Is Medicare Headed for a Crisis?
July 17, 2010
If you are among the wave of Baby Boomers about to begin enrolling in Medicare you may be in for some tough times. Recent stories in Financial-Planning.com and USA Today report that the number of doctors refusing new Medicare patients is reaching a record high—and it’s not expected to improve anytime soon, especially since last month “Congress failed to stop an automatic 21% cut in payments that doctors already regard as too low.” Doctors simply feel they cannot afford to treat Medicare patients anymore.
Here are some of the distressing details you’ll find in the USA Today article:
- The American Academy of Family Physicians says 13% of respondents didn’t participate in Medicare last year, up from 8% in 2008 and 6% in 2004.
- The American Osteopathic Association says 15% of its members don’t participate in Medicare and 19% don’t accept new Medicare patients. If the cut is not reversed, it says, the numbers will double.
- The American Medical Association says 17% of more than 9,000 doctors surveyed restrict the number of Medicare patients in their practice. Among primary care physicians, the rate is 31%.
What this means for seniors is that although you may be able to qualify for Medicare you may not necessarily be able to count on it. But you can take action to ensure that a crisis for Medicare doesn’t mean a crisis for you. Your financial advisor or estate planner can help you determine what options you have regarding long-term care, asset protection, and even using alternate strategies in conjunction with Medicare. For example: it may be possible to re-design your trust and estate plan to facilitate access to a nursing home subsidy from the government in the event of future need. See our articles, “Spousal Protection Planning: Creating A Plan for Each Other”, and “Developing a Plan for An Incapacitated Spouse“
The days of being able to count on the government to take care of you in your old age may be coming to an end. It’s time to make your own luck and plan for your own future. Our firm may be able to help.
Should A Bank Help You Care for Your Elderly Parents?
July 8, 2010
The influential Baby Boomer generation is aging, which means more and more of them are taking on the responsibility of caring for their elderly parents, and the Boomers are beginning to face up to the fact that they will need caregiving themselves in the not-so-distant future.
Large banks are not immune to this trend—and the potential to increase their client base by offering financial elder-care services. The question is, how effective can a bank be at helping you care for your elderly relatives?
According to this article in the Wall Street Journal banks can be helpful with certain financial issues such as helping to “sort out medical bills, hire in-home care or even manage the sale of a home.” Some of the larger banks are even beginning to offer more in-depth services such as “estate planning and setting up powers of attorney… crisis management (triggered, say, by a broken hip or a car accident); health and home assessments; Medicare-coverage selection and claims management; and evaluating retirement communities and long-term-care facilities.”
All of this sounds great, but before you get too excited our firm would like to caution you to be as careful about hiring a bank to do your estate or elder care planning as you would be with engaging any other attorney or professional advisor. After all, as the WSJ article says, “banks and trust companies aren’t doing this solely out of the goodness of their hearts. Providing extra services targeted at the elderly and their family caregivers can bump up the asset-management fees that clients pay each year. . . [or] persuade a few clients to move assets to an institution to meet its minimum deposit requirements.”
So we urge you, before you jump into anything—whether it be with a bank, an attorney, a CPA or other important advisor—do the research and ask all the questions you need to ask in order to find out whether this advisor truly knows their stuff; knows the ins and outs of the law and the care-giving industry; and most important of all, make sure the person or institution you hire will be working for you, will be your advocate and your ally during difficult and confusing times. Further, to the extent your loved one needs legal services to plan for incapacity, to implement asset preservation strategies, to design an estate plan or to plan for Medi-Cal or other public benefits, our strong recommendation is to first seek the advice and guidance of an Elder Law attorney knowledgeable in the field. In our opinion, acquiring these skills takes years of study, practice and experience.
Can You Really Afford Long-Term Care Insurance?
June 26, 2010
The American Association for Long-Term Care Insurance recently released a report on the costs of long-term care insurance, and the results were surprising. Most people mistakenly believe that long-term care insurance is going to be expensive and difficult; but in fact, according to the report, “over one-fourth [of buyers under the age of 61] paid less than $999-per-year.” And in fact, “fewer than one in 10 (9.3%) pay $3,500 or more.”
