Kansas & Missouri Estate Planning

Medicaid Misunderstandings Costly

When an elderly person is ready for the nursing home, some families are entirely understanding, in agreement, and financially able. As a result, the transition happens smoothly. Unfortunately, for a far larger number of families and elderly persons, some trip to the hospital will happen in between and may even immediately precipitate the transition to nursing home care.

If that's the case, then there are important hospital and Medicare policies of which you should be forewarned. Enter "observation care" which can make for a big bill upfront and even far bigger ones down the line.

According to a recent article in the Wall Street Journal, and their sources at the Medicare Rights Foundation, the number of "observation hours" has been steadily growing for years. Tragically, such observation hours count as "outpatient services," even if the service lasts for several days (as it sometimes does with the elderly) and Medicare pays for inpatient and outpatients services in entirely different ways.

As you likely know, Medicare Part A pays for inpatient bills, so those are usually taken care of, but Medicare part B is what takes care of outpatient services. And those services can add up to a far greater cost.

It's often vital to know the distinction between the two types of services from the hospital, and yet it's also fairly difficult. Medicare advises to simply ask, but then there are certain documents such as the "Important Message from Medicare" which accompanies inpatient care, but not outpatient. Still, the hospital can switch with little to no notice.

It's actually even more important than the size of the immediate bill. Medicare will only pay for nursing home expenses if the person was admitted inpatient at a hospital for at least three days, excluding the discharge day.

For so many families that's the sole reason why it takes a hospital visit to arrange for the transition to nursing home care in the first place, but if you are put under observation or other so-called "outpatient" care, and without your notice, it can literally mean thousands of dollars out-of-pocket down the line.

Bottom line: It all hinges on hospital practice and Medicare definitions.

Reference: The Wall Street Journal (February 5, 2012) "Check Hospital Tab"

Medicare Red Tape Confuses Many Seniors

As many readers will know, it's fairly critical to understand the rules for filing for Social Security. Likewise, the rules for filing for Medicare benefits can make or break your retirement. Unfortunately, it's also fairly easy to forget about the basics of Medicare filing, as a recent article out of Reuters highlights the importance of filing earlier rather than later.

For each full 12-month period that a senior could have had coverage but didn't sign up, the monthly Medicare Part B premium jumps 10 percent. The average monthly cost of Part B coverage is $99.90, so just a few years delinquency will result in $20, $30, or more a month; that adds up, is unnecessary waste, and is permanent.

Suffice it to say that the government really wants you do sign up when it's time. But why is that difficult? Well, for one, the full retirement age for Social Security is no longer the age for Medicare enrollment. As a result, many otherwise forward-thinking people are waiting until age 67 to enroll in Social Security (for the maximum monthly benefit), but 65 is the age for Medicare.

In addition, with so few people actually leaving the workforce it's easy to forget (or fail to realize, since you’re not really retired) that it might be time for Medicare. That also can depend on the nature of your employment. For example, if you are still working at age 65 and your employer has fewer than 20 employees, Medicare is the primary payor; at companies with more than 20 workers, the employer's plan is primary.

In the latter situation, a senior can postpone filing for Parts A (hospitalization) or Part B, although many choose to enroll for Part A anyway, since it doesn't require premium payments. If you delay your Part B coverage, you can enroll without penalty when you do retire for up to eight months following that point.

The bottom line is to keep all of this on your radar, regardless whether you will be relying on Medicare. In fact, not relying on Medicare may be the source of the problem.

If you are employed it may be worth a visit with the company accountant to be sure on which side of the line the company falls, and therefore what your insurance ought to be like.

Reference: Reuters (January 20, 2012) "Big penalties await those who delay Medicare filing"

Hospice: A Medicare and Medicaid Profit Center?

Healthcare lawsuits involving the various ways the elderly can be taken advantage of turn up in the news on a (seemingly) daily basis these days. Why? Well, partly for political reasons and partly for the sheer number of egregious situations that have been created.

As an informed citizen/taxpayer, it's important to think about and understand the big picture. However, as a family member, it's vitally important to remember them for the sake of your elderly loved ones.

Consider this: A national hospice company improperly cycled patients through nursing homes and hospice with a goal of making as much profit as possible from Medicare, according to a whistleblower lawsuit announced recently.

A new legal battle has begun to churn, as recently reported at Kaiser Health News. Yet another healthcare company is being accused of taking advantage of the elderly and their families to draw the greatest yield from Medicare and Medicaid coffers. Here a large company, operating across several states, is accused of actively recruiting and cycling patients through nursing home and hospice services.

Such companies are compensated by Medicare based on the length of time patients receive care. Medicare picks up the entire nursing home tab for the first 20 days (after that the patient has to contribute), and conversely, if a patient spends too much time in hospice care, Medicare demands their money back since the patient was clearly admitted to end-of-life care under false pretenses.

Here's the rub: If you cycle between nursing home regimens and then jump into hospice care as early as possible (but not too early), Medicare will pick up the entire tab and for the maximum amounts, and that's the issue.

The legal battles, as well as the politics and economics aside, stories like these also demand a certain amount of attention since they could directly impact your family.

If you have a loved one in need of nursing home and/or hospice care, it's important that they find and receive that care… and that they not be abused by an uncaring system.

Reference: Kaiser Health News (January 4, 2012) "Lawsuit Accuses Company of Fraudulently Cycling Patients through Nursing Homes, Hospice Care."

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"

Medigap Policies Catch (Unfavorable) Attention of Congress

Are you (or a loved one) a Medicare beneficiary? If yes, then likely you already know that it doesn’t always cover all the costs in a time of crisis. That’s why there are Medigap policies.

