Medicaid Is Not for the Poor — It's for the Prepared with Scott Moen — Full Episode Transcript

Welcome back to the Caregivers Compass. I'm your host, Lindsay Friedman. Today, we welcome Scott Moen. Scott is the founder of Elder Life Group and a senior-focused strategist with nearly three decades of experience helping families protect lifetime assets and legacies. He's an absolute magician when it comes to Medicaid planning and asset protection. Scott has advised seniors nationwide, led multi-state advisor teams, and now partners with professionals across the country like LTCareNav to deliver practical solutions for aging with confidence. Thanks, Scott, for being here.

Thank you.

So, as I said, you're just like this Medicaid magician. You have taught me things that I never knew existed in this industry. So let's start with the fact that most people think Medicaid planning sounds super overwhelming, kind of like a failure. But when we say Medicaid planning and asset protection, what do we actually mean, and how does it relate to real life?

Yeah, that's a great question. I think for most people there is a myth that's probably been going on for at least 25 years — that Medicaid is for poor people, right? But the reality is, if you look at the numbers the government produces every couple of years — it's the Congressional Research Service project on long-term care services in the United States, and that report is done every two years.

What you'll find in that report is that we're spending as a country right now about $400 billion a year on long-term care services. That's everything from home health care to assisted living to skilled nursing. And who are the payers at the end of the day? Between Medicare and Medicaid — Medicare pays a small piece — but Medicaid in general is paying around 70, 75 percent of that $400 billion each year. So what does that tell us? That our money, our family's money, does not last very long in a care setting — whether that's home health care or assisted living or skilled — when the average cost of a nursing home is around $10,000 a month.

Yeah, and that is such a huge number that I think most families cannot afford to pay that and still keep food on the table for a spouse or other family members. But I think people are really scared of Medicaid — like, I'm going to lose everything. I'm not going to have any money to even buy my grandchild a gift, right? And in some cases, those actually can happen. What does that look like? Are there ways for that not to be the situation someone ends up in?

What I would tell people is this: not having a plan actually is a plan. And what do I mean by that? Unless you really create your own rulebook and you actually create a plan, you're going to be subject to the government's rulebook. And what that means depends on whether you're married or single, how much your care is, what your income is, and what your assets are.

Most people do not look for help until it's too late. And what do I mean by too late? They've already spent two, three hundred thousand dollars, and now they're asking questions. None of this really becomes real to anybody until they've written their first $10,000 check to a facility or a $25,000 check for monthly home health care. But there is also this false sense of hope — well, we've got a million dollars, we're fine. And then they don't realize that at $10,000 a month, you start going through your money really quick. And if it's a married couple, what if they both need care? And what's going to be left to take care of the community spouse? Women often outlive men. So our job, when we're working with married couples, is to make sure that the community spouse — the one at home — does not become broke paying for their loved one's care.

And a lot of these situations, when we talk about the community spouse being left at home — I think there's a lot of fear about losing a house. What does that look like in a situation where you do lose a house, versus how do you save your home?

When it comes to Medicaid planning, there are rules that the government lays out in front of us. We really operate in the exceptions to the rules. We know the rules, but we're living in the exceptions to the rules.

Here's a quick example. We can exempt the home at the time of care for Medicaid — but exempting that home for eligibility is different from protecting that home from estate recovery. There's a huge difference between protecting a home for eligibility and ultimately losing that house in estate recovery. The states have become very smart about how they can recover from one's estate. What I do know is that they cannot collect until the second death. So there's often this false sense of hope — and what happens is the children realize it 15 years later when they're settling mom and dad's estate, because now the second person has died and all of a sudden there's a lien on the property for a quarter million dollars.

So what we help people with is: we might be able to exempt the home at the time of eligibility, but now we need to make a plan for how to protect that home from estate recovery. That could be gifting the home to a trust. That could be selling the home and then doing a spend-down strategy on the value of the home. You have to be really careful about how to protect that home. And what you don't want to do — because there are things like capital gains that come into play — is give your home to your son or daughter for a dollar. That's the myth a lot of people have heard: just give the house away. Okay, well, what if they get divorced? Or what if they end up in a lawsuit? Where does your house go? You've got to be really careful. For most people, their home is their biggest asset, or one of their biggest assets.

