Kansas and Missouri Estate Planning

How do I Talk to My Aging Parents ... about Aging?

Bodies degenerate as people age.

And this is nothing new, as the Apostle Paul (aka Saul of Tarsus) observed some 2,000 years ago in 2 Corinthians 4:16-18,

¹⁶ Therefore we do not lose heart, but though our outer man is decaying, yet our inner man is being renewed day by day. ¹⁷ For momentary, light affliction is producing for us an eternal weight of glory far beyond all comparison, ¹⁸ while we look not at the things which are seen, but at the things which are not seen; for the things which are seen are temporal, but the things which are not seen are eternal.

Are you spending time with your parents over the holidays?

Maybe all or most of your family tribe is gathering at "the folks" between Christmas and New Year's.

That is how it is playing out in the Krull family this year, as we gather in Berryton, Kansas.

What a blessing.

You are enjoying yourself, but you begin to notice something is a little different this year.

Your parents are a year older, and they are not quite themselves.

You are concerned.

Should you say something?

According to a recent KARE 11 article titled “Making the best care decisions for aging parents,” you will need to have a hard conversation about aging with your parents at some time.

You should plan to do this sooner rather than later.

Why?

It will save you and your loved ones stress, money, and energy.

If your parents were to face an emergency where they required urgent care, what would you do?

You would be scrambling to make decisions.

What level of care would they need?

Who are reputable providers?

How much can you afford?

Assisted living must be paid out-of-pocket, unless you have long-term care insurance or qualify for Medicaid.

Medicare will not cover assisted living.

Without careful planning, your parents could quickly drain their resources.

Unless they have sufficient cash flow to "private pay" from their own retirement savings, the best time for your parents to apply and qualify for a long-term care policy is when they are healthy in their 40s or 50s.

Gretchen and I took out our own policy when we were age 49.

The rates are cheaper the younger you apply.

No surprise there.

In addition, the chances of developing a disqualifying medical condition increase with the number of candles on your birthday cake.

If you think your parents will require Medicaid, then you should work with an experienced elder law attorney.

Start now as Medicaid applications have a five-year look back period.

These conversations are not easy.

Come to your parents in love and do not assume they have no plans.

Ask what they desire and then see how you can help them move forward.

Be very, very careful how you approach and care for your parents ... because your own children are watching.

I leave you with a poem to enjoy and ponder, as it is appropriate for this time (and any time of year), whether thinking of your father or mother:

"What I Want"

I don't want a pipe and I don't want a watch,

I don't want cigars or a bottle of scotch.

I don't want a thing your money can buy,

I don't want a shirt or a four-in-hand tie.

If you really would like to make this old heart of mine glad,

I just want to know you're still fond of your dad.

You women folk say, and believe it I can,

"It's so terribly hard to buy things for a man!"

And from all that I've heard I am sure it must be.

Well, I don't want you spending your money on me.

The joy that I crave in a store can't be had.

I just want to know you're still fond of your dad.

Get on with your shopping: Give others the stuff!

For me just a hug and a kiss are enough!

Just come in at Christmas with love in your eye

And tell me you think I'm a pretty swell guy,

With all that for my gift I can never be sad.

I just want to know you're still fond of your dad.

- by Edgar A. Guest

Reference: KARE 11 (Minneapolis) (November 27, 2018) “Making the best care decisions for aging parents”

Are There Any Changes to Medicare Premiums in 2019?

Medicare will see some changes in 2019.

Change is a part of life, yes?

Medicare is no exception.

According to a recent Kiplinger article titled “What You'll Pay for Medicare Premiums in 2019,” people will be seeing some change$ in 2019.

Fortunately, for the most part, they are relatively small changes.

What are they?

Most seniors will pay $135.50 for Medicare Part D rather than the $134 per month owed in 2018.

About 3.5 percent of Medicare beneficiaries will pay a little less than they did in 2018.

Why?

The “hold-harmless provision.”

This applies if the cost-of-living increase for Social Security will not be enough to cover the full premium increase for those who have premiums automatically deducted from their benefits.

Higher income beneficiaries will see an increase in their premiums.

By how much?

This depends on the annual adjusted gross income plus tax-exempt interest.

If you are single, the threshold is $85,000.

