Fong Law Group

Could Medicaid Payback Rules Come to an End?

Amid recent reports from such prominent news outlets as The New York Times and Associated Press about the negative impact of Medicaid estate recovery on families, the idea of ending this practice altogether has resurfaced.

What Is Medicaid?

Medicaid is a public assistance program that seeks to provide health insurance coverage for Americans with limited means. To be eligible for Medicaid in most states, you must meet strict income and asset guidelines. Generally, Medicaid rules will require that you have no more than $2,000 to your name.

Many older Americans who eventually need long-term care services come to rely on Medicaid to cover these costs. (Note that Medicare, a different government program, does not pay for long-term care.)

As of late 2023, the median monthly cost of a semi-private room in a nursing home in the U.S. was close to $9,000. The vast majority of people cannot afford to pay these prices out of pocket over the long term. So, they often opt to spend down what assets they do have until they can qualify for the Medicaid program.

What Is Medicaid Estate Recovery?

Federal law requires that states attempt to recover the funds they had paid out for a Medicaid recipient’s medical care during their lifetime. This might include any costs that have accrued for nursing facility services, prescription drugs, or other medical or long-term care. The Medicaid Estate Recovery Program specifically affects Medicaid long-term care recipients who had reached age 55 or older.

With certain exceptions, it’s mandatory for a state to seek these repayments from the person’s estate after they have passed away. States that fail to pursue this course of action may be at risk of losing the Medicaid funding they receive from the federal government.

Can Medicaid Take Your Home?

In most states, only property that is part of your probate estate is subject to Medicaid estate recovery. So, for instance, if you have named someone to benefit from your life insurance policy, those funds will pass outside probate in most places. However, your house may be your sole asset, and you may not have taken precautions to protect it from estate recovery. In this case, the state Medicaid agency could place a lien on it to recover its costs.

The financial consequences of the Medicaid Estate Recovery Program can be devastating for grieving families. As states seek to recover money they have spent on Medicaid beneficiaries who received long-term care benefits, families with lower incomes tend to be the ones in the crosshairs. In some cases, the survivors of the deceased may lose their family home or face bankruptcy.

The Stop Unfair Medicaid Recoveries Act

In March 2024, U.S. Rep. Jan Schakowsky (D-IL) reintroduced legislation, the Stop Unfair Medicaid Recoveries Act, proposing to end Medicaid estate recovery altogether. The bill would prevent states from placing liens on the homes of Medicaid recipients while helping to improve access to long-term care services.

According to the recent story in the Times, one nonpartisan agency cited that, for fiscal year 2019, most states recouped less than 1 percent of what they had spent on Medicaid long-term care benefits.

“This current system ... is ineffective and unjust, and it must end,” Schakowsky said in a news release about the Act. “Let’s give our seniors and their families dignity and peace of mind.”

Numerous advocacy groups had previously expressed their support for ending Medicaid estate recovery. However, the bill may not be particularly likely to move forward immediately.

Plan for the Unforeseen With Your Elder Law Attorney

Avoiding Medicaid estate recovery is possible, but it does take careful and deliberate planning.

Facing the possibility that you could one day need Medicaid long-term care coverage is important. After all, statistics show that seven in 10 older Americans are likely to require some form of long-term care in their later years.

Keep in mind that the rules regarding Medicaid benefits, which are specific to your state, can be complex. Be sure to work with your elder law attorney, who can help you navigate your potential options. They can assist you in planning for your future and guide you in making the best possible decisions. This might include strategizing about when and how to apply for Medicaid or looking for ways to protect your assets.

Selling Your Life Insurance Policy to Help Cover Expenses

The National Council on Aging reports that more than 16.5 million adults 65 and older experience economic insecurity, with incomes below 200 percent of the federal poverty level. Rising housing and health care bills can burden seniors on fixed, limited incomes.

Life insurance is an asset that many older adults have. According to Vital Life, 57 percent of Americans aged 65 and older have life insurance policies. In 2019, life insurance companies paid beneficiaries $78.4 billion and supplied $88.1 billion in annuity benefits, per Forbes.

