“Is it christian to plan for Medicaid or VA benefits in the future to pay for long term care?”
Here is the objection that some have said about doing any type of “Medicaid Planning” or “VA Pension Planning” to prepare for long term care costs.
“It is wrong for a Christian to arrange his or her assets to qualify for Medicaid or VA Pension — instead the christian should spend his or her own money to pay for long term care.”
In my view, this is incorrect. Let’s take a look at this and then you can reach your own conclusion.
Is it wrong for a Christian to plan for the future to protect against risks?
No. That is simply being smart.
No problem buying car insurance. Or health insurance. Or locking your doors at night or turning the stove off when you go out of town for vacation.
This is why we have retirement plans, we wear our seat belts, and we eat right and exercise — to enjoy life now and protect against future risks.
Remember Proverbs 6:6-8? It tells us to examine how the ants work hard and prepare.
Is it wrong for a Christian to use any type of governmental assistance or get any benefit from the government?
Well, let’s take a look at this.
Do you drive on the roads that the government builds?
Do you enjoy protection from enemies that the military provides and that the police provide which is what Romans 13:1-7 is discussing. Romans 13:1-7 says:
Let every person be subject to the governing authorities. For there is no authority except from God, and those that exist have been instituted by God.2 Therefore whoever resists the authorities resists what God has appointed, and those who resist will incur judgment. 3 For rulers are not a terror to good conduct, but to bad. Would you have no fear of the one who is in authority? Then do what is good, and you will receive his approval, 4 for he is God’s servant for your good. But if you do wrong, be afraid, for he does not bear the sword in vain. For he is the servant of God, an avenger who carries out God’s wrath on the wrongdoer.
5 Therefore one must be in subjection, not only to avoid God’s wrath but also for the sake of conscience. 6 For because of this you also pay taxes, for the authorities are ministers of God, attending to this very thing. 7 Pay to all what is owed to them: taxes to whom taxes are owed, revenue to whom revenue is owed, respect to whom respect is owed, honor to whom honor is owed.
How about education — public schools or public universities?
We pay taxes and we get benefits from the government. That’s the benefit and the responsibility of being in a nation. That’s not wrong — it is right.
“But isn’t it wrong to do things that give you a special advantage in either getting government benefits or paying taxes?”
Let’s talk about taxes first.
Do you claim any deductions?
Mortgage interest deduction?
If you have a loss or high medical expenses, etc. do you report these on your tax returns?
How about your charitable contribution to church — do you report that on your tax return?
Simple — because these items will lower your taxable income. Think about that — “taxable” income. Not simply your “gross” income but your taxable income. The income you pay taxes on.
Is it wrong to do this?
Is it unchristian to pay exactly what you owe in taxes or should you pay more?
Romans 13:6-7 tells us to pay the taxes that are owed:
For because of this you also pay taxes, for the authorities are ministers of God, attending to this very thing. Pay to all what is owed to them: taxes to whom taxes are owed, revenue to whom revenue is owed, respect to whom respect is owed, honor to whom honor is owed.
Paul didn’t say to pay more than is owed — he said “Pay to all what is owed….”
So you might look at a new house — “Should I rent or buy it” and when you run the numbers, it may be cheaper to buy the house and get the tax deduction than it is to rent it.
Is this wrong to do this?
Is this fair or unfair?
Are you cheating the government out of taxes?
Or are you simply following the rules and paying “what is owed to them” as the Holy Spirit directed Paul to write in Romans?
“But it is different to pay as low of taxes as possible — it is wrong to take steps to qualify for benefits”
Let’s think this through.
Suppose you pay taxes to get social security benefits — is it wrong to collect them if you are legally entitled to receive them? What if you are not hurting financially — is it ok to still accept your social security benefits?
What about your dental insurance — if you have a maximum amount is it wrong to get one crown done in December and the other one done in January to maximize the benefit and minimize the out of pocket expense?
Going back to social security — on some versions of social security, you can only make a certain amount of money before losing social security benefits. Is it wrong to work to maximize that money without losing your social security benefits?
Here is a famous quote about paying taxes from 1934 by Judge Learned Hand (a great name, right?):
“Anyone may arrange his affairs so that his taxes shall be as low as possible; he is not bound to choose that pattern which best pays the treasury. There is not even a patriotic duty to increase one’s taxes.
