Kansas & Missouri Estate Planning

Squeezing The Sandwich Generation

As our population ages, more Americans find themselves in the role of caregiver for their elderly parents... often before they have completely graduated from parenting their own children.

Clients who care for aging parents need more than financial and tax help from advisors.

A recent issue of Financial Advisor Magazine encourages trusted financial advisors to help their clients with caretaker challenges. Advice includes helping ensure all necessary legal documents are in order (for both the caretakers and their charges), finding financial assistance to hire help, and investigating the role of long term care insurance.

Reference: Financial Advisor Magazine (October 2011) "Caretaker Challenges."

Tax Breaks for Caregivers Worth A Look

If you have had to arrange for a caregiver for an aging loved one, then you have some appreciation of the enormity of the costs often involved. It's important, then, not to overlook tax breaks that just might help reduce the economic pain.

A recent article from Forbes offers a helpful reminder. The costs of a caregiver, under certain circumstances, can be partially tax deductible as medical expenses. After all, they are, in fact, very important and very costly medical expenses. However, conditions for taking the deduction essentially amount to proving that fact to the IRS.

So, what are some of these key conditions?

For one, you must document a care regimen for someone who is chronically ill. This means a licensed health care practitioner has to prescribe it. Unfortunately, it can't be up to your own discretion, but such prescriptions and suggestions are common for aging persons, especially when they suffer from dementia.

Next, there is an expense threshold. Medical expenses are deductible only to folks who itemize, and then only to the extent that the expenses exceed 7.5% of adjusted gross income. Itemizing taxes can be a little more of a burden, but with the associated medical costs involved it is generally easy to qualify. Caregiving expenses are generally rather expensive and include the wages, employment taxes, and actual medical costs along with the associated living costs from meals to even costs of rent, if live-in care is needed.

Finally, this deduction is not without caveats and the IRS watches those who try to abuse it. For example, if the cost of the caregiver is covered by insurance (e.g., long-term care or medical insurance) then you can't double-dip and claim both costs.

This is a complicated issue. There are many moving pieces.

Fortunately, the Forbes article shares some anecdotes from some illustrative cases and tax court challenges. Nevertheless, if you're using a caregiver now (or will in the future), don't overlook this potentially valuable deduction.

Reference: Forbes (December 8, 2011) "Tax Breaks For Caregiving Expenses Help Sandwich Generation"

When Medicine Becomes a Menace

Seniors are increasingly reliant upon their medications. Literally. It's a fact of life.

However, with so many different kinds of medications to do so many different things, sometimes the medications themselves can cause more harm than good. Nonetheless, according to a recent study from the Center for Disease Control, as reported here, two-thirds of drug-related emergency hospitalizations result from just four types of medications.

The four types of medicine are also very common. Listed below in order, from the greatest to the least percentage of adverse instances per drug, whether taken together or separately:

1. A blood-thinning medication called warfarin (Coumadin, Jantoven)
2. Insulin
3. Antiplatelet drugs used to prevent blood clots such as aspirin and clopidogrel (Plavix)
4. Oral hypoglycemic agents – a diabetes medicine

The most important fact, however, is that nearly two-thirds of all such cases were not just the drugs themselves; they were the result of unintentional overdoses.

It's scary to see such common medicines listed, and if you or loved ones use them there is cause to take notice, but the real lesson is awareness and care.

Bottom line: There are real consequences when care is not received properly or when an elderly person is not able to accurately gauge their medications.

Reference: USA Today (November 25, 2011) "Four Common Meds Send Thousands of Seniors to Hospital"

Filling the Medicare Doughnut Hole

There is some good news for many Medicare recipients, present and future. According to new Medicare figures, the cost of falling into the “doughnut hole” is shrinking.

The so-called "doughnut hole," as many know all-too-well, is the treacherous territory you fall into when you have spent too much of your Medicare Part D benefits to continue receiving full benefits (but not so much of your own money to qualify for "catastrophic coverage").

It's an easy hole to fall into, especially if you have a special medication. With the new health law, however, pharmaceutical companies have begun offering a 50% discount on medications to beneficiaries in the gap, and that has meant a great deal of savings.

According to the figures, the average beneficiary who falls into the coverage gap already would have spent $1,504 this year on prescriptions. Yet, with the new law, that cost fell to $901, with each individual doing better or worse depending on which medicines they use.

I thought you could use a little cheery news today.

Reference: ABC News (November 27, 2011) "AP Newsbreak: Medicare’s Drug Coverage Gap Shrinks"

Rate Of Impoverished Seniors (Nearly) Doubles

It's been fairly clear that medical expenses were becoming an immense financial drain on the elderly. If you are elderly or have an elderly loved one, then this is a given, as supported by recent census data.

