Garland Law Offices, P.A.

Long Term Care Varies, State by State

“States can differ dramatically when it comes to long term care regarding availability, quality, government benefits, retirement communities and cost.”

What if your parents live in Oklahoma, you live in Nebraska and your brothers and sisters live in New York and California? Having the important conversation with your aging parents about what the future might hold if one of them should need long-term care is going to be a challenge, to say the least.

It’s not just about whether they want to leave their home, reports the article “What is the best state for long term care” from The Mercury. There are many more complications. Every state has different availability, levels of care and taxes. If the family is considering a continuing care retirement community, or if the parents already live in one, what are the terms of the contract?

The differences between states vary, and even within a state, there can be dramatic differences, depending upon whether the facility being considered is in a metropolitan, suburban or rural area. There’s also the question of whether the facility will accept Medicaid patients, if the parents have long-term care insurance or any other resources.

Here’s what often happens: you open up a glossy brochure of a senior community in a warm climate, like Florida or Arizona. There are golf courses, swimming pools and a great looking main house where clubs and other activities take place. However, what happens when the active phase of your life ends, slowly or suddenly? The questions to ask concern levels of care and quality of care. Where is the nearest hospital, and is it a good one? What kind of care can you receive in your own apartment? Are you locked into to your purchase, regardless of your wishes to sell and move to be closer to or live with your adult children?

And what happens if you or a “well” spouse runs out of money? That’s the question no one wants to think about, but it does have to be considered.

For people who move to Florida, which has a very generous homestead exemption for property taxes and no state tax, the incentives are strong. However, what if you become sick and need to return north?

For seniors who live in Pennsylvania and receive long-term care and other services, the well spouse’s retirement funds are exempt for Medicaid regardless of the amount. However, if you move over the state’s border to New Jersey, and those accounts will need to be spent down to qualify for Medicaid. The difference to the well spouse could be life changing.

Delaware and New Jersey have Medicaid available for assisted living/personal care. Pennsylvania does not. The Keystone State has strict income limitations regarding “at home” services through Medicaid, whereas California is very open in how it interprets rules about Medicaid gifting.

The answer of where to live when long-term care is in play depends on many different factors. Your best bet is to meet with an estate planning elder care attorney who understands the pros and cons of your state, your family’s  situation and what will work best for you and your spouse, or you as an individual.

Reference: The Mercury (March 4, 2020) “What is the best state for long term care”

Are You Ready for Retirement?

“It’s never too early to start planning for your retirement.”

While retirement planning may seem daunting, it’s critical to be certain that you have enough savings set aside for your golden years.

According to the Federal Reserve, 26% of non-retirees say they have nothing saved for retirement. Zero.

CNBC’s recent article, “Make these 6 moves now to be financially prepared for retirement,” provides the steps you should take right away to start building your retirement savings.

1. Put on your thinking cap. Picture as accurately as you can what your ideal retirement will look like—and what it will cost. Use an online retirement savings calculator to help you see if you’re on the right spending and savings path.
2. Get a checkup. Get educated about Medicare and weigh the alternatives for long-term care, such as long-term care insurance.
3. Be sure your estate plan is up to date. See your attorney and be sure that all your estate documents work with the laws of the state where you’re retiring. Look at any possible concerns about estate taxes. Keep beneficiary designations up to date because, regardless of what’s said in your will, beneficiaries listed on specific accounts, such as IRAs, will inherit those funds.
4. Think of charities now. With more time on your hands, consider selecting a cause or two. You can lend a hand or make a donation.
5. Review your portfolio. You may have your money primarily deposited in a target-date fund that keeps your investment mix of stocks, bonds, cash, and other assets appropriate for your retirement time horizon. However, it’s a good idea to make certain that your asset allocation is where you want it. Remember that portfolio growth and market shifts can change your allocation at any time, and the closer you get to actual retirement—or if you’re already there—the more conservative an allocation you’ll want to have. You should also monitor the account fees you’re paying in funds and consider lower-cost alternatives.
6. Get professional advice. If you’re not already working with a money and tax expert, consider it.

Reference: CNBC (November 11, 2019) “Make these 6 moves now to be financially prepared for retirement”

What Types of Senior Care is Available for Veterans?

