Survey Finds Rich Are Not Engaging in Medicaid Planning

Critics of current laws that allow older Americans to transfer assets and still qualify for Medicaid coverage of long-term care often claim that the wealthy are benefiting from these laws. Millionaires, so the story goes, are intentionally impoverishing themselves and then taking advantage of a health care program that was designed for the poor.

A recent survey of elder law attorneys contradicts this view. The survey instead finds that the vast majority of those transferring assets to qualify for Medicaid coverage are individuals of very modest means who are transferring relatively small amounts of money. For example, more than 60 percent of Medicaid planning clients transferred less than $75,000 and only 1 percent of clients who engaged in Medicaid planning had estates of $750,000 or more.

The survey, conducted in April and May 2003, asked members of the National Academy of Elder Law Attorneys (NAELA) about their Medicaid planning cases. The results were based on 110 responses from practicing elder law attorneys in 30 states.

The responding elder law attorneys reported that 28 percent of their Medicaid planning cases involved estates of $100,000 to $200,000 (excluding the home), while another 37 percent involved estates of less than $100,000. The attorneys were also asked the approximate average amount transferred per client. The amount transferred to qualify for Medicaid was less than $50,000 in 46 percent of the cases, and less than $75,000 in more than three-quarters of the cases. There were no reported instances of transfers greater than $500,000.

The surveyors conclude that the typical Medicaid planning client has liquid assets of less than $200,000 (excluding the home) and that assuming he or she engages in Medicaid planning, the amount transferred is about $50,000.

"If the remainder goes toward the cost of long-term care," writes attorney Charles Sabatino, who summarized the survey results in the May/June issue of the NAELA News, "it may be argued that this is roughly the balance of contribution that the Congress may have had in mind in fashioning the complicated Medicaid eligibility rules for long-term care."

The survey also undercuts the image of the elder law attorney as primarily a Medicaid planning specialist. Less than one-quarter of the attorneys reported that the majority of their time is devoted to Medicaid planning cases. Elder law encompasses a broad range of other legal matters affecting older and disabled persons and their families.