Don’t Make the Mistake of Not Signing up for Medicare Supplemental Coverage

Posted on December 14, 2018 by Hope Elder Law

You are turning 65 and enrolling in Medicare, but as a healthy senior do you really need to also sign up for Medicare’s supplemental coverage? Not signing up initially can be very costly down the road.

Medicare pays for only about half of all medical costs. To augment Medicare’s coverage, you can purchase a supplemental or “Medigap” insurance policy from a private insurer. There are 10 Medigap plans that each offers a different combination of benefits, allowing purchasers to choose the combination that is right for them. In addition, Medicare offers a federally subsidized prescription drug program, in which private health insurers provide limited insurance coverage of prescription drugs to elderly and disabled Medicare recipients.

Purchasing the supplemental coverage means paying more premiums. If you don’t go to the doctor very often or have any regular prescriptions, you may not want to sign up for the additional coverage. However, if you get sick, what Medicare doesn’t cover can be a lot more costly than the extra premiums. And buying coverage after you get sick can be difficult and expensive.

You cannot be denied a Medigap policy for pre-existing conditions if you apply within six months of enrolling in Medicare Part B. If you don’t buy a policy right away, the plan can use medical underwriting to decide whether to accept your application. The plan will look at your age, gender, and pre-existing conditions and can charge you higher premiums, restrict coverage, or even reject your application.

Beneficiaries who enroll in Medicare Advantage plans can’t also buy a Medigap policy. But if they chose Medicare Advantage as their first form of insurance and later decide to return to original Medicare, they must select a Medigap policy within the first year of their initial Medicare enrollment or risk being shut out of a policy.

Medicare beneficiaries are also subject to significant financial penalties for late enrollment in the Medicare drug benefit (Medicare Part D). For every month you delay enrollment past the Initial Enrollment Period, the Medicare Part D premium will increase at least 1 percent. For example, if the premium is $40 a month, and you delay enrollment for 15 months, your premium penalty would be $6 (1 percent x 15 x $40 = $6), meaning that you would pay $46 a month, not $40, for coverage that year and an extra $6 a month each succeeding year.

There are some exceptions built in to both Medigap and Medicare Part D if you did not enroll right away because you had other coverage. But if you choose not to enroll because you think you won’t need the plan, it is not easy to change your mind later on.

How to Handle Sibling Disputes Over a Power of Attorney

Posted on December 8, 2018 by Hope Elder Law

A power of attorney is one of the most important estate planning documents, but when one sibling is named in a power of attorney, there is the potential for disputes with other siblings. No matter which side you are on, it is important to know your rights and limitations.

A power of attorney allows someone to appoint another person — an “attorney-in-fact” or “agent” — to act in place of him or her — the “principal” — if the principal ever becomes incapacitated. There are two types of powers of attorney: financial and medical. Financial powers of attorney usually include the right to open bank accounts, withdraw funds from bank accounts, trade stock, pay bills, and cash checks. They could also include the right to give gifts. Medical powers of attorney allow the agent to make health care decisions. In all of these tasks, the agent is required to act in the best interests of the principal. The power of attorney document explains the specific duties of the agent.

When a parent names only one child to be the agent under a power of attorney, it can cause bad feelings and distrust. If you are dealing with a sibling who has been named agent under a power of attorney or if you have been named agent under a power of attorney over your siblings, the following are some things to keep in mind:

Right to information. Your parent doesn’t have to tell you whom he or she chose as the agent. In addition, the agent under the power of attorney isn’t required to provide information about the parent to other family members.

Access to the parent. An agent under a financial power of attorney should not have the right to bar a sibling from seeing their parent. A medical power of attorney may give the agent the right to prevent access to a parent if the agent believes the visit would be detrimental to the parent’s health.

Revoking a power of attorney. As long as the parent is competent, he or she can revoke a power of attorney at any time for any reason. The parent should put the revocation in writing and inform the old agent.

