Posts Tagged ‘Long Term Care’

Before A Spouse Becomes Ill

Friday, April 28th, 2017

When a spouse becomes ill, the well spouse is suddenly faced not only with the emotional toll, but the burden of handling all the financial responsibilities and long-term planning on his or her own.  If the ill spouse always handled the financial matters, even paying bills can be overwhelming.  Additionally, the well spouse may not know what long-term planning considerations have been made for him/her or what is even available.  This article will provide an outline of things to consider and steps to take when the financial responsibility and long-term care planning burden passes to the spouse who has generally not had to deal with these issues previously.  Though not always possible, it is important to be as proactive as you can and review and familiarize yourself with these matters before a spouse becomes ill.

Locate and Organize Documents

First, it is very important to locate and organize your documents to see what you have, what long-term planning is in place and what needs to be updated.  Items to look for include:

  • Identification documents: Social Security card, Medicare card, birth and marriage certificates
  • Military records
  • Insurance documents: including, health, automobile, homeowners, life, long-term care
  • Legal documents: Last Wills and Testaments, Trusts and Advance Directives (Power of Attorney, Health Care Proxy, Living Will, HIPAA Release and Burial Designation)
  • Financial Information, including bank, brokerage and retirement accounts, stocks and bonds, income, tax records, debts and bills
  • Any other important items including: the deed to your home, title and registration to automobiles, and safety deposit box

Understand your Present Situation

Once you locate your documents, it is important for you to learn what they are and what purpose they serve.  Understand what your assets and expenses are.  Regarding your assets, careful analysis should be made as to what type of account you have, how much money is in it, how the account is titled (who owns it) and whether there are any beneficiaries.

Know what your income is and where it comes from.  Does your spouse receive a pension?  If so, will it continue if he predeceases you?  Do you have any retirement accounts (including IRAs, 401ks, profit sharing plans) that you are required to take minimum distributions from because you have reached the age of 70 ½?

Important resources are available to aide you with this undertaking.  Many senior centers offer programs to assist with managing household finances and bills.  They also may have volunteers who will review your Medicare coverage with you as well as your medical bills so you understand what you are being charged.  If your spouse dealt with the same bank for several years, he may have developed a personal relationship with them and they may work with you to review your accounts.  Additionally, an elder law attorney can play a vital role in making this process easier for you.  He or she can meet with you either at your home or in the office and go through and explain all of your paperwork with you.

Simplify Your Life

You can set up automatic bill payments to have your utility, insurance and telephone bills paid directly from your checking account every month.  If your spouse always prepared and filed income taxes on his own, perhaps it would ease the burden for you by hiring an accountant to prepare your taxes.

Social Security

If your spouse dies, it is important to contact the Social Security Administration to advise of his/her death and to make sure you receive all of the benefits to which you may be entitled.  You may be eligible for a one-time payment of $255. Also, if you are considered full retirement age for survivor’s benefits, as defined by the Social Security Administration, you can receive Social Security benefits based upon your deceased spouse’s earning record.  This can be a significant amount if you either did not work outside of the home or earned less than your spouse during the time you were employed.  It is important to know that your full retirement age for retirement benefits may be different from your full retirement age for survivor’s benefits.  Also, if you are receiving survivor’s benefits you can switch to your own retirement benefit if your retirement rate is higher than the rate you are receiving for survivor’s benefits.  The rules are complicated, and, therefore, it is important that you carefully consider all your options before making a final decision.

Health Insurance

Littman Krooks Retirement PlanningYou need to understand what type of health insurance coverage you have, including Medicare.  If you have Medicare, review whether you have Part A, Part B and/or Part D.   Also, if you and your spouse has a retiree health plan through your spouse’s former employer, does it continue if your spouse predeceases you?

If it does not, you may be eligible for COBRA.  COBRA is federal legislation that allows former employees, retirees, spouses and dependent children to temporarily continue group health coverage that would otherwise be terminated.  If you are covered by both Medicare and a group health plan as part of your spouse’s retirement and your spouse dies, then you may have the right to elect COBRA continuation coverage with respect to the group health coverage for the maximum period of coverage available (18 to 36 months).  If you become covered by Medicare at any time after an election of COBRA continuation coverage your COBRA continuation coverage will probably end.  It is important to know that you only have 60 days from the date of your spouse’s death to elect COBRA coverage so action must be taken promptly.  Also, COBRA coverage can be very expensive (i.e., employer can charge up to 102 % of the employer premium).  The additional 2% is designed to cover administrative costs.

Legal Documents

Make sure your legal documents are in order and up to date.  Set up an appointment with your elder law attorney to review them.   If your spouse has become ill, consider appointing someone else as your executor under your will or as agent under your power of attorney and health care proxy.  You should review with your attorney whether you need to establish a trust to protect your assets should your spouse need long term care either in a nursing facility or at home.

Long-Term Care

Long term care is not limited to nursing homes.  Today, most care is received at home and it is important for you to understand what options you have available to you and your spouse.  Review whether you have long term care insurance and what coverage it provides.   It is important to familiarize yourself with the differences between Medicare and Medicaid and what each program can offer you.  Geriatric care managers are available to assist you with care planning assessments and provide solutions to your individual long term care needs.

