Patinelli & Chang, LLP

How to Plan for Long-Term Care Costs

“A one-bedroom apartment in an assisted-living facility will cost you $194 per day–or about $71,000 per year. A home health aide will set you back $25 per hour, or $1,000 for a 40-hour week. Not scared yet?”

The odds are that most of us will need long-term care. At least 52% of those over age 65 will need some type of long-term care at some point in our lives, according to a study conducted by AARP. As most of us are living longer, we’ll probably need that care for a longer period of time, as reported in the article “It’s best to plan for long-term care” from the Times Herald-Record.

Here’s the problem: ignore this issue, and it won’t go away. This is a fairly common response for people 55 and older. The size of the problem makes it a bit overwhelming, and the cost to tackle it seems unsolvable. However, not addressing it becomes even more expensive. How can we possibly pay for long-term care insurance?

Here’s a simple example: a 64-year-old woman who broke her ankle in three places. She was healthy and mobile. However, a badly broken ankle required extensive rehabilitation and she was not able to stay in her home. She has been living at a rehabilitation center and the costs are mounting. What could she have done?

There are two basic ways (with a number of variations) to pay for long-term care.

The first and most obvious: purchase a long-term care insurance policy. Only 2.7 million Americans own these policies. They are wise to protect themselves and their families.

Most families put off buying this kind of insurance, because it’s expensive at any age and stage. The average cost is about $2,170, according to the Kiplinger Retirement Report, for about $328,000 worth of insurance. That rate varies, and it should be noted that if you have a chronic condition, you may not be able to purchase a policy at all.

If a local nursing home costs $216,000 per year and you have $328,000 of coverage, you’ll run out of coverage. The average nursing home stay is about two years. As boomers age, the cost of long-term care insurance is rising, while benefits are becoming skimpier, says Kiplinger.

There are some alternatives: a hybrid life insurance plan that includes long-term care coverage.  However, those can be more expensive than regular long-term care insurance. Try about $8,000 a year for a 55-year-old, about $13,000 for a 65-year-old.

Another choice: a Medicaid Asset Protection Trust. You’ll need to work with an estate planning attorney to create and fund this trust long before you actually need it. Your assets must be placed in the trust five years before an application to Medicaid, which will then pay for your care. You don’t have to live in poverty to do this. If the care is for one person, the applicant is permitted to keep about $15,450 of assets. The spouse may also keep a home worth up to $878,000 and assets up to about $120,000. In New York State, you can keep the principle of retirement funds like an IRA or 401(k), as long as you are taking the required distribution withdrawals.

However, what if you have money to pay or need long-term care before you put assets in trust? If you live in New York, Florida and Connecticut, you have what is called “spousal refusal.” The spouse of the person in long-term care can choose not to pay for their cost of care. This can get complicated, and Medicaid will try to get funds for the care. However, an estate planning elder law attorney can negotiate the amount of payment, which may leave the bulk of your estate intact.

These are complicated matters that become very costly, often at a time when you are least able to deal with yet another issue. Speak with an estate planning attorney before you need the care and learn how they can help you protect your spouse and your assets.

Reference: Times Herald-Record (July 22, 2019) “It’s best to plan for long-term care”

Long-Term Care Costs and Your Estate Plan

“Remember that the role of an elder law attorney is to be a client-centered advocate, which is a different assignment than being a taxpayer watchdog.”

There are many misunderstandings about long-term or nursing home care and how to plan from a financial and legal standpoint. The article “Five myths about nursing home costs and estate planning” from The Sentinel seeks to clarify the facts and dispel the myths. Some of the truths may be a little hard to hear, but they are important to know.

Myth One: Before any benefits can be received for nursing home care, a married couple must have spent at least half of their assets and everything but $120,000. If the person receiving nursing home care is single, they must spend almost all assets on the cost of care, before they qualify for aid.

Fact: Nursing homes have no legal duty to advise anyone before or after they are admitted about this myth.

Several opportunities to spend money on items other than a nursing home, include home improvements, debt retirement, a new car and funeral prepayment. An elder law attorney will know how to use a Medicaid-compliant annuity to preserve assets, without spending them on the cost of care, depending on state law.

There are people who say that an attorney should not help a client take advantage of legally permitted methods to save their money. If they don’t like the laws, let them lobby to change them. Experienced elder law and estate planning attorneys help middle-class clients preserve their life savings, much like millionaires use CPAs to minimize annual federal income taxes.

Myth Two: The nursing home will take our family’s home, if we cannot pay for the cost of care.

