Tools to balance the fight between health care costs and bankruptcy?

[pb4uski]

+1
If it’s legal, it's legal. You don't have to participate if you feel some moral point about it.

I personally dont like the idea of millionaires qualifying for ACA or other tax benefits but it's legal and I would never begrudge anyone who takes advantage of it.

IMO, many laws are written so that they can be gamed in the first place.

While you have a fair point, I see a big difference between someone that manages their income for ACA purposes to receive a $800/monthly or $9,600 annual benefit for a few years between ER and Medicare at 65 vs someone who gains a $120k benefit annually for 3-10 years.

The other difference is that to manage income all one needs to do is to withdraw from taxable rather than tax-deferred whereas for Medicaid planning you need to set up irrevocable trusts, retitle assets into the trust, etc. Big difference IMO.

FWIW, I haven't done either... I chose not to take ACA subsidies so I could do more low tax cost Roth conversions and I will not do Medicaid LTC planning either even though our heirs might benefit significantly.

We've always paid our own bills and will continue to do so as long as we have money to pay them.

 

[marko]

While you have a fair point, I see a big difference between someone that manages their income for ACA purposes to receive a $800/monthly or $9,600 annual benefit for a few years between ER and Medicare at 65 vs someone who gains a $120k benefit annually for 3-10 years.

The other difference is that to manage income all one needs to do is to withdraw from taxable rather than tax-deferred whereas for Medicaid planning you need to set up irrevocable trusts, retitle assets into the trust, etc. Big difference IMO.

FWIW, I haven't done either... I chose not to take ACA subsidies so I could do more low tax cost Roth conversions and I will not do Medicaid LTC planning either even though our heirs might benefit significantly.

We've always paid our own bills and will continue to do so as long as we have money to pay them.

Nobody said it would be easy! I see your point but go back to the position that it's either legal or not.

Respectfully, your ACA argument sounds a bit like "Well, I didn't steal THAT much money and it was easy to do". There's just so much built into "what's legal" that gets by with the proverbial wink and a nod. There's a workaround for just about everything. As one poster pointed out, the rules are made by those most likely to benefit.

But like you, we pay our own way despite the occasional pang of "where's mine?". ACA was never even close to being an option due to income but I don’t begrudge those who finagel a way into it.

As far as Medicaid, they advertise on TV here on how to avoid nursing home costs etc. And, as I noted earlier, at least in Mass, it's pretty much common practice, often with better care than paying patients.

If its legal and it shouldn't be, they ( whoever "they" are) should change it. But again, the rules are made to favor them.

 

[Teacher Terry]

There’s people on Mr MM that have a million or two saved and are manipulating their income as to be on Medicaid since they are retired young. That adds up over decades and they pay nothing.

 

[MarieIG]

It must vary State to State.

I've mentioned this before: I had to place my brother in a Skilled Nursing Home Facility for six months of therapy and healing after his near-deadly stroke.

I found an excellent facility with everything the way it should be. Stellar therapists too. My brother had "Cadillac" health insurance but eventually that ran out and we went to self pay.

Here's the kicker: they told me that they hadn't had a self pay patient in over 10 years and we're trying to figure out how to accept payment. Took them over a week to figure out how I could pay them. Everybody there was on Medicaid.

To make it worse, despite his top of the line insurance, a therapist took me aside and strongly encouraged me to find a way to get him on Medicaid. "I could do so much more for him if he was on Medicaid; I could give him so much more time". He wasn't able to do that due to his income and assets but I found the whole thing interesting.

Yes, I think Medicaid benefits do vary from state to state. I saw Medicaid benefits through my job, including Medicaid recipients receiving home aides, visiting nurses, visiting therapists, etc. They were even permitted to have aides (up to seven days a week) who did cooking and laundry. These were not paralyzed patients or persons with Alzheimers - they were people who qualified for assistance at home via lack of finances coupled with physician recommendation documenting need.

As an aside, those facilities providing rehabilitative care may as in following a hospital discharge - part of ongoing treatment - with goals established for improvement; may be superior facilities.

That said - where the rubber meets the road are the "basic" nursing home facilities. Patients with daily visitors seem to do better. The Medicaid facilities can be utter h@ll on earth: insufficient staffing; patients unable to chew given incorrect diets; thirsty patients with their water left out of their reach; repeated falls; clothes not changed, teeth not brushed, left in their filth for hours, pressure ulcers; patients sad/ upset/ confused/ and/or in pain - moaning and crying.

 

[Walt34]

Walt, I suspect we live close to one another (I’m in Maryland not far from the WV panhandle) and I’ve been researching which lawyer to use to update my will and prepare a financial POA etc..I’m not sure if this is allowed, but would you be willing to give me the name of the attorney you used? There are two in this area that specialize in elder law, but I’ve heard good and bad about each. Thank you!

PM sent.

 

[Walt34]

So did you short the mortuary & they church ladies who provided the lunch? It seems to me that you could use this reasoning to not pay any legitimate debts of her father. Maybe I’m missing something.