So I've got so many questions that roll right off of that, but I'm going to start with this one. Say the community spouse stays in the home and the other spouse goes to assisted living. Now you have payments on your home, right? It's not just like, okay, your house is paid off — you still have taxes and all of the stuff that goes along with it. What happens if you deplete your assets to the point where you can no longer actually afford the home?

Yeah, it happens. You don't see a lot of homeless seniors on the streets today, but the reality is that without proper planning, what you just described happens all the time. We work nationally, and we see all the horror stories. We see situations where liens got put on properties and now the family is trying to figure out, is that even legal?

The government lays out rules on what we call spousal asset protection strategies — you get to exempt the home, you get to keep a certain dollar amount, you get to keep some income. But that doesn't apply unless you actually apply for Medicaid. A lot of people think it's automatic. What I've seen so many times is a family spends four or five hundred thousand dollars, and they're already spending down into exempt assets. And it's too late. The money is gone. There are no refunds. You spent the wrong money.

So one of our key strategies for everybody is: one, whether we're going to accelerate financial relief through government benefits — but two, how do we pay for a facility, and what bucket of money are we going to use to pay for the facility? Keeping in mind taxes, capital gains, and whether that asset is exempt. Are we spending the wrong money? Because what does it look like five years from now? Most people, unless they've got a strategist helping them — 99 percent of the time they're going to go to Google, they're going to get very confused, and they're going to spend the wrong money.

And I think people really miss all the misconceptions around Medicaid — even I had a lot of them. So it's really interesting when you talk about the wrong money. Say I came to you with my parents today: they have a house, it's worth $500,000 and paid off, mom needs to go to assisted living, my dad is going to stay home. But it looks like mom is going to be there for a long time, and eventually dad would have to join her. Would your first stop be, let's get the house in a trust? What would you look at to protect both of them?

What we typically do is an intake with the family to identify the assets and identify what the health crisis is that we're navigating. The number one rule is we want to make sure their loved one is safe in a great setting, whether it's home health care or a facility.

We partner with a national group of attorneys. We are not attorneys; we don't try to be attorneys. When you think of Medicaid planning, it is a legal matter — however, it's all financial. At the end of the day, attorneys are not fiduciaries; they are not financial advisors. Their plan is only going to be as good as the financial team they're partnering with. And on our side, the financial side, our plan is only going to be as good as the legal team we partner with.

So in the scenario you laid out, we're going to identify the best strategy. Oftentimes we create a trust and fund it over time — we may not fund it immediately, but we create the trust so that if one of the individuals dies, the trust will then be payable for the real estate. It's a transfer on death — the real estate would automatically get funded into the trust. That's ideal; we do that for everybody. But oftentimes, once somebody's qualified for benefits, we take the institutionalized individual's name off the deed. We have to do deed work to take that individual's name off, and then we can do planning from there.

So is there a difference if I come to you saying, my mom's got these diagnoses, I can tell she's going to need care five, six years from now — versus, hey, my mom needs care today and I forgot to do this? What do those outcomes look like?

It depends on the state, because we want to apply all the exceptions to the rules. I'll give you an example. In Wisconsin, which is our home state, for a community spouse — husband and wife — in crisis we can protect about 100 percent of the assets. But we also need to navigate the rules in place with the facility they're in. If they've signed an agreement for two years of private pay, we have to account for that. Some require around three years of private pay, or maybe a year. We have to work around those numbers.

At the end of the day, what I always tell people is that in a crisis, sometimes we are limited by the legal documents they have in place. If we have a single person and we don't have good legal documents — statutory forms — we're going to be very limited in what we can help that individual with. But if we got there early enough and they worked with our legal team, we're going to create what I call nuclear-powered powers of attorney. What does that do? It gives the agent the authority to do planning — create trusts, divest to trusts, create penalty periods, give assets away. That allows us the flexibility to do real planning.

At the end of the day, we always tell people: for single people we can pretty much protect about half of the assets in a crisis. For a married couple, we can push that to 75 percent, oftentimes 100 percent depending on the state. But if you get into a pre-planning situation five years ahead of time — yeah, we can protect the majority of the assets and make sure that money is set up as generational wealth for the kids down the road.

And when you say generational wealth and Medicaid in the same sentence — I think that is something nobody puts together in a Medicaid situation.

Well, here's one thing to consider. Our health does not discriminate. There are over 400 different types of dementia. If that strikes a loved one — does dementia really care about how much money you have? No, it doesn't. You could spend a half million dollars on your care, you could spend a million, or you could spend a quarter million. How long you can take care of your loved one is basically based on your net worth.

