Redkey Gordon P.C.

Unless You Are Very Poor or Very Rich, You Need Long-Term Care Insurance

As fewer companies write long-term care policies, the premiums have increased. But unless you are wealthy enough to pay for your own long-term care or poor enough to qualify for assistance, you need an LTC policy.

Paying for nursing home care or other long-term care is as difficult for many people to discuss as death and dying. And with the Baby Boomer generation retiring, nursing homes becoming increasingly crowded and premiums for long-term care insurance policies on the rise, it is time to have that difficult conversation with family members and loved ones. Being able to pay for a LTC policy without sacrificing retirement funds is a real challenge, especially now that LTC premiums are on the rise.

When people purchased their policies 10 to 15 years ago, nursing home costs were about $150 or $200 a day; now typical costs are closer to $400 a day, or $12,000 per month.

The expense incurred by the insured going on claim has caused the long-term care insurance industry to downsize. Those companies still offering policies are bumping up the premiums amid the rising cost of long-term care.

What the middle class doesn't know is that there is no plan for them. They can get their Social Security and use Medicare. They may believe that they're covered for old age, but it won't be enough. A long-term care policy must also be kept and not allowed to lapse.

The high cost of long-term care can result in many folks relying on family members. These people struggle to handle their jobs and care for their parents at the same time. And in the event that issues develop that put a person beyond home care (like dementia), the patient will end up facing astronomical healthcare costs. In many cases, the only other option is Medicaid, which covers the cost of care when an individual becomes financially eligible which varies somewhat from state to state with certain federal requirements. An elder law attorney can help you determine whether you are eligible.

Whether you need a long-term care policy and can afford it depends on a family's health history. But like anything else, it's insurance—it's a hedge: you may not ever use it. When you look at the numbers, even with increased policy premiums, you're still going to be better off at the end of the day by having it.

There are only a few absolutes in life. In addition to death and taxes, one such absolute is that most people will at some point in their lives need long-term care. The best way to deal with it is to speak with your family and meet with Robert A. Gordon of Redkey Gordon Law Corp, an experienced elder law attorney before you are at a crisis point.

Reference: Buffalo Business First (November 23, 2015) "Finding ways to afford long-term care"

Make Downsizing Part of Your Retirement Plan

Once upon a time, we all visited Grandma and Grandpa at the family homestead, and the siblings and their own children would pitch in to help care for them and their home. Times have changed, and now it’s more likely that Grandma and Grandpa live in a modern condo.

A reporter shared his personal story about his parents, who are in the early stage of retirement and have wisely decided to leave their old five-bedroom, single-family home behind to move into a smaller two-bedroom home as part of their retirement plan. In the Chicago Tribune article, “Don't want to burden your children? Plan now,” he candidly shared that the old place was in need of a lot of work. Now his parents live in a smaller new home in a neighborhood where they can walk to everything instead of needing to drive. Even better, friends and family live close enough to continue their relationships. Sounds perfect – yet it wasn’t an easy transition.

Downsizing is emotionally and logistically difficult. It is wise to do so while you are young, healthy retirees. In more traditional times, older folks would be cared for until the end of their lives by children and extended family. However, times have changed.

Part of this changing perspective is from "the triple-decker sandwich," where baby boomers are facing retirement themselves and have to also care for their elderly parents—plus manage relationships with their own children.

The number of Americans needing long-term care is expected to double in the next 30 years, and a recent study of Medicare patients found that out-of-pocket costs at the end of life were highest for patients with dementia. These people require help with daily living, often for years—most of whom aren’t covered by public programs.

Here are some ideas on how to address this issue:

Downsizing. If you're in a large, expensive home in a car-dependent neighborhood, downsizing now lets you limit expenses while maintaining independence longer. Proximity to family and friends is also very important. Even though 89% of respondents in the survey said they'd wanted to stay in their current home, they still found the option of a smaller home to be much more preferable to a nursing home or assisted living.

Invest in long-term care insurance. If you want to be cared for in your home, find an insurance policy that covers that type of care as part of your retirement planning. The younger and healthier you are, the cheaper these policies are going to be.

Bring the entire family to meet with an estate planning attorney. There are discussions you’ll need to have about passing wealth down through the generations, inheritances and estate planning. Robert A. Gordon of Redkey Gordon Law Corp, an experienced elder law and estate planning attorney will be able to help the family.