Fact: Nursing homes do not want and will not take your home. They just want to be paid. If you can’t afford to pay, the state will use Medicaid money to pay, as long as the family meets the eligibility requirements. The state may eventually attach a collection lien against the estate of the last surviving homeowner to recover funds that the state has used for care.

A good elder law attorney will know how to help the family meet those requirements, so that the adult children are not sued by the nursing home for filial responsibility collection rights, if applicable under state law. The attorney will also know what exceptions and legal loopholes can be used to preserve the family home and avoid estate recovery liens.

Myth Three. We’ve promised our parents that they’ll never go to a nursing home.

Fact: There is a good chance that an aging parent, because of dementia or the various frailties of aging, will need to go to a nursing home at some point, because the care that is provided is better than what the family can do at home.

What our loved ones really want is to know that they won’t be cast off and abandoned, and that they will get the best care possible. When home care is provided by a spouse over an extended period of time, often both spouses end up needing care.

Myth Four: I love my children equally, so I am going to make all of them my legal agent.

Fact: It’s far better for one child to be appointed as the legal agent, so that disagreements between siblings don’t impact decisions. If health care decisions are delayed because of differing opinions, the doctor will often make the decision for the patient. If children don’t get along in the best of circumstances, don’t expect that to change with an aging parent is facing medical, financial and legal issues in a nursing home.

Myth Five. We did our last will and testament years ago, and nothing’s changed, so we don’t need to update anything.

Fact: The most common will leaves everything to a spouse, and thereafter everything goes to the children. That’s fine, until someone has dementia or is in a nursing home. If one spouse is in the nursing home and receiving government benefits, eligibility for the benefits will be lost, if the other spouse dies and leaves assets to the spouse who is receiving care in the nursing home.

A fundamental asset preservation strategy is to make changes to the will. It is not necessary to cut the spouse out of the will, but a well-prepared will can provide for the spouse, preserve assets and comply with state laws about minimal spousal election.

When there has been a diagnosis of early stage dementia, it is critical that an estate planning attorney’s help be obtained as soon as possible, while the person still has legal capacity to make changes to important documents.

The important lesson for all the myths and facts above: see an experienced estate planning elder law attorney to make sure you are prepared for the best care and to preserve assets.

Reference: The Sentinel (May 10, 2019) “Five myths about nursing home costs and estate planning”

Don’t Neglect Planning for Long-Term Care

“As people live longer, the retirement population grows and health care costs climb, long-term care is a critical component of family financial planning.”

If you don’t have a plan for long-term care, welcome to the club. However, you may not want to be a member of this club, if and when you need long-term care. A recent report from the U.S. Department of Health and Human Services found that people age 65 and older have a very good chance—70%—of needing long-term care. Despite this, most people are not putting plans in place, according to an article from Westfair Online titled “Keybank poll reveals clients aren’t planning for long term care.”

This is true for people with assets exceeding $1 million and for people with more modest assets. In a study by Keybank, fewer than a quarter of high net-worth clients had plans in place for long-term care. This poses real financial risks, to the individuals and their families.

Consider the costs of long-term health care. One study from Genworth Financial reports that in 2017, the national median cost of a home health aide was roughly $49,000 a year, assisted living facilities could cost $45,000 (that’s not including medical services), and a private room in a nursing home came close to $100,000 annually. Costs vary by region, so if you live in an expensive area, those costs could easily go much higher.

Why don’t people plan ahead for long-term care? Perhaps they think they will never become ill, which is not the case. They may think their health insurance will cover all the cost, which is rarely the case.  They may believe that Medicare will cover everything, which is also not true.

Everyone’s hope is that they are able to be at home during a long illness, or during their last illness. However, that’s often not a choice we get. This is a topic that families should discuss well in advance of any illness. Talking with family about potential end-of-life care and decisions is important for setting expectations, delegating responsibilities and avoiding unpleasant surprises.

The other part of a long-term care discussion with family members needs to be about estate plans and decisions about the disposition of assets. Everyone should have a will, and all information including deeds, trusts, bank and investment accounts and digital assets should be discussed with the family. You’ll also need a power of attorney and health care proxy to carry out your wishes. An experienced estate planning attorney can help create an estate plan and facilitate discussions with family members.

Long-term planning is an on-going event. Life changes, and so should your long-term care plan, as well as your estate plan. You should also keep communications open with your family. They will appreciate your looking out for them before and after any illness.

