Fong Law Group

Getting Paid as a Family Caregiver Through Medicaid

Caring for an ailing family member is difficult work, but it doesn’t necessarily have to be unpaid work. There are programs available that allow Medicaid recipients to hire family members as caregivers. 

All 50 states have programs that provide pay to family caregivers. The programs vary by state, but are generally available to Medicaid recipients, although there are also some non-Medicaid-related programs. 

Medicaid's program began as "cash and counseling," but is now often called "self-directed," "consumer-directed," or "participant-directed" care. The first step is to apply for Medicaid through a home-based Medicaid program. Medicaid is available only to low-income seniors, and each state has different eligibility requirements. Medicaid application approval can take months, and there also may be a waiting list to receive benefits under the program. 

The state Medicaid agency usually conducts an assessment to determine the recipient's care needs—e.g., how much help the Medicaid recipient needs with activities of daily living such as bathing, dressing, eating, and moving. Once the assessment is complete, the state draws up a budget, and the recipient can use the allotted funds to pay for goods or services related to care, including paying a caregiver. Each state offers different benefits coverage. 

Recipients can choose to pay a family member as a caregiver, but states vary on which family members are allowed. For example, most states prevent caregivers from hiring a spouse, and some states do not allow recipients to hire a caregiver who lives with them. Most programs allow ex-spouses, in-laws, children, and grandchildren to serve as paid caregivers, but states typically require that family caregivers be paid less than the market rate in order to prevent fraud. 

In addition to Medicaid programs, some states have non-Medicaid programs that also allow for self-directed care. These programs may have different eligibility requirements than Medicaid and are different in each state. Family caregivers can also be paid using a "caregiver contract," increasingly used as part of Medicaid planning. 

In some states, veterans who need long-term care also have the option to pay family caregivers. In 37 states, veterans who receive the standard medical benefits packagefrom the Veterans Administration and require nursing home-level care may apply for Veteran-Directed Care. The program provides veterans with a flexible budget for at-home services that can be managed by the veteran or the family caregiver. In addition, if a veteran or surviving spouse of a veteran qualifies for Aid & Attendance benefits, they can receive a supplement to their pension to help pay for a caregiver, who can be a family member. 

All of these programs vary by state. Contact your attorney to find out what is available in your state. 

Protect A Life of Working and Saving from Long Term Care Costs 從長期護理成本中節省及保障工作生活 (中英對照)

“Though complex, existing laws provide people with a pathway to protect their assets, become legally poor and qualify for publicly funded Medicaid to cover nursing home bills.”

Every month, Lawrence Cappiello writes a check to a nursing home for $12,000 to pay for the cost of his wife’s nursing home care. Two years ago, his net worth was $500,000. In less than two years, the Cappiello’s savings will be gone. This unsettling story is explained in the article “How to Keep LTC Costs From Devouring Your Client’s Life Savings” from Insurance News Net. He is suffering from nursing home sticker shock and says he should have known better.

Cappiello was a professor at the University of Buffalo for 25 years. During that time, he taught an introductory course on health care and human services that touched on the costs to consumers. He said it was clear even then, that the cost of health care was going to escalate out of control.

To qualify for Medicaid payments of nursing home care in New York State, residents are permitted to own no more than $15,450 in nonexempt assets. However, elder lawyers, whose practices focus on these exact issues, say that the way to protect the family’s assets, is to take steps years before nursing home care is needed. Some general recommendations:

• Establishing an irrevocable trust, that upon death, transfers the house to the beneficiaries. There must be language that ensures that you have life use of the house.
• transferring savings and other financial assets to an irrevocable trust.
• Gift way assets pursuant to a gifting program

In New York, transfers of any assets must take place more than five years before applying for Medicaid nursing home coverage. In California, such transfers must be done 30 months before applying for Medi-Cal (California version of Medicaid).  In California, an elder law attorney can even devise a gifting program such that assets can be gifted away much less than 30 months before applying for Medi-Cal.  In some cases, people with substantial net worth can gift away their assets in just several months before applying for Medi-Cal. 

That is why planning with an experienced elder law attorney is so critical for families, especially when one of the spouses is facing a known illness that will get worse with time. There are steps that can be taken, but they must be done in a timely manner.

