Massachusetts Estate Planning & Asset Protection Blog

A recent report from the Alzheimer’s Association states that one in ten Americans age 65 or older currently have Alzheimer’s. With the baby boomer generation aging and people living longer, that number may nearly triple by 2050. Alzheimer’s, of course, is just one cause of dementia—mini-strokes (TIAs) are also to blame—so the number of those with dementia may actually be higher. A 2011 study by the Alzheimer's Disease International and the World Health Organization found that 50% of people over 80 years old have some form of dementia.

Caring for someone with dementia is more expensive—and care is often needed longer—than for someone who does not have dementia. Because the cost of care in a facility is out of reach for many families, caregivers are often family members who risk their own financial security and health to care for a loved one.

In this three-part blog, we will explore these issues and steps families can take to alleviate some of these burdens.

Cost of Care for the Patient with Dementia—And How to Pay for It

As the disease progresses, so does the level of care the person requires—and so do the costs of that care. Options for care can range from $40,000 to $140,000 and more. Levels of care include in-home care, adult daycare, assisted living facilities and nursing homes.

 Care for a person with dementia can last years, and there are few outside resources to help pay for this kind of care. Health insurance does not cover assisted living or nursing home facilities, or help with activities of daily living (ADL), which include eating, bathing and dressing. Medicare covers some in-home health care and a limited number of days of skilled nursing home care, but not long-term care. Medicaid, which does cover long-term care, was designed for the indigent; the person’s assets must be spent down to almost nothing to qualify. VA benefits for Aid & Attendance will help pay for some care, including assisted living and nursing home facilities, for veterans and their spouses who qualify.

Those who have significant assets can pay as they go. Home equity and retirement savings can also be a source of funds. Long-term care insurance may also be an option, but many people wait until they are not eligible or the cost is prohibitive. 

However, for the most part, families are not prepared to pay these extraordinary costs, especially if they go on for years. As a result, family members are often required to provide the care for as long as possible. To learn more about how to protect your home, spouse and life savings from the increasing cost of nuring home care, register today for a free educational workshop.

Click on the button below to get our FREE report "The Plain Truth About Alzheimer's Disease" which includes the 9 Steps You Need to Take Right Now to Care for Your Loved One and to Protect Your Family’s Finances.

At the Estate Planning & Asset Protection Law Center, we provide a unique education and counseling process which includes our original 19 Point Trust, Estate and Asset Protection Review to help people and their families learn how to protect their home, spouse, life savings, and legacy for their loved ones. Attend a free workshop to discover where opportunities exist to eliminate problems now as you implement plans for a protected future.

You may register now for a free educational workshop - call 800-964-4295 or click the button below, to register and learn more about what youcan do to protect your spouse, your home, and your life savings.

WHAT TO KNOW BEFORE YOU ENROLL IN MEDICARE

 Three critical things to know to keep your healthcare costs in check and make smart decisions.

1. The importance of enrolling in Medicare on time

It sounds like a no-brainer, but most people don’t realize that the effects of procrastination in their enrollment can cost them a rise in their part B premiums (these are the premiums that cover medical services) by 10% for each year they were eligible for Medicare but didn’t enroll. The “Initial Enrollment Period” is 7 months long, beginning three months before your 65^th birthday and ending three months after. You may still enroll during the “General Enrollment Period” (from January 1 – March 31 of each year), however coverage won’t begin until July and be advised that you may have a late penalty. 

Another item to note: if you’re already receiving Social Security benefits before your 65^th birthday, you may be automatically enrolled in Medicare (you’ll receive notification in the mail via a Medicare card in the 3 months before your 65^th birthday if you are automatically enrolled) Special enrollment periods are available for  people who are either working as a volunteer abroad or still working at age 65 with employer-provided healthcare coverage.

2. Which plan is right for you?

There are two main plan choices for a Medicare enrollee – the “original” Medicare plan or a Medicare Advantage Plan. Read on to discover the basic components of each plan and which is best for your needs.

 The “Original” Medicare Plan includes:

• Part A: hospital coverage
• Part B: physician/medical insurance
• Part D: optional, provides prescription drug coverage
• Enrollees can also opt to add on a private ‘Medigap’ plan which will pay for more of what Medicare doesn’t cover

 Medicare Advantage Plan, sometimes a better option than the Original Medicare Plan, are regulated by the US government although they are offered by private insurers. These plans are required to offer at least as much coverage as the original Medicare Plan and many often include prescription drug coverage as well as vision, dental or hearing coverage.

