Government Funding Cutbacks
Being Stuck In Sandwich Generation Is No Baloney
Reblogged from CNBC
One-time real estate agent Evelyn Rehg was showing a house to a prospective buyer four years ago when an alarming phone call came from the retirement facility where her mother lived.
“They told me I either had to get my mother immediately into a mental hospital or she would be evicted,” said Rehg, 48, of Crestwood, Missouri. “I panicked,” she added. “I didn’t know how to handle it insurance-wise, what hospital to take her to or anything like that.”
Rehg’s mother, 80, suffers from mild dementia, severe anxiety and manic behaviors that now are treated properly. But prior to the phone call, her mom’s anxiety had become so debilitating that she began calling Rehg’s cell phone upward of 200 times a day.
In desperation, Rehg, then still working in real estate, changed her number because she needed her phone for work. So instead, her mother started incessantly calling the front desk at the retirement facility. “They put up with it for about a day and a half,” Rehg said. “Then they called me.”
Rehg also has two children, who were then 12 and 9 and needed supervision and care. That meant that her husband, Jon, had to adjust his work schedule to tend to their needs.
Financial advisors say that in addition to the emotional drain, “sandwichers” may also face a financial burden if they haven’t taken an interest in the steps parents have put in place to ensure they receive proper care.
“It’s important to talk about financial things, but allow your parents some space,” said Rita Cheng, a certified financial planner and chief executive of Blue Ocean Global Wealth.
“You don’t need to be completely involved in their business, because they still want to be independent and in charge,” she said. “But ultimately, if they want to be in charge of how they are cared for, they need to be proactive and plan for it.”
After the call that made it clear that her mom’s condition had deteriorated, Rehg checked her into a mental health facility. It was the first of a handful that Rehg had researched before her mother received a diagnosis and effective medication.
But then her mom fell and broke her arm and spent several months in a rehab center. She then lived in Rehg’s house for about six months, until the situation became too challenging for the whole family.
Rehg, who by then had given up her real estate license, eventually found a suitable assisted-living facility and moved her mother there.
Gregory W. Edwards, a CFP and partner at Lawless Edwards & Warren Wealth Management, is also in the sandwich generation. His father, who had lived next door to him since 2001, died in 2011 after losing his battle with Alzheimer’s disease.
His dad was financially well-equipped to pay for his care, but Edwards organized it—and it was complicated, because his father’s wishes stated that he never wanted to be put in a nursing home.
During the last two years of his dad’s life, the cost to care for him in his own home was $7,000 to $8,000 monthly.
Additionally, Edwards and a brother each now give their mother, who was divorced from his father years ago, about $1,800 a month toward her various expenses, medical and otherwise. “People have no idea of what’s coming down the pike when it comes to the cost of care in the last months of life,” he said.
For many sandwichers, the pressures from the parent side outweigh those from the child side.
“The hardest part is feeling overwhelmed and overworked. Sometimes you have to make hard choices and you have to be patient with yourself.”
Rehg said that without her husband, she doesn’t know how she could have managed the situation.
“It was the hardest thing I’ve ever been through in my life,” she said. “At the height of it, I was probably spending 40 hours a week on my mom—paying bills, talking to doctors, visiting her, medicines—and trying to work 30 to 40 hours a week and take care of the house and two kids.”
Cheng at Blue Ocean Global Wealth said that it is a difficult balancing act.
“The hardest part is feeling overwhelmed and overworked,” she said. “I have to give myself permission that I’m only one person and this is stressful. Sometimes you have to make hard choices and you have to be patient with yourself,” Cheng added.
There are strategies that can help no matter what your current situation dealing with LTC. In some cases, even if someone is on Medicaid already there may be ways to help improve the financial situation. Of course, owning a good LTC insurance policy is the best way to have the cash flow to pay for the help you need. For more information visit www.TheLongTermCareGuy.com
Why Do Medicare Reductions ($400 Billion) Matter?
