Kansas and Missouri Estate Planning

What Does Medicare Cost?

Costs depend on Medicare coverage.

Health care is important at every stage of life.

Paying for health care can cause stress at any stage in life.

As you age, the anxiety over health care may increase.

According to a recent CNBC article titled “Here’s what you should know about Medicare costs if you’re nearing age 65,” it is important to understand Medicare.

Fidelity investments approximates the health care costs for a couple in retirement at $285,000.

This estimate excludes the care not covered under the basic Medicare plan such as vision, dental, over the counter medications, and long-term care costs.

Yikes!

So, from where do these estimated numbers come?

Is Medicare not free?

The answer is not a simple one.

Medicare premiums are free for Medicare Part A if you have a 10 year work history.

But what, there is more.

You do not escape the deductibles.

The deductible for Medicare Part A is $1.364 per benefit period with caps on the benefits.

Also, Medicare Part A is not all-encompassing.

It includes hospital stays, some home health benefits, skilled nursing, and hospice care.

For more coverage, you will need to purchase additional plans.

What are these options?

The first is Medicare Part B.

This covers medical supplies and outpatient care.

The standard monthly premium for 2019 is $135.50.

But what, there is more.

Those who earn more will pay more.

The deductible for Part B is $185.

After the deductible, you pay 20 percent of covered services.

For prescription drug coverage, you will need to sign up for the Part D plan as well.

Those parts of Medicare don’t cover prescriptions, so a Part D drug plan is needed or you can purchase an Advantage Plan.

The Advantage Plan is also known as a Part C plan.

Should you choose this route, your Part A and Part B plan will be delivered by the same insurance company.

How much does a Part D plan cost?

In 2019, the cost is $32.50 per month and the deductible is $415.

Again, those who earn more will pay more.

How do you sign up for Medicare?

If you take Social Security before age 65, you will be enrolled automatically.

One or two months before you turn 65, you will receive your card in the mail.

The cost of your Part B premium will be automatically taken from your Social Security.

If you have not yet taken Social Security, you will need to enroll yourself in Medicare.

You can enroll within a window of time that is opens three months before your 65th birthday to three months after your birthday.

The exception would be if you are still working at age 65.

If this is the case, you can enroll later in Medicare without a penalty.

Unless you have medical coverage from your employment, Part B is required.

Failing to enroll will give you a 10 percent penalty for each year you are not enrolled.

There is also a penalty for not enrolling in Part D when you are first eligible, unless you are working with insurance from your employer.

How much is this penalty?

The penalty for Part D is 1 percent for every month you should have been signed up.

Some couples choose to supplement their benefits with a Medigap plan.

You cannot have both a Medigap plan and an Advantage Plan.

Instead, you should choose the best option for you.

One item to note is that dental and vision coverage may be limited on an Advantage Plan.

There is a lot to consider when signing up for Medicare.

Researching and understanding your options and obligations will help you to avoid penalties and find the plan to fit your needs.

Reference: CNBC (August 29, 2019) “Here’s what you should know about Medicare costs if you’re nearing age 65”

What is Not Covered by Medicare?

Medicare does not cover everything.

You know you need Medicare Part A and Part B.

You know you can start signing up three months prior to the month you turn age 65.

Surely this is sufficient for all of your health care needs when you turn age 65.

Right?

Think again.

According to a recent Kiplinger article titled “7 Things Medicare Doesn't Cover,” this assumption could get you into trouble.

Medicare Part A helps with hospital stays, nursing home care, surgery, hospice, and certain home health care.

Medicare Part B helps cover outpatient care, visits to the doctor, some medical supplies, and some preventative services.

These may seem all inclusive.

They are not.

Some things are not covered or are not fully covered.

What are they?

Prescription Drugs.

If your doctor prescribes drugs, these are not covered.

You will need a supplemental plan.

What would you need?

You would need to select a separate Part D plan or a Medicare Advantage plan.

You can either enroll immediately or once you have lost drug coverage from another source.

Long-Term Care.

Skilled nursing services covered in Medicare are limited.

Very limited.

Medicare pays only for short-term rehabilitation care intended to get you back to independent living, not assisted living.

Consequently, help with dressing, bathing, and other activities for daily living are not included.

Purchasing long-term care insurance or a life insurance policy with a long-term care rider could assist in covering these addition costs.

Your Deductibles and Co-Pays.

