IS MEDICAID PLANNING ETHICAL?
Some people simply do not like the fact that there are elder law attorneys who specialize in advising clients how to save their money and qualify for Medicaid coverage sooner than later. Their theory is that Medicaid is a “welfare program” for the poor, broke and destitute, and was not designed as a way for middle class parents to pass their money on to their children at tax payer expense. My answer to this is as follows: John Jones lives next door to Sam Smith. Both of these fine fellows are age 75 and have $100,000 in the bank and a free and clear home. John has a friend name Joe who lives across town in an apartment. He used to have some savings but he squandered it on drink and gambling.
John has a heart attack and is rushed to the hospital. Thank goodness he survives, but the operation that helped heal him cost $80,000. Lucky for him he’s covered by Medicaid, so he arrives home with his life savings in tact. When John dies, his $100,000 and his home passed to his children under his will.
Meanwhile, neighbor Sam has a stroke and has to be moved to a nursing home. Since the nursing home cost $7,000 a month, Sam’s life savings are gone in about a year. At that point, Sam qualifies for Medicaid which pays his nursing home bills. He continues to reside in the nursing home for two more years and, upon his death, the state has spent another $200,000 on his care. Under federal law, the state must be repaid at Sam’s death and, since the only asset in his name is his house, that house has to be sold to repay the state, leaving Sam’s heirs almost nothing. As for Joe, his drinking takes his toll and he also winds up in a nursing home since he is broke, he immediately qualifies for Medicaid which pays all of his bills. Upon his death the state cannot be repaid since Joe leaves no estate.
So, in essence, the government is content all of John’s hospital bills for his heart problems, but Sam must first impoverish himself; then they take his house at his death to pay for his nursing home bill. Meanwhile, Joe is “rewarded” for his lifestyle by getting a free ride from the government. His family does not have to sacrifice one penny for his care.
Are you starting to get the picture? More later on the unfair nature of our healthcare system.
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