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The following is a guest post by Robbi Weinman, CLTC:

Long-term care planning should play a key role in your overall financial, estate, and retirement planning strategy. Unfortunately, there are many myths associated with long-term care insurance. The goal of this article is to provide you with the facts you need to make an informed decision on the need for long-term care planning for yourself and your family.

Myth: It is difficult to qualify for benefits.

The reality is that it is relatively easy to qualify for benefits. The two benefit triggers are (1) you cannot perform two of the six activities of daily living (as a result of an accident or chronic disease) or (2) you have severe cognitive impairment. Approximately half of the long-term care claims are Alzheimer's, and Alzheimer's patients are being diagnosed much earlier (some in their fifties), as a result of more sophisticated diagnostic techniques. The other large claims are the result of cancer, cardiovascular disease, diabetes, osteoporosis, arthritis, Parkinson's, and similar chronic diseases. If you go on a disability claim and are using your disability policy, the chances are very good that you also qualify for long-term care services.

Myth: These are nursing home policies.

The reality is that most long-term care services are being given in the home. A long-term care policy covers home health care, assisted living facilities (which have medical floors and Alzheimer's units), nursing homes, and adult day care. A policy helps keep you out of a nursing home by providing options for you. You have control over where you will receive care and who will be providing the care for you. Most people want to receive care in the home. Home health care is an array of services that include licensed and certified home health aides, homemaker services, and skilled care (nurses, physical therapists, etc.).

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The U.S. News and World Report has issued a report on the best nursing homes in America. From the website: "All of the homes shown received 5 stars, the highest overall rating, from the federal government's Centers for Medicare and Medicaid Services. A facility's overall rating is geared to its performance in health inspections, nurse staffing, and medical care. Homes are ranked in tiers according to their star ratings in the three individual areas. Within each tier, the order is alphabetical."

Here's the list for North Carolina.

 

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The stress of moving into a nursing home is great -- and it's compounded by the loss of freedom, dignity and privacy.

Adding to the anxiety is the fact that people moving to an elder care facility often have no choice. They may no longer be able to care for themselves without risking injury.

Family members should become advocates and observe their loved one's care and living conditions. Concerns should be discussed with the staff. And be aware that federal laws and various state laws provide nursing home residents with specific rights. For example, under the Nursing Home Reform Act, (OBRA '87) a number of protections are present, including:

Privacy and Confidentiality:

Residents can keep and use personal belongings and property as long as the items don't interfere with the rights, health, or safety of others.

The Right Choice Living in a nursing home will probably never be the same as living in a personal home. But the burden can be eased by choosing a facility that treats residents with respect and follows the law. For more information about what to look for, click here to read our previous article, "The Business of Care Giving."

Married couples can share a room if both spouses reside in the same facility.

Confidential medical and personal records must be made available. Residents have the right to review their medical records within 24 hours of making a request, and staff members must ask permission to release personal records to others.

Residents are allowed privacy in their rooms and during medical treatments. Privacy should also be available during telephone calls, visits and meetings with other residents. Mail should be received unopened. Residents have the right to see family members, a resident advocate, a physician, service providers, or representatives of the state or federal government.

Residents can plan their own daily activities, wear their own clothes, and participate in social, religious, and community activities that do not interfere with the rights of other residents.

Medical Care:

Medications and treatments can be refused. Residents have the right to see their own doctors and must be informed about their conditions and medications.

Equal access to quality care must be provided, regardless of whether residents pay privately or receive Medicare or Medicaid benefits.

Financial:

Residents can ask a nursing home to handle personal funds, but the facility must follow state and federal recordkeeping requirements. However, residents also have the right to manage their own finances unless a guardian or conservator has been appointed.

Relocation:

Notice must be received before a resident's room or roommate is changed.

Residents can refuse transfer to another room if the purpose is to move from a Medicare bed to a Medicaid bed, or vice versa. When it comes to a discharge or move for other reasons, such action must be necessary for the person's welfare; required to protect other residents; or appropriate because care is no longer needed. A move or discharge can also be made because a resident failed to pay bills or the facility is closing.