“If you served the United States of America as a member of the armed services, you may be entitled to certain benefits that could make some aspects of getting older a little easier.”

The U.S. Department of Veterans Affairs offers some funding programs that can help offset the cost of some types of senior care.

U.S. News & World Report’s recent article, “Veteran Benefits for Assisted Living,” explains that many senior living companies try to help many veterans maximize their benefits, which in some cases can significantly reduce the cost of senior living.

Note that the VA won’t pay for a veteran’s rent in an assisted living facility. However, VA benefits may pay for some of the extra services required, like nursing assistance, help with bathing and toileting, and possibly meals.

There are a variety of benefits that may help, based on a vet’s specific service history and eligibility. The most commonly used benefits are the Aid & Attendance Pension. Another common benefit is the Survivor’s Pension for spouses of a deceased veteran with wartime service.

The VA’s Aid & Attendance and Housebound program is part of the pension benefits paid to veterans and survivors. The VA says these benefits are paid, in addition to monthly pension. A vet must satisfy one of the potential conditions, including:

• Requiring the aid of another person to perform personal functions, like bathing, dressing, eating, toileting, or staying safe from hazards;
• Being disabled and bedridden, above what would be thought of as recovery from a course of treatment, such as surgery;
• Being a patient in a nursing home due to physical or mental incapacity; and
• Having very poor eyesight (5/200 corrected visual acuity or less in both eyes) or a field of vision limited to five degrees or less.

Vets may qualify for these benefits, which are added to the standard monthly pension, when he or she is “substantially confined to your immediate premises because of permanent disability,” the VA says. Eligibility for the program is based on a case by case basis and involves a review by the VA.

It’s important to begin the application process early, rather than waiting for a crisis to occur. Ask an experienced estate planning or elder law attorney to help you and to discuss your options.

Reference: U.S. News & World Report (August 12, 2019) “Veteran Benefits for Assisted Living”

What Are My Estate Planning “Must Have’s”?

“Estate planning is not only for the wealthy—everybody can benefit from ensuring their assets and finances are properly taken care of after their death.”

Many people think that having an estate plan just means drafting a will or a trust. However, there’s much more to include in your estate planning to be sure all of your assets are transferred directly to your heirs at your death. A successful estate plan also includes provisions allowing your family members to access or control your assets, if you become incapacitated.

Investopedia’s recent article, “6 Estate Planning Must-Haves,” provides us with a list of items every estate plan should include:

• A will and/or a trust;
• Powers of attorney;
• Beneficiary designations;
• A letter of intent; and
• Guardianship designations.

In addition to these documents and designations, a thorough estate plan also should consider the purchase of insurance, like long-term care insurance, a lifetime annuity to generate some level of income until death and life insurance to pass money to beneficiaries without probate.

Let's look at each item on this checklist to make sure you haven't left any decisions to chance.

Wills and Trusts. A will or trust should be one of the primary parts of your estate plan, even if you don't have a lot of assets. Wills make certain that your assets are distributed according to your instructions. Some trusts also help limit estate taxes or legal challenges. Talk to an experienced estate planning attorney about wills and trusts.

Power Of Attorney. A durable power of attorney (POA) allows an agent or a person you assign to act on your behalf, if you’re unable to do so yourself. A healthcare power of attorney (HCPA) designates another person to make critical healthcare decisions on your behalf in the event of incapacity.

Beneficiary Designations. Some of your assets will pass to your heirs without being mentioned in your will, such as 401(k) plan assets. Therefore, maintain a beneficiary and a contingent beneficiary on these types of accounts. Likewise, insurance plans should have a beneficiary and a contingent beneficiary, because they also pass outside of a will. Your beneficiaries should be over 21 and mentally competent.

Letter of Intent. This is simply a document for your executor or a beneficiary to define what you want done with a particular asset after your death or incapacitation. Some letters of intent also contain funeral details and other special requests. A letter of intent isn’t legally binding. It helps inform a probate judge of your intentions and may help in the distribution of your assets, if the will is declared invalid for some reason.

Guardians. If you have minor children or are considering having kids, naming a guardian is very important. Be sure the person(s) shares your views, is financially sound and willing to raise your children. You should also name a backup or contingent guardian.

Without these designations, a court could order your children to live with a family member you wouldn't have selected, or in some instances, the court could instruct that your children become wards of the state.

