by Michael Ettinger, Esq.
I am unsure how many of you have run into this scam. I have seen it off and on for the last few years and think all should know about it. These companies that flog Medicaid annuities have a deal going with assisted living facilities that essentially says this. We will advertise and promote VA benefits to seniors. When they call us we will refer them to your facility provided you recommend our services, for people who come to you, in assisting them in the VA application (free of charge) and for financial planning. The company is actually in the business of selling Medicaid annuities and they give out Medicaid advice consistent only with the one product they have to sell.
Here is what happened in an actual case in my office recently. Client was told by the assisted living facility to contact the VA assistance company to help “expedite” the process. Company told the client it would take three months to get benefits. It is now nine months and nothing has been received by the family. Client was also told that they did not have to do anything now to protect assets because they could purchase a Medicaid annuity if and when she had to go into a nursing home. Turns out that client has rallied nicely and will be staying in assisted living for the foreseeable future. Family is now setting up a Medicaid Asset Protection Trust (MAPT) but nine months later than they should have but for the poor advice received by the annuity floggers. But also consider this: had the client needed nursing home care, it turned out that the HCFA life expectancy was only 5.5 years which the client, in this case, might have well outlived. The client was never told about the requirement that the annuity be actuarially sound (i.e. all the money had to be paid back to her within the 5.5 years) and what that meant or what the alternatives were. Client, in this latter case, would have been better off with a gift and loan strategy.
The client will be meeting with the assisted living facility next week and sharing this information with them but the lesson for all should be that a New York Elder Law attorney should be consulted when disability occurs or is threatened in order to get all of the options on the table.