Abuse:

Residents must be protected from physical and mental abuse, neglect, mistreatment and misappropriation of their property. They must be allowed to stay with other residents and remain free from physical or chemical restraints except in emergencies.

 

Grievances:

Complaints about care or treatment must be allowed without punishment.

Residents must be informed about their rights. The facility must provide a written statement of rights if asked. The facility must investigate all claims of violations and report the results of the investigation to authorities if warranted. There must be a quick resolution of grievances.

 

North Carolina has Bills of Rights for Nursing Home Residents as well as Residents of Adult Care Homes.

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The North Carolina Medicaid program paid a total of $52,575.14 in nursing home costs for Sallie Anthony. After Mrs. Anthony's death, Anna Thompkins, who would become the Executrix of Anthony's estate, contacted the State to inquire about its claim for the Medicaid expenditures. She then completed the probate of the Estate without paying the State. Some time later, the State filed suit against Thompkins, who defended herself by alleging that the statute of limitations had expired. The Court ruled for the State because the statute of limitations did not expressly apply to the State and, in the absence of express inclusion in the statute, the doctrine of nullum tempus occurritt regi (no time runs against the king) applies in North Carolina.

North Carolina Department of Health and Human Services v. Thompkins, 2010 N.C. App. LEXIS 1153 (July 6, 2010)

Source: July 13, 2010 NAELA eBulletin

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You or someone you love may be ready for a retirement community living arrangement, which typically includes lifetime residential accommodations, meals, and some degree of medical services. These facilities can be quite expensive. The good news: Unexpected tax write-offs may help offset the cost.

The tax-saving idea is that you may be able to deduct part of the retirement community's one-time entrance fee and ongoing monthly fees as medical expenses on your Form 1040, regardless of your current health status. Since the fees we are talking about here can be quite large (see right-hand box), meaningful deductions may be possible despite the limitation on medical write-offs. (You can only deduct medical expenses to the extent they exceed 7.5 percent of your adjusted gross income.)

Court Decision Shows the Way

For recent proof that substantial deductions are possible, we can point to a 2004 Tax Court decision. Source: Delbert L. Baker v. Commissioner (122 TC 143 (2004). In 1989, Delbert Baker and his wife bought into a resort-style retirement community. It provided four living arrangement categories:

• Independent living with minimal medical services,
• Assisted living with more medical help,
• Special care (for victims of Alzheimer's and dementia), and
• Skilled nursing with maximum medical services.

The Bakers paid a one-time entrance fee of about $130,000 plus monthly fees of over $2,000 in exchange for lifetime residential and medical care privileges for both spouses. (This was back in 1989. Today's prices would be much higher in many areas.)

 

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Genworth recently conducted a survey of the Cost of Care in North Carolina (Home Care, Adult Day Care, Assisted Living and Nursing Homes).  There are comparisons of the U.S. and NC as a whole, along with the largest metro areas in the state.

 

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I recently gave a presentation on the Legal and Contractual Aspects of Continuing Care Retirement Community (CCRC) Agreements.  The talk was very popular - I planned for 40 attendees and over 140 came!  I thought others might be interested in the topic - click here for the presentation handouts, which include a comparison of several local CCRCs in which I have clients.

Note:  As of June 17, 2010, the handout to which I have linked contains a few corrections to the Carolina Meadows information, courtesy of Liz Rossi of Carolina Meadows.

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This posting is courtesy of attorney Marc Soss of Florida:

The aging demographics of the United States coupled with the Pension and Recovery Act of 2006 (the "PPA”) and Deficit Reduction Act of 2007 (“DRA”) have provided an excellent planning opportunity to create tax efficient vehicles to solve a clients’ long-term care planning needs. Beginning on January 1, 2010, a tax-free planning option will become available for individuals who desire to provide for long-term medical care by utilizing an existing annuity or life insurance contract purchased after 1996. While not a new concept (it dates back to 1997), the 2010 tax-free planning opportunity may be beneficial to an individual with a larger than needed life insurance policy death benefit, unaffordable monthly or annual premiums, an under-performing or matured deferred annuity contract, or the desire to incorporate long-term medical care into his or her estate plan. 