When people turn 65 and retire, they all think about it — I'm going to get the sailboat, we're going to travel around the world. And then they realize they've been retired a few years, they didn't spend their money, their health conditions deteriorate — and they don't buy the sailboat. They don't travel. So they're sitting on a nest egg.

But if you had to ask them — would you want all your money to go to pay for your care as you age? Or would you want that money to go to your favorite charity, your loved ones, your grandkids? What choice would you want to make today, if you could be in control of that choice? Ninety-nine percent of the time they're going to say, I want to make sure my money goes to my family. So all our planning does is provide options. We call it putting a stop-loss into your planning. If you're a day trader, it's about putting a stop-loss on your plan. If I have a million dollars, I'm willing to spend a quarter million, but I can't spend more than that on my care — because my wife might need care down the road too. So we build their numbers into the plan. That's not what I want to do — it's what they tell me is important to them.

You just debunked the biggest myth ever in Medicaid — that Medicaid equals poor, instead of Medicaid equals smart financial planning. I hope everyone really hears that, because you can always come and have a great conversation with Scott — I told you, he's a magician. So — you even talked about crisis planning, which means not the five-year lookback. Why is everyone so afraid of this five-year lookback if there are ways to plan in crisis?

Because I look at it as what I call a five-year look forward. The government calls it a five-year lookback, and what that really means is if you gave away assets in anticipation of filing for benefits within the next 60 months — five years — you're going to be penalized on what you did. Okay. That doesn't mean a penalty is bad. What is the penalty? How do we account for the penalty? We often plan for it.

But the other scenario is the look forward. Nobody talks about the look forward. The look forward means we're going to do planning today — maybe we're financially fine, maybe we are healthy today — so let's go ahead and do a plan, so five years from now we have options on how we pay for care. I like to call it the wait-and-see.

There are two things about Medicaid. For most people, they're in one of two categories: they're physically qualified but not financially qualified, or they're financially qualified and not physically qualified. It's about navigating where they are in their journey, putting the plan together, and at the end of the day giving them options — so when things get out of control, when the cost of care goes from $3,000 a month to $18,000 a month, they're not scrambling trying to figure out how to pay for it.

At the end of the day, if you don't have a plan and you follow the government's rulebook, you're going to go broke in the process. You just will. The average person will exhaust their life savings within two and a half years of entering a nursing home. That's the average, and that's pretty significant.

Why I'm passionate about this is because that actually was my grandparents. They didn't have a plan, and I watched them spend everything on their care. Not that I was greedy, looking for an inheritance — but that's not what my grandpa's plan was. He was an entrepreneur, a business owner. He owned multiple gas stations, retired at 55, lived the American dream — and then spent all of his money on him and my grandma in their retirement, on long-term care. And you know what? My story is a lot of families' stories as well.

So it sounds like there are a lot of ways to plan — even if you haven't planned in advance. You and I are always trying to convince people: plan early, and your plan can change. Have a plan and keep working it. But we know most people aren't doing that yet, so it's nice to know that if you haven't planned, there are still options. But where is too late? Where's the point where you're like, hey, I'm sorry, I just can't help?

That's a great question. Sometimes we do run into too late. A lot of people, when they get down to their last $50,000, that's when they start thinking, oh geez, how do I do all this? For me, where it's too late is when we didn't start — when we don't have good legal documents. A lot of agents — the person in charge of the finances for that individual — if the documents are not good, they have very few options. And we do run into that a lot.

We're very mindful of that because I have years of horror stories of how things weren't handled properly — like telling somebody bad news. Because I look at it like this: we can almost always fix what's been done. I'll give you an example. We had a client who had gifted assets. They didn't anticipate being in a facility, they went to the ADRC, they gave away assets — and they didn't qualify for care. Well, we can undo everything they've done. They gave their house to their kid? Let's undo it. Let's turn it back. Let's give it back to mom and dad, and now we can do planning from there.

With the right legal documents, we can pretty much undo anything that's been done. But if the legal documents are not good, we're very limited. And that is because this is America — we all have rights. Unless you're giving somebody the authority to act on your behalf, no one can act on your behalf. That's when we've seen guardianship — a court appoints a guardian for an individual. That's kind of when it's too late.

Yeah. And it's so unfortunate, what happens when you're too late. I'm sure you've seen so many bad situations. So if people are listening right now — is there a too early? Is there a time when it's just like, okay, you're 45, I don't know what you're thinking — but is there a too early?

