 Elder Law Update
North Carolina Edition |
Vol 2 Issue Seven
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December 2008
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Important 2009 Numbers
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Medicare Part B 2009 Premium: $96.40 (YES!! The Same As 2008) (Increases for income over $85,000)
Part A Hospital Co-Pay
Days 1-60 ($1,068)
Days 61-90 ($267/day)
Days 91-150 ($534/day)
Medicare Nursing Home Co-Pay
Days 21-100 ($133.50/day)
Maximum Amount Protected Under Medicaid For Community Spouse (When Other Spouse In Nursing Home):
$109,560
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PLEASE VISIT MASON LAW
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I WANT TO KNOW
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Greetings!
Wow!
Christmas time is again here. It seems just like yesterday that we pulled out
my "special" Christmas  portrait prepared by sweet kid sister in California. I like to
run it in Elder Law Update (A) to
remind everyone I am not a stuffy old lawyer and that I do have a sense of
self-deprecating humor, and (B) to simplify my Christmas shopping list by
reminding me to scratch at least one name off my list!
We're
having a bit of a software glitch this month that prevents us from
sending the abbreviated newsletter we've been sending the past few
months. Sorry. The full newsletter appears below. Scan this
introductory column to see what you are interested in or look at the
"In This Issue" box to the left.
Annuities Protected?
Annuities remain a hot topic. Occasionally they are a great investment for seniors . . . and at other times they are most definitely NOT. Also, especially lately, many clients have wondered whether their annuity investments are safe. In my column below I take a look at annuities and I will steer you to a website that will help you determine whether an annuity is covered under an "FDIC-like" state insurance fund.
2009 Social Security Limits
Actually,
Uncle Sam has come through with a bit of seasonal cheer: Social Security benefits are going up 5.8%
come January 1 (that is the biggest boost in more than 25 years). At the same
time, Medicare premiums are remaining at the 2008 $96.40 level. Warren Coble's
column below updates us on other key 2009 adjustments.
The Car Keys Talk
Daily
Money Manager Penny Louis looks at an issue that for many is painful: When to hang up the car keys. I was lucky. My
own mother (I better be nice because she reads this newsletter online!)
recently decided to take the step when she concluded she couldn't see well
enough to safely drive (she has some macular degeneration). Other children
aren't so lucky and have to "screw up the courage" to do something.
The Advance Directives Talk
Finally,
another touchy topic: Advance
directives. Dr. Hodges reminds us not to let these slip by. Regardless of your
"end-of-life" treatment preferences, advance medical directives are a good way
to let the world know what those preferences are.
It is a
good thing Dr. Hodges is a friend. If you'll read the last line of her article
you'll see why I think she is just so very, very clever. Funny, too. Right up
there with my kid sister.
Have a Merry Christmas . . . and if you aren't
of the Christian persuasion, join in on some of the fun!
Bob Mason
Certified Elder Law Attorney
Certified by the
National Elder Law Foundation, recognized by the American Bar Association as
the certifying entity for specialization in Elder Law.
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Medicaid and Annuities
Sometimes Terrible . . . Sometimes Great
Bob Mason
First, let me explain: I do NOT hate annuities. I DO take great exception to
financial advisors and, especially, sales people who take a "one size fits
all" approach to their clients and customers. I get particularly exercised
by those who must believe that EVERYONE needs an annuity. They must believe
that because they attempt to sell an annuity to anyone they meet.
Annuities are a tool. There are times when the tool is great. There are other
times when caution is key. One of
those "be cautious" times is if the buyer believes Medicaid and a nursing home
might be anywhere on the horizon.
 Recently I have been working with a number of older clients who invested
substantial amounts (by substantial, I mean more than 50%) of their nest eggs
in annuities. In more than one case, a spouse was in, or near to being in, a
nursing home. If the annuity is a "deferred annuity" with substantial surrender
policies, and a nursing home placement is a possibility, such an annuity is
terrible. On the other hand, in such a case, a carefully designed annuity can
be a real life saver.
The Basics
First, understand the basic concept of an
annuity. Someone pays money to a company in exchange for the promise of the
money being returned either in a lump sum in the future, or over time in
regular installments. The return, maybe the installments, will include a return
of what was paid, plus some interest. Meanwhile, the company is taking the
money and (it hopes) making more with it than it will have to pay back to the
buyer.
With an "immediate annuity" arrangement, the
company begins paying installments very soon, perhaps within a month or two. If
the annuity is "deferred" the company agrees to begin paying at some point in
the future. Usually a deferred annuity carries substantial penalties for
attempting to access or cash in the annuity before the deferred payments begin
(or perhaps even while they are being paid). For some people, a deferred
annuity may be good, especially from a tax standpoint. For others, especially
those who have even thought of a nursing home, deferred annuities are bad . . .
very bad.
Many seniors have a problem of too much cash
on hand when a spouse has to go into the nursing home. Most people entering
their senior years understandably panic when a spouse goes into a nursing home
to the tune of $6,000 or so a month.