If you are married and filing jointly, it is $170,000.

These individuals will pay between $189.60 and $460.50 monthly per person.

What exactly will these be?

Those with incomes between $85,001 and $107,000 (or $170,000 to $214,000 if filing jointly) will have an increase from $187.50 to $189.60 per month.

Those with incomes between $107,001 and $133,500 (or $214,001 to $267,000 if filing jointly) will have an increase from $267.90 to $270.90 per month.

Those with incomes between $133,501 to $160,000 (or $267,001 to $320,000 if filing jointly) will have an increase from $348.30 to $352.20 per month.

Those with incomes between $160,001 to $499,999 (or $320,001 to $749,999 if filing jointly) will have an increase from $428.60 to $433.40 per month.

Those with incomes of $500,000 or more (or $($750,000 or more if filing jointly) will have an increase from $428.60 to $460.50 per month.

Deductibles will also increase in 2019.

For Medicare Part A, they will increase from $1,340 in 2018 to $1,364.

For Medicare Part B, they will increase from $183 to $185.

While no one likes to pay more for anything, these Medicare increases will not break anyone's piggy bank.

Reference: Kiplinger (October 12, 2018) “What You'll Pay for Medicare Premiums in 2019”

How do I Know if I am "Retirement Ready"?

You need to evaluate your financial situation and needs before your retire.

Retirement should not be spontaneous.

It should not result from being tired of working.

You should not retire merely because you reached a certain age.

According to a recent Motley Fool article titled “Don't Even Think About Retiring Until You Can Answer These 3 Questions,” a successful retirement takes planning.

Unfortunately, fewer than 38 percent of Americans have created a long-term financial plan.

Yikes!

How do you know if you are ready to retire?

Can you delay taking Social Security?

Although you can claim Social Security starting at age 62, this can reduce your overall distributions in retirement.

How?

Your benefit will be reduced up to 30 percent of what it could be.

At age 65, you can take Social Security without any penalty.

If you can wait longer, you could actually increase your amount.

Claiming at age 70 would allow you to maximize your benefit.

Waiting for Social Security may not be the best choice for your circumstances, but for many it will be advantageous.

How long will your retirement savings last?

Start by calculating how much you will spend each year in retirement.

You should multiply this by the number of years you will likely live.

For most, you should calculate several decades.

Your savings should last you the rest of your life.

Can you pay for healthcare costs?

Your healthcare needs will only increase as you age.

On average, a retiree will spend about $4,300 on out-of-pocket expenses.

About two-thirds of this number are on premiums.

Medicare will not cover everything.

Surprise.

You will need to pay some bills on your own and/or get supplemental insurance.

Budget for this.

No one can predict the future.

You can prepare for it.

This is true for retirement.

Reference: Motley Fool (October 9, 2018) “Don't Even Think About Retiring Until You Can Answer These 3 Questions”

What do I Need to Know About Medicare at a Minimum?

It is important to understand the basics of Medicare.

Many people find Medicare a mystery.

If you are one of them, then you are not alone.

The good news?

According to a recent Think Advisor article titled “Essential Medicare Facts & Penalties Advisors Should Know on One Page,” learning the basics is not difficult.

What should you know?

You are eligible to enroll in the program if you (or your spouse) have paid Medicare taxes for at least a decade and are age 65.

What if you are younger than age 65?

You must either have an end stage renal disease or be disabled.

What is the deadline for Medicare enrollment?

You are eligible beginning the first day of the third month preceding you birth month in the year you turn age 65.

It will end on the last day of the third month following the month you were born.

There will be a separate “later-enrollment” penalty for Part B and Part D.

You should know are four parts to Medicare.

What are they?

Medicare Part A

For most people, this plan is free.

What if you did not enroll in Medicare taxes?

You may be able to receive it for free if you meet certain qualifications.

What are they?

One way is if you are a kidney transplant patient or on kidney dialysis.

The other is if you have been entitled to Railroad Retirement Board disability or Social Security for 24 months.

Medicare Part B

You will be required to pay a premium for Medicare Part B.

This payment is deducted from your Social Security retirement payment.

What if you have not yet opted to receive your Social Security benefits?

Medicare will simply send you a bill.

