Overcoming the Fear of Handouts

By Aaron Paker.


This 
week in Crisis Corner, overcoming the fear of handouts. 

 

We have had many clients who were children during the great depression and many more who have spent much of their adult lives opposing Welfare and the spending of money on those who have not earned it.  They come to our office, usually grudgingly dragged in by their loved ones, and they tell us they do not want a handout and to find another way for them to get help.  Sometimes it even gets to the point of the family coming in only after their loved one is too incapacitated to refuse the help or completely out of money and with no other options.   

 

There are a few things that we often share with clients who are of this mindset: 

  1. You have likely paid for this.  There is no direct “Medicaid tax” that you pay, though you do pay into Medicare and Social Security, at least while you are working.  However, roughly 60% of the Federal budget is dedicated to mandatory spending.  That primarily consists of Social Security, Medicare, Medicaid, and Veteran’s benefits.  If you have paid taxes, you have contributed to the funding of the Medicaid program.  You might as well use some of that money rather than have it all go to others who may or may not have paid in. 

 

  1. Your family are the most likely to suffer from your refusal.  You have every right to spend all of your life savings paying privately for care.  The rules that we use to help clients protect some of their assets make it possible for them to have assets available to improve the quality of life that they experience after their care needs increase and, just maybe, have a little something left to pass on to their children when they are gone.  As with any set of rules, there are ways for people to abuse the rules that allow for the protection of assets.  We have had several couples with multi-million dollar estate and massive incomes request help getting Medicaid to pay for care and, if we were so inclined, we could have legally helped them do just that.  However, most of the people who come to me for help have somewhere in the range of $100,000.00 to $1,500,000.00 and care costs that are reaching the level of $60,000.00 to $180,000.00 per year.  It does not take long to become destitute with care costs that reach those levels.  For those with more than $500,000.00 there are often other, non-Medicaid, options available, but they are not always practical or appropriate. 

 

  1. Waiting could cost the government even more and give you a lower quality of life.  There are a few people who will hold out until every dime is gone and their family cannot help them, physically or financially, any longer.  At that point Medicaid, in a nursing home, may be the only option that is left to them.  The benefits that Medicaid pays to a nursing home are, generally, larger than the benefits paid in any other setting, with Medicaid paying as much as $10,000.00 per month or more to the nursing home as opposed to the $3,000.00 to $5,000.00 that they would pay in most other settings.  For all of that extra money that the government is paying, the person receiving care is living in a situation that almost no one would choose for themselves if there were any other options.  Do not get me wrong, we have visited clients in nursing homes that were quite pleasant and that provided a fairly good quality of life.  However, the majority of my visits to nursing homes are depressing.  We see patients sitting in wheelchairs in the hallwaywearing nothing but a hospital gown, and staring at nothing in particular. We see six patients seated around a horseshoe table being fed by one disinterested care provider. We smell the overwhelming stench of urine and bleach that lingers with me and my clothes for hours.  Waiting until you are out of options for where you receive care makes it very difficult to be choosy about which nursing home you land in and we would not wish most of them on our worst enemy if we had any other options. 

The key is to recognize that you are not taking a handout, you are taking a hand up.  You are using the rules that have been created, by the government, to give yourself and your family the best quality of life possible.  Assuming you come to us or another elder law attorney that believes that Medicaid is not always the answer, you will look at other options besides Medicaid unless it truly is the only resource left for you in your current situation.  You may still land on Medicaid, but you can at least feel better knowing that you have explored other options and then did what was right for you and your loved ones.   

 

If you want to learn more about Medicaid and how it might fit into your future or the future of a loved one, please give us a call today. 

Start Planning With Professionals Early!

This week in Crisis Corner, why it is more important than ever to start early and get professional help in planning for your long term care needs.

I recently had the opportunity to be a guest on Rajiv’s Aging Options radio show. During our conversation he asked me about changes to Medicaid in 2021 and, for the first time, I really put all of the changes I have been seeing together in my mind.

The good news, if you want to call it that, is that the amount of money a well spouse can have at the time of the application, the personal needs allowance that the Medicaid recipient gets to keep, the allowable home equity, and all of those sorts of things increased by a tiny percentage, as they do every year. In fact a person receiving benefits outside of their home gets to keep a full $1.12 per month more of their money in January 2021 than they did in December 2020. Needless to say, the increased benefits from the State are not significant.

The bad news is that the way that the State enforces rules is changing, whether officially or not, and the way care providers accept Medicaid is also changing. One of these sets of changes increases the need for seeking professional help and the other increases the need to start the process early.