Over and over again the Courts have said that there is nothing sinister in so arranging affairs as to keep taxes as low as possible.
Everyone does it, rich and poor alike and all do right, for nobody owes any public duty to pay more than the law demands.”
Is it wrong to learn the rules on taxes, insurance, speed limits, or other benefits and to follow the law?
No — you are staying well within the rules.
So if the speed limit is 70, and it is safe to do so, you can drive up to 70. That’s not cheating the government out of money because you should get a ticket? Nope — you don’t get a ticket for going the speed limit.
Now if you speed — exceed the rules — then yes you may owe money. You have broken the law and you face the consequences.
You take your deductions on your taxes — that’s not cheating — it is playing by the rules the government sets up.
Did you know if you pay taxes on money now, and put it into a Roth IRA, it grows tax free. It could be in there for 40 years making money. You don’t pay taxes on it.
And when you take it out, you don’t pay taxes.
Is that fair and legal?
Yes — the IRS tells us the rules on IRAs and we follow the rules.
“Yes, but qualifying for Alabama Medicaid or VA Pension (Aid and Attendance) is different!”
How is it different?
Let’s take Medicaid first and then the VA Pension benefits.
Both of these are designed for the specific purpose of helping you pay for the devastating cost of long term care, if you qualify for these benefits.
Alabama Medicaid has its own set of rules — learn them and follow them.
Medicaid has rules on the amount of income you can make. If you make less, even by one dollar, you qualify. Is this unfair? No, it is just the rules.
But what if you make over the income requirements? Medicaid rules allow you to set up a particular type of trust that the extra money goes in and then it is paid to Medicaid.
Is this illegal?
No — Medicaid tells us what to do.
Then there are asset requirements for Medicaid. If you are under this limit, you qualify. If you are over, then you have to “spend down” your assets.
But how do you do this?
You follow the rules Medicaid has laid out.
Is it wrong to follow their rules? To spend money on certain things that Medicaid allows? Nope — just following the rules.
But what about planning ahead of time?
Medicaid says this is legal and fine to do. There are time limits involved (the “5 year look back rule”) and there may be “penalties” involved but Medicaid explains what these are so you can decide what to do.
For example, on the 5 year lookback — Medicaid does not look back for “gifts” more than five years from when you apply. So control the timing on when you apply. Someone might say “But it is not right to have made large gifts of assets 63 months before you apply.”
Why not? That’s the rule that Medicaid has. It could have made the look back rule 70 months, or 150 months, or unlimited. Just like the speed limit could be 20 on I-65.
But it is not so we follow the rules.
How about VA Pension or Aid and Attendance? Again learn the rules and follow them.
It has rules on what a wartime veteran is — what if you barely meet that requirement? Is this wrong to take advantage of this benefit?
Nope — its the same as the person whose military service is one day short of qualifying — it is just the rules and either you meet the rules or you don’t.
How about income? The VA allows us to take certain “deductions” to get our income down to where we qualify for the highest level of benefits which can be over $25,000 a year tax free.
Is this wrong?
Nope — same as taking tax deductions for giving to church.
How about transferring assets to qualify for VA Pension?
The VA says it is perfectly legal and there is no look back period. Congress considered, this year, a 3 year look back but it did not pass. So the law — the rule — is you can give away assets and qualify immediately for the VA Pension.
Now if the rule changes, then you have to follow it. (The VA wants this changed and it may change — if so, then we follow the new law).
Bottom line — we are obligated to follow the rules and the law and if those rules and laws allow us to plan to maximize our benefits, then there is nothing wrong with this.
One final point — churches don’t pay taxes on contributions. There are some who think this is wrong and churches should pay taxes on contributions.
Does the church you belong to pay taxes on contributions?
I doubt it. Because the tax laws do not require churches to pay taxes on contributions.
So stay within the rules and the laws and plan for your own future so you can maximize the benefits that you will receive to help you pay for long term care.
If you would like help in understanding the rules and your options, call us at 205-879-2447 and tell the receptionist you have a question about Alabama Medicaid or the VA Pension or you can contact us online through this website. We look forward to helping you!
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