... to think good thoughts about humankind, which always brings to mind my absolutely favorite short and revealing quote of Will Rogers (http://www.willrogers.org/wrbio.html ). For those of you of the short-memoried Internet Generation, Will Rogers was a Cherokee-turned-cowboy-turned humorist of the 1920s-1930s (until his death in a plane crash in Alaska in 1935) justly famed for a certain laconic, ironic humor. One favorite (of mine): “I am not a member of any organized political party. I’m a Democrat.”

But the one that goes with the season is his comment on Trotsky – viewed then by many with the same warmth and affection that most Americans have now for Osama Bin Laden: “I bet you if I had met him and had a chat with him, I would have found him a very interesting and human fellow, for I never yet met a man that I didn't like.” Saturday Evening Post (6 November 1926). I never yet met a man that I didn’t like. Only someone supremely (but not narcissistically) self-confident and self-knowing could feel that way about others. For someone that secure, knowing his own strengths and weaknesses, no one could trigger a self-doubt or uncertainty that would translate into a dislike to avoid disliking himself. No matter how arrogant or annoying or disreputable or dishonest or cloying someone might be to most of us, it would seem that Rogers could see the other person’s essential humanity and not get caught up in an emotional struggle over whatever that other baggage – to use a term Rogers never would in that sense – his interlocutor carried around. As with my admiration for Lincoln, I hope my appreciation of Will Rogers’ virtues lifts me up, even if I don’t achieve what he did. I never yet met a man that I didn’t like. Wow.

... at Timpano Restaurant, this one focused on married couples and Medicaid post-eligibility estate recovery. Thursday, December 16^th. Call Sanja or go to my handy-dandy new web site (www.ronmlandsman.com) to sign yourself up. No charge. Free breakfast. Great information.

For you non-lawyers out there, I am happy to tell you that a lot of lawyers come to hear what I have to say. It may be the free breakfasts ...

... and gave me a plaque as “Chapter Member of the Year,” whatever that means. Not most handsome, or outstanding, just “Chapter Member ... .” Sigh. Would you believe a celebrity-studded dinner at Kincaid’s, a huge turnout, a standing ovation from almost five hundred awed attorneys? No, huh? How about a hundred at a catered dinner with a few politicians in attendance and two very kind speeches about my good works? How about a dozen sleepy elder law attorneys at a quarterly NAELA breakfast meeting at the basement restaurant at the Columbia Sheraton, and some polite applause?

Jerry Hyman, an excellent elder law colleague in Hockessin, Delaware, wherever the Hock it’s in, wrote:

... yes, the investment returns of insurance companies (and everybody else) are way down (I deal with it every day in my investment management business). But this should be a problem with almost all lines of insurance. Yet I don't hear about insurers struggling with their life, casualty, etc. insurance products.

No, I think it [is] really stupid underwriting--that goes back many years--with respect to LTCI. For MetLife the decision was easy. While it is the no. 2 or 3 player in LTCI, that business only accounts for a tiny fraction of its overall business. That makes it easy for them to walk away from it. It also implies that the volume of policies sold never reached that "critical mass" to allow paying out benefits while still making a profit.

It's a bit like annuities. Insurance companies sell enough of them so that the premiums of those who die young (and never collect on their policies) are enough (and then some) to pay the claims of those who live long.

But, perhaps the silver lining here is that, if the public option (CLASS Act) can get past its initial political problems, it will ultimately garner enough premium revenue to become a good alternative.

And a former Justice Department colleague, now trying her hand at elder law, had this to report:

I [couldn’t get] Long Term Care Insurance [because] pre-existing medical conditions made me ineligible. ...

Here's what I did instead.... I bought annuities that have a LTCI rider. So I can take the money out as an annuity, or use the LTCI benefit, or leave the money to my kids (because some driver took me out crossing the streets in my neighborhood and I was gone in a flash). I don't know exactly how inflation is going to figure in. But since this was all I could get, I'm stuck with what I've got. On the bright side, if I never need long-term care, or don't need much, the rest of the money is still available to me or my kids.