A will is a great place to start, but it's only the starting point.

Reference: Investopedia (July 16, 2019) “6 Estate Planning Must-Haves”

How Much Will Long-Term Care Cost?

“Many people are frightened of long-term care costs—for good reason.”

The recent article from MarketWatch, “This is how much long-term care could cost you, and don’t expect Medicare to help,” reports that most people over 65 will eventually need help with daily living tasks, like bathing, eating, or dressing. Men will need assistance for an average of 2.2 years, and women will need it for 3.7 years, according to the U.S. Department of Health and Human Services’ Administration on Aging.

Many will rely on unpaid care from spouses or children, but over a third will spend time in a nursing home, where the median annual cost of a private room is now more than $100,000, according to insurer Genworth’s 2018 Cost of Care Survey. Four out of ten will choose paid care at home; the median annual cost of a home health aide is more than $50,000. Finally, more than 50% of people over 65 will incur long-term care costs, and 15% will incur more than $250,000 in costs, according to a study by Vanguard Research and Mercer Health and Benefits.

Note that Medicare and private health insurance typically don’t cover these “custodial” expenses. This means that such costs can quickly deplete the $126,000 median retirement savings for people age 65 to 74. People who exhaust their savings could wind up on Medicaid, the government health program for the indigent that pays for about half of all nursing home and custodial care.

People who live alone, are in poor health, or who have a family history of chronic conditions are more likely to require long-term care. Women face special risks, since they typically outlive their husbands and, as a result, may not have anyone to provide them with unpaid care. If husbands require paid care that erases all of the couple’s savings, women could have years or even decades of living on nothing but Social Security.

The earlier you start planning, the more choice and control you’ll have. Let’s look at some of the options:

Long-term care insurance. The average annual premium for a 55-year-old couple was $3,050 in 2019, according to the American Association for Long-Term Care Insurance. Premiums are higher for older people, and those with chronic conditions might not be eligible. Policies typically cover part of long-term care costs for a defined period, like three years.

Hybrid long-term care insurance. With life insurance or annuities with long-term care benefits, money that isn’t used for long-term care can be left to your heirs. These products typically require you to commit large sums or are paid in installments over 5 to 10 years, although some now have “lifetime pay” options.

Home equity. People who move permanently into a nursing home may be able to sell their houses to help fund the care. Reverse mortgages may be an option, if one member of a couple remains in the home. This type of loan lets them use their home equity. However, it must be repaid if the owners die, sold, or they must move out.

Contingency reserve. People with a great deal of investments could plan on using some of those assets for long-term care. Their investments can produce income, until there’s a need for long-term care, and then can be sold to pay for a nursing home or home health aide.

Medicaid spend-down. Those who don’t have much saved or who face a catastrophic long-term care cost that cleans out their entire savings, could wind up applying for Medicaid. Ask an elder law attorney about ways to protect, at least some assets for your spouse.

Reference: MarketWatch (July 19, 2019) “This is how much long-term care could cost you, and don’t expect Medicare to help”

What are Some of the Hidden Risks in Retirement?

“Being well-prepared for retirement is wonderful, but there is no fail-safe plan. Things can unravel, due to many inherent post-retirement risks.”

Knowing the risks that may be found in retirement and the ways in which they can harm financial security is critical to making important modifications in a retirement plan. Sometimes without those changes, the effect of unfavorable and unpredictable events can be far worse.

The Bay City (TX) Tribune’s recent article, “5 hidden risks in Retirement” says that once you have a retirement plan in place, it’s not etched in stone. Circumstances change, and you may add or lose family members, your retirement objectives may shift, the economy may create new considerations and financial innovations may present new opportunities.

Be sure that your retirement plans (and beneficiaries) are current. Review these at least once a year.

Retirees and those making retirement plans should know about these five risks:

• Running out of money before you die, is a primary concern of most retirees. This is even a greater concern, as the average life expectancy has increased.
• Be certain that both you and your spouse are protected from the unexpected, such as the financial impact of the loss of one spouse. The surviving spouse will only get the higher of your two Social Security checks. Life insurance and estate planning are important to protect survivors.
• A longer life expectancy could result in high costs in a long-term care facility. Look into long-term care insurance.
• Know that a 50% gain doesn’t let a portfolio recover from a 50% loss. It takes a 100% gain to restore a 50% loss. Common stocks have substantially out-performed other investments over time and are usually recommended for retirees, as part of a balanced asset allocation strategy.
• Finally, plan on prices for food, goods, and services to increase during retirement, which reduces your buying power incrementally because you’re living on a fixed income. You must factor that in.

