Often one of the first considerations is to sell the home to access the equity for long-term care expenses.  A number of factors should be considered before jumping to that conclusion.

Long-Term Care and Medical Assistance

If the person/s have few assets and are close to being eligible for Medical Assistance to help cover long-term care expenses, selling the home and increasing the assets may not be a wise idea.  Some states do not include assets, such as savings, retirement accounts, investments, etc., in the Medical Assistance calculation.  However, if the state does count assets, often they do not include the house as an asset.  If you sell the house and then have resultant savings, that money is counted.

Elderly Waiver and Alternative Care

A specific type of government benefit funded between the federal and state governments is the waiver program.  Waiver programs for the elderly help provide services that can keep people in their home vs. entering a residential facility.  With the burgeoning number of Boomers getting older and the limited resources of the government to continue to pay for total institutional care, the government is seeking ways to help provide care more economically and efficiently.  Most people express an interest in remaining in their homes.  Therefore, if the government can spend less to keep people in their homes and out of nursing homes, it is a win-win situation.  Most states have different programs and criteria for eligibility.  Again, this may be an option to review before deciding that the home must be sold to afford care.

Extra Help with Medicare Part D

To be eligible for Extra Help paying for your Medicare Part D prescription drug coverage, you must meet asset guidelines.  Currently in 2012, a single Medicare beneficiary can have a maximum of $12,640 in assets.  A married couple can have only $25,260.  The primary residence is not included in the total assets.  Again, selling a house might push someone out of eligibility for this program.

Medicare Savings Program

One of the best kept secrets about Medicare is the Medicare Savings Program.  This program for lower income Medicare beneficiaries either pays only the Medicare Part B premium ($99.90 in 2012) or also covers the deductibles and co-pays for Medicare Parts A and B.  The asset levels are low.  In 2012 for Single–$10,000; for Married–$18,000.  Again, the equity in a house is not counted unless the house is sold and savings results.

Help with Sale of Home Decision

These financial programs are just some of the issues to consider when deciding to sell a house to help aging parents or other senior adults.  How do you decide?  I recently heard a homecare agency professional say that a trip to an elder law attorney  usually pays for itself– in savings from financial decision-making mistakes when planning for long-term care.  Another source of information for state or local asset requirements is often county social workers who help administer these programs (Browse the web for “county social workers” or “county case managers”).  Care managers  who help evaluate housing and service needs and locate service providers can direct you to an appropriate professional for information in your state and situation.  Area Agencies on Aging may also be able help locate these professionals for you.   

There are obviously many factors to consider when deciding how to best meet the needs of your loved one.  The decision to sell the family home can be an emotional one.  Sometimes even though it seems like the simplest way to raise funds to provide services, selling the home may actually interfere with receiving those very services that could make your loved one most happy.  

Often a medical crisis changes things very quickly–a stroke, a fall, an accident.  But even if a parent is aging and has a chronic diagnosis (diabetes, coronary disease, etc.), we seem surprised when independence and living situation finally require change.  I just heard a social worker say that he gets calls from adult children saying they were not expecting this medical/housing crisis with their parent, even though the parent is over 90 years old.  We do not like to think about or plan for difficult situations.

So what are we to do to prepare?  Family discussion is a great beginning.  This is also usually difficult.  Unless everyone is comfortable with emotionally-charged discussions, this one is usually avoided.  Trying to convey what kind of home-based help or housing you might be willing to accept may not be welcomed by your future caregivers.  Everyone knows there will be an end to life, but no one looks forward to enduring physical or mental incapacity before that final event. Here are some helpful resources to begin the process.

Senior Housing

Local resources may be a great place to start the evaluation process.  If you do not have any idea of what kind of living situations are available, try to find a local senior housing guide.  There usually are a wide range of different housing options from independent living to skilled nursing facilities (nursing homes) and everything in-between.  Services range from none to meals, cleaning, personal care and medical care.  Exploring choices before the crisis gives you more options.

Senior in-home services

If you want to age in place and stay in your home as long as possible, investigate what in-home services are available in your area.  A good beginning source might be http://www.eldercare.gov/ from the US Administration on Aging.   