If possible, it is important to review, understand and work on these issues.  The more familiar you are with these responsibilities, the more comfortable you will become with them and less fearful of handling them on your own.  It will help ease your burden and provide peace of mind so most of your attention can be paid to your ill spouse.


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Comparing Different Options in Life Insurance

Wednesday, March 18th, 2015

Certain forms of life insurance can be used as an investment and estate planning tool as well. Understanding the different options, term life insurance and permanent life insurance, can help to protect your family’s economic security in the event of an unexpected death.

Term life insurance
Term life insurance is pure risk protection, and it is what many families consider to be essential. The premium is paid for a certain term, or number of years, and the death benefit is paid out only if the insured person dies before the term ends. Term life insurance is much less costly than permanent life insurance, for the simple reason that the insurance company expects to only have to pay out the death benefit for about five percent of policies.

Within term life insurance, a common type is guaranteed level premium term life insurance, in which the annual premium remains the same for the entire term of 10, 15, 20 or 30 years. Insurance companies may also offer return premium term life insurance. With this type, some of the premiums paid are returned if the policyholder outlives the term, minus fees that the insurance company retains. This type of term life insurance is more expensive.

Permanent life insurance
With permanent life insurance, there is no fixed term, and the policy is in place for the insured person’s entire life. As long as the premiums are paid, then a death benefit will be paid when the person dies. Because the insurance company knows it must pay out a benefit, the premiums it charges are much higher than for term life insurance.

Permanent life insurance is typically comprised of an insurance portion and a savings or investment portion. The insurance company invests part of the premiums paid, and the policy builds up a cash value on a tax-deferred basis. The policyholder can usually borrow against the cash value.

The basic form of permanent life insurance is known as whole life insurance. A more flexible form is known as universal or adjustable life insurance. With a universal life insurance policy, one may choose to pay premiums at different times and increase the death benefit. One may also select a fixed death benefit, or an increasing amount equal to the face value of the policy plus the cash value amount.


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Facing sky-high LTC costs, clients nurse Medicaid hopes

Monday, December 17th, 2012

But misunderstandings about the national program abound; poor planning can leave retirees in a bad place

By Darla Mercado,  Investment News

December 7, 2012

Medicaid may look like a tempting long-term-care plan for retirees who want to pass assets on to their heirs, but that approach has its share of financial pitfalls.

Investors nearing retirement are asking more questions about Medicaid — the state and federal program that aids people who can’t afford to pay their medical bills — and the role it can play in helping to cover LTC costs. Nationwide Financial Services Inc. and Harris Interactive Inc. polled 501 financial advisers and found that 42% think of Medicaid planning as a way to preserve money for their heirs.

“People are exploring extreme steps to qualify for a program that wasn’t intended for them,” said John Carter, president of distribution and sales for Nationwide. “Medicaid wasn’t ever intended for people who could pay for those long-term-care needs.”

Medicaid requires applicants and their spouses to meet certain income and eligibility rules to qualify for the program: For instance, monthly income cannot exceed the costs of long-term care, and applicants generally cannot hold more than $2,000 in assets.

Enter a variety of Medicaid strategies that “impoverish” the person applying for the program in a bid to get under the $2,000 limit. But Medicaid applicants face a five-year look-back provision for asset transfers.

About half of the advisers polled said that they’ve had clients ask them about giving all their money to their children to qualify for government assistance in paying for long-term care.

Much of that anxiety is driven by the shakeup in the LTC insurance business, as well as the fact that today’s economic realities place greater emphasis on preserving wealth, noted Bernard A. Krooks, founding partner of Littman Krooks LLP and past president of the National Academy of Elder Law Attorneys.

Clients who were unable to pass the underwriting process at an LTC carrier may be interested in Medicaid planning.

“If you have a prospect with an interest in preparing for this risk, and you can’t sell them the insurance, then that’s a perfect candidate to refer to an elder-law attorney,” Mr. Krooks said. “You can set up a trust or a planning opportunity to help them accomplish their objectives.”

Many misconceptions come with Medicaid planning, however, which is one reason advisers might want to consider seeking outside help. “We would encourage advisers to work with elder-law attorneys,” Mr. Carter said. “There can be a lot of risk if you do it on your own.

Mr. Krooks noted that a common misconception is that if clients miss the five-year look-back, they have no way to protect assets. “That’s not true,” he said, noting that the solutions are state-specific. “In all states, there are things you can do even if you waited until the last minute. It’s not going to be as beneficial if you had done it earlier; you may not be able to protect as much.”

Clients are also unaware that Medicaid covers nursing home care but typically won’t foot the bill for assisted living and other care options, according to Nationwide. Additionally, Medicaid patients have very little choice in where they end up residing, and they won’t have access to private rooms.

Though advisers are becoming increasingly aware of the need to educate clients on covering the cost of care in retirement — 72% agree that many clients don’t see how crucial it is to plan for health care costs in retirement — many advisers also come up short on other facets of planning for long-term care.

For instance, 60% of the participants said they couldn’t explain to clients how the Affordable Health Care Act will affect their retirement. Only 42% were aware of filial-responsibility laws, which are state rules that establish a legal duty for children to support their impoverished parents. Nursing homes and other third parties can pursue children whose parents end up in care and are unable to pay.

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