Medicare Part C

Another name for this is the Medicare Advantage plan.

A Medicare-approved insurer must issue this plan.

These will typically offer those services covered in Part A and Part B.

They often will provide coverage for prescription drugs, dental, vision, and hearing.

If you have a Part C plan, will you still need to pay for Part B?

Yes, you will.

Medicare Part D

This plan will cover prescription drugs.

Medicare creates a tier list for drugs.

Higher tiers will typically cost more than the lower tier drugs.

Begin planning now to make enrollment easier.

Remember: “An ounce of prevention is worth a pound of cure.” When making your financial, tax and estate plans, do not go it alone. Be sure to engage competent professional counsel.

For more information about estate planning in Overland Park, KS (and throughout the rest of Kansas and Missouri), visit our estate planning website and be sure to subscribe to our complimentary estate planning e-newsletter while you are there.

Reference: Think Advisor (July 31, 2018) “Essential Medicare Facts & Penalties Advisors Should Know on One Page”

What are Some "Surprising Gaps" in Medicare Coverage?

Medicare does not cover everything.

Medicare.

Are you expecting it to cover all of your health care needs?

If so, you are wrong.

According to a recent Kiplinger article titled “7 Things Medicare Doesn't Cover,” Medicare Parts A and B pay for medical care if you are age 65 or older, but they do not cover everything.

Most people can sign up for them three months before turning 65.

What does Medicare cover?

Part A will cover care in skilled nursing facilities, impatient hospital stays, certain home health care, hospice care, and surgery.

Part B is essentially medical insurance for outpatient care, hospice care, and preventative care.

Some medical supplies and equipment are also included.

What does it not over?

Prescription Drugs

Any outpatient drugs are not covered.

Instead, you will need to purchase either a Medicare Advantage plan or a Part D prescription-drug policy.

You can sign up for these when you enroll.

You can also update these policies during open enrollment.

Long-Term Care

Yes.

Medicare will cover some skilled nursing with limitations.

Custodial care is not covered.

What does this mean?

If you need help with daily tasks like bathing or dressing, Medicare will not cover these costs.

Instead, you should plan ahead and purchase a long-term care insurance policy or make other arrangements to cover these costs.

Deductibles and Co-Pays

Deductibles and Co-Pays are out of your own pocket.

What are these costs?

This year your Part A deductible would be $1,340 before coverage starts.

You will also be responsible for paying a portion of long hospital stay costs.

How much would this be?

It would be $335 per day for 61-90 days in the hospital.

If you are an in-patient longer than this, then you will pay $670 per day.

Medicare will only help pay a total of 60 days after the 90-day limit.

This is for a lifetime.

What does this mean?

If you stay in a hospital any longer, the entire cost must be paid by you.

Although Part B usually pays 80 percent of x-rays, lab tests, and services provided by your doctor, you will pay the remaining 20 percent after the 2018 deductible of $183.

How can you get help with the other portion?

You can get a Medigap policy or a Medicare Advantage plan.

By purchasing a Medigap policy within six months of signing up for your Part B plan, you cannot be rejected by insurers for pre-existing conditions.

The Majority of Dental Care

Routine dental care like checkup visits, fillings, teeth cleaning, dentures, or tooth extractions are not covered.

A Medicare Advantage plan does cover some costs for x-rays or basic cleanings.

Typically, there is an annual coverage gap.

How much?

About $1,500.

Another option would be to purchase a dental discount plan or another dental insurance policy.

Basic Vision Care

Typically, Medicare does not cover eye exams or glasses.

Is there an exception?

Yes.

It may cover those if associated with diabetes or after cataract surgery.

Some Medicare Advantage plans to provide coverage.

Research a plan to cover both dental and vision.

Hearing Aids

Hearing tends to deteriorate as you age.

You will need to select the right Medicare Advantage plan if you want fitting exams or hearing aids.

Other ways to help these expenses are to save money in an HSA before enrolling in Medicare.

Medical Care Overseas

Are you planning live abroad or visit a country overseas?

Medicare will not cover this.

There are limited exceptions.

An example?

You may receive coverage if you get ill on a cruise ship six hours from a U.S. port.

By purchasing a Medigap Plan C through G, M, and N, you could get coverage of up to 80 percent of emergency care abroad.

