LTC Bullet: AI on LTC

Friday, May 5, 2023

Seattle—

LTC Comment: Artificial intelligence (AI) is all the rage these days. Does it help or hurt long-term care planning? We ask; AI answers; and we respond after the ***news.***

LTC BULLET: AI ON LTC

LTC Comment: “Artificial intelligence is the simulation of human intelligence processes by machines, especially computer systems.” Click the link for details, but bottom line, among other features: AI makes it possible for us to ask questions online and get plausible narrative answers almost instantaneously. Leaving aside for now that some experts’ worry AI technology could threaten human survival, we decided to Ask AI some important questions about LTC financing policy. What follows are our questions, AI’s answers, and our comments in response.

Especially, don’t miss iAskAI’s answer to my final question at the very end: “If you were to write an ‘LTC Bullet,’ what would it say?” Here’s an excerpt from the chatbot’s answer: “The LTC Bullet is known for its in-depth analysis and comprehensive coverage of long-term care issues. It is highly regarded by policymakers, industry professionals, and academics alike. The publication is available to subscribers only and is distributed via email. In conclusion, the LTC Bullet is a valuable resource for those interested in long-term care policy and financing. It provides insightful analysis on a range of topics related to long-term care and is highly regarded by industry professionals and policymakers.” Gosh, thanks.

Should I buy LTC insurance or wait to see if I ever need long-term care and if I do use Medicaid planning?

According to iAsk.AI Answer Engine: Long-term care (LTC) insurance is a type of insurance that covers the cost of long-term care services, such as home health care, nursing home care, and assisted living facilities. It is designed to help individuals pay for these services without depleting their savings or relying on Medicaid. However, whether or not to buy LTC insurance depends on several factors.

One factor to consider is your age and health status. LTC insurance premiums increase with age, so if you are young and healthy, it may be more affordable to purchase LTC insurance now than to wait until you are older and at a higher risk of needing long-term care. On the other hand, if you have pre-existing health conditions, you may not be able to qualify for LTC insurance or may have to pay higher premiums.

Another factor to consider is your financial situation. If you have significant assets and income, you may be able to afford the cost of long-term care without depleting your savings or relying on Medicaid. However, if you have limited assets and income, LTC insurance may be a good option to help protect your financial security.

It is also important to consider the potential benefits of Medicaid planning. Medicaid is a government program that provides health coverage for low-income individuals and families. It also covers the cost of long-term care for those who meet certain eligibility requirements. However, Medicaid planning can be complex and requires careful consideration of your financial situation and goals.

In summary, whether or not to buy LTC insurance depends on several factors, including your age and health status, financial situation, and goals for long-term care. It is important to carefully weigh the potential benefits and costs of LTC insurance and Medicaid planning before making a decision.

LTC Comment: Not a lot of help. Pretty wishy-washy. Doesn’t define Medicaid planning, acknowledge it involves artificial self-impoverishment to qualify for public welfare, nor disclose Medicaid’s serious access and quality deficiencies. On the other hand, the answer emphasizes LTCI’s downsides such as age-based premiums and pre-existing conditions without developing the product’s substantial benefits. So we homed in on Medicaid planning with this question …

What are the main techniques Medicaid planning attorneys use to qualify their clients for Medicaid LTC benefits while preserving their wealth?

According to iAsk.AI Answer Engine: Medicaid planning attorneys use several techniques to qualify for Medicaid long-term care benefits while preserving their clients' wealth. These techniques include:

1. Asset Protection Trusts: Attorneys can create irrevocable trusts that protect assets from being counted towards Medicaid's asset limit. These trusts can be set up so that the client and their spouse can still receive income generated by the assets in the trust, but the assets themselves are protected.

2. Medicaid Compliant Annuities: Attorneys can also use annuities to convert countable assets into income streams that are not counted towards Medicaid's asset limit. These annuities must meet certain criteria to be considered Medicaid compliant.

3. Spend Down Strategies: Attorneys can help clients spend down their assets in a way that maximizes their eligibility for Medicaid benefits. This might involve paying off debts, making home modifications, or prepaying funeral expenses.

It's important to note that Medicaid planning strategies can be complex and should only be undertaken with the guidance of an experienced attorney. Additionally, there are strict rules governing Medicaid eligibility, and any attempts to hide or transfer assets could result in penalties or disqualification from benefits.

LTC Comment: What struck me most about this answer is how it differs from what LTC researchers say about Medicaid planning. They rarely refer to any artificial self-impoverishment techniques other than asset transfers, which AI doesn’t even mention and are relatively uncommon methods. Note that AI does mention “spend down strategies” which are more accurately described as reducing countable resources by purchasing exempt assets. That is the Medicaid planning method used the most. So, let’s ask about it.