The Medicare website offers a helpful tool – the Medicare Plan Finder to help you compare your plan options. Whichever plan you choose, be aware that you may choose a different plan the following year.

3. Take Advantage of the Available Services

Screenings and preventative care may sometimes be available at no extra cost, in addition to the wellness benefits included in your coverage. One annual wellness visit to your primary care doctor is included at no extra charge in your membership. You may also be eligible to other perks such as discounts on gym membership.

 In conclusion, following the tips above to make the most of your Medicare enrollment can enable seniors to live a longer and healthier life.

At the Estate Planning & Asset Protection Law Center, we help people and their families learn how to protect their home, spouse, life-savings, and legacy for their loved ones.  We provide clients with a unique educational and counseling approach so they understand where opportunities exist to eliminate problems now as they implement plans for a protected future.

If you would like more information on Medicare, the Affordable Care, or the impact of new health care laws on your health care coverage, request your free preview of our guide, the Senior & Boomers’ Guide to Health Care Reform & Avoiding Nursing Home Poverty.  

We encourage you to attend one of our free educational workshops, call 800-964-4295 and register to learn more about what you can do to enhance the security of your spouse, home, life savings and legacy.

Sources: Fox BusinessNews

What will 2017 bring to Seniors and Persons with Disabilities? - Part II

In last week's blog 'What will 2017 Bring to Seniors and Persons with Disabilities? - Part I' we discussed some of the key issues to watch out for in 2017 including Medicare and Medicaid reform. In Part II of the blog we continue our review of potential impacts on legislation that affects seniors and persons with disabilities.

Affordable Care Act

Republicans are already moving to repeal and replace Obamacare. The question is: How much will be repealed? There are several programs included in the ACA, not related to traditional health insurance, that are important to elder law attorneys and their clients. For example, Medicaid expansion, a kind of Medicaid reform, is part of the ACA.

The ACA also includes programs that work toward ending the institutional bias in Medicaid. One is Community First Choice, a state plan that provides home- and community-based services. Currently it has an extremely low-income threshold so it’s a limited population, but it’s a start.

Another is Money Follows the Person, which pays for transition services. For example, it could provide extra funds to help someone leave a nursing home, by paying for a housing coordinator to find an apartment, a roommate, buy basic furniture and so on.

We are moving toward home- and community-based service, which many people favor. How will that interact with Medicaid reforms? Because they are optional, some fear that with per capita caps, these services will be among the first to go. There may be more opportunities to expand these services through block grants because they allow more flexibility in what is offered. Along this line, Senator Chuck Schumer (D-NY) has introduced a bill called the Disability Integration Act, which would make home- and community-based services a civil right.

Other Medicaid-Related Issues to Watch

Limiting home equity: This proposal, H.R. 1361, would take away the state option to expand the cap for single individual home owners. It would not impact people who have a community spouse living in the home or if you have a disabled child or a dependent under 21. 

Medical liability reform: This could impact whether individuals get adequate access to personal injury settlements and funds that can be put into a special needs trust.

Long-Term Care Reform

There has been a lot of discussion on Capitol Hill about picking up the pieces on long-term care. After a decade, the market has completely collapsed. John Hancock just withdrew, and Genworth was bought out by a Chinese private equity firm. Republicans and Democrats agree on the problem, but there doesn’t seem to be common ground yet on a solution. The Senate Aging Committee is starting the process, which is a positive step. There are calls for catastrophic coverage, at least on the back end, and probably some sort of front-end coverage for two or three years. There may be some long-term care reform as part of Medicaid reform.

VA Benefit Rules

The new rules have been delayed again until at least April, 2017. Fixing the VA is a Trump priority. An important piece to what will happen with the VA is who Trump names to head the VA and Veterans Benefit Administration (VBA). 

Nursing home binding arbitration rules

Nursing homes must comply with binding arbitration rules to have access to Medicare or Medicaid funds. NAELA has been working with others to push CMS to ban pre-dispute binding arbitration. The for-profit nursing home industry association is fighting it and recently won a preliminary injunction in a Mississippi district court (American Health Care Association et al v. Burwell). We do not yet know if the Trump Administration will appeal this ruling and continue with banning binding arbitration for nursing home contracts. 

In Kindred Nursing Centers Limited Partnership v. Clark in Kentucky, the issue is whether federal arbitration acts overrule the state’s arbitration acts. The state of Kentucky has a law that says in order to waive the principal’s constitutional right to a jury trial, the agent must be given that specific authority within the power of attorney. Whether this is overturned is likely to hinge on President Trump’s pick to fill Justice Scalia’s vacancy on the Supreme Court.

