The reason is that Medicaid eligibility rules allow some slick legal maneuvers to make Grandma and Grandpa paper paupers and Medicaid eligible almost as soon as they need long term care. In the mean time the heirs would get to keep all their assets untouched. I have seen very wealthy people use these estate planning gimmicks to get a free ride from Medicaid once they enter a nursing home. This affects all of us since Medicaid in most states reimburses nursing homes less than the cost of care and forces them to shift costs to private pay patients in order to stay open.
California is one. I manage my 100 year old mother’s assets while she is in “assisted living”. She is not on Medical (California version of Medicaid) but her Trust is designed to protect her assets so if she does need to go into Medical (should she take a turn for the worse before she dies and need a skilled nursing facility) her assets remain untouched within her trust.
I don’t understand how all this is possible, but an attorney set it up and assures us that it is all legal under California law. Her current maintenance costs about $1500 more per month than her retirement income. Her retirement checks go into her checking account, and I move most of them immediately upon deposit to her Trust account and then pay her bills out of her Trust. She is gradually spending down her Trust, but she has the assurance that she will be eligible for Medical, should she need it.
If you have an elderly parent in California, I suggest you contact an attorney and set up something similar for that person. It cost us about $6000, but the attorney took care of transferring the title to her house into the Trust so that it was easy to handle when we sold it.
there is a cost for living a long, long life, and that is that it costs money for drs, medicines,physical therapy, nursing home care, etc...
Exactly. A completely unfair gaming of the system.
That appears to be moot now since Obamacare drops the asset test for Medicaid eligibility. The goal of “getting more people insured” in the minds of the bill’s authors trumped any bit of sanity anyone could’ve come up with.