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Right Idea, Wrong Conclusion

In this edition of Crisis Corner: Right Idea, Wrong Conclusion

We do a lot of consultations about Medicaid planning.  Many of them involve at least on child of the person who might need benefits.  In those consultations we will occasionally hear a child admit that they are doing the planning because they want to get something when mom and dad are gone, which is the wrong idea, but is also refreshingly honest.  More often, and usually heartfelt, we hear something along the lines of: “We don’t care about inheriting anything, it is mom’s/dad’s money and they should spend it.”  That is usually followed with calculations that range from grossly optimistic, i.e. “Mom is already 89 and has $100,000 in savings which should easily pay for her care for the rest of her life”; to “Based on the doctor’s prognosis, net income, and monthly expenditures with an expectation that care costs will increase over time, mom should have enough money to outlive her prognosis by about eighteen months.”

The problem with “letting them use their money on themselves” is that it assumes Medicaid planning is designed to save money for the sake of saving money.  It is great to reassure someone that by planning with us they will be able to leave a little something for their children or loved ones when they are gone.  Whether the kids want/need the inheritance or not, it is comforting to a parent to feel like they are helping their children.  It is the same reason that retired parents, on fixed incomes, sometimes insist on paying for meals out with their very successful, employed, children.  However, the real purpose behind Medicaid planning is to ensure the quality of life for the person receiving benefits.  It is not enough to make it to the end before you run out of money if the end comes with a low quality of life.

There are a few things that can cause a drop in quality of life when Medicaid planning is skipped in favor of spending every dime:

One of the things that we see more often than we ever imagined is a client out living the most optimistic predictions of doctors.  The most extreme case of this was a client who came to me more than 13 years after being diagnosed with four different Stage-4 cancers and given a life expectancy measured in weeks.  We have also had 94 year old clients driven to my office by their 96 year old spouse, and at least one client that came to me and got onto Medicaid just after his 101st birthday.  With the pharmaceuticals available today people are living longer and longer lives and planning your needs around the idea of dying by 90 does not work for many people.

If you outlive your life expectancy by a significant margin and you do not plan ahead to save assets or to move into a community that will eventually accept Medicaid, you could end up out of money and with no option except living in a skilled nursing facility (SNF).  Some SNFs are much nicer than others and in some situations they are the most appropriate setting from a medical stand point but, in general, living in a SNF should be the absolute last option for most people.

I started working in Medicaid planning in 2015.  At that time many adult family homes (AFHs) started in the $3,000 to $3,500 per month range and topped out around $6,000 to $7,000 per month for clients with very high care needs.  At that time there were also many AFHs and Assisted Living Facilities (ALFs) that took Medicaid with 0-12 months of private pay (the time you have to live in the community before they will accept Medicaid as a form of payment).  Today, it is hard to find an AFH that is less than $5,500-6,000 per month for low care levels and up to $9,000 or more for higher care levels.  Additionally, the most common private pay period is now 2-3 years and some communities are asking for up to 5 years.  In that same time, many of my clients have seen an increase of about $10 to $20 per month in their Social Security income.  Care communities are not the only place you will see this increase in costs.  Over the last six years I have seen the average cost of hiring in-home care rise from $10-15 per hour from an individual or $20-25 per hour for an agency to $20-25 for an individual and $30-40 for an agency.

I cannot account for the increase in charges by these communities, other than supply and demand and charging what they think the market can bear, but the lengthening private pay periods is not surprising at all.  In 2015, Medicaid would often approve $100 to $180 per day for care in a non-skilled nursing facility (nSNF) community (about $3,000 to $5,500 per month), which was lower than the private pay numbers but not significantly lower.  Today, Medicaid often approves $100 to $180 per day for care in an nSNF community.  Instead of losing 0-20% of the income they could get from private pay, they are losing up to 50% or more by accepting Medicaid. 

Increasing base costs of care, at home and in communities, are not the only unexpected costs that might spring up.  Let’s assume you find a community that has a base rate of $3,500 per month plus care costs based on need and they guarantee that the rates will not change once you move in, except with increased level of care.  Often this looks something like “Level 1 Care – $1,500; Level 2 Care – $2,000….”  Now let’s assume you are the client who very carefully calculated that mom would have 18 months of extra money left because you assumed that she would gradually move from Level 2 to Level 4 over the three years she has left.  Then six months after moving to a community she has a massive stroke that she only partially recovers from.  It does not shorten her three years but it jumps her instantly from Level 2 to Level 5, where she will remain for the next 2.5 years.  People with devastating health issues tend to develop more health issues and at a faster rate than those who are mostly healthy to start with.  I have had clients that move into a community and then have an episode that literally doubles their care cost within the first few months of living there.