 Conclusion

There are a number of issues that will be addressed in 2017 that can have significant impact on seniors and their loved ones, Veterans, and persons with disabilities. If you have questions or would like to discuss any of the issues raised here, please don’t hesitate to contact us.

At the Estate Planning & Asset Protection Law Center, we help people and their families learn how to protect their home, spouse, life-savings, and legacy for their loved ones.  We provide clients with a unique educational and counseling approach so they understand where opportunities exist to eliminate problems now as they implement plans for a protected future.

We encourage you to attend one of our free educational workshops. Call 800-964-4295 and register to learn more about what you can do to enhance the security of your spouse, home, life savings and legacy.

What will 2017 bring to Seniors and Persons with Disabilities? - Part I

Donald Trump’s election and Republican majorities in both houses of Congress surprised much of the nation. With control of legislative and executive branches of government, the expectation is Republicans will finally be able to push through long-awaited legislation, as well as follow through on promises made by candidate Trump. And they are expected to move quickly.

We will summarize some key issues to watch out for in 2017 that affect seniors and persons with disabilities and continue to provide updates throughout the year.

What the Election Outcome Means in Congress

The House has remained in Republican control—about 45% Democrat and 55% Republican. The majority rules, so while the Democrats may have loud opposition, they don’t have a lot of power. Currently, Republicans are mostly united, but those in the Freedom Caucus (Tea Party Republicans) are deciding how they will interact with the Republican establishment. If they split, votes may be needed from Democrats to pass legislation.

The Senate is 48 Democrats and 52 Republicans. 60 votes are needed to prevent a filibuster (where senators can talk for hours and delay votes). But with budget reconciliation, only a simple majority (51) is needed to pass legislation in the Senate. Because they are all budget-related programs, the Republicans will try to reform Medicaid, Medicare and the Affordable Care Act (Obamacare) through budget reconciliation. Individual Republican senators will have a lot of power, as some may insist on additions or deletions to secure their vote. If the Republicans do not stick together for the majority, votes may be needed from Democrats. (Note: Budget reconciliation was used to pass the Deficit Reduction Act of 2005 and OBRA 93, which enacted big cuts that changed elder law—the lengthening of the transfer penalty, the change in the time of when that penalty applies, the move from trust.)

One thing to watch is who is going to run Health and Human Services (HHS), Centers for Medicare and Medicaid Services (CMS) and the Social Security Administration, especially considering how much is related to Supplemental Security Income (SSI). The people now in charge of staffing these agencies are conservative. For example, the person in charge of staffing the political positions at the Social Security Administration has called for privatizing Social Security in the past. Donald Trump has repeatedly said he doesn’t want to change Medicare and Social Security, but that may be changing. (See below.)

Tax Policy

Tax changes are expected as part of the budget reconciliation process. We are not sure yet if 2017 will bring major tax reform or just tax cuts, but tax rates are expected to decrease for both individuals and businesses. Candidate Trump called for elder care and child care tax deductions and/or credits. He has also stated his plan to eliminate the federal estate tax, then charge capital gains tax on everything over $10 million, with exemptions for family farms and small businesses.

We may also see some changes to the ABLE Act (Achieving a Better Life Experience), which passed in December 2014 and amended Section 529 Plans. Currently, ABLE allows people with disabilities developed before the age of 26 and their families to set up tax-exempt savings accounts, which can be used to cover qualified disability expenses such as, but not limited to, education, housing and transportation. Revisions in 2017 may raise the age to 46, allow those working to put in more money, and allow rollovers of these accounts. 

Medicare Reform

President-elect Trump started by saying he was going to protect Medicare and Social Security. After meeting with House Speaker Paul Ryan, he said he will modernize Medicare. Reince Priebus, incoming chief of staff, recently insisted that Mr. Trump won’t meddle with Medicare or Social Security. Instead, he has said he will focus on 1) improving the economy, which will reduce the debt and ease entitlement concerns and 2) save Medicaid, Medicare and Social Security without cuts while eliminating fraud, waste and abuse. 

But he is already encountering resistance from Republicans, who for years have claimed that a major overhaul to Medicare and other entitlements are needed to ensure they don’t go bankrupt; that entitlement reform is critical to reducing debt; and the longer they wait, the harder it becomes to solve the problems. Obama administration officials warned just last year that a central Medicare trust fund is projected to run out of money by 2028.