 

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Nursing home coverage for veterans is available from two sources within the Department of Veterans Affairs -- the veterans health care system and the state veterans homes system.

Nursing Home Coverage through the VA Health Care System
Nursing home coverage along with other long term care services such as home care and assisted living as well as geriatric care management are available through the Veterans Health Administration for qualifying veterans.

In order to get into the veterans health care program, the veteran must have service-connected disabilities, or be below a qualifying income level or be receiving Veterans Pension income. Once in the system, veterans are not guaranteed long term care services, including nursing home care, unless they meet specific requirements. Here is a list of these requirements for nursing home coverage.

 

 

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A recorded version of the National Academy of Elder Law Attorneys (NAELA)'s public webcast "Aging in America: How to Plan for it" is available for  through November 30 on the NAELA website. During the one-hour program, AARP and NAELA officials discuss talking with one's parents about aging, family issues in elder care, healthcare decision making, long term care insurance, reverse mortgages and more.

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The National Academy of Elder Law Attorneys  (NAELA) has unveiled its new Senior Housing Locator powered by SNAPforSeniors®, an online navigational tool designed to help easily find senior housing anywhere in the country.

Users can search a database of more than 60,000 senior housing communities, including listings for all licensed senior housing in the U.S. Searches can be conducted by city, county, ZIP code, community name, etc., and can be refined by criteria such as desired care services, payment options, and lifestyle amenities.

According to SNAPforSeniors, there are 247 different senior housing license types across the country and new license types are emerging each year. The NAELA Senior Housing Locator offers definitions for each type.

The site also provides users with a simple way to check how nursing home and rehab communities compare in inspection reports. The listings of all Medicare Certified facilities include a link which takes users directly to each facility’s Nursing Home Compare Report page on medicare.gov, bypassing 7-10 clicks through other pages to find the page desired.

 

 

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Planning for long-term care expenses should be a part of everyone's estate plan by the time they reach 50.  Here's a piece by Alex Townsend, CLTC of Raleigh on why it may not be a good idea to try self-insure:

Things To Consider:

“How much does someone have to be worth to not need long-term care insurance?”

What’s the magic number? How rich is too rich to not need LTC insurance protection? Even though I think that is the wrong question to ask (see next question), my answer is this: If you can write a check each month, indefinitely, for the kind of long-term care that you and your spouse will desire should you have the need, and it doesn’t bother you to write this check, then you may want to pass on LTC insurance.

“I want a number. Exactly how much does someone have to have to not need LTC insurance?”

My answer is a question. How much does someone have to be worth to not need Major Medical or Medicare Supplement or homeowners insurance? The reason I ask these questions is that we don’t think of other types of insurance in terms of whether we have enough money to not need them. Think about it: There are many wealthy people who could afford to rebuild their home if it burned to the ground, and the likelihood of that kind of total loss is minimal. You may want to take this opportunity to review all your insurance with a critical eye applying sound risk management principles. Perhaps LTC coverage is not the only potentially catastrophic cost you should consider
self-insuring. Assuming that you believe in the value of insurance and you insure for other large risks, why is long-term care insurance the one insurance that you won’t buy? Financially astute people don’t make the best decisions every time, but they also don’t make big mistakes. Most wealthy people don’t like their money to be vulnerable. If you buy LTC insurance and never use it, you might say you’ve made a small mistake. If you don’t buy LTC insurance and need it, you might say it was a big mistake.