The lifetime limit would be $50,000.

You may also want to check and see if a Medicare Advantage plan covers emergency expenses abroad.

Another way to get coverage is to purchase a travel insurance policy to cover medical expenses abroad.

As you see, Medicare has its limitations.

You will need to research and plan ahead to develop a plan to meet your medical needs in retirement.

Remember: “An ounce of prevention is worth a pound of cure.” When making your financial, tax and estate plans, do not go it alone. Be sure to engage competent professional counsel.

For more information about estate planning in Overland Park, KS (and throughout the rest of Kansas and Missouri), visit our estate planning website and be sure to subscribe to our complimentary estate planning e-newsletter while you are there.

Reference: Kiplinger (May 23, 2018) “7 Things Medicare Doesn't Cover”

What Retirement Questions Must I Answer if I am 50 or Better?

A good retirement takes planning.

Retirement.

Everyone plans to retire.

But not everyone plans to retire.

What do I mean?

Most people expect they will retire.

Unfortunately, however, not everyone puts enough thought and effort into making it successful.

According to a recent Forbes article titled “5 Key Retirement Questions You Need To Answer When You're 50 Or Older,” everyone should create a written plan to address important retirement questions.

What are these questions?

How long will you live in retirement?

You do not want to underestimate your life expectancy.

Why?

You will run out of money if you shoot too low.

Check your family history and national averages.

After all, it is hard to "fool the gene pool," let alone the law of large numbers.

When will you be ready to retire?

You should avoid retiring because you feel you have reached a certain age.

If you enjoy working, you can keep working.

How will you fill your time in retirement?

Are you planning to travel?

If so, you will need to make sure you have funds allocated for this.

Expenses on leisure and travel will be higher earlier in retirement.

As these expenses decrease, health care costs tend to increase.

When estimating your financial needs in retirement, you should also consider inflation.

When can you retire financially?

Without saying, you will need to save enough to maintain your standard of living.

Regardless, health issues or layoffs could force you into retirement earlier.

As you age, you will experience more health issues.

That is a fact of life.

You should budget for long-term care and medical costs.

Medicare does not cover as much as most people expect.

You should pay more for a Medicare Advantage plan or add a Medicare supplement (Medigap) plan or Part D prescription coverage to a traditional plan.

Yes, your premiums will be more per month.

However, your maximum out-of-pocket expenses will be less.

How will you budget your savings?

You should modify your investment strategy as things change.

Also, do not make the mistake of overspending early in retirement.

Create a budget and stick to your plan.

Work with an experience financial advisor who specializes helping folks plan for retirement.

This investment alone, will pay for itself many times over and give you added peace of mind.

Remember: “An ounce of prevention is worth a pound of cure.” When making your financial, tax and estate plans, do not go it alone. Be sure to engage competent professional counsel.

For more information about estate planning in Overland Park, KS (and throughout the rest of Kansas and Missouri), visit our estate planning website and be sure to subscribe to our complimentary estate planning e-newsletter while you are there.

Reference: Forbes (April 3, 2018) “5 Key Retirement Questions You Need To Answer When You're 50 Or Older”

What "Free" Medicare Service Should I Use or Lose?

Many people do not take full advantage of their Medicare benefits.

You have Medicare.

But are you taking full advantage of it?

Many people are not.

Why?

They do not know that certain benefits cost them little or nothing in copays.

According to a recent AARP article “10 Free Services Medicare Provides,” their are some expanded Medicare preventative care offerings available.

What do these include?

Preventative "Welcome" Visit

To take advantage of this service you will need to do so within the first 12 months of being on a Part B Medicare plan.

What is included in this visit?

The doctor will review your medical history, take your vitals, check your vision, give you shots, and runs some tests.

You will also be able to discuss advanced health care directives, as well as create a plan for shots or services you would require.

You can have only one welcome visit covered.

Annual "Wellness" Visit

This visit is similar to the welcome visit.

During this visit the doctor will also review your medical history, update medications, and providers.

She will take your vitals, then give you advice on treatments and health.

All of this is free once a year after the first 12 months of your Part B plan.

What about tests or procedures ordered by your doctor?

These will cost more in a deductible or copay.

Mammogram

This is an important screening for women.