Many older people are not exactly jumping with joy at the idea of handing over their assets, even when relationships with adult children are good.  Setting up an irrevocable trust can be a solution.  By setting up an irrevocable trust, the elderly person can retain full control of the assets while qualifying for Medi-Cal.   

It should be noted that a sick spouse can move assets to a healthy spouse, to make the sick spouse lawfully poor and eligible for Medicaid. There is no look back period or penalty for interspousal transfers. This sounds like a very simple solution. However, these are complex matters that need the help of an experienced attorney. If it were so easy, countless spouses would not be facing their own impoverishment because of an ill spouse.

Reference: Insurance News Net (Feb. 4, 2019) “How to Keep LTC Costs From Devouring Your Client’s Life Savings”

“雖然複雜，但現行法律提供了保護資產的途徑，使人合法地成為窮人，並獲得資格取得醫療補助以支付養老院賬單。”

Lawrence Cappiello每個月都需要寫一張12,000美元支票給養老院，以支付他妻子在養老院的護理費。兩年前，他的淨資產為50萬美元。不到兩年，Cappiello的積蓄將會化為烏有。這個令人不安的故事在Insurance News Net的文章“How to Keep LTC Costs From Devouring Your Client’s Life Savings” 中說到。他給養老院的費用嚇一跳，但說他自己早應該知道。

Cappiello在布法羅大學當教授已有25年。期間，他教授了關於醫療保健和公共事務的入門課程，這些課程涉及消費者要負擔的費用。他說當時已明白到醫療保健的成本會如脫彊野馬般失控。

要獲得紐約醫療補助的養老院護理資格，居民可以擁有不超過15,450美元的非豁免資產。然而，專精這些問題的老人法律師說要保護家庭資產的話就要在需要入住療養院之前的數年便要採取行動。一些基本的建議：

• 成立不可撤銷的信託，在去世後將房屋轉移給受益人。必須有文字去確保您擁有房子的使用權
• 將儲蓄和其他金融資產轉移到不可撤銷的信託
• 依據贈予計劃贈予資產

在紐約，任何形式的資產轉移必須在申請療養院的醫療補助五年前進行。在加州，此類轉移必須在申請白卡的30個月前完成。在加州，老人法律師可以創立一個贈予計劃，以便在申請白卡之前，資產可以在不用在申請白卡之前30個月完成。在某些情況下，擁有大量淨資產的人可以在申請白卡之前的幾個月內贈送他們的資產。

這就是為什麼與經驗豐富的老人法律師一起規劃對家人來說如此重要，特別是當配偶面對每況愈下的已知疾病時。有一些步驟可以採取，但必須及時完成。

即使與成年子女的關係良好，許多老人對於交出資產的想法也並不喜悅。成立不可撤銷的信託是一種解決方案。通過成立不可撤銷的信託，老人可以在符合白卡資格的同時能全權控制自己的資產。

應這樣說，患病的配偶可以將資產轉移給健康的配偶，使患病的配偶合法地成為窮人並獲得醫療補助資格。對於配偶間轉移並沒有回顧期或罰款。這聽起來像一個非常簡單的解決方案, 但這些都是複雜的事情，需要經驗豐富的律師的幫助。如果這麼容易，便不會有無數配偶因患病的配偶而使自己面臨貧困。

參考: Insurance News Net (Feb. 4, 2019) “How to Keep LTC Costs From Devouring Your Client’s Life Savings”

Still Wondering Why You Need to Review an Estate Plan? 還在想為什麼你需要審查您的資產產計劃？ (中英對照）

“An estate plan is the guide to how you want your personal and financial affairs to be handled, in the event of your incapacity or death. As life changes, your guide changes with it.”

One of the most common mistakes in estate planning is thinking of the estate plan, as being completed and never needing to be reviewed. That is similar to taking your car for an oil change and then simply never returning for another oil change. The years go by, your life changes and you need an estate plan review.

The question posed by the New Hampshire Union Leader in the article “It’s important to periodically review your estate plan” is not if you need to have your estate plan reviewed, but when.

Most people get their original wills and other documents from their estate planning attorney, put them into their safe deposit box or a fire-safe file drawer and forget about them. There are no laws governing when these documents should be reviewed, so whether or when to review the estate is completely up to the individual. That often leads to unintended consequences that can cause the wrong person to inherit, fracture the family and leave heirs with a large tax liability.

