A Nationwide Financial survey released Dec. 6 found 42% ofadvisers said their clients were interested in divesting themselvesof their wealth, like passing their assets on to their children, inorder to qualify for Medicaid.

Clients who intend on “intentionally impoverishing themselves”are taking “pretty extreme measures” to plan for long-term care,John Carter, president of Nationwide Financial, told AdvisorOne on Tuesday.

“The new age of retirement planning needs to include plans foraddressing out-of-pocket expenses and long-term care.” Advisorsneed to help their clients develop a “more holistic plan,” headded.

Harris Interactive surveyed 501 advisers on behalf ofNationwide. At least half of respondents' clients have $250,000 ormore in investable assets.

That so many people appear to be interested in giving awayconsiderable assets in order to qualify for government assistancewas surprising, Carter said; especially so in light of an earlierNationwide survey conducted in July when pre-retirees listedmaintaining control of their assets as one of their topconcerns.

“It's ironic that half of advisers have clients who would giveup control,” he said.

Over one-third of advisers say their clients don't understandlong-term care costs, and just 31% say their clients understand thelong-term care options that are available to them. One thingclients who are thinking about “Medicaid planning” may notappreciate is just how much they have to give away to qualify.

“They have to prove they are impoverished,” Carter said. “Inmost states, that means they must have less than $2,000 with afive-year look-back period.” Medicaid is a useful option for thepeople who need it, Carter said, “but it was never intended to payfor long-term care for people who have assets.”

Giving away enough assets to become eligible won't mean clients'long-term care needs are covered, at least not in a way they may besatisfied with. They may find their options are more limited thanthey expected, Carter said.

For example, for clients who want to maximize their time intheir home, if they use Medicaid coverage for long-term care needs,many states don't cover the types of care they would need, such asa home health aide.

That's assuming they become eligible. “If you've given all yourassets away and Medicaid deems you ineligible, it's difficult tochange your mind and get it back,” Carter pointed out.

It's also important to recognize the effect the Affordable CareAct will have on Medicaid, Carter said. “In 2014, more Americanswill be eligible for Medicaid. If this is what you get today, Ican't imagine you'll get more [in 2014].”

But why are investors with significant assets even consideringusing Medicaid for long-term care coverage?

Carter said it's a combination of several factors, some of themfamiliar. “Corporate retirement benefits are shrinking,” he said,“and people are living longer. The cost for chronic care is rising,and families moving apart reduce the availability of home healthcare. Investors owe it to themselves to explore opportunities.”

This article was originally posted at AdvisorOne.com, a sister siteof Credit Union Times.