Our president wants nursing homes to deliver care much more efficiently and for significantly less over the next ten years. The proposal indicates that Medicare can save $400 Billion over the next 10 years in reimbursements for nursing home recovery care following a hospital stay.
There are also proposals afoot to raise the minimum wage by nearly a third. Nursing home care is overwhelmingly bricks and mortar and minimum wage help. With labor costs going up, more and more utilization as the baby boomers turn 65 at a rate of 10,000 a day, how will Medicare save $400 Billion dollars?
Medicaid already requires impoverishment before it will pay for your Long Term Care. Perhaps the look-back could be extended to 10 years from the current 5 (that has already been introduced in Congress twice, but died in committee). Perhaps a new requirement will be to force reverse mortgaging of the family home before Medicaid eligibility is granted. Many options are on the table, and the result of each idea is less available government money to cover LTC for you and I.
I am fine. I have my LTC insurance policy. Do you? If not, is it because you heard that they are way too expensive? Or have you heard that you must be in perfect health get the coverage? neither of these excuses are valid – if you plan with someone knowledgeable on how LTC actually works.
Imagine if one of a couple becomes laid up and requires day to day care for bathing, dressing, toileting, etc. Will that couple still own two cars and a Harley or a pickup truck and camper? I think not. Will they go to Branson, MO this year? Probably not. Will there be a cruise in their future, I doubt that as well.
When one of a couple needs LTC, the “fun” budget shrinks drastically, or disappears entirely. If a single person requires LTC, they may find themselves “stuck” in the home versus living there, especially if they cannot drive. In that case, an assisted living facility might be less expensive and provide much more social interaction. With the household and auto expenses eliminated, and both of those items converted to cash that can earn interest, one might find themselves able to pay the majority of the monthly bill. It might only require a small addition from a properly sized LTC insurance policy to make up the difference.
That is the benefit of investigating LTC insurance with a specialist who understands the finances of care. Most people will never require a nursing home, but may be able to use an assisted living facility or stay at home with their family. Thus, a policy sized for that will handle the great majority of care situations. Then with health and ages taken into account, the most appropriate company can be priced and voila, reasonable, affordable LTC insurance can save the day.
If, however you wait, wait until your health changes and nobody will insure you, you have waited too long. You need homeowners insurance before the tornado. You need auto insurance before the accident. You need LTC insurance while you are still healthy enough to get it. When your annual physical comes up and the doctor says “I’m going to write a prescriptions for”…….. you know immediately that you waited too long. How long will you wait? Do you feel lucky this year? Do you?
Why You Shouldn’t Count On Your Family To Take Care Of You When You’re Old
The Washington Post recently published an article claiming that the great majority of Americans think (incorrectly) that their family will provide their care when they are old.
First of all, 60 percent of adults between 40 and 65 don’t think they will ever need any long term care (LTC). The Health and Human Services office in Washington DC tells us that 70% of us will need such care. 20% for between two and five years and 20% for more than 5 years.
Fortunately, only about 15% is done in nursing homes (at a typical cost of just over $100,000 a year). The great majority of LTC is provided in your own home or in the assisted living type facilities, at about half the cost of nursing homes.
“A major reason people are too optimistic is that they think their families will take care of them. Almost 75 percent expect their families will provide long-term care, which was about seven times more than those expecting to need a home health agency, nursing facility or assisted living facility, according to the Health Affairs study, which analyzed responses from the 2012 National Health Interview Survey. People in the survey were asked to say who they expect would provide long-term care, even if they didn’t think they needed it.”
(Health Affairs)
The Health Affairs study also warned that the 29 percent of people ages 40-65 who live alone could have the greatest needs for long-term care. They had the worst health of any group in the survey, were much less likely to rely on family to provide care and had the greatest expectation of any group that they’d need to pay for long-term care services, according to the University of Minnesota researchers who authored the study.