Reference: The Chicago Tribune (November 14, 2015) “Don't want to burden your children? Plan now”

The Growing Specter of Guardian Abuse

The traditional and expected role of the court appointed guardian is to protect and look out for the best interest of the individual who they have been assigned to care for. Sadly, there are a growing number of cases where professional guardians, those who are not related to their wards, are taking advantage of their elderly wards, decimating estates and causing unnecessary hardship.

Guardianship is a fairly straightforward and basic function. A person who is not able to handle her or his own affairs, for any number of reasons, is assigned a guardian by the court, who is to act on their behalf for financial, medical and care-taking purposes. The guardian is charged with putting the interest of their ward first, and the guardian is entrusted with a great deal of responsibility.

However, as the Wall Street Journal reports, in "Abuses Plague Guardianship Systems Across the Country," the financial abuse of elderly people by guardians is rampant throughout the United States.

Court appointed guardians with no family relationship to the elderly wards too often act in their own interests and deplete the wealth of the wards.

This problem is mostly avoidable through estate planning. Part of a good estate plan is planning for end of life issues and getting a general durable power of attorney and a health care power of attorney. With those two documents, you can appoint someone you know and trust to look after your financial and medical affairs in case you are ever not competent to do so. Doing that can often make the appointment of a guardian unnecessary.

Even if a guardian is necessary, a court will likely appoint the person you have already designated as trustworthy whenever possible.

Do not fall victim to an abusive guardian.

Schedule an appointment with Robert A. Gordon of Redkey Gordon Law Corp, an experienced estate planning attorney and get the documentation that you need to make your own decisions about who should look after your affairs if you are not able to do so.

Reference: Wall Street Journal (October 30, 2015) "Abuses Plague Guardianship Systems Across the Country"

Get Ready for The 2016 Medicare Mess

2016 has the potential to become a disaster if our government does not act soon. Picture this: nearly one third of all Medicare beneficiaries will face a 50% – you read that right – increase in their Part B premiums in 2016. More than two thirds will have ZERO premium increase. Some beneficiaries will have the same monthly premium in 2016, while others will see a $50 monthly increase. That's a big bite out of a fixed monthly income. Two expected results: more seniors will apply for Social Security benefits earlier than they had originally planned and state Medicaid programs will see bigger than usual bills.

As a direct result of complex relationships between Social Security and Medicare and a number of other unforeseen issues, 2016 will be an expensive year for some seniors, according to Forbes' recent article, "Untangling the Medicare Premium Mess -- And What It Means For You." Medicare laws require it to increase premiums annually to cover increases in per capita costs. This would typically be about $16, which most seniors can manage.

Except that 2016 will not be a normal year. Most retirees have their Medicare premiums deducted from their Social Security benefits, but because inflation was so low this year, there won't be a cost-of-living increase in 2016 for Social Security. And the law says that if Social Security benefits don't rise—you guessed it—neither can the Medicare premiums. That's at least not for most people who get Social Security benefits.

That means about 70% of Medicare beneficiaries won't see the premium hike. However, that leaves the entire burden of this year's Medicare cost increases on the remaining 30%. Those guys are going to be hit with 50% premium hikes.

This list of those who are unprotected is a bit curious. It includes high income seniors, new enrollees, those enrolled in Medicare but not getting a Social Security check, and the so-called "dual eligibles" (who receive Medicare and Medicaid benefits; their premiums are paid by state Medicaid programs).

For high-income people, those premium hikes are hefty: for a single making more than $214,000, Part B premiums are will increase from $335.70 to $509.80. For some of these folks, it'd be cheaper to buy insurance through Affordable Care Act exchanges than to buy Part B plus Part D drug coverage and a Medigap policy. But they also might be better off with Medicare long term. It's complicated.

Seniors with more typical incomes also have some tough choices to make. For years, we've heard how the government and many financial experts encouraged seniors to wait to take their Social Security benefits for as long as they could. However, the special circumstances in 2016 may give some the exact opposite message, like those age 67, single, making less than $85,000, and enrolled in Medicare but not yet taking Social Security. The rule is that you must pay a large increase if your premiums are not being deducted from your Social Security check. If you claim Social Security now and start having premiums deducted, you can save more than $500 in Medicare premiums in 2016, and you start getting Social Security benefits.

