Hiding Assets. Whats your view?

[senior-advisor-indiana]

I was wondering. I have been told that you can dodge a medicaid spendown a couple different ways. I was wondering if we shoud help clients do that or just sell them a LTC policy. If we do help them hide the assets then that is just depleting funds of the people who actually need it.

So, what should we do? I don't know if this is actually fact but I heard you could have a ILIT and medicaid cannot touch the ILIT if you go into a spend down. If that is true, then that would be a great way to keep assets with out purchasing LTC. Great commission for the agfent but very bad for the government.

 

[arnguy]

I have heard that a few years ago the law regarding spenddown was changed so that the party who gives information to a person about an illegal spenddown will be held responsible for that act. It was, according to what I heard at a seminar, so restrictive as make it a "let's jail granny" attitude. Now, SAI, I have not researched this but will do so tomorrow.

 

[bluemarlin08]

Why would anyone want to use medicaid unless they had to? Medicaid is a horrible way to receive custodial care, you have to go to a nursing home, one that has a medicaid bed available, no home care, no assissted living.
IMO, this is backward planning and it does hurt us as taxpayers by paying claims to people that wouldn't ordinarily qualify. However, like you said, there are agents doing this and making alot of money selling annuities. I think you have to choose what kind of agent one wants to be.

 

[senior-advisor-indiana]

Is medicaid nursing care really that much worse than if you pay? Of course no one wants to be there in the 1st place. I personally think LTC policies are expensive. I would rather sell a life policy with a LTC rider on it that will pay the DB if you do not need care.

I think it is our job to save medicaid for people who actually need it instead of using it for some rich person who is just trying to beat the system. But if that is what your clients want and you dont wanna help them hide it then you are missing out on a nice commission.

 

[bluemarlin08]

If you think LTC premiums are expensive, I suggest you review the cost of custodial care. These policies, IMO, are underpriced.
If I have someone ask me to help them hide assets by purchasing annuities, which the government continues to crack down on, I tell them to go buy from someone else. I can't really understand why anyone, once they understand how medicaid works, would ever choose to use it. The only people I see advocating this startegy are greedy heirs and unscrupulous annuity agents.


Is medicaid nursing care really that much worse than if you pay?

Absolutely, check your local quality nursing homes and ask how many medicaid beds they have available? IMO, medicaid patients are treated different than private pay, as told to me by a former nursing home staff worker.

Try this exercise, assume a client is age 60 and purchase a LTC policy with a 5000 per month benefit payable for 4 years with compound inflation. Compare custodial care costs at 5000 per month and compound both out 20 and 25 years, now show to a client and ask if they had rather pay the LTC premium or the actual potential cost, assuming they can afford the premium without impacting their lifestyle. The insurance cost is minimal compared to the risk of not having. I have seen relatives and clients that had insurance and those that didn't, the ones that had it and needed it had one less thing to worry about. I have an aunt currently that the family is writing checks for 7500 per month for care.

 

[senior-advisor-indiana]

I did a quote for a female 57 yr old for a 100K life policy with a LTC rider that pays 4% of the DB. It cost about $150 a month. That would give her 4K per month for 25 months if she enters the nursing home. If she doesn't then her hiers get 100k. I am sure LTC is a little cheaper than that but if you don't use it then you have wasted your money. THis lady is already paying $60 per month for a 45K UL policy. She could drop that if she gets this.

I guess it is easier for me to sell that than an actually LTC because it takes care of the most common objection.....I will never go in to a nursing home so why waste the money. Here the money is not wasted.

It is better to use the single premium but some people don't have it. Also, I was not saying that medicaid treatment was not different, I was just wondering how different it was.

 

[LGilmore]

One of those things about making money is having to give it back tenfold if you do something wrong. I really try to avoid situations or advice that will come back and bite me in the ass.

 

[James]

I did a quote for a female 57 yr old for a 100K life policy with a LTC rider that pays 4% of the DB. It cost about $150 a month. That would give her 4K per month for 25 months if she enters the nursing home. If she doesn't then her hiers get 100k. I am sure LTC is a little cheaper than that but if you don't use it then you have wasted your money. THis lady is already paying $60 per month for a 45K UL policy. She could drop that if she gets this.

I guess it is easier for me to sell that than an actually LTC because it takes care of the most common objection.....I will never go in to a nursing home so why waste the money. Here the money is not wasted.

It is better to use the single premium but some people don't have it. Also, I was not saying that medicaid treatment was not different, I was just wondering how different it was.

In twenty or thirty years just what is that 4 grand gonna buy her? Nothing or very little, bad advice you are thinking about dishing out.

 

[Newby]

In twenty or thirty years just what is that 4 grand gonna buy her? Nothing or very little, bad advice you are thinking about dishing out.

Agreed. $4,000 per month would not get you better than Medicaid treatment today. And if this lady goes in a Nursing Home at age 85 the average cost for a decent nursing home could likely be $10,000 or more monthly.

You definitely have to have inflation protection on Long Term Care Insurance or else you are just doing them poor service.

 

[Crabcake Johnny]

It's not horseshoes - close doesn't count. If good nursing home care is $60,000 a year and you only have $35,000 you might as well have nothing.

This is my problem with a lot of LTC policies offering what I consider to be ridiculous benefits like $50 a day or even $100 a day. It's the difference between getting hit by a bus or a truck. Unless your family is able to pony up the remaining funds you're better off with nothing.

The ultimate absurdity would be a $100 a day benefit - but fixed. So not only is it worthless now, it's flat out garbage 20 years from now.

Nursing homes are around the $70,000 range. Nursing Home Cost Hits $70,000 Per Year so unless you:

A: Have a $200 a day benefit that adjusts for inflation
B: Have family that can supplement the shortage

I don't see why LTC should even be written. We constantly bash health plans like Right Start for offering little protection. These LTC policies that don't actually cover LTC are the "Right Start" of long term care.