The biggest change the State has made, its automated asset verification process (AAVP), is not really new to 2021 but it has been an increasing issue as 2020 progressed. Before the system was implemented, we would send three to six months of bank statements along with the Medicaid application and explain any unclear deposits or withdrawals. On rare occasions the case worker assigned to the application would see a red flag and ask for more bank statements, sometimes (twice that I recall from hundreds of applications) they asked for all statements from the five years leading up to the application. When the AAVP was first rolled out I did not see much change and it seemed that they only used it if they saw a red flag and wanted to get more information, or to look for bank accounts that were not reported at all. Then things changed. Now, as far as I can tell, the case worker prints out a report of every deposit or withdrawal over a specified amount (about $350 I think) that has occurred in the last five years. The good caseworkers sort through and eliminate the items such as transfers from checking to savings, automatic payments to a mortgage, or other similar items that are self-explanatory. Other case workers send a seven page letter requesting an explanation for each and every transaction, most of which I can simply note as self-explanatory. The problem lies with the ones that are not self-explanatory. If I show you a bank statement from January of 2016 and ask why you made a cash withdrawal of $400.00 on the 5th would you remember what the money was for? This becomes even more of an issue when the person applying for benefits managed their own finances until two or three years ago and now have no capacity to recall what they did, so their agent is trying to explain transactions that they had no part in. I spend more time trying to explain bank transactions that should not even be the subject of scrutiny than I do explaining the really complicated transactions that used to be the reason people came to me for help.

The other big change I have seen from the State is how they enforce old rules that have not changed. A good example is home equity. In the past if a single person was living at home or intended to return home and the equity was too high, the State would approve benefits and place a TEFRA lien on the home right away (a lien for all Medicaid benefits that normally is not placed until the recipient passes). Similarly, I had several married couples where the well spouse kept the home but rented an apartment near the care facility of the spouse applying for benefits, sometimes renting the house until they were able to move back in. Now, on several occasions, the single applicants are being forced to go through formal hardship waiver applications and the State is applying the equity limit to the married couples (normally a well spouse can own a home of any value) and requiring a hardship waiver application if the house has too much equity. The hardship waiver application is not overly difficult in and of itself, especially with help from an attorney; however, by the time the State informs you of the requirement, you prepare the application, and it gets reviewed by all the levels of supervisors that are mandated by the application, the approval can be delayed for several extra months. This is not the only rule that is seeing much harsher interpretations. I have had children pay large amounts of money to cover repairs to a parent’s home so that it can be sold and then get paid back after the sale and the State’s case worker insisted that the child made a gift and then received a gift because there was no paperwork to prove it was a loan. They wanted to impose a gifting penalty for something that was clearly not a gift (I eventually won that fight). That is only one extreme example of an increasing unwillingness to admit transfers that are not for Medicaid qualifying purposes as excluded. A few years ago I had a client who gave $10,000.00 to her youngest daughter, just before applying, because she had paid that much towards the other daughters’ weddings and did not want her youngest to miss out just because she was applying for Medicaid… and it was approved without a single extra question asked!

That brings me to the changes I am seeing in care providers, both in home and in communities. A year ago I could call one of the geriatric care managers that I regularly work with and tell them I need an adult family home (AFH) or assisted living facility (ALF) in a certain part of the state and I need them to accept Medicaid in no more than 6-12 months. They might have grumbled at me, but in most cases they had three to five possible communities for the families to look at within a week or two. Today, if I make the same request, the families might get a list of 3-5 facilities within 25 miles of the part of the state they want after a month or two (assuming they want a quality facility and not just one that accepts Medicaid). The demand for beds in quality communities is higher than ever and the amount that Medicaid is asking them to accept for care provided is not increasing with the increase in private pay rates. For example, when I started this six years ago, an AFH might get $4-5K per month private pay and $3-3.5K from Medicaid, so they would often take Medicaid after 6-24 months of private pay. Now the private pay is often $6-9K per month and the Medicaid rate is $3.5-4K so they all want 2-5 years of private pay or they have stopped accepting Medicaid all together. What used to be the high end of private pay periods has become the starting point for most communities. We always advocate for trying to keep your loved ones at home, but that is not always realistic, especially if you wait to start planning until the money is mostly gone and the needs are at their highest. Recognizing that a care community might be required and transitioning early, while care needs are relatively low, can save tens of thousands of dollars. Think of it like this, you can pay privately for three years while care needs are low and the rate is $5,500 per month or you can pay privately for three years when assistance is needed for nearly every activity of daily living and the rate is $8,000 per month.

People receiving care at home are not immune to this change in care givers or, more accurately, this lack of change in benefits. Clients often have care providers that have been working with them for some time and, when Medicaid starts, they want to keep that care provider. However, a care provider who is being paid $20-35 per hour may not want to accept $16.50 from Medicaid. Not only are Medicaid rates very low, they only look at experience related to State approved work. A recent client had a care provider with the training and experience to warrant over $20 per hour from the State, but it was not work performed for the State so she was only offered $16.75 per hour to stay on as a Medicaid provider. The only saving grace for finding willing providers is that the State approves very few hours for most elderly recipients and the families can pay a higher rate for the extra hours that they cover privately (please note that you cannot simply pay the provider more for the hours that Medicaid already pays for or the provider and you can face severe repercussions). For example, the state may pay $16.50 per hour for the first 100 hours of care each month and the family might opt to pay for an additional 20 hours of care at $30 per hour that the State does not cover. This brings the average pay per hour up to $18.75, which may be at least a little more palatable to the care provider.

