At least once a week, someone will post a question on this board that basically amounts to asking how to “protect” some parental asset or amount of money and still apply for/qualify for Medicaid. Inevitably, such a poster gets jumped on by numerous people replying that trying to protect assets is “cheating” and grossly unfair to other taxpayers.
I’m not so sure. I'm not advocating trying to circumvent the system -- but I would like to start a discussion about whether it's immoral. I’d like to explain why I’m not so sure, and then I’d like to know what other people think.
Imagine two identical families. We’ll call them Family A and Family B. In both families, Mom and Dad work. Both Parents A and Parents B have identical jobs and identical incomes, and both families have three kids.
That is where the similarities end.
In Family A, even before the kids are born, Dad and Mom scrimp and sacrifice to save money. This an old-fashioned phrase for an old-fashioned concept, but Dad and Mom are 100% dedicated to it, and their commitment does not change as the kids grow.
The family goes on vacation every third year instead of every year. These vacations are usually “road trips” and involve camping in tents and peeing in terrifying, spider-infested outhouses to save money on hotels. Getting to eat out once a month is a huge treat, and usually occurs only at low-end chain restaurants with a mid-week “kids eat free” night. For their entire public-school education, the kids dress primarily in clothes that their mother sews by hand instead of wearing clothes bought from the store ... and sure, maybe they get teased and made fun of at school, because they’re wearing polyester pants instead of blue jeans, but Mom and Dad decide it’s a worthwhile sacrifice because the money that is being put away will make a difference in the kids’ lives later, when it really “matters.”
The family drives a beat-up old car that Dad manages to keep running year after year because hey, maybe the upholstery is all split open and the windshield is cracked, but at least it’s paid for. Cable TV is out of the question, so if a show doesn’t come in over rabbit ears to the family’s one small TV in the living room, no one watches it.
The house, which is uncomfortably small for the family and not in the best neighborhood – and which certainly does not feature hardwood floors or a kitchen with granite counters or stainless steel appliances! – is one that can be managed on a mortgage that still leaves a fair amount of each month’s paycheck available to go into savings instead. The family COULD qualify financially for a “nicer” place, but Dad and Mom believe that it’s better to put the money away so that it will be there to make a difference for their kids down the line – maybe by buying a college education or by helping them to buy their own homes when the time comes. Everyone sacrifices, sacrifices, sacrifices. Eventually, even the modest mortgage is paid off. Gradually, the little nest egg grows.
In Family B, by contrast, just about every dime that ever comes in is spent immediately. The family motto is “Instantaneous Gratification Isn’t Soon Enough!” The family denies itself nothing, ever.
The whole family goes on vacation to Disney World every year, always staying at an official Disney resort (where the kids get their own room). At home, all the kids have their own TVs (which get every premium channel imaginable), laptops and iPads and get new iPhones every time Apple releases an “upgrade.” Eventually, the kids get driver’s licenses, and guess how the family celebrates this rite of passage? You got it! Mom and Dad buy them their own cars. The family eats out at nice restaurants three or four times a week. The family car is replaced at least every two years, and loaded with every option the family’s creaking credit score can support.
The kids get designer clothes and shoes and the latest video games and pretty much whatever else they want at every gift-giving holiday. The family lives in a huge house in a nice neighborhood, with a pool and a hot tub, and yes, they’re carrying a lot of debt on their credit cards, and yes, they’re quite a bit overextended on the mortgage and the car notes, but what the heck – isn’t that the American way? Sure, there’s no nest egg ... but what does that matter? Living life in the moment is what it’s all about.
Fast-forward. Dad is now 75. Tragically, Mom died 6 years ago from cancer, and Dad has now been diagnosed with a progressive dementia, and will likely soon need very expensive long-term memory care in a facility.
In Family B, there are next to no savings. After retiring, Mom and Dad B traveled a bit, and spent every dime that came in in pension and Social Security income. After Mom B died, the overextended mortgage on the house turned completely upside down, and Dad B abandoned the equity in the house and walked away ....
(Continued in Part B, first post)
I'm surprised to hear that she was forced to sell the house, though. I understood - perhaps wrongly, I'm certainly no expert - that a widowed person occupying the family home would not be required to sell involuntarily. Was she pushed or did she jump? Or could she not afford the upkeep on her inevitably reduced income?
But, so, in any case: who should have paid for the husband's care if not him?
Your husband's (cameo) role in your business shouldn't change the possible distinction between business and personal assets. I'd still check this point carefully - the worst that can happen is that you're no further forward.
My comment about legal vs ethical was about the treatment of my friend, for whom no cnsideration was given when she was forced to sell the house and assets and give 50% back to the govt., leaving her with next to nothing.
The business account of a sole trader - are you a sole trader? - is a bit of a grey area. Is your business a company, a separate entity from you, or is it just a practical piece of self-organisation that helps you keep your business income and outgoings separate from your domestic ones?
Could you, hypothetically, sell the business as a going concern? This wouldn't prevent your exceeding the Medicaid threshold, of course, because you'd then realise the value of the business in cash terms. But it might help to distinguish between your personal assets and those of your business if it could, theoretically, function without you. Not that I'd know, but it doesn't sound quite right that you could be forced to fold your only source of income - I think you should look into this more carefully with Medicaid, and check that they have taken all the details on board.
The prospect of poverty at the end of a life of hard work, conscientious saving and responsible budgeting seems very scant reward, I agree. But unethical? On whose part? Who is cheating you out of something you're owed? What are you owed, and by whom?
