Medicare Advantage plans are used by more than 16 million elderly and disabled people. The system, an alternative to traditional Medicare, allows private insurers to manage health care benefits.
Reimbursement rates for insurers are announced by the government each April, allowing health insurance companies to plan which options to provide and in which areas to compete. The increase comes after Medicare Advantage payments had been cut for several years in a row, due to changes under the Affordable Care Act and declining spending on health care costs. The government said that the increase in payments was in response to expected growth in health care spending.
Payments that the U.S. government makes to health insurance companies operating Medicare Advantage plans will go up by 1.25 percent in 2016, a division of the U.S. Department of Health and Human Services announced. In February, the government proposed a 0.95 percent cut in payments to insurers.
The increase is good news for insurers, and perhaps for health care consumers as well. Health insurance companies had warned that cuts in payments could harm the elderly, because fewer insurers would find it profitable to compete in the marketplace, reducing consumer choice.
People who are eligible for Medicare have the opportunity to switch from original Medicare to a Medicare Advantage plan, or vice versa, or switch from one Medicare Advantage plan to another, during the open enrollment period from October 15-December 7.
Certain forms of life insurance can be used as an investment and estate planning tool as well. Understanding the different options, term life insurance and permanent life insurance, can help to protect your family’s economic security in the event of an unexpected death.
Term life insurance
Term life insurance is pure risk protection, and it is what many families consider to be essential. The premium is paid for a certain term, or number of years, and the death benefit is paid out only if the insured person dies before the term ends. Term life insurance is much less costly than permanent life insurance, for the simple reason that the insurance company expects to only have to pay out the death benefit for about five percent of policies.
Within term life insurance, a common type is guaranteed level premium term life insurance, in which the annual premium remains the same for the entire term of 10, 15, 20 or 30 years. Insurance companies may also offer return premium term life insurance. With this type, some of the premiums paid are returned if the policyholder outlives the term, minus fees that the insurance company retains. This type of term life insurance is more expensive.
Permanent life insurance
With permanent life insurance, there is no fixed term, and the policy is in place for the insured person’s entire life. As long as the premiums are paid, then a death benefit will be paid when the person dies. Because the insurance company knows it must pay out a benefit, the premiums it charges are much higher than for term life insurance.
Permanent life insurance is typically comprised of an insurance portion and a savings or investment portion. The insurance company invests part of the premiums paid, and the policy builds up a cash value on a tax-deferred basis. The policyholder can usually borrow against the cash value.
The basic form of permanent life insurance is known as whole life insurance. A more flexible form is known as universal or adjustable life insurance. With a universal life insurance policy, one may choose to pay premiums at different times and increase the death benefit. One may also select a fixed death benefit, or an increasing amount equal to the face value of the policy plus the cash value amount.
According to Carol Bradley Bursack, author of “Minding Our Elders,” there is a lot to be said for routine. What many would consider one’s daily, mundane habits may also be the very thing that lets you know when one a loved ones needs assistance.
As the population ages and society continues to foster long-distance family relationships, it is uncommon for the adult children of elderly parents to live close by. If an elderly parent is in declining health and lives on his or her own, and the adult child lives an hour or more away, that adult child is considered a ” long-distance caregiver.” And when the only caregiver is far away, it often falls to everyday acquaintances – the bank teller, the dentist, the letter carrier – to notice when something is amiss. Those people, says Bursack, can become part of a long-distance caregiver’s community care network.
Bursack has strategy tips for how to develop community help for long-distance caregivers, including reaching out to regular delivery people, such as letter carriers, newspaper delivery people, and supermarket carriers. They can be asked to make contact if they note that newspapers are piling up or mail is uncollected. The same can be asked of service providers such as landscapers or house cleaners. There are also individuals that can be recruited who are trained to keep an eye on things, such as a visiting nurse or meal delivery person.
Linda Rhodes, author of “The Essential Guide to Caring for Aging Parents,” also suggests engaging the local community. She advises long-distance caregivers to exchange phone numbers with a parent’s neighbor. She also advises touching base with the parent’s local house of worship, and tapping into the volunteer community there to have someone do well visits.
Set up a phone tree. Share phone call days with other relatives, and have a strictly adhered-to schedule. If a caller cannot get hold of the parent or does not get a call returned, make certain the information is shared and can be followed up.
