Is Medi-Cal Planning Ethical?

As in any area of consumer spending, knowing what to look for and what strategies to use in arranging for paid care services can save money. Medi- Cal planning allows many seniors to keep their homes and limit the depletion of their retirement savings.

A person facing the prospect of long-term care with only moderate income and savings may have to rely on Medi-Cal to pay part or all of the cost of care. For example, someone making $2,000 a month would not be able to afford a nursing home at $8,500 a month. Savings would be depleted quickly and a spouse’s income and savings may be depleted as well. Medi-Cal may become the only option.

Medi-Cal has provisions to protect a healthy spouse at home, but many states will take away the previously adequate resources of healthy spouses by protecting too little of their resources and savings. Likewise, children, other relatives and friends are not compensated for any financial sacrifices they make to provide the early care before a recipient needs Medi-Cal-funded professional help. Medi-Cal planning, using a professional Medi-Cal planning advisor, allows families to correct inequities in the system.

Medi-Cal planning, however, has gotten a bad name because some individuals, who would normally have too many assets to qualify, give away everything to their family many years in advance so they can qualify for Medi-Cal. It is wrong to abuse the system in this way and to use taxpayer dollars to ensure an inheritance for the family. Additionally, if the person giving away assets is not anticipating immediate care, this strategy is really unfair. There are much better ways to plan for long-term care in advance.

Some Medi-Cal planners will attempt to discredit other forms of funding long-term care, such as using insurance or a reverse mortgage. They do this in order to discourage the public from using these other strategies. The intent is to limit competition, ensuring that paying clients will rely entirely on Medi-Cal planning as a solution.

On the other hand, many long-term care funding specialists will use the same strategy against Medi-Cal planners to eliminate competition from their services. These people make Medi-Cal planners seem evil or dishonest. In addition, many elder law attorneys will make it appear that they are the only professionals knowledgeable in this field.

Medi-Cal planning is no different than tax planning. In fact, a Supreme Court decision condones honest methods of eliminating income taxes or estate taxes. Tax planning and Medi- Cal planning both have the potential to place an additional burden on taxpayers, but one is considered ethical and the other is often frowned upon.

All strategies have their place in the grand scheme of things. Medi-Cal planning is valuable in certain circumstances, usually where families are in a crisis mode trying to preserve a few assets such as a house or a savings plan. There is no attempt to take advantage of taxpayers.

Meanwhile, using other strategies to pay the cost of care is a much better approach than Medi-Cal planning for a younger generation. Not relying on Medi-Cal will allow a greater choice in care settings and care services.

Gregory A. Steen is the CEO of Steen & Company, a full-service estate planning firm. Steen is also the host of the popular Truth4Seniors TV program, and founder of Truth4Seniors. He is certified in Life Resource Planning, and a member of the National Ethics Association and the National Association of Senior Advocates. He can be reached at greg@truth4seniors.com.