Mom Has $1,000,000. She’ll Never Run Out of Money (Part 1)
December 26, 2011
Paul called concerning his 88 year old mother who needs nursing home care. “She doesn’t have a power of attorney. I think she needs one”, he said. I concurred but our conversation didn’t stop there. As we always do, I asked him about Mom’s finances. “Her income consists of Social Security of $1000 per month and what she generates in income from investments”, Paul told me. “But I’m not worried because she has $1,000,000 in assets. I don’t think she’ll ever run out of money so Medicaid isn’t possible or necessary.” “Maybe – maybe not”, I replied.
Why did I say that? Doing some quick math, spending approximately $100,000 a year of her assets on nursing care, it will take 10 years before Paul’s mom spends it all. A 10 year stay isn’t all that likely, is it? After all, she would be 98 at that point. Not likely, but it is certainly possible. But let’s say she doesn’t outlive her money. What if, instead, she lives in a facility for 6 years or 8 years and spends $600,000 or $800,000?
I told Paul that whatever is left will be passed on to her heirs in her will. The exact amount will depend on how long she lives and how much she uses for her care. I then asked if she had a will. That’s when he told me that Mom has 3 children, but Paul’s brother Bill has “issues”. “He hasn’t been deemed disabled or even diagnosed with anything”, Paul told me, “but Bill never married, has never held a job for very long and is just ‘off’.”
Paul told me that Mom’s will leaves 2/3 of her estate to him to look after his brother. I then asked about Bill’s situation, his financial needs. Not surprisingly, he has nothing to his name. As we were talking, Paul had an “aha” moment. He realized that there just might not be all that much left for Bill and that the financial burden would fall to him. Suddenly, Medicaid seemed to be more relevant. Paul grew concerned and asked, “Is there anything you can do to help me?” “Actually, there just might be”, I told him.
Next week I’ll share with you what I told Paul.
The Best Laid Plans of Mice and Men
December 12, 2011
It was a call I received a number of years ago but one I’ll always remember. Don called regarding his mother’s need for long term care. Her health had been slowly declining but she was still living at home. Her investments were dwindling and she needed increase care. It was a pretty typical situation we’ve seen over and over again. I knew where he was headed – or so I thought.
When we sit down with new clients to explain how we can move assets out of their name in order to qualify for government benefits, they so often think in terms of gifting outright to their children. Well, that’s what happened in this case. Don told me that his mother gifted the home to Don’s deceased brother’s son, Clyde, a year and a half ago. He lived in the home with his grandmother and was supposed to provide some care – or at least that was the plan – until Clyde decided that he wanted to sell and move to California to pursue a new career. I figured out what was coming.
Don told me that Mom was essentially being kicked out of her house. Clyde reneged on his agreement and was taking the proceeds from the sale with him. Don wanted to know what his options were. We talked about the possibility of suing Clyde to recover some of the money. The problem was that no written agreement existed. It sure looked a gift from Grandmom to Grandson, no strings attached.
He then asked me about assisted living care for his mom who, he felt, really needed supervision. She had approximately $50,000 in savings and $2200 in income from Social Security and pension. At a cost of $5000 per month it would take her about 18 months to run out of money, leaving her unable to pay the assisted living facility expenses beyond that and with nothing to get her into a nursing home later on if she needed it.
“It all sounded reasonable when she transferred the house”, he told me. “Clyde needed a place to live and Mom wanted to help him get on his feet.” I understood, but at the same time, I know that life doesn’t always go according to plans. It reminds me of the quote from a Robert Burns poem, that “the best laid plans of mice and men often go awry”.
That’s why we never advise our clients to transfer assets outright to other family members, but instead we use trusts. Even when someone tells me that “everyone is on the same page – we all get along”, that is hardly a guarantee. Life is too complicated, with so many twists and turns. What Don’s mother should have done is work with an elder care attorney to put a plan in place to help her grandson, as she desired, but first to be sure to provide for her care needs for the present and the future. Only when she no longer needed the funds should they have been given over to Clyde.
So what did Don do? I told him that he’d have to make that $50,000 stretch another 3 and ½ years before Mom could hope to qualify for Medicaid. He considered moving her to his home, not an ideal situation, but the least costly option. He took the name of an attorney to talk with about suing his nephew and he thanked me.
End of the World? Fat Chance
October 24, 2011
I was talking to Warren the other day about long term care and he said – jokingly, I think – that he didn’t need to plan because the end of the world was coming, October 21 to be specific. Usually, I hear people say that the government will bail them out. This was a slightly different version of a common theme. Don’t deal with the problem because, somehow, it will take care of itself.