Unfortunately, Medigap policies might just be the next thing to get the unwanted attention of Congress, according to a recent article in the Kaiser Health News.

A Medigap policy is actually a private, supplemental form of insurance to cover medical bills Medicare doesn't cover. Medigap is especially important in a crisis, since it can kick in for hospital visits that otherwise would go uncovered. Accordingly, this can prevent a financial crisis on top of a medical one.

If nothing else, a good Medigap policy offers a bit more peace of mind.

The problem some are citing against Medigap policies, from a budget perspective, is that they offer too much peace of mind and allow beneficiaries to seek medical care even when it's not absolutely necessary. As a result, this puts a strain on Medicare itself.

So, does this criticism of Medigap have any merit? It's hard to say, and it's certainly hard to quantify. In addition, it's difficult to make sense of the social safety net (Medicare) – or a private supplement to it (Medigap) – if it doesn't offer some peace of mind.

Regardless, if this Congressional "attention" touches you (or your loved ones), it's worth keeping tabs with any new developments. The original article offers the recent history of Medigap policies and the attitude of Congress regarding them.

Reference: The Kaiser Health News (November 21, 2011) "Officials Looking to Cut Federal Spending Eye Medigap Policies"

Medicare and Medicaid Dodge The Budget Bullet (For Now)

Have you heard the news? It seems the grand experiment failed. The Congressional Super Committee, charged with doing what the Congress at large could not do, has run out of time.

And, by running out of time, failed in its mission to come up with budget cuts.

So, what does that mean for Medicare and Medicaid beneficiaries?

As Reuters reports, in the event the Super Committee should fail, as it has, then automatic and sweeping cuts go into effect. For Medicare, that means a two percent cut across the board, or about $123 billion over the next decade.

Not exactly chump-change.

However, it might have been $500 billion to $700 billion in cuts, if various supercommittee arguments had prevailed.

Nevertheless, as it stands, there definitely will be a little pain, but not quite as much for individual beneficiaries. No, likely it will hit hospitals and doctors the hardest. Why? In the aggregate, that's where the money tends to end up.

Of course, we're not yet out of the woods just yet. As it became clear last summer that we'd have to wait until the winter for some kind of budget solution from Congress, it now seems that we'll have to wait for the upcoming election season. In turn, expect things to intensify even further and for budget discussions to become all the more drastic.

Ah, isn't it good to live in interesting times?

Reference: Reuters (November 22, 2011) "U.S. healthcare cuts minimal, more pain looms"

More Medicaid Asset Transfer Travails

Oftentimes, Medicaid and Medicare can be entirely necessary programs. They also can be pretty tricky to navigate, especially if you, or a loved one, fall just above the income limits.

That said, Medicare and Medicaid don’t like it when they feel you are "gaming" the system. Elder Law Answers highlights yet another case in which an elderly person was denied benefits because of improper planning.

The case in question is Hedlund v. Wisconsin Dept. of Health Services (Wis. Ct. App., No. 2010AP3070, Oct. 13, 2011). Lucille Hedlund was a Medicaid applicant who was denied benefits because she also was a beneficiary to an irrevocable trust that qualifies as an available asset, bringing her above the income threshold. It didn’t matter that the trust has been set up 17 years ago, especially because of the circumstances.

Mrs. Hedlund transferred all of her assets to her children in June 1991, with the exception of a checking account. And, on the very same day, her children put those very same assets into an irrevocable trust and named her as beneficiary. While this was pretty sneaky, it was not enough to give Medicaid the slip.

Medicaid ruled that there was reason to infer that Mrs. Hedlund had directed her children to create and fund the irrevocable trust because the plan was effected on the same day. Note: It didn’t even matter that the assets weren’t hers at the time the trust was created, since they were still "available assets" in the eyes of the court… some 17 years later when Mrs. Hedlund entered a nursing home in 2008.

Applications for Medicare and Medicaid are important and should not be taken lightly. If you, or a loved one, need to make plans for long-term care, then you need to seek competent legal counsel before you apply.

I always recommend planning for long-term care in advance. For more information on this essential subject visit the Long-Term Care Learning Center on our website.

Reference: Elder Law Answers (October 14, 2011) "Irrevocable Trust Set Up by Medicaid Applicant’s Children is Available Asset"

Decision-Making Ability Declines, As Birthdays Increase

Why do many of the most difficult decisions we face come later in life? I guess it's just fact of life. Unfortunately, we're not always at the top of our game when those decisions must be made. Therefore, it's essential to make proper plans earlier, rather than later.

According to a recent study, reported on here by the Wall Street Journal, the decline starts around age 60. The scores on a test measuring knowledge of investments, insurance, credit and money basics fell about 2% each year starting after age 60. In fact, they fell from about 59% correct for those in their 60s to a dismal 30% for those 80 and older.

What'’s almost as bad? These very people actually grew more confident in their decisions and knowledge!

Problem: These are the very same people who are attempting to sift through the messy and confusing programs like Medicare and Social Security, at the very same time they are undergoing this dramatic change in their mental agility. These also are the people who will want to take care of their loved ones in their estate plans in an era of constantly changing laws and regulations.

If you are the child of older parents, this is something to bear in mind when seeking to help them, perhaps especially when your assistance is unwanted. Likewise, as a parent, fact of life will necessitate a bit of self-understanding. And for everyone, this means that proper estate planning means getting it done earlier, rather than later.

Reference: The Wall Street Journal (October 30, 2011) "Financial Acumen Declines After 60"

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"