Tax Breaks for Caregivers Worth A Look

If you have had to arrange for a caregiver for an aging loved one, then you have some appreciation of the enormity of the costs often involved. It’s important, then, not to overlook tax breaks that just might help reduce the economic pain.

A recent article from Forbes offers a helpful reminder. The costs of a caregiver, under certain circumstances, can be partially tax deductible as medical expenses. After all, they are, in fact, very important and very costly medical expenses. However, conditions for taking the deduction essentially amount to proving that fact to the IRS.

So, what are some of these key conditions?

For one, you must document a care regimen for someone who is chronically ill. This means a licensed health care practitioner has to prescribe it. Unfortunately, it can’t be up to your own discretion, but such prescriptions and suggestions are common for aging persons, especially when they suffer from dementia.

Next, there is an expense threshold. Medical expenses are deductible only to folks who itemize, and then only to the extent that the expenses exceed 7.5% of adjusted gross income. Itemizing taxes can be a little more of a burden, but with the associated medical costs involved it is generally easy to qualify. Caregiving expenses are generally rather expensive and include the wages, employment taxes, and actual medical costs along with the associated living costs from meals to even costs of rent, if live-in care is needed.

Finally, this deduction is not without caveats and the IRS watches those who try to abuse it. For example, if the cost of the caregiver is covered by insurance (e.g., long-term care or medical insurance) then you can’t double-dip and claim both costs.

This is a complicated issue. There are many moving pieces.

Fortunately, the Forbes article shares some anecdotes from some illustrative cases and tax court challenges. Nevertheless, if you’re using a caregiver now (or will in the future), don’t overlook this potentially valuable deduction.

Understanding the complexities of Tax Planning is just a part of successful estate planning. To ensure a successful plan, we at Idaho Estate Planning will: 1) educate you and your helpers; 2) take the time to get to know you, your family, your desires, your concerns, your goals, and your potential problems; 3) gladly and patiently answer questions until you understand the concept or issue; and, 4) based on experience with the problems and results caused by poor planning, help you design and implement the plan that fits your concerns and goals. Remember, good planning is no accident.

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Recognize the Need for Help in Caregiving

Caregivers often don’t recognize when they are in over their heads, and often get to a breaking point. After a prolonged period of time, caregiving can become too difficult to endure any longer. Short-term the caregiver can handle it. Long-term, help is needed. Outside help at this point is needed.

A typical pattern with an overloaded caregiver may unfold as follows:

• 1 to 18 months – the caregiver is confident, has everything under control and is coping well. Other friends and family are lending support.
• 20 to 36 months – the caregiver may be taking medication to sleep and control mood swings. Outside help dwindles away and except for trips to the store or doctor, the caregiver has severed most social contacts. The caregiver feels alone and helpless.
• 38 to 50 months – Besides needing tranquilizers or antidepressants, the caregiver’s physical health is beginning to deteriorate. Lack of focus and sheer fatigue cloud judgment and the caregiver is often unable to make rational decisions or ask for help.

It is often at this stage that family or friends intercede and find other solutions for care. This may include respite care, hiring home health aides or putting the disabled loved one in a facility. Without intervention, the caregiver may become a candidate for long term care as well.

With the holiday season upon us, caregivers feel even more stress — with planning, shopping and participating in holiday activities. This is a perfect time for family and friends to step up and provide some respite time and caregiving help. Whether it is provided personally or arranged as a gift of services to be provided by a professional respite company or home care provider, it is a welcome gift.

An article in “Today’s Caregiver” states:

“Nearly one in four caregivers of people with Alzheimer’s disease and other dementias provide 40 hours a week or more of care. Seventy-one percent sustain this commitment for more than a year, and 32 percent do so for five years or more. One of the best gifts you can give someone caring for Alzheimer’s is something that relieves the stress or provides a bit of respite for the caregiver.
The Gift of time: Cost-effective and truly meaningful gifts are self-made coupons for cleaning the house, preparing a meal, moving lawn/shoveling driveway, respite times that allow the caregiver time off to focus on what he/she needs.”

Hiring professionals can provide valuable ongoing support to an overloaded caregiver. There are also cash benefits for Veterans, who served during a period of war, that pay for home care or assisted living. At Idaho Estate Planning we have the resources to help you put together an effective team to fill your long-term care needs. We are the experts in Idaho when it comes to Medicaid planning and pre-planning as well as Veteran’s Pension benefits.

