Clients ask financial planners ‘make me poor’ to be eligible for Medicaid
A counterintuitive trend is popping up in financial planning: clients are asking their advisers to “make them poor”, so they can qualify for the federal health care program Medicaid.
A survey released by Nationwide Financial found that half of the 500 financial advisers polled in July had a client who had considered this strategy. The main motivator was preserving their children’s inheritance.
Experts agree that if a client makes this request, the first move would be to try to talk them out of it. Most are unaware of the lack of choices and limited care provided through the low-income health program.
“The only clients who should be aiming for Medicaid are the ones who truly expect to need it. Everyone else should be reallocating their assets, buying long-term care insurance and holding strategy meetings with their families,” CNBC reported.
Many people who are illicitly seeking Medicaid coverage have gifted all their money to their children by way of a trust, with the understanding that the kids will use that money to support them.
The government, however, is looking for these types of trends to try to prevent abuse of the system. If they have seen that you have transferred assets within the last five years, they will delay the Medicaid application, based on the amount of the assets transferred.
Advisers insist that this is not a great way to plan for the future and insist other option like long-term care insurance. With health care costs continually rising, some see this as a practical and affordable option for their future.
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