Maybe the plan is for mom or dad to use their money on themselves, but as a backup they move into an ALF that will eventually take Medicaid if they run out of money.  They have a nice private room, a consistent staff of care providers that they know and get along with.  They are bathed at least every other day and have a one-on-one helper with mealtime.  Then they run out of money and apply for Medicaid.  They are approved and the ALF is now receiving $4,000 per month instead of $7,000 per month.  Mom or dad is now told that all of the ALF’s Medicaid beds are in shared rooms, so they will have to move to a new room, the same size or smaller in some cases, and share it with a total stranger.  Baths or showers may decrease to once or twice per week, and meal time might become one care provider sitting at a horseshoe table with six patients.  The staff who provide the daily care may be less experienced and or more randomly assigned, since the more experienced, long-term staff will have their pick of patients and will want to stick to the private payers.

Families can pay the ALF facility to upgrade to a private room, to provide more baths, and to have a one-on-one meal companion.  The problem is that the family has to find the money for those niceties.  With planning that protected some of the assets early on, there would be a source for those costs.  Without planning, that money is coming from the pockets of the family members or it just is not coming.

Why Plan? 

Proper planning makes it far more likely that your loved one will make it to the end of life with the highest quality of care and maybe, just maybe, a little something that they can leave for their children.  The funny thing is that most children will tell you that the quality of life is the more important piece of this and most parents will tell you that the ability to give something to their children is the most important piece.

The CARES Act Says Retirees Don’t Have to Take RMDs This Year – But What If You Already Did? You Could Get a Do-Over

We’ve been getting a lot of questions here at AgingOptions about the CARES Act and how it affects retirees. “CARES” stands for Coronavirus Aid, Relief, and Economic Security, and this new law’s impact is far-reaching and, in many cases, still being assessed. One of the well-publicized benefits of the new law for retirees is the stipulation that they do not need to take their required minimum distribution (RMD) from their retirement accounts in 2020. Instead they can leave those dollars on deposit to (hopefully) recover from some recent losses.

The RMD Do-Over Let’s You Put That Withdrawal Back Where It Came From

But between January 1st and March 27th, the date the CARES Act was signed into law, many retirees, unaware that a rules change was in the offing, may have already taken their RMD for this year. If you were one of them, this article from the Money website has some potential good news: you just might be able to claim a do-over.

Here’s how Money’s Carla Fried explained it. “The coronavirus stimulus bill that became law in late March suspended the RMD requirement for this year. But what if you already took your required minimum distribution for 2020, and now you wish you hadn’t? You may be able to put the money back into your retirement account.”

The RMD Do-Over Means Uncle Sam Has to Wait a Bit Longer for His Share

The RMD law is, according to the article, “Uncle Sam’s way of finally getting his hands on some of the money that’s grown tax-deferred for decades in your traditional 401(k) or IRA.” The rule, which affects everyone 72 and older, requires account holders to withdraw a minimum amount from their account each year and pay income taxes on it, whether they need the money to live on or not.  But IRS rules also allow what’s called a roll-over, where the entire withdrawal is re-deposited in a qualifying account within 60 days, generally with no tax consequences.

“In the case of an RMD,” says Money, “you could do the rollover back into the account you withdrew it from, or move the money into another retirement account.”  This may be the simplest and best idea for those who want to undo an early withdrawal. “If you don’t need that money to pay your bills, you might as well put it back,” reporter Carla Fried advises. “Extra income could push you into a higher tax bracket for the year and a higher income bracket for Medicare premiums down the line.”

The RMD Do-Over: Some of the New Rules Are Still Under Consideration

Under the CARES Act, Money explains, if you’re already past the 60-day window, you’ll still have some options “that allow early-bird RMD takers to reverse their decision.” However, some of those options haven’t yet been made clear. “The expectation is that the Internal Revenue Service will soon release guidelines that may make it possible for anyone to return an RMD taken out in January or February, regardless of whether they’ve been affected by the coronavirus or not,” the article explains.

Financial experts echo this wait-and-see approach. “Caution and patience are the name of the game,” CPA Hayden Adams from the Schwab Center for Financial Research told Money.  “The IRS is definitely going to be coming out with guidance,” possibly within weeks as the agency works through the particulars of the CARES Act. “Until there is 100 percent clarity,” the article says, “it’s ‘best to hold off’ on any moves right now.”