Murf

That was uncalled for.

If it makes you feel any better he died before the plan put in place by the attorney could take effect so it was all for naught.

Feel better now?

 

[CRLLS]

I am late to this discussion but will add one or two points. The first is that a family member might be able to care for the elder for a while before around the clock medical care is necessary. I know it is very hard to do, but it is a way to preserve the $$ as long as humanly possible. My 2nd point is that if somebody thinks that LTC facility is expensive, try hiring 24/7 home care. Way more expensive than LTC. In LTC, typically the home is the last thing to be sold off for care. The costs of maintaining that asset while in LTC is in addition to the LTC fees.

 

[Murf2]

That was uncalled for.

If it makes you feel any better he died before the plan put in place by the attorney could take effect so it was all for naught.

Feel better now?

Sorry Walt34. Your right it was uncalled for. I apologize.
My thinking was that if you and your wife found it morally wrong, she could have stepped away from the situation. I guess “morals” are different for different people / situations and I have never been in that situation. I hope if I ever am I will have the courage of my convictions.
My condolences on your family’s loss!

Murf

 

[Lstansbury]

Look into Long-Term Care Partnership Programs.

When you buy LTC policy, make sure it is one of the partnership policies in your state. Most states have this in place. My states description: "The Louisiana Long-Term Care Partnership Program offers individuals a way to protect their assets if they ever need to apply for Medicaid services.

The initiative encourages citizens to partner with the state-based program as they purchase qualified private long-term care insurance policies. Partnership-Qualified policies are available from licensed insurance professionals. Policies must meet the state and federal Partnership requirements.

Long Term Care Partnership Programs provide a dollar of asset protection for every dollar of insurance coverage paid on one’s behalf. An individual who owns long term care insurance will pay into the policy over a period of time, usually on a yearly or monthly basis, and then receive a large amount paid out by the policy when long term care becomes necessary. That amount paid out then changes the eligibility requirements by significantly increasing the asset limit when the individual applies for Medicaid.

As an example, let’s say someone purchases long term care insurance that pays out $150,000 when they can no longer live independently because of old age or a chronic illness like Alzheimer’s disease. In a state with a Long Term Care Partnership, the recipient earns a dollar of asset protection for every dollar paid out by their private insurance.

So the policy holder can keep $150,000 in assets, and still qualify as Medicaid poor.

 

[Emerson11]

Wait -- preserve inheritence and someone else pays for Dad?

Is OP asking whether there are legal ways to get someone else to pay for Dad's care so that his family can get an inheritence? I know some people game the Medicaid system for that purpose, but I suspect folks don't usually admit such a goal. Someone has to pay, shouldn't it be the person receiving the care?

 

[pb4uski]

Is OP asking whether there are legal ways to get someone else to pay for Dad's care so that his family can get an inheritence? I know some people game the Medicaid system for that purpose, but I suspect folks don't usually admit such a goal. Someone has to pay, shouldn't it be the person receiving the care?

No, OP is not asking for Dad at all.

OP is asking whether there are legal ways to get someone else to pay for their care so that his heirs can get an inheritence?

I agree with you on the last part which is why I refused to offer the OP any advice.

 

[MarieIG]

I am late to this discussion but will add one or two points. The first is that a family member might be able to care for the elder for a while before around the clock medical care is necessary. I know it is very hard to do, but it is a way to preserve the $$ as long as humanly possible. My 2nd point is that if somebody thinks that LTC facility is expensive, try hiring 24/7 home care. Way more expensive than LTC. In LTC, typically the home is the last thing to be sold off for care. The costs of maintaining that asset while in LTC is in addition to the LTC fees.

Been there, done that, no regrets. (This was in addition to daily care provided by family.)

 

[sebvad]

This was a thread that sparked a great deal of interesting discussion.

To those that provided insightful commentary - thank you for your insight.

To those who that responded with a breathtaking level of judgement based on inferred scenarios leading to morale righteousness - this is why i hate the internet.

 

[target2019]

Ahem. Wealthy People wrote the tax codes. The end

The secret of what troubles many. Thank you for the reminder!

 

[target2019]

This was a thread that sparked a great deal of interesting discussion.

To those that provided insightful commentary - thank you for your insight.

To those who that responded with a breathtaking level of judgement based on inferred scenarios leading to morale righteousness - this is why i hate the internet.

Sometimes I need to filter noise, snark, and so on. Sometimes there are tools to help one do that with little effort. Good luck with the search.

 

[audreyh1]

Here's the kicker: they told me that they hadn't had a self pay patient in over 10 years and we're trying to figure out how to accept payment. Took them over a week to figure out how I could pay them. Everybody there was on Medicaid.

To make it worse, despite his top of the line insurance, a therapist took me aside and strongly encouraged me to find a way to get him on Medicaid. "I could do so much more for him if he was on Medicaid; I could give him so much more time". He wasn't able to do that due to his income and assets but I found the whole thing interesting.