If you are the one providing daily care for a loved one, you owe it to yourself to seek help; to take care of yourself and your needs, both physically and mentally. You owe it to those you care for to be your most efficient and effective; often that means a little help from the outside. Seek out professional help that will ease your burden. Look for community service organizations that offer respite help. If you don’t know where to start call us. Remember, good planning is no accident.

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Power of Attorney

Some people who thought they had covered all their bases and acted responsibly to care for loved ones in the event of a debilitating illness or incapacity are finding their plans un-done by strict banking policies. Bank of America recently updated their online security procedures, and no longer accepts a power of attorney for online banking.

As Bernard Krooks wrote last week for Forbes, this strict policy came to light when Chicago resident Eva Kripke was blocked from accessing her husband’s Bank of America account. According to Krooks, Mrs. Kripke had been handling her husband Sidney’s bank accounts as agent under a power of attorney ever since he was diagnosed with Lewy body dementia four years ago. Suddenly now, however, she is denied access under the bank’s updated security procedures.

The bank suggested she go to her local branch and get a printout of her husband’s account information. Unfortunately, Mrs. Kripke felt this was unacceptable because her husband’s health status requires close financial oversight. Kripke’s options in this situation are limited because her husband’s illness has rendered him incompetent. Opening a new bank account for her husband elsewhere would require executing a new document, a near impossible task when the grantor is incompetent.

Rules such as these are becoming increasingly prevalent and significant as more people are called upon to care for an aging population and their attendant disabilities.

Understanding Powers of Attorney is just a part of successful estate planning. To ensure a successful plan, we at Idaho Estate Planning will: 1) educate you and your helpers; 2) take the time to get to know you, your family, your desires, your concerns, your goals, and your potential problems; 3) gladly and patiently answer questions until you understand the concept or issue; and, 4) based on experience with the problems and results caused by poor planning, help you design and implement the plan that fits your concerns and goals. Remember, good planning is no accident.

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Negotiating Long-Term Care Costs

There are some things you just don’t haggle about but, perhaps contrary to what you would guess, it turns out that long-term care isn’t one of those things. Long-term care is expensive, to say the least, but as explained in a recent article in SmartMoney, there are some expenses that may be negotiable.

Nursing homes usually will not negotiate fees, but you may be able to negotiate with assisted-living facilities and home health care agencies.

Start by arming yourself with information. You can look up local costs at Genworth.com/costofcare on a map prepared by Genworth Financial, one of the country’s largest long-term care insurers. This can help you compare costs for various types of care in your area. MetLife offers another source of area-specific information at MatureMarketInstitute.com (click on “Research” then “2010 Market Survey of Long-Term Care Costs.”)

Other resources include “Medicare and Home Health Care” which describes the home health benefits that Medicare covers (available at Medicare.gov) and the United Hospital fund’s “Next Step in Care” website for family caregivers.

Other bargaining strategies to keep in mind:

• Ask if there is a waiting list at the facility. If not, you may have more room to negotiate.
• While nursing homes generally do not discount rates, you may be able to negotiate for extra amenities.
• If a home-care agency has rates at the higher end of your local market, you may be able to get a lower rate if you let them know you are interviewing several agencies and taking cost into consideration.
• If you hire a home-care agency for a significant number of weekday hours, that agency may be willing to discount any extra fees they charge for weekend work.

At Idaho Estate Planning, we can help you find the resources you need to put your long-term care plan together. We have the experience and expertise to help you maintain your options and protect yourself as well as your loved ones now and into the future. Remember, good planning is no accident!

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Family Caregivers of Veterans May Qualify for Compensation

Looking for a way to help Mom and Dad pay for home care or assisted living? Perhaps you are their caregiver. Wouldn’t it be nice to receive some compensation to help you provide their care? There is financial help available for senior veterans and their spouses.

For veterans who served during a time of war or for their surviving spouses, veterans benefits such as the Veterans Aid & Attendance Pension will pay additional income to cover long term care costs. The great news about this program is that VA will allow veterans’ households to include the annual cost of paying any person such as family members, friends or hired help for care when calculating the Pension benefit.

Pension can provide an additional monthly income of up to $1,949 a month for a couple, $1,644 a month for a single veteran or $1,056 a month for a single surviving spouse of a veteran. This money can be used to help pay the cost of home care, adult day services, assisted living or nursing home services.

A family member can be considered an in-home attendant, but that family member has to be paid for services duly rendered. There is potential for fraud here where a family member may move into the home and ostensibly receive payment as a caregiver but not actually provide the level of care paid for. Documentation for this care must be provided to VA, and it is reasonable for VA to question whether the services being purchased from a family member living in the household are legitimate. Such arrangements should be extensively documented and completely arm’s-length.