Warren was referring to the latest prediction by Harold Camping, an American Christian radio broadcaster. Camping claimed the world would end on October 21, 2011 after incorrectly predicting disaster would occur on May 21, 2011. It always amazes me that so much media attention attaches to apocalyptic predictions. Camping claimed he had examined the Bible and using numerology, a form of mathematics of sorts, was able to calculate the exact date.
So, October 21 came and went. The world as we know it is still here, and we’re still wrestling with the same problems we had on October 20. While Warren was being facetious, his comment expresses the sentiment of many. They just don’t want to deal with the unpleasant subject of aging and dying. I am not sure why talk of the end of the world is any easier or more comforting to think about, but I’ll have to ask him when I see him next.
It really just allows us to push the topic into the back of our minds, but time marches on and we all get older. We can ignore it for a while but eventually the subject will rear its ugly head. If Harold Camping wants to increase his batting average as far as predictions go, he might want to focus on the future of the long term care system in this country. Because it doesn’t look pretty. We are headed towards a real catastrophe and our government doesn’t seem to have a clue how to solve it (See my post last week about the death of CLASS). As always, those who are ill prepared will suffer most. The message is clear. If you were “hoping” the end of the world would bail you out, sorry to disappoint you. Maybe it’s time to buckle down and put your long term care plan in place.
The Death of CLASS
October 17, 2011
I’m not talking about a loss of manners or style or discretion in a world in which technology has helped push the doors open wide to reveal everything that used to be private or personal. That’s a whole other subject. I’m referring to CLASS, President Obama’s attempt to establish a national long term care insurance plan.
CLASS, which stands for Community Living Assistance Services and Support was the part of President Obama’s 2010 health care reform bill that addressed long term care. There weren’t many specifics in the bill, just a general outline. The plan was to be a voluntary government program under which participants pay a monthly premium, which would then guarantee them a small benefit to cover their long term care needs. However, they would be required to pay into the program for at least 5 years before claiming the benefit.
Participants would pay a monthly premium through payroll deduction. The program was not intended to be another government funded one. How much of a benefit would be paid and for what types of care weren’t clearly defined in the bill which became law. The plan called for a committee to be formed to develop all the details over the next 2 years with the goal of beginning enrollment in 2012 and payouts in 2017. Now, you may notice that I keep referring to the plan in the past tense. That’s because only 19 months after the law was passed the President scrapped the CLASS program.
Last April, in this blog, I pointed out the many flaws in the plan. It didn’t take an actuary to look at the numbers and figure out very quickly that there would be serious problems collecting enough premium dollars from a shrinking workforce to be able to pay out the mountain of claims that are sure to come as our population continues to age. There was also the matter of the benefit amount which, although never finalized, was rumored to be in the $50 to $75 range. The whole plan just didn’t seem to be well thought out, and perhaps that’s why the Obama Administration chose to announce its death on Friday. (If you have bad or embarrassing news to release the PR trick is to release it on Fridays so it hits the papers Saturday when readership is at its lowest.)
So, where does that leave us? I said last year that I wasn’t expecting much from CLASS and that proved correct. But, I am also sure that this isn’t the last we will hear from this president or the next administration on the subject. We can’t continue to ignore the problem of long term care in this country and we can’t hope and pray that the government will come to our rescue. Each of us needs to ask some hard questions. “Do I have a plan and is it adequate to meet my needs?” If you don’t or it isn’t, then you’ve got to talk to the right people, such as your financial advisor, accountant, insurance agent and elder law attorney and get help now. The clock is ticking and time is most definitely not on our side.
Be Nice to Me – I Pick Your Nursing Home!
October 10, 2011
For several years now, many regular readers of this blog have offered me kind words and feedback on my weekly stories and interesting posts, suggesting that I write a book. Well, I have finally taken their advice and am pleased to announce the publication of my first book, titled “Be Nice to Me – I Pick Your Nursing Home”. Some might be puzzled, others amused, by the title. It was intended to be humorous and head turning. The book is a compilation of many of my posts over the years, updated in some cases. My goal is not simply to be thought provoking, but for the reader to take action to address what is a growing problem in this country, the cost of long term care and how best to administer it.
For more information and to purchase your copy go to www.elderlawtodaypodcast.com/services/
Don’t Put Long Term Care Planning on the Backburner
August 8, 2011
Laura called us in a panic because her husband, George, was in a nursing home, about to have his Medicare coverage terminated. George had no long term care insurance and Laura was totally unprepared for how Medicaid works and how much she would have to spend down. I explained that we could help her preserve more than what Medicaid said she could keep, but we needed to work quickly. She was onboard and we rolled up our sleeves and got working on it. Then George died.
In Laura’s mind, the crisis for which she hired us had now subsided. She could put long term care issues on the backburner. She had other things to deal with, among them the psychological, emotional and financial toll of the loss of her longtime spouse and what changes to her lifestyle that would cause. I can certainly understand her thinking, but that is absolutely the wrong response.