While the purpose of a life insurance policy is to provide for beneficiaries, some older adults may consider selling their life insurance policies, allowing them to use a portion of the policy’s value to cover their expenses.

How Life Settlements Work

When you sell your life insurance policy, you can receive a life settlement. This allows you to obtain money to cover your expenses. The payment will be less than the full amount of the cash benefit. The average life settlement ranges from 10 percent to 25 percent of the full benefit, according to Smart Asset.

In return for the payment, an individual or company becomes the new policy owner. The new owner is responsible for paying all premiums and receives the full payment upon your death. Once you sell your life insurance, you are no longer responsible for paying the premium, but any intended beneficiaries can no longer benefit from the policy.

Once you have entered into an agreement in exchange for a life settlement, you no longer own the policy, and your loved ones will not be able to obtain payment when you pass away.

Reasons People Sell Their Life Insurance for a Life Settlement

Obtaining a life settlement allows you to capitalize on your life insurance policy now, helping you pay for your expenses, such as medical bills and long-term care.

If you are at risk of lapsing on payments, selling the policy allows you to avoid forfeiting it entirely. When you receive a life settlement, you will get more than if your policy lapsed or you surrendered it. Keep in mind, however, that many policies have grace periods for lapses in payment. Before giving up your life insurance policy, check with the policyholder to find out how much time you have to pay your premium before losing coverage.

Life settlements can also be beneficial if you no longer need a life insurance policy. For instance, if your spouse was your intended beneficiary, but your spouse passed away before you, you may no longer feel you need the life insurance policy.

Considerations When Selling Your Life Insurance Policy

While selling your life insurance could help you cover your expenses, it may not be the best choice for everyone. Your age, health, and the terms of your policy can all affect how much you will receive from a life settlement. Consider the following before making a decision:

• Before agreeing to a life settlement, contact your insurer to learn about all of your options under your policy.
• Speak with a life settlement broker or life settlement provider. The broker can help you shop around and find the best settlement offer. Brokers typically charge 8 percent and must disclose their fees upfront. You may want to ensure that the broker has a license in your state.
• Consider alternatives to a life settlement, such as taking out a reverse mortgage on your home or using the cash value of your insurance policy as security for a loan.
• Take time to review your outstanding debts. Creditors may attempt to take your life settlement.
• Speak to a tax professional about the tax consequences of acquiring a life settlement. You will likely have to pay taxes on the amount you receive.
• Take into account how the life settlement could affect whether you are eligible for government benefits, such as Medicaid. The settlement could constitute an asset that disqualifies you.
• The individuals who would have otherwise benefited from your life insurance policy may need to sign off on your life settlement. This is a requirement of some life settlement providers.

Consult With Your Attorney

If you are considering selling your life insurance policy, consulting with your attorney is essential. They can help you determine whether a life settlement could benefit you. This can also assist you in identifying alternative strategies allowing you to maintain your policy and afford care.

Can Life Insurance Affect Your Medicaid Eligibility?

casWhen applying for Medicaid many people often forget about life insurance. But depending on the type of life insurance and the value of the policy, it can count as an asset. 

In order to qualify for Medicaid, you can't have more than $2,000 in assets (in most states). Life insurance policies are usually either "term" life insurance or "whole" life insurance. If a Medicaid applicant has term life insurance, it doesn’t count as an asset and won't affect Medicaid eligibility because this form of life insurance does not have an accumulated cash value. On the other hand, whole life insurance accumulates a cash value that the owner can access, so it can be counted as an asset.

That said, Medicaid law exempts small whole life insurance policies from the calculation of assets. If the policy's face value is less than $1,500, then it won't count as an asset for Medicaid eligibility purposes. However, if the policy’s face value is more than $1,500, the cash surrender value becomes an available asset.

For example, suppose a Medicaid applicant has a whole life insurance policy with a $1,500 death benefit and a $700 cash surrender value (the amount you would get if you cash in the policy before death). The policy is exempt and won't be used to determine the applicant's eligibility for Medicaid. However, if the death benefit is $1,750 and the cash value is $700, the cash surrender value will be counted toward the $2,000 asset limit.