Some Important Rules About the RMD Do-Over

Even though some of the rules have yet to be released, there are some that are expected to remain in force. Here are a few things Money magazine wants early-bird RMD-takers to know:

  • Directly Impacted by COVID-19: According to Money, “The 60-day limit on a rollover doesn’t apply if you have been directly impacted by the coronavirus.” You can put the money back into the same account it came from if you, your spouse, or your dependent have been diagnosed with COVID-19. You’re also exempt from the 60-day rule if you or a spouse have experienced “adverse financial consequences” from quarantine, furlough, or lay-off.
  • One Do-Over Per Year: Under most circumstances, you can only “undo” one IRA transaction per 365-day period. That means one withdrawal, not one account. There are some detailed provisions you need to know about, so make sure you get good advice from a qualified planner.
  • The Entire Distribution: “If you already took a 2020 distribution, you likely had some taxes withheld,” says Money. “If you intend to return the money to a retirement account, you need to repay the entire amount, not just what landed in your pocket. For example, if you took a $20,000 RMD and had 10 percent withheld for federal taxes, the net that landed in your account was $18,000. But to repay you must rollover (recontribute) the entire $20,000 into a retirement account.”

As stated above, there will be more to this story, so it’s best to sit tight. The CARES Act gives the government wide latitude in allowing retirees to reverse an RMD distribution, regardless of when it was taken in 2020. “Translation: Stay tuned,” says Money. The best short-term strategy will be “a virtual huddle with your tax advisor to start working through under what conditions you may be able to roll an early RMD back into a retirement account.”

The three primary versions of Medicaid Long Term Care (LTC)

This week in Crisis Corner: The three primary versions of Medicaid Long Term Care (LTC).

There are many flavors of Medicaid benefits available to Washington residents, especially once you get into all of the medical only benefits. When it comes to LTC benefits for a person who is “aging, blind, or disabled” there are at least five or six programs, but in most cases clients are looking at one of three. Those three are: 1) Classic Medicaid; 2) Community Options Program Entry System (COPES); and 3) Community First Choice (CFC). They share many similarities but each is also unique both in its rules and its benefits. Much of the confusion that I have to help my clients sort through is created when they do their research before coming to me, but they research the wrong program for their needs.

Similarities across the board. About the only thing that is the same across the board for these three programs is the resource limit for a single person. In all three, a single person can own a home with up to $603,000.00 in equity, a car of any value, and up to $2,000.00 in other countable resources. For all three, a “well spouse” can have a house of any value and a car of any value (not separate from the ones owned by the applicant), and an unlimited income. The rest varies from program to program.

Classic Medicaid.

Classic Medicaid is what most people think of when they talk about Medicaid. It is the Federal program that is, relatively, universal across the states. This program is only available in a Skilled Nursing Facility (SNF) and nowhere else. When a married person applies for Classic Medicaid, their spouse can have up to $130,380.00 worth of “other countable resources.” This is not a fixed amount and has to be calculated on a case by case basis. The formula is that you add up the total value of resources (other than the house and car) that the couple owned on the first day of the month in which the applicant received care at the SNF and divide that number by two. The well spouse can have that amount of resources with a minimum of $58,075.00 and a maximum of $130,380.00.

Some examples:

  • John moves into a SNF on January 5th. On the 1st he and Jane owned their home, one car and $100,000.00 in other countable resources. Jane should get to keep $50,000.00, except the minimum is $58,075, so that is the amount she can keep.
  • John moves into a SNF on January 5th. On the 1st he and Jane owned their home, one car and $300,000.00 in other countable resources. Jane should get to keep $150,000.00, except that exceeds the maximum, so she is limited to $130,380.00.
  • John moves into a SNF on January 5th. On the 1st he and Jane owned their home, one car and $150,000.00 in other countable resources. Jane gets to keep $75,000.00.

The other big difference between Classic Medicaid and the other programs is that there is no functional assessment required. Medicaid assumes that you would not choose to live in a SNF if you did not have to do so because of your care needs.

Once on Classic Medicaid, the applicant can keep a $71.21 personal needs allowance (PNA), enough money to pay for their supplemental insurance premiums, and maybe give some to their spouse (if the spouse’s income is low enough). The rest of their income is paid to the SNF and then Medicaid pays the rest.

If any gifts are made within five years of applying for benefits, benefits may be denied for a period that is determined based upon the size of the gifts. The penalty is approximately equal to a month of penalty for every $10,500.00 given away.