No. Here's the thing. I started in this industry back in the early 90s, and back then we probably had a hundred companies offering long-term care insurance in the United States. Fast forward 30 years — there's only a handful. You could count them on one hand, the insurance companies offering long-term care.

Today it's really more of a hybrid scenario, where people can have their cake and eat it too. If you start early enough, we can really solve three issues. Where does anybody really want to have their care? Probably at home — that's going to be the future. So let's account for that. If you're early and you start accounting for this, leveraging your money into insurance is always going to be your best option, and it's always going to give you the most flexibility on how and when you're going to have your care.

The future is at home. Your caregiver might be your loved one, it could be an RN, it could be somebody you pay — but we need to create the money to pay for that. If you were a government worker, you probably have long-term care insurance. If you were a schoolteacher, you might have it. But everybody else in the general public who is 50 years old right now — they have nothing. What they're seeing their parents go through is their aha moment. So we get a lot of calls from somebody 50, 60 — hey, I need to get some long-term care insurance.

The old-school policies were: you pay a premium, and if you need care, great — elimination periods, and you could only get the care in a facility. There were no home health care benefits. Today's hybrid policies let you have your care at home, with very small elimination periods. But here's the catch — what if you don't need the care? What if you just die? Today's policies are geared to give a beneficiary all the money you paid in, back. Or what if you did it at 50, and all of a sudden at 75 that sailboat I mentioned really is something you want to do? Hey, I've got 60, 70, 80 thousand in my long-term care policy, but I really want to buy a sailboat. Yeah — cash the policy in, get all your money back. That's what I mean by have your cake and eat it too. If you're early, you're going to have nothing but options in the future.

And I think that's super interesting, because when I've talked to people, long-term care insurance kind of has a bad rap — like reverse mortgages have a bad stigma. And I think a lot of it is that a long time ago, they earned their bad reputation, right?

They did. To defend the insurance companies a little bit — they had no idea what they were getting into. Long-term care insurance is not mortality-based; it's based on your health, which has nothing to do with mortality. I have clients that are 50 years old in assisted living. People can't fathom that. You're telling me people are 50 years old in assisted living? Absolutely. There are a lot of health conditions that are not covered by health insurance. MS is a big one — we have lots of clients that are 50, 60, with MS, in assisted living facilities on government benefits.

The insurance companies obviously had no clue how to price this, and a lot of them went belly up because of the claims. They didn't anticipate that assisted living in 1997 was $1,200 a month — nobody anticipated that was going to cost $9,000 in 2026. Or memory care: nobody realized that memory care in 1997 at $3,500 a month would, in 2026, commonly be $18,000 a month. The insurance companies underpriced the product, and a lot of them went belly up in the process.

So when you say that — now I think we're going to scare people about the cost of long-term care insurance. So one, where do you see that pricing falling? And are there other options to a high-priced product?

I think what the carriers have gotten really good at is they have experience now — they have the data, and they've priced in what things are going to cost in the future. One thing they learned in this process was how long a community spouse will live. A lot of what we see today is based on reimbursement. The carriers have gotten a lot smarter. There are still very few in the space, but the hybrid policies today are the future, in my opinion. It's lumped into life insurance, which is mortality-based, but they've put in per diems on the maximum you can get out of the policies.

States have tried things too — a lot of states said, we're going to have a long-term care mandated plan. They tried that. States have had qualified long-term care plans; those were underpriced as well, and they didn't get adopted by the masses. But at the end of the day, if you have a plan — whatever your plan is — at least you are proactive. It may not work perfectly, but at least you made a decision.

What I think went wrong is my grandparents' generation didn't talk about this stuff. Talking about dying, talking about nursing homes, was not a family dinner-table conversation. We never talked about our health. Today, that's all we talk about. It's still a little bit of a morbid, taboo subject — but I think with companies like yours, and what we're seeing on the education side, people are becoming a little more comfortable having these conversations, and having them early.

And I hope that's what we'll leave everyone with, because I could talk to you for hours. I learn so much every time you and I have a conversation, so we'll do this again. But again — planning is key. For everyone listening, reach out to Scott, because he truly is amazing. Have that consultation. Come to LTCareNav — we'll get you your first plan and then get you in touch with Scott. Thank you so much for having the conversation today.

Yeah, thank you, Lindsay. I really appreciate it.