Further Thoughts on Long-Term Care Insurance

March 17th, 2014

Our recent post (see below) entitled, “Is Long-Term Care Insurance Worth the Cost?” has generated a lot of discussion.

We’d like to clarify a few points:

Long Term Care (LTC) insurance pays for expenses associated with chronic illnesses, such as home care, assisted living and nursing homes. On a long-term basis, these expenses are not covered by Medicare, which covers mainly short term rehabilitation.
In many cases, long-term care insurance enables policy holders to protect their financial assets.
Premiums for LTC insurance are based on a variety of factors, including the person’s age, health, medical history and policy benefits. The earlier you buy, the less expensive the policy will be.

Whether and when a particular individual should purchase a LTC policy is a complex issue and the answer to the question posed in the original post can differ by individual, age, family situation, income and assets. There really is no bright line test. LTC insurance should be considered by all as part of the estate planning process.

Before purchasing a LTC policy:

Familiarize yourself with the benefits as well as the limitations
Have a thorough understanding of your financial situation and goals

Work with a reputable agent who specializes in LTC insurance. In addition, speak to an elder law attorney and discuss the terms of the policy, the costs, the associated benefits as well as the financial strength of the insurer.

Is Long-Term Care Insurance Worth the Cost?

As the cost of a nursing home stay has increased, so has the cost of long-term care insurance, causing many seniors to reassess the value of such insurance.

Many people’s financial planning for retirement includes a combination of Social Security retirement benefits, other sources of income such as a pension, and savings and investments. On the expenses side, many costs are stable and predictable, with one serious risk being the need for nursing care for a long period of time. Since the annual cost of care in an Alzheimer’s unit can reach $100,000 or more, it is no wonder that many consider long-term care insurance. However, it is important to think about whether such protection is right for you.

First, keep in mind that many nursing home stays are not covered by such policies. Most long-term care policies do not cover the first 90 days, and two-thirds of nursing home stays are for less than 90 days, so insurance will not help at all in these cases. In the case of an extended stay, many policies will cover only a certain dollar amount and only for the period of time covered, often three years.

For many seniors entering a nursing home for an indefinite stay, Medicare will provide for the cost, with assets being used to offset the cost until they are exhausted, when Medicaid will kick in. Therefore, for a single person with no heirs, long-term care insurance may not be necessary. For a married couple, if one spouse requires an extended stay in a nursing home, the healthy spouse may keep the house, one vehicle, and assets of about $116,000 (the amount varies by state), and still qualify for Medicaid for the nursing home expenses.

One view is that long-term care insurance may be unnecessary either if a couple’s assets are less than $116,000 exclusive of the home and one vehicle, such that they will be eligible for Medicaid, or if assets are above about $700,000, in which case the couple can probably self-fund a nursing home stay. Within that window between roughly $116,000 and $700,000, long-term care insurance may be useful.

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How Divorce and Remarriage Affect Social Security Retirement Benefits

March 11th, 2014

People considering divorce as their 10-year wedding anniversary approaches should know that delaying the split until after the decade mark can result in higher Social Security retirement benefits for a spouse with a lower earning record.

Taking the example of a divorced couple where the ex-husband had a higher earnings record, if the couple was married for 10 years or more, then the ex-wife can receive higher benefits based on his record, provided she is age 62 or older and has not remarried.

Even if the ex-husband has not applied for retirement benefits, the ex-wife may receive benefits based on his record, provided they have been divorced for more than two years. If the woman remarries, then she would no longer be able to collect the benefits unless the later marriage ends.

Recent years have seen a rise in both marriages and divorces later in life, and statistics suggest that divorcing couples may take retirement benefits into account, as there is a measurable increase in divorce after the 10-year mark. As might be expected, the effect is most pronounced for couples nearing retirement age. A recent study found that for people 55 and older, there is an 11.7 percent increase in the likelihood of divorce at about the decade mark. For couples age 35 to 55, that drops to a 6 percent increase in likelihood of divorce at 10 years, and for people under age 35, there is almost no effect.

Other researchers are skeptical that many people take retirement benefits into account in their divorce decisions, pointing to studies that show that only 13 percent of people are very knowledgeable about how Social Security benefits are calculated.