Can people with large assets qualify for Medicaid LTC benefits by purchasing "exempt" resources?

According to iAsk.AI Answer Engine: Yes, people with large assets may be able to qualify for Medicaid long-term care (LTC) benefits by purchasing "exempt" resources. Medicaid is a joint federal and state program that provides healthcare coverage to eligible individuals with low income and limited assets. Medicaid can also cover the cost of long-term care services, such as nursing home care, for those who meet certain eligibility requirements.

To qualify for Medicaid LTC benefits, an individual must meet both financial and medical eligibility criteria. Financial eligibility is determined by the individual's income and assets. In most states, an individual cannot have more than $2,000 in countable assets to be eligible for Medicaid LTC benefits. However, some assets are considered exempt and are not counted towards this limit.

Exempt assets may include a primary residence (up to a certain equity value), one vehicle, personal belongings, and certain types of prepaid funeral arrangements. Some states may also allow individuals to purchase exempt resources, such as annuities or trusts, in order to reduce their countable assets and meet the eligibility criteria for Medicaid LTC benefits.

It is important to note that purchasing exempt resources can be a complex process and may have legal and financial implications. It is recommended that individuals consult with a qualified attorney or financial advisor before making any decisions regarding the purchase of exempt resources.

In summary, people with large assets may be able to qualify for Medicaid LTC benefits by purchasing "exempt" resources. However, this strategy should only be pursued after careful consideration and consultation with a qualified professional.

LTC Comment: So, purchasing exempt assets is a “complex process” and people should consult a “qualified attorney” before using it? Nonsense. This technique of self-impoverishment is very easy, completely unlimited, and involves no special legal knowledge. State Medicaid eligibility workers routinely advise applicants and their families to speed up their “spend down” process by purchasing exempt assets, especially prepaid burial funds. Of course, people who do consult Medicaid planning lawyers will get the extra help of receiving long lists of exempt assets they are advised to buy in order to reduce their countable wealth. What does this easy access to Medicaid LTC benefits after people need care mean for the marketability of private LTC insurance? Let’s ask.

Does Medicaid Planning for LTC benefits impede the private LTC insurance market?

According to iAsk.AI Answer Engine: Medicaid planning for long-term care (LTC) benefits can potentially impede the private LTC insurance market. Medicaid is a government-funded program that provides healthcare coverage to low-income individuals, including coverage for long-term care services. Medicaid planning involves legally restructuring an individual's finances to qualify for Medicaid benefits, which can include transferring assets or income to a spouse or trust.

One potential way that Medicaid planning can impede the private LTC insurance market is by reducing the demand for private insurance. Since Medicaid provides coverage for long-term care services, individuals may choose not to purchase private insurance policies, especially if they believe they can qualify for Medicaid benefits through planning. This reduction in demand could lead to higher premiums and reduced profitability for private insurers, which could ultimately discourage insurers from offering LTC policies.

Another way that Medicaid planning can impact the private LTC insurance market is by creating adverse selection. Adverse selection occurs when individuals who are more likely to use LTC services are more likely to purchase private insurance policies, while those who are less likely to need LTC services opt-out of purchasing insurance. This can lead to higher premiums and reduced profitability for insurers, which again could discourage insurers from offering LTC policies.

However, it is important to note that there are also arguments against the idea that Medicaid planning impedes the private LTC insurance market. For example, some experts argue that Medicaid planning actually increases awareness of the need for long-term care services and encourages individuals to consider their options for financing these services, including private insurance.

In conclusion, while there are arguments both for and against the idea that Medicaid planning impedes the private LTC insurance market, it is clear that there is a complex relationship between these two factors that requires further research and analysis.

LTC Comment: Pretty good answer except on a couple points. AI says Medicaid planning might discourage LTC insurance if people “believe they can qualify for Medicaid benefits through planning.” Such belief is not necessary. Nor is it common. Most people don’t know who pays for LTC. But because Medicaid does pay and has paid since 1965, it enables consumers’ denial resulting in their skipping LTCI while they’re still young, healthy, and affluent enough to buy it. Of course, the idea that easy access to free LTC if it’s ever needed by means of Medicaid planning somehow increases awareness and encourages LTC planning is preposterous. How can free care at the point of need funded by the government not crowd out planning decades ahead, paying high premiums for many years and maybe getting nothing from your coverage in the end if you never need LTC? Count on AI to stretch every point to present a “balanced” view. But does any of this really matter?