A better idea: review the estate plan on a regular basis. For some people with complicated lives and assets, that means once a year. For others, every three or four years works. Some reviews are triggered by changes in life, including:

• Marriage or divorce
• Death
• Large changes in the size of the estate
• A significant increase in debt
• The death of an executor, guardian or trustee
• Birth or adoption of children or grandchildren
• Change in career, good or bad
• Retirement
• Health crisis
• Changes in tax laws
• Changes in relationships to beneficiaries and heirs
• Moving to another state or purchasing property in another state
• Receiving a sizable inheritance

What should you be thinking about, as you review your estate plan? Here are some suggestions:

Have there been any changes to your relationships with family members?

Are any family members facing challenges or does anyone have special needs?

Are there children from a previous marriage and what do their lives look like?

Are the people you named for various roles—power of attorney, executor, guardian and trustees—still the people you want making decisions and acting on your behalf?

Does your estate plan include a durable power of attorney for healthcare, a valid living will, or if you want this, a DNR (Do Not Resuscitate) order?

Has your estate plan addressed the possible need for Medicaid?

Do you know who your beneficiary designations are for your accounts and are your beneficiary designations still correct? Your beneficiaries will receive assets outside of the will and nothing you put in the will can change the distribution of those assets.

Have you aligned your assets with your estate plan? Do certain accounts pass directly to a spouse or an heir? Have you funded any trusts?

Finally, have changes in the tax laws changed your estate plan? Your estate planning attorney should look at your state, as well as federal tax liability.

Just as you can’t plant a garden once and expect it to grow and bloom forever, your estate plan needs to be reviewed, so that it can protect your interests as your life and your family’s life changes over time.

Reference: New Hampshire Union Leader (Jan. 12, 2019) “It’s important to periodically review your estate plan”

“資產計劃是您在喪失工作能力或去世時如何處理個人和財務事務的指南。隨著生活的變化，你的指引隨之改變。“

資產規劃中最常見的錯誤之一是認為資產計劃已經完成並不需要再審查。這就好像於您將汽車換油然後就不再換油了。隨著歲月流逝，你的生活起了變化，你是需要審查您的資產計劃。

New Hampshire Union Leader在“It’s important to periodically review your estate plan”一文中提出問題是您要何時去審查您的資產計劃。

大多數人從他們的資產規劃律師取得他們的遺囑和其他文件的原檔，將文件放入他們的保險箱或防火文件抽屜中接著便忘記了。沒有法律規定應何時審查這些文件，因此是否或何時審查完全取決於個人。這通常會引致意想不到的後果，導致錯誤的人繼承，破壞家庭並給繼承人帶來巨額稅務。

更好的意見是：定期審查資產計劃。對於一些生活和資產複雜的人來說，應每年審查一次。對於其他人，每三到四年審查一次。有些是因為生活起了變化而需要審查，包括：

• 婚姻或離婚
• 死亡
• 資產發生巨大變化
• 債務大幅增加
• 遺囑執行人，監護人或受託人去世
• 子女或孫兒的出生或收養
• 職業變化，無論好壞
• 退休
• 健康危機
• 稅法的變化
• 與受益人和繼承人的關係發生變化
• 搬到另一個州或在另一個州購買房產
• 繼承了可觀的遺產

在審查您的資產計劃時，您應該考慮什麼？以下是一些建議：

您與家人的關係是否有任何變化？

有沒有家人陷於困境之中或是有沒有人有特殊需求？

以前的婚姻中是否有子女，他們的生活如何？

您為各種角色命名的人 - 律師，遺囑執行人，監護人和受託人 - 仍然是您想要為您做出決定並代表您行事的人嗎？

您的資產計劃中是否包括醫療授權書，有效的遺囑，或者如果您需要，還包括DNR（不要急救指令）？

您的資產計劃中是否有提到醫療補助 (白卡) 的需求？

您知道您銀行帳戶的指定受益人是誰以及您的指定受益人是否仍然正確？您的受益人繼承這些遺囑之外的資產，而您遺囑中的內容並不會推翻這些資產的分配。

您是否將您的資產與資產計劃保持一致？某些帳戶是否直接傳給配偶或繼承人？你有把您的資產注入您的信託中嗎？

最後，稅法的變化是否改變了您的資產計劃？您的資產規劃律師應該查看您所在的州以及聯邦稅務。

正如你不能一下子建立了一個花園並期望它永遠成長和開花一樣，你的資產計劃需要進行審查，這樣可以保障你的利益，因為你的生活和家庭情況會隨著時間而變化。

參考：New Hampshire Union Leader (Jan. 12, 2019) “It’s important to periodically review your estate plan”

Who Will Pay for Your Nursing Home Care? 您的養老護理費由誰來支付? (中英對照)

“Health insurance coverage will often pay for the first few days or months at the nursing home, but that eventually stops.”

