Since when does a nursing home require that all assets be given to them, including life insurance policies before going on Medicaid?  Why should they get every penny while the person is alive and after they die too?

You ask an interesting question from both philosophical and policy points of view.

First, we should clarify that the nursing home itself only gets the resident’s assets to the extent that they are spent down paying for the resident's care. Once they are gone, Medicaid will pick up the cost of care. Medicaid is a joint federal and state safety net program that provides health care coverage, including nursing home care, for the indigent. In the absence of any other program, it has also become the main source of payment for nursing home care for both the poor and the middle class.

While Medicaid only kicks in when the nursing home resident has run out of other funds, the rules do provide some exceptions. For instance, the spouse of a nursing home resident may keep the couple's house plus about $110,000 in savings and investments. Assets may be transferred into trust for children or others with disabilities. Other assets may be protected through careful planning.

The philosophical question is whether people should have to spend everything down before they can expect help from government to pay their long term care expenses, and what planning techniques should be permitted. Life insurance, after all, is simply an asset, but one that is worth more after the insured passes away.

The political question is how government should come up with the money to pay those costs. If the life insurance policy is not liquidated, its owner will qualify for Medicaid sooner and federal and state governments will have to begin paying sooner. The question is how should they raise the money to pay these costs. Options available include (1) lowering the reimbursement rate to nursing homes (which almost has to have a harmful effect on the quality of care), (2) raising taxes, (3) borrowing -- in other words, let future generations pay, or (4) cutting government expenses for other programs.

None of these options is very appealing. It would be terrific, however, if we could have a straightforward national conversation on long-term care policy – what government should pay for and how it should come up with the funds to do so.

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Harry Margolis founded Margolis & Bloom LLP, a six-lawyer Boston law firm in 1987. He has been a designated “Super Lawyer” since 2005 and is Founder and President of ElderLawAnswers that supports seniors, their families and their attorneys by providing various online tools and resources.

My mother's (second) husband is ill.  All of their assets -- home and stocks/bonds/annuities -- are in his name only.  We contacted an elder care attorney to start the Medicaid application/asset transfer & preservation.  I understand it's a rather complicated and time consuming process.  Can you please give me a ballpark figure for these services (we’re on Long Island)?  How is the attorney's fee is collected i.e. total upfront, payment in thirds, one half, etc.?

Attorneys charge differently, so you will have to ask.  But most elder law attorneys have moved away from charging by the hour towards a flat-fee model that reflects both the amount of time and the expertise needed to complete the needed work.  They may charge a low fee or no fee for the initial meeting, and then quote a higher fee to complete the work once you’ve agreed what needs to be done.  At that time, they may ask that the entire fee be paid up front or a portion up front and the balance upon completion of the contemplated work.

Medicaid planning and Medicaid applications consist of a mix of elements.  The planning piece takes the expertise of an experienced elder law attorney, but may not take considerable time.  The implementation of the plan and the Medicaid application can be time consuming, though most of the work may be completed by an experienced paralegal.  In addition, fees vary considerably around the country.

In short, you will need to ask the elder law attorney, though he or she may not be able to quote a fee until after an initial consultation.

• Read the Six Ways to Help Parents with their Finances

Harry Margolis founded Margolis & Bloom LLP, a six-lawyer Boston law firm in 1987. He has been a designated “Super Lawyer” since 2005 and is Founder and President of ElderLawAnswers that supports seniors, their families and their attorneys by providing various online tools and resources.