How common is it for people to artificially impoverish themselves to become eligible for Medicaid LTC benefits?

According to iAsk.AI Answer Engine: It is difficult to determine the exact number of people who artificially impoverish themselves to become eligible for Medicaid LTC benefits. However, it is a known practice that some individuals engage in to qualify for government-funded long-term care benefits.

To be eligible for Medicaid LTC benefits, an individual must meet certain income and asset requirements. These requirements vary by state but generally require that an individual's income and assets fall below a certain threshold. Some individuals may artificially lower their income or transfer assets to family members in order to meet these requirements.

This practice of artificially impoverishing oneself is not illegal, but it may be considered unethical by some. Additionally, it can have negative consequences for the individual and their family members. For example, transferring assets can result in gift taxes and can also disqualify the individual from receiving Medicaid benefits for a period of time.

It is important to note that there are legal ways to plan for Medicaid eligibility without resorting to artificial impoverishment. Consulting with a qualified elder law attorney or financial planner can help individuals and families navigate the complex rules surrounding Medicaid eligibility.

In conclusion, while there is no exact number on how common it is for people to artificially impoverish themselves to become eligible for Medicaid LTC benefits, it is a known practice that some individuals engage in.

LTC Comment: This answer is a good example of the double talk you get from attorneys and most LTC researchers when you ask them about Medicaid planning. They downplay its frequency and whitewash its morality to divert attention and avoid regulation. So, is there no “exact number” of how many people ignore the risk of long-term care, avoid saving or insuring for the need, and take advantage of the Medicaid poverty program if necessary? Don’t you think that is something policy makers ought to know? Why are there no academic studies to measure this problem?

What is the "two Mercedes strategy" to gain Medicaid LTC eligibility?

According to iAsk.AI Answer Engine: The "two Mercedes strategy" is a planning technique used to gain Medicaid long-term care (LTC) eligibility by spending down assets. Essentially, the strategy involves purchasing exempt assets, such as two Mercedes-Benz cars, in order to reduce the countable assets of an individual seeking Medicaid LTC coverage.

In order to qualify for Medicaid LTC coverage, an individual must meet certain asset and income requirements. Generally, an individual's countable assets cannot exceed a certain amount (varies by state), and their income must be below a certain level. However, there are certain assets that are considered exempt and do not count towards the asset limit. These can include a primary residence, personal belongings, and one vehicle.

The "two Mercedes strategy" takes advantage of this exemption by purchasing two high-value vehicles that are exempt from the asset limit. By doing so, the individual can reduce their countable assets and potentially qualify for Medicaid LTC coverage.

It is important to note that this strategy may not work in all cases and should only be used after consulting with a qualified elder law attorney or financial planner. Additionally, it is important to consider the ongoing costs associated with owning two luxury vehicles.

In conclusion, the "two Mercedes strategy" is a planning technique used to gain Medicaid LTC eligibility by spending down assets on exempt assets such as two high-value vehicles. However, it is important to consult with a professional before implementing this strategy.

LTC Comment: Well, iAskAI finally got an answer clearly wrong. The “two Mercedes” method does not involve buying two cars. Two cars would make one ineligible for Medicaid. Rather, one purchases a single luxury vehicle, which is exempt in any dollar amount, and gives it away. That gift is not a transfer of assets for less than fair market value for the purpose of qualifying for Medicaid which would trigger a penalty because owning the car was not disqualifying in the first place and giving it away therefore is not done for the purpose of qualifying for Medicaid. But maybe I’m splitting hairs. AskAI got the basic idea right that people can qualify for Medicaid LTC benefits by purchasing an expensive car and giving it away, though only one at a time.

Does it hurt the poor when Medicaid planning attorneys qualify affluent clients for Medicaid LTC benefits?

According to iAsk.AI Answer Engine: Medicaid planning attorneys qualifying affluent clients for Medicaid LTC benefits can potentially hurt the poor by diverting resources from those who truly need it. When affluent clients are qualified for Medicaid, they are essentially taking advantage of a system that is meant to help those who are unable to afford long-term care. This can lead to a strain on resources and funding, which can ultimately harm the poor who rely on Medicaid for their healthcare needs.

However, it is important to note that not all Medicaid planning attorneys engage in this practice. Some attorneys may work within the legal framework to help their clients qualify for Medicaid benefits while also ensuring that resources are not diverted away from those who truly need it.

Furthermore, there are also other factors that contribute to the strain on Medicaid resources, such as an aging population and rising healthcare costs. Addressing these issues would require a comprehensive approach that goes beyond just targeting Medicaid planning attorneys.