It’s hard for everyone in the family, when a beloved parent or grandparent must enter a nursing home, because they can no longer live on their own. Often the result of a physical or mental decline, the difficultly is compounded by worries about how to pay for the care, reports The Ledger in the article “The Law: Are you eligible for Medicaid nursing home coverage?”

Once health insurance coverage ends, the cost of care becomes enormous, with the monthly cost for a private-pay resident at nursing homes often exceeding $10,000 a month. What usually happens? Residents can’t afford the care and only have two options: qualify for Medicaid Nursing Home coverage, or sell every asset they can, impoverish the spouse, and ask adult children or other family members for help. Most people contact an elder law attorney and explore becoming eligible for Medicaid Nursing Home coverage.

Let’s use the state of Florida for an example of how to qualify for this coverage. A person must pass a three-part test that examines their assets, income and health, at the time the application is filed.

Income. As of Jan. 1, 2019, you could have a maximum of $2,313 per month in income (before deductions) to be eligible for Medicaid Nursing Home coverage. If your income was above that number, then legal planning is necessary to create a qualified income trust. Timing is extremely important, because if the trust is not set up correctly or in a timely fashion, you will not qualify for Medicaid.

There is a common mistake made about a spouse’s income being too high. It’s happily not true: a spouse’s income can be unlimited, and it does not impact a Medicaid applicant’s eligibility for benefits.

Assets. As of Jan. 1, 2019, you may have a maximum of $2,000 of countable assets and be eligible for Medicaid Nursing Home coverage. If the assets are above that threshold, there are a number of acceptable legal options to help the individual become eligible. There are two types of asset classes to consider when applying for Medicaid Nursing Home coverage: countable and non-countable.

Some non-countable assets are as follows: In Florida, homestead property up to $585,000 in value, one automobile, a prepaid burial contract and term life insurance without a cash value. Countable assets include bank accounts, investment accounts, life insurance with cash value, CDs and annuities.

As of Jan. 1, 2019, a spouse may have a maximum of $126,420 of countable assets, without having an impact on their spouses’ Medicaid eligibility.

An elder law attorney should be consulted to help the family understand the income and asset tests and create a strategy to help the individual qualify, if they anticipate needing Medicaid Nursing Home coverage. It’s best to do this well in advance, if possible.

Reference: The Ledger (Jan. 9, 2019) “The Law: Are you eligible for Medicaid nursing home coverage?”

“健康保險通常可支付在療養院幾天或幾個月的費用，但最終會終止。”

當心愛的父母或祖父母必須住進養老院時，這對家中的每個人來說都很困難，因為他們不能再照顧自己了。 Ledger在文章“The Law: Are you eligible for Medicaid nursing home coverage?”中說，這是身心倒退的結果，困難是擔憂如何支付醫療費。

一旦健康保險覆蓋範圍沒了，護理費用就會變得很大，養老院的私人住戶每月的費用通常超過每月一萬美元。一般會發生什麼問題？就是居民負擔不起，而選擇只有兩種：合資格獲得療養院補助的保險，或賣掉他們的所有資產，使配偶破產，並向成年子女或其他家人求助。大多數人會聯繫老人法律師並查看他們是否獲得療養院補助的資格。

讓我們用佛羅里達州的一個例子來說明如何獲得此資格。在提交申請時，必須通過三部分測試，包括檢查他們的資產，收入和健康狀況。

收入。自2019年1月1日起，您每月最多只可有2,313美元的收入（扣除前）才有資格獲得療養院補助。如果您的收入高於這數字，則需要合法的的規劃去成立一個合資格的收入信託。時間安排非常重要，因為如果沒有正確或及時地建立信託，您將無法獲得療養院補助。

