Medicare Misunderstandings Can Be Costly

When an elderly person is ready for the nursing home, some families are entirely understanding, in agreement, and financially able. As a result, the transition happens smoothly. Unfortunately, for a far larger number of families and elderly persons, some trip to the hospital will happen in between and may even immediately precipitate the transition to nursing home care.

If that’s the case, then there are important hospital and Medicare policies of which you should be forewarned. Enter “observation care” which can make for a big bill upfront and even far bigger ones down the line.

According to a recent article in the Wall Street Journal, and their sources at the Medicare Rights Foundation, the number of “observation hours” has been steadily growing for years. Tragically, such observation hours count as “outpatient services,” even if the service lasts for several days (as it sometimes does with the elderly) and Medicare pays for inpatient and outpatients services in entirely different ways.

As you likely know, Medicare Part A pays for inpatient bills, so those are usually taken care of, but Medicare part B is what takes care of outpatient services. And those services can add up to a far greater cost.

It’s often vital to know the distinction between the two types of services from the hospital, and yet it’s also fairly difficult. Medicare advises to simply ask, but then there are certain documents such as the “Important Message from Medicare” which accompanies inpatient care, but not outpatient. Still, the hospital can switch with little to no notice.

It’s actually even more important than the size of the immediate bill. Medicare will only pay for nursing home expenses if the person was admitted inpatient at a hospital for at least three days, excluding the discharge day.

For so many families that’s the sole reason why it takes a hospital visit to arrange for the transition to nursing home care in the first place, but if you are put under observation or other so-called “outpatient” care, and without your notice, it can literally mean thousands of dollars out-of-pocket down the line.

Bottom line: It all hinges on hospital practice and Medicare definitions.

Trying to keep up to date on Medicaid, Medicare or any other issues faced by America’s Elderly can be a daunting task. At Idaho Estate Planning, we understand these challenges. 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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Alzheimer’s & National Politics

With budget plans just now coming to a head it is good news for many of us that Alzheimer’s has become one of the “we can’t wait” initiatives on the national scene.

Such measures still need to be passed through Congress, and positive advances may not be immediately forthcoming. However, it is heartening to see fiscal support for an issue that affects so many of us and our loved ones.

If congress approves the actions the budget will earmark an infusion of $156 million for Alzheimer’s research and care.

In many ways it’s the flesh and bones to an earlier announcement from the current administration regarding a national plan toward treating Alzheimer’s that came out to some guffaws due it’s lack of a clear source of funding. The full details on allocation are still forthcoming, but at least a small portion of that infusion, some $26 million, is intended for immediate use and care of Alzheimer’s patients. The rest is to go toward research and the hope of improving future care, and also perhaps systematic prevention.

How this news will affect us, and whether it will weather violent political and economic seas is yet to be seen, but it’s a powerful promise for many.

Idaho Estate Planning is concerned about the health and legal issues faced by our seniors. Issues of aging include senior housing and home care, long-term (or nursing home) care, guardianships and health care documents, Medicare and Medicaid. If you or family members are facing these types of issues we can help. Call Idaho Estate Planning today, remember good planning is no accident.

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Medicare Confuses Many Seniors

As many readers will know, it’s fairly critical to understand the rules for filing for Social Security. Likewise, the rules for filing for Medicare benefits can make or break your retirement. Unfortunately, it’s also fairly easy to forget about the basics of Medicare filing, as a recent article out of Reuters highlights the importance of filing earlier rather than later.

For each full 12-month period that a senior could have had coverage but didn’t sign up, the monthly Medicare Part B premium jumps 10 percent. The average monthly cost of Part B coverage is $99.90, so just a few years delinquency will result in $20, $30, or more a month; that adds up, is unnecessary waste, and is permanent.

Suffice it to say that the government really wants you do sign up when it’s time. But why is that difficult? Well, for one, the full retirement age for Social Security is no longer the age for Medicare enrollment. As a result, many otherwise forward-thinking people are waiting until age 67 to enroll in Social Security (for the maximum monthly benefit), but 65 is the age for Medicare.

In addition, with so few people actually leaving the workforce it’s easy to forget (or fail to realize, since you’re not really retired) that it might be time for Medicare. That also can depend on the nature of your employment. For example, if you are still working at age 65 and your employer has fewer than 20 employees, Medicare is the primary payor; at companies with more than 20 workers, the employer’s plan is primary. In the latter situation, a senior can postpone filing for Parts A (hospitalization) or Part B, although many choose to enroll for Part A anyway, since it doesn’t require premium payments. If you delay your Part B coverage, you can enroll without penalty when you do retire for up to eight months following that point.