Yet Republicans are also encouraged by what some of the President-Elect’s Cabinet picks could mean for future entitlement reform. Representative Tom Price (R-GA), who replaced Paul Ryan as Budget chairman and sought to overhaul entitlement programs, is Trump’s pick for Health and Human Services secretary. Representative Mick Mulvaney (R-SC), a fiscal hawk and Freedom Caucus co-founder, will lead his White House budget office.

So, we will have to wait and see if President-elect Trump, his Cabinet members and leading Republicans will find a way to agree. Some reforming of Medicare may be part of the 2017 budget reconciliation, but with ObamaCare repeal and replace, tax reform and infrastructure as the immediate priorities, solving the decades-long problem of deficits in Medicare and Social Security will likely have to wait until after 2017.

In the meantime, we are seeing a tilt toward Medicare Advantage plans. These managed care plans (offered through HMOs) often have lower costs and provide benefits not covered by traditional Medicare and Medicare Supplement Plans, such as health club memberships and preventative educational programs for those with diabetes and other chronic diseases. 

A long-term goal for Medicare, which has been around since its founding in 1964, is premium support. Basically, the consumer would choose a plan from those offered through an exchange. The government would provide subsidies to companies, they would lower the premiums and then people would choose their plans. It’s not likely that this will replace Medicare as we know it, but it is an idea being discussed.

Medicaid Reform

President-elect Trump has called for block granting Medicaid. House Speaker Paul Ryan has called for it, too, and Republicans are looking at whether they can reform Medicaid through budget reconciliation.

Those who want to reform Medicaid are focusing on the FMAP, the federal percentage match that states receive through federal funding. This is based on per capita income of the state. For example, a rich state like New Jersey is a 1:1 ratio, while a poor state like Mississippi is about a 3:1 ratio. This means for every one dollar that Mississippi spends on Medicaid, they will receive three free extra dollars from the federal government. This can impact states’ budget decisions. For example, if the governor of Mississippi needs to cut costs, he will more likely cut education or infrastructure by one dollar, rather than cut Medicaid spending by one dollar and lose the three free extra dollars.

The idea of block grants has been around for about 30 years. They are attractive because there are fewer federal rules to comply with and the states can use the money however they wish. But block grants shift more costs onto the states, and governors tend to oppose that.

Another idea floating around is a per capita cap, which would give the states a fixed dollar amount per individual, based on Medicaid standard lines (the blind, aged, and disabled children and adults). It was first proposed by President Clinton, who also wanted block grants. A per capita cap may force the states to control Medicaid costs over time, but there is also a demographic shift to consider—the medical needs and costs for an 85-year-old are much greater than for a 65-year-old. Nursing homes and aging disability provider groups have a huge stake in this and would likely oppose it, as would some governors.

The cost changes may not be felt right away, but they will be noticeable ten years from now and that’s what Congress must plan for. There may be increased waiver flexibility for the states and provider taxes to offset states’ losses. We may also see reforms to make it easier to manage care.

We will be following changes in legislation very closely and will keep you informed as to how these changes affect seniors and persons with disabilities. Check back next week for Part 2 of this blog where we will discuss more anticipated changes in the law including the Affordable Care Act and VA Benefit Rules!

At the Estate Planning & Asset Protection Law Center, we help people and their families learn how to protect their home, spouse, life-savings, and legacy for their loved ones.  We provide clients with a unique educational and counseling approach so they understand where opportunities exist to eliminate problems now as they implement plans for a protected future.

To learn more about elder care and how changes in the law may affect you,attend one of our free educational workshops, call 800-964-4295 and register to learn more about what you can do to enhance the security of your spouse, home, life savings and legacy.

Nursing home care is more than $180,000 per year! Attend this FREE educational seminar to learn:

• How to protect your home and assets from the costs of long-term care
• How to stay out of the nursing home and access in-home care
• How to make sure your spouse is not left financially ruined if you need nursing home care
• How to access Veterans benefits to pay for long-term care

     Human life expectancy in the past 100 years has been substantially lengthened as a result of advances in medical science.  However, as we know, the quality of an extended life span isn’t always great.  Many people live with serious illnesses such as COPD, Heart Disease, Cancer, Parkinson’s Disease etc. for many years, often spending those years suffering extreme physical and emotional pain.

     While the medical community continues to focus on finding cures for these illnesses and conditions, an important part of administering medical care is easing a patient’s pain.  This is what is known as palliative care and only recently – within the last 10 years or so – has palliative care become a new discipline of medicine.