Knowing what the potential post-retirement risks are and considering them in the retirement planning stage, will help you be sure that they are mitigated and managed properly.

Reference: The Bay City (TX) Tribune (July 19, 2019) “5 hidden risks in Retirement”

What Do I Need to Know About Long-Term Care Insurance?

“For any type of LTC insurance, it may make sense to buy when you are in your 50s or 60s.”

Long-term care policies are available from insurance companies. Federal employees can also obtain them through the federal FLTCIP program. LTC (long-term care) policies offer a wide variety of features.

Some policies may pay for care not only in a nursing home but also in an assisted living facility or at the home of the person who requires care.

Policies may also include cost-of-living adjustments, which will increase future benefit payments.

Some companies also offer LTC policies that cover both spouses at a discounted rate, rather than having to purchase two separate policies.

Fed Week’s recent article, “Selecting among Long-Term Care Options to Hold Down Costs,” explains that there also are life insurance policies that double as LTC insurance.

Therefore, if these policies cover long-term care expenses; the policy’s death benefit will be reduced.

However, if long-term care is not needed, the insured individual’s beneficiary eventually can receive the full death benefit.

Remember also that the ongoing premiums will be lower, compared with policies bought when a person is older.

When you’re shopping for LTC insurance, there are some tactics that can reduce your policy cost. Here are just a few:

• Reduce benefits. A policy that pays benefits as long as you need long-term care can be very expensive. However, a policy with a five-year maximum payout will be less expensive. There are not many people who will need more than five years of long-term care.
• Wait longer. You can reduce costs, by extending the period before you collect benefits. A policy with a 90-day waiting period will be less expensive than an LTC policy with a 20-day wait. Of course, this is only a bargain, if you can afford to pay for 90 days from your own resources.
• Avoid automatic inflation increases. A policy that increases your benefit each year from $100 a day to $105 to $110, etc., will be very costly. You can go with a “future purchase option.” This will let you to buy more coverage, if you need it, even if your health has declined.

Reference: Fed Week (June 27, 2019) “Selecting among Long-Term Care Options to Hold Down Costs”

Are You Prepared for Retirement?

“This is one big thing that boomers should be planning for when they get older—but most aren’t.”

MarketWatch’s recent article, “Baby boomers are more prepared for death than they are for their own lives” explains that more than eight in 10 middle-income boomers have made at least one formal preparation for when they die. This includes preparing a will or detailing their funeral preferences, according to a study released by the Bankers Life Center for a Secure Retirement. However, just 32% have a plan for how they will receive care, should their health fail in retirement. Only 20% have long-term care savings, and 30% have less than $1,000 saved for emergencies, like a healthcare issue. Most aren’t all that worried about it, since 40% of middle-income boomers say that retirement care planning is a low priority or not a priority whatsoever.

Even so, the reality is that failing health is likely to affect most of us, often to a point that we’ll need to get a caregiver or even go into a nursing home. According to the Family Caregiver Alliance, 69% of people 65 and older will have disabilities before they die, and 35% will enter a nursing home. Therefore, why are boomers so resistant to planning for the care they might need in life? Perhaps it’s a topic that makes people uncomfortable because they don’t know where to start.

Of those who don’t have a retirement care plan, 32% responded that they needed advice but didn’t know who to trust, and 21% said that planning was too complicated. Others said it was too hard to talk about (20%), while 16% reported that they believe a plan isn’t needed.

Many people are also unaware of the fundamental facts about Medicare and paying for retirement care. About 56% mistakenly think they’ll use Medicare to pay for care, even though it typically doesn’t pay for long-term care, like a nursing home. If you factor in their lack of preparation, 81% of boomers underestimate the cost of nursing home care. However, whatever the reasons, it’s vital to plan for caregiving, so that our wishes can be honored, and we can afford to pay for the care we’d like. Let’s look at how to do this.