Whether divorcing couples currently consider retirement benefits in timing their divorce, many advisers agree that they should. Divorcing just short of the 10-year mark could result in thousands of dollars in lost benefits, so it may be worthwhile for some to delay the process.

Financial considerations are often part of making decisions about divorce, so it is important to be aware of how Social Security benefits can be affected.

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Tags: divorce, retirement benefits
Posted in Alzheimers, Asset Protection, Caregivers, Elder Law, Estate Planning, LGBT, Long Term Care, Medicaid, Social Security, Tax Planning, Wills | Comments Off on How Divorce and Remarriage Affect Social Security Retirement Benefits

Students Loans Affecting Retirees

February 24th, 2014

Unmanageable student loan debt is a common problem, with nearly one in 10 borrowers defaulting within two years, according to the U.S. Department of Education. Now student loan debt is increasingly interfering with the retirement plans of older adults as well.

According to the New York Times, people age 60 and older now comprise the fastest growing age group for student loan debt. More older adults are borrowing, and a larger percentage of the borrowers are defaulting.

Some older Americans took out loans to pay for their children’s college expenses, and some are in debt from their own education costs. The ratio is unknown because there is no government system to track that information.

A particular concern for retirees is that the federal government will take up to 15 percent of Social Security payments and apply it to unpaid loans, although this does not affect recipients who collect less than $750 per month.

The total outstanding student loan debt in the United States has reached a remarkable $1 trillion, and with unemployment still high, many people of all ages have been unable to pay back their loans. Even people who are able to pay back loans may find that their retirement is affected, because high payments make it more difficult to save for retirement.

One legislative reform that has been proposed is to allow private student loans (but not government-sponsored loans) to be dischargeable in bankruptcy.

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Tags: student loan debt
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NY Connects: Long Term Care

February 12th, 2014

Choosing the right long term care services and supports can be difficult. If you are looking for long term care in New York State, you should be aware of NY Connects: Choices for Long Term Care. This is a free, state-funded service that can provide you with personalized information over the telephone about options such as assisted living residences, nursing homes, senior centers, adult day care, home care, hospice care, transportation, paying for medicine, and many other similar concerns.

Speaking with a NY Connects counselor can be very helpful if you know you need assistance but are not sure what kind of help is available or which long term care option is best for your situation.

The service is available whether you are eligible for a government program, using insurance, or paying for services yourself. Calls are confidential and are answered by trained specialists. Help is available in several different language, and TTY is available for the hearing impaired.

In Westchester County, NY Connects Can be reached at 914-813-6300. More information is available at www.nyconnects.ny.gov.

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Tags: NY Connects, NYS, westchester county
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Retirement Benefits: How Social Security, Medicare and Retirement Accounts Change in 2014

January 30th, 2014

Medicare, Social Security retirement benefits, and individual retirement accounts all change in small but important ways in 2014, and people too young for Medicare will have new health insurance options. Here is what is changing.

First, thanks to the Affordable Care Act, people retiring before age 65 can now purchase health insurance on the new state health insurance exchanges. People can no longer be denied health insurance because of a pre-existing condition, and subsidies may be available for low and middle income earners.

For people on Medicare, the Part D prescription coverage gap has lessened in effect. Once a Medicare beneficiary has spent $2,850 on medication, then there is a gap until catastrophic coverage kicks in after $4,550 in costs for medication. In that gap, beneficiaries were required to pay 79 percent of drug costs, but that decreases to 72 percent in 2014.

Social Security benefits go up by 1.5 percent in 2014, due to the annual cost-of-living increase. The average increase will be $19 per month for individuals and $31 per month for couples who are both receiving benefits.

Social Security taxes increase for some in 2014. Workers usually pay 6.2 percent of their income into the system until they reach the $113,700 tax cap for the year. For 2014, that cap rises to $117,000.

Finally, the income limits for those eligible to contribute to individual retirement accounts (IRAs) and 401(k)s have increased. Investors who have workplace 401(k)s and also want an IRA can claim a tax deduction for IRA contributions until their adjusted gross income (AGI) reaches between $60,000 and $70,000, an increase of $1,000 over last year. For married couples, the income limits are now between $96,000 and $116,000. The income phaseout range for investors whose spouses have a 401(k) is up $3,000 from last year, to between $181,000 and $191,000. For Roth IRAs, the income phaseout range increased by $2,000, to between $114,000 and $129,000, or for married couples between $181,000 and $191,000.

