Medicaid- Pending Changes in Federal Law

For years there has been a huge debate over what is known as "Medicaid Planning" with attorneys and the elderly on one side and government officials on the other. As the costs of Long Term Care (a uphemism for being institutionalized in a nursing home) have skyrocketed, more and more middle class people have tried to find ways to protect their assets from being drained away by nursing home costs. In 2005, the average monthly cost of nursing home care in New York was over $8,000 and the average length of nursing home institutionalization for an elderly person was nearly 3 years. That translates to an average cost of almost $300,000 for the nursing home care of one person! So, its certainly understandable that people would want to see some of their property and money passed on to their children and that a lifetime of saving isn't flushed down the drain of nursing home care. However, the increasing number of people qualifying for Medicaid covered nursing home care and the increasing cost of monthly care (its been rising at more than 2x the rate of overall inflation) has meant that Medicaid costs to govenment have risen to levels approaching 50% of the budgets of many states. Attorneys have responded to their client's desire to protect assets by creating a variety of different strategies involving gifting and/or the creation of trusts. In turn, both state and federal governments have responded by making it more and more difficult for people with the means to pay for nursing home care to avoid doing so. In early 2006 revisions to Medicaid law will take effect that extend the period that Medicaid agencies will "look back" for transfers to other people or to trust vehicles. Many politicians and commentators have criticized Elder Law attorneys for their efforts to find new and creative ways for their clients to protect some resources. These criticisms are totally misplaced. Whether a lawyer feels the current system is irrational or not (I'm one who does), the attorneys duties are clear...namely, to represent their client's interests. If attorneys start to let their views on public policy cloud the kind of counsel and respresentation they give their clients they aren't doing their job. So, finding new ways, looking for loopholes in new Medicaid legislation is exactly what attorneys should be doing in order to further the individual interests of their clients. It is also very clear that the pending changes in Medicaid rules will surely not be the last. As the baby boom generation ages the number of people institutionalized in nursing homes will rise even more rapidly than it has over the past couple of decades. If governments continues to shoulder most of these costs the result will be dramatic increases in taxes or ever more stringent rules for eligibility. The bottom line is that people who don't do their estate and Medicaid planning soon may find that there is no way to protect their assets from long term care exhausting those resources. -Glenn Magnell