But it's a trade-off, because you may also receive less in lifetime Social Security benefits. You'll need to do some math and the answer will depend on how much money you make, your best guess about how long you will live, and whether you're married.

Reference: Forbes (October 9, 2015) "Untangling the Medicare Premium Mess -- And What It Means For You"

Long Term Health Care and Care for Dementia Patients

The brochures look more like travel adventure materials than information for long term care facilities for frail and cognitively impaired seniors. Scenic mountain views and adobe style mansions with gourmet chefs and a schedule of daily activities is not what most of us think of when we consider caring for an elderly dementia patient. And the Villas at Houghton, a facility that certainly raises the bar for care, isn’t even the most expensive, at $52,750 per year. Most people will not have access to that level and quality of care, but all will likely be surprised at the cost of long term care.

Several key points about long term care are clarified in a recent article from The Arizona Daily Star, “Costs pile up fast for dementia care.”

Don’t count on Medicare. The median annual cost for a private room in a skilled nursing facility in Tucson last year was more than $90,896. Assisted living costs about $45,000. In a 2015 annual Cost of Care survey, results showed that Americans paid approximately $16,060 more per year in 2015 for a nursing home than they paid in 2010.

Remember that Medicare doesn’t pay for long-term care, including home care, aside from 100 days of skilled services or rehabilitative care. After that, it’s up to the family to figure out how to pay. The options include long-term care insurance, public assistance through Medicaid programs for people over 65, Veterans Aid, or private pay. On average, an American turning 65 today will incur $138,000 in future long-term services. This cost could be financed by setting aside $70,000 today.

A loved one with dementia will increase the costs for round-the-clock care and a secure place to live, with the disease lasting up to 20 years. Caregiver costs, including hospitalizations, skilled nursing facilities, home-health services, day-care services for adults and assisted living add up, and the cost is enormous. One way to ease the emotional cost is to create a plan and provide relief to your family.

When it comes to paying for care, many people incorrectly assume they have too much money to qualify for Medicaid. Talk with an elder law attorney and see whether you or your loved one qualifies because Medicaid can help pay for both in-home and out-of-home care. The individual must be medically eligible—cognitively impaired or unable to perform at least two activities of daily living on their own (like bathing and eating). Single applicants are not allowed to have resources of more than $2,000. Applicants who do have more than $2,000 should talk to an attorney about creating a burial fund, or buying a house or car, as these are all exempt.

Although the gross monthly income limit is $2,199 for an individual, sometime those with a higher income can set up a “Miller Trust” for the money above that limit. For married couples where only one partner is applying, the income limit is either $2,199 for the applicant, or an average of the two spouses, whichever is more favorable to the applicant.

It’s important to remember that Congress set a five-year look-back period on gifts. So someone who gives money and other assets to children and other family members in order to be eligible has to do this five years before they apply. An elder law attorney can help a single person with too many assets to qualify to spend down those resources on long-term care or on any legitimate expense that benefits either the applicant or the spouse, and then apply.

Long-Term Insurance. People whose incomes are too high to qualify can consider long-term insurance or self-pay. With long-term insurance, typically the buyer defines a monthly amount they’d like to get for a set number of years. For example, a couple could each choose a $2,000 benefit for five years, and they’d have access to a maximum $125,000. However, buyers may have to supplement with their own money.

The best time to buy long-term care insurance is when buyers are in their mid-50s to early 60s. If you wait, you might have a medical condition arise and fail the underwriting. For example, a policy might guarantee $5,000 per month for five years if the individual needs it. Expect the premiums to go up every five years, and note that they are not fixed like level term life. Some folks are surprised by big premium hikes and cancel the coverage. If you buy long-term care, read the policy carefully.

Reference: Arizona Daily Star (September 26, 2015) “Costs pile up fast for dementia care”

Medicaid Planning Requires Both Estate Planning and Elder Law Skill Sets

Let’s clarify the difference between estate planning and elder law. Estate planning focuses mainly on transferring assets after death, and elder law addresses issues about retirement income issues. In many circumstances, these two practice areas must work together to solve the challenges presented by wealth transfer, taxes, the need for long term care and medical care.

The Huffington Post published a worthwhile article on the ethical and legal issues posed by two related legal practice areas, “Some Legal Issues at the Intersection of Elder Law and Estate Planning.” There are legal and ethical issues that arise when determining courses of action in both areas.