You see, when a married couple becomes our client in what we call “crisis mode”, the family is focused on one problem only. In Laura’s case it is how to afford George’s long term care without losing everything. While that is my primary focus too, I am also looking at the care needs of the healthy spouse, Laura. How can we best protect Laura so that, down the road, she doesn’t find herself in the same situation as George.
Laura is healthy. Now is the time to take action so that if and when she is faced with the spector of long term car – and that might be 3, 5 or 10 years from now – we won’t be trying to put out fires, so to speak. We will have a plan in place and the ability to tap into all available sources of payment. That will make it so much easier for Laura’s children to manage their mom’s care without worries that she will run out of money and it will decrease the chance that Laura will need to enter a nursing home.
This is critical to Laura, but also to her children. While Laura devoted the last several years to caring for George, it won’t be so easy for her children to do the same for her. While they want to be there for their mom, they have young children and careers too. They can’t simply drop everything on a moment’s notice.
When I explained this to Laura she understood. It took her a little time to adjust to the loss of her life companion, George but we also didn’t need to work quite as quickly. Over the next several months we put the pieces of a plan in place. Laura and her family have the peace of mind of knowing that they’ll be much better prepared if a long term care crisis hits a second time.
Is Your Long Term Care Plan Stuck in a Time Warp?
July 18, 2011
The amount of change in the last 15 years is incredible and the pace of change has quickened. Nothing stays the same forever, and forever is not as long as it used to be. We are starting to see this in the senior market, beginning with how the term “old” is viewed by seniors themselves and by the businesses that serve them. The generation turning 65 today is the Woodstock generation. The term senior citizen doesn’t seem to fit and may itself become a relic before long.
If you ask anyone turning 65, they’ll tell you they don’t feel like seniors. They also don’t act like seniors, certainly not like ones of past generations. Growing up with sex, drugs and rock and roll, many of the recently minted seniors, the oldest of the baby boomers, still think of themselves as young and are generally healthier than their parents were at that age.
65 now is not what it was 20 or 40 years ago. People are living longer, more active lives and that will have an impact on what services new seniors will require and demand in the marketplace. For example, traditional senior centers in some areas are closing for lack of funding and lack of participation. Many are too sedentary. You are more likely to find younger seniors at a health club than a senior club. They are more likely to be playing basketball, softball, tennis, golf, even adventure sports, than playing board games, cards and bingo. This change will affect many senior communities, including active adult communities and assisted living facilities.
It usually takes society time to adjust to change. We’ve heard about how the Social Security and Medicare will run out of money within the next 10 to 20 years. The retirement age for Social Security has been raised gradually from the traditional 65 and probably will continue to climb. The notion of retirement in 1935, when the Social Security program was created, did not contemplate 20 or 30 years or more of retirement but that has become the norm. In 1935 people weren’t living with chronic ailments for years like we are now, thanks to advances in modern medical science. In fact, the average life expectancy in 1935 was less than 65 years of age. Social Security was designed with the expectation that a large segment of the population would never collect benefits. That’s generally how insurance works, at least if the insurance company wants to remain in business.
With people living longer, more active lives does that mean long term care services are no longer necessary? Of course not. While we can put off the aging process we can’t avoid it – at least until someone figures out that whole cryogenics thing. It just means we are more likely to face significant declines in our health later, perhaps at 75 or 85. Everything is stretched out over a longer time frame and we’d better be prepared for it. We have to stop thinking about retirement and long term care as it was 75 years ago. Most people have a plan that fits 1935, as if they are caught in a time warp. It’s time to replace it with one that works in 2011.
What’s Your “88 Plan”?
July 11, 2011
It seems more and more to me, that dementia and Alzheimer’s Disease are everywhere, but then, maybe as an elder law attorney I am more tuned to it. In the last month three notable celebrities died or were diagnosed with dementia and/or Alzheimer’s, actor, Peter Falk of Columbo fame, “Rhinestone Cowboy”, singer, Glen Campbell and NFL football Hall of Famer, John Mackey.
Mackey was a tight end for the Baltimore Colts in the 1960’s and early 1970’s after having played his college ball with some great Syracuse teams in the early 1960’s. He later became the first president of the NFL Players’ Association and was instrumental in efforts to secure pensions and other benefits for retired and ailing players. Football is a violent sport and like many players Mackey began to suffer from dementia. In his last years he needed to be cared for in an assisted living facility.
Mackey played in the days before athletes made millions. His wife, Sylvia, therefore, had to go back to work as a flight attendant to pay their bills and because they needed the health insurance. As the disease progressed, however, the Mackeys realized what many of our clients come to learn, that traditional health insurance won’t cover long term care. That’s when Sylvia Mackey and other wives and children of former NFL players pursued the NFL and its Players Association to establish the 88 Plan.