Reference: Westfair Online (Sep. 7, 2018) “Keybank poll reveals clients aren’t planning for long term care”

The Basics About Caring for a Senior Parent

“The best time to plan for the care of an aging loved one, is before they need to be cared for. Here’s what you need to know to get started.”

The reversal of roles happens when children become the caregivers of their aging mothers and fathers. In some families, it’s an easy transition, based on an affectionate understanding by children and parents that this is the natural course of life. However, it’s not easy for everyone, says Connecticut Magazine in the article “Senior Caregiving 101.”

The very idea of being in charge of the people who taught you how to tie your shoes and drive a car can be emotional. Therefore, many people put off having the talk about caregiving, until an emergency presents itself. That’s not a good plan. Those of us in our 40s, 50s, and 60s will at some point need to be involved in taking care of a parent, including their finances, living arrangements, legal issues and medical care.

Where to start? Take it one step at a time.

Begin with a conversation about these issues, long before anyone is sick. Getting started in a crisis leads to increased anxiety and sometimes outright panic.

If you are worried that your parents or siblings will think you are after their money, think again. How you approach these topics will make the difference. Once a caregiving plan, legal and financial matters are addressed, you’ll all feel more comfortable. Start with a simple thought: “I/We want to make sure that your wishes are respected.”

Is there a lot of paperwork? Yes and no. By preparing in advance, you avoid digging through a scavenger hunt for insurance policies and bills and wills. You’ll know where the documents are and will be free to focus on the important things, such as taking care of and spending time with your aging parents.

You’ll need to have a Power of Attorney prepared. A Durable Power of Attorney means that the Power of Attorney will remain in effect, so the appointed agent may continue acting, even if the principal becomes mentally incapacitated. Power of Attorney can be limited or broad. However, it’s a good idea to build in periodic reports, as a system of checks and balances.

You’ll also need an advance directive. This is a document that protects an individual’s right to refuse medical treatment or to request treatment, if they are not able to make decisions on their own. Depending on the person’s needs, they may need a living will, a health care representative, designation of a conservator and an anatomical gift declaration. This is needed, if they want to make an “anatomical gift,” which is also known as an organ donation.

A will should also be prepared with the help of an estate planning attorney. An executor needs to be named. However, it’s also important that any accounts with beneficiary designations be checked to make sure that they reflect your parent’s wishes. Any beneficiary designations supersede the will and there’s no way to undo that. If they haven’t looked at their life insurance policies in decades, it’s time for a review.

Reference: Connecticut Magazine (Nov. 23, 2018) “Senior Caregiving 101”

Seniors Not Diligent About Long-Term Care Planning

“When individuals plan ahead for long-term care, they can better secure their own future, while reducing financial burdens on their friends and family.”

Here’s an eye-opener: a recent survey from the Harris Poll on behalf of One America asked more than 2,000 adults, if they’d had any conversations about long-term care with friends, family members, spouses or partners, health care professionals, financial planners, insurance agents, estate planning attorneys, clergy, accountants or anyone else about preparing for the possibility that at some point they may need long-term care.

Doesn’t sound like anyone was left out here, does it?

Nearly four in 10 people 65 years and older, who you would think would be more aware of this issue, said they had not. The Harris Poll says this response is similar, when asking that same question of American adults.

The problem is this: roughly 70% of all Americans can expect, at some point in their lives, to have a long-term care need, according to the U.S. Department of Health and Human Services. For 20% of them, conditions like Alzheimer’s and other forms of dementia, Parkinson’s disease and other chronic conditions will lead to situations where they need long-term care.

Planning ahead for this very likely scenario can make it less of a strain on assets and reduce the burden of care on family members and loved ones.

Not surprisingly, wealthier people are more likely to report having engaged in a long-term planning conversation. However, even of those who do, only a small group have moved forward to have a conversation with a financial planner or insurance agent.

It’s important to have these conversations and take the necessary action without delay, so that assets can be protected, and the correct care can be received without financial pressure.

Asset-based protection is a solution that may be more within reach than most people think. This is a critical conversation to have with the right professionals, especially for people who are near retirement.

This is also a conversation that should be part of your estate planning. Long-term care planning protects the individual, the family and the family’s assets. When you meet with your estate planning attorney to create your estate plan, or if you are having regular meetings to review or update your plan, discuss how long-term care is addressed.

Reference: Plan Advisor (Oct. 3, 2018) “Long-Term Care Planning Neglected by Many Older Americans”

Caretaking for an Elderly Relative Comes with a Cost

“You can’t put a price on filial affection, but the cost of being responsible for a parent or grandparent may run a lot higher than you’d expect.”