If you have a life insurance policy that may disqualify you from Medicaid, you have a few options:

• Surrender the policy and spend down the cash value.
• Transfer ownership of the policy to your spouse or to a special needs trust. If you transfer the policy to your spouse, the cash value would then be part of the spouse's community resource allowance.
• Transfer ownership of the policy to a funeral home. The policy can be used to pay for your funeral expenses, which is an exempt asset.
• Take out a loan on the cash value. This reduces the cash value and the death benefit, but keeps the policy in place.

Before taking any actions with a life insurance policy, you should talk to your attorney to find out what is the best strategy for you. 

Should You Sell Your Life Insurance Policy?

Older Americans with a life insurance policy that they no longer need have the option to sell the policy to investors. These transactions, called "life settlements," can bring in needed cash, but are they a good idea? 

If your children are grown and your mortgage paid off, you may decide that there is no longer a reason to be paying premiums every month for a life insurance policy, or you may reach a time when you can no longer afford to keep up with the premiums. If this happens, you may be tempted to let the policy lapse and get nothing from it or to surrender the policy for its cash value, which usually is a fraction of its death benefit. Another option is a life settlement. This allows you to sell your policy to an investor for an amount that is greater than the cash value, but less than the death benefit. The buyer pays all future premiums and receives the death benefit when you die. 

Life settlements offer seniors a way to get cash to supplement retirement income and help pay for living expenses, health care, or other needed items. They can be a good alternative to surrendering a policy or letting it lapse. But as with any financial transaction, you need to exercise caution. 

The amount you receive from a life settlement depends on your age, your health, and the terms and conditions of the policy. It is hard to determine if you are getting a fair price for the policy because there are no standard guidelines for life settlements. Before selling you should shop around to several life settlement companies. You should also note that the amount you receive will be reduced by transaction fees, which can eat up a good chunk of the proceeds of the sale. In addition, you may have to pay taxes on the lump sum you receive. Finally, the beneficiaries of your policy may not be pleased with the sale, which is why some life settlement companies require beneficiaries to sign off on the transaction.

Before choosing a life settlement, you should consider other options. If you need cash right away, you can borrow against your policy. If the premiums are too much, you may be able to stop premiums and receive a smaller death benefit. In some cases of terminal illness, you can receive an accelerated death benefit (this allows you to receive a portion of your death benefit while you are still alive). If you don't need the cash but no longer want the policy, another possibility is to donate the policy to charity and get a tax write-off. 

To find out the right solution for you, talk to your elder law attorney.

Tips on Creating an Estate Plan that Benefits a Child with Special Needs

Parents want their children to be taken care of after they die. But children with disabilities have increased financial and care needs, so ensuring their long-term welfare can be tricky. Proper planning by parents is necessary to benefit the child with a disability, including an adult child, as well as assist any siblings who may be left with the caretaking responsibility.

Special Needs Trusts           
The best and most comprehensive option to protect a loved one is to set up a special needs trust (also called a supplemental needs trust). These trusts allow beneficiaries to receive inheritances, gifts, lawsuit settlements, or other funds and yet not lose their eligibility for certain government programs, such as Medicaid and Supplemental Security Income (SSI). The trusts are drafted so that the funds will not be considered to belong to the beneficiaries in determining their eligibility for public benefits.

There are three main types of special needs trusts:

• A first-party trust is designed to hold a beneficiary's own assets. While the beneficiary is living, the funds in the trust are used for the beneficiary's benefit, and when the beneficiary dies, any assets remaining in the trust are used to reimburse the government for the cost of medical care. These trusts are especially useful for beneficiaries who are receiving Medicaid, SSI or other needs-based benefits and come into large amounts of money, because the trust allows the beneficiaries to retain their benefits while still being able to use their own funds when necessary.
• The third-party special needs trust is most often used by parents and other family members to assist a person with special needs. These trusts can hold any kind of asset imaginable belonging to the family member or other individual, including a house, stocks and bonds, and other types of investments. The third-party trust functions like a first-party special needs trust in that the assets held in the trust do not affect a beneficiary's access to benefits and the funds can be used to pay for the beneficiary's supplemental needs beyond those covered by government benefits. But a third-party special needs trust does not contain the "payback" provision found in first-party trusts. This means that when the beneficiary with special needs dies, any funds remaining in the trust can pass to other family members, or to charity, without having to be used to reimburse the government.
• A pooled trust is an alternative to the first-party special needs trust.  Essentially, a charity sets up these trusts that allow beneficiaries to pool their resources with those of other trust beneficiaries for investment purposes, while still maintaining separate accounts for each beneficiary's needs. When the beneficiary dies, the funds remaining in the account reimburse the government for care, but a portion also goes towards the non-profit organization responsible for managing the trust.