What an excellent solution. Without knowing the actual costs, which would affect my conclusion, at least conceptually this is superb. And another:

[Your Lagniappe] also provided an ‘aha!’ moment. I applied for a John Hancock LTC policy in July. The application process has been languishing since then in an unending stream of requests from the underwriter for more details on this or that obscure note my physician wrote in my records or further information about the results of a routine lab test done a year ago. I was getting more than fed up with the whole silly business and wondering why it was taking months to complete the process of issuing a policy for a healthy middle-aged person, especially since I already have a JH annuity. Then I read your newsletter. Aha!

In two matters that I filed and – when the agency did nothing because it could not figure out what I meant – appealed, the D.C. Medicaid agency has now decided that the “gift and return” strategy is proper under its policy and Federal law.

Under this rule, every person going on to Medicaid long term care benefits can, if they want, protect a substantial portion – on the order of one-half – of the resources they own at the time they undertake the strategy. This is in addition to protecting assets of disabled people under age 65 who choose to fund special needs trusts and those 65 and over who fund an account in a pooled special needs trust. (For more information on pooled trusts, see the websites for Shared Horizons, http://www.shared-horizons.org/ , and the http://www.firstmdtrust.org/

Some background. Congressional policy has long discouraged giving away one’s assets to qualify for Medicaid long term care. Congress tried to make such planning illegal; when that failed, it tried to criminalize giving legal advice about such planning. That failed, too (whew!). But Congressional policy continued to impose a period of ineligibility for long term care benefits for those who sought to qualify by simply giving away some or all of their assets. So, for as many years, we in the Medicaid biz would advise clients how to minimize the adverse effect of that rule by the “half-a-loaf” strategy.

The rule was elegantly simple. Give away assets, lose benefits. The penalty began when you gave away the asset. The length of the penalty was the period of time during which the gifted asset could have paid for your care; if nursing homes cost on average $7,500, then a gift of $75,000 would result in exactly a 10-month period of ineligibility. The look-back period – a statute of limitations – brought in all transfers within three years of the month of application. If you did not apply for Medicaid until more than three years after the transfer, it was not considered at all.

For planning purposes, this was not bad. Suppose you had $100,000 the day you went into the nursing home, January 2005. Your income from Social Security and OPM was $3,500 per month, but the nursing home cost $7,500 per month. You went through $4,000 of principal every month. The transfer rule assumed nursing homes cost $6,000 per month (in your hypothetical state), so a gift of $6,000 resulted in a one month period of ineligibility.

If you wanted to provide for your children a little, and enable them to help you, if they could, with your money, you could give away $60,000, leaving you with $40,000. That would trigger a ten-month period of ineligibility. You would need $40,000 to make up for the shortfall between income and cost of care for 10 months (remember - that was $4,000 per month). Voila! Come November 1, 2005, you qualify for benefits. I hate the analogy, but the only one I could think of that fit was concurrent jail sentences – while you are going through a penalty period, you are spending down what remains.

Enter Stephen Moses, the Scourge of Medicaid Lawyers and promoter of long term care insurance, who got the ear of some Republican congressmen and got some anti-Medicaid planning provisions added to the Deficit Reduction Act of 2005, enacted February 8, 2006. It made three significant changes to the anti-transfer rule:

-- The penalty does not start until the applicant is in a nursing home getting Medicaid level of care “nursing facility services.”

-- The look-back period was extended to five years for transfers on or after February 8, 2006. (Thus, for now, the look-back period is to February 8. 2006. After February 8, 2011, it will be a full five years from the date of application.)

There was nothing to be done about the first two; those are clear and precise and our clients have to live with it. But the “otherwise eligible” is another matter.

The purpose of the “otherwise eligible” requirement was to discourage if not eliminate “half a loaf.” In the example above, the penalty would not start until November, when the applicant was “otherwise eligible” because until then he had too much money (“overscale” in Medicaid-speak). But if the penalty started then, how would he pay for his care? With the $40,000 that has been salted away. But of course that had already been spent. To quote any number of three-year-olds, “Oops!”

