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Question:

I read your response to the question of how to rearrange assets to give an elderly person access to Medicaid services, including possible long term care. I wonder about the ethics of the suggested strategy. I feel that someone with assets approaching $1 million should have to pay their fair share of medical and LTC costs as they age. There are different ways to provide a legacy for our kids, but anyone with assets in that range should not be asking the government to pay 100% of their late-in-life bills. What do you think?

Response:

I agree in principle that people who can afford to do so should pay their own way, but I’m not sure where the dividing line is between those who should or should not participate in long-term care planning. As they say, a million isn’t what it used to be. It can be significantly depleted by the costs of long-term care and the need for such care can be very unpredictable. Long-term care planning often allows people to stretch their savings to stay at home or in assisted living longer and it can protect the financial stability of a surviving spouse.

Further, I think your premise is a bit inaccurate in terms of “asking the government to pay 100% of their late-in-life bills.” Most if not all of our clients are seeking a middle ground, not that they seek Medicaid coverage of all their health and long-term care costs, but that they preserve some of their savings and investments and their homes to be able to pass on to their children and grandchildren. This is both because they do want to pay their “fair share” and due to the Medicaid rules.

The standard way to protect assets is to transfer them outright to children or into trusts from which they may only receive the income. To do so with all of their assets can leave them high and dry when they need funds to pay for anything, whether for their care, vacations, house repairs or a new car. Our clients often take steps to protect their homes, which are not so liquid in any case, and assume they will use their savings and investments for their care if need be.

I’m a big fan of Kwame Anthony Appiah’s Ethicist column in The New York Times Magazine. He recently addressed your question. In his response, he explains the Medicaid eligibility rules and concludes: “The real scandal here is that you evidently have reason to worry about not being able to afford health care in old age, long-term care being a notable gap in Medicare coverage. In a decent society, preparing for the routine infirmities of age shouldn’t require extraordinary measures.”

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