One is whether to dispose of assets through pre-need planning to qualify for means-tested government programs such as Medicaid that might pay, for example, the cost of long term nursing home care. This is very complicated, and you should work with a qualified elder law attorney.

If you want to maximize eligibility for means-tested governmental benefits, a common income reduction technique is to create a Qualified Income Trust (QIT), also called a “Miller Trust.” There are also other types of "special needs trusts" that can be created without reducing government benefits. Again, this is a highly complex area that requires help from an elder law attorney.

Remember the five-year look-back on transfers. Medicaid eligibility usually examines the transfer of assets (like gifts) to third parties that happen in the 60 months prior to the Medicaid application. To avoid this issue, you may be able to create irrevocable college saving plans and also make transfers to your spouse without penalty. A child who lived in the parent's home and cared for the parent—and delaying institutional care in a physician's opinion—may be able to get assets as a gift without a Medicaid penalty under the "two-year caretaker rule." This is also extremely complex and requires consultation with an experienced elder law attorney.

For your family and yourself, do as much elder law and estate planning as far in advance as possible. Contact Robert A. Gordon of Redkey Gordon Law Corp, an experienced elder law attorney.

Reference: Huffington Post (September 22, 2015) “Some Legal Issues at the Intersection of Elder Law and Estate Planning”

Planning for the Future for a Family Member with Alzheimer’s Disease

When a loved one has Alzheimer’s, advanced planning for legal and financial matters becomes even more important than in day-to-day estate planning. Ideally, planning well in advance, before the disease has taken a toll on the person’s cognitive abilities, may give them an opportunity to express their wishes for their care. The debilitating nature of Alzheimer’s and other forms of dementia is extremely stressful for family members who are charged with being caregivers and decision makers. Planning early with the help of an experienced professional can alleviate some of the stress that results.

Caring for a loved one with Alzheimer’s or a different type of dementia is a challenge that requires a great deal of planning in advance. An article in The Lincoln (NE) Journal Staraddressed a number of financial, legal and medical care issues – “Planning the future of a loved one with dementia.”

You will encounter a number of costs in caring for a person with dementia. Planning for these expenses and costs throughout the course of the disease will involve examining all the costs you could possibly face now and in the future. These can include prescription drugs, personal care supplies, adult day care services, in-home care services, and residential care services.

Discuss financial needs and goals as early as possible. This way the person with the disease will be able to comprehend the issues, take a role in mapping out his or her objectives, and clarify their wishes. An experienced elder law attorney will have worked with financial advisors and will be able to point out potential financial resources, uncover tax deductions, and counsel against imprudent investment decisions. You may have these financial resources available to help you with the costs during the course of the disease:

• Health care coverage
• Long-term care insurance
• Life insurance
• Medicaid
• Veterans benefits
• Other public programs:

In addition, many states have state-funded, long-term care available, such as adult day care and respite care.

Legal capacity is the ability to understand the meaning and importance of a legal document, such as a power of attorney. A person suffering from dementia who has the ability to understand and appreciate the consequences of his or her actions to execute a document needs to be the decision-maker. As long as he or she possesses legal capacity, they should take part in legal planning. The article recommends these documents:

• Living will
• Power of Attorney
• Health Care Directive or Power of Attorney
• Will
• Living Trust
• Guardianship/Conservatorship

Talk to Robert A. Gordon of Redkey Gordon Law Corp, an experienced and qualified estate planning attorney if you have questions about elder care for your loved one.

Reference: The Lincoln (NE) Journal Star (July 20, 2015) “Planning the future of a loved one with dementia”

Talking with Aging Parents about Finances and the Future

Talking with aging parents about their finances, their wishes, and the future, is never an easy conversation. When it became clear that her mother was starting to suffer from memory loss, Gwen started to speak with her mother about finances, accounts and final wishes. While she felt uncomfortable pressing her own mother for information, in the long run obtaining this information made things easier when Gwen, the daughter, ultimately had to take over her mother’s finances. While not all parents are willing to have these discussions, they are important to prevent the difficulties that eventually arise. Gwen Morgan, the author of “What If…Workbook,” a guide that helps gather and convey this type of information, notes that “People hold tight to their bootstraps.” Communicating early and often can help.

