Archive for September, 2008
Posted by Jerrold Bartholomew on September 19, 2008
Many veterans are unaware of the Aid and Attendance Pension that is available to help them with their medical expenses, which include the cost of assisted living. Some veterans are simply unaware of this benefit. Others have been told that they do not qualify based on “having too much money.” It is important to understand the scope of the Aid and Attendance pension as a starting point. It is also important to realize that veterans who meet the service requirement and who have significant, reoccurring medical expenses can be eligible for this valuable and well-deserved benefit with proper estate planning.
The aid and attendance pension is available to veterans who served during a time of war. It is not necessary to have participated in combat, but simply to have been in the military during a time of war. In addition to the service requirement, it is also necessary to be medically eligible and to meet the income and asset test. Read the rest of this entry »
Posted in Asset Protection, Estate Planning, Pre-Planning for Long Term Care, Transition to Nursing Home / Medicaid | Tagged: Assisted Living, Financing Assisted Living Costs, Michigan Elder Law, Michigan Estate Planning, veteran's benefits | No Comments »
Posted by Jerrold Bartholomew on September 17, 2008
Question: I purchased an annuity in 2007 in the hope that it would be protected from nursing home costs. I have heard some things in the news that make me wonder whether that money will have to go to the cost of nursing home care. What is the truth?
Answer: By itself, an annuity is either an asset, in which case it will be subject to the asset test for Medicaid qualification or an income stream, in which case it will be subject to the owner’s monthly patient pay amount. There is nothing about an annuity that protects it from the cost of nursing home care. But annuities can be valuable tools in asset protection planning.
Exactly how the annuity is treated will depend on whether the annuity has been annuitized (turned into a monthly income stream). As noted in Wikipedia:
There are two possible phases for an annuity, one phase in which the customer deposits and accumulates money into an account (the deferral phase), and the annuity phase in which the insurance company makes income payments until the death of the customers (the “annuitants”) named in the contract. It is possible to structure an annuity contract so that it has only the annuity phase; such a contract is called an immediate annuity. Annuity contracts with a deferral phase are similar to bank CDs and have a growth phase prior to distribution of income, and are called deferred annuities. The newest incarnation is the fixed, equity indexed product which can be either a fixed annuity or pure life insurance.
Annuities in the deferral phase would be treated as an asset and accordingly subject to either the $2,000.00 asset limit for individuals or the more complex rules for spouses.
This situation is complicated further by the new rules under the Deficit Reduction Act that requires you to name the state of Michigan as a beneficiary in order to avoid having the annuity treated as a gift and subject to a penalty period.
Does this mean that annuities cannot be used to shelter assets from the cost of long-term care? No. There are still viable methods of planning with annuities, but a successful outcome will require a thorough understanding of the rules for Medicaid qualification. It makes sense to have annuities reviewed by an elder law attorney prior to purchase. If you have already purchased an annuity and have questions about your exposure to the cost of long-term care, it makes sense to have your annuity contract reviewed by an elder law attorney.
Posted in Annuities, Asset Protection, FAQ, Financing A Nursing Home Stay, Medicaid Qualification, Michigan Elder Law | No Comments »
Posted by Jerrold Bartholomew on September 17, 2008
Posted in Michigan Elder Law | No Comments »
Posted by Jerrold Bartholomew on September 16, 2008
Mary Ellen Geist, formerly a high-powered New York radio journalist, has written about her experiences as a caregiver for her father. Her book, Measure of the Heart, tells her story of returning home to Michigan to care for her father suffering from Alzheimer’s. MSNBC recently interviewed Mary (video here) and provided a number of excerpts from her new book here.
Perhaps the most stunning aspect of her story is her first-hand account of the breadth of the care-giving generation. Statistics show that the population with Alzheimer’s or some other disabling condition is increasing with the aging of the population. The consequence is that the number of caregivers is also increasing. As Mary Ellen Geist writes:
It is safe to say that each day in the United States dozens of daughters and sons are contemplating transferring jobs or quitting them altogether to respond to the needs of aging parents.