     What is palliative care?  It is specialized medical care for people with serious illnesses.  It focuses on providing patients with relief from the symptoms and stress of a serious illness.  The goal of palliative care is to improve the quality of life for both the patient and the patient’s family.

     Palliative care is provided by a specially trained team of doctors, nurses and other specialists such as social workers and chaplains, who work together with a patient’s other doctors to provide extra support.  Palliative care specialists undergo additional training and certification in order to provide palliative care services.

     Palliative care is often coupled with hospice care, however, they are not the same.  Hospice care is for patients who are terminally ill, and have an expected lifespan of less than six months.  Palliative care is available for any patient with a serious or advanced disease who needs the added support that it care can provide.

     Palliative care specialists can play an important role in helping patients and their families discuss and make important and difficult decisions about their medical care.  That could include evaluating the different treatment options presented to the patient, weighing the pros and cons of each.  They can also assist in focusing on the future, on what the patient may or may not want as his/her condition declines.

     The palliative care team can facilitate this discussion well ahead of an acute medical crisis.  Knowing what the patient wants or doesn’t want helps to reduce the stress level of all involved when that medical crisis does arrive.

     Navigating the waters of palliative care and hospice care can feel overwhelming.  Let us help you to make that trip easier with a Health Care Proxy and Living Will and a Release of Protected Health Information (HIPAA, commonly).

     Learning more about Estate Planning and Asset Protection can protect you now and in the future. Call us or register for one of our workshops today to make your life a little easier down the road.  

Alzheimer's and Long Term Care

Alzheimer's is growing at an alarming rate. Alzheimer's increased by 46.1% as a cause of death between 2000 and 2006, while causes of death from prostate cancer, breast cancer, heart disease and HIV all declined during that same time period.

The 2015 Alzheimer's Association annual report titled, “Alzheimer's Disease Facts and Figures” explores different types of dementia, causes and risk factors, and the cost involved in providing health care, among other areas. This report contains some eye-opening statistics:

• An estimated 5.3 million Americans of all ages have Alzheimer's disease. This figure includes 5.1 million people aged 65 and older and 200,000 individuals under age 65 who have early-onset Alzheimer's.
• One in nine people age 65 and older (11 percent) has Alzheimer’s disease.
• About one-third of people age 85 and older have Alzheimer’s disease.
• Eighty-one percent of people who have Alzheimer’s disease are age 75 or older. The number of people aged 65 and older with Alzheimer's disease is estimated to reach 7.7 million in 2030 - more than a 50% increase from the 5.1 million aged 65 and older currently affected.
• Every 67 seconds, someone in the United States develops Alzheimer’s. Thus, approximately 473,000 people age 65 or older developed Alzheimer’s disease in the United States in 2015.
• By 2050, the number of individuals aged 65 and older with Alzheimer's is projected to number between 11 million and 16 million - unless medical breakthroughs identify ways to prevent or more effectively treat the disease.

Currently long-term care costs for dementia and Alzheimer's patients are about 80% higher than any other long-term care need. This is because dementia and Alzheimer's patients require more “caregiving” in terms of help with basic daily functions. Things that many of us take for granted to be able to do for ourselves, even when we are sick, such as bathing, dressing, toileting, and eating, are all activities many dementia patients require assistance with as the disease progresses. In addition, dementia patients often need someone with them just to protect them from themselves. Many dementia patients wander or harm themselves. Therefore, constant oversight of them is necessary.

Currently, there is no cure for Alzheimer’s, or any other type of dementia. There are treatments that may help slow the progression of the disease. There are also theories related to diet that may help prevention or stave off the development of dementia. However, there are no surefire ways to beat this disease right now. Advocating for the recognition of the costs associated with the disease as well as the heartbreaking effect on friends and family of the patient, is the best way to raise awareness to support the finding of a cure and prevention of dementia. We can all look forward to a day that this disease is a thing of the past because a cure, and/or prevention, has been found.

Click here to get a FREE copy of our book "The Senior and Boomer's Guide to Health care Reform and Avoiding Nursing Home Poverty"

At the Estate Planning & Asset Protection Law Center, we provide a unique education and counseling process which includes our original 19 Point Trust, Estate and Asset Protection Review to help people and their families learn how to protect their home, spouse, life savings, and legacy for their loved ones. Attend a free workshop to discover where opportunities exist to eliminate problems now as you implement plans for a protected future.

You may register now for a free educational workshop - call 800-964-4295 or click the button below, to register and learn more about what youcan do to protect your spouse, your home, and your life savings.