Even if your parents are reluctant to discuss their finances, the sooner the conversation begins, the better for all concerned. In an article posted on Go Banking Rates, “How to Talk About Money With Your Aging Parents,” the author shares a deeply personal experience with her own mother. Some parents are simply not willing to have these conversations, and several different approaches may need to be tried before you find the one that they are comfortable with. Not knowing key information could lead to family members needing to go to court to obtain the ability to gain control of their parents' finances and make medical decisions on their behalf. These scenarios can cause serious emotional and financial hardship for families.

Here are several strategies from the article to get aging parents to discuss their finances. Make sure that the conversation is respectful. Also make certain that it’s understood that you’re not trying to take over your parents’ finances. Starting with an area that doesn’t feel like a loss of power, may be more successful, the article advises.

1. Use a story. Whether true or not, this can get the ball rolling. It can be about someone who did or didn’t have information about his elderly parents’ finances and what happened:  major headaches for the children because they didn’t have any information about the father’s accounts or legal documents. Assure your parents that you want to make sure this doesn’t happen to your family and suggest that they divulge some of their financial information.

2. Get help from your siblings. The child with the closest relationship with the parent should start the conversation, with the other kids joining in later conversations to discuss specific details about your parents’ money.

3. Talk about your own situation. The article notes that you might be able to get your parents to speak more freely if you share what you’ve done to get your own financial affairs in order. This can include that you’ve met with an estate planning attorney to create documents such as a will and trust. Also, let your parents know that you have a list of your accounts and passwords to give to your spouse if the unforeseeable occurs. Then ask your parents what steps they’ve taken.

4. Discuss your parents’ future. Inquire of your parents about their plans for retirement. This is a more general discussion that can get things going, the article said. You can ask if they plan to downsize or what sort of care they’d like to receive if something happened. This could start a detailed discussion about their finances.

There are several other great tips in the article, one of which is to get some help from an expert. If your parents aren’t willing to talk to you, suggest that they meet with Robert A. Gordon of Redkey Gordon Law Corp, an experienced estate law attorney. He can help urge your parents to share important financial information with you.

Reference: Go Banking Rates (July 18, 2015) “How to Talk About Money With Your Aging Parents”

Not Easy to Get, But Worth It - VA Long-Term Care Benefit

A survey conducted by the National Association of Area Agencies on Aging, National Council on Aging and UnitedHealthcare reveals a frightening statistic in the United States of Aging survey.  97% of professionals supporting people 60 and older believe that seniors will not be able to afford their health care costs as they age. Only 3% are very confident older Americans will be able to manage health care costs. Not a pretty picture.

The high and ever-increasing cost of long-term care is the leading reason that professionals do not believe that seniors will be able to afford their health care. The median price of a private room in a nursing home now costs about $91,000 - an increase of 4% from last year. The survey on aging, reported on in an article in Forbes, offers a glimmer of hope with a look at a little-known program from the VA:  "The VA Program That Pays For Long-Term Care for Vets."

About half of us will someday use nursing home care, and many others will need long-term care in assisted living facilities or at home.

But here's a little good news… there's a little-known Veterans Administration (VA) program that pays for some long-term care costs for vets and their families. It's called the Aid and Attendance Benefit. This benefit has been around for over 60 years and covers some expenses for in-home care, nursing homes and assisted living facilities. This benefit is available to honorably-discharged wartime veterans over age 65 and their widowed spouses who are eligible for a VA pension and require the "aid and attendance" of another person or are housebound. The VA calls this "additional pension benefits for care assistance in the home or in an assisted living community."

Aid and Attendance pays up to: $1,788 per month to a single veteran, $1,149 to a surviving spouse, $2,120 to a married veteran and $2,837 to a veteran couple. The benefit is tax-free. To qualify, the applicant must either:

• Require      assistance with Activities of Daily Living (ADLs) like dressing,      bathing,  and eating;
• Be      bedridden;
• Be a      nursing home patient due to mental or physical incapacity; or
• Have      eyesight limited to a corrected 5/200 visual acuity or less in both eyes      or concentric contraction of the visual field to five degrees or less

Of course there's the catch: applying for and receiving the money is a real pain in the bottom. The VA estimates it can take on average about five months for an Aid and Attendance claim to be processed after a veteran applies to a VA regional office. Even so, some applicants have been crushed with red tape and much longer waits.