This is great news! This means that long-term care insurance could cost you less than $100 per month! The trick is that you have to think about it early. “Age at the time of application plays an important role in determining the cost for long-term care insurance the Association study reports. While 41.5 percent of buyers under age 61 pay between $500 and $1,499-per-year, only 20.8 percent of buyers who are ages 61-to-75 pay within this range.”
This is not to imply that if you’re over the age of 75 you’re out of luck. You’re not likely to get the same great rates as someone in their 50’s, but you still may not have to pay an arm and a leg for long-term care insurance. According to the report, of applicants aged 76 and older only 28.2% end up paying an annual premium of $4,000 a year or higher. Actually, almost half of applicants in this age range still end up paying less than $2,500 a year. This may not be the attractive $500/year you could have gotten in your 50’s, but it also isn’t the thousands of dollars a month most people seem to be afraid long-term care insurance is going to cost them. In fact, it’s only a little over $200/month.
If you’ve been thinking about long-term care insurance, don’t wait any longer. This is one situation where time is not on your side; the quicker you act the better it will be.
Senator Kennedy’s Legacy May Also Be Yours
May 23, 2010
One of the most important pieces of the recently enacted ”Patient Protection and Affordable Care Act” is the “CLASS Act“, which stands for the Community Living Assistance Services and Supports program. Authored by the late Senator Ted Kennedy and others, it creates — for the very first time — a long term care insurance plan to help those with functional impairments pay for necessary care at home or in their communities. While the daily benefit is limited, the CLASS Act will help many continue to live at home or in assisted living facilities, rather than be forced prematurely into a nursing home in order to qualify for government assistance. Some key features of the program are:
(1) enrollment is open to those who are employed and choose to make voluntary monthly contributions to the program, and there is no underwriting exclusion based on pre-existing conditions; enrollment will open January 1, 2011; (2) eligibility kicks in only after the individual has been enrolled in the voluntary payroll deduction program for 5 years, but the payout will not begin until 2017; (3) benefits will be a minimum of $50/day but be scaled up as high as $75/day, depending upon the degree of impairment, and there is no lifetime “cap” on payout; (4) benefits will coordinate with government assistance from the Medi-Cal program, such that CLASS benefits will have no effect on eligibility for Medi-Cal, Medicare, Social Security Retirement or Disability benefits, nor SSI. In fact, persons in nursing homes who qualify for CLASS benefits will be able to retain 5% of their daily or weekly cash benefit without seeing a reduction in their Medi-Cal subsidy.
Unfortunately, because of the 5 year vesting requirement and the companion requirement that the individual be employed for at least 3 out of those 5 years, most currently retired seniors will not see any direct benefit from the program. However, seniors can, and should in our view, encourage their children and family members who are still employed to sign up. That encouragement can be a part of the parents’ legacy to their own children, just as Senator Kennedy left his legacy to the nation.
For more on topic, see the following fact sheet prepared by the Kaiser Family Foundation.
Protecting Your Parents, Protecting Yourself
May 10, 2010
Do you need long-term care insurance? You may think you’re too young to think about that quite yet, but what about your parents? If you’re reading this blog it’s likely that your parents are at an age where they soon may need some sort of care, whether that will be in-home care, nursing care, or even need to stay in a nursing facility; if your parents haven’t planned ahead for this eventuality, the burden for their care—either financial or physical or both—may fall on you.
It is for this very reason that a new trend in long-term care insurance seems to be emerging. According to this article by Stacy Schultz, there is an upswing in the purchase of long-term care insurance by the Boomer Generation—except the insurance isn’t for the Boomers themselves, it’s for their parents. “Many of them have just had a relative go through being in a nursing home, and they see the devastation and the stress it causes,” quotes the article. “They’re concerned about mom and dad, and if their parents don’t have a lot of means they want to buy insurance for them.”
If you are considering buying long-term care insurance, either for yourself or your parents, you have a number of options, especially compared to even just a few years ago. Forbes.com recently published an article outlining the improvements in long-term insurance, and what your options are if you’re buying it today.
Take an hour or two this month to talk to your parents (or your kids) and advisors about what the coming years have in store. You may not need long-term care insurance, but you will certainly need a plan, and it’s never a bad idea to know your options, especially when it comes to protecting your future. In the lives of many Boomers, protecting their own future also means protecting their parents’ futures.
Will You Be Able To Afford Old Age?