Underestimating the Risk of Long Term Disability:
The Importance of Being Prepared

Most Individuals Will Face At Least a Temporary Disability
Study after study confirms that nearly everyone will face at least a temporary disability sometime during their lifetime. More specifically, one in three Americans will face at least a 90-day disability before reaching age 65 and, according to the definitive study in this area, depending upon their ages, up to 44% of Americans will face a disability of up to 4.7 years. On the whole, Americans are up to 3.5 times more likely to become disabled than die in any given year.

Many People Will Face a Long Term Disability
For many Americans, the disability will not be short-lived. According to the 2007 National Home and Hospice Care Survey, conducted by the Centers for Disease Control's National Center for Health Statistics, over 1.46 million Americans received long term home health care services at any given time in 2007 (the most recent year this information is available). Three-fourths of these patients received skilled care, the highest level of in-home care, and 51% needed help with at least one "activity of daily living" (such as eating, bathing, getting dressed, or the kind of care needed for a severe cognitive impairment like Alzheimer's disease).

Long Term Care Costs Can Be Staggering
Not only will many individuals and families face prolonged long term care, in-home care and nursing home costs continue to rise. According to the Genworth 2015 Cost of Care Survey, the Median Annual Cost for a Private Room in Massachusetts during 2015 was $114,026.

Perhaps most importantly, despite overwhelming and compelling statistics; most Americans grossly underestimate the risk of disability to themselves and to their loved ones. According to the Council on Disability Awareness 2010 survey:

• 64% of wage earners believe they have a 2% or less chance of being disabled for 3 months or more during their working career; the actual odds for a worker entering the workforce today are closer to 25%.
• Most working Americans estimate that their own chances of experiencing a long term disability are substantially lower than the average worker’s.

Given the high costs of care, this underestimation often leaves Americans ill prepared to pay for the costs of long term care.

All Planning Should Thoroughly Address Disability
When a person becomes disabled; he or she is often unable to make personal and/or financial decisions. If the disabled person cannot make these decisions, someone must have the legal authority to do so. Otherwise, the family must apply to the court for appointment of a guardian over the person or property, or both. Those who are old enough to remember the public guardianship proceedings for Groucho Marx recognize the need to avoid a guardianship proceeding if at all possible.

At a minimum, seniors need broad powers of attorney that will allow agents to handle all of their property upon disability as well as the appointment of a decision-maker for health care. We recommend that our clients have both a Health Care Proxy and a HIPPAA to make this transition smoothly. Alternatively, a fully funded revocable trust can ensure that the senior's person and property will be cared for as desired, pursuant to the highest duty under the law - that of a trustee.

Click here to view our Free Consumer Report on "The Plain Truth About Alzheimer's."

At the Estate Planning & Asset Protection Law Center, we even provide a unique education and counseling process which includes our unique 19 Point Trust, Estate and Asset Protection Review to help people and their families learn how to protect their home, spouse, life savings, and legacy for their loved ones. Attend a free workshop to discover where opportunities exist to eliminate problems now as you implement plans for a protected future.

You may register now for a free educational workshop - call 800-964-4295 or click the button below, to register and learn more about what youcan do to protect your spouse, your home, and your life savings.

Is it time to update your estate plan and confirm your bank accounts are safe?

Are you concerned about the safety of your bank accounts? If so, your fears are justified.  A few years ago, the Federal Deposit Insurance Corporation (“FDIC”), which insures bank deposits, reported the biggest jump in “problem institutions” it has seen since the Savings and Loan Crisis of the late 1980s. The FDIC identified 76 banks in trouble, a 52% increase from the prior year.

But there’s also good news. With proper planning you can protect your assets – even if you have considerable assets.

The FDIC Insures bank accounts

Each individual is covered for up to $250,000 in account assets. The limit is based on account ownership – if you own three different accounts totaling $500,000, at any one institution, only $250,000 is covered. One way to increase the amount of FDIC insurance at any one bank is to designate different ownership of the accounts at that bank. Say you own the $500,000 in your name alone; in that case, only $250,000 is covered. If you divide the accounts so you own $250,000 and your spouse owns $250,000, the full $500,000 is covered. While this is an easy way to get greater FDIC coverage for accounts at the same financial institution, it can lead to problems when the spouse whose name is not on an account needs to access the funds in that account.

Another option is to avoid placing more than $250,000 with any one financial institution. If you and your spouse place $1,250,000 in assets equally across five different banks, all the funds will be fully insured. To make the process easier, the Certificate of Deposit Account Registry Service (CDARS), a program which divides your assets across a network of institutions, can help you maintain insurance coverage on funds up to $50 million.