My long-winded point is this: between changes to how Medicaid rules are enforced and a lack of change to how care providers are compensated, it is very important that you start planning for your long term care needs sooner than later and that you work with a professional to minimize the snags along the way. If you are fortunate enough that Medicaid and care providers are something that is in your distant future, if at all, then talk to one of our Life Planners and get a really early start. If things are starting to get shaky but you think you can hold it together a little longer before you spring for a professional, call me and start now. Starting early is the single best thing you can do to provide yourself and your loved ones the best possible outcome.

What is a Geriatric Care Manager, and what do they do?

This week we learn about Geriatric Care Managers. Who are geriatric care managers (GCMs) and what do they do?

GCMs play a huge part in the work that we do to help clients prepare for Medicaid. In general, most GCMs are nurses or social workers by trade, but that is not always the case. They can also offer a wide variety of services and not all of them offer the same services. The following are the primary services offered, that we request the most often, and how they help our clients.

Far and away the most common service that our clients need help with, and the one that most GCMs provide even if they provide no other services, is finding appropriate housing options in an adult family home (AFH), assisted living facility (ALF), skilled nursing facility (SNF), or continuing care retirement community (CCRC). Any GCM will have a list of facilities and the cost for each within any given search radius. The better GCMs will also be able to provide information about: past and present complaints or actions against the facility; anecdotal information about the quality of care; and a sense of what the overall feel/personality of the facility is. They can tell you whether or not your loved one who hates Asian food or only speaks in Cantonese or wants hotdogs every Tuesday will fit in. When it comes to housing research, many GCMs will not charge because they receive payment from facilities where they place a client. Some will charge by the hour if they do not receive such payments or if they are looking at facilities that do not make such payments. You should always clarify what you will be charged ahead of time and ensure that, regardless of the fee, the GCM is willing to look at facilities that do not make payments to the GCM for the placement.

The other thing that separates a good or great GCM form the rest is their willingness and ability to use their connections within the facilities to negotiate shorted private pay periods. As you may have read elsewhere in this firm’s writings, most non-SNF facilities that accept Medicaid expect you to pay privately for 2-4 years. GCMs can often negotiate terms where a larger deposit is made up front and the private pay period is shortened or even eliminated completely. Attorneys can make similar negotiations, but we have less of a direct connection with the facilities and that lack of a relationship can make it much harder to strike the same bargain.

Similarly, GCMs facilitate the finding and hiring of care providers to provide in-home care for their clients, such as driving them to appointments, fixing meals, or paying bills. They are familiar with local agencies that have good reputations and they are skilled at finding individuals who do not work for an agency if you want to avoid some of the agency mark-up. They are also very good at helping identify the pros and cons of using an agency or an individual based on the merits of your individual needs. Once a care provider is hired, the GCM can also serve as an overseer, checking in to be sure that the care is appropriate and the care providers are doing all that they are being paid for. To start out, this might be weekly check-ins and then ease back to monthly or even quarterly check-ins.

The second most common service that our clients need is a functional assessment and care plan. In order to qualify for Medicaid, and sometimes just to successfully create a plan for future benefits, it is important to know what help a client needs, how often they need it, and what it will cost them if they pay for it privately. GCMs can assess the needs of the client and put together a care plan that tells family members what they should be doing or what they should be hiring someone to do. It is very helpful to ensure that Medicaid does not understate the needs of the client, to create a contract for paying loved ones for care before the time for a Medicaid application, or for several other planning options that may be in consideration. A thorough assessment with a well prepared care plan makes my job much easier and provides invaluable information to the family and friends of someone who is in need of care

GMCs will often help coordinate and schedule appointments, attend medical and/or legal appointments, and then help relay and explain the conversations that were had to loved ones or to the client. They are also great at translating on the spot when a doctor starts using a lot of medical jargon and then asks a client to make a decision that could dramatically affect their life. Having someone with you who “speaks the language” can make a big difference.

GCMs are also available to help loved ones who have chosen to be the care provider. A good GCM can help find short-term respite options for someone who just needs a break but does not want to give up providing the care. This could range from finding care providers that are willing to only work one or two days per week, for limited hours, to allow the care provider a chance to get out, or it could be helping identify local adult daycares that will provide great quality care on an irregular schedule.

And So Much More.

We have also known GCMs to serve as agents under a financial and/or health care power of attorney, serve as weekly hired companions to just spend quality time with lonely individuals, coordinate family discussions to avoid or resolve misunderstandings and disputes, and so much more.

It is very important to find a great elder law attorney when planning for your future or the future of your loved ones. It is equally important to find a great GCM to work with. We have several great GCMs that we work with and we are happy to make introductions between our clients and our trusted GCMs.

I want to stay at home as long as possible…

This week in Crisis Corner, “I want to stay/keep them at home as long as possible.”

Just about everyone wants to stay at home or keep their loved one at home “for as long as possible” before moving to a care facility. In many cases, with enough planning and family support, it is possible for someone to remain in their home until they take their last breath. However, even in the best circumstances it takes a lot of effort and must be approached from the starting place of staying home for the long haul, not for as long as possible.