常犯的一個錯誤是配偶的收入過高。可幸的是，這不是真的：配偶的收入可以是無限的，並且它不會影響療養院補助申請人的福利資格。

資產。自2019年1月1日起，您可擁有最多二千美元的資產便有資格獲得醫療補助。如果資產高於此值，則有許多合理合法的途徑可幫助獲得資格。申請療養院補助時，有兩種類型的資產類別需要考慮：不可豁免和可豁免的。

一些可豁免的資產如下：在佛羅里達州，可擁有房產價值高達585,000美元，一輛汽車，預付葬禮合同和沒有現金值的定期人壽保險。不可豁免資產包括銀行賬戶，投資賬戶，有現金值人壽保險，定期存款和年金。

截至2019年1月1日，配偶最多可獲得126,420美元的豁免資產，而不影響其配偶的療養院補助資格。

如果他們需要療養院補助保險，應諮詢老人法律師以幫助家人了解收入和資產測試並製定策略以取得資格。如果可能的話，最好提前做好。

參考: The Ledger (Jan. 9, 2019) “The Law: Are you eligible for Medicaid nursing home coverage?”

Three Reasons Why Giving Your House to Your Children Isn't the Best Way to Protect It From Medicaid

You may be afraid of losing your home if you have to enter a nursing home and apply for Medicaid. While this fear is well-founded, transferring the home to your children is usually not the best way to protect it.

Although you generally do not have to sell your home in order to qualify for Medicaid coverage of nursing home care, the state could file a claim against the house after you die. If you get help from Medicaid to pay for the nursing home, the state must attempt to recoup from your estate whatever benefits it paid for your care. This is called "estate recovery." If you want to protect your home from this recovery, you may be tempted to give it to your children. Here are three reasons not to:

1. Medicaid ineligibility.Transferring your house to your children (or someone else) may make you ineligible for Medicaid for a period of time. The state Medicaid agency looks at any transfers made within five years of the Medicaid application. If you made a transfer for less than market value within that time period, the state will impose a penalty period during which you will not be eligible for benefits. Depending on the house’s value, the period of Medicaid ineligibility could stretch on for years, and it would not start until the Medicaid applicant is almost completely out of money.

There are circumstances under which you can transfer a home without penalty, however, so consult a qualified elder law attorney before making any transfers. You may freely transfer your home to the following individuals without incurring a transfer penalty:

• Your spouse
• A child who is under age 21 or who is blind or disabled
• Into a trust for the sole benefit of a disabled individual under age 65 (even if the trust is for the benefit of the Medicaid applicant, under certain circumstances)
• A sibling who has lived in the home during the year preceding the applicant's institutionalization and who already holds an equity interest in the home
• A "caretaker child," who is defined as a child of the applicant who lived in the house for at least two years prior to the applicant's institutionalization and who during that period provided care that allowed the applicant to avoid a nursing home stay.

2. Loss of control.By transferring your house to your children, you will no longer own the house, which means you will not have control of it. Your children can do what they want with it. In addition, if your children are sued or get divorced, the house will be vulnerable to their creditors.
3. Adverse tax consequences.Inherited property receives a "step up" in basis when you die, which means the basis is the current value of the property. However, when you give property to a child, the tax basisfor the property is the same price that you purchased the property for. If your child sells the house after you die, he or she would have to pay capital gains taxes on the difference between the tax basis and the selling price. The only way to avoid some or all of the tax is for the child to live in the house for at least two years before selling it. In that case, the child can exclude up to $250,000 ($500,000 for a couple) of capital gains from taxes.

There are other ways to protect a house from Medicaid estate recovery, including putting the home in a trust. To find out the best option in your circumstances, consult with your elder law attorney.

More than a Will: What Else Should Your Estate Plan Include?

“A will directs how your probate assets will be distributed upon your passing, designates an executor to be in charge of your estate, and allows you to create trusts for minor grandchildren or disabled beneficiaries. However, having a will is just part of the story.”

A will is the cornerstone of an estate plan, but it is by no means the only document needed to distribute assets and prepare for both incapacity and death. The Island Now reviews a number of things that an estate plan should address in the article “Five things that will impact your will.”

How are your bank accounts structured? If you have a bank account set up as “joint with right of survivorship,” when one of the owners dies, the other owner automatically inherits the whole account. Remember that this will occur, no matter what is stated in the will. If you have added a child to that account for convenience, is it your wish that the child should inherit the entire account? That’s exactly what will happen. You may be better off letting a child help you, using Power of Attorney rather than structuring the account that way.