The article tells the story of Frank Fassnacht, an 84-year-old former Disney projectionist now living in a Motion Picture & Television Fund home. He applied for the benefit three years ago, and still no luck. Because of the VA's high turnover rate, it's hard to find a consistent person to help you.

One other thing to note: a veteran may be turned down for the Aid and Attendance benefit if his or her assets are too great. The VA doesn't have a strict rule on how much assets one can have, but it's typically no more than $80,000 (not including your home), depending on age.

The article advises you to seek the assistance of an elder law attorney to apply. The rules and paperwork can be a super difficult, so a qualified attorney can really be a help. He or she can also assist you in preserving assets. Also, you should be ready to document your long-term care expenses and provide all the application materials.

For more information contact Robert A. Gordon of Redkey Gordon Law Corp, an experienced elder law attorney.

Reference: Forbes (July 10, 2015) "The VA Program That Pays For Long-Term Care for Vets."

New Legislation Enacted in Certain States to Protect Elderly Investors

After a long and high profile life of philanthropic endeavors, socialite Brook Astor died in 2007 with an estate worth $200 million.  Two years later, her son Anthony Marshall was convicted of stealing millions from her. Astor suffered from dementia, and Marshall was paying himself from her assets. While not all families enjoy this level of wealth, the fact pattern is not all that unusual.  A large and growing number of Americans suffer from dementia-type illnesses and a equally large number of them will be taken advantage of by family members.

 

States are now trying to provide greater protection for elderly investors, according to a recent Reuters article titled “Protecting dementia sufferers from scammers gains ground in U.S.” Retail brokers – in three states thus far, have been permitted to help deter scams against people with dementia.

 

The laws, which are being examined by other state legislatures, allow brokerages to halt an older client’s request to transfer money to others (at least temporarily) if a wealth manager suspects that his or her customer may have dementia and may be unknowingly be the victim of a scheme.

 

More than 5 million Americans over the age of 65 have Alzheimer's disease, which is the most common form of dementia, the article says. Citing the Alzheimer's Association, that figure accounts for roughly 1.5% of the U.S. population. Experts say this could grow to 7.1 million by 2025. 

 

The elderly are often easy targets for con artists and unscrupulous family members. In fact, U.S. seniors lose approximately $2.6 billion annually to financial exploitation. And more than half of this financial exploitation is committed by friends, family members, or caregivers.

 

Elder financial abuse is frequently hard to detect, but the article explains that requests for large, "questionable" sums of money can often be a clear sign.

 

Philip Marshall (Anthony's son and Astor's grandson) commented that these new laws might have helped protect his grandmother. The younger Marshall is a professor of historic preservation in Rhode Island who recently went on sabbatical to devote more time to elder protection issues.

 

Brooke Astor was an heir to the Astor family fortune that started back in the 18th century. She passed away in 2007 at age 105, and had a $200 million estate. Most of this was earmarked for charities. Unfortunately, her son exploited part of her estate that was to be used for her personal expenses. He paid himself roughly $1 million for managing her affairs in 2006, as was revealed in a court proceeding.

 

Some have concerns about these laws and think that perhaps the government could empower wealth managers to interfere with legitimate transactions and keep elderly people from their investments, the article reports. FINRA, an industry watchdog, is also developing guidance on the issue, with input from the SEC, as brokerages have asked for clarity on this because of rules that require them to execute a customer’s transaction.

 

Roughly half of the states have laws that require employees of financial institutions to contact state agencies if they suspect an elder customer is being financially exploited. However, many of these laws do not include retail brokerage employees or allow those institutions to delay withdrawals.

 

Brokerages are often put in a tough position when this situation arises. Contacting concerned family members to question an elderly client's instructions could run afoul of laws about protecting privacy, as well as rules that require processing transactions on time. That said, following the client's instructions can help the customer who otherwise may fall victim to a con or abusive caretaker. As it stands in most states, brokers could be liable for taking action or honoring such a transaction.

 

Contact Robert A. Gordon of Redkey Gordon Law Corp, an experienced estate planning attorney for guidance on how trusts may be used to help curb this abuse.

 

Reference:  Reuters (July 1, 2015) “Protecting dementia sufferers from scammers gains ground in U.S.”