Staying home for as long as possible means that you have already decided that, at some point, staying home will not be an option. In most cases, if we are truly honest with ourselves, those who want to keep themselves at home as long as possible are really saying that they are afraid of making the change and those who want to keep a loved one home as long as possible are really trying to avoid feeling guilty about “putting them in a home.” If you know that staying home will not be an option, and you are willing to face the fear of the unknown or the guilt of making the hard choice; then there are many reasons to start the transition to a new place sooner than later.

First and foremost, this discussion typically starts with someone receiving a diagnosis of dementia or Alzheimer’s. Healthy people rarely talk about staying home as long as possible, they either talk about staying home or they talk about finding a retirement community. We cannot count the number of times that we have heard “I’ll keep him home until he is so confused that it does not matter where he is living” or “When she doesn’t recognize me anymore, then I’ll take her to a facility.” The problem with that line of thinking is that people with dementia and Alzheimer’s tend to have better long-term memory than short-term. They have spent years and years ingraining the layout of their house and their things in their minds. If they move to a new home early in the progression of their illness, they have more opportunity to form new memories and patterns. Moving them to a new home when they are not forming any sort of new memories and are already confused all of the time is much harder for them. They are more likely to have trips and falls, especially at night, as they try to navigate an unfamiliar room based on patterns that they walked in the old home. They are also likely to become even more confused and/or depressed. Many studies have shown that changing the place where a person with dementia or Alzheimer’s lives has a negative effect on their health and can make their condition progress even faster. The further they are into the illness, the greater this negative effect becomes.

Second, most care facilities, other than nursing homes, will not accept Medicaid without being paid privately for a period, typically 2-4 years. This means that if someone is receiving Medicaid benefits at home and then needs to move to a facility, they will likely either have to move to a nursing home or find a way to private pay and then reapply for benefits. There are a few adult family homes and assisted living facilities that will take Medicaid without a private pay period, but they are increasingly hard to find and many of them are not places that you would want to live or to have a loved one living.

Even if Medicaid is not yet involved, the cost for most care facilities increases as the needs of the resident increases. Moving yourself or your loved one into a facility early after the diagnosis rather than after a few years could mean the difference between paying $5,000 per month during the private pay period and paying $9,000 per month during the private pay period. If you have to pay privately for two or more years, then you want those to be the years when you need the lowest levels of care.

Finally, you need to consider the health of the rest of the family that is providing care. It is hard work to care for someone 24 hours per day. Even when professionals are hired to come into the home and help, it is hard for family members, especially spouse’s, to really back off and let others be the care givers. They often change from spouses to nurses and the effect is visible. Many couples come to us for help with planning for one ill spouse only to have the “healthy” one pass first because they are working themselves to death. We have seen clients lose 50 pounds, which they did not have to lose, over the course of six months working with them, not to mention the ones who have strokes or break a hip trying to assist with a transfer. In those situations, not only has the healthy spouse thrown away their own health, but they have created a situation where the ill spouse has no one available to provide care and they are forced to move to a facility on short notice with no thought or planning into where they will go.

If your plan is that you or your loved one will take their last breath at home, great; we can help make that happen. If your plan is try for as long as you can and then make the move, please read through this one more time and decide if you are making the best plan for the person who needs care or the best plan for avoiding a sense of fear or guilt for yourself. There truly are great care facilities out there and we can help you form a plan that is best for you and your loved ones.

What to do with your parents money.

This week in Crisis Corner, we want to discuss what to do when mom or dad gives you a large sum of money as part of their Medicaid planning.

It is a very common practice for aging parents, especially those with a new diagnosis of Alzheimer’s or Parkinson’s, to give a large portion of their assets to their children and start a “five year look back period.” In most cases, Medicaid will not pay benefits for an applicant that has made a gift within 60 months of applying. The period of time that the applicant is ineligible is based upon the size of the gift. Under the current standards (these change at least once per year) a gift of $631,450.00, give or take a little bit based on leap years, is enough to trigger a five year penalty. If the gift is less than this amount, it might be worth applying right away, or it might still be better to wait. That is a separate discussion that has to be had on a case by case basis.

Whether the gift is part of a plan to apply soon or a plan to apply after five years, you may be left wondering what to do with all of that money. In general, there are three options:

  1. Spend it. When a gift is made for Medicaid purposes, it has to be a true gift. That means that mom or dad cannot give it to you on the condition that you will only use it for them until they die. You can quit your job and take a month long trip to Europe, by a Ferrari or two, or just pay off your own debt. Most children do not do this but it is an option.
  2. Put it in the bank. Some children put some or all of the money in a bank account that is dog-eared for use that benefits mom or dad. This is totally acceptable and, for smaller gifts, it may be the best way to handle the funds. This gives you the flexibility to still use some of it for yourself and it is readily available to help mom or dad if they need help.
  3. Put it into a Safe Harbor Trust. If the gift is a significant one (that means different things to different people), and you want to use all or most of the money for mom or dad’s needs, then putting the money into a Trust for their benefit has a lot of advantages.
    • If the gift was made to several children who all want to help mom or dad, they can all put their gifted money into one Trust and not worry about who is paying more from their gifts.
    • If you rear-end someone on the freeway or otherwise get sued, the money is protected from the lawsuit.
    • Similar protection is there if you predecease mom or dad.
  4. You, and any others putting money into the Trust, can designate where the money will go after mom or dad dies. For example, there are two kids but one was disinherited over a silly fight and both kids feel like the estate should be shared when mom or dad passes so the gift goes to only one of you and they put it into a Trust that says when mom or dad dies everything in the trust goes to both of you.
    • You are able to avoid temptation. You might really want to save the money in case mom or dad needs it but you also really want a new car/home/vacation. You know that once you buy yourself one thing you will want to buy yourself more things. It might be easier if you keep enough of the gift to buy yourself one thing and the rest is securely in a Trust that cannot be used for the benefit of anyone except mom or dad.