When was the last time you reviewed beneficiary designations? Like titling bank accounts, as explained above, the beneficiary designation takes precedence over anything in your will. If you opened an IRA at your first job and now two decades—and two marriages—have passed, that IRA will still be passed on to the person who you named two decades ago, unless you have updated the beneficiary name. Accounts that often pass directly to beneficiaries include life insurance, annuities, 401(k), 403(b), brokerage accounts and some bank accounts.

Each asset that has a beneficiary, should also have a contingency beneficiary in the chance that the primary predeceases you or does not wish to receive the asset.

Are you prepared for the cost of a health crisis? The cost of a health crisis can, and often does, wipe out a family’s years of retirement savings. There are several strategies that an estate planning attorney can help you with to plan in advance for this. Long-term care insurance may be an option and placing assets in an irrevocable trust may be another, depending on your situation. There is a five-year look-back for any Medicaid benefits, so planning in advance is critical.

For many families, placing their primary residence into a trust while retaining the right to live in the home, retaining any STAR or Veteran’s exemptions and possibly even securing capital gains advantages for heirs is a possibility but requires the help of a skilled estate planning attorney.

Is gifting part of your estate plan? Most people know about the annual exclusion gift, which allows anyone to make a gift in the amount of $15,000 per year to a beneficiary with no gift tax consequences. However, if you need to apply for Medicaid coverage within a five-year period, any gift will trigger a waiting period before you can be eligible for Medicaid. Therefore, you can make a gift for tax purposes but it’s not something you can do for Medicaid planning. This is an expensive mistake. Talk with an estate planning attorney to make sure you get this one right.

Who is your Power of Attorney? Everyone should have a Power of Attorney. This is a person who is your legal representative, if you become incapacitated. The durable power of attorney gives your agent the authority to handle banking matters, real estate transactions and other financial matters. You’ll also need a health care proxy and a living will.

All these issues are part of a comprehensive estate plan, which is best created with an experienced estate planning and elder law attorney.

Reference: The Island Now (Nov. 12, 1018) “Five things that will impact your will”

Financing Assisted Living by Saving, Planning and Insurance

“In March 2018, the U.S. Census Bureau reported that by 2030, all baby boomers will be over the age of 65, leading to a unique situation in demographics: 20% of U.S. residents will be at retirement age.”

Part of the increase in the number of people who live long enough to be of retirement age, is because life expectancies have increased. The average U.S. life expectancy has increased from 68 years in 1950 to 79 years in 2013, according to the Population Reference Bureau cited in an article from U.S. News & World Report titled “How Should I Finance Assisted Living?”

The combination of increasing life expectancies and improvements to healthcare, means that more people are living longer after they stop working. This has led to a financial crisis for many Americans: how can they pay for the increased cost of healthcare and assistance needed, as they enjoy these additional years, and in some cases, decades.

It’s like a math problem. If you retire at age 65 and need to enter an assisted living facility 10 years later, how much money will you need to pay for the health care you’ll need by the time you reach 84? It’s impossible to calculate, because there are so many unknown factors.

Those factors are exactly what Americans need to consider, because most facilities primarily rely on private payments and Medicare does not cover the cost of assisted living facilities. It only pays for rehabilitation in a nursing home for the first hundred days. After that, the only assistance available is Medicaid.

Medicaid coverage is supposed to kick in, only when a person has spent down all of their assets and is basically destitute.

One survey by a major financial company reports that the median monthly cost for an assisted living community is $3,750 or $45,000 a year. Long-term care by a home health aide can top $4,000 monthly or nearly $50,000 a year.

These kinds of numbers demonstrate the need to save and plan well for retirement and for the possibility of needing to pay for assisted living. However, boomers are not at all positioned well for either retirement or assisted living. By the time people start thinking about retirement, they are usually in their 50s or 60s.

No matter when you start, starting is better than not doing anything. When you meet with your estate planning attorney, discuss how your estate is structured, in terms of paying for long-term care. Does it make sense for you to purchase an insurance policy to protect your assets and should it be owned by you or by a trust? What kind of trust?

Your estate planning attorney also is likely to have a network of professionals who help families navigate this complex world of care facilities. Understanding this system and the individual’s needs, can go a long way in making a difficult and expensive process much easier.