Arguably the best alternative is to place the accounts in the name of a Revocable Living Trust. Handled properly, the amount of FDIC insurance on bank accounts owned by a Revocable Living Trust can then be much greater. Why? Regulations now allow coverage to be calculated not just on ownership but also based on the number of beneficiaries identified in the trust agreement. If your trust names two beneficiaries in equal shares, the account is covered up to $500,000. Under the right circumstances, if you and your spouse set up a joint trust, that coverage could expand to $1,000,000!

Coverage is limited only to those individuals who receive assets upon your death. If your trust passes to your son Johnny and then, upon his death, to your daughter Suzie, Johnny is the only beneficiary considered.

FDIC insurance coverage rules can become much more complicated under certain circumstances: When there are more than two owners of a Revocable Trust, when the ownership of the trust is not in equal shares, or when the beneficiaries do not receive equal shares of the trust at the death of the owner. Plus, the regulations for calculating the amount of FDIC insurance coverage for an Irrevocable Trust are different than for a Revocable Living Trust.

Our office can help you ensure your assets are covered in the event of a bank failure, as well as help you take advantage of changes in state and federal regulations regarding your estate plan. Call us to find out how we can help you determine the best way to protect your assets and plan for your family’s future.

 Click here for our Free Consumer report on “Are Your Bank Accounts Truly Safe.”

At the Estate Planning & Asset Protection Law Center, we even provide a unique education and counseling process which includes our unique 19 Point Trust, Estate and Asset Protection Review to help people and their families learn how to protect their home, spouse, life-savings, and legacy for their loved ones.   Attend a free workshop to discover where opportunities exist to eliminate problems now as you implement plans for a protected future.

You may register now for a free educational workshops, call 800-964-4295 to register and to learn more about what you can do protect your spouse, home, and life savings

Last week I was explaining the problem with IRAs and long term care.  If you need care at $175,000 per year or more but want to protect your IRA, what are your options?  It’s always easiest to illustrate by way of an example.          

 Mark has an IRA worth $1.2 million and he doesn’t have long term care insurance.  Mark has two ways to pay for his care; use his own money, or apply for Medicaid benefits.  However, Mark must have no more than $2000 in assets to his name if he wants to qualify for Medicaid (a bit more if he is married).  So, Mark must first spend the $1.2 million before Medicaid will begin paying.  

 “What about if Mark transfers his money out of his name”, you may ask?  That’s what we call 5 year trust planning.  Move the assets into a trust, leave enough to cover 5 years and then Mark can qualify for Medicaid.         

 While statistically the odds are that Mark will need the care, we can’t say for sure.  What if he passes away peacefully in his sleep and never needs care?  Pulling $1.2 million out of his IRA will cost him somewhere in the neighborhood of $500,000 in income taxes.  This type of planning is best done while Mark is still healthy and doesn’t yet need long term care.  But, I don’t have a crystal ball to know what the future holds.  If it turns out that he never needs care, then we guessed wrong. 

Ok, maybe he should wait until he needs care and then pull the money out of the IRA.  While that would lessen the tax somewhat because the cost of his care could be a deduction taken against the tax, he would need to leave enough to cover 5 years of his care before applying for Medicaid.  He certainly would need to pay more for his care in those 5 years than if he moved the money while he was still healthy and didn’t have those long term care costs.

And what if he doesn’t live through the 5 years, and never makes it to the point of qualifying for Medicaid.  Then we again guessed wrong.  He will have paid the tax and never gotten the benefits. 

So, you see how IRAs have really presented us with a dilemma.  The type of planning we have done for years, while beneficial to many of our clients, isn’t at all helpful to someone like Mark.  We’ve never had a solution for the “Marks” who call our office – until now.

Next week, I’ll share with you how that has changed and what Mark can now do to protect his IRA.

For a discussion on some of the critical matters that may affect people and their families, we have provided a free report based on our new book: The 10 Biggest Estate Planning and Asset Protection Mistakes People Make and How to Avoid Them! 2^nd edition, now including the special bonus chapter, The Biggest Long Term Care Planning Oversights and Opportunities for Long Term Care.  Click for immediate access.

At the Estate Planning & Asset Protection Law Center, we even provide a unique education and counseling process which includes our unique 19 Point Trust, Estate and Asset Protection Review to help people and their families learn how to protect their home, spouse, life-savings, and legacy for their loved ones.   Attend a free workshop to discover where opportunities exist to eliminate problems now as you implement plans for a protected future.