As reported in Reuters, the number of poor persons hit a record high in 2010, and poverty rates among the elderly have had the steepest gain.

In fact, according to the census, a record 49 million Americans (i.e., 16 percent of the population) qualify as impoverished. When it comes to the elderly, the poverty level jumped to 15.9 percent, or roughly 1 in 6, from the previous year’s nine percent.

It’s true that the census study and methods have become a political flashpoint. However, the new analysis takes a broader look at life and includes government benefits. Previous studies used older methods that failed to account for how people maintained their standard of living.

Politics aside, it's still a sobering data. If government benefits have become that much more of the equation, then it goes a long way towards showing what's at stake in the present and upcoming political storms.

Reference: Reuters (November 7, 2011) "New Census data raise number of poor to 49 million"

Hospital-Induced Delirium Hits Seniors Hard

When the elderly visit the hospital it's simply not the same as when they were younger. No, everything is more dangerous, apparently even the medical care itself.

The New Old Age Blog at the New York Times recently discussed a danger that is all too common, but still under the radar screens of medical and the everyday worlds alike. It's the problem of elderly delirium.

Usually, when we talk about an elderly person no longer being themselves, we think of dementia. Nevertheless, another dramatic neurological problem is delirium and it is often, ironically, brought on by hospital visits. Here's what happens: When the elderly are put under such heavy medication it can generate a neurological imbalance that results in dramatic disorientation, sudden confusion, and loss of attention.

The list of medications that can have this affect is fairly long, including sedatives, sleeping pills, narcotic painkillers and some allergy, blood pressure and incontinence drugs. As a result, it's not a surprise that delirium is common.

Each year 20 percent of the 11.8 million elderly patients in hospitals develop delirium. This includes some 60 percent to 85 percent of those in intensive care on ventilation and more than half of postoperative surgical patients.

The problem is that delirium also can have long-term affects, according to recent research. In the end, many hospitals actually may be doing long-term damage to their patients. For more information and a disturbing example, read the original story here. Be sure to take a look at the checklist to help determine the difference between dementia and delirium.

Reference: The New York Times (November 2, 2011) "Another Hospital Hazard for the Elderly"

No “CLASS” Today (Or Tomorrow)

As you know, I am a big believer in private long-term care insurance. To me, it is a matter of personal responsibility. That's why Gretchen and I took out our own policies some three years ago. In life, we all make choices and we all set priorities with our finances.

For those who won't (or can't) legitimately provide for personal care in their elder years, then the government (read: Medicaid) is the insurer of last resort. And the attempt to create long-term care insurance as part of Obamacare is DOA. The numbers didn't work.

After much speculation, the Department of Health and Human Services (HHS) has pulled the plug on the CLASS part of the health law. As a recent Reuters article points out, this brings to the fore the question of long-term care insurance, both as it impacts the United States in general and each of us in particular, as potential patients in need of such care.

The CLASS act was the first attempt at establishing a public (read: government) option for long-term care insurance and that put it between the proverbial rock and a hard place. The late Senator Kennedy championed the cause. Politics aside, what torpedoed the CLASS act? Money.

According to HHS, the program would prove too costly to achieve its goal. Why? Too few healthy people would elect to pay the required premiums. But what now?

The Center for Retirement Research at Boston College notes that about one-third of the Americans turning 65 this year will need at least three months of nursing home care sometime during their lives. Presumably, however, many of these same Americans will need such care even longer (and future generations can't be expected to fare much better).

So, how we deal with long-term care as a country is yet to be seen. Regardless, since you or a loved one will likely need long-term care, the question remains: How will you pay for it?

Good news: An increasing number of people are turning to private long-term care insurance.

Is private long-term care insurance right for you or a loved one?

For many who wait too long pondering this question, their default option is the more complicated question of Medicare and Medicaid. Undoubtedly, Medicaid (the means-tested shared federal-state program) is the largest source of long-term care financing. However, last time I checked, the federal government was not exactly flush with cash and many states are operating in the red.

In the end, whatever you decide to do when it comes to paying for long-term care, the best time to make plans is yesterday. Whatever you do, be sure to seek appropriate legal counsel.

Reference: Reuters (October 17, 2011) "What’s next for long-term care after CLASS act folds?"

Medicare Enrollment Window Opens Earlier

Are you (or someone your love) Medicare eligible? If yes, then did you know the Medicare enrollment period is earlier this year?

It's Medicare season once again, but it’s early this time. Unfortunately, many seniors just haven’t gotten the message. According to a recent survey in Florida and reported through the Kaiser Health News, nearly two-thirds of seniors are unaware that Medicare enrollment is earlier this year.

The open enrollment period is now from October 15 to December 7. And that's a whole month earlier than in the past.

