The Rise of Bankruptcy in the Lives of Aging Americans

The golden years are turning into bankruptcy red for many retired and aging Americans. While medical advances are keeping seniors alive longer, the associated healthcare costs in the quest for longevity are being off-loaded onto the older individual at a time when reduced income is a hallmark of senior living.  Older Americans are increasingly filing for consumer bankruptcy. According to the Consumer Bankruptcy Project, the population aged 65 or more are filing for bankruptcy at a two-fold increase, and there is nearly a five-fold increase in the percentage of seniors in the US bankruptcy system. The economic risk for seniors is running rampant, and the sad truth is currently 97 out of 100 people aged 65 and over are not able to write a check for $600 or more due to insufficient funds.

The sentiment among Americans is that their standard of living will increase at the age of retirement when it is quite the opposite. The typical retiree has set aside about $60,000 for their old age living, and more than 50% over the age of 55 have saved less them $50,000; as much as 40% of these workers have less than $25,000 set aside. The stark reality is none of these “nest eggs” are enough to see a senior through old age and the unforeseen disasters that can deplete what little has been saved.

One of the more common financial obstacles that create this bankruptcy scenario is a health issue. Medicare is not comprehensive. In the absence of a supplemental insurance plan picking up the non-Medicare funded 20 percent cost, a senior can be left with unforeseen operation and rehabilitation costs. Without full health care coverage, the cost of staying alive as a senior is practically prohibitive between prescriptions, treatments, surgeries, rehabilitation, and assisted care. The primary two options available to a senior to cover these costs of survival are credit card debt and loans.  Suddenly, at a time when most seniors should have very low monthly living costs, they find themselves back in a debt slave scenario with little or no income to address their healthcare debt.

Many seniors have concluded that retirement is not a part of their future as they will need a viable stream of income to avoid financial disaster. While this seems reasonable, it is not a good plan to assume one will be healthy enough to work forever. As we age, there is an increased probability that working will become impossible due to unforeseen illness. When this happens, debts begin to mount, and bankruptcy becomes a likely result. Additionally, the era of stable pensions afforded to a long time employee has gone by the wayside. Fewer companies even offer them anymore and those that do often modify and reduce pension benefits to meet corporate expectations of financial profits.

The cost of living rarely if ever is reduced over time and while social security benefits seem like the answer to a senior’s retirement years; these benefits seldom cover basic living expenses no matter how long an individual may have worked or how much they paid into the system. The senior who is faced with government social security benefits and very little additional income usually turn to credit cards to address the gap between low income and living expenses. This scenario takes a senior right back to debt slave mode. As many as two out of three seniors who file for bankruptcy cite credit card debt as one of the primary reasons.

Scams that target the senior population are becoming more sophisticated and prolific with the advent of technology. What used to be a “one to one” scam can now be distributed via email to thousands of targeted seniors who are online in greater numbers than ever before. Often the unsuspecting senior will make passwords or personal bank information available to what they believe is a legitimate request for information from what appears to be a valid email. Seniors can also fall prey to predatory lenders as many seniors cannot read the fine print or understand the consequences of their actions. When scam artists victimize a senior, the senior often loses a large chunk of their assets which in turn can put them in a bankruptcy scenario.

While it is impossible to know the exact future, it is possible to make reasonable plans for it. Learn the ways that you can protect yourself from becoming part of these bankruptcy statistics in your senior years. Even a modest plan is better than no plan at all. Seek the advice of trusted legal and financial professionals to help you understand what you can do to protect your future. Please feel free to contact our office today to discuss how we can help you with your planning.

 

 

4 Steps to Choosing the Right Nursing Home

Choosing a nursing home for a loved one is an important decision and should be carefully considered. It is important for families to take the time to explore nursing home options and to carefully assess the nursing home facilities in order to choose the best care for the loved one.  Below are some steps designed to assist families in choosing a nursing home.

  1. Identify Nursing Homes in the Area

The first step in choosing the right nursing home is to identify all the possible nursing home options in the area. Asking friends, family, and other people you trust is an excellent way to begin the search for possible options, especially if have had personal contact with the nursing home. Doctors and hospitals can also help identify nursing home options that provide the type of care a loved one may require.

Another option is using the internet to locate nursing home facilities. The Medicare website has a locator for nursing homes and even provides some comparisons of nursing homes – an important benefit highlighted in the next step below.

  1. Research the Quality of Care Provided by the Nursing Home

Using comparisons like those found on the Medicare and Medicaid websites can be a very helpful starting place for gathering information on nursing homes and the quality of care provided. This information along with information from other sources like the long-term care ombudsman. Many facilities may provide survey results that can give insight into the facility’s care.