Yes.

You are responsible for these expenses.

Medicare will only help pay for 60 days past the 90-day limit for hospital stays for your entire coverage lifetime.

Hospital costs are then your full responsibility.

Most Dental Care.

Some Medical Advantage plans provide x-ray coverage or basic cleaning, but there is a cap.

This typically is $1,500 per year.

For cleanings, visits, fillings, dentures, or tooth extractions, you may need to have a separate private dental policy.

A health savings account could also be helpful if you built up money prior to Medicare enrollment.

Routine Vision Care.

You will want to choose an appropriate Medicare Advantage plan or supplemental policy if vision care is something you will need.

Hearing Aids.

Selecting a Medicare Advantage plan with coverage for hearing aids would be wise if you have hearing loss.

You may also want to research discount programs for low-cost hearing aids.

Medical Care Overseas.

If you travel abroad or go on a cruise more than six hours from a U.S. port, you will need additional coverage.

What are your options?

Medigap plan C through G, M, and N can cover about 80 percent of the emergency care abroad.

There is a lifetime limit of $50,000.

Two other options are travel insurance or a Medicare Advantage plan.

Advance planning and research will be necessary help you select the coverage you need for your various health care expenses.

A health insurance agent experienced in the specific needs of retirees should be consulted.

Reference: Kiplinger (May 23, 2019) “7 Things Medicare Doesn't Cover”

What Retirement Planning Mistakes are Baby Boomers Making?

Poor planning leads to greater stresses in retirement.

We you born between 1946 and 1964?

If yes, then you are a Baby Boomer.

There is a 47 percent chance you are already retired.

If you planned well financially, you will have set yourself up for success in your retirement years.

Congratulations!

According to a recent CNBC article titled “Baby boomers face retirement crisis — little savings, high health costs and unrealistic expectations,” not everyone has done so.

What are the most common planning mistakes?

Not saving enough.

You cannot expect Social Security to supply all of your retirement income.

If your company does not have a pension plan (and very few do, outside of government), you are left with only one other income source—your personal savings.

Nearly 45 percent of Baby Boomers zippo in personal savings for retirement.

Yikes!

This leads us to the second major mistake.

Underestimating health care costs.

As you age, you will have more medical issues.

Many people do not account for these costs in requirement.

Instead, they assume Medicare will cover whatever they need.

Wrong again.

Anticipate and save for health care costs.

Purchase long-term care insurance as well.

In addition to underestimating health care costs, Baby Boomers often make another significant miscalculation.

Underestimating retirement income.

On average Americans ages 65 to 74 spend $55,000 annually.

Most people do not account for this.

The result?

Many must downsize, ask their children for help, or go back to work.

None of these options is ideal.

If you have not yet retired, make like a Boy Scout - and be prepared!

You will be glad you did.

Reference: CNBC (April 9, 2019) “Baby boomers face retirement crisis — little savings, high health costs and unrealistic expectations”

Do I Need a Long-Term Care Plan?

Do not neglect long-term care planning.

Every day you get older.

Each year you celebrate another trip around the sun.

You look back at your life with greater wisdom.

Now look forward and prepare for the future with equal wisdom.

According to a recent The Motley Fool’s article titled “Baby Boomers Are More Prepared for Death Than Life,” about 70 percent of those retiring will need long-term care in the future.

The odds requiring such care are high, even for you.

What should you do?

Take steps now to prepare for the financial demands of such care in your retirement planning.

According to the U.S. Department of Health and Human Services, the average cost for long-term care in retirement is $138,000 per year.

If you do not plan for this expense, your put your savings in jeopardy.

If you believe Social Security or Medicare will be able to handle your long-term care costs, you are mistaken.

Medicare coverage has its limits regarding both what it will cover and the duration of coverage.

It will cover some long-term care expenses such as skilled nursing after a hospital stay, but will not cover custodial home health care.

In short, you cannot rely on Medicare to save you.

You need to make other plans and set aside additional savings.

For many long-term care insurance may be a beneficial option.

If you do not know who trust for advice, seek guidance from a trustworthy insurance professional.

Find an experienced elder law attorney or financial advisor.

He or she will help you create a plan to tackle your long-term care needs.

Do not delay.

Denial is not a wise strategy.

Reference: Motley Fool (March 27, 2019) “Baby Boomers Are More Prepared for Death Than Life”

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”