The family member who becomes a primary caregiver for a loved one is doing a wonderful thing, says The Motley Fool in the article “The High Cost of being an Elderly Relative’s Caregiver.” However, they should go into this relationship knowing what the cost will be in terms of time, energy, emotions and money. That includes a frank conversation with other family money, which is not an easy discussion to have.

Caregivers spend about $7,000 a year out of their own money on caregiving. Paying for rent, utilities, food, clothing or medical expenses all adds up. If you don’t live nearby, the cost of travelling creates additional costs.

Caring for someone with dementia? Double that amount.

Being able to access the financial resources of the person you are caring for, is fraught with problems. First, are you able to do that? Second, will there be any accusations of elder financial abuse? If there are siblings who are not involved with the care, will they question those expenses?

Most of the time, there’s one person in the family who takes control. If the loved ones have not done any planning, they need to designate who is going to be the power of attorney and who is going to manage the estate, when they’re gone. It should ideally be one person who is running things. However, the financial burden should never fall on any one person. Find ways in which everyone can pitch in.

You’ll need to know about any benefits the person is receiving. If they are a veteran, what will they be eligible for through Veteran Aid and Attendance benefits? Most people don’t know about those benefits, but they may be available.

If the person you are caring for is still able to do so, make sure to have the caregiver designated as a power of attorney. Contact the banks, utilities, and others where bills are being paid to ensure that they understand that a family member has been given authorization to deal with their accounts. Sometimes a phone call will do, but sometimes documents need to be prepared.

Find the different sources of income to make sure you are maximizing what the person has before the family starts pitching in. What if they have a long-term care insurance policy but the kids don’t know about it? Get all the information before you start spending.

Speak with an estate planning attorney and plan for incapacity in advance. Do an audit of the person’s financial resources, the benefits that may be available and any insurance policies they own. The estate planning attorney will be able to guide you through the process.

Reference: The Motley Fool (Sep. 13, 2018) “The High Cost of being an Elderly Relative’s Caregiver”

Self-Directed Home Care? Could It Work for You?

“Rather than hewing to the old model of first using a laundry list of home health agencies and then moving to assisted living in facilities, self-directed programs allow people to customize their care in home, even giving them freedom to hire caregivers directly.”

There are programs that cater to seniors who would prefer to stay at home, says Next Avenue in the article “Does Self-Directed Long-Term Home Care Make Sense for You? Many retired Americans with disabilities don’t know that they have options and their adult children don’t know either.

When one woman sought long-term care for her 83-year-old father, she knew the options because she was a long-term care researcher for AARP’s Public Policy Institute. She’s been examining how older Americans can “self-direct” their own care, choosing from several options they can receive in their own homes.

Several states now provide innovative strategies to provide long-term care at home. They involve “person-centered” choices to Medicaid patients. Each state has these programs, although they vary in quality and scope.

One Texas woman had relied on home health care agencies. However, she found them inflexible and unreliable. She switched to her state’s self-directed program and found that by scheduling and paying her home-care providers as she wished, the services were provided to her liking.

A study by Matematica Policy Research found that people who were able to take charge of their care were more satisfied and experienced equally good or better outcomes. The idea of choosing your own mode of long-term care is an evolving trend. There are now more than one million people in more than 200 self-directed Medicaid and Veteran directed programs nationwide. Enrollment in these services has increased by more than 40% since 2011.

Self-directed programs are not for everyone, because they require the ability to manage the care and vet caregivers. Someone who is too ill or suffering from mental incapacity may not be able to handle this.

You’ll need to know what services are available locally before making a choice. For example, when is adult day care an option? How do you find a home care specialist who can do anything from basic homemaking to providing in-home nursing care?

The other drawback is that self-directed services are typically offered only through veterans and state Medicaid programs for low-income participants.

Most Americans who need long-term services must still pay for it themselves. You’ll need a family member with the tenacity and time or you can hire a geriatric care manager who will be able to determine needs and set up a care management plan. That person can help select the right professionals and coordinate services.

It may take some extra work, but the comfort of being at home is, for many, priceless.

Reference: Next Avenue (Aug. 13, 2018) “Does Self-Directed Long-Term Home Care Make Sense for You?”

A Happy Retirement Takes Planning

“Forget finances, you’ll never be ready to retire, unless you've thought through exactly what you want your next chapter to be like.”

In the past, people usually retired when they reached 65. They stayed near their family homes and died after just a couple of years. We now see retirement very differently.