Other sites that allow consumers to post reviews, like Yelp.com, can also be an important way to compare nursing homes. While best known for its restaurant reviews, Yelp also includes reviews of skilled nursing facilities and rehabilitation centers.

  1. Visit the Nursing Homes in Person

After doing ample research, it is time to visit the nursing home. Nursing homes will schedule tours for prospective residents.  While there, pay close attention to the cleanliness of the facility, and the appearance of the residents. Make note of what the residents are doing and how they look. Are they engaged in activities, is there evidence of neglect, is there enough staff to attend to the patients? Ask about patient to caregiver ratios so you can compare it with other nursing homes.

Other things to consider include how the facility provides for social, religious, recreational, or cultural needs, and the types of meals they prepare.  You may have the opportunity to have a meal during your visit, which will allow you to sample a meal, but also observe how the residents are treated during meal times.

Before leaving, find out who you can call if you have additional questions.  Then, make a second unplanned visit at a different time or on a different day. An unplanned visit will allow you to observe the nursing home and its residents on a “normal” day.

  1. Choose a Nursing Home

Making notes during the first three steps can help families go back and carefully look at the information gathered to make a decision. If more than one facility fits the needs of the loved one, then it is important to consider cost and what is most important to the family.

Once a nursing home is chosen, an agreement will need to be signed. It is important to have an elder law attorney review this agreement to make sure there are no hidden provisions, like holding a child responsible for non-payment, or a minimum number of months before a resident can apply for Medicaid.

These steps will allow families to make the best nursing home choice possible. Although, many families find themselves in sudden need of a nursing home facility after hospitalization, most have time to make preparations. If time is not a factor, following these steps can help to avoid making a decision that is not best for the loved one in need of care. Any long-term care decision is made best when families are armed with as much information as possible.

If you have any questions about something you have read or would like additional information, please feel free to contact us.

America is Facing a Family Home Caregivers Shortage

The aging population of the United States is widely reported as the bulk of the baby boomer generation is already retired or nearing retirement. However, what has not been widely reported is how the rest of the nation will provide care for this large, aging population. According to a 2017 Merrill Lynch study, nearly 95% of caregivers are family members. These family members are providing over $500 billion worth of free care annually. For perspective, that’s three times Medicaid’s professional long term care spending.  The number of family caregivers is shrinking at a time when the population that needs them is expanding at a rapid rate. In 2020, there will be over 56 million people in the U.S. age 65 and older. In 2010, that number was just 40 million.

This is a unique problem for the baby boomer generation for several reasons. The main reason is the simple fact that there is just an unusually large number of people in this generation. Unfortunately, every elder who needs care will not have a family member willing to give care. This responsibility will then fall to professional home care workers. Government statisticians project that the nation will need an additional million home care workers by 2026, an increase of 50% from 2014. Fulfilling the need for this many additional workers will be difficult, however.

Home care workers face extremely low wages, inconsistent work schedules, and there is little, if any, room for advancement in the industry. For example, the median salary for a home care worker is a minuscule $10.66/hour according to the U.S. Bureau of Labor Statistics. For comparison, that’s about the same hourly wage as a fast-food cook and about 30% less per hour than a veterinary technician makes. Looking beyond just salary, benefits are dismal, also. Only a third of home care workers are full-time and qualify for benefits. Further, there is a better chance you get injured on the job as a home care worker than if you worked in the oil and gas extraction field.

Another reason why this is such a unique problem for baby boomers is that it was more common in the past for children to stay in the same geographic area as their parents and be able to provide free care to them when it was needed. With advancements in travel and technology, it has become exponentially easier for people to move away from their parents, whether it be for job seeking reasons or simply for a change of scenery. Also, with the increasing rate of debt Americans are taking on, some family members just do not have the means to take time away from work to care for ailing family members.

There are several small initiatives taking place to help combat this shortage. In Massachusetts, the Home Aide Care Council has started a two-week training program that introduces new home care workers to what the job entails before they start their formal training as a home care worker. Also, some states are starting programs that provide opportunities for advancement. New York has a program that trains home care workers to administer routine medication, which gives them experience that can help them move into other positions in the healthcare industry.

There are options that should be explored now that can help you or a loved one prepare for a possible shortage in caregivers.  Contact our office to discuss steps you can take now to ensure you have the best care possible if needed.