Draft an advance directive, which details your medical wishes, if you become unable to voice those wishes for yourself. You can also name someone else to make the decisions on your behalf, if you’re unable to do so.

Think about how you’d afford long-term care, if required. Long-term care insurance may cover the nursing home, assisted living or in-home-care costs that Medicare won’t, but it can be costly. It also has limitations, like possible specifications that may require you to be in a very high-level assisted living or nursing home, before the policy starts.

Save for medical costs—not including long-term care—in retirement. The average couple will need $280,000 in today’s dollars for medical expenses in retirement. That doesn’t include the costs of long-term care. You could put the money in an HSA. If you’re still working and your job offers an HSA-eligible health plan, you’re eligible to contribute to a health savings account (HSA). An HSA allows you save pretax dollars (and possibly collect employer contributions), which have the potential to grow and be withdrawn tax free for federal tax purposes, if used for qualified medical expenses—currently or in retirement.

Finally, stay as healthy as you can.

Reference: MarketWatch (March 15, 2019) “Baby boomers are more prepared for death than they are for their own lives”

What Type of Things Can’t a Nursing Home Do?

“People who reside in nursing homes are in a vulnerable position, since they are in need of near-constant assistance–not just with medical and health problems, but also, often, for daily living activities. Federal and state laws exist to safeguard nursing home residents’ care. However, your ability to protect yourself or your loved one during a short- or long-term nursing home stay, depends in part on knowing what these facilities are not allowed to do and what action to take if a violation occurs.”

 

Investopedia’s recent article, “Things Nursing Homes Are Not Allowed to Do” cautions that the discussion points in its article apply specifically to skilled nursing facilities, that are defined by Medicare as a special facility or part of a hospital that provides medically necessary professional services from nurses, physical and occupational therapists, speech pathologists and audiologists. They don’t apply to assisted living facilities or retirement homes.

Discrimination. Federal law prohibits skilled nursing facilities from making a decision about whether someone can live there based on race, color, religion, age, sex or any other protected characteristic.

Services Provided. A skilled nursing facility must state in writing the types of services it will provide and fees before a patient moves in. Some types of retirement facilities, like continuing care communities, also require a large buy-in fee up front that guarantees residents access to various levels of care as their needs change, but skilled nursing facilities can’t charge those fees.

Health Assessment. When a patient first enters a nursing home, he is given a health assessment. These assessments continue daily for the length of his stay. The medical staff will evaluate the patient’s physical and mental health, medications, ability to take basic care of himself and ability to speak and make decisions. The assessments are used to plan treatment, evaluate progress and determine ongoing eligibility for Medicare coverage. Residents can participate in their care plan, and if they’re not able to do so, an adult child can participate on their behalf.

Money Management. A nursing home may offer to manage a resident’s personal funds as part of its services, but it can’t require a resident to let it manage their money, and it cannot do so without the resident’s written consent. When approved, the nursing home must provide quarterly financial statements and cannot prevent residents from accessing their bank accounts, cash or financial documents. If a resident deposits more than $50 into a managed account, that account must pay interest.

Dignity and Respect. Federal law states that nursing home residents have the right to be treated with dignity and respect. This includes making decisions on the time they want to go to bed and when they get up; what time to eat; and what to do during the day, provided their decisions don’t conflict with the care plan. Residents cannot be verbally or physically abused, medicated with drugs that aren’t in their treatment plan, restrained physically (unless they pose a danger to themselves or others), involuntarily isolated or to have their property used or taken by anyone else at the facility. Patients have the right to privacy and to personal property—this means being allowed to open their own mail and to have private phone conversations.

Visitation. Patients can have visitors during reasonable times of day. They’re also allowed to refuse visitors they don’t want to see. Family members must be allowed to have access to the patient at any time (unless the patient says otherwise).

Physical Condition. Even though a patient is in poor physical or mental health, she has the right to be told her physical condition; her diagnoses; and the types of medications she’s been prescribed. She also has a right to see her medical records. Patients can continue to see their own doctors, meaning they don’t have to accept the services of practitioners provided by the nursing home. Patients also have the same right to refuse treatments and medications that outpatients do. If a patient needs mental, legal, or financial counseling concerning her treatment, the nursing home must provide these services.