You may register now for a free educational workshops, call 800-964-4295 to register and to learn more about what you can do to protect your spouse, home, life savings.

How Will Affordable Care Act Affect You?

| Massachusetts Estate Planning Attorney

We have had a number of people concerned about the potential changes of Health Care Reform and what it means for them and their families.  So we have developed a review of aspects of the Affordable Care Act that particularly affect seniors and Boomers and their families

Medicare

The Affordable Care Act will extend the life of the Medicare trust fund which, without intervention, was projected to be depleted by 2017.  Along with the passage of the Reconsiliation Act in 2010 (H.R. 4872), the Medicare Part D coverage gap will be eliminated by 2020.  Reducing payments to Medicare Advantage (Part C) plans to make them equal to payments through traditional Medicare.  Currently, Medicare Advantage plans receive $135 per beneficiary per month more than traditional Medicare.  Individuals and couples in traditional Medicare pay higher premiums to subsidize these higher payments to private insurance plans.  This Act will prohibit cuts to guaranteed Medicare benefits.  The only benefits that the private Medicare Advantage plans can eliminate are optional extras such as health club memberships, vision or dental.  The Act slows the rate of growth in Medicare premiums by new care delivery models focusing on quality rather than quantity; reducing avoidable, dangerous and needless hospital readmissions caused by poor care or lack of follow-up; reducing fraud and abuse; and trimming future increases to hospitals and rehabilitation providers.   The Act will also reduce out-of-pocket expenses for prevention and wellness services for Medicare beneficiaries and provide a free annual check-up for Medicare beneficiaries.

Long-term care

The Affordable Care Act will accomplish a great deal including the following:

• Require nursing homes to disclose owners, operators, suppliers, financial backers and others with whom they do business so they can be held accountable for the care residents receive.
• Require reports on nursing home staffing, including information on the hours of care residents receive; staff turnover rates; and spending on wages and benefits.
• Require criminal background checks on employees of long-term care facilities.

Establish the Community First choice option, allowing states to provide community-based services to Medicaid-eligible individuals with disabilities who require an institutional level of care.  Participating states will receive a 6 percent increased "federal match."

• Provide spousal impoverishment protection to home-and community- based waiver program participants.
• Create Community Living Assistance Service and Supports - a new national long-term care insurance program through voluntary payroll deductions that would provide a cash benefit to individuals who are unable to perform activities of daily living.  The Congressional Budget Office projects that this provision alone will reduce the deficit by $57.8 billion over 10 years, including federal and state Medicaid savings of $4.4 billion.
• Create home health, a state option for Medicaid enrollees with chronic conditions (including mental health condition, substance use disorder, asthma, diabetes, heart disease or obesity) to designate a provider or team of health care professionals as their health home.

Elder Justice

The law will:

• Establish an Elder Justice Coordinating Council to make recommendations on activities of federal, state, local and private agencies relating to elder abuse, neglect and exploitation.
• Dedicate funding for adult protective services and state demonstration grants to test a variety of methods to detect and prevent elder abuse.
• Establish elder abuse, neglect and exploitation forensic centers to develop forensic expertise and provide services.
• Provide grants to support the Long-Term Care Ombudsman Program and training programs for national organizations and state long-term care ombudsman programs.
• Authorize grants to enhance long-term care staffing through training, recruitment and incentives for individuals seeking or maintaining employment in long-term care, either in a facility or a community based long-term care entity. 

For a discussion on some of the important matters that can affect people and their families, please take a look at our new book: Senior and Boomers Guide to Health Care Reform and Avoiding Nursing Home Poverty.   

You can even obtain a free report or attend a free workshop to learn more and be eligible to receive your free copy of Senior and Boomers Guide to Health Care Reform and Avoiding Nursing Home Poverty (a $14.95 value)

 At the Estate Planning & Asset Protection Law Center, we even provide a unique education and counseling process which includes our unique 19 Point Trust, Estate and Asset Protection Review to help people and their families learn how to protect their home, spouse, life-savings, and legacy for their loved ones, click here for more information. We provide clients with a unique approach so they understand where opportunities exist to eliminate problems now as they implement plans for a protected future.

 If you would like to learn more, you are invited to attend one of our free educational workshops, our next workshop is on August 13^th  in Wellesley.  Register online or call 800-964-4295 to learn more about what you can do to protect you, your spouse and life savings. You will be entitled to receive a free book and review or your existing planning.