The bottom line is to keep all of this on your radar, regardless whether you will be relying on Medicare. In fact, not relying on Medicare may be the source of the problem.

If you are employed it may be worth a visit with the company accountant to be sure on which side of the line the company falls, and therefore what your insurance ought to be like.

Trying to keep up to date on Medicaid, Medicare or any other issues faced by America’s Elderly can be a daunting task. At Idaho Estate Planning, we understand these challenges. 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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Elder Law

On the topic of disclosures, a reader inquired about what to do about her family of eight siblings and one elderly father. Long ago the siblings got together and put two of the sisters in charge of their father, largely because his will and other directives advised as much. As a result, they were granted power-of-attorney and access to his accounts.

Now, the reader has discovered that they aren’t forthcoming with information about their father, his care, and his finances. The reader is worried that she won’t hear anything until there’s a demand for money to care for their elderly father, and, perhaps, that the original funds weren’t adequately used.

The response of Craig Reaves is tailored to the reader’s unique situation, but his advice is applicable for many in this same or similar position. As a preliminary caveat, there are specific state laws (i.e., like those regarding “powers of attorney”) that govern the authority, responsibility and liability of agents and fiduciaries.

You can read Craig Reaves’ enlightening response in his original post.

At Idaho Estate Planning, we understand the challenges faced by elder Americans. 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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Unclaimed Insurance Benefits a Catch 22

To make a broad but warranted generalization, life insurance companies generally don’t like to pay out death benefits. After all, they make their profits on betting not to pay out death benefits or to pay out less in death benefits than they take in as premiums.

A recent article in the Wall Street Journal may give you pause regarding whether you might be owed some life insurance money.

According to state regulators, as much as one billion dollars is languishing in the form of uncollected life insurance death benefits. All is right by the insurers, however, as most policies require the beneficiary to file a claim to collect. This occurs when a beneficiary doesn’t collect or doesn’t know that they are entitled to collect.

Unjust or not, this phenomenon has raised regulator suspicions and, out of good will or regulator urgings, some companies have started programs to determine if policy holders have passed and whether claims ought to be filed.

Still, it is a difficult enterprise, and one of the reasons insurers let beneficiaries make the claims in the first place, so there is room for error. So, if you want to ensure that you (or your loved ones) receive all that is owed, consider doing some sleuthing yourself. The original article has some advice regarding how to find out about a missed policy.

An even bigger lesson is for policy holders, and estate planners generally. One billion dollars sits in policies that were meant to care for the policy holders’ families, and it is there mostly because it’s unknown.

As a result, the most important part of proper planning, whether elaborate or simple, is making your family aware of what you own, what your plan is, and how it is to work. This especially includes any life insurance you may own.

At Idaho Estate Planning we encourage the involvement of family members in the estate plan. A good estate plan avoids the “Catch 22″ of unclaimed insurance benefits by beneficiaries who are unaware of the policy. Good planning is no accident.

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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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Medicare and Medicaid Dodge the Budget Bullet (For Now)

Have you heard the news? It seems the grand experiment failed. The Congressional supercommittee, charged with doing what the Congress at large could not do, has run out of time. And, by running out of time, failed in its mission to come up with budget cuts.

What does that mean for Medicare and Medicaid beneficiaries?

As Reuters reports, in the event the supercommittee should fail, as it has, then automatic and sweeping cuts go into effect. For Medicare, that means a two percent cut across the board, or about $123 billion over the next decade. However, it might have been $500 billion to $700 billion in cuts, if various supercommittee arguments had prevailed.

Nevertheless, as it stands, there definitely will be a little pain, but not quite as much for individual beneficiaries. No, likely it will hit hospitals and doctors the hardest. Why? In the aggregate, that’s where the money tends to end up.

Of course, we’re not yet out of the woods. Just as it became clear last summer that we’d have to wait until the winter for some kind of budget solution from Congress, it now seems that we’ll have to wait for the upcoming election season. In turn, expect things to intensify even further and for budget discussions to become all the more drastic.

Trying to keep up to date on Medicaid, Medicare or any other issues faced by America’s Elderly can be a daunting task. At Idaho Estate Planning, we understand these challenges. 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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Loans, Gifts & Family Strife

A loan is not a gift; if you’ve spoken with a bank representative or a particularly pennywise relative.

We talk a lot about gifts when it comes to estate planning, but loans are just as important, as evident in a recent piece on the New Old Age Blog.

