Retirement Planning Retirement PlanningRetirement Planning
Advice on how to prepare for life after government.

Poverty Line

I'm feeling a little sting from last week's column. Some readers apparently thought its point was to advocate the idea of hiding your money from the government to qualify for public assistance. I thought a follow-up column might be in order to clarify my position.

First of all, the central point of the column was that people should think about whether they might need expensive custodial or personal care in the future, and if so, how they would pay for it and who would provide it. If you don't have family caregivers, full-time custodial care comes at a terrific price. To receive it through Medicaid, you must spend down your assets to a defined poverty level. (The exact level varies from state to state, but generally is around $2,000.)

Some people who need this type of care will rationalize trying to find a way to become impoverished, even if it means hiding their assets with their children. Believe me, this is a thought that even crosses the minds of upstanding federal employees, given the alternative of writing a $7,000 check every month to a nursing home. It is an act of desperation, not of criminal intent.

The government has made it more difficult to take such actions by implementing a five-year look-back period to see if you have given away any assets before requesting financial assistance for your care. That means you have to start the process of impoverishing yourself long before you actually need care and potentially before you even know whether or not you'll need it.

My father spent the last two years of his life in a nursing home that provided assistance with dressing, bathing, using the toilet and all the other things we hope we never need help with during our time on Earth. He received assistance from Medicaid, but only after we used his Social Security and Teamster's pension checks for his care and drained all his assets down to about $2,000. That included selling the family home and spending allthe savings left after my mother died.

My brother and I received no inheritance, but it was worth it to see my father get the care he needed in a facility close enough for me to visit every day. When his money ran out, Medicaid stepped in and allowed him to continue to get the same care in the same facility. (For more on my father's story, see a series of columns I wrote in 2006, titled "The Long Haul," Part One, Part Two and Part Three.) This week, I opened my copy of AARP The Magazine and found a column called "Love Is (Not) All You Need." Here's part of what it said:

"A look at the numbers reveals just how precarious the system really is. Americans who live to 65 have a 40 percent chance of entering a nursing home during their lifetime. The average stay lasts 2.5 years and costs about $175,000. In 2008, the most recent year for which numbers are available, 9 million older people required long-term care. That number is expected to reach 12 million by 2020 as the boomer population ages. Currently, only about 8 million Americans have private long-term-care insurance, leaving the government to underwrite care at an enormous cost to taxpayers.

"Critics of asset transfers point to the staggering costs of Medicaid -- $333.2 billion in 2007 -- and maintain that those who dodge their responsibility to pay for their own long-term care are gaming the system. But elder advocates say these practices go on because Medicare and Medicaid haven't done enough to support home- and community-based services. Medicaid, in particular, is overly focused on nursing home care, with far fewer resources allotted for home- and neighborhood-based care."

I hope all of you plan for a future that might include a need for long-term care. If you want to leave money to your heirs, thinking ahead might get you to consider a long-term care insurance policy to pay for your expenses and legitimately protect your assets from being spent on this catastrophic expense. For now, this is the best option available for those who are not independently wealthy or already poor.

In the future, I believe we'll eventually see changes to the way we as a country provide services to those needing custodial care. Considering the number of baby boomers who will be aging in great numbers in the near future, there will have to be a better way.

Tammy Flanagan is the senior benefits director for the National Institute of Transition Planning Inc., which conducts federal retirement planning workshops and seminars. She has spent 25 years helping federal employees take charge of their retirement by understanding their benefits.

For more retirement planning help, tune in to "For Your Benefit," presented by the National Institute of Transition Planning Inc. live on Monday mornings at 10 a.m. ET on or on WFED AM 1500 in the Washington metro area.


Tammy Flanagan has spent 30 years helping federal employees take charge of their retirement by understanding their benefits. She runs her own consulting business at and provides individual counseling as well as online training for the National Active and Retired Federal Employees Association, Plan Your Federal Retirement as well as the Federal Long Term Care insurance Program. She also serves as the senior benefits director for the National Institute of Transition Planning Inc., which conducts federal retirement planning workshops and seminars.

For more retirement planning help, tune in to "For Your Benefit," presented by the National Institute of Transition Planning Inc. live on Federal News Radio on Mondays at 10 a.m. ET on WFED AM 1500 in the Washington-metro area. Archived shows are available on

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