So, why the change? The Affordable Care Act (read "Obamacare").

Along with the accelerated enrollment period, it is hoped that beneficiaries will have their Medicare cards by the start of the New Year. Customarily, late enrollees find themselves in a bit of a pickle (i.e., without their Medicare cards) come January 1. While the start date this year is non-memorable (October 15), the deadline isn't for most Americans of Medicare eligibility age (December 7).

Of course, the enrollment period isn't the only change afoot with Medicare. Like last Medicare season, the sheer number of plans has been pared down in an effort to make selection easier.

Planning pointer: Review your anticipated medical needs (or those of your senior loved ones) to determine whether a change in plan is warranted. As a result, you could stand to save hundreds – or even thousands – of dollars. Many seniors don’t make plan changes out of habit. Accordingly, some diligent (and gentle) prodding may be in order.

Reference: The Kaiser Health News (October 4, 2011) "Changes Take Seniors By Surprise"

Government Medical Care (And Senior “Double-Dippers”)

Like old Mother Hubbard and her empty cupboards, the U.S. Government coffers are bare. So what does that mean for Medicare and Medicaid, especially for folks who dip into both programs? Government health benefits for some 9 million of the sickest and poorest U.S. citizens will come under scrutiny from the congressional "super committee" seeking to cut the nation's debt.

Are you or an elderly loved one receiving benefits from Medicare or Medicaid? If yes, then likely you already appreciate the funding problems facing Congress and its appointed "super committee" regarding the future of these programs. However, for many of today's elderly, certain changes to these programs may be both real and immediate. Consequently, careful attention must be paid to the associated political developments. One area of specific focus is "dual-eligibles."

Seniors receiving aid from both Medicare and Medicaid are so-called "dual-eligibles" (read: "double-dippers") and, as such, their benefits are under scrutiny from the super committee. In fact, changes may be in the wings, according to Reuters.

Medicare and Medicaid spend about $300 billion a year for "dual-eligibles," making them a prime target. Here's what that means in real terms: Roughly 39 percent of the Medicaid program costs and 27 percent of Medicare costs are going to 15% and 16% of program enrollees respectively - and at the same time. Of course, these patients also tend to be the ones in the greatest need, with half of them under treatment for five or more chronic conditions.

What's going to happen? As usual, that's far from clear. Many states and insurers are pushing for managed care options to handle all aspects of care. This would help reduce the present bureaucratic overlap and, hopefully, cut costs. On the other hand, there are the detractors.

The reality of dual-eligibles is likely to continue to rise in budget and debt discussions, along with a host of other little issues. What can you do? Keep a close eye (and open ear) on the decision-making process (and the decision-makers), especially if those changes may impact your health care. It probably wouldn't hurt to contact your representatives in Congress.

Reference: Reuters (September 28, 2011) "Debt panel eyes dual Medicare/Medicaid patients"

Alzheimer's: Be Prepared Now!

Living with Alzheimer’s disease is very difficult for the individuals affected, as well as their loved ones. Nevertheless, by dedicating some time to prepare personally, financially and legally early on in the diagnosis a family can know they have done everything to support their loved one to live a full life and protect their legacy.

You may not have known but September is World Alzheimer's Month. As the month comes to a close tomorrow, it's important not to forget about Alzheimer's all year long. Medical research and advocacy are vital causes to uphold. And, it is a disease that you and your loved ones might have to face directly, if you have not already. The reality of Alzheimer's or dementia striking close to home (along with some understanding and prior planning) can help you come to terms with the extensive economic toll and the unique legal ramifications.

According to a recent Forbes article, Alzheimer's is as widespread as it is demanding. Consider this: Another American citizen will develop Alzheimer's every 69 seconds. Oftentimes, the symptoms are subtle, at least initially. Some estimate that more than 13 million Americans will have the disease by 2050 and run up as much as $1 trillion in costs. Because of the progressive nature of the disease, most of the costs and problems won't develop until later on. Nevertheless, significant planning must take place at the time of diagnosis, if not anticipated beforehand.

So, what is the scope of this "significant planning"? First, you will need to secure medical care, both for now and down the road. That means fundamental financial planning needs to be addressed, to include securing government benefits like Medicare and Social Security Disability Insurance. Second, because of Alzheimer's progressive cognitive degeneration, estate planning must occur early in the process to secure and protect family assets.

Fundamentally, it's important to understand that Alzheimer's is not the same as other diseases. Through it all, competent counsel will be necessary to properly assess the needs and possibilities, as well as to ensure that everything is in place when needed most.

Reference: Forbes (September 21, 2011) "September Marks World Alzheimer's Month as Advocates Push for Early Diagnosis and Health Care Planning"