Cannier Medicaid lawyers than I (there are plenty out there) developed the gift-and-return strategy, which is almost identical to “half-a-loaf” operationally but not procedurally. It works like this:

We are back to January, but now it is 2010. Give away all $100,000 and apply for benefits; you get a period of ineligibility of 16 months, twenty days. Assuming you have stayed on good terms with your kids, they then return $40,000 to you. You tell Medicaid, which then reduces your penalty to ten months because you got some of the money back; the net gift was only $60,000 for which the penalty is that ten months. You now use the $40,000 you got back to cover the cost of care during the penalty period.

Does that make sense as a matter of policy? Of course not. But does it make sense as a matter of policy that Medicare does not cover such necessary medical care as long term care for the permanently disabled? Of course not. Insane practices are the response to irrational and unfair policies.

The Lincoln Box

The campaign for Vicksburg – a brutal six month struggle against nature as well as military foe – was probably the single most crucial battle of the war. Confederate control of Vicksburg, then on a high bluff above the Mississippi, was doubly important strategically. First, it blocked Union access to Mississippi River transportation, so that farmers in the Northwest could not ship their grain to market the usual way – weakening support for the war in a large and crucial area. Second, it maintained the Deep South’s access via the rail to its only source for food and war materiel, Texas, given the success of the Union blockade of Southern Atlantic and Gulf ports.

Grant had been trying to take Vicksurg since not long after his initial victories at Fort Henry and Fort Donelson in early 1862, thwarted by higher ranking generals who felt threatened by his successes. Lincoln knew enough of Grant to forestall attacks on him – “I need this man. He fights” – but it was a long hard slog to get positioned with the resources to move on Vicksburg.

(Most of you may know, but I can’t help repeating, the quote widely attributed to Lincoln in response to teetotalers who wanted Grant removed because of his drinking. “Tell me what brand of whiskey he drinks,” Lincoln is purported to have said, “I will send a barrel to my other generals.”)

The problem was how to get men and boats at Vicksburg given its commanding position on the river and the lack of fighting ground in the bayous and tributaries that surrounded the city. Between December 1862 and April 1863, Grant made eight – count them – eight extended efforts to get at Vicksburg – against bluffs on one side of the city, by building a canal to get around the blocked northern approach, by boat on different rivers that feed into the Mississippi nearby. All failed. He finally took his army – largely cut loose from its supply line and feeding on the land – around to the west and then to a point about 35 miles south, where he could cross the Mississippi and head north, first toward the state capital, Jackson, and then directly west toward Vicksburg, where ne ultimately prevailed by laying siege to the city.

It worked, partly because Grant and his field commanders – Sherman, McPherson, Sheridan – were so intrepid, partly because the generals facing him were inept beyond words. Had it been Lee rather then Pemberton or Johnston, who knows what result? But it wasn’t.

This summary is drawn from Winston Grooms, Vicksburg 1863 (Vintage Books 2009), a nicely written review of just that campaign. Grooms notes that with the fall of

Vicksburg, the South’s fate was sealed. Jefferson Davis, had he not been blinded by the rabid dislike of Lincoln that had at least since the presidential campaign rendered southerners unable to hear what he actually said, might have brought the war to an end then on terms vastly better, and with losses far less crushing, than eventuated two years later. But that is too harsh on Davis. Just as neither side could end the First World War in 1917, before millions more died, so no politician could have lead the South to forego its need to fight to the bitter end. To be sure, he is correct that Davis did not – like Churchill in 1940 – face a duplicitous tyrant who would sign a deal one afternoon and breach it shamelessly the next morning. But the inability of either side to back down is one of the defects of democracies when they go to war – the two World Wars showed that.

I didn’t unload all of my Administering a Special Needs Trust – A Handbook for Trustees yet, so if you are an SNT trustee – or for that matter, a beneficiary or a relative or close friend of a trustee or a beneficiary – you might find it useful and/or troubling. It is published by the Special Needs Alliance, written by my esteemed and widely admired colleague, Robert Fleming (see www.elder-law.com), and provides an excellent brief review of the most important things the trustee of a special needs trust should know.

