Mary and Bob – Almost Divorced But Then Tragedy Strikes
October 25, 2010
Mary and Bob were married 40 years and raised a son together. Over the years, however, they grew apart and when their son entered the military and his career took him overseas they realized that there was no reason for them to stay together. They agreed that a divorce and pursuing separate lives made sense. Mary and Bob owned a home together, but not much more in the way of assets. Bob agreed to give Mary the home. In return Mary agreed not to seek alimony. Problem solved – or so they thought – until Bob suffered severe head and neck injuries in a car accident.
Probably 20 years ago Bob would not have survived but advances in medical science saved his life. However, Bob remained in a coma for several weeks. After regaining consciousness, he could not speak and had limited movement of his arms and legs. Bob was transferred to a rehab facility where he began intensive therapy. It is too soon to tell the extent of his recovery or if he will need to remain in a nursing facility for a lengthy period of time.
Meanwhile, Mary now has a dilemma. She is still married to Bob. The nursing facility is pressing her about how she will pay for his care if he needs to remain there. Emotionally, she is torn. She and Bob have agreed to a divorce, although it’s not final yet. But, she also knows that he has no family, other than their son, but, again, he is overseas. She is also concerned about finances. She doesn’t have the funds to pay for nursing care at $10,000 per month.
To make it even more complicated, Bob never signed a power of attorney. As Bob’s spouse, Mary is being looked upon as Bob’s decision maker, but legally she has no right to make those decisions. But, beyond that, some of the answers to the questions on the financial side of things, may benefit her but maybe not Bob. Since their intent, before the accident was to part ways, is she even in a position to act in Bob’s best interest? If Bob needs Medicaid, the home can be protected for Mary as the healthy spouse. But what happens when the couple isn’t really still “together”? How does that change things?
We’ll discuss those issues and more in next week’s post.
Obamacare – What Seniors Need to Know (Part 2)
October 18, 2010
So, last week we were discussing the highlights of President Obama’s health care plan that most affect seniors. The closing of the infamous prescription drug donut hole is one. But there are others.
Beginning in 2011 Medicare Advantage plans will have to reduce members’ out of pocket expenses for some more costly services and for members who use the most health care. The Advantage plans must continue to provide the same benefits available under Medicare Parts A and B. Currently Advantage plans are paid 14% more than it would cost to cover the same person in traditional Medicare. Over the next several years the new law will reduce that number to 1%. Plans that receive a high government rating will receive bonus payments, so seniors considering an Advantage plan should look for a plan in existence at least 5 years and one that carries a high government rating.
The Community Living Assistance Services and Supports Act (CLASS) establishes a national long term care insurance program. The program is intended to help pay for some future long term care services and support. (See my blog posts of April 12, 2010 and April 19, 2010 for further discussion.)
The new law also provides better information and accountability for nursing home care. It promotes home and community based services by providing financial incentives to the states to offer greater assistance for those who choose to remain at home rather than residing in a nursing facility. This signifies a recognition by the government that more people want to remain at home (where it is less expensive to administer care). It will be interesting to see if this becomes a trend as 77 million baby boomers start to turn 65 next year.
The new law does include provisions requiring those with higher incomes to pay for Medicare. Beginning next year, some will see higher premiums for Part D benefits. Additionally, the Medicare tax rate for households with high income will increase and the Medicare tax will be applied to unearned income (investment income, royalties, rent etc.)
The Affordable Care Act is very complicated and this review covers only a few key elements of import to seniors. It is clear, however, that while President Obama and Congress have attempted to address some long term care concerns, the need for planning is as urgent as ever. The government will not come to the rescue. It is up to each one of us to protect ourselves and a carefully constructed long term care plan will go a long way to providing that security.
Obamacare – What Seniors Need to Know
October 11, 2010
Recent studies have shown that most Americans, while fearful of President Obama’s new health insurance plan, (something which many opposed to the plan have been quick to capitalize on) don’t really know what’s in it. This is partly due to the President’s failure to educate the general public about it. The complexity and broad scope of the law no doubt have something to do with it as well. There are, however, some important features of interest to seniors and their loved ones.