Life Insurance
Not everyone has a large chunk of money that can be left to a special needs trust, so life insurance can be an essential tool. If you've established a special needs trust, a life insurance policy can pay directly into it, and it does not have to go through probate or be subject to estate tax. Be sure to review the beneficiary designation to make sure it names the trust, not the child. You should make sure you have enough insurance to pay for your child's care long after you are gone. Without proper funding, the burden of care may fall on siblings or other family members. Using a life insurance policy will also guarantee future funding for the trust while keeping the parents' estate intact for other family members. When looking for life insurance, consider a second-to-die policy. This type of policy only pays out after the second parent dies, and it has the benefit of lower premiums than regular life insurance policies. 

ABLE Account
An Achieving a Better Life Experience (ABLE) account allows people with disabilities who became disabled before they turned 26 to set aside up to $15,000 a year in tax-free savings accounts without affecting their eligibility for government benefits. This money can come from the individual with the disability or anyone else who may wish to give him money.

Created by Congress in 2014 and modeled on 529 savings plans for higher education, these accounts can be used to pay for qualifying expenses of the account beneficiary, such as the costs of treating the disability or for education, housing and health care, among other things. ABLE account programs have been rolling out on a state-by-state basis, but even if your state does not yet have its own program, many state programs allow out-of-state beneficiaries to open accounts. (For a directory of state programs, click here.)

Although it may be easy to set up an ABLE account, there are many hidden pitfalls associated with spending the funds in the accounts, both for the beneficiary and for her family members. In addition, ABLE accounts cannot hold more than $100,000 without jeopardizing government benefits like Medicaid and SSI. If there are funds remaining in an ABLE account upon the death of the account beneficiary, they must be first used to reimburse the government for Medicaid benefits received by the beneficiary, and then the remaining funds will have to pass through probate in order to be transferred to the beneficiary's heirs.  

Get Help With Your Plan
However you decide to provide for a child with special needs, proper planning is essential. Talk to your attorney to determine the best plan for your family. 

What Are Some Good Tips for Business Succession Planning in The Internet Age? 在這互聯網時代，有什麼好提議給商業繼任計劃？ (中英對照)

“Many business owners build their businesses hoping that they will continue to generate income for their heirs, after they pass away. However, businesses often die or lose significant value when the owner dies.”

When considering how to make sure your business continues to thrive, it’s important to remember that if you do nothing, your business already has a default plan in place: if no additional planning is done, your business is an asset of your estate and will be subject to probate.

Forbes’ article, “Business Succession Planning In The Internet Age,” says that there are four issues with this default plan. First, it can take years for a court to probate your estate. In that time, your business can dry up, when probate is finalized. Next, if you do not have an estate plan, your heirs may fight over who will inherit the business. Whoever inherits the business under the state’s intestate succession laws may also not be the best person to make sure your business will continue to grow and be successful. Finally, if you have co-owners, they might not like your heirs and could get into disputes with the new owners that harm the business.

There are two legal tools to look at when reviewing your options: a buy-sell agreement and good estate planning.

A Buy-Sell Agreement. This is a contract between the co-owners of a company that addresses a variety of business-changing events, such as when an owner dies. Rather than the deceased owner’s equity being a part of the assets distributed during probate, the buy-sell agreement can include an agreed-upon amount that will be paid to the estate, in exchange for the business repurchasing the equity. The purchase is often financed with a life insurance policy on each owner of the business.

Estate Planning. Instead of allowing your business to be subject to probate, a business owner can work with an estate planning attorney to make the business an asset of the owner’s trust.

