Legal Welfare Fraud Among Middle-Class Families

Abstract

The Medicaid program was enacted in 1965 for the purpose of providing federal cost sharing in the payment for medical services for the indigent. Although there are major differences among the states in eligibility criteria and benefits, the federal law requires that benefits include payment for long-term care services. The article notes that certain provisions of the law enable middle-class individuals to transfer assets and to use other means of qualifying for Medicaid. These practices, especially Medicaid estate planning, enable middle-class persons to retain their assets in their families rather than “spending down” to qualify for Medicaid benefits. This article argues that these practices constitute a form of legal welfare fraud. The reality of the long-term care provisions of the Medicaid program can be seen as backfiring in ways that undermine the intended purpose of the program and that have negative consequences for the general social good.