Ozzie and Harriet lived in the 1950’s and into the 1960’s. Harriet stayed home, wearing a dress, heels, and a pearl necklace. She had the time, space, and energy to have parents or in-laws move in and provide their care. How many of you have children who stay home wearing dress, heels, and pearl necklace with the time, energy and finances to provide all of your care? I didn’t think so!
LTC insurance does not need to be expensive – if chosen appropriately. There are many options, and knowledgeable guidance can help greatly. Just as you might not invest based on your barbers advice while getting a haircut, seeking out a specialist in the financing of LTC can result in custom tailoring coverage to the risks you wish to cover, and no more.
One universal piece of advice to consider is the impact of inflation. Numerous recent articles have stated that the costs of LTC have only increased an average of 3%/year during the past 5 years. This is correct, and the past 5 years have been the worst recession since the great depression of the 1920’s. Minimum wage is set to increase legislatively, employment is picking up and who will fill the workers slots at minimum wage going forward? A recent New York Times article stated that professional caregiving will overtake retail as the number one profession in America in just 5 years. We did not have enough children to provide our care! Costs will increase more than 3%, and 5% is the best inflation hedge we have. it is absolutely essential!
More information can be found at www.TheLongTermCareGuy.com
Thanksgiving is Coming, How is Your Family Doing?
Thanksgiving comes around every year about this time. Families get together, hopefully getting along. Sometimes it is the one time a year everyone sees how the older members of the family are doing since last year.
For some families, it will be a difficult time when they realize that grandma or grandpa are not as sharp as they used to be. Perhaps it is difficulty in getting around, or driving, or perhaps it is in confusion that seems to be getting worse and frustrating the person no end.
Well, the family is all together, so let’s discuss what to do. Perhaps nobody is willing to start the discussion, ignoring the elephant in the room. Or perhaps someone attempts to make suggestions and is quickly shot down.
Talking about losing independence is never easy. Help may be offered and declined since “I can do it myself”! In any case, some family members can see that a problem is evident and wonder what to do about it.
A big part of searching for solutions is learning what options are available. All sorts of support services exist, to help people in their homes, day care several times a week, or even an assisted living facility. Many of these have pools or hot tubs, and most now offer happy hour one afternoon a week to help with socialization. However, who will bring up the topic and risk the wrath of the loved one you all care about?
All of the options can be expensive. The good news is that only about 15% to 20% of LTC is done in nursing homes now. Home care and assisted living facilities cost half or less than a traditional nursing home. However, $1500 to $4500 per month will strain most budgets or put a large dent in the family funds rather quickly. Perhaps it might be prudent to learn what financing arrangements for LTC services are available.
Medicare does not pay for LTC. Medicaid will, but only once the person has spent-down to impoverishment and cashed in any life insurance. There are other, better options available. LTC insurance, if purchased while still healthy is the least expensive way to address this, but even after the need arises, there are other strategies. In a worst case, there is still the option to move some money to family without Medicaid penalties. You simply need to consult an expert in this area and learn what options can work for you.
More information is available at www.TheLongTermCareGuy.com
Be Careful About Gifting
The concept of “gifting”, or spreading gifts throughout one’s lifetime, has been a recognized as an effective strategy for reducing estate taxes. But, did you know that there is more to think about “gifting” than how it might impact estate taxes—especially for those people for whom estate taxes are not a concern?
So, what is gifting? Most people understand that gifting can be writing a check to the grandchildren for Christmas or birthdays. Gifting can include paying another’s bills and may even include paying someone to provide services.
For federal gift tax purposes, someone can receive $14,000 per year from an individual giver without being subject to gift taxes. On the other hand, very different rules apply to gifts given in the past five years if one ever needs to ask the government for assistance.
Let’s say a couple gives their daughter $10,000 to purchase or remodel her house. The amount is well under the $14,000 gift tax limit, so should not be a problem, right?