In the article, a piece by Craig Reaves, past president of the National Academy of Elder Law Attorneys, a family had their mother’s estate plan in shambles. The culprit? A small notebook found under her bed. Apparently, there were many disagreements, but none so deep seated as those caused by the notebook. Why? Because it has a little ledger of the “loans” she had made to all the family members.

Some of the family members hadn’t received any money, but at least one had received $20,000. Other family members had repaid in full and some had not so much as begun to do so. This case raises an important question: To what extent does the amount of an unpaid loan get added to the decedent’s estate, and does it simply come out of each family member’s share in proportion to their loans?

One thing that’s clear, of course, is that the money is not gone and out of the estate. Why, it’s a loan and not a gift, after all. The second thing that’s clear is that the mother hadn’t thought about how these “loans” figured into her estate.

It should be noted that any loan evidenced by a signed promissory note can become an asset in the estate. And, even if it’s a family loan, the promissory note has to be repaid.

This story represents a classic example of failure to plan. It would have been very helpful if the mother had thought about what she considered fair and left appropriate instructions. An estate planner can ease this problem with a bit of foresight. For example, the loan can be forgiven, meaning they relinquish any expectation of being repaid. For that matter, too, the loan can be “offset” and thereby deducted from any assets made available through inheritance. While there are a number of things that can be done, forgetting or ignoring a loan is not acceptable.

After all, the IRS is waiting just within earshot and has a trained eye to recognize the difference between a loan and a gift, as well as the additional tax burdens it can assign if it spots a gift or a poorly executed loan.

We’ve said it before, proper planning starts with a thorough understanding of your needs, goals, dreams and aspirations. It takes into account your Values not just your Valuables. It starts with a thorough understanding of your family – those who you care about and who will someday receive the benefits of your success – and your family’s dynamics. Let’s work together to put together an estate plan that works for you. Remember, good planning is no accident.

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Impoverished Seniors Rate Nearly Doubles

It’s been fairly clear that medical expenses were becoming an immense financial drain on the elderly. If you are elderly or have an elderly loved one, then this is a given, as supported by recent census data.

As reported in Reuters, the number of poor persons hit a record high in 2010, and poverty rates among the elderly have had the steepest gain.

In fact, according to the census, a record 49 million Americans (i.e., 16 percent of the population) qualify as impoverished. When it comes to the elderly, the poverty level jumped to 15.9 percent, or roughly 1 in 6, from the previous year’s nine percent.

It’s true that the census study and methods have become a political flashpoint. However, the new analysis takes a broader look at life and includes government benefits. Previous studies used older methods that failed to account for how people maintained their standard of living.

Politics aside, these are still sobering data. If government benefits have become that much more of the equation, then it goes a long way towards showing what’s at stake in the present and upcoming political storms.

For many of America’s elderly that find themselves struggling to meet growing health costs a solution comes in the form of an underutilized VA benefit. For veterans who served during a time of war or for their surviving spouses, the Veterans Aid & Attendance Pension will pay additional income to cover long term care costs. Pension can provide an additional monthly income of up to $2,019 a month for a couple, $1,703 a month for a single veteran or $1,093 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.

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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Medicaid Asset Transfer Woes

Oftentimes, Medicaid and Medicare can be entirely necessary programs. They also can be pretty tricky to navigate, especially if you, or a loved one, fall just above the income limits. That said, Medicare and Medicaid don’t like it when they feel you are “gaming” the system. Elder Law Answers highlights yet another case in which an elderly person was denied benefits because of improper planning.

The case in question is Hedlund v. Wisconsin Dept. of Health Services (Wis. Ct. App., No. 2010AP3070, Oct. 13, 2011). Lucille Hedlund was a Medicaid applicant who was denied benefits because she also was a beneficiary to an irrevocable trust that qualifies as an available asset, bringing her above the income threshold. It didn’t matter that the trust has been set up 17 years ago, especially because of the circumstances.

Mrs. Hedlund transferred all of her assets to her children in June 1991, with the exception of a checking account. And, on the very same day, her children put those very same assets into an irrevocable trust and named her as beneficiary. While this was pretty sneaky, it was not enough to give Medicaid the slip.

Medicaid ruled that there was reason to infer that Mrs. Hedlund had directed her children to create and fund the irrevocable trust because the plan was effected on the same day. Note: It didn’t even matter that the assets weren’t hers at the time the trust was created, since they were still “available assets” in the eyes of the court … some 17 years later when Mrs. Hedlund entered a nursing home in 2008.

Applications for Medicare and Medicaid are important and should not be taken lightly. If you, or a loved one, need to make plans for long-term care, then you need to schedule a consultation with us right away, before you take any actions. Remember, good planning is no accident.

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