COPES.

COPES is the rough equivalent to Classic Medicaid when the applicant lives anywhere other than a SNF. The Well spouse of a COPES applicant is allowed to have $58,075.00 in other countable resources. COPES does have a functional requirement in addition to the financial requirements. A State social worker will perform an assessment of the applicant’s care needs and assign a value to those needs. If benefits will be received at home, the assessment is used to determine how many hours per month Medicaid will approve (rarely over 180) and in any other setting it is used to determine how many dollars per day the care community will be paid.

Once on COPES, the applicant can keep a $71.21 PNA (outside of the home), $794.00 or $1,064.00 PNA (in the home married or single), enough money to pay for their supplemental insurance premiums, and maybe give some to their spouse (if the spouse’s income is low enough). The rest of their income is paid to the care provider and then Medicaid pays the remainder of the approved care cost.

If any gifts are made within five years of applying for benefits, benefits may be denied for a period that is determined based upon the size of the gifts. The penalty is approximately equal to a month of penalty for every $10,500.00 given away.

CFC.

The requirements for CFC are nearly identical to COPES, as are the benefits. It is easier to point out the differences in this program than it is to start from the beginning.

CFC is only available to those who are outside of the home but not in a SNF and whose gross income is less than $2,382.00 per month, or those who are in the home with gross income below $794.00 per month.

CFC only allows for the PNA and not for supplemental insurance premiums, which could mean that the applicant will need to change to a free supplemental insurance or their loved ones may need to cover the cost of the insurance premiums.

CFC benefits are not delayed by gifts made within five years of applying. However, the penalty period is still calculated and the applicant is not eligible to transition to COPES or Classic Medicaid during that period. The penalty period for all three programs is limitless. This means that a person who qualifies for CFC benefits but gives away $700,000.00 (just a random example) will not be able to move to a SNF with Medicaid coverage for over five and half years. This makes it important to ensure that the care community where they are living is one that will be able to handle their care needs for a long time.

Summary. It is not important for you to decide which program is right for you, which is the job of elder law attorneys like myself. However, understanding the differences between the programs can help you understand the advice you are given or even dissolve some misconceptions that have kept you from reaching out for help in the first place.

Choosing Where to Live and Receive Care

Anyone who has ever listened to Rajiv Nagaich speak knows that about 80% of Americans would like to take their last breath at home. They also know that only about 30% of Americans succeed at that goal. We believe that part of the answer to that problem is redefining how we think of “home.” Not counting an actual hospital, there are five places that you can live out the end of your life (this is over simplified, but covers the vast majority of options). Each of them has certain advantages and disadvantages and we will describe each individually, in no particular order.

For most people this means either their home or the home of a child or loved one. It could be the home you have always lived in, a new condo or house that you downsized to, or even a home in a 55+ community that does not provide any care services, but does have amenities close by.

The biggest advantages to spending your final years at “home” are comfort and autonomy. Everything in the space is yours (or your loved ones’). It is familiar, and there is no one telling you what to do or when to do it. If it is the home you have lived in for a long time, you know every nook and cranny and, even when your memory starts to fail, you can navigate in the dark with little concern.

The downside to staying here is that, if your care needs become significant, you will need to have a good deal of money and/or family support to meet all of your needs, even if Medicaid is paying for long term care (LTC). In most cases, unless you have a specific qualifying diagnosis, Medicaid will pay for no more than 120-180 hours per month of LTC, about 4-6 hours per day. If you need more care than that, then your family needs to provide it or you need to pay for it privately at an average of $30+ per hour. Even four extra hours per day will quickly add $3,600 per month that you will struggle to find once you have reached the point of financially qualifying for Medicaid (maybe a little easier for a married couple who are able to keep more assets and use more methods to protect assets).

Skilled nursing facilities or SNFs are rarely places that anyone would call home, though we can think of at least three that are better than most for comfort and quality of care. In most cases, a SNF is a last resort for people who waited too long to get help or who chose a different path that did not work out as planned.

SNFs do have a few advantages. Married couples can keep even more assets in a SNF than any other setting (generally), facilities that accept Medicaid do not have private pay periods (described more in later options), and there are staff available 24/7 to provide care for even the highest levels of care needs. Of these, the one that ends up deciding the care location for most of my clients who move into a SNF is the lack of private pay period. If you have high care needs and wait to get help until you cannot afford care at home and cannot pay privately at any other care community that will accept you, a SNF may be the only viable option.