With either option, be sure you note the important digital assets for the continued operation of your business. Your business’s digital assets may include customer lists, intellectual property and creative products. It is important to remember these tips on considering your digital assets:

1. Understand the policies that impact your tools. Review your software provider’s policies on what happens if your company needs to name a new point of contact, pay bills differently, or be transferred to a different company, in case the unexpected happens.
2. Security and redundancy. A company’s success requires owners and employees to keep proprietary information and client information secure. However, the concern for safety must be balanced with redundancy that considers which people will have access to digital assets and an understanding of what to do with them, if the owner or main management team is unable to tend to business as usual.
3. Add digital assets in legal documents. Include an inventory of digital assets in your buy-sell agreement or estate plan. Be specific about who should get access to digital assets.

Creating a detailed plan as to who should have access to your business’s digital assets in case of your incapacitation or death, is an important part of succession planning.

Reference: Forbes (April 8, 2019) “Business Succession Planning In The Internet Age”

“許多商人成立他們的企業是希望能在他們去世後繼續為他們的繼承人製造收入。可是，當企業主去世時，企業往往會倒閉或失去價值。＂

在考慮如何確保您的業務可繼續蓬勃發展時，更重要的是要緊記如果您什麼都不做，有人已經為您的企業做了一個預設的計劃：如果沒有做好額外的計劃，您的業務就是您的資產，將需通過遺囑認證。

Forbes的文章“Business Succession Planning In The Internet Age,”說到，此預設計劃存在四個問題。首先，法院可能需要數年時間來審理您的遺產。到了那個時候，當遺囑認證敲定時，您的企業可能已不存在。接著，如果您沒有資產計劃，您的繼承人可能會因誰將繼承該企業而爭吵。根據州的無遺囑繼承法，　繼承業務的人可能不是一個使業務持續發展並取得成功的最佳人選。最後，如果您有合夥人，他們可能不喜歡您的繼承人，並可能與新業主發生爭執而有損業務。

在審視您的選擇時，有兩種法律工具可考慮：買賣協議和良好的資產規劃。

買賣協議。這是公司合夥人之間所簽的合同，該合同涉及各種業務變化，例如企業主去世時。買賣協議不是將去世的企業主的權益作為遺囑認證期間分配資產的一部分，而是將商定金額支付給遺產，以換取回購過世合夥人的股權。回購通常由企業的各業主的人壽保險來提供資金。

資產規劃。企業主可與資產規劃律師合作，將企業資產變成企業主的信託的資產，以避免企業資產通過遺囑認證。

無論選擇哪種方式，請務必記下重要的數碼資產，以便繼續經營您的業務。您企業的數碼資產可能包括客戶名單，知識產權和創意產品。在考慮您的數碼資產時，需要緊記一些技巧：

1.了解影響工具的政策。如果您的公司需要指定新的聯繫人，以不同的方式支付賬單或轉移到別的公司，以防意想不到的事情發生，請查看您的軟件供應商的政策。

2.安全和過多。公司的成功是有賴企業主和員工保護專有信息和客戶資料的安全。但是，如果企業主或主要管理團隊無法照常營運，那麼對安全的關注必須包括考慮哪些人可以取得數碼資產以及了解如何處理這些資產。

3.在法律文件中加入數碼資產。在您的買賣協議或資產計劃中包含數碼資產清單。具體說明誰可取得數碼資產的權限。

制定周詳的計劃，確定在您失去能力或去世後誰可取得您企業的數碼資產的權限，這是繼任計劃的重要部分。

參考: Forbes (April 8, 2019) “Business Succession Planning In The Internet Age”

Another Reason for an Estate Plan: Family Solidarity

“If your life insurance lists only “Jr.” as the beneficiary, he will get 100% of the death benefit and your daughter will get only half of the assets that do not have a beneficiary designation.”

How would your daughter feel about receiving no part of that death benefit? No matter how good your son is, there’s no way to guarantee that he will do the right thing and share those assets with his sister as you wanted. The result could be a family fracture that keeps siblings, cousins, and even grandchildren apart.