It can help detect breast cancer or other abnormalities early.

A yearly screening will be free.

What about diagnostic mammograms?

These will require a 20 percent copay.

The Part B deductible would also apply in this case.

Colonoscopy

This screening is not annual.

But really, who wants to go through this every year?

If you are high risk you can get a colonoscopy screening every 24 months.

What if you are not?

This test will be covered one time every ten years.

Diabetes Screening

Do you have a history of abnormal cholesterol, obesity, high blood sugar, or high blood pressure?

If you are, then you could be eligible for two free diabetes screenings.

Are there other ways to qualify?

Yes.

Are you over age 65?

Do you have a family history of diabetes?

Did you have gestational diabetes?

Are you overweight?

If the answer is yes to two or more of the above questions, you could also be eligible for this free benefit.

Prostate Cancer Screening

Like the mammogram, certain tests will cost you.

These include the digital rectal exam and the physician services related to the exam.

For these, the Part B deductible will apply.

The exam will also cost 20 percent of the Medicare-approved amount.

Only the annual PSA test is free.

Vaccines

Certain vaccinations are free.

These include shots to prevent pneumococcal infections and the yearly flu shots.

If you have a medium to high risk of hepatitis B, you can also get this vaccination for free.

If you have a Part A or Part B plan, the shingles vaccine is not covered.

Coverage may be available through a Part D prescription drug plan or a Medicare Advantage plan.

Cardiovascular Disease Visits

Each year you can get a visit with your doctor.

She will assess your risk and provide behavioral modifications to help lower your risk

Lung Cancer Screening

You can get a low-dose computed typography tests yearly.

Are there qualifiers?

Yes.

You need to be a current smoker or have quit within the past 15 years.

You need to be between 55 and 77 years of age.

You also must have a history of 30 pack years.

What are 30 pack years?

This means you averaged one pack a day for 30 years.

Depression Screening

If you go to a primary care center with referrals and follow-up available, you could get this screening for free each year.

It should be noted the follow-up care may require copays.

Now you are better educated on what is available through Medicare as a free service.

You should be proactive and take advantage of them.

Remember: “An ounce of prevention is worth a pound of cure.” When making your financial, tax and estate plans, do not go it alone. Be sure to engage competent professional counsel.

For more information about estate planning in Overland Park, KS (and throughout the rest of Kansas and Missouri), visit our estate planning website and be sure to subscribe to our complimentary estate planning e-newsletter while you are there.

Reference: AARP (November 21, 2017) “10 Free Services Medicare Provides”

What can I Expect from Medicare This Year?

Medicare rules can change year to year.

Healthcare.

Insurance.

Medicare.

No one really wants to spend time think about these.

But you must.

It is a reality.

Especially when the amount you pay changes - and only keeps going higher and higher.

According to a recent Kiplinger article titled “Medicare Part B Premiums Rise for Some,” the hold-harmless provision from 2017 will have this effect on some people.

How so?

The cost of the standard Part B premium will remain $134.

But some beneficiaries will be paying more than they did before.

Why?

The clause had restricted the cost a person paid for premiums from increasing above the Social Security cost-of-living adjustment, if they deducted their Medicare premiums from their Social Security benefits.

This adjustment was low in 2017.

The result?

Many people still payed less than the full amount in premiums.

For 2018, this is a different story.

The Social Security COLA was 2 percent for this year compared to 0.3 percent for 2017.

This change means about 42 percent of beneficiaries will be paying the full $134 premium again, even though they did not do so in 2017.

About 28 percent will see no change.

The reason?

Their Social Security benefits are low enough so even their adjusted amount will not trigger payment of the full standard.

What about those who do not deduct their premiums?

They will still pay the full $134 standard.

What if you are a high incomer?

The hold harmless rule will not apply to you.

In fact, you could have far higher premiums than the standard.

How much?

The Part B plan could be as high as $429 per month.

A surcharge of $75 per month for Part D premiums could also be a reality.

When would a surcharge apply?

It would apply if your adjusted gross income plus your tax-exempt interest came out to more than $170,000 for a married couple filing jointly or $85,000 for a single individual.

The good news is the surcharge for Part D actually decreased in 2018 while the surcharge for Part B remained the same.