Consider the latest in technology – Skype and Facetime both allow virtual face-to-face interaction. Personal response systems can be placed in the home or even worn around the neck or wrist. Motion-sensing systems can alert a monitor to a lack of movement in the home, and send an alert via computer or to a call center.
Individuals who have a doctor’s orders to receive home health care cannot have these services suddenly cut or scaled back. Many elderly people need a certified home health agency to help with basic tasks after a hospital procedure or short-term rehabilitation stay. It has come to the attention of patient advocates and the New York State Commissioner of Health that some Certified Home Health Agencies (CHHA) are illegally stopping services or reducing the hours of care.
Unless a doctor has cleared the patient and has informed all parties in a sufficient manner, a CHHA cannot cut services without warning. If a CHHA is illegally doing this, they can receive violations for not adhering to state regulations and policies. Individuals and their loved ones can seek to have a fair hearing about the issue. Until a decision is made at the hearing, home health care must continue.
Some CHHAs are blaming the changes due to Medicaid payment cuts or state budget constraints. But state law specifically says that, “Agencies may not discriminate against a patient based on source of payment, and may not diminish nor discontinue services solely because of a change in the patient’s source of payment.” Around-the-clock care is still available for patients who receive a doctor’s orders for this type of care.
When patients are able to complete daily tasks on their own again and a doctor has approved this, a CHHA must follow defined procedures to discharge the patient from the home health care plan. This is also a critical component of the Medicaid home care procedures.
People who have had services unjustly cut or diminished need to contact a New York elder law attorney or New York special needs attorney. New York law firm Littman Krooks LLP excels in helping the elderly and people with special needs get their present and future needs upheld.
Our New York City, White Plains or Fishkill Elder Law and Special Needs attorneys have substantial experience in standing up for your rights. To learn more, visit www.elderlawnewyork.com.
Martin M. Shenkman, Esq., (www.shenkmanlaw.com) focuses on the estate and business planning needs of high-net-worth individuals, closely held business owners, and real estate owners/developers. We recently spoke to him about estate planning when a loved one has a chronic disease.
Q: What’s different about estate planning for someone with a chronic illness?
A: You need to focus on the specific disease, the individual’s experience with it, and its likely future course. There’s lots of variability. Generic approaches don’t work; I can’t think of a worse candidate for online estate planning. The standard disability clauses that appear in most legal documents, even lawyer-prepared documents such as a shareholder’s agreement, should be examined. People make lots of dangerous assumptions—even professionals.
Q: Can you give me an example?
A: For instance, they may automatically structure an estate as if the person will be or has been unable to work. Take MS–you can be diagnosed with it as a child but the average age is in the thirties. Someone with MS may be able to work for 10-20 years, some until retirement. Or look at Parkinson’s. Most people experience its onset in their mid-sixties or later, but some begin to have symptoms in their thirties. The older individual diagnosed with chronic illness may have had a full career during which to acquire assets. Planning is not only for the elderly and not only about special needs issues. Each situation requires a different approach.
Q: What about advance directives?
A: That’s another area that requires careful consideration. Consider diseases such as MS and Crohn’s that involve uncontrolled attacks. A good way to approach power of attorney (POA) in such cases might be to structure an immediate limited POA that would authorize someone to handle routine matters—bill paying—for a couple weeks. But they wouldn’t be able to handle anything major, such as selling someone’s home. The comprehensive POA would “spring” when the illness became incapacitating.
Q: You’ve said that estate planning tools should empower, not disempower. What do you mean?
A: Disease disempowers. If you are living with a chronic illness or disability it limits what you can do. It disempowers you on some level or in some manner. There’s a big emotional component to planning for a loved one with a chronic illness, and there are creative means of preserving someone’s independence as much as possible. Take a situation in which an individual has bipolar disorder. The person may be exceptionally bright and capable, but a manic episode could pose serious problems. The bulk of this person’s estate could be protected by establishing a fully funded living trust having family and institutional trustees. But the trustees could be directed to establish a small account –say, $5,000–outside the trust that’s accessible to the individual by checkbook, credit and debit card. This would empower the person to do anything anyone else can do. It could be replenished, as necessary, while the bulk of the estate would remain protected.
Estate planning tools should be used to ensure quality of life. They shouldn’t be used as blunt instruments.
Thanks, Marty, these are thoughtful approaches to complex situations. I hope they prompt readers whose loved ones have chronic illnesses to think creatively about their own estate planning.