When the plan to give you the gift was made, the attorney suggesting the gift should have talked to mom or dad about these options. If you came to Life Point Law and had a Family Meeting, the attorney should have also talked to you about these options. If you have not talked to anyone about what to do with the gift you received, or if you have a loved one that is waiting to run out of money so that they can apply for Medicaid (because they do not realize that these options exist), please give us a call and see how we can help you understand your options.

The Dangers of Free Advice.

by: Aaron Paker

This month in Crisis Corner, I want to discuss the dangers of free advice. As a Medicaid planner, one of the most common phrases I hear from clients is “I was told….” On a few occasions the things people were told was pretty good advice. On most occasions the advice ranges from inaccurate but harmless to potentially devastating if followed.

One such potential bear trap that I recently heard was made worse because it came from a source that you would expect to be trustworthy, HUD (the department of Housing and Urban Development). Without sharing too many details, a HUD employee learned that one of my clients was taking his mother off the Title on the house that they own together. He told them that she was coming off of Title to avoid Medicaid estate recovery, but taking her off the Title would affect a mortgage. The government employee told my client that a simple quit claim deed would block estate recovery and, since quit claim deeds do not affect Title, the mortgage would be fine. For those of you not in the legal world, I can tell you simply that the one and only purpose of a quit claim deed is to change Title. If my client had taken this advice he would have been blindsided by the loss of the mortgage.

HUD workers are not the only guilty parties. Most of the advice comes from well-meaning family and friends. Some comes from Wikipedia or Google searches that turn up information that may be accurate, but is hard to interpret without experience working with the rules and regulations. Some come from people who should know better, like the Auditor’s office (I have been given a lot of free legal advice while recording deeds and it always comes from a person with a large sign on their desk that says “WE CANNOT PROVIDE LEGAL ADVICE”), a nursing home administrator, or an in-home care provider.

If you have been paying for care for your loved one, the last two sources are likely the ones you are most familiar with and the ones you should be most wary of. The tendency of most nursing homes in Washington, in my experience, is to tell loved ones not to worry, they will submit a Medicaid application for you. They then submit an application that is based on partial information, without any attention paid to whether your loved one is remotely qualified for benefits. Then, after a month or two of waiting for an answer, you receive a letter explaining the 15 reasons your loved one was denied benefits. In many of those cases, they could have been qualified with a week or two of close work with a trained Elder Law Attorney. Instead, months of benefits are lost to the good intentions of the nursing home.

Here is the quick and easy rule of thumb to remember about legal advice about Medicaid. If it is not coming from an Elder Law Attorney, you should not rely on it. There is a reason that so many of these government and care facility employees have signs about not providing legal advice.

When you are ready for real legal advice about planning for Medicaid benefits, give me a call and let’s talk.

Continuing Care Retirement Communities, an alternative to Medicaid planning?

This month in Crisis Corner, I want to take a closer look at Continuing Care Retirement Communities (CCRCs) as an alternative to Medicaid planning.  In many cases, whether because of very high resource values or simply because a client does not like the idea of Medicaid, CCRCs can provide an alternative means of ensuring that you and/or your loved ones will receive the care that they need for the rest of their lives, without worrying about being displaced if they run out of money (read the fine print).

CCRCs, in general, are communities that offer independent living, assisted living, and skilled nursing all within the same campus. They have “buy ins” that can range from around $50,000 to over $1,000,000, and monthly charges for rent and care, which can vary greatly from $2,000 per month to over $10,000 per month. When looking at CCRCs there are several key points that you should research before choosing a community.

Flat Fee.  These are used in roughly 1/3 of WA CCRCs.  They tend to have larger buy ins, but the monthly fees are relatively consistent from move in to death.  There may be annual raises in fees for inflation, but you pay the same whether you are in independent living or in skilled nursing care.  These CCRCs are more likely to sign up residents who will come in at the independent level and spend as long as possible at that level of care.  This can be a great deal if your health turns well before the end of your life, but if you are expecting a long, healthy life, you will likely pay more here than you would for independent living at a different CCRC.

Resource Requirements. The buy in is only half of the financial qualification process. Nearly all CCRCs require that you show evidence of sufficient resources to pay for some number of years. This number can vary greatly from community to community, but my limited experience with these requirements suggests that it is often roughly double the buy in fee; i.e. if you buy in with $200,000, then you have to demonstrate proof of at least $400,000. It is important to know what this number is because you may want to reduce your estate to a number that is closer to this amount before showing your resources. Most CCRC contracts, at least for the ones that guarantee that you will not be kicked out if you run out of money (all non-profit CCRCs must make this guarantee, but for profit CCRCs are not required to do so) include language that states you will not gift resources after moving in. This is not small gifts at birthdays or holidays, but it does exclude larger gifts, such as those that you might make if trying to qualify for Medicaid.

