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Recently one of our subscribers wrote in asking for ideas on overcoming Medicaid Planning Attorneys massive marketing campaign attempting to convince seniors that Medicaid is the answer to their long-term care needs. I thought this was an excellent question, in fact I felt it was such an excellent question that it will be the topic of our Sales Tip this month. Thanks to Ann A. for the question.
The strongest way to address the Medicaid Planning issue is with facts. As with many other objections, most clients and prospects haven't really completely thought through the issue. I will offer you two approaches that I have found to be effective for overcoming this objection.
Before we begin, if your prospect resides in a Partnership state, simply sell him or her a LTCI Partnership Policy. This is exactly the issue that Partnership policies were designed to address - the protection of personal assets in the event you need Medicaid. If the prospect is trying to get out of paying for long-term care all together, which many times is the case, that's another story.
First in my experience I have found that if and when Medicaid Planning becomes a consideration, the prospect falls into one of two categories:
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The prospect mentions Medicaid Planning but really has no idea what it entails and is merely using the topic as an excuse (or objection) because it keeps him or her from having to make a decision about long-term care insurance; or
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The prospect has actually explored Medicaid Planning and is seriously considering it as an option.
The most effective way to deal with either prospect is through a detailed discussion of the facts. I take time to fully explain exactly what Medicaid Planning will mean for the prospect and work through some family and caregiver issues which the prospect has mostly likely not discussed in any depth. Begin by explaining the income and assets requirements; these vary from state to state and some state requirements are much lower than others, meaning the prospect will have to divest himself or herself of more assets. Make sure you have the current numbers for your state before speaking with your prospect. (Login to SellingLTC.com and select LTC Basics and then Medicaid for a general review of how these work.)
After I explain the income and asset limits to the prospect, I explain that he or she must "spend down" or divest themselves of assets which exceed those limits. And even after doing so, he or she will still be subject to what is known as a "look-back" period of 36 months. If the client needs care before the look-back period has expired, there could be a significant period of time where Medicaid does not pay for care. The "penalty period" is calculated based on the amount of money the applicant divested. (The Medicaid review in the LTC Basics module explains the look-back penalty in detail.)
Once I am sure the prospect fully understands the financial issues, I then ask the prospect how he or she intends on divesting themselves of their assets. Most plan on passing the assets on to their children. So now I explain the possible pitfalls a decision like that could bring. I do so by asking questions.
Mr. and Mrs. Client, I am sure your attorney explained that if you give your money to your son or daughter, that money becomes theirs. period. If they choose not to give it back for any reason or they spend all of it, you have no recourse whatsoever. Was that clearly explained to you?
Further if your son or daughter should go through a divorce, your child's ex-spouse could likely end up with half of your assets. You were aware of that correct?
Additionally, if your son or daughter were sued for any reason, your assets could be lost that way as well. Or the assets could be seized because of a tax problem. Were you aware of that? Sometime the risks of losing your assets, once you have divested yourself of them, far exceed the gain of Medicaid paying your long-term care benefits.
Many prospects decide at this point that maybe Medicaid Planning is not all it's cracked up to be and are receptive to exploring how long-term care insurance can help them be better prepared. However, if your prospect is determined to use Medicaid Planning, now is the time to show how long-term care insurance can take the guess work out of ensuring you meet the look-back period without having to pay a penalty.
Explain to the prospect that by purchasing LTCI, he or she can hold on to his or her money up until the very time he or she actually needs long-term care. Then the prospect can turn it over to the children without having to be concerned about the look-back period. Since the look-back is 36 months in most cases, the prospect can simply purchase a 3 year-plan (higher if needed) to cover the length of the look-back period. The prospect can then pass their assets on to their children and rely upon the LTCI to meet their care needs during the 36 month look-back period. When the LTCI runs out, the prospect can file for Medicaid.
Finally, one other aspect generally not discussed by Medicaid Planning attorneys is the issue of quality of care. If you start out receiving care paid for by Medicaid, you will likely be placed in a full "Medicaid Facility." Medicaid Facilities currently receive about 60 cents on the dollar for care, so you must ask the question - if proper care cost $1.00 to provide and a Medicaid Facility receives only 60 cents, wouldn't it stand to reason that the quality of care would be reduced by at least the same percentage, if not greater? It may seem like a pessimistic view but in many cases, you do get what you pay for. Also, it is a matter of what may be available at the time you need care. The only available location may not be close or convenient for your family.
The majority of private pay facilities reserve a small number of beds for Medicaid patients. However, they are generally reserved for their private pay patients who have run out of money, not Medicaid patients walking in off the street. And even if they do allow Medicaid patients who were not former patients, it is a question of bed availability at the time you need care. So any prospect who believes he or she will be able to have Medicaid pay for their long-term care and still receive the same quality and level of care private pay patients enjoy is likely not living in reality. Have them call around to several facilities, tell them they are on Medicaid and they need a bed and see what's available. Then go visit the facility and see how they like it.
The options are clear. The prospect can look to LTCI to protect his or her assets in order to pass them on to his or her children. Or your prospect can look to LTCI as a means to help him or her effectively manage the spend down and look-back period in order to qualify for Medicaid. Either way, LTCI is still the answer.
Good Selling!
Phillip W. Sullivan
President,
SellingLTC.com, LLC
Providing LTCI Sales and Marketing SolutionsT
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