Removing an agent under power of attorney. Once a parent is no longer competent, he or she cannot revoke the power of attorney. If the agent is acting improperly, family members can file a petition in court challenging the agent. If the court finds the agent is not acting in the principal’s best interest, the court can revoke the power of attorney and appoint a guardian.

The power of attorney ends at death. If the principal under the power of attorney dies, the agent no longer has any power over the principal’s estate. The court will need to appoint an executor or personal representative to manage the decedent’s property.

If you are drafting a power of attorney document and want to avoid the potential for conflicts, there are some options. You can name co-agents in the document. You need to be careful how this is worded or it could cause more problems. The best way to name two co-agents is to let the agents act separately. Another option is to steer clear of family members and name a professional fiduciary.

Sibling disputes over how to provide care or where a parent will live can escalate into a guardianship battle that can cost the family thousands of dollars. Drafting a formal sibling agreement (also called a family care agreement) is a way to give guidance to the agent under the power of attorney and provide for consequences if the agreement isn’t followed. Even if you don’t draft a formal agreement, openly talking about the areas of potential disagreement can help. If necessary, a mediator can help families come to an agreement on care.

To determine the best way for your family to provide care, consult with your attorney.

How Long Will You Live? Four Life Expectancy Calculators

Posted on December 7, 2018 by Hope Elder Law

How much you need for retirement depends a great deal on how long you expect to live. There are now many Web-based calculators that can give you an idea of your life expectancy based on your current age, gender, family health history, smoking and drinking habits, exercise patterns, stress level, and other important lifestyle choices.

Here are four life expectancy calculators that we have identified as particularly detailed (although we cannot yet vouch for their accuracy!). Most require you to sign up with an email and a password before sharing the results. Click on each site name below to access the calculators.

Living to 100

LifeSpan Calculator from Northwestern Mutual

MetLife Longevity Calculator

BlueZones True Vitality Test

Can I Give My Kids $15,000 a Year?

Posted on November 18, 2018 by Hope Elder Law

If you have it to give, you certainly can, but there may be consequences should you apply for Medicaid long-term care coverage within five years after each gift.

The $15,000 figure is the amount of the current gift tax exclusion (for 2018), meaning that any person who gives away $15,000 or less to any one individual in one particular year does not have to report the gift to the IRS, and you can give this amount to as many people as you like. If you give away more than $15,000 to any one person in a single year (other than your spouse), you will have to file a gift tax return. However, this does not necessarily mean you’ll pay a gift tax. You’ll have to pay a tax only if your reportable gifts total more than $11.18 million (2018 figure) during your lifetime.

Many people believe that if they give away an amount equal to the current $15,000 annual gift tax exclusion, this gift will be exempted from Medicaid’s five-year look-back at transfers that could trigger a waiting period for benefits. Nothing could be further from the truth.

The gift tax exclusion is an IRS rule, and this IRS rule has nothing to do with Medicaid’s asset transfer rules. While the $15,000 that you gave to your grandchild this year will be exempt from any gift tax, Medicaid will still count it as a transfer that could make you ineligible for nursing home benefits for a certain amount of time should you apply for them within the next five years. You may be able to argue that the gift was not made to qualify you for Medicaid, but proving that is an uphill battle.

If you think there is a chance you will need Medicaid coverage of long-term care in the foreseeable future, see your elder law attorney before starting a gifting plan.

Long-Term Care Insurer Cannot Be Sued for Elder Financial Abuse

Posted on November 15, 2018 by Hope Elder Law

Long-term care insurance policyholders suing Bankers Life and Casualty Company were dealt a blow by the Oregon Supreme Court when it ruled that the state’s elder financial abuse statute does not apply to their case.

Residents of Oregon who bought long-term care insurance policies from Bankers Life and Casualty Company sued the insurer five years ago in federal court. The policyholders claimed that the company violated Oregon’s elder financial abuse law by purposely delaying and denying insurance claims. The policyholders alleged that, among other things, the company didn’t answer phone calls, lost documents, wrongly denied claims, and paid less than policyholders were entitled to.