The care arrangements and payment for home care must be made prior to application and there must be evidence that this care is needed on an ongoing and regular basis. We recommend a formal care contract and monthly invoice billing for services. Money must exchange hands and there must be evidence of this. All of this documentation must be provided as proof to VA when making application for the pension benefit. Costs for these services must be unreimbursed; meaning these costs are not paid by insurance, by contributions from the family or from other sources. Even though the family member being paid for services cannot reimburse the veteran household directly, the family may pay the bills for the veteran household. This indirect form of support is allowed.

In 2007 the AARP released a study on Caregivers in America in which they reported, “Many caregivers make direct out-of pocket expenditures to help support a family member or friend with a disability. Non-spousal caregivers were asked how much money they spend in a typical month for groceries, medicines, or other kinds of cash support for the care recipient. About half of caregivers contributed financially, spending an average of $200 per month ($2,400 per year). Caregivers who had the greatest level of caregiving burden reported spending $324 per month ($3,888per year) out of pocket.”

The study went on to say, “In addition to direct out-of-pocket expenditures made by caregivers, many caregivers experience other significant economic losses. The majority of caregivers in the United States (59 percent) are employed either full or part time. The financial impact of caregiving on caregivers in the workforce can involve multiple aspects of their income security, including their wages, job security and career paths, and employment benefits such as health insurance and retirement savings.

Those family members acting as caregivers for America’s veterans and/or their spouses can help reduce the stress on their own and their families emotional, social and financial well being by making use of the VA Pension Benefit.

The secret for receiving a successful award from the VA is not in filling out the form but in knowing what documents and evidence must be submitted with the application. Knowing the secrets for a successful award – with the special case of long term care recipients – is 95% of the battle. A knowledgeable, accredited consultant can provide information to shorten the VA’s decision window of 6 to 12 months to possibly 3 or 4 months.

At Idaho Estate Planning we understand how to maximize the benefit or avoid a denial. We can also provide guidance for meeting the asset test. We provide the best strategies for reallocating assets through trusts or income conversions to allow for the best possible accommodation of assets for beneficiaries thus avoiding or reducing taxes, family disputes and Medicaid penalties.

We are VA Accredited and we know how to help veterans get the benefits they have earned through their  greatly appreciated service to our country. Remember, good planning in no accident.

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Helping Our Parents Prepare for Their Future

There is a very good chance that you or someone you know is taking care of elderly parents now or looking at that possibility in the near future. In 2008 a USA TODAY/ABC News/Gallup Poll of baby boomers found that 41% who had a living parent were providing care for them — either financial help, personal care or both — and 8% of boomers said their parents had moved in with them.

Of those who were not caring for an aging parent, 37% said they expected to do so in the future. About half said they were concerned about being able to provide such care.

If financial planning and long term care planning have not been done previous to the need for care, the burden falls on the caregiving family member. Decisions about how care will be paid for, who will be responsible for managing the estate as well as how the long term care will be given can cause stress and contention among family members.

It is best for parents and all family members to be involved in planning for future financial needs. The financial resources being used today could change drastically with the occurrence of a stroke, illness or onset of dementia. In order to plan financially for long term care, you need to know what the costs are now and what they will be in the future.

Every year MetLife does a survey of long term care costs. Their 2010 survey shows that the average daily rate for private nursing home is $229 which is up from $219 in 2009. Assisted living monthly base rate cost rose to $3,293 in 2010 from $3131 in 2009. Home health aides average $21 an hour.

Planning financial needs can be very difficult, considering you do not know when long term care will be required or how long it will be needed. Staying in the home for care will require professional home care assistance, travel accommodations to doctor appointments, help with shopping, meals, medical supplies and medication and possibly a 24-hour attendant. Even if a family member is doing most of the care, in most cases professional care will eventually be required or a move to a nursing home facility will be necessary.

When evaluating present income and assets consider how they would work for future needs. Consider the following:

• Care options
• Long Term Care Costs
• Long Term Care Insurance
• Home Care Costs
• Medicaid Planning
• VA Benefits & Planning
• Legal Documents – Estate Planning

Idaho Estate Planning is part of the Treasure Valley Care Planning Council, a non-profit network of elder care professionals available to provide information for and beyond the items discussed above. Let us know your concerns and we will help you find the resources you need.

In addition to caring for your parents or other family members, it is also important to consider your own concerns for the future. How will you maintain your independence as you grow older? What effect would a costly health issue have on your quality of life? The more planning you do now the less difficulty there will be later. Better planning now will reduce the stress placed on you and your future caregivers. Good planning is no accident.