To get your copy, contact the ever-reliable Sanja, by calling her at 240-403-4300 x 106 or e-mailing her at sp@ronmlandsman.com

Snooze. As I said last month, I will do it again, glutton for punishment that I am, on Thursday, December 30, but at 8 a.m. I will have just returned from taking my daughter to National (not Reagan, not to me, anyway) Airport, so you may have to put up with some kvelling. (For you linguistically benighted, see http://www.merriam-webster.com/dictionary/kvell)

My plaintive plea for email solicited responses from friends and colleagues. My first high school sweetheart, Sherry Knazan, emailed me minutes after the Lagniappe went out and she raved about it. Let me quote the salient part: “I enjoyed reading the latest edition of your newsletter. They don't come on a regular basis, and as a matter of fact, I can't remember when I last received one, but I enjoy them when they come.”

And the next day this, which I would put in the “Maybe Not Fan Mail” category: “I suppose I got on this mailing list because I once made an appointment to see you, then cancelled it when I found out how outrageous your fees are. Please take me off your mailing list. A busy lawyer wouldn't have time for stuff like this.” Ouch.

But after that, I did get a bunch of nice comments. “A pleasure to read, as always…” (E.W., New York); “Excellent” (D.H., Idaho); “I enjoyed your article on LTCI in your recent newsletter (and everything else in it too)” (R.M., California); “Thanks for the newsletter, and for all your wonderful talks that you give. You're the only lawyer I know who educates us for free” (P.M., Maryland). Hmmm, maybe that’s my problem.

So, with pleading, I got about a dozen-plus responses. Maybe not the Teeming Masses that The Straight Dope reaches, but ... Keep ‘em coming.

E lder and disability law firm – Ron M. Landsman, P.A., is an elder and disability law firm headed by Ron M. Landsman, who has worked in this area of the law since 1983. We represent older and disabled people, their families and advocates. The work we do includes estate, disability and retirement planning, probate, estate and trust administration, wills, trusts and powers of attorney, titling of assets and designation of beneficiaries, protective proceedings (guardianship and conservatorship), special needs trusts and public benefits – Medicaid, Medicare, Social Security, and SSI.

S pecial Needs Alliance – Ron M. Landsman is a Maryland-D.C. member of the Special Needs Alliance, Inc., a nationwide network of attorneys especially knowledgeable about coordinating public benefits and private resources through different kinds of special or supplemental needs trusts. We and our colleagues assist disabled people, their families, estate attorneys and personal injury attorneys in enhancing the resources of disabled individuals – savings and investments, inheritances, settlements or judgments – by coordinating them with public benefits like SSI and Medicaid. We also manage such trusts or advise family members or bank trustees who manage them. For more information on the Special Needs Alliance, visit its website at www.specialneedsalliance.com

P lease share Landsman’s Lagniappe with anyone interested in the elderly and disabled and their advocates. (That’s the whole point, besides the fun I have avoiding work.) You may copy and use anything in this newsletter, but if you don’t credit us at the outset, no fair blaming us later. If you do use anything from the newsletter, please, please, please let me know.

If you would like to get Landsman’s Lagniappe or you would like to change the form in which you receive it or want to be removed from our mailing list, please send an email to newsletter@ronmlandsman.com, or call Sanja Pirsl at 240-403-4300, ext. 106, or fax her at 240-403-4301. No charge; still that same Mr. Big Spender.

I f you have trouble sleeping and are looking for something really soporific, I am available to talk on any number of topics, including some that I know about – Medicaid, Lincoln, planning for disability, Medicaid, planning for the disabled child, Medicaid, and that always lively topic, probate in Maryland and D.C., as well as Medicaid. If you are interested, call Sanja Pirsl at 240-403-4300, ext. 106.

W e hope you find this to be a good newsletter, but it is not the same as legal counsel. A free newsletter is ultimately worth what it costs you; you rely on it at your own risk. Good legal advice includes a review of all of the fact of your situation, including many that may at first blush seem to you not to matter. The plan it generates is sensitive to your goals and wishes while taking into account a whole panoply of laws, rules and practices, many not published and, often, will reflect years of experience and judgment about what works and how and why. Whether it’s worth the cost is for you to decide although, unfortunately, usually not ‘til after the fact. This is just an e-newsletter; some may think an overpriced one at that.