She describes a hidden community of caregivers who know each other at first sight:
We find each other easily in crowds. The daughters — we look each other in the eye, as if to ask, Where’s your husband? Where are your children? Are you single, too? Did you leave your life in a big city to come home to help your parents, too?
We often have unkempt hair, no makeup, and a look of exasperation in our eyes. We are trying to hide the fact that we have just wrestled our parents into tennis shoes after coaxing them to finish their cereal and explaining to them what pills are and why they have to take them, and where we are going today. I see faces that look like my mother’s that seem to say, This shouldn’t be happening to me. I don’t deserve this. This was supposed to be the best time in our lives….
Mary Ellen Geist seems to be at her best when she relates how the time with her father is redeemed. Helping him to through his illness has its own unexpected, bittersweet rewards:
He’s always so glad to hear about the history of our family, and each time it is brand new. After I tell him that each of us went to college and what has transpired since then in our lives, he says, “Aren’t we lucky?”
Indeed, the title of the book is taken from the transformation of her own values and outlook that has taken place since she gave up her city life and moved back home to be with her family:
Some of us realize that we are coming home not only to help do the remembering for our Alzheimer’s-afflicted parents, but also to remember something very important about ourselves. We are coming home to learn how to measure our lives by new standards that we’ve never explored before, to measure our lives in a different way. Instead of defining ourselves by our careers, we’re defining ourselves by the amount of love our hearts can hold.
Posted in Alzheimer's, Caregiving, Disability Planning, Michigan Elder Law | Tagged: Alpena Elder Law, Alzheimer's, Bay City Elder Law, Detroit Elder Law, Flint Elder Law, Michigan Elder Law, Michigan Estate Planning, Oakland County Elder Law, Saginaw Elder Law | No Comments »
Posted by Jerrold Bartholomew on September 7, 2008
Drew Sygit, a certified mortgage specialist from the Lending Edge Team in Rochester Hills, Michigan sent me some interesting thoughts regarding the government takeover of Fannie Mae and Freddie Mac over the weekend. Drew offers several helpful points:
- Look for mortgage-based lending standards to become even stricter in the coming months.
- Look for increased flexibility in workouts and mortgage rehabilitation for distressed homeowners. Cash flow means everything under the present circumstances and policies geared toward keeping people in homes and making some payment may become more widespread. Drew explains that the irrational policies of the past that left properties vacant when the homeowner could have made substantial partial payments were largely a consequence of privity of contract. Going forward from the takeover, it appears possible that partial forgiveness of debt or debt-restructuring will be considered in order to keep people in their homes and keep some cash moving.
- The federal takeover is calculated to produce stability in the real estate and lending markets.
Drew Sygit’s complete email can be read in pdf here.
The fact that previous policies protected the contractual rights of the purchasers of mortgage debt on the secondary market makes me wonder whether the new policies have the potential to harm the purchasers of mortgage backed securities (MBS)—like pension funds and insurance companies. In other words, it appears likely that the mortgage meltdown will expand to other financial markets. The question for most seniors is whether the failure of Fannie and Freddie will be significant enough to impact their savings in life insurance products like annuities or whole life insurance. Comments are open.
Posted in Annuities, Asset Protection, Detroit Elder Law, Estate Planning, Michigan Elder Law, Mortgages, financial planning | Tagged: Estate Planning, Elder Law, financial planning, Mortgages, Financial, Investments, Pension, Fannie Mae Takeover | No Comments »
Posted by Jerrold Bartholomew on September 4, 2008
Many seniors receive group health insurance coverage from their spouse’s retirement plan. What many seniors don’t realize is that losing one’s spouse can also mean losing that group health insurance coverage. For seniors on a fixed income, the additional health insurance premium can be an unpleasant surprise. This article from AARP explains that there are several options when group health coverage is lost. First, check into COBRA coverage. It might be possible to extend the less expensive group policy that was available under your spouse’s employer. Second, your rights under HIPAA may allow you to continue coverage from one group policy to the next. Third, it may be that you belong to an organization of some kind that will allow you to get group coverage, such as a local chamber of commerce. If all else fails, you may need to get individual coverage. Be sure to check all of your options and to speak with an insurance agent that you trust.