The bad news is the income thresholds for the three highest tiers were lowered.

Unfortunately, many high incomers will end up paying more as a result.

Is there a way to avoid this?

Maybe.

The income used to calculate your threshold comes from your 2016 tax return.

If your income is less in 2018 due to life changes like retirement, divorce, or the death of a spouse, then you could apply for relief.

A more recent tax return will be used to determine whether you will  indeed be paying more.

Remember: “An ounce of prevention is worth a pound of cure.” When making your financial, tax and estate plans, do not go it alone. Be sure to engage competent professional counsel.

For more information about estate planning in Overland Park, KS (and throughout the rest of Kansas and Missouri), visit our estate planning website and be sure to subscribe to our complimentary estate planning e-newsletter while you are there.

Reference: Kiplinger (January 2018) “Medicare Part B Premiums Rise for Some”

What Should I Know about Reverse Mortgages?

Reverse mortgages can help pay bills when you may not have the liquid resources.

Reverse mortgages.

Perhaps you have heard of them.

Maybe you understand them fairly well.

Maybe you do not.

What is a reverse mortgage?

It essentially allows you to continue to remain in your home while using it to get tax-free cash equity.

There are no mortgage payments.

The load will not impact your Medicare benefits or Social Security.

Is it the best option for you?

According to a recent The Observer News article titled “Reverse mortgages can be a key component in retirement planning,” this depends on a few facts.

Why do people like reverse mortgages?

These loans allow people age 62 or older to remain in their home and enjoy a comfortable retirement.

As for how you receive the benefits, there are options.

When you close, you could receive cash immediately.

You can also open a line of credit to access the rest on an "as-needed" basis after a year.

You could elect to get payments each month for the rest of your life or for a set period of time.

You could even mix-and-match these options.

You may be able to qualify, even if you have an existing mortgage.

Still, there are some cautions to taking a reverse mortgage.

What are they?

Each time you take a draw on the equity in your home, your loan balance increases.

Fees and interest accumulate.

At the same time, your equity is decreasing.

As a natural consequence, you will be eating into any inheritance for your heirs.

Even if they inherit your home upon your passing, they will need to pay any outstanding balance owed on your reverse mortgage.

Also, the reverse mortgage can only be taken on your primary residence.

What if you move or a title-holder is no longer living in the home?

The reverse mortgage payments will be due immediately.

The problem?

The fees and closing costs on reverse mortgages are higher than on other loans.

Before you make a decision, you should carefully weigh the risks and rewards.

Remember: “An ounce of prevention is worth a pound of cure.” When making your financial, tax and estate plans, do not go it alone. Be sure to engage competent professional counsel.

For more information about estate planning in Overland Park, KS (and throughout the rest of Kansas and Missouri), visit our estate planning website and be sure to subscribe to our complimentary estate planning e-newsletter while you are there.

Reference: The Observer News (February 15, 2018) “Reverse mortgages can be a key component in retirement planning”

2,000

Today's blog post is a milestone.

There have been 1,999 posts before it.

Thank you for all of the kind words and feedback over the years, whether you follow me Monday through Friday on Twitter or are subscribed to our weekly blog digest (i.e., the previous week's five blog posts are sent in one email with "hotlinks" to each individual blog post along with "summaries" of each post).

To say the world of estate planning is in a state of flux is an understatement. 

After all, what isn't?

This blog is my attempt to help you stay abreast of changes in the law, as well as to help you remain vigilant regarding changes in your own circumstances and those of your loved ones.

Estate planning is a process, not an event.

In addition to estate planning, I also try to mix in the latest developments on other areas like Medicare, Social Security, long-term care planning, and estate plans gone awry.

As for the latter, none of us will live long enough to make all of the mistakes, so it is wise to learn from the mistakes of others.

If you are not currently subscribed to our complimentary monthly estate planning newsletter, click here and sign up to it (and perhaps even the blog digest, if you are a current Twitter follower).

Finally, feel free to offer these free subscriptions to your family members, friends, and especially those folks who would be guardians for your minor children, financial decision-makers, and health care decision-makers. It would be helpful for them to stay informed and in the loop as we all go through this journey called "life" together.

Again, thank you for your support and encouragement.

Blessings,

Kyle