I am in a quandary myself. My husband, because of ill health, had to retire early. He was self employed all his life, we could not afford health insurance, and his SS was barely $1,000/month where it has remained the same for 20 years. My own self employment, up and down (mostly) netted me $650/month when I retired at 65, though I continued to work because $1650 is not enough to live on in a state where one's utility bills ran well over $500/month. We have a reverse mortgage to make up the difference, and I've been working part time also. I own the business and have tucked away much of what I've made.
However, in about a year, my husband will need full time care of some sort. And I've been told that what is in my business account will have to spent down before he can get aid. Thereby killing the business in because there will be no capital left to invest in anything to do with the business.
I had a friend whose husband died after NH care on Medicaid. She was then forced to sell the house and give 50% of net cash, sell all his tools and anything of value and give 50% back to Medicaid, leaving her with next to nothing to live on. Her kids wouldn't take her in. So she lived her remaining days in subsidized housing.
Now that is where Legal becomes Unethical!
That being said..my husband has PK, dementia and post-polio syndrome and still at home. I had to retire early(62) to take care of him. If he needed to go into a nursing home I would end up living in poverty the rest of my life - how is that fair? I worked hard and saved my $$ to enjoy retirement when it got here. The way our country takes care of the elderly is a disgrace and looks like it won't get better any time soon. NH costs are outrageous, they can charge what they want because they know there is a shortage and this too is only going to get worse as the baby boomers age. They just keep these people (most have no idea what is going on) alive so they can get paid, roll them out into a room each day and leave them there asleep or staring into space. This is no way to live and if the person were able to say it would agree. Something has to be done to help these people out, it is not only sad for the person but effects the lives of family members that can't live a normal live either.
According to one way of thinking, family A is hurting the economy by hoarding their income and not supporting growth! To be content, worry about how you are choosing to live, not about others.
One has nothing to do with the other. You do not know the internal workings of that family. You cannot judge.
AND?..why is the whole topic framed in the terms of my needs are greater than yours?
Why isn't the topic framed...why is the top 1% paying far less than at any time in history? And isn't there a direct collection between the crashing middle class and the Largest income disparity in history?
Why can't we all have peace in old age? Because this scheme of drain the most vulnerable dry is in place to enrich the billionaires.
In the famous words of John Adams...."we had better hang together, or we will assuredly hang separately".
Stop grousing about what someone gets in service, and start voting!
Neither spouse is on Medicaid, they are like family "A", and they are very proud, don't want handouts or anyone to spend money but family is not on board with getting them the care needed right now. But they are very concerned about their inheritance.
Just maybe my post was off-topic, sorry. I cannot give details because of their privacy. I just want them to have help soon.
The whole business of ensuring that middle class families cannot pass on the accumulated wealth to the next generation is actually a concept that came around when we moved completely into health care FOR PROFIT. Remember where that money is going....into the pockets of the 1%.
There are more and more schemes to strip the lifetime savings or the middle class and move it into the hands of the investor class. Wealth is flowing up in all these systems.
When will we all wake up and STOP voting against our own self interest?
Meanwhile, privatization means improverishment for more.
Still reading the answers here. Trying to find a moral answer if ever family is at cross purposes, or only for themselves.
At the same time, as each adult child has said: "Oh, there is money".
Money for themselves.
Meanwhile, my elderly both go without proper care.
One was removed from home, his assets and income still going to pay for that home and his wife's care. His wife, without enough care, not enough income from both would be enough for her care. Because, NO ONE has acted on behalf of both parties. In concert, looking at the bigger picture. The delays have been criminal.
This is criminal.
They had their chance to do what is right.
Happy Valentines Day everyone, in advance. Because I am no longer keeping quiet, cannot care for your Mom, and your Dad by myself.
You all have mistaken kindness for weakness, I am coming after you all, without judgment, without hate, without malice, just the facts.
And the Lord himself will set it right.
Kimber166, good for you for saying no to your selfish (sorry, no other word to use!) mother.
My mom's friends saved their money and invested. Now they are able to choose nice senior living / assisted living. These places are beautiful, have transportation to events and grocery stores, on site exercise, beauty parlors, etc.
My mom, on the other hand, spent money she had and more. She got nearly $300,000 when my dad divorced, also worked at jobs that paid great wages for 20 years before she retired. In spite of our advice and encouragement - she saved NOTHING and did not do a 401K. All she has right now is social security. (All the years she refused to save -she said she would live on SS). Now she sees what she can afford based on her social security. Not so nice. Safe, yes, but no amenities. Now she is not so happy.
Her solution - I am supposed to pay the $2,000 per month she needs for the nice senior living/assisted living so she can live with her friends and enjoy that lifestyle. I'd have to earn $36,000 per year MORE pre tax to be able to give her $2,000 per month. She was surprised, outraged, and threw a hissy when I said "no, I can't afford that".
So, while I will help my mom research what she can afford and it is not much beyond the basics, I am not willing to give her any more money. I turned off the tap about 5 years ago when she was constantly short for rent. She made decisions for 50 years of work life - so now she needs to live with them.
This is where I see the save vs spend pinch people - in retirement when they need senior living, in home services, assisted living - but not full nursing home care. What qualify of life will be had in the years when you need to live differently and have assistance.
The people I know who fit family B will take all the help they can and then complain it isn't enough.
Either way, it's a very complicated issue and most fall somewhere in between. It's not for me to judge another. It's legal to do a lot of things that I don't want to do. It's illegal to do some things I think are no big deal. We all draw the line where we see it. Morals and ethics are beautiful to strive for and are at the core personal. To go against your own moral code is always painful.
s needed for medical care
Meanwhile, if you hide, or "shield" if you prefer, your assets from Medicaid you are in breach; and, yes, most people think it is bad faith to be in breach of contract, and most people would call that immoral.