Medicaid, a vital program for indigent and disabled Americans who need long-term care, is facing a crisis of sustainability. The program, initially designed to assist those with insufficient means, is commonly exploited by loopholes in the system that allow basically anyone to gain eligibility for LTC services through financial planning. This trend not only stretches Medicaid’s resources thin but also raises questions about the program’s long-term viability and its impact on state and federal budgets.
In my time managing Medicaid in a number of states, I observed how the system is abused, often by adult children who care more about preserving their inheritance than caring for their aging parents. Consider a typical Medicaid LTC recipient like Linda Johns, a 75-year-old widow with a current net worth of $750,000. As Linda got older and approached the need for long-term care, her children and a savvy Medicaid attorney worked with her to legally restructure her finances so she could qualify for Medicaid.
Like many parents, she put her children’s needs before her own by giving them $500,000 — a substantial portion of her assets — more than five years before applying.