The Affordable Care Act, which Congress passed and the President signed into law in March, 2010 will expand health care coverage for all Americans. No guaranteed benefits under Medicare Part A or Part B are being cut. Some provisions of the new law will take effect immediately. Others will be phased in over the next several years.
Seniors will receive a big benefit immediately with assistance with the infamous Medicare Part D donut hole. The donut hole is the Part D coverage gap. When a Medicare beneficiary surpasses the prescription drug coverage limit, he/she is then responsible for all prescription drug costs until expenses reach the catastrophic limit. Each year everyone starts at zero again so many seniors incur this cost year after year.
A $250 rebate will be paid to Medicare beneficiaries who reach the donut hole in 2010 (even by $1). Seniors will receive these checks automatically. They do not need to fill out any special forms. Be careful, however, as there are scams in which it is claimed that you can pay a fee to get your check faster. Not true. Beginning in 2011, upon reaching the donut hole, seniors will received a 50% discount on brand-name prescription drugs and a 7% discount on generic prescription drugs. By 2020 the donut hole will be gone and Medicare beneficiaries will instead pay 25% of the cost until they reach catastrophic coverage levels.
Another change beginning in 2011 will be coverage for preventative care. Medicare will cover one annual wellness exam for each beneficiary. There will be no cost sharing for these services.
Stay tuned next week for some more features of the new health care plan that will affect seniors.
But Mom Wanted Me to Have the Money
October 4, 2010
In the last few years readers of my blog know that many of my posts are real stories that highlight the pitfalls and dangers of not putting together a plan for long term care until you are on the doorstep of the nursing home. Here’s another one, with names changed of course.
Jane’s mom has been living at home with the assistance of Jane and some private aides. Mom is now in her 90’s, her health is declining and she needs ever more assistance. Jane called me because she is anticipating Mom’s money running out in a few months and Mom will probably need nursing home care. As Jane explained, “I want to be prepared.”
Jane told me that Mom is down to about $50,000 in assets. I asked about transfers and that’s when she told me that 2 years ago Mom gave her a gift of $50,000. I asked if she gave her other daughter, Mary, a gift as well . Jane told me that Mary is well off, doesn’t need the money and that Mom wanted to “compensate” Jane for all the care she would be providing.
Jane acted surprised when I told her that although she thought she was planning ahead she was actually too late and now, in what we call, “crisis mode”. That’s because Mom’s gift makes her ineligible for Medicaid. “But I’ve been providing care for Mom. She’s really just paying me for care that, if I wasn’t providing, we would have to hire someone to do”, Jane exclaimed.
I then related to her that the State doesn’t look at it that way. In fact, I’ve had discussions with the State’s attorneys in which it is clear that, philosophically, they feel that families should provide care without compensation, that it is simply a case of hiding money. In my view, that’s a simplistic and unrealistic way to look at it. I see many cases where children stop working to care for aging parents. They lose income that they need to support themselves.
But, it doesn’t matter to Jane how things should be, just how they are. Mom could have transferred assets to her, but it had to be for fair value. In other words, Mom and Jane needed to enter into a caregiver contract in which Mom paid Jane for care that, if not provided, she would have to pay an aide. And, no, Jane can’t go back retroactively and sign that contract. The State presumes Mom made a gift to Jane and that carries a Medicaid transfer penalty. I told Jane that if Mom needs care she’ll either have to give the money back or pay for Mom’s care at the private pay nursing home rate for 7 months, the length of the penalty.
Jane listened and then told me that she doesn’t have the money to give back, however, her sister, Mary does have the money. “Shouldn’t she cover it since I have been taking care of Mom?”, she asked. I told her that this could possibly be a solution but legally, Mary is under no obligation to do that.
So, where does that leave Jane? In a predicament with no great solution. But, again, one that could have been avoided with proper planning.