Medicare and Medicaid: Unlocking the Mystery

Medicare and Medicaid have long been a mystery to many consumers. In fact, it can baffle and confuse even some of the smartest citizens. Like me, you might have thought, “I don’t need to worry about this right now.” However, it is never too early to gain a little understanding and awareness that just might help you help an aging loved one or yourself down the road. As the saying goes, “Time flies.”, and you will be there sooner than you think. Let’s break it down and learn some of the differences and basics of Medicare and Medicaid to unlock the mystery.

Medicare

Medicare is a health insurance program provided through the federal government. In order to receive Medicare, a person must meet certain requirements. A person must be 65 years old or older or have a severe disability. In order for a disabled person under the age of 65 to be eligible for Medicare, they must have received Social Security Disability Insurance (SSDI) for two years. In order to be eligible a person must have Social Security retirement benefits or Social Security disability benefits. Because Medicare is run and administered by the federal government, it is uniform from state to state. If a person meets Medicare eligibility requirements, they can receive Medicare no matter their income or assets. Costs for Medicare are based on the recipient’s work history. This means that costs are determined by the amount of time a person paid Medicare taxes. These costs like all insurance include premiums, copays, and prescriptions.

Medicare can be confusing because there are four parts. The commercials talk about Parts A, B, C, D. What does it all really mean? Parts A, B, and D can be somewhat simplified. Part A is hospital insurance, Part B is medical insurance, and Part D is prescription drug coverage. Parts A and B are covered in Original Medicare offered by the government. Part C is often called the Medicare Advantage Plan. This is a private health plan. The Medicare Advantage Plan or Medicare Part C plan are required to include the same coverage as Original Medicare but usually also include Part D as well. It is important to do your homework on these plans to find what works best and is most cost effective for you.

Medicaid

Medicaid is a health care assistance program. Its guidelines come from the federal government, but it is administered by each state. Medicaid is for people who cannot afford to pay for their care on their own. It is based on income and assets, and is available to people who belong to one of the eligible groups. The eligible groups are children, people with disabilities, people over age 65, pregnant women, and the parents of eligible children.  Seniors who require nursing home care can qualify for Medicaid and only pay a share of their income for the nursing home. Medicaid then pays the rest.

Dual Eligibility

A person can be eligible for both Medicare and Medicaid and can have both. The two programs work together to help the recipient best cover the expenses of health care. For example, Medicare costs include premiums, copays, and deductibles. Full Medicaid benefits can cover the costs of Medicare deductibles and cover the 20% of costs not covered by Medicare. Medicaid can also help with Medicare assistance and may cover costs of premiums for Part A and/or Part B.

Although Medicaid and Medicare can be quite confusing, it is important at a minimum to know the basics. When you or someone you love is eligible or in need of the benefits, there are organizations willing to help and your elder law attorney is also a valuable resource.

If you have any questions about something you have read or would like additional information, please feel free to contact us.

Helpful Ways to Pay for Assisted Living Costs

Assisted living rent can vary from $2,000 to $5,000 monthly. Depending on what type of care your loved one needs, assisted living can be the most affordable solution when compared to a nursing home ($5,000 to $10,000 or more per month) or long-term in-home care. If closely monitored medical supervision is not necessary for your aging senior, assisted living might be the best financial choice.

One payment strategy that has become popular is to use Medicaid.  If your loved one does not have many financial assets and their income levels are low, this could be the right solution for them. Medicaid varies from state to state both in name and in eligibility requirements. Many states dictate that a senior is eligible if he or she has less than $2,000 in assets, or $3,000 if married.

If you are trying to help a senior with a creative financial strategy by gifting money and other assets to family members, known as “Medicaid spend-down”, the government has a five-year look-back rule regarding financial transactions. There are strict guidelines about Medicaid spend-down. If a senior is caught incorrectly spending down resources to qualify for Medicaid, the penalties are steep, including disqualification from receiving Medicaid for a lengthy period. Also, many states do not cover assisted living under Medicaid, but require the submission of an additional wavier.   Be aware that Medicaid assisted living payments are only accepted by some communities and Medicaid beds are usually limited. There can be long waiting lists to enter into a Medicaid financed assisted living facility.

If your senior has a disability, he or she may qualify for Supplemental Security Income (SSI), which is a federally administered program. SSI is the government safety net for those destitute and wholly or partially disabled by illness or injury. SSI is a monthly payment which a senior can use to pay for assisted living. To qualify for SSI, contact the appropriate local Social Security office and provide financial documentation and a doctor certification to attest to your senior’s inability to work because of a medical disability.