This is one aspect of estate planning many people don’t even consider, says the Observer-Reporter in the article “Improper estate planning can lead to familial conflict.”

“Dying intestate” is the term used to describe the legal status of someone who has died without a will. The laws of your state will then dictate what happens to your assets. Most of your tangible possessions will be distributed following probate. If your estate is complex, for example, and you own property in more than one state, the process will take a long time and the costs will be high. A will—and an estate plan that is updated regularly—can prevent this and many other scenarios.

Some of your assets do not pass to heirs through a will. This includes retirement accounts, life insurance policies and annuities. All accounts that have named beneficiaries go directly to the people who are named. If they predecease you, then the contingent beneficiary receives the asset.

Reviewing beneficiary designations is as important as reviewing your entire estate plan. If you name only your son as the beneficiary for your insurance policy, then later welcome a daughter into your family by birth or adoption, you’ll want to add her as a named beneficiary as well. Otherwise, when you die, only your son will receive the proceeds.

Anytime a life event occurs—births, deaths, divorces, marriages—is the right time to review your beneficiary designations.

Here’s the key: you can make these changes when you are living. When you die, the designation is irrevocable.

Your estate plan also needs to include two different types of Power of Attorney (POA). The first is to make financial decisions if you are incapacitated, and the second is to make health decisions.

The person you give the POA to has authority to make these decisions for you, only while you are alive. The POA terminates upon your death.

Most people name their spouse for their healthcare POA, but if your spouse passes and you have adult children, one of them should be named your healthcare POA. Regulations about healthcare have put medical professionals into a difficult situation, when they want to have the family involved but are legally unable to share information. If your children disagree about your care, emergency situations may also become more challenging. If you have a blended family, things can get really divisive.

Here’s a celebrity story that serves as a perfect example. A famous father made his third wife his executor and gave her total control over his business, despite the fact that his son was equally famous and the top executive in that business, as well as its public face. The son was baffled when he learned that the third wife now controlled the business, including the rights to his own name. When the father died, a long, expensive and unpleasant estate battle began. The son was Dale Earnhardt Jr.

Keep your family together, ensure that assets are distributed as you want and make sure to have conversations with your family members, so the family you devoted a lifetime to creating continues as part of your legacy. Speak with an estate planning attorney to create the documents and if need be, help you communicate with your family members. Don’t overlook what’s at the heart of estate planning: your family.

Reference: Observer-Reporter (Dec. 12, 2018) “Improper estate planning can lead to familial conflict”

Expensive Mistakes People Make With Life Insurance

“Life insurance provides a financial safety net for families. Sounds simple, but decisions over whether and how much to buy can get complicated, and mistakes can be costly.”

Life insurance sounds like a simple enough concept: you insure your life to protect your family. If something should happen to you, your family receives enough money, so it can pay for the things your income would have otherwise provided. According to an article from The Washington Post, “Don’t make these big life insurance blunders,” many people get it wrong.

Here are the common mistakes that financial planners see:

Too much or not enough. Not everyone needs life insurance. If no one is depending on your income, you may not need any. However, if you have young children, and especially if you are the only breadwinner, then you need a lot. Even a stay-at-home parent needs coverage. If you died, how would the surviving spouse cover the cost of child care and all the other tasks that are done by the stay-at-home parent?

One rule of thumb is to purchase seven times the amount of your annual salary, plus money for college educations. That’s a lot of insurance, but the protection is well worth it.

Buying the wrong kind of policy. There are two kinds of policies, and they serve very different purposes. Term life is simple and cheap. It offers coverage for a specific amount of time, usually 10, 20 or 30 years. If you die while the policy is in effect, it pays proceeds to the beneficiaries. If you live past the term, it has no value. It’s a good pick for most families, offering protection when kids are young or there’s a mortgage that needs to be paid. The idea is that, at the end of the term, you don’t need the insurance anymore.

There’s also permanent or whole life insurance. Many people get sold these policies, usually with the argument that they are building cash value. The problem is that the fees and agent’s commissions consume a lot of that value. One school of thought says to instead put money into tax-advantaged retirement accounts. If you’ve got money left over, use a low-cost index fund instead of funding a life insurance policy.