Evaluating what caregiving services are needed

This local Area Agency on Aging Long-Term Care Choices Navigator asks questions to help determine what services are needed and where you might find them.  This specific example is from the Minnesota Area Agency on Aging, but is a helpful framework for looking at areas of need in general.

Professional help

Overwhelmed at the thought of evaluating what is needed, finding the services and discussing it with the family?  A care manager may be the professional to contact.  These former social workers, nurses, counselors and gerontologists work with families to complete all these tasks.  These professionals can be paid by you, the client, or the service providers.  for more info:   http://www.eldercare.gov/ .

Do-It-Yourself Guide for Caregiving

This Caregiving Choices PDF looks at how to help yourself as a caregiver, how to assess what services are needed, how to organize the information you have or still need, how to evaluate legal and financial issues and much more.  This example includes information on national and Minnesota-based services.

Out-of-State Caregiving

http://www.ecarediary.com/ provides a way for families to stay connected and organized even if some of the family members (including the loved one needing care) are out-of-state. So valuable!

This may not be a fun activity to pursue, but if you can force yourself to just do a little research, it will pay off if you ever need to make those quick crisis decisions.  Winter is a great time for indoor research…

Benefits of Prefunding your Funeral

Not only does it save your family from difficult decisions at a very stressful time when you gather and share your wishes for your funeral or cremation, but you might want to consider prepaying the service in advance also.  Why? 

1. Prefunding can protect the family from inflation cost by locking in today’s prices.
2. These funded plans are flexible, and any leftover funds are returned to the estate.
3. Once funds are set aside for this purpose they can become an Irrevocable Funeral Trust which is a protected asset– protected from long-term care costs, not considered an asset for Medical Assistance determination.

Protections for Your Prefunded Funeral

Today there are laws which protect preneed funds in a safe, secure and efficient manner.  Although there are various funding options, the most common and inclusive is the use of a Preneed Insurance policy that is held in the insured’s name until the time of need.  Then the funds are paid to the funeral home of choice, even in another state.  States may have different laws.  Check a funeral home in your state for your options.

This may not be the first item on your list for retirement planning, but it impacts estate planning, financial planning, caregiving and long-term care planning.

Again, have a conversation with your family.  Let them know what you want to do, and find out what is important to them.   They will appreciate your concern now and even more at that future stressful time. Contact a Funeral Preneed Specialist to gather information and assist you in putting funds aside safely for this purpose.  Next up, caregiving.

Information provided by Meg White Heintze, Funeral and Cremation Preneed Specialist           952-201-6504   Heintze5@integra.net

Beneficiaries and other designations

Any financial account for which you can designate a beneficiary provides a way to pass on an inheritance without going through probate.  Retirement accounts and life insurance policies have beneficiaries.  There are payable on death, POD, designations for banking accounts.   Transfer on Death, TOD, are for investment accounts.  Some states (Minnesota included) even have Transfer on Death Deeds, TODD, for real estate.

However, you may want to consult an attorney to make sure you are not missing tax (estate, gift, etc.) or other consequences by trying to avoid a will or trust by using only these designations.  Using joint ownership with children is an area where you always want to check on the consequences of such a move.  You may be limited on what you can do with your assets without your children and their spouses’ consent, and your assets may be included in your children’s assets for the purpose of divorce or bankruptcy.  So what seems simple may become more complicated if you do not know the potential difficulties.

Also, a big consideration is to keep your beneficiary and other designations up to date.  Remember to update if there is a death, divorce, etc.  No one wants to be unpleasantly surprised because a beneficiary was not changed.

Wills and Trusts

A will gives directions for disposition of your property, but it still requires the probate process.  A trust avoids probate and, therefore, may save time, provides more privacy, but costs more than a simple will.  If you have property in more than one state, you definitely need to check if you can have a “simple” estate plan.

There are ways to simplify your estate planning, but remember to consult an attorney before making decisions which can affect your or your heirs’ tax or ownership situation.  Next stop, funeral planning.

The earlier you start to save and plan for retirement, the better.  Your initial financial planning revolves around investing as much as possible into your retirement accounts—401 (k), traditional IRA, Roth IRA, SEP IRA, SIMPLE IRA, Keogh plan, etc.