Medicare Benefits. Nursing homes don’t have to keep track of the Medicare benefits being used to pay for a patient's care. When it comes to facilities, Medicare coverage can be complicated because it covers a stay completely for a certain number of days but then pays a set amount for an additional period and all this only under certain conditions. After that, patients are responsible for the whole bill, unless they have long-term care insurance or some other form of coverage.

The nursing home doesn’t have to notify a resident that the benefit days are ending, and it can continue to charge them for their care. The one exception is if Original Medicare benefits stop earlier than expected, because the care is deemed no longer “medically reasonable and necessary.” In that case, the nursing home must notify the patient that coverage is ending, when it’s ending and why. The nursing home must also tell such patients that they’ll be responsible for further costs and how much it estimates those costs will be. But a facility usually can’t require another family member to pay for a resident’s care.

Discharge Planning. Nursing homes must help with discharge planning, and they generally can’t discharge a patient or transfer him to another facility without his consent, unless:

• the patient’s health has declined to the stage, where the facility can no longer meet his needs;
• the patient has improved to the point, where he no longer requires the facility’s services; or
• the patient poses a threat to his own welfare or that of other residents.

In addition, a resident can be discharged for not paying the facility’s bills (but not when the delinquency is caused by waiting for Medicaid payments from the government).

Complaints. Residents and their advocates have a right to complain about any issue they have in a nursing home, and nursing homes can’t punish someone for doing so.

Ability to Sue. A 2016 regulation gave nursing home residents and their families the ability to sue any nursing home that receives federal funding. Before this, nursing homes could try to force people into arbitration, and any quality of care and safety issues could be kept private. However, a preliminary injunction granted in Mississippi in late in 2016 put this regulation on hold for now.

New Rules. There are new rules that give nursing home residents more rights. Residents will be allowed to receive any visitor, not just relatives, at any hour of the day, provided visitors don’t disturb fellow residents. Residents who want to live together will be permitted to do so, and nursing homes will have greater responsibility for ensuring that residents’ personal belongings aren’t lost or taken. In addition, nursing homes will be required to provide meals and snacks when residents want them, rather than only at set times. Staff will get more training in caring for dementia patients and preventing elder abuse, and nursing homes won’t be able to easily discharge residents with dementia, by sending them to a hospital and then refusing to readmit them.

In effect, a person’s rights as a nursing home resident should be the same as the rights she had outside the facility.

Reference: Investopedia (September 30, 2018) “Things Nursing Homes Are Not Allowed to Do”

What is My Retirement Plan Missing?

“How can you possibly know how much money you will need for retirement, if you don't know what you will be doing?”

Forbes’ article, “The One Piece Missing From Most Retirement Plans” says there’s just one small piece that many people don't think about when crafting their retirement plan. Any guesses what that is? Well, the missing piece is: THEIR RETIREMENT PLAN!

All the calculations are critical, but they aren’t much good without actually thinking about what you plan to do during retirement. There are two reasons why thinking about the final years of your life are crucial. The first is that you can’t possibly know how much money you’ll need for retirement, if you don't know what you’ll be doing, right? There’s a big difference in the money needed to travel around the world versus sitting on the porch knitting sweaters for grandchildren and playing bingo at church.

Next, when you wake up on your first morning of official retirement, you’ll have no responsibilities or plans. How great! But, be honest: how much can you really tend to your garden or catch up on reading? Retirement can be up to 30 years or more. That's a lot of time left to live. Retirees frequently are bored, lonely, or depressed during retirement, because they don't have the routine, social interaction or purpose that they had at work.

Before you begin your retirement calculations, ask yourself these questions:

• Where will I live?
• Do I want to downsize?
• What are my dreams and goals in retirement?
• Do I want to have the flexibility to move near my children?
• Do I want to help my children with their finances?
• Have I adequately considered the rising cost of healthcare?
• Do I have family to help me?
• Will I need to consider living in a retirement home?
• Do I want to work a part-time job to keep busy?
• Do I want to leave my estate to my children or charity?

If you’ve thought about how much money you have and how much money you'll need in retirement, that’s terrific. However, as you’re planning for retirement, remember to think about exactly what you’ll do when you retire.

Reference: Forbes (November 21, 2018) “The One Piece Missing From Most Retirement Plans”