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Getting Your Affairs in Order

Recently I had someone in my office wanting to know what his options were for taking care of his In-laws. In 2004, when the first signs of medical troubles appeared, he had, with his wife and her siblings, tried to convince the parents that they needed to get their affairs in order. They needed to do some planning, but as is all too common, no planning was done. Where there could have been many choices and options, now there are few. Where there could have been comfort in their final years, now hard choices must be made that would never have been considered before.

The National Institute on Aging gives three simple, but important steps to putting your affairs in order:

• “Put your important papers and copies of legal documents in one place. You could set up a file, put everything in a desk or dresser drawer, or just list the information and location of papers in a notebook. If your papers are in a bank safe deposit box, keep copies in a file at home. Check each year to see if there’s anything new to add.
• Tell a trusted family member or friend where you put all your important papers. You don’t need to tell this friend or family member about your personal affairs, but someone should know where you keep your papers in case of emergency. If you don’t have a relative or friend you trust, ask a lawyer to help.
• Give consent in advance for your doctor or lawyer to talk with your caregiver as needed. There may be questions about your care, a bill, or a health insurance claim. Without your consent, your caregiver may not be able to get needed information. You can give your okay in advance to Medicare, a credit card company, your bank, or your doctor. You may need to sign and return a form.”

When it comes to planning for the future, the sad fact is that every year we fail to plan we lose options. Wait long enough and the only options left are those made for us out of desperation. Remember, timing is everything. In order to maintain control as long as possible and have an effect on your own quality of life decisions you must choose to act now. Your decisions need to be made known and documented correctly. Good planning is no accident!

Call us today and let us help.

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Legal Issues with Veterans Benefits

Accreditation

The VA Pension Benefit helps veterans and surviving spouses pay for assisted living care in the home, nursing home, or assisted living facility. It pays up to $1,949 per month to provide care for single or married veterans, or their surviving spouses. Applicants must meet certain medical and financial thresholds. Many find the application process complicated and seek help preparing the forms. It is important to understand federal law dictates that no one may help a veteran in the preparation, presentation and prosecution of an initial claim for VA benefits unless that person is accredited by the VA. The only exception to this law is that any one person can help any veteran – one-time only – with a claim. To help any veteran a second time requires accreditation.

VA recognizes 3 types of individuals for purposes of accreditation.

1. Accredited attorneys
2. Accredited agents and
3. Accredited representatives of service organizations. (Veterans Service Officers)

In order to be accredited to help veterans with new claims, an individual desiring this certification from VA must submit a formal application, must meet certain character requirements and work history requirements and – except for attorneys – must pass a comprehensive test relating to veterans claims and benefits. There are also requirements for ongoing continuing education.

What Does It Mean to Help a Veteran with a Claim?

VA interprets its prohibition on preparing, presenting and prosecuting a claim to mean that talking to a veteran or a veteran’s qualifying spouse or dependent after that person has indicated an intent to file a specific claim for benefits requires accreditation. Anyone can talk about veterans benefits in general with any veteran and need not be accredited. The point at which discussion narrows down to specific information about the veteran’s service record, medical conditions, financial situation including income and assets and other issues relating to a claim specific to a veteran or dependent triggers accreditation. According to VA, discussing the specifics of the claim means that the veteran has expressed an intent to file an application for veterans benefits, and at this point, the consultant helping the veteran must be accredited.

This bears repeating: An individual cannot advise a veteran or other eligible beneficiary about that person’s specific claim for VA benefits unless that individual is accredited.

Using an Accredited Agent

The secret for receiving a successful award from the VA is not in filling out the form but in knowing what documents and evidence must be submitted with the application. Knowing the secrets for a successful award – with the special case of long term care recipients – is 95% of the battle. A knowledgeable, accredited consultant can provide information to shorten the VA’s decision window of 6 to 12 months to possibly 3 or 4 months.

At Idaho Estate Planning we understand how to maximize the benefit or avoid a denial. We can also provide guidance for meeting the asset test. We provide the best strategies for reallocating assets through trusts or income conversions to allow for the best possible accommodation of assets for beneficiaries thus avoiding or reducing taxes, family disputes and Medicaid penalties.

We are VA Accredited and we know how to help you get the benefits you earned through your greatly appreciated service to our country. Remember, good planning in no accident.