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Tags: AFFORDABLE CARE ACT, medicare part d, social security benefits
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Leaving Unequal Inheritances to Children Can Cause Problems

January 22nd, 2014

Many people creating or updating an estate plan are blessed with children and grandchildren, and enough assets to leave them a significant inheritance. However, deciding how to provide for future generations can lead to conflict, and much of that conflict stems from unequal treatment of children, whether it is intended or not. Here are a few pitfalls to avoid.

In some families, especially in previous generations, it was common to treat sons and daughters differently in regards to inheritances. A family business might be left to sons, while another asset such as a trust may have been created to provide for daughters. Needless to say, this can cause resentment and disputes. In modern times, such gender distinctions are less common. However, parents creating an estate plan often still choose to treat some children differently.

Parents sometimes consider providing for their adult children differently based on each child’s family income and assets. While this may seem like fairness, it is likely to cause resentment. It is, of course, one’s right to distribute one’s assets according to one’s wishes. However, parents may want to consider simply dividing their assets equally among their children. This simple solution can head off arguments and hurt feelings.

Distribution of assets to one’s children and grandchildren during one’s lifetime may be unequal for valid reasons. Paying for college may entail a greater cost for one child than for another. Helping to provide for grandchildren may mean that one’s adult children with more children of their own receive more help. These matters are best approached with openness and an attempt at fairness, keeping in mind individual circumstances.

When it comes to planning one’s estate, there may be a temptation to either mirror those inequalities by leaving more to adult children with more children of their own, or to make up for them by leaving something additional to one’s other children. However, the best approach may be the simplest: dividing one’s estate equally among one’s adult children, and providing that in the case of an adult child who has passed away, that any grandchildren receive that child’s share of the estate.

Passing on a family business may seem like a special case, but it need not be. If one or more adult child has had a special role in a family business, then that role will likely continue. Ownership of a family business may still be passed on to all adult children equally, with a child who has worked in the business continuing to be compensated for his or her work. Alternatively, a child who works in the business can receive ownership shares during the parents’ lifetime, so that the remaining family shares are distributed equally upon the parents’ death.

Passing on an inheritance to one’s children should be a cause for celebration rather than disputes. Making distributions as equal as possible is one way to keep it that way.

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Nonprofit Groups Help Seniors Feed Their Pets

January 10th, 2014

Meals on Wheels now helps some seniors get donated food for their pets. For many seniors, a pet is a lifeline, providing companionship to ward off loneliness and depression, and promoting physical and mental activity. And of course, people love their pets, so much so that nonprofit groups that help seniors in need found that some seniors were giving donated food meant for them to their pets. The groups have responded by arranging for pet food to be included with deliveries

The arrangement comes from a partnership between organizations that help low-income seniors and pet groups around the country. Meals on Wheels is one of the organizations involved, and they have cooperated with a number of independent pet groups in several different states.The pet groups ask volunteers to collect donated pet food and bring it to Meals on Wheels or another agency that delivers food. The pet food is delivered along with regular deliveries to seniors who need it. The groups also deliver to community centers, nursing homes and senior centers. The organizations said that seniors who are eligible for Meals on Wheels or similar programs usually qualify for the free pet food deliveries as well.

The groups said that pets are extremely important for seniors, and that it is not unusual for low-income seniors or people with disabilities to feed their pets before themselves, sacrificing their own health.

One of the organizations, LifeCare Alliance, began a pet food delivery program five years ago in Columbus, Ohio and now brings donated food to over 1,000 animals per month. The group started the program after learning that many of the people they served were extremely isolated, with 70 percent reporting that they did not see anyone other than a Meals on Wheels driver each week.

Another pet food delivery program, AniMeals, began in 1984 in San Diego, among the first in the nation. The group delivers food to 250 pets each month, relying on 40 volunteers to collect 3,200 cans of wet food and about 3,000 pounds of dry food each month. The group has bins in pet stores for customers to donate food for the program.