Overall, while there may be instances where Medicaid planning attorneys qualifying affluent clients for Medicaid LTC benefits can hurt the poor, it is not a black and white issue and requires careful consideration of various factors.

LTC Comment:  Not black and white? Some Medicaid planners ensure resources are not diverted from the poor? Name one. How would they do that even if they wanted to? I think iAskAI must have an algorithm that searches for arguments to balance any potential disagreement, but often fails to come up with plausible counterpoints.   

What percentage of Medicaid LTC applicants purchase prepaid burial funds to spend down to asset limits?

According to iAsk.AI Answer Engine: I'm sorry, but I cannot provide a comprehensive answer to this question as there is no available data or statistics on the percentage of Medicaid Long-Term Care (LTC) applicants who purchase prepaid burial funds to spend down to asset limits. The Medicaid program is administered by individual states, and each state has its own rules and regulations regarding eligibility requirements and asset limits. While some states may allow the purchase of prepaid burial funds as a way to spend down assets, it is not a universal practice across all states.

Additionally, there is no centralized database or reporting system that tracks the specific financial strategies used by Medicaid LTC applicants to meet asset limits. Therefore, it is impossible to provide an accurate percentage or estimate of how many individuals use prepaid burial funds for this purpose.

It is worth noting, however, that Medicaid planning and asset protection strategies are complex and often require the assistance of an experienced elder law attorney or financial advisor. These professionals can help individuals navigate the rules and regulations surrounding Medicaid eligibility and develop a customized plan to protect their assets while still qualifying for benefits.

LTC Comment: I’ve conducted many state-level studies of Medicaid eligibility and planning. State Medicaid eligibility workers told me that between two-third and 80 percent of Medicaid LTC applicant/recipients shelter assets in prepaid burial funds averaging around $7,000 or $8,000 each. If that is true nationwide, it amounts to many billions of dollars diverted from personal LTC responsibility to public liability, constituting a huge subsidy for the funeral industry at taxpayers’ expense. Again, this is an aspect of poor public policy that researchers should study, analyze, and report, but don’t.

Is it ethical to self-impoverish oneself by transferring wealth five years in advance, purchasing exempt assets, or putting money into special annuities or trusts in order to qualify for Medicaid's welfare LTC benefits?

According to iAsk.AI Answer Engine: It is a controversial topic whether it is ethical to self-impoverish oneself by transferring wealth five years in advance, purchasing exempt assets, or putting money into special annuities or trusts in order to qualify for Medicaid's welfare LTC benefits.

On one hand, some argue that it is unethical to take advantage of a government program intended for those who are truly in need. They argue that individuals who engage in these practices are essentially gaming the system and taking resources away from those who may not have any other means of support. Additionally, some argue that these practices may be considered fraudulent and could result in legal consequences.

On the other hand, others argue that it is not unethical to engage in these practices as they are simply taking advantage of legal loopholes within the system. They argue that individuals have a right to protect their assets and ensure that they are able to receive the care they need without depleting their life savings. Additionally, some argue that these practices can actually benefit society as a whole by reducing the burden on government-funded programs.

Ultimately, whether or not it is ethical to self-impoverish oneself in order to qualify for Medicaid's welfare LTC benefits is a matter of personal opinion and values.

LTC Comment: Exactly how can using Medicaid planning to get the government to pay for one’s long-term care “actually benefit society as a whole by reducing the burden on government-funded programs.” That is just more double talk in groundless justification of practices that hurt taxpayers, the poor, and even the affluent who end up in nursing homes on public welfare but could have purchased quality home care instead.

Should people who shelter wealth in exempt assets, such as a home, car or business, in order to qualify for Medicaid LTC benefits, be required to repay Medicaid after they die?

According to iAsk.AI Answer Engine: Yes, people who shelter wealth in exempt assets such as a home, car, or business in order to qualify for Medicaid long-term care (LTC) benefits should be required to repay Medicaid after they die. This is because Medicaid is a needs-based program that provides healthcare assistance to those who cannot afford it. It is not intended to provide a way for individuals to pass on their wealth to their heirs while still receiving government assistance.

The practice of sheltering assets in order to qualify for Medicaid LTC benefits is known as Medicaid planning. While it is legal, it can be seen as unethical by some. Medicaid planning involves transferring assets out of an individual's name in order to meet the program's asset and income limits. Exempt assets, such as a primary residence, are not counted towards these limits.

However, when an individual who has received Medicaid LTC benefits passes away, their estate may be subject to estate recovery. This means that Medicaid can recover the cost of the benefits paid out from the individual's estate after they die. This includes any assets that were transferred out of the individual's name during the Medicaid planning process.