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Holiday Blues – Depression in the Elderly

Holiday Blues – Depression in the Elderly

The holiday season is upon us. If you are a caregiver for an elderly loved one, you may notice a change in your loved one’s mood as the holiday season progresses. Perhaps you are one of many who live a distance away and visit elderly parents and family during the holidays. When you visit you may notice that loved ones are not as physically active, or they show symptoms of fatigue or sadness and have no interest in the holiday or in their surroundings.

According to the National Institutes of Health, of the 35 million Americans age 65 or older, about 2 million suffer from full-blown depression. Another 5 million suffer from less severe forms of the illness. This represents about 20% of the senior population — a significant proportion.

Depression in the elderly is difficult to diagnose and is frequently untreated. The symptoms may be confused with a medical illness, dementia, or malnutrition due to a poor diet. Many older people will not accept the idea that they have depression and refuse to seek treatment.

Causes

It is not the actual holiday that causes depression, but the fact that holidays tend to bring memories of earlier, perhaps happier times. Additional contributing factors that bring on depression may be the loss of a spouse or close friend, or a move from a home to assisted living, or a change with an older person’s routine.

Depression may also be a sign of a medical problem. Chronic pain or complications of an illness or memory loss can also cause depression. In addition, diet can also be a factor when proper nutrition and vitamins are lacking.

Symptoms to look for in depression might include:

• Depressed or irritable mood
• Feelings of worthlessness or sadness
• Expressions of helplessness
• Anxiety
• Loss of interest in daily activities
• Loss of appetite
• Weight loss
• Lack of attending to personal care and hygiene
• Fatigue
• Difficulty concentrating
• Irresponsible behavior
• Obsessive thoughts about death
• Talk about suicide

Depression or Dementia?

Depression and dementia share similar symptoms. A recent article on Helpguide.org gives some specific differences:

In depression there is a rapid mental decline, but memory of time, date and awareness of the environment remains. Motor skills are slow, but normal in depression. Concern with concentrating and worry about impaired memory may occur.

On the other hand, dementia symptoms reveal a slow mental decline with confusion and loss of recognizing familiar locations. Writing, speaking and motor skills are impaired and memory loss is not acknowledged as a being problem by the person suffering dementia.

Whether it is depression or dementia, prompt treatment is recommended. A physical exam will help determine if there is a medical cause for depression. A geriatric medical practitioner is skilled in diagnosing depression and illnesses in the elderly. If you are a caretaker of an elderly person it may be beneficial for you to seek out a geriatric health care specialist.

Idaho Estate Planning is part of the Treasure Valley Care Planning Council, a non-profit network of elder care professionals available to provide information beyond the items discussed above. Let us know your concerns and we will help you find the resources you need.

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How We Benefit from Being Grateful

The Science of Gratitude

Researchers Robert A. Emmons, University of California – Davis, and Michael E. McCullough, University of Miami, have been conducting a study on gratitude. Three groups of participants in the study were asked to keep journals. One group used their journals to record the hassles and problems they had faced. The second group recorded neutral life events while the third group kept “Gratitude Journals” listing the experiences and things they were grateful for each week. Following are highlights from the “Research Project on Gratitude and Thankfulness – Dimensions and Perspectives of Gratitude”.

• In an experimental comparison, those who kept gratitude journals on a weekly basis exercised more regularly, reported fewer physical symptoms, felt better about their lives as a whole, and were more optimistic about the upcoming week compared to those who recorded hassles or neutral life events (Emmons & McCullough, 2003).
• A related benefit was observed in the realm of personal goal attainment: Participants who kept gratitude lists were more likely to have made progress toward important personal goals (academic, interpersonal and health-based) over a two-month period compared to subjects in the other experimental conditions.
• Participants in the daily gratitude condition were more likely to report having helped someone with a personal problem or having offered emotional support to another, relative to the hassles or social comparison condition.
• In a sample of adults with neuromuscular disease, a 21-day gratitude intervention resulted in greater amounts of high energy positive moods, a greater sense of feeling connected to others, more optimistic ratings of one’s life, and better sleep duration and sleep quality, relative to a control group.

The researchers have found that “grateful people report higher levels of positive emotions, life satisfaction, vitality, optimism and lower levels of depression and stress.” One’s thankfulness also has an effect on how others see them. “People with a strong disposition toward gratitude have the capacity to be empathic and to take the perspective of others. They are rated as more generous and more helpful by people in their social networks”

Other traits found to be improved or enhanced by an attitude of gratitude are: well being, sociality, spirituality and a healthier view on possessions and materialism.

The holidays are a great reminder of the importance of gratitude. The challenge then, is can we take that frame of mind and carry it through the rest of our lives. If we do, research tells us we will live a happier, less stressful and more meaningful life.

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