Permanent life insurance is valuable, if there is a special needs child who will be financially dependent on the parents. In that case, speak with an elder law attorney with special needs planning experience.

Depending on the life insurance in your employee benefits package. Check with the HR department to make sure you know how much coverage your work benefits provides. It’s likely not enough to protect your family. When you leave the company, the coverage ends.

Procrastinating the purchase. Many people treat the purchase of life insurance the way they do having their wills and estate planning done. There’s always something else that needs to be done first. However, if you wait too long, it may become more expensive. Get a few quotes from reputable companies and make a decision.

Reference: The Washington Post (Nov. 1, 2018) “Don’t make these big life insurance blunders”

Widows Be Wise About Social Security

“Losing one's spouse is one of life's most difficult and overwhelming experiences. Claiming Social Security survivor benefits apparently ranks as a close second, based on a frantic phone call I received from a close friend this week.”

A friend who was unexpectedly widowed, when her husband died at age 44 of a massive heart attack, was left with a toddler, a teenager, too little life insurance and household income that had been cut in half. She managed, as reported in Investment News’ article “Inaccurate info from Social Security Administration a challenge for widows,” in part thanks to Social Security.

Now that she is planning her retirement, she’s struggling to get to the heart of her benefits as a surviving spouse. She’s not the only one facing this issue.

Her financial advisor recommended that she claim her survivor Social Security benefits when she retires next January and then switch to her own benefits at age 70, when the amount has maxed out.

Three separate calls to Social Security Administration representatives resulted in three incorrect answers. They told her that she was not entitled to survivor benefits, because her own retirement benefits were larger. Each reported that there were new “deemed filing” rules that require anyone born after Jan. 1, 1954, to file for all available benefits at the time of the claim. They also said that people who are born after that date are no longer allowed to claim one type of benefit first and then switch to another.

This misconception was based on an old file and switch method that was changed and is no longer available. However, the change does not apply to survivor benefits. The agents did not know the difference.

Earlier this year, an internal Social Security Administration report found that agents and representatives gave widows and widowers incorrect advice 85% of the time, based on random samples of claims by surviving spouses, who were also entitled to claim their own retirement benefits.

Social Security had been a blessing for the widow, as she received dependent benefits for two children as she struggled as a single parent. When the kinks were worked out, she was pleasantly surprised to learn that her survivor benefit was much larger than anticipated, given the short span of her late husband’s working years.

 However, this incident and the statistics from the study should serve as a warning to those about to navigate their own journey for Social Security survivor benefits. Don’t be afraid to ask questions, call more than one time and visit the Social Security website to get information on your benefits.

Your elder law planning attorney will also be able to help, since he keeps tabs on changes in the law and various government institutions that impact seniors.

Reference: Investment News (Sep. 12, 2018) “Inaccurate info from Social Security Administration a challenge for widows”

Protect Your Retirement from These Threats 保護您的退休免受這些威脅 (中英對照)

“Four types of expenses can wreak havoc with your retirement.”

Retirement is a balance between enjoying your golden years, taking good care of your health and balancing your finances, so you don’t run out of income too early. However, as reported by MD Magazine in the recent article “Four Big Retirement Threats and How to Protect Yourself,” there are challenges ahead, some of which you can control, others requiring preparation.

Threat One: Premature death of a spouse and loss of Social Security or pension income. The loss of one Social Security check can have a significant impact on the household’s income. This is also true with the loss of a private pension. Both spouses need to be aware of how their retirement income will be generated and what will happen, when one spouse passes away.

Life insurance can be used to make up for the lost income. If you are young enough, buy term insurance. If you are older, consider cash-value policies, like whole life. Make sure that both spouses are familiar with household finances. Put together a list of your checking, savings, investment and credit card accounts.

Threat Two: Healthcare Costs. Medicare simply does not cover everything. Even a Medicare Advantage plan doesn’t cover everything. That includes long-term care, dentistry, vision care, hearing aids, eyeglasses or private nursing. There’s a “donut hole” in prescription coverage, so if you need pricy drugs you’ll need to budget at least $5,000 annually. If you underestimate the cost of healthcare, you could go through your medical budget fast.