The loss of group coverage for health insurance could have a significant impact on your cash-flow and monthly budgeting in retirement. Your estate plan should take into account the possible need for individual health coverage in the future and the anticipated costs of meeting that need.
Posted in Estate Planning, Health Insurance, Insurance | No Comments »
Posted by Jerrold Bartholomew on September 2, 2008
Estate recovery has been permitted under the Federal law since 1965. In 1993, the Federal law was changed to require states to have some form of estate recovery. Since that time, many different kinds of estate recovery programs have been enacted in different states. Michigan became the last state in the union to enact estate recovery when it passed an estate recovery law in September of 2007. Despite being tremendously unpopular, the estate recovery law passed in Michigan during the state’s budget crisis in the fall of 2007.
There are probably two reasons why Michigan adopted estate recovery. First, with the state budget showing severe deficits, law-makers were interested in any possibility of increased revenues. Second, the Federal government was threatening to deny money to fund Michigan’s Medicaid program because Michigan had failed to comply with the 1993 mandate to enact some form of estate recovery. The loss of matching funds from the Federal government would have been a catastrophic blow to Michigan’s already ailing budget.
Whether estate recovery will do anything to balance Michigan’s budget is far from clear at this point. Estate recovery programs are costly to administer and the recovery is often meager. It is hard to say whether recovering an estimated 5% will be worth the trouble:
The Mackinac Center for Public Policy has estimated that Michigan could actually see a savings of up to $85 million per year if it implemented an estate recovery system, which was based on collections nationally from 2004 that totaled $362 million out of the $45.8 billion spent on nursing home Medicaid recipients.
“Oregon had the second highest rate of collection at 5.8 percent, or $13 million of its $238 million Medicaid nursing home care bill. Given the $1.7 billion Michigan spent on Medicaid nursing home care, a 5 percent recovery rate would save taxpayers $85 million,” wrote TaraLynn Velting, an estate attorney with Garan Lucow Miller in Grand Rapids and an adjunct scholar with the Mackinac Center.
There are always unintended consequences to laws that seek to increase revenues. The enactment of estate recovery is likely to contribute to anxiety among seniors and may actually result in more extensive Medicaid planning. Protecting a home from estate recovery often requires a combination of strategies that are only available to families who are proactive and begin the planning process sooner to avoid risk to the home. The net impact of estate recovery could therefore be an increase in the number of people receiving long-term care Medicaid.
Posted in Ann Arbor Elder Law, Detroit Elder Law, FAQ, Medicaid Qualification, Michigan Elder Law, Nursing Home, Roscommon Elder Law, Saginaw Elder Law | Tagged: Estate Planning, Elder Law, Estate Recovery, medicaid planning, Michigan Elder Law | No Comments »
Posted by Jerrold Bartholomew on September 1, 2008
Estate recovery is a state program created to recoup the costs of providing care to Medicaid long-term care recipients. Once a Medicaid recipient passes away, the state uses a variety of legal processes to take the remaining assets of that Medicaid recipient to the extent of Medicaid benefits provided. The state’s ability to take assets is not unlimited and may be subject to a variety of allowances provided in other parts of the state law. For most people, the biggest worry regarding estate recovery is that the state will take the family home.
Posted in Detroit Elder Law, Estate Recovery, FAQ, Flint Elder Law, Medicaid Qualification, Roscommon Elder Law, Saginaw Elder Law, Technical, Your Home | Tagged: Estate Planning, Nursing Home, Estate Recovery, Michigan Estate Recovery, Financing A Nursing Home Stay, FAQ: Medicaid Qualification, FAQ: Elder Law, Exempt assets | No Comments »