The lead plaintiff, 87-year-old Lorraine Bates, moved into an adult foster home in 2009 but Bankers refused to pay her claim, saying the facility didn’t meet its policy requirements. Another plaintiff, Eileen Burk, purchased a long-term health-care policy from Bankers. After she moved into an assisted living facility, her son had trouble filing a claim with the insurance company because the company refused to assist him. Continue reading →

Don’t Wait Too Long to Purchase Long-Term Care Insurance

Posted on November 5, 2018 by Hope Elder Law

The older you get, the harder it is to qualify for long-term care insurance. If you are interested in buying this insurance, it is better to act sooner rather than later.

Many people put off purchasing long-term care insurance until they need it, but by then, it may be too late. Not only do premiums increase as you age, you also may not even qualify for insurance due to your health. The older you are, the more likely you are to have a pre-existing health condition that will disqualify you from getting long-term care insurance.

According to a recent study by the American Association for Long-Term Care Insurance, 44 percent of applicants who were age 70 or older had their applications denied due to health reasons. And those are the applicants who completed applications. Insurance agents frequently discourage unhealthy applicants from applying in the first place.

In contrast to older applicants, only 22 percent of applicants who are between 50 and 59 years old and 30 percent of applicants between 60 and 69 years old had their applications declined. Generally, the best (and cheapest) time to buy long-term care insurance is when you are in your 50s.

Long-term care insurance is not the best option for everyone, but if you are thinking about it, don’t put off the purchase until it is too late. To find out if a long-term care insurance policy fits into your long-term care plan, consult with your elder law attorney.

A Guidebook to Planning for Old Age

Posted on October 18, 2018 by Hope Elder Law

Millions of Americans are facing old age essentially alone. One in three baby boomers is single or no longer part of a couple due to divorce or death. Others may be in a relationship where chronic illness has struck both partners simultaneously. Children may live too far away or lack the resources to offer a parent meaningful help.

But there is no reason why circumstances like these should bar anyone from a quality old age. It just takes planning, which is where this empowering book comes in. Full of helpful checklists and worksheets, Who Will Take Care of Me When I’m Old? is an essential guide to preparing for and navigating the inevitable losses that aging entails – the loss of functioning, the loss of loved ones and friends, and the loss of income.

Joy Loverde, a consultant and speaker on aging issues and the author of The Complete Eldercare Planner, has written a self-help book that offers both emotional and practical advice. The first chapters address overcoming the psychological barriers to planning. After all, the prospect of growing old and needing care is something most people would prefer not to think about, much less plan for. One early section suggests ways to avoid self-sabotaging thoughts. Other section headings include “Lessen the Grip of Guilt” and “Motivate Yourself.” Continue reading →

Promissory Notes and Medicaid

Posted on September 14, 2018 by Hope Elder Law

A promissory note is normally given in return for a loan and it is simply a promise to repay the amount. Classifying asset transfers as loans rather than gifts can be useful because it sometimes allows parents to “lend” assets to their children and still maintain Medicaid eligibility.

Before Congress enacted the Deficit Reduction Act (DRA) in 2006, a Medicaid applicant could show that a transaction was a loan to another person rather than gift by presenting promissory notes, loans, or mortgages at the time of the Medicaid application. The loan would not be counted among the applicant’s assets, unlike a gift. Congress considered this to be an abusive planning strategy, so the DRA imposed restrictions on the use of promissory notes, loans, and mortgages.

In order for a loan to not be treated as a transfer for less than fair market value (and therefore not to interfere with Medicaid eligibility) it must satisfy three standards: (1) the term of the loan must not last longer than the anticipated life of the lender, (2) payments must be made in equal amounts during the term of the loan with no deferral of payments and no balloon payments, (3) and the debt cannot be cancelled at the death of the lender. If these three standards are not met, the outstanding balance on the promissory note, loan, or mortgage will be considered a transfer and used to assess a Medicaid penalty period.

It’s good practice when lending money to use a promissory note, whether or not the loan is related to Medicaid. To learn more about using promissory notes in Medicaid planning, contact your elder law attorney.

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Category Archives: Estate Planning