What this means is that if you move in with $600,000 in resources and you live there for 15 years, you could easily be out of money. If you only needed to have $400,000 to qualify, then you could have given $200,000 to your family before applying, still run out of money (without being kicked out), and kept $200,000 in the family. Either way, you might run out of money but, by gifting before moving, your family can hold onto money that can be used for your benefit or just so that you feel like you are protecting a legacy for your children.

Type of Contract.  There are four basic types of CCRC contracts to be aware of.  It is important to understand which type you are signing up for when weighing buy in costs and initial monthly fees.  The different types are:

  1. Flat Fee. These are used in roughly 1/3 of WA CCRCs.  They tend to have larger buy ins, but the monthly fees are relatively consistent from move in to death.  There may be annual raises in fees for inflation, but you pay the same whether you are in independent living or in skilled nursing care.  These CCRCs are more likely to sign up residents who will come in at the independent level and spend as long as possible at that level of care.  This can be a great deal if your health turns well before the end of your life, but if you are expecting a long, healthy life, you will likely pay more here than you would for independent living at a different CCRC.
  1. Pay As You Go. These are also used in roughly 1/3 of WA CCRCs.  The buy in may be smaller, but your monthly expense is based largely on the level of care that you need and can make significant jumps any time your needs increase.  You may start in independent living, paying $2,000 per month, then start needing help with dressing or bathing and find yourself paying over $5,000 per month.  In these communities, skilled nursing care is often over $9,000 to $10,000 per month.
  1. Roughly 1/4 WA CCRCs use a hybrid contract.  In these communities there is a set monthly cost for independent living, one for assisted living, and one for skilled nursing care.  The level of care needed within each classification does not affect the cost, just the classification itself.  You will pay the same for assistance with dressing as you do for assistance with dressing, bathing, and using the toilet.
  1. Month to Month. A small number of WA CCRCs have month to month contracts, where either you or the community can terminate the contract with 30 days’ notice.  In most of these CCRCs the buy in is smaller or it vests over time, so you can get a partial refund if you leave within the first five years or so.

Care Levels.  Most CCRCs have independent living, Assisted Living, and Skilled Nursing care.  However, not all have the Skilled Nursing care.  It is important to know what level of care the community can provide before spending 10-15 years there, using up all of your savings, and then being told you have to leave because your care needs exceed those that the community can safely provide.

Location, Reputation, and Atmosphere.  These can all be lumped together as the “squishy factors.”  Location is most important to those who want to be close to family, friends, or community activities.  This is something that only you can judge the importance of, but it can play a big difference in your costs.  Reputation is hard to judge from the internet or the handouts the CCRC gives you.  You will see the highlights, but it is harder to locate the bad reviews.  You should talk to a professional housing specialist for the inside scoop.  Finally, Atmosphere really boils down to how you feel about the place when you visit or tour or spend a week test-driving the place.  If it feels like home, great; if it feels like a prison, bad.

Talk to a Specialist.  There are a lot of geriatric care managers who specialize in helping find appropriate housing.  If you are thinking about moving to a CCRC, contact us for a list of companies you can contact for help.

How COVID is affecting even healthy Seniors…

This month in Crisis Corner, I want to discuss the COVID deaths that most people do not hear about. I am not talking about deaths caused, directly, by someone contracting COVID but rather the deaths caused by the unbearable isolation that so many seniors are facing in care facilities.

Early in the pandemic most care facilities stopped allowing any visitors to the residents, though a few made exceptions for spouses or allowed outdoor or “through the window screen” visits. Within two months of these lockdowns I started noticing an increase in the number of Probates being handled by the firm. Only one of those new Probates involved someone who died of COVID related illness, but many of them were people who lived in nursing homes or assisted living facilities and who were no longer allowed to see their loved ones.

I have no definitive proof that the two things are related. I am not a trained psychologist or statistician. I am a person who has spent a lot of time visiting clients in care facilities over the years. I know how important visits from friends and family can be. I even had a few clients who were excited to see me, which says a lot about how lonely these facilities can be. I absolutely believe that many of my new Probate work was caused by residents of these facilities who simply gave up the will to go on when they lost their connection to loved ones.

On September 17, 2020, the CMS (Centers for Medicare and Medicaid Services) issued new instructions to nursing homes that encourage resuming visitation of some kind. The statement echoes my own thoughts when it states:

While CMS guidance has focused on protecting nursing home residents from COVID-19, we recognize that physical separation from family and other loved ones has taken a physical and emotional toll on residents. Residents may feel socially isolated, leading to increased risk for depression, anxiety, and other expressions of distress. Residents living with cognitive impairment or other disabilities may find visitor restrictions and other ongoing changes related to COVID-19 confusing or upsetting. CMS understands that nursing home residents derive value from the physical, emotional, and spiritual support they receive through visitation from family and friends.