One trick is to take the "excess"
cash (which was an excess asset for Medicaid purposes) and put it into an
annuity (the shorter time frame the better) to immediately begin paying the
stay-at-home spouse income. (Until last month, Georgia did not allow these types
of annuities. For months the state has been playing Medicaid hardball . . . now
it has thrown us a beach ball!)
Voila! The excess asset is converted into
income that is not counted for Medicaid purposes (the state counts the income
of the spouse in the nursing home only).
Even then the annuity must meet a number of
stringent requirements. It must pay no longer than the actuarial life
expectancy of the annuitant and must name the state as the remainder
beneficiary for an amount equal to the Medicaid benefits paid on behalf of the
spouse in the nursing home. That should not be a concern, however, if the
annuity pays out to the payee spouse before that spouse dies.
Caution:
Such an annuity MUST be correctly designed. An experienced elder law
attorney can work with a financial consultant to ensure correct design.
Is My Annuity Safe?
With the rash of bank failures and insurance company bailouts, wondering if money invested or placed in an annuity contract (even a short term one for Medicaid planning purposes) is safe is quite natural. Many do not realize that most states have created statutorily chartered guaranty associations that protect life, health and annuity products sold in state.
The North Carolina Life and Health Insurance Guaranty Association protects most annuity contracts up to $300,000 per annuitant per company. Anyone can check to ensure a company is covered by going to the Guaranty Association website.
The Wrong Annuity: The Damage
Here is what happens: Mrs. Homebody buys an
$80,000 annuity (out of the $120,000 she and her husband have on hand)
two months before her ailing husband goes into a nursing home. Her daughter
lives in California
and isn't available to scream "Mom! Stop!"
The annuity provides that payments won't begin
for five years and that there is a large (HUGE, in fact) surrender penalty if she
attempts to cash it in early.
With $40,000 left she comes to me to ask about
how to pay for the nursing home. The annuity salesman is not happy to talk to
me. He told me he didn't know about the new rules. I told him he shouldn't be
selling annuities if he doesn't know what he is doing. I also explain about
financial exploitation and a number of other concepts he isn't too happy to
hear me discuss.
Meanwhile, Mrs. Homebody has a choice. She can
try to figure out how to pay for Mr. Homebody's nursing home bill because she
cannot qualify him for Medicaid, or she can cash in the annuity and take a
tremendous penalty she can ill afford.
We're discussing her options.
Medicaid and annuities can mix . . . just very
carefully.
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2009 Cost of Living Adjustments Announced
-Warren Coble
On October 16, 2008, Social
Security announced the Cost of Living Increase for 2009.  The increase is 5.8%,
the largest since 1982. Social Security and Supplemental Security Income
benefits increase automatically each year based on the rise in the Bureau of
Labor Statistics' Consumer Price Index (CPI-W), from the
third quarter of the prior year to the corresponding period of the current
year. This year's increase in the CPI-W was 5.8 percent.
The increase will be
reflected in the Social Security payments individuals receive in January 2009. Supplemental
Security Income recipients will notice the increase in the payment sent to them
on December 31, 2008. (Checks are paid early when the 1st of the
month falls on a holiday or week-end.)
The maximum Social
Security benefit for a worker retiring in 2008 at full retirement age was
$2185.00 per month. This maximum benefit increases to $2323.00 per month for a
worker retiring in 2009 at full retirement age. Note that these individuals
would have paid Social Security taxes on maximum earnings every year. For 2008,
that earnings maximum was $102,000, and increases to $106,800 for 2009.
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Estimated Average Monthly Social
Security Benefits Payable in January 2009:
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Before
5.8% COLA
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After
5.8% COLA
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All
Retired Workers
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$1,090
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$1,153
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Aged
Couple, Both Receiving Benefits
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$1,773
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$1,876
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Widowed
Mother and Two Children
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$2,268
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$2,399
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Aged
Widow(er) Alone
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$1,051
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$1,112
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Disabled
Worker, Spouse and One or More Children
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$1,695
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$1,793
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All
Disabled Workers
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$1,006
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$1,064
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Supplemental Security
Income (SSI) payments will increase to $674.00 for an individual and $1011.00
for a couple. The SSI resource or asset thresholds remain at $2000 for an
individual and $3000 for a couple.
Good news for Medicare
enrollees: the premium for Part B Medical Insurance remains at $96.40 for 2009,
unless they are under the income-related adjusted premium for
individuals/couples with higher incomes. Additionally, the Medicare Part B
Deductible remained constant at $135.00. The Medicare Part A Hospital
Deductible increased to $1068.00 for 2009.
Other factors in Social
Security eligibility are also tied to the CPI based Cost of Living Adjustment:
- Earnings allowances for
individuals under full retirement age increased from $13560 to $14160 per year.
For individuals over full retirement age, the earnings allowance for months
prior to attainment of full retirement age (currently age 66) increased from
$36120 to $37680.
- Disabled individuals who
are working can now earn up to $980.00 per month before their earnings are
classified as Substantial Gainful Activity. After a nine-month trial work period,
individuals continuing to work at SGA levels will have their Social Security
Disability benefits suspended.