Some folks are now working well into their 70s or even 80s at their current job or at a new position. Some seniors continue to work full time, and others work part-time, with time for vacation trips and leisure activities in their routine. Some people remark that they’re busier now, than when they worked full time.

Kiplinger’s recent article, entitled “The Emotional Side of Retirement Planning,” explains that the majority of people who are happily retired, spent a lot of time thinking and planning for it.

People in their 60s should be thinking about retirement. While most have started to make plans, others have trouble formulating a strategy. Nevertheless, everyone wants to know whether they can afford to retire. The answer is usually “that depends.” It depends on the answers to some questions like the following:

• What do you see yourself doing your first week of retirement and how does that feel?
• If you’re married, how does your spouse feel about retiring?
• Do you think you’ll stay in your home or downsize?
• Do you want to live in warm weather or a cooler climate?
• How’s your health?
• Do you want to leave a legacy for your family or spend your money now?

Figure out what your retirement looks like. Before you consider whether you can afford to retire, check where you are both psychologically and emotionally. If you’re not ready mentally, then boatloads of money won’t make you 100% happy in retirement. It’s not unusual for people these days to spend 15-20 years in retirement.

The Stages of Retirement

Many people first think of retirement like it’s a long vacation. Some return to school and take fun courses, change professions or find new hobbies and interests. Many new retirees do more traveling or get involved with church or charities. But after the novelty of retirement declines, many people gravitate to a slower and more settled lifestyle.

Physical health may start to decline, and at some point, many aren’t able to live on their own and require assistance. Some try to stay in their homes with help, some go to assisted-living facilities and others enter nursing homes. Everyone has a distinct set of circumstances, and decisions must be made on an individual basis. Available finances impact how, when and where someone retires. With more resources, there will be more options. However, every potential retiree needs to have a well-thought-out plan in place that makes sense for them financially and emotionally. Speak with an elder law attorney about creating your game plan.

Reference: Kiplinger (May 2017) “The Emotional Side of Retirement Planning”

Nursing Home Costs in 2016 in Torrance, CA

Every year the insurer Genworth conducts a study of the costs of nursing home care. While costs have risen in 2016, the rate of increase has actually slowed.

Elder Law Answers has recently written about this year's Genworth study concerning the costs of nursing home care in "Nursing Home Care Costs Are Only Slightly Higher in 2016." The report contains some good news and some bad news.

Nursing home costs are higher in 2016 than they were in 2015. However, costs rose less dramatically than they did from 2014 to 2015.

In 2016 the average cost of a private room is $92,378 a year, which is an increase of 1.24%. Semi-private rooms cost $82,175, which is an increase of 2.27% from 2015. Both increases are lower than last year when costs rose 4.2% and 3.8%, respectively.

Other costs, such as assisted living facilities and home health aides also rose slightly in 2016. However, the cost of adult day care actually decreased.

One troubling aspect of the study is that Americans continue to underestimate the costs of long term care by as much as 50%. However, that is just an average. A total of 30% of Americans believe that long-term nursing home care will cost less than $417 a month, which is not even a quarter of the monthly cost for a home health aide.

Contact an elder law attorney about your options for long term care and how best to prepare to pay the costs.

Reference: Elder Law Answers (May 12, 2016) "Nursing Home Care Costs Are Only Slightly Higher in 2016."

The Dangers of Elders' Hoarding

In addition to health hazards elderly hoarders often face eviction and expensive clean-up bills.

In the last few years the problem of hoarders has been brought to the public's attention thanks to television shows about the people with the issue. Hoarders are people who collect and keep everything. Their homes become so full of stuff that it is impossible to clean.

Often it is impossible to even walk around except by following narrow paths through the home.

Recently, Next Avenue had a story about one elderly hoarder and the problems that has caused for his family in "The Painful Costs of Elder Hoarding."

In this case a Florida man was living in a mobile home retirement community. The homeowner's association threatened eviction because of everything spilling over from inside to outside of the home. The cost to his family for cleanup was $4,000.

It was then discovered that the inside of the home was in even worse state and contained many health hazards for an elderly person. Cleaning up the inside of the home by professionals came at an estimated cost of $15,000, which the family was unable to afford.

Fortunately, the man's air conditioning unit broke and the family was able to convince him to do some cleaning in exchange for a new air conditioner.

Hoarding by the elderly is a serious problem that does not have any easy solutions.

If you have a family member with the problem, contact an elder law attorney or an elder advocacy group to see what resources are available in your area to help.

Reference: Next Avenue (March 23, 2016) "The Painful Costs of Elder Hoarding."