Accumulation vs. Distribution Phase of Financial Planning

As you get closer to your actual retirement date, you change your perspective from just accumulation of savings and type of investment used to distribution of those assets.  Now you must plan to invest your savings/investments in a way to make your assets provide an income for as long as possible, hopefully comfortably for the rest of your life.  Financial advisors have differing philosophies on how to accomplish this, but a financial planner who specializes in retirement financial planning definitely looks at your potential expenses/budget in retirement and develops a plan to try to produce as adequate an income stream for as long as possible.

Younger Workers

The younger you are, with a lower starting income and the more time to accumulate savings, the better case for a Roth IRA or 401 (k).  You must pay income taxes on the investment as you make it, but you can withdraw the investment and earnings later with no tax liability.  If you are in a lower income bracket as a young employee, you have lots of time for the money to grow and take it out later without taxes even though you hopefully are in a higher income tax bracket at that time.  The closer you are to retirement, the more you need to consult a financial advisor to decide if a traditional or Roth IRA makes more sense in your specific situation—income level, years to retirement, projected income in retirement.

Taxes on Retirement Assets

During the accumulation phase when you are working and saving for retirement, you can enjoy the tax advantages of retirement accounts.  However, when you are retired and start to withdraw the money from those tax-deferred accounts (traditional IRA, non-Roth 401 (k), etc), you must start paying income taxes on the investment and all subsequent earnings.  So entering retirement, it is always nice to have some savings /investments outside of those tax-deferred accounts.  Then you can choose which type of account is most advantageous at the time according to your income, relative value of the investment and tax consequences.

Also remember that depending on your income, your Social Security benefits could be taxable up to 85%.  So far we have been discussing federal income taxes.  Remember that states tax retirement income differently.  Some states do not tax retirement income at all—worth a look!

Required Minimum Distribution (RMD)

If you are in the enviable situation where you have not had to withdraw from your tax-deferred retirement accounts before you reach the age of 70 1/2, at that time you will have to start withdrawing an amount equal to the total of these accounts divided by your life expectancy.  (For the life expectancy divisor table, see page 102 of IRS publication 590—IRAs Use this link:  http://www.irs.gov/pub/irs-pdf/p590.pdf

This has just touched on areas of retirement financial planning, but it gives you a place to start your New Year’s review if you have not considered these issues previously.  Good luck!

In the US, we are often not especially fond of planning, especially in personal matters.  An often-heard quote is that we spend more time planning a 2-week family vacation than we do planning our retirement.  A well-planned vacation goes more smoothly than a last-minute bolt-out-the-door trip.  Spontaneity can be fun because there are surprises, but even spontaneous trips need to have some basics covered to be enjoyable, and not disastrous.  

Retirement can be much more fun with some basic preparation too.  Then those surprises do not completely devastate us.  Of course, the first type of planning everyone addresses is financial planning, but there are so many more things to think about. 

In the next blog posts, we will cover a variety of retirement planning issues in addition to retirement financial planning, including:  estate planning, long-term care planning, caregiving planning, retirement life planning, retirement housing planning, funeral planning, work vs. volunteer planning, etc.

So join us for a leisurely trip down the path to a meaningful, fun-filled, active and stable retirement–with enjoyable surprises, not devastating ones.   Happy New Year!

Medicare-eligible Veterans and emergency care

However, if you need emergency care, the VA system does not provide that.  If you have chosen not to pay for Medicare Part B ($99.90 per month in 2012) when you were first eligible, you may be not-so-pleasantly surprised at your bill for initial physician, emergency room or ambulance services at a non-VA facility.  Of course, once you are stabilized and can be transported, you can be transferred to VA facilities.

Veterans and supplementing VA coverage

If you have Medicare Parts A and B, you are eligible to enroll in a Medicare Advantage plan or a private supplemental plan.  Medicare Part A alone covers the initial hospital basic charges with a 2012 deductible of $1156.  With just Medicare Part B, you have 80% coverage for physician, emergency room and ambulance services.  Sometimes there are very inexpensive Advantage or supplemental options which can provide more coverage for these services, especially if you do not need the Medicare Part D prescription drug coverage also.