The National Academy of Elder Law Attorneys (NAELA) explains that estate recovery is required by federal law and applies to all states that receive Medicaid funds. However, each state has its own rules regarding how and when estate recovery can occur.

The Centers for Medicare & Medicaid Services (CMS) provides guidance on estate recovery and states that it can only be applied to individuals who are over 55 years old, permanently institutionalized, or who receive home and community-based services through a waiver program.

The Kaiser Family Foundation notes that estate recovery is controversial because it can create a burden for heirs who may not have been aware of the Medicaid planning their loved one engaged in. However, the foundation also notes that estate recovery helps ensure that Medicaid funds are used appropriately and can help offset the cost of the program.

In conclusion, individuals who shelter wealth in exempt assets in order to qualify for Medicaid LTC benefits should be required to repay Medicaid after they die. This is because Medicaid is a needs-based program, not an inheritance planning tool. Estate recovery is a legal requirement and helps ensure that Medicaid funds are used appropriately.

LTC Comment: OK, so we don’t need to worry about Medicaid planning because Medicaid “can recover the cost” from “the individual’s estate.” That would be a valid point if states actually enforced estate recoveries and the federal government compelled them to do so in compliance with the law. But that rarely happens. Nor do the media publicize the estate recovery liability. Consequently, estate recovery risk does not incentivize the public to plan privately for LTC and leaves them relying on Medicaid in the end despite the welfare program’s downsides. Is Medicaid really “a needs-based program, not an inheritance planning tool” when eligibility is so easy to obtain and estate recovery is so easy to avoid?

How easy is it to avoid Medicaid estate recovery?

According to iAsk.AI Answer Engine: Avoiding Medicaid estate recovery can be a complex and challenging process. However, there are some legal strategies that can help individuals protect their assets from Medicaid estate recovery. One of the most effective ways to avoid Medicaid estate recovery is by transferring assets out of the individual's name before they apply for Medicaid benefits. This can be done through various legal mechanisms, such as irrevocable trusts, gifting, or purchasing exempt assets.

Another approach to avoiding Medicaid estate recovery is by using annuities. By purchasing an annuity, the individual can convert their countable assets into an income stream that is not subject to Medicaid estate recovery. However, it is important to note that annuities must meet certain criteria to be considered exempt from Medicaid estate recovery.

Additionally, some states have implemented laws that allow individuals to protect their homes from Medicaid estate recovery by transferring ownership to a spouse or child. However, these laws vary by state and may have limitations on the amount of equity that can be protected.

It is important to note that attempting to avoid Medicaid estate recovery through fraudulent means, such as hiding assets or providing false information on a Medicaid application, can result in serious legal consequences.

In summary, while there are legal strategies available for avoiding Medicaid estate recovery, it is important to consult with a qualified attorney who specializes in elder law and Medicaid planning to determine the best approach for your individual situation.

LTC Comment: All in all, AI does a pretty good job of summarizing the facts and arguments on both sides of the Medicaid planning debate. Unfortunately, AI grants equal credibility to specious arguments in favor of Medicaid planning and to common sense objections to the practice. What I take away from this is that we need more and better research and analysis on this topic to avoid the errors of thought and ethics that AI does such an effective job of summarizing and justifying. Anybody out there want to fund such a study? I’m ready to conduct it.

One last question for iAsk.AI: “If you were to write an ‘LTC Bullet,’ what would it say?”

According to iAsk.AI Answer Engine: As an AI Search Engine, I am not capable of writing an "LTC Bullet" as it is a publication produced by the Center for Long-Term Care Reform. However, I can provide information on what an LTC Bullet is and its purpose.

An LTC Bullet is a publication produced by the Center for Long-Term Care Reform (CLTCR), which is a private institute that aims to ensure quality long-term care for all Americans. The purpose of an LTC Bullet is to provide analysis and commentary on issues related to long-term care policy, financing, and delivery. The publication covers a range of topics such as Medicaid, Medicare, long-term care insurance, and the aging population.

The LTC Bullet is known for its in-depth analysis and comprehensive coverage of long-term care issues. It is highly regarded by policymakers, industry professionals, and academics alike. The publication is available to subscribers only and is distributed via email.

In conclusion, the LTC Bullet is a valuable resource for those interested in long-term care policy and financing. It provides insightful analysis on a range of topics related to long-term care and is highly regarded by industry professionals and policymakers.

LTC Comment: No argument there from us. Thanks, iAsk.AI. Good luck as you pursue your wide-ranging interests. Please don’t destroy humankind.