For more information,
visit the SSA website at WWW.SSA.GOV. Click
on " PRESS RELEASES" on the lower right side of the home page. Scroll down to
the press release regarding the COLA. Then click on Social Security announces
2008 COLA.
Social Security
expert Warren Coble welcomes your questions
regarding Medicare, Social Security and Senior Life
in general! Email Warren by clicking
HERE.
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Time For THE TALK (About Advance Directives)
Beth Hodges, MD
 The holidays are here.
Please, this year, don't forget to make your list of important
tasks. You know,
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Buy chocolates for Aunt Bessie.
- Send holiday cards.
- Ask Mom how she feels about
life support.
Seriously, most of us spend a little extra quality time
with our older loved ones around the holidays, so it is a good time-in between
eggnog and football games-to have THE TALK.
No, not the birds and bees talk. Uncle Frank may not remember how to two-step
anymore, but that horse left the barn a long time ago. No, I'm talking about the Advance Directives
Talk.
You would be surprised how few people have any idea how
their nearest and dearest feel about things like CPR, life support , and other
heroic measures. But just because you
don't know Mom's opinion, doesn't mean she doesn't have one. And what about feeding tubes, prolonged
intravenous fluids, and pain management?
Everyone dies at some point, and unfortunately, we often
are not in a position to let our wishes be known around that time. It is much easier if there is something down
on paper and failing that, at least have let someone close know how you
feel.
On that same topic, who should make Mom's decisions if she
cannot? Does she want crazy sister Jane
or Cousin Tom, who has some medical background? Many of our elderly have faced
death around them and have given a surprising amount of thought to their own
demise. Putting it into words and down
on paper can alleviate anxieties at a critical moment.
Another important thing to know is that Do Not Resuscitate
does not mean Do Not Treat. There is a
lot of confusion about the concept of no heroic measures. If a patient who did not want to be on a
ventilator came into the hospital, we would still treat his pneumonia, but if
he did not respond, we would not progress to putting him on a machine to
breathe for him if he could not breathe on his own. Medical personnel would still treat anything
treatable up to that point.
If you have had The Talk with Mom, and wish to get things
down on paper, you can go to the Mason Law website to download North Carolina
forms (click HERE for a Declaration of Desire for Natural Death ("Living Will")
in which you can specify certain end-of-life treatment options and HERE for a
Health Care Power of Attorney in which you can appoint someone to act on your
behalf). Each state has its own set of
paperwork.
Alternatively, you can
contact a good Elder Law specialist to help with the finer points. Anybody know one?
Beth Hodges, MD, is a principal in Hodges
Family Practice with offices in Asheboro,
and Ramseur, North Carolina.
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It's 9:00 - Do You Know Where Your Parents Are?
When It Is Time To Take Away The Car Keys
- Penny Louis, MPA
 One of
the toughest issues confronting adult children or others involved with elders
is driving. We have laws that control
the age at which we can begin to drive but not when we should quit. While elders want to maintain their
independence for as long as possible, there comes a time when they become a
danger to themselves and others on the road.
Over time
we may begin to notice that our loved one is becoming compromised behind the
wheel. Loss of hearing, impaired vision,
other health issues, delayed reaction times, and dementia can all contribute to
this. The elders fail to recognize their
decline (or choose to ignore it) and insist upon driving when they should not
be.
But
confronting the issue is sensitive and tricky.
Adult children are often still recognized as "the children" and their
advice and concerns are usually ignored.
My sister relayed to me a conversation she had with our 84 year old
Mother recently. We had visited her and
her 92 year old husband last summer and were terrified after several hairy car
rides with him behind the wheel. We also
knew that he has had 2 accidents in the last few months. So my sister suggested to our Mother that
perhaps he should no longer be driving the car.
She agreed that he probably shouldn't be driving, but her excuse for
allowing it is that she doesn't like to drive at night herself, so relies on
him to get them where they want to go.
Once the
adult children concur that Mom or Dad should not drive anymore, it is wise to
get others involved. It may be a doctor,
geriatric care manager, caregiver, neighbor or trusted friend. When a trusted
advisor or professional broaches the subject, it is less "loaded" than if the
children confront the parents.
Alternatives to them driving themselves should
be researched and presented as solutions to the problem of being
housebound. Resources may include taxis,
senior bus services, home care providers, friends, neighbors and adult
children. [Ed. Note: See Dr. Beth Hodges' July 2007 article on steps a physician can take to help under state law by clicking HERE]
So when
the time comes, don't ignore the problem.
Someone, including your loved one, could get hurt.
Penny Louis, MPA is the Managing
Partner of Financial Care for Elders, LLC, Savannah, Georgia, which provides personal business
assistance to clients who have difficulty managing their personal monetary
affairs. She is a member of the American
Association of Daily Money Managers. You may email Penny by clicking HERE.
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The Usual Disclaimer: This newsletter is for general information only. Please do not rely on anything you read in this email as definitive legal advice applicable to you. All situations are different, including yours. Nothing you read in this newsletter is a suitable substitute for professional advice you may receive from your attorney, your accountant, or your tax advisor.
All contents copyrighted 2008 by Mason Law, PC. Contents may be republished with written permission of Mason Law, PC (which permission will usually be given!). |
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