Retired military and Medicare

If you are retired military, you are eligible for Tricare for Life, again great health care coverage.  But to be eligible for this coverage, you must take Medicare Parts A and B when you turn 65.  If you are still on active duty when you turn 65, you do not need to enroll in Medicare Part B until you retire. 

Help with Medicare decisions

The government wants to provide good health care for the people who have risked their lives to maintain our freedom.  Don’t be unpleasantly surprised.  If you fall into one of these categories, contact your county veteran service officer   and/or state SHIP counselors (State Health Insurance Assistance Program) for help in figuring out how Medicare will work with your VA coverage. 

And thank you for sacrificing for the rest of us!

This year is also the year that the first Baby Boomers turned 65.  If your personal Initial Enrollment Period overlapped with the Annual Open Enrollment Period, you may have had some difficulty enrolling in a Medicare Advantage, Cost, Medicare Part D, or supplemental plan.  If you erroneously received a 2012 application when you were trying to sign up for the end of 2011, you may have missed deadlines which left you with a gap in health coverage or a penalty for not signing up by the end of your Initial Enrollment Period.

If you fit into either of these categories, contact your SHIP  (State Health Insurance Assistance Program) counselors.   Congress needs to know if there are Medicare beneficiaries who were negatively impacted by the new deadline during this transition period.  Contact your Senator or Representative’s office for help.

As much as possible, remember to document the dates, times and reference numbers of phone calls, name of person with whom you spoke and any other helpful info as to what paperwork you submitted.  The more information you have, the easier for the SHIP counselors or Congressional staff to assist you.

New to Medicare

First, if you are new to Medicare, you have up to 3 months after your month of eligibility (birth month if just turned 65) to enroll in Medicare Advantage and Part D plans.

Recent Move and effect on Medicare

If you have moved (see examples), you have 2 months to change or join plans.

1. Moved out of your plan’s coverage area
2. Moved from a skilled nursing facility/nursing home
3. Been released from incarceration

Lost health coverage through no fault of your own and effect on Medicare

Again you have 2 months after that coverage ends—February 28, 2012 if coverage ends December 31, 2011.  Examples of this type of loss include:

1. Your employer/union drops retiree coverage
2. You are no longer eligible for Medicaid/Medical Assistance
3. Drug coverage changes and is no longer “creditable.”

 Lost health coverage by your own choice and effect on Medicare

 You also have 2 months to change if you decide to:

1. Drop your employer coverage during open enrollment (coverage ends 12/31/11)
2. Leave a Medicare Cost plan with drug coverage

 Unique SEPs for Medicare

There are SEPs for some very specific situations.  Contact your State Health Insurance Assistance Program  (SHIP) counselors or Medicare at 1-800-MEDICARE for more info.

 Stop working and effect on Medicare

If you had health coverage because you or your spouse was working and that employment ends, you have an 8 month SEP.  Remember you have to submit the appropriate paperwork with Social Security (See blog post “Medicare and Working Past 65.”)

Now you can relax and enjoy the holidays.  Remember, with these SEPs the coverage will be effective the beginning of the following month after you make your change.

Medicare Part D and Medicare Advantage (Medicare Part C) Plans

If you make changes on www.medicare.gov or the plan’s website, you have until midnight on December 7.  However, if you send in an application, it must be received by the plan by end of business on December 7.  Your insurance company may be staying open until midnight that day, but you must make sure they have received the correct application by that date.  Make sure you use the correct application for the specific year and specific plan you want.

Supplemental or Medigap plans

If you have a supplemental or Medigap plan to cover the gaps in basic Medicare Parts A and B, you still have until December 31 to make those changes because you just have to have changes submitted before the end of the month previous to the effective date of the new plan.  So if your insurance company changed the benefits or premium of your plan for 2012, and you want to change to a different version/level of their plans or go to another company’s supplemental/Medigap plan, you can do that up until December 31.  Make sure you use the application for the correct year and specific plan you want.

Help

Remember, contact your state SHIP counselors  or contact Medicare directly at 1-800-Medicare  for help.

Then enjoy the rest of December and your holidays!