

I get invited to present to a lot of groups about various topics – one of the most popular topics being planning for long term care. It is an important topic because there is so much misinformation and so many misconceptions about it. As a result, giving people a neutral non-sales oriented place to get information and ask questions is very needed.

Much of what people believe about this topic is a product of what we call the “chicken dinner seminar” circuit – those so-called “educational programs” where Medicaid and VA concepts are tossed out authoritatively – but in a manner that is designed not to enlighten – but rather create fear – so that the presenter can push products – annuities and irrevocable trusts currently being the most popular.

So, at a recent program I got the question I often get: ‘You’re office helps people use schemes to get the government to pay for their care – but what about personal responsibility?’ Or said another way: ‘Why should the taxpayers pay for your clients to get care when they have resources that could be used?’

It’s a good question – a natural question. I have become comfortable answering this question. The challenge is always to respond in a way that does not to make person asking feel uncomfortable.

My answer is twofold: first, the ‘what lawyers do’ response; and second, the ‘disease discrimination response.’

Answer part 1: Medicaid planning is just a lawyer explaining the law and how to use it to the advantage of the client. Just like rich people do. I usually say – just like George Bush or Al Gore do when they talk to their lawyers about planning to avoid taxes (capturing an icon from both sides of the political spectrum so that it doesn’t seem like this perspective is a function of my own politics). So, I suggest, if rich people can do it, why can’t middle class people talk to lawyers about how to use laws to their advantage?

Answer part 2: More importantly and somewhat more complicated is the idea of disease discrimination. Medicaid pays for long term supports and services – which by a quirk in history is a type of healthcare that is not covered under any of the parts of Medicare.

When the two houses of healthcare were created 50 years ago, Medicare was intended to provide healthcare for all people who worked and paid taxes, but in doing so, it was oriented to skilled care, hospitals and doctors visits (the type of care that dominated the healthcare systems at that time.) Medicaid was for poor people and covered all types of costs. Over time, long term supports and services became an important form of healthcare, mainly because people began living longer and with longer life came the epidemic of cognitive impairments, Alzheimer’s disease and the other forms of age-related cognitive impairment. Because the type of care that was required to provide for people with these medical conditions did not fit into the traditional concepts of skilled care, hospital care, and doctors visits; it fell onto Medicaid to cover these costs.

The result is that in the past 20 years or so, older Americans are increasingly finding that the healthcare they need is not covered by Medicare (or the supplemental private insurance policies that are all triggered by the same definitions as Medicare), and so they began to access Medicaid. In recognition of this development, Medicaid policy evolved to create a whole subset of programs specifically oriented to long term care. Over time these programs developed special rules for persons needing this type of care, including spousal protections and divestment rules. Despite these developments, Medicaid eligibility for long term care remains a program based on the concept of impoverishment, with countable and exempt assets, etc..

As I like say to the people who ask the question, and the many who are too shy to ask: My mother had cancer. It was hard on the family. But she was a retired teacher, so she had good insurance, and nobody ever asked my father how many cars he had, or whether he had made any gifts to his children in the past five years. If she had contracted Alzheimer’s, the situation would have been much different, and that difference seems to have no logical basis. Why do people with healthcare needs arising out of some types of diseases have their care provided by their government healthcare programs, while others do not?

That is how I answer this common question.

A related question, but usually not asked, is: Where do we go from here? How do we fix the system? Assuming all forms of illnesses should be treated similarly, should long term care services become a Medicare benefit? Or, should Medicare become more like Medicaid, with all services having some component of impoverishment? Recent developments in Medicare, including Part B premiums being increased for persons with higher incomes, and Part D benefits having asset tests that impact premiums and coverage; suggest it is more likely that we will see the latter. And that would be consistent with the reality that more and more people are getting old, and healthcare costs are only going to continue to rise.

The government healthcare systems that were created in the 1960’s when only about half the people in the system lived long enough to receive benefits, and those that did typically only lived a few years thereafter, is ill-suited for a world in which people commonly live for 30-40 years after they reach the age when the benefits begin, and in which healthcare has evolved to provide amazing, but amazingly expensive, forms of care that continue extend our lives.

Food for thought I hope.