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Legal Ploys Let Middle Class Get Medi-Cal Nursing Care : Aid: Complex 'estate planning' satisfies eligibility rules, shields assets after death. Some call maneuvers unfair.


A growing number of middle-class elders are using sophisticated "estate planning" techniques to obtain government-funded nursing home care intended for the needy while retaining comfortable homes, expensive cars and hundreds of thousands of dollars in other assets.

Using the advice of attorneys who specialize in such planning, many older people are able to obtain years of nursing home care paid for by tax dollars and still leave substantial estates to their heirs.

The result, welfare officials say, is that increasingly scarce tax dollars meant for the poor are going instead to the financially comfortable.

Government officials are attempting to tighten regulations to prevent abuse of the federal Medicaid program designed for the poor, known as Medi-Cal in California. But lawyers continue to find ways around the restrictions to help clients whose assets are far above Medi-Cal eligibility requirements.

No laws are being broken by such estate planning, but disparate tales emerge.

There is, for example, Robert J. Cervantes, a Montebello man who had about $200,000 in the bank. With the aid of a lawyer, he was able to arrange for Medi-Cal to pay for several months of his wife's nursing home expenses. And there is Richard Burch of Tulare, a poor man who didn't engage in estate planning and is now in danger of losing the home his father left him to Medi-Cal bill collectors.

Kim Belshe, director of the California Department of Health Services, said she is concerned that Medi-Cal has "loopholes that allow more affluent people to have care financed by the taxpayers. Medi-Cal is supposed to be a safety net for the indigent and we need to ensure that our tax dollars are financing care for the truly poor."

Medi-Cal rules, simply stated, say an individual can have no more than $2,000 in the bank to qualify for assistance. There are different and complex rules for couples, and all recipients are allowed to possess certain "exempt" assets.

Shifting Assets

While estate planning is a respected method of organizing assets in old age, experts say attorneys specializing in Medi-Cal law are using techniques to artificially reduce assets of the well-to-do so they can qualify for tax-supported nursing home care. This involves transferring and sheltering assets and spending funds on items such as cars, homes or home repairs that are exempt from Medi-Cal income limits.

At least one law firm in California stages seminars and publishes newsletters on how the middle-class and even the wealthy can qualify for nursing home care paid for by tax dollars.

Besides health care professionals, these seminars attract an audience of elderly people, many of whom have recently learned to their despair that they face staggering nursing home bills that are not covered by either their private insurance policies or by Medicare, the national medical insurance policy for the elderly.

Medi-Cal picks up the tab for 64% of the 103,000 nursing home patients in California. The annual cost to taxpayers is nearly $2 billion.

There are no figures on how many people engage in estate planning to obtain tax-supported care, but Brian Burwell, an East Coast consultant who has conducted studies on the phenomenon for the federal government and the insurance industry, said it is a nationwide practice that has been growing since the 1980s. Areas of high activity, he said, include Los Angeles and New York, where there are concentrations of wealth.

"Medicaid planning is a serious public policy issue, and it is definitely a growing business," Burwell said.

Los Angeles attorney Zoran K. Basich is a Medi-Cal specialist who travels up and down the state giving lectures on how to qualify for tax-supported nursing home care.

At a videotaped session in Santa Ana last year, the flamboyant and assertive Basich tossed teddy bears to members of the audience as he proclaimed that Medi-Cal benefits are not meant only for the poor.

"It is not a poverty program," Basich said. "In fact, it is a planned program. [If] you plan yourself on Medi-Cal, there's no problem at all. The problem is most people don't know that. . . .

"This is something you've paid into all your life [by paying state and federal taxes]," he continued. "You've spent your whole lifetime working and paying taxes."

Basich grinned with pleasure as he told his audience of an elderly woman client who bought a new red Lexus that was considered an exempt asset under Medi-Cal rules.

A home, too, is exempt under Medi-Cal, but after the recipient's death the property is subject to claims by state bill collectors seeking to recover government-paid nursing home costs. There are, however, ways to avoid such claims.

Using exemptions and other arcane provisions of the regulations, Basich said he can--for a $15,000 fee--qualify an affluent elderly couple for Medi-Cal coverage of nursing home expenses, assure them of a decent standard of living and protect their assets and home for their heirs. He said his firm handles about five such cases per month.

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