Let’s then say that 4 years later, one of them suffer a stroke, and needs to receive care in a long term care (LTC) facility such as a nursing home or assisted living facility. If they can pay the bill ($3500 – $9000 per month) there is no problem at all. But if they can’t afford such a monthly expense, and savings are insufficient, they may need to apply for Medicaid to pay for the care. Medicaid is the long term care program for the poor, so they will find that there are restrictions on the total amount of money and other assets they can keep on hand. In addition, if they have given assets (e.g., money, land, a business) away in the past five years, those will be considered gifts and the amount will prevent them from receiving Medicaid, once they are impoverished. So, that gift to their daughter will be considered to be an asset they gave away and will impact when they become eligible to receive Medicaid.
Even if they pay someone privately to provide the long term care they need at home, it will be considered a gift when they need to apply for Medicaid unless they have proper documentation. They need documentation to prove that the money paid was for services provided, and not a gift. This is the case regardless of whether the caregiver they pay is a family member or not—there needs to be proper documentation that the money paid is in exchange for care given, or they risk having it considered a gift.
Given all of this, it’s not difficult to understand that the monthly check a parent might give an adult child who is struggling financially would also be considered a gift, as would a child assuming operation and ownership of a family business or farm that is held in the parents’ name.
Medicaid requires documentation of finances from the past five years. All gifts made in this time period will be counted. The total of the gifts is divided by the average monthly cost of a nursing home to determine how long a person could have paid for care, had (s)he not given money (or other assets) away. That is how long they will need to wait to receive Medicaid, even after impoverished. Our government feels that it is unfair to give money away, and then want government funding to cover a budget shortfall.
I have a LTC insurance policy that will, along with my available income and assets, pay for my LTC. If I can pay my bills when due, with my funds or insurance I own, I can make gifts to whomever I please in any amounts I want. I will not have to ever ask the government for help through Medicaid when I need LTC. What about you?
More information is available at www.TheLongTermCareGuy.com
More Bad News For The Sandwich Generation – Filial Responsibility Laws
The sandwich generation are the folks who are currently raising teens, paying for school, and taking care of their parents as well. This causes much missed work, missed work opportunities, missed events with children, and general exhaustion. How could you possibly accept a promotion requiring a move when you are taking care of an aged loved one here?
Now there is another worry to consider, Filial Responsibility Laws. 30 states have them and they state that adult children have a duty to provide necessities for parents who cannot do so for themselves. This includes long term care (LTC)!
Here is a list of the states that have such laws: Alaska, Arkansas, California, Connecticut, Delaware, Georgia, Idaho, Indiana, Iowa, Kentucky, Louisiana, Maryland, Massachusetts, Mississippi, Montana, Nevada, New Hampshire, New Jersey, North Carolina, North Dakota, Ohio, Oregon, Pennsylvania, Rhode Island, South Dakota, Tennessee, Utah, Vermont, Virginia, and West Virginia. If your state is not listed here you are NOT out of the woods. If you have parents living in one of those states, you could become responsible for their bills including the cost of home care, assisted living or a nursing home.
Judges use a number of factors when determining the adult child’s responsibility to cover the indigent parent’s bills. I personally thought I would never see these laws enforced, but California, New York, and Pennsylvania have each had a number of cases.
You may have heard the various rumors of shortfalls in government budgets. You may also be aware that the baby boomers are turning 65 at a rate of 10,000 a day and will for the next 18 years. Where do you think the money will come from to pay for the LTC these people will need, if they do not have the funds, or insurance to pay their own bills?
You might view this as a way to get even with your kids, like the bumper sticker that says we are spending our children’s inheritance. But do you really want to bankrupt them from their financial security? Perhaps you should investigate LTC insurance for yourselves, if you are still able to qualify for it. for more information, visit www.TheLongTermCareGuy.com
Long Term Care Insurance is Less Expensive Than Most Realize
I cannot tell you how many times people have told me this LTC insurance is too expensive. This is typically followed an hour later by “Wow, I can’t believe that’s all it costs”. Perhaps agents are explaining things incorrectly.