Perfect health at 55 is no guarantee for what’s to come.

One solution is making the most of a Health Savings Account (HSA). You can save for future medical expenses and get a tax deduction for contributions. Even better—there’s no income tax on withdrawals for qualified medical expenses. Check with your employer, since HSAs are usually part of an employee benefits plan. You must have a high-deductible heath plan and can’t be on Medicare to qualify for an HSA.

Threat Number Three: Inflation According to the U.S. Bureau of Labor Statistics, inflation has averaged about 4% annually over the last 50 years. In 20 years, today’s $1 will be worth only 46 cents. Make sure your investment portfolio is diversified. Remember that your retirement could last several decades, so it may not be wise to abandon equities during retirement.

Threat Number Four: Outliving Your Savings. This sounds like a good problem, but it is still a problem. The longer you live, the longer you are expected to live. According to the IRS life expectancy tables, a 30-year-old can expect to live to age 83.  However, if you are 65 years old now, you can expect to live until age 86. The solution is to do periodic planning to make sure your retirement accounts and investments are keeping up with your living expenses. Give yourself a cushion, in case you live far past your expectations.

To protect your family in case of a sudden death, make sure you have an estate plan in place.  An estate planning attorney can help you set up an estate plan that works for you. 

Reference: MD Magazine (Aug. 2, 2018) “Four Big Retirement Threats and How to Protect Yourself”

“四種類型的開支可能會對您的退休造成嚴重破壞。”

退休是享受的黃金歲月，與照顧好自己的健康和平衡財務之間的一種平衡，所以你不要過早地用盡收入。但是，正如MD Magazine在最近的文章中所報導的那樣“Four Big Retirement Threats and How to Protect Yourself,” (四大退休威脅以及如何保護自己) 未來有挑戰，其中一些是你可以控制的，另一些是需要準備的。

威脅一：配偶過早死亡，失去社會保障或養老金收入。失去一張社會保障支票會對家庭收入產生重大影響。失去私人養老金也是如此。雙方配偶都需要知道如果一方配偶去世，對他們的退休收入將有什麼的影響以及將會發生什麼事。

人壽保險可以用來彌補損失的收入。如果你還年輕，購買定期保險。如果您年齡較大，請考慮現金價值的保險，例如人壽保險。確保配偶雙方都熟悉家庭財務狀況。列出您的支票，儲蓄，投資和信用卡賬戶清單。

威脅二：醫療成本。聯邦老人保險(Medicare)並不包括一切。即使是優化聯邦老人保險(Medicare Advantage Plan)也未包括所有內容。例如長期護理，牙科，視力保健，助聽器，眼鏡私人護理和一些處方藥物。如果你需要昂貴的藥物，你需要每年預算至少5000美元。如果您低估了醫療保健的成本，您可能會很快用完所有醫療預算。

一種解決方案是充分利用健康儲蓄賬戶（HSA）。您可以省未來的醫療費用並獲得扣稅。更好的是對合格的醫療費用提款不徵收收益稅。請諮詢您的雇主，因為HSA通常是員工福利計劃的一部分。您必須擁有高自付額的健康計劃，如果你有聯邦老人保險就不能有HSA資格。

威脅第三：通貨膨脹。根據美國勞工統計局的數據，在過去的50年裡，通貨膨脹率平均每年約為4％。在20年內，今天1美元的價值僅為46仙。確保您的投資組合多樣化。請記住，你的退休生活可能會是數十年，因此退休時放棄股票可能並不是明智的決定。

第四威脅：儲蓄用完了。人活得長久，本來是好事，但另一個問題是錢不夠用。一個30歲的人可以活到83歲。但是，如果你現在65歲，你可能活到86歲。解決方案是定期計劃，以確保您的退休賬戶和投資可以跟上你的生活費用。給自己準備一個後備方案，以防你的生活費用超出你的預期。

為了在遇到突然死亡的情況下保護你的家人，請確保你有一個資產計劃。資產規劃律師可以幫助您制定適合你的資產計劃。

參考: MD Magazine (Aug. 2, 2018) “Four Big Retirement Threats and How to Protect Yourself”