If you have a friend or family member who is living in a nursing home or other care facility and you have not been able to have contact with them for months on end, I encourage you to read the CMS instructions; call the facility and find out how they are changing their policies in light of the instructions; and find a way to visit your loved ones. Even if you cannot do a live visit for one reason or another: convince the staff to facilitate a video chat visitation; make phone calls; send letters with new photos; stand outside of windows and wave; just be present for your loved one.

I love to stay busy and have work to do, but not because this virus has caused even more far reaching devastation that what it is already given credit for. In this instance I implore you to do all that you can to ensure that you do not become my next client because of this pandemic.

How Much Do You Know About Social Security? Check Out These Seven Surprising Statistics – Plus Some Related Advice from Rajiv

Social Security may be the biggest, most important, and least understood government program in America. If you consider the sheer amount of money the program spends and the huge number of Americans who rely on the program for all or part of their livelihood, you’d think we would all have a solid working knowledge of how Social Security actually works.

Social Security is Vital to Millions, Yet Widely Misunderstood

Yet that’s not the case. We just read this interesting article about Social Security on the Motley Fool financial website. “When MassMutual recently surveyed 1,500 people 55 to 65 on their knowledge of Social Security,” the article begins, “more than half failed or barely passed.” The Fool calls that “a jaw-dropping figure,” especially when you take into account how essential Social Security is to most beneficiaries. (If you want to take the 10-question MassMutual quiz for yourself, click here.)

We want to share a few of these Social Security facts and figures from the Motley Fool article with you, but before we do, we think it’s important to get some perspective from Life Point Laws’ Rajiv Nagaich. As always, Rajiv looks behind the numbers and sees some broader implications.

Social Security Bound to be Affected by “Unprecedented Times,” Says Rajiv

“There’s an untold story here,” he states. “We’re in the midst of unprecedented times – people are waiting for stimulus checks related to the coronavirus, and millions are facing layoffs. That combination paints a really bad picture for Social Security.” According to Rajiv, people being laid off means smaller contributions into the Social Security system, while at the same time increasing numbers of workers may start taking benefits prematurely to help bridge the unemployment income gap. All of this is happening against the backdrop of a ballooning federal deficit.

Rajiv suggests now is the time to be especially proactive. “Before you leap to the solution of tapping Social Security early, you need some comprehensive advice,” he says. “If you can start planning now to work longer, that’s a good strategy. Look for ways to cut expenses, and talk to your family about the potential of multi-generational living where you can combine household incomes.  As soon as possible, get a financial dashboard in place so you have the ability to evaluate and adjust your circumstances.” And, he adds, you can still attend a LifePlanning webinar from the comfort of your own home. Read on and we’ll tell you more.

How Much Do You Know About Social Security? Seven Surprising Stats

Here are some numbers compiled by MotleyFool that dramatize just how massive Social Security is and how essential to the fabric of American life.

  • $1 trillion: Social Security pays out roughly $1 trillion annually to approximately 68 million Americans (as of 2018). Since the entire U.S. GDP is about $21.5 trillion, Social Security alone represents around 5 percent.
  • 22 million: That’s the number of Americans Social Security is keeping out of poverty, according to the Center on Budget and Policy Priorities. “That doesn’t mean it’s giving them a comfortable, middle-class existence,” the article reminds us. The federal poverty level for singles is just $12,760 annual income – roughly $17,240 for couples.
  • 8 percent: Even with the good news of those kept out of poverty by Social Security, the bad news is that nearly 9 percent of recipients are living below the poverty line even with Social Security income. “Another 5 percent were ‘near poor,’ meaning their income was between 100 percent and 125 percent of the federal poverty level,” the article reports. “The [poverty] rates were significantly higher for single people and minorities.”
  • $1,507: The average Social Security benefit is about $18,000 per year, or $1,507 per month. That may come as a wake-up call to the people who may be over-estimating how much they’ll receive. The highest allowable benefit this year is $3,790 per month, or about $45,000 annually. Your benefit is a function of several factors including your year-by-year work history and the age at which you start taking benefits.
  • $1,627 vs. $1,297: That average benefit just cited doesn’t tell the whole story, says Motley Fool: there’s a major gender disparity. “Because women tend to earn less over their lives, due to income inequality and also because they often have to leave the workforce for some years to care for children or other family members,” women have a much lower average monthly benefit: $1,297 in 2018 compared with $1,627 for their male counterparts..
  • 24 percent: Most people know that the simplest way to boost Social Security income is to delay starting benefits. We can start collecting benefits as early as age 62 and as late as age 70, even though “full retirement age” is generally between 66 and 67. “For each year earlier than our full retirement age that we start, our benefits will shrink,” says MotleyFool. “And for each year beyond it that we delay, they’ll increase – by about 8 percent annually. So, delay from age 67 to 70 and you’ll enlarge those checks by about 24 percent.”
  • 77 percent: Many people fear that Social Security is going bankrupt and their benefits will disappear. “Social Security is facing some serious challenges ahead,” the article acknowledges, “but the recent worst-case scenario was that around 2035, in about 15 years, it wouldn’t have enough to pay retirees their full benefits – but it would have enough to pay them about 77 percent of those benefits.” A 23 percent haircut is an unhappy prospect but, as the article says, “it’s a whole lot better than zero.” We hope Congress and the President will one day get around to a legislative fix.