The downsides are a bit more obvious. This is essentially like living your final years in a hospital. In all but a few SNFs we have been in, there is a smell of urine and disinfectant that lingers for hours after you leave, and very little social interaction takes place outside of treatments.

Adult Family Home – An AFH is usually a converted private home, though some are built for the purpose. They are limited to six residents receiving care, and are frequently owned by current or former nurses or EMTs (not always, but we see this very frequently).

The biggest advantage to an AFH is the small size. With only six residents and at least one staff member always on duty, there are more opportunities for one-on-one interaction with care providers. You can get to know the whole staff and all of the residents quickly and form relationships with them.

There are several disadvantages, but the extent to which they exist varies greatly from facility to facility. The most significant is the private pay period. Most AFHs require that you pay them privately for at least 2 years before they will accept Medicaid payments. With help from a geriatric care manager you can sometimes find shorter private pay periods, but the general trend if for these periods to get longer and homes that will take shorter periods are becoming fewer and fewer. The other major disadvantage is the lack of socialization and activities. While not always true, AFHs generally have fewer organized activities and always have fewer people around to interact with. Often times at least half of the residents are effectively non-communicative and there is rarely more than 7-8 total people in the home at any given time (other than visitors). For a very social person, this can be a nightmare scenario. The final disadvantage is that most AFHs do not have a nurse on premises at all times, though there is always supposed to be one on call. This means that if there is an emergency during a time when there is not a nurse on duty, you have to wait for an ambulance or the on call nurse to arrive.

ALFs are, generally, like living in an apartment complex with staff coming in and out all the time to provide services, though some are set up more like a SNF, with a hospital-like feel to them. They tend to handle higher levels of care than most AFHs (though not always), but less than SNFs (also a generalization), and they are the most common place to find secured memory care units.

The greatest advantage that an ALF has is the opportunities for activities and socialization. Most ALFs, or at least the good ones, have staff dedicated to organizing activities from bingo to crafts to field trips. There are many more residents than in an AFH, so you are more likely to find other residents that share a similar interest or hobby and that can communicate with you on your level. The other major advantage over an AFH is that there should always be at least one nurse on duty in the building and most also have a dedicated physician that works with all of the residents and is on call as needed.

The disadvantages include private pay periods, like those at AFHs, and reduced one-on-one interactions. With so many more residents and staff, it can be harder to form close relationships with the care providers, who may be different every day of the week. Some ALFs make an effort to have the same handful of care givers assigned to each resident for consistency, but that is not always the case. If you do not like a lot of social interaction and you want to have a closer bond with care givers, then this may not be a good fit.

CCRCs are a great option for people who can afford them and who do not want to use Medicaid. They come in many flavors but most require an initial buy in that can range from $50,000.00 to over $1,000,000.00 and proof that you own enough assets to pay for a while. The most common CCRCs that past clients have chosen require about $200,000.00 for the buy in and proof of $400,000.00-600,000.00 in assets.

While not always true, the advantage to most CCRCs is that they promise you will never have to leave because you run out of money or your care needs become too great. The buy in money is treated like an insurance policy so that the CCRC has money if you can no longer pay the monthly rent and most CCRCs have independent living, assisted living, and SNF level housing all on the same campus. Once you move in, the furthest you should ever have to move again is across campus to another building or another wing of the same building.

The biggest disadvantage is the cost. Even after the buy in, you can easily pay anywhere from $2,500.00 per month for independent living to over $10,000.00 per month for SNF. Even a large estate can be drained fairly quickly at those prices. Another disadvantage is that most CCRCs have a clause in the contract that forbids making large gifts once you sign the agreement. That means that if you have a $1,000,000.00 estate and need to prove at least $400,000.00 to move in, you had better consider giving away $600,000.00 before you move in or it will all go to the CCRC, assuming you live long enough to spend it all. The final disadvantage is that it can be very difficult to spot the CCRCs that do not guarantee that you will not be kicked out if you run out of money or the ones that cannot handle every level of care needs. It is very important to have a geriatric care manager or an attorney review the contracts closely before signing up or you may find yourself paying a lot of money to the CCRC only to be kicked to a different SNF when your money is gone or your care needs are too high.

Summary – There are options out there and, with careful planning and the right team, you can make any of these setting feel like “home,” even a SNF. The earlier you start looking at options and deciding what you will or will not accept, the more likely you are to spend your final years in a place that you consider to be your home, whether it is the place you currently live or not.

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. 

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.

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)