If your loved one or their spouse is a Veteran, residential care could be paid for in a variety of situations with Veterans benefits. There is a set of benefits available to those with disabilities or service-related injuries, and there is also another set of benefits called Aid and Attendance, made available to any Veteran or surviving spouse who is both disabled and whose income is below a certain threshold. The Veterans Administration website outlines the complicated process to access benefits. It is extremely beneficial to work with an elder law attorney who knows the details of the programs and can assist with the application.

A life insurance policy can pay for your loved one’s assisted living. Often, seniors have a long-standing policy that was implemented to help family members upon their death, but a life insurance policy can provide financial support now. A process known as “accelerated” or “living” benefits is a “cash out” policy that can have your senior redeem 50 to 75 percent of the face value of the policy. Each amount is based on specific policy conditions as well as individual corporate rules. Some policies can only be cashed out if the policyholder is terminally ill while other companies are more flexible in cash outs. If your senior’s particular company does not allow the policy to be cashed, it can still be sold to a third-party company who usually affords the same 50 to 75 percent face value cash out. That company continues to pay the original premiums until their death, at which time the company redeems the full value of the policy. Finally, if your loved one’s policy is of lesser value, it may qualify for a life settlement option known as a “life assurance” benefit or conversion program, which allows the senior to convert between 15 and 50 percent of the policy value directly into long-term care payments.

Does your loved one have a long-term care insurance policy? It can pay for assisted living care. Policies vary, but once the determination and action is taken to collect on it, those monies can be paid directly to an assisted living facility or to the beneficiary who in turn pays the facility. It is wise to consult with an elder law attorney to help understand individual company requirements to optimize the process of collection.

An annuity can be used to pay for some or all of the senior’s assisted living. If your loved one invests a lump sum into an annuity, they will receive regular payments over a promised time period, usually the rest of their life. The annuity helps to stretch your senior’s budget and guarantee at least some money is coming in, even in the event they live longer than expected. Most annuities allow the beneficiary to continue to receive money regularly even if the purchase premium runs out. If your senior were to live a very long time, they would get more back than they put in and an added bonus is that annuities are oftentimes not fully counted as assets by Medicaid when applying for government assistance. The income is counted but not the value of the asset. It is imperative to seek the advice of an elder law attorney before opting into an annuity as they are complex financial products and a wrong decision could be disastrous.

Reverse mortgages are another strategy to pay for assisted living. If your loved one owns their home outright or has only a small mortgage on it, they can get cash value from their home equity in a lump sum or series of monthly payments. The bank will decide the valuation of the home based on multiple factors like the homes worth, interest rates and the applicant’s age. The borrower can stay in the house until death even if the loan balance exceeds the worth of the home. After death, the loan balance has to be repaid which usually means selling the home. Reverse mortgages were developed to help widows remain in their homes after the primary income earner passed away or if that spouse needed to move into assisted living, leaving the other spouse to reside in the long-time family home. Like annuities, a reverse mortgage is a complex financial product, and it is crucial to receive sound advice from a trusted professional and work with a reputable reverse mortgage company. If only one senior parent is living and they do not want a reverse mortgage, they might consider renting out their home and using a landlord to manage the property. The income from renting the house can be used to pay for assisted living expenses.

Lastly, it is possible to pay for assisted living with a bridge loan, which is a short-term loan of up to $50,000 explicitly designed to provide funds to move a loved one into an assisted living facility or continuing care retirement community. It is an unsecured (no collateral required) line of credit with the intent to finance the first few months of living expenses during the sale of the senior’s home, while the application for Veterans benefits is pending, or other actions that are taken that free up funds. Since the interest rates can range from 8.25 to 12.5 percent, this option is best as a short-term strategy. The other type of bridge loan is called the Capital Access Program. It is a lower interest lump sum loan secured by real estate or other assets that the company deems acceptable collateral. It is designed to help seniors come up with the large upfront entrance fee some senior assisted living facilities require. Both types of loans are based on the usual credit criteria: credit score, credit history, debt to income ratio, and more. The senior or an adult child can secure the loan, and up to six family members can cosign loan applications, allowing the risk to be shared among multiple family members.

If your loved one is healthy enough to successfully live in an assisted living facility, the monthly cost is likely a top factor when considering their options. These are some, but not all of the viable and creative ways to pay these costs. To fully explore the options available and what is best for your senior seek the advice of an experienced elder law attorney and make the best decision for your loved one. Contact our office today and schedule an appointment to discuss how we can help you with your planning and which strategy is best to help your senior pay for assisted living.

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