Let’s take a 50 year old couple who wisely choose to investigate this coverage while they are still healthy enough to qualify. They choose modest coverage, enough that with their available income they can pay for home care and assisted living type facilities, where 80% of all LTC is done.
The coverage gives them 10 years of care, when needed, and the daily benefit of $100/day increases automatically at 5% compound each year. This feature is absolutely essential due to the quickly rising costs of LTC. The NYTimes reported recently that by 2020 professional caregiving will overtake retail as the number one occupation in the USA. Where will those workers come from and who will pay their wages?
We determine an annual premium of less than $3000 a year to cove the both of them and the automatic annual 5% benefit increases. Over 30 years they will have paid considerably less than $90,000 of tax-deductible premiums.
By that time, at age 80, they will have $4,000,000 dollars for LTC costs between the two of them! If they had instead put those dollars in a stock market account earning 10% interest every year (wouldn’t that be wonderful), with no losses ever, they would have less than $600,000 by then. They would have had to earn a consistent and unrealistic nearly 20% every year to do as well.
Lets compare this to an auto insurance policy. If you never have an accident, it’s a big waste of money. You’re a good drive, cancel that policy! Instead, take the premiums and put them in the bank earning (today’s current rate of) 1% interest. In 30 years, you might have enough for a fender bender, assuming nobody gets hurt. Who would do that?
Back to my original example: If the couple were 60 years old instead of 50, and still healthy enough to qualify for coverage (25% are not by age 60) they would pay twice as much in premiums to have that same $4,000,000 in coverage in 30 years.
At a recent discussion at Wisconsin’s HHS offices, the following statement stuck in my memory. “In 12 years we will look back on 2014 as the ‘good old days’ of long-term-care. We have the facilities, and we have the staff, but in 12 more years as the 10,000 baby boomers turning 65 every day start hitting 80, we won’t have the people or the facilities to handle them”.
Recently, I was approached by two home care agencies in Green Bay, WI. Each one asked if I would inquire of my clients if anyone would be willing to work just 2 mornings or afternoons a week as a caregiver. They indicated they were turning away clients today as they cannot hire enough caregivers now.
Is it time for you to investigate LTC insurance? Perhaps, or perhaps not. But investigate with a professional who understands all the things that need to be taken into account to come up with an appropriate solution. More info can be found at www.TheLongTermCareGuy.com
Do You Know Someone Who May Soon Need Help Managing On Their Own?
We all dread the time when we may need some assistance due to not being able to manage on our own anymore. It happens to others, but surely, not us. We are never prepared when a loved one needs help, and then we find out how expensive such care is. There seems to be no one place with all the information we need to formulate a plan.
Many family meetings occur in my office, trying to figure out how the family will care for Mom or Dad. The usual questions include: will the VA provide any assistance? Yes, perhaps, through a program called Aid and Attendance. It is a needs based program (meaning your assets must be somewhat limited) that can be available to veterans and even their spouses to help pay for care.
Medicaid is another possible assistance program. It, however, requires strict impoverishment, spending down to very low asset and income levels and is a last resort. There are things a family can do to protect some assets from this spend-down requirement, and this is often a topic of much interest.
If some funds are available from savings or home equity, there are some little known strategies to produce an income for life that requires far less of these assets than a typical life annuity. When life expectancy is less than “average” for someone’s chronological age, this can seem like a miracle. Being able to pay for the needed care and never running out of money is a very good thing indeed.
If you or someone you care about is going to need some help with day to day activities, and you have no idea where to start looking for help, call us at The Long Term Care Guy. We are Wisconsin specialists based in Green Bay, but can help with questions no matter where you are.