Tags: animeals, boomers, lifecare alliance, meals on wheels, pet food, pets, seniors
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Understanding Palliative Care

December 30th, 2013

Palliative care is a branch of medicine devoted to improving quality of life for people diagnosed with serious illnesses. Receiving such care can make a huge difference in patients’ lives, but many people do not know that it exists, or confuse it with hospice care. One of the hurdles to overcome in making this relatively new specialty more widely available is helping people understand when it is appropriate and why it is so important.

Palliative care focuses on providing relief from the pain, stress and other symptoms of serious illnesses. Hospice care is a type of palliative care that focuses on people who are dying. However, palliative care is also appropriate for patients who are continuing treatment for their illnesses and are expected to live much longer or even recover.

In hospitals and other settings where palliative care is provided, it is delivered by a team of doctors, nurses and specialists to provide additional support beyond that provided by the patient’s primary treatment team. A palliative care team may assist patients with cancer, cardiac or pulmonary disease, Alzheimer’s Parkinson’s, ALS or other illnesses. The team concentrates on addressing symptoms such as pain, fatigue, nausea and depression, improving patients’ ability to endure necessary medical treatments and bettering their quality of life.

Pain relief is often a major focus of palliative care. Patients who have serious illnesses or are recovering from major surgery may suffer from debilitating pain, and both doctor and patient may be wary of opioid use because of the danger of dependence. However, pain relief is an important part of treatment, and a palliative care team can help a patient find the best way to relieve suffering.

Relief from pain is not the only aspect of palliative care. It also includes more general help with quality of life issues such as accessing community services, living comfortably at home and obtaining medical and personal care services that a person with a serious illness may need.

The use of palliative care results in fewer emergency room trips and lower medical costs, in addition to making life more enjoyable for patients and improving prospects for recovery. Advocates for palliative care want the services to become universally available in hospitals, nursing homes and assisted living facilities, but there is much road to travel before that goal is reached. This type of treatment was first defined as a medical specialty in 2007, and many doctors are unfamiliar with it. Doctors who are untrained in palliative care may – like much of the public – equate it with hospice care, and therefore not request it for some patients who may need it.

Palliative care is available at most large hospitals in the United States, but patients may have to request it. Depending on the patient’s reason for seeing a doctor, palliative care may be covered by private insurance, Medicare and Medicaid. Patients who would benefit from palliative care, and their families, should advocate for the patient and request the services they need.

Tags: Medicaid, medicare, palliative care
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Different Types of Assisted Living Facilities Meet Different Needs

December 17th, 2013

Assisted living facilities are residences for senior citizens where help is provided with daily living activities, as needed. This can include making doctor’s appointments and taking medication, as well as bathing, dressing and grooming. Meals and housekeeping are also provided at such facilities. In the state of New York, all types of assisted living residences are licensed as adult care facilities by the Department of Health. However, there are different types of adult care facilities, which may also be called enriched housing programs or adult homes.

First, all adult care facilities are distinguished from nursing homes in that they are for people who do not need round-the-clock medical services or skilled nursing. People who need for medical staff to be present on a continuous basis are better served by a nursing home.

The two kinds of adult care facilities in New York, enriched housing programs and adult homes, both offer long-term care in a residential setting, including meals, laundry, housekeeping, supervision and assistance with personal care and medication. One major difference is that the law has stricter supervision requirements for adult homes, although a number of enriched housing programs may offer the same level of supervision. In addition, enriched housing programs usually provide apartment-style residences, while adult homes generally provide private rooms or two-person rooms.

The same types of service provided in enriched housing programs and adult homes may also be provided by assisted living residences and assisted living programs. In order to refer to themselves as providing “assisted living,” these facilities must meet additional requirements of providing certain disclosures and rights for residents. The goal of assisted living facilities is to provide the care necessary to allow individuals to live as independently as possible, emphasizing personal dignity and freedom of choice.

Finally, an assisted living residence that offers aging-in-place services and obtains additional certification may be designated an enhanced assisted living residence. A special needs assisted living residence is an assisted living residence that provides specialized care and meets additional certification requirements.

For more information, refer to the New York State Department of Health’s website on assisted living, available at http://www.health.ny.gov/facilities/assisted_living.

Tags: adult homes, assisted living facilities, enriched housing programs, senior citizens
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