(originally reported at www.fool.com)

Guest Article: Three Reasons You Need an Attorney for Your Will

As a service to Life Point Law blog readers, we’re always on the lookout for helpful articles from a variety of sources.  The following column comes from Missouri-based Rudy Beck, Attorney and Founder of Beck and Lenox Estate Planning & Elder Law, LLC.

Nearly half of American adults over the age of 55 do not have a will, according to a 2019 study by Merrill Lynch. These stories make headlines when a public figure such as Aretha Franklin, Prince or Kurt Cobain passes away without a will — but the truth is that failing to prepare an estate plan can have devastating consequences for any family.

Long ago, a person could handwrite their own will without consulting an attorney, and that will was honored. As taxes and financial tools have continued to evolve, Estate Planning is no longer the “D-I-Y project” it once was. The consequences of drafting a will or trust incorrectly can be disastrous and create long-lasting problems for your heirs.

Stick to basic house projects for your D-I-Y talents, and read three real-life scenarios to help you better understand why Estate Planning is a job best left to will and trust attorneys.

The Top Three Reasons to Consult an Estate Planning Attorney for Your Will

Many people assume they do not need more than a simple will if they do not have a rock star’s massive, wealthy estate. They may even try to save time and money on attorney fees by purchasing a template for a will or buying their will online.

We have learned these individuals usually undervalue the size of their estate, or that their wishes are often more complicated than they realize.

Three of the most important reasons to consult with an attorney for your Estate Planning needs are:

  1. Simple solutions are not always the result of a simple plan.
  2. Attorneys offer an unbiased voice to ask personal, potentially difficult questions.
  3. An Estate Planning attorney can help you plan for the cost of long-term care.

The below lessons are based on real-life scenarios involving clients of our law firm.

Scenario #1: Your Simple Estate Planning Solutions Are Often Not Simple.

Doris came to our firm to discuss her will and how to prepare it for her three children. She owns a home worth approximately $180,000 and has investments totaling approximately $450,000. Doris explained that she wants to leave her house — or really, the proceeds from its sale after her death — to her children equally.

When asked about the plan for her investments, Doris said, “Don’t worry, I’ve taken care of it.”

Doris had her investments in three laddered Certificates of Deposit (CDs), each one Payable on Death (POD) to a different child. By Doris’s calculations, each child would receive $150,000 when she passed away. But we posed several scenarios under which that would not happen.

For example, Doris assumed the amount of money she has and where she has it will remain unchanged, which is very unlikely. When a CD matures, she may roll it over to a new one or decide to invest elsewhere. And if Doris passed away suddenly, the funds intended for one of her children could be stuck in her checking account.

Unfortunately, Doris’s child couldn’t receive that money unless their name was also on the checking account — which is not what Doris wants or what her children expect.

Scenario #2: An Estate Planning Attorney Will Ask Tough, Unbiased Questions.

Jennifer and her husband wanted to set up a trust that would provide income to their adult child, solely through investments in that trust. They were concerned their daughter would spend the principal funds quickly and foolishly, and not have any money left to fund her future retirement.

On the surface, this sounded like a good idea — but when our attorney asked more questions about their objectives for this inheritance, the plan this couple envisioned had some significant shortfalls, including:

  • Changing Interest Rates.
    Their daughter’s inheritance was expected to be around $250,000. If the interest income is 4%, or $10,000 per year, it seems to be a reasonable amount. But what if an economic boom (or recession) caused today’s interest rate to change?
  • Unpredictable Life Circumstances.
    In the future, their daughter could lose her job or face a sudden medical crisis. The way the inheritance was structured, she could not access any part of the principal, even if she needed it to pay her mortgage or medical bills.

Our clients were so focused on the prospect of their daughter purchasing a sports car and a boat, they had not considered other realistic life events — and realized their trust needed to reflect some important changes.

Scenario #3: Asset Protection Strategies Can Help Fund Future Long-Term Care.

Georgia came to see us after her husband, Henry, suffered a stroke. He was in the hospital, and doctors had already told Georgia he was not going to be able to return home. Instead, he would need to live in a skilled nursing facility.

Did You Know: Long-term care is a big concern for many of our clients. Statistics from an AARP report show that 52% of people turning 65 will need long-term care services at some point in their lives, whether at home, or in an assisted living or skilled nursing facility. If they have not planned for the expense, these seniors will need to spend a significant amount of their savings to receive essential care.

Georgia was concerned about how they would pay for the high cost of this facility without spending everything they had — including their home and $500,000 in savings and investments. She was quite healthy and had every reason to expect to live another 20 years or more. They needed to make their hard-earned money last.

With our Estate Planning knowledge and expertise, our attorneys recommended putting their funds into Medicaid-compliant annuities, to pay Georgia as the “community spouse.” After their affairs were sorted, we were able to obtain Medicaid to pay for Henry’s care and preserve funds for Georgia’s future needs.

(originally reported at www.beckelderlaw.com)