April 8, 2010
Are you ready for the financial implications that come with growing older? As the average American lifespan grows longer the cost of aging becomes more and more prohibitive.
A recent segment on NBC’s The Today Show takes a close look at long-term care and the price individuals and couples are required to pay as age related illnesses make it more and more difficult for senior citizens to live at home without care.
The show tells the story of “Roberta” and her husband, a couple married for 44 years, who felt there was no choice but to divorce after Roberta’s husband was diagnosed with dementia and the subsequent nursing home bills quickly depleted their assets. After paying no less than $75,000 in care costs, Roberta was advised by her attorney that one of the only ways to conserve her remaining assets for her own support would be to divorce her husband, allowing him to qualify for Medicaid coverage. As an Elder Law firm, we frankly wonder whether that was the only option for Roberta. In California, at least, there may have been other options that might avoided the tragedy of divorce.
With growing numbers of senior citizens being diagnosed with debilitating elderly illnesses, and the cost of nursing care on the rise, more and more couples are finding that without some kind of long term care insurance, or a Long Term Care Estate Plan, they simply can’t afford the cost of aging. Medicaid (called “Medi-Cal” in California) can help, but planning is the key to avoiding the tragedy of Roberta and her husband.
Plan ahead for your own old age by talking to your advisors about Medi-Cal, your options for long-term care insurance, and whether your existing estate plan should be re-designed. Most have been designed with death in mind, rather than with extended long term care needs in mind. Our firm has specially designed a Long Term Care Estate Plan for couples in just the situation above, and we have been able to help couples avoid the dreaded option of divorce. See the following links, one for healthy couples and one for a couple with an incapacitated spouse.
Talking About Elder Care
December 22, 2009
Do you know who will take care of you when you are too elderly to take care of yourself? According to the statistics your caregiver is likely to be a woman, and most likely to be your daughter or daughter-in-law. What this means is that unless you have a plan for your future long term care, the financial burden of caring for you will fall to her and her family.
“Financial burden” refers not just to the expense of paying for food and medical costs, but to loss of income incurred over years of care-giving. “Women take time away from their careers to care for family members,” writes George I. Connolly, “and… lose an average of $659,130 over a lifetime in reduced salary and retirement benefits.”
Many people think that government programs will pick up what they can’t pay for themselves, but relying on government programs can leave your family footing just as much of the bill as they would without them. You may want to consider other alternatives as well, such as investing in long-term-care insurance and setting up a Long Term Care Estate Plan. If you aren’t sure about your options, or how to start planning for the future, call our office for help.
If you are a daughter of aging parents, now is the time to talk to your parents about the future. Studies show that you are the one who is likely to shoulder the responsibility of caring for them as they age. Doing so will affect your family, your career, your finances, and even your health.
The subject of aging and elder care is a difficult one, but not one to be left to the last minute. Talk to your family about your wishes and plans for the future, then bring your Elder Law attorney into the discussion. Once you have an idea of your wishes, an expert can help you feel better about your options, and put you on the right path for keeping your family healthy, happy, and financially secure in the years to come.
Will Nursing Home Costs Bankrupt the Nation and the Elderly?
December 17, 2009
Along with the rest of the nation, you are probably watching the progress of various versions of the health care legislation making their way (or not making their way) through Congress. An article in the Deember 13, 2009, issue of the New York Times points out that the current bill contains a “major new federal insurance program for long-term care” — although many are not aware of it. It is sometimes referred to as the “CLASS ACT”, so known by the initials for the full title, the Community Living Assistance Services and Supports Act.
Should it become law, the program might have a significant positive benefit for a social problem that is already bad, and promises to get worse. That is, how are we to care for members of our society who can no longer care for themselves, but might live for years? To give just one prominent example, former President Ronald Reagan revealed his Alzheimer’s diagnosis in 1994, but did not pass away until ten years later.
Nursing home costs have the potential to bankrupt families that are not prepared with legal planning. Drafted by the late Sen. Edward M. Kennedy several years ago, this federal insurance program might be an important tool in addressing the problem, but critics say it will be unsustainable. Instead of families going bankrupt paying for nursing home care, it will be the government, in their view. Supporters view the matter quite differently, and believe that it will not only help with the reduction of the Deficit but, more importantly, will enhance the quality of life for the elderly, disabled and their families. Read the entire article here.
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