Reference: U.S. News & World Report (Oct. 10, 2018) “How Should I Finance Assisted Living?”

Is Bankruptcy in Your Future?

“According to U.S. Bankruptcy Court data, 819,159 people filed for bankruptcy in 2016. Although that is down 6.9 percent from 2015, Debt.org reports that people 55 and older account for 20% of those filings, a number that has doubled among seniors since 1994.”

Overall, personal bankruptcies are on the decline.  However, the number of seniors filing for bankruptcy has reached record numbers. That is a terrible thing to have to face in your later years. According to the article “Planning key to avoid becoming a bankruptcy statistic in retirement” from nwi.com, this unpleasant fate can be avoided. However, it takes early planning.

For starters, people need to do a complete financial analysis. This includes a hard look at current and potential future health care costs, which can decimate even the best retirement plan. That means planning for early retirement, long before Medicare is available. Resources may include a younger spouses’ COBRA, contributing to a Health Savings Account and any coverage gap that may occur between the time the person retires and when they reach age 65 and are eligible for Medicare.

Planning needs to start early, so include the cost of college education for your children and planning for retirement. Saving rates slow down during retirement, so getting started on saving early is critical.

A financial plan can expose shortfalls. People may not want to consider themselves at risk. There is a strong tendency to procrastinate, thinking that there is enough time to catch up. The sooner you start planning, saving and facing reality, the better your chances of not filing for bankruptcy.

Another reason for the increasing rate of bankruptcies is that we are all living longer. That’s a great thing but it also means that health care costs are increasing, especially long-term care.

Medicare does not cover long-term care, including assisted living, memory care and the need for nursing home care. It does not cover routine eye care, dental care or hearing aids.

The national average costs for long-term care in the U.S. in 2016 were $225 a day or $6,844 per month for a semi-private room and $253 a day or $7,698 per month for a private room. All other health care costs have been increasing 6% annually, according to the Center for Medicare and Medicaid.

As a nation, we spent $3.2 trillion for health care in 2016. Those cost increases make planning a challenge for seniors and their families.  Therefore, many unforeseen issues occur.

Another reason for the increase in bankruptcies among seniors is the “unwanted retirement.” Many older workers were downsized during the Great Recession and 60% of retirements were unplanned, according to a survey from TransAmerica. Downsized workers took on debt to survive and are now entering the next phase with expenses they did not count on having.

Many returned to the workforce, but at lower salaries. The Bureau of Labor Statistics says 36% of those 65 and older are still working—and 20% of those who are 70 and older are still working. When a low paying job and Social Security are not enough to cover costs, bankruptcy becomes the only option. 

Another common reason for bankruptcies is the rising healthcare cost especially nursing home costs.  You need to plan ahead so that healthcare costs will not bankrupt your lifetime savings.  Contact an estate planning attorney today.  

Reference: nwi.com (Sep. 16, 2018) ““Planning key to avoid becoming a bankruptcy statistic in retirement”

 

Medicaid Problems in Louisiana

If the Louisiana legislature cannot fix a budget shortfall soon, 30,000 nursing home residents in the state will be evicted on July 1st.

It would probably come as a shock for most nursing home residents, if they were suddenly sent an eviction notice. It would be even more shocking, if the residents were all on Medicaid and the government was paying for their care.

That is about to happen to some 30,000 nursing home residents in Louisiana, who are on Medicaid.

The state faces a revenue shortage and the Louisiana House's budget cuts include Medicaid funding. That would mean that the state Medicaid program will no longer be able to pay for nursing home care, as of July 1.

The notices are being sent out by law as the USA Today reports in "More than 30,000 nursing home eviction notices to be sent in Louisiana Thursday."

There is still time for the state to fix this problem. However, there appears to be an impasse between the governor and the legislature over funding. Something similar could also eventually happen in other states.

As the population of the U.S. gets older, Medicaid expenses are growing for both the states and the federal government. Many states are looking for ways to change their programs to save money and the Trump administration has given them greater flexibility to do.

It is not certain how far the administration will allow states to go. For example, Kansas was recently denied its request to limit the number of years a person could be on its program. However, the administration has been more amenable to imposing work requirements on recipients who are not disabled.

Reference: USA Today (May 7, 2018) "More than 30,000 nursing home eviction notices to be sent in Louisiana Thursday."