Give us a call at (920) 884-3030 or (800) 219-9203 or send us an email at [email protected]
Help Wanted – Home Health Aides
Another article appeared in the Wall Street Journal recently about home health care workers. If you want job security, long hours and low pay, this is the career for you.
I have mentioned in prior posts about the shortage of workers caring for our elderly in the US. The turnover rate for home health care workers is 40% to 65% every year. The US Labor Department predicts this profession will grow by nearly 50%, or the equivalent of nearly a million new jobs by 2022. That is nearly five times the average of all occupations.
This also confirms the New York Times study that caregiving will overtake retail as the number on occupation in America by 2020, only 5 1/2 years from now. Where will all these workers come from? Who will want these jobs at a median wage of $20,000 a year? ResCare, one of the nations largest home care providers hires 2000 workers a month, just to replace workers who have left.
When your health changes and you can no longer manage on your own, who will care for you? Will it be your children? How many do you have, where do they live, and can they leave their careers and families to care for you?
Do you think the government will provide your care? Spend your money and let Uncle Sam take over? He can’t print it fast enough now and the baby boomers continue to turn 65 at a rate of 10,000 a DAY!
A nice assisted living facility that costs $3600 a month now (assuming your need for care is not significant) will be close to $15,000 a month when today’s 50 year olds are 80. Many 80 year olds think this is something they might not need for 10-15 years yet, when it will cost $30,000 a month.
I have Long Term Care insurance that will help pay these bills. Every year its benefits increase automatically at 5% compounded. Many insurance companies and agents are promoting LTC insurance policies that do not increase at all or do so at only 3% inflation. That will not pay the bills in the future! The only good those policies will do is to earn them a commission and leave the (woefully inadequately) insured clients to spend down to Medicaid impoverishment.
Congress wants to raise the minimum wage by a third. Caregiving providers cannot hire or retain workers at current pay grades. Wages will go up, and those with money will be able to get the care they want. I will. Will you? Long Term Care insurance is still available at reasonable rates, if it is chosen appropriately. That’s where I can help.
More information is available at www.TheLongTermCareGuy.com or call me, let’s talk. (920) 884-3030 or at (800) 213-9203 if are from out of town
Providers Sue Kids For Parents LTC Costs
From Financial Advisor magazine comes the following information: more than half the states have filial responsibility laws making adult children legally responsible for indigent parents’ bills.
I’ve known about this for years, but never thought they would be enforced. However, now nursing homes, assisted living facilities, or even a publicly funded long term care agency can go after family members to repay outstanding LTC bills. 28 states have these laws on the books and are now starting to use them.
Buried in the Omnibus Budget Reconciliation Act of 1993 are rules that “compel state agencies to collect back funds they’ve expended on Medicaid services from families if they discover the families have assets available”.
Before Medicaid benefits kick in, you’re supposed to liquidate the cash value of any life insurance policies and spend the proceeds on health or long term care. If Medicaid discovers you did not, it will essentially fine you to pay back any money it’s spent on your behalf. Even after you die and your family collects a death benefit on that insurance, Medicaid can sue the family in probate court to recover what the state spent on care. It doesn’t matter if the family intentionally deceived Medicaid or it was an accident.
Why is this happening? 10,000 Americans turn 65 every day, we are getting older as a nation. We don’t have stay at home adult children to move in with a la Harriet Nelson (of Ozzie and Harriet). LTC is expensive, and most of us did not prepare for it – ending up on government welfare called Medicaid. Our government does not have enough money for Social Security and Medicare, let alone thousands per month for a LTC facility for all of us.
So now the Medicaid agency will pay (and the providers lose on the low reimbursements) initially and claw back when and where they can. If you think there is no reason to worry, the government will take care of everything, think again. Talk to your children, perhaps they would purchase LTC insurance for you to protect a possible inheritance (if you are still healthy enough to get it). They could end up paying for your care later, whether they want to or not.
I can email the entire article, simply ask for it at [email protected] Check out www.TheLongTermCareGuy.com for more info