In that scenario couldn’t you come to some other financial arrangement with the therapist?

 

[pacergal]

Original Poster here. So a few things stand out to me from the responses:
1) I may not have been clear - my father in laws scenario is just fine. I'm not looking for advice for his scenario, and we have elder law and estate planning legal resources plugged into this for quite some time here. I noted this as a scenario that has opened our eyes to something that we didn't quite understand, but know is coming for us, which bring us to the second point
2) The ask is what legal instruments are available are for us - not my father in law - for future scenarios where we have sufficient money to meet their requirements - but desire to take advantage of - again - legal pathways for us to optimize our overall financial scenario. We are not looking to short the future care facility - but we're also not looking to give them more than the contract dictates. In my view - from what we've observed with my FIL's experience - this business model represents a transfer mechanism to siphons generational wealth away from families and to institutions - yes, there is an exchange (care in exchange for $) - and while I acknowledge that this is quiet literally the deal - I also want to give sufficient consideration to *how* that happens to be sure I'm optimizing for my family while adhering to the tenets of future care in exchange for $ (funding the minimum we are required to fund). I'm in no way interested in entering into a morale debate - I think it's fair to assume in any post there's never a full scenario/picture painted, and as another posted acknowledged, the inquiry has parallels to using existing tax laws to optimize ones tax scenario - I know of no one who willingly pays more taxes than they are required to.
3) While evaluating the above posts - it sounds like an irrevocable trust has arisen as a potential option to explore with an estate attorney. Are there other instruments that we should consider?

Thank you

Definitely a consult with an estate attorney is warranted to understand all of the legalities of trying to preserve wealth, yet still pay and receive quality medical care needed.
Understanding the different levels of a CCRC for potential future living/medical expense if you go that route
Understanding exactly what an irrevocable trust entails.
All I can relate is one of my relatives had one. His spouse was unable to receive any more $ from the trust when she wanted, even though it was legally hers. Their children are unable to receive any more $ than allowed yearly, even though two of them have medical issues that cost a lot to monitor and care for. As I stated, I don't know the details, I only know the consequences of that particular relatives trust.

 

[pb4uski]

...Understanding exactly what an irrevocable trust entails.
All I can relate is one of my relatives had one. His spouse was unable to receive any more $ from the trust when she wanted, even though it was legally hers. Their children are unable to receive any more $ than allowed yearly, even though two of them have medical issues that cost a lot to monitor and care for. As I stated, I don't know the details, I only know the consequences of that particular relatives trust.

Yeah, sometimes trying to be too clever can backfire.

 

[athena53]

Yes, Medicaid rules should be changed so a couple only has to use up half of their combined resources.

Essentially the same as if they went through a divorce.

I totally agree with this. It's one of the reasons I'm unlikely ever to marry again. The guys who are wealthy enough to fund their own LTC are looking for women 10-15 years younger and I'm not gonna start looking for guys in the 80+ age bracket.

 

[pb4uski]

^^^ Sounds like age discrimination to me.

 

[RetiredAt55.5]

This was a thread that sparked a great deal of interesting discussion.

To those that provided insightful commentary - thank you for your insight.

To those who that responded with a breathtaking level of judgement based on inferred scenarios leading to morale righteousness - this is why i hate the internet.

Good thing is that all the info was free. That's what's great about the Internet.

Take whatever you find useful, and discard the rest.

 

[marko]

In that scenario couldn’t you come to some other financial arrangement with the therapist?

I tried. Apparently in Massachusetts, it's illegal. She would lose her license.

You cannot go beyond a set amount of sessions when self paying. I was told it prevents unscrupulous operators from taking advantage of people with money.

Also you cannot have more therapy sessions than what Medicaid patients get for the same reason. "Well....if you could come up with a few hundred bucks, maybe we could work something out....". It's highly regulated and 'for my own protection' (ha!)

Any therapy my brother would have would have had to be in the facility because he was physically unable to leave at the time, so no sneaking him out for a few hours.

Believe me, short of dropping hundred dollar bills on the floor, I tried 8 ways to Sunday and I'm a big believer in 'money talks' (and my brother has a lot of money); went up and down the command chain.

Quite an eye opener at the time.

 

[pb4uski]

^^^ looks like this should be posted in the nanny state thread

 

[imnontrad]

I believe there is a "spend down amount" before he is eligible for Medicaid. If he is a veteran, he would also be eligible for care there and there is an "Aid and Attendance" benefit for those with limited means.

 

[Music Lover]

Which has us thinking about generational wealth protection. We're not billionaires by any stretch - but we've done ok. We'd love to be able to 'carve out' enough from a nest egg to qualify for entry into such a facility should the need arise - but 'carve out' the rest to shield/protect it to fund inheritances, charitable gifting, etc so that - again if the need arises and we find ourselves in a care facility - they don't take it all.

I'll be blunt. Don't be greedy. You have the money, suck it up and pay for your own care instead of looking for ways to hide assets hoping that someone else will pick up the tab.