Named in honor of John Mackey, whose uniform number was 88, the plan provides up to $88,000 a year to cover long term care for former NFL players with dementia. Much has been written about the connection between football and brain injuries although the NFL still insists there isn’t any higher incidence of dementia in football players than there is in the general population. Maybe the 88 plan is just the NFL recognizing what I have been saying for a long time, that long term care is a big problem in this country and the owners and players are doing what we all should, implementing a plan to solve the problem.
The Mackeys’ story is instrumental. It’s a story of a wife who suffered along with her husband, supporting him physically, financially, emotionally and psychologically the best she could. It’s also a lesson about being unprepared. The Mackeys didn’t have a plan, but they were lucky. They convinced John Mackey’s former employer to come through with the “88 Plan”. The question then is, “who’s going to provide your 88 Plan?” Chances are you’ll have to do it yourself so the sooner you get started the better off you’ll be, unless you’re thinking the NFL is going to help us all out – just as soon as they figure out how to solve their lockout and save the coming season. Yeah, right.
Underground Storage Tanks and Long Term Care?
May 16, 2011
It just keeps getting worse doesn’t it? I’m talking about the economy and our federal, state and local governments’ inability to balance their budgets and provide the services and assistance they have provided in the past and promise to provide in the future. And is why you can’t expect the government to bail you out.
The latest example is not about long term care but the parallels are there. The State of New Jersey established a fund to help homeowners remove rusted and leaking underground storage tanks that contaminate the soil. 5 years ago the fund had $90 million. Now there is nothing. But it’s the reason why there is nothing left that gets me. The fund ran out of money in part because it was spent on other things that had nothing to do with removing underground storage tanks and in part because too many people were made eligible. As a result, 1300 people seeking grants or loans to help pay for cleanup will have to wait at least a year and no new requests will considered until 2014. Of course, there is nothing preventing the State from extending either of those timelines, making residents wait even longer.
Meanwhile, leaky tanks will continue to leak and the State environmental agency can, by law, hold the residents responsible for the spill. It’s commissioner has said that in some cases, where the homeowner doesn’t have the money to pay for the removal and it can’t wait, then the State will go in and clean it up and then put a lien on the property for the cost of that cleanup. What does that tell you about whether any funds will be available next year, 2014 or any time? All the chairman of the Senate environmental committee could say is that they will conduct an investigation as to what happened to all the money and why no one told them sooner. Great.
What has this got to do with long term care? Nothing and everything. Certainly environmental and long term care issues couldn’t be more different. What is important, however, is to pay attention to what the government is, or in this case, is not, doing for its citizens, especially where it made certain promises. The State isn’t beyond changing the rules in the middle of the game and breaking its promises.
And that’s the lesson to be learned here. Long term care is a huge problem. The government is a part of the solution. But, it has in the past, and will most certainly again in the future, change the rules. If you aren’t prepared for the possibility of needing long term care and expect the government to be the answer, you’d better rethink it. Look what happened with a small program to remove underground tanks. Don’t think it won’t happen with a program like Medicaid. It will. That’s why it’s so important to get your ducks lined up now, have a plan and a backup plan in place. Because what the government provides you today may be very different than what is willing to provide you tomorrow. You’d better know how you will respond.
Of Alzheimer’s Disease and Government Shutdowns
April 11, 2011
A new survey by the MetLife Foundation indicates that Alzheimer’s Disease is more feared by adult Americans than any other disease except cancer – and in a few years that just might change. Approximately 1000 Americans were interviewed last fall. 31% indicated they most feared Alzheimer’s Disease, ahead of heart disease, stroke and diabetes. 41% said they most feared cancer. Interestingly, 4 years earlier 38% said they feared cancer most vs. 20% for Alzheimer’s. With babyboomers entering retirement, presumably the gap will continue to close. The survey also confirmed some other suspicions.
Nearly 1 in 4 interviewed said they were concerned about needing to provide long term care for a loved one with Alzheimer’s. Less than 1 in 5 said they had made any plans for the possibility of getting Alzheimer’s. Only 2 in 5 people said they have had discussions with their families about Alzheimer’s. 4 in 5 adults admitted that they have made no financial arrangements for the cost of care should they develop the disease. And here’s one final stat. 63% of those surveyed acknowledged they know little or nothing about Alzheimer’s Disease.
One thing is clear. While the average American is concerned, he/she is not doing anything about it. The problem isn’t going away and will only continue to intensify. The government isn’t going to help either if this week’s developments are any indication. Congress and the President only avoided a government shut down at the 11th hour when they reached tentative agreement on federal budget cuts. The message is clear. You’ve got to look out for yourself and your family. Others won’t do it for you. To start taking action, visit our website www.livingstonmemorylawyer.com/