Other Considerations:

• Today’s average cost (2007) in a skilled facility in the Piedmont NC area is approximately $190 per day or $70,000 per year. In 25 years, at a time you’re more likely to need care, if costs rise at just 5% annually, the cost will be approximately $700,000 per year. A need of 3 years would mean $2,100,000 total costs. Regardless of how much money you have, you or your family probably won’t be happy about writing those kinds of checks!
• The above example assumes just one person needs LTC. What if both spouses need it at the same time? I have clients where this is the case. It can and does happen.
•  How “liquid” will your assets be at claim time? Which asset will you liquidate first? Will you have to sell an equity that happens to be way down at the time? Will liquidation trigger unwanted capital gains taxes? As you save for the eventuality of needing LTC, what if your health takes an unexpected change for the worse sooner rather than later?

Often, after purchasing a policy, I have had many people tell me that they felt a tremendous sense of freedom, relief, and peace of mind saying things like, “now I can enjoy my money because I have so much more confidence knowing I have a resource in place in case the unthinkable happens”.

Plan...then relax!

 

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Nursing homes are being accused by some patient advocates and state long-term care ombudsmen of increasingly evicting patients who are too inconvenient or too costly to care for. And the most vulnerable appear to be those patients with dementia or highly vocal families who are on Medicaid, according to a recent Wall Street Journal report.

The federal government permits nursing homes to evict patients for specific reasons, such as endangering the health or safety of others and needing care only available elsewhere.

The facilities claim they play by the rules and follow federal guidelines, but an increasing numbers of formal complaints about nursing home discharge practices suggest otherwise.

The U.S. Administration on Aging has seen complaints double from 1996 to 2006. And this doesn’t take into account informal complaints or unreported incidents.

The reason for the increase in nursing home evictions – also referred to as involuntary discharges – appears to be financial. Evicted Medicaid patients are replaced by patients coming out of the hospital who pay a higher daily rate for short-term care and rely on Medicare or private insurance to pick up the tab.

This new focus on short-term recovery and rehabilitation makes good financial sense for facilities. One nursing home chain claims it averages $411 a day from Medicare patients but just $166 from those on Medicaid. As an industry, nursing homes report Medicaid reimbursements are $4.4 billion short of the actual cost of care.

Of course it’s the patients who suffer the most. Elderly and frail, they are transferred to other nursing home facilities, hospitals or psychiatric facilities, where they find it difficult to thrive in a totally new environment. The “transfer trauma” they experience results in mental health problems, weight loss, and frequent falls that can lead to death within months of a change in venue.

In comparison with nursing home patients, assisted living residents have even less protection. Management in assisted living centers can evict residents without reason or appeal process just by giving them one or two month’s notice. Here, too, the U.S. Administration on Aging has seen discharge practice complaints soar over the last decade. Accusations are growing that Medicaid patients are being targeted for eviction and two states are pursuing assisted-living companies on these charges.

Source: To be Old, Frail and Evicted: Patients at Risk. Wall Street Journal, 7 August.

 

 

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The Problem: Continuing care retirement communities have been growing in popularity with seniors for years.  Such communities usually require a "buy-in" upon admittance and many provide for a refund of a portion of the fee upon death.  The contracts (often called Residence and Care Agreements or the like) generally provide that the refund will be paid to the estate of the resident.  The trouble with this is that the refund triggers probate even if there are no other probate assets.  Since the refunds are often hundreds of thousands of dollars, unnecessary probate fees of $1,000 or more often result.

The Solution:  For those residents with living trusts, this can be avoided by a simple amendment to the Residence and Care Agreement that provides that the refund will be paid to the resident's living trust rather than his or her estate.  The amendment (or addendum, as some facilities call it) must be signed by the resident and the management of the facility.

For those residents without living trusts, the cost of having a trust prepared will generally be at least equaled by the probate cost savings alone, not to mention time and trouble avoided by escaping probate.

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The U.S. government's Center for Medicare and Medicaid Services has released a report listing the poorest quality nursing homes in the country.  One is in North Carolina - Sunbridge Care and Rehab of the Triad in High Point, which has been poorly performing for 34 months!

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A recent article in the Raleigh News and Observer describes how many assisted living and nursing homes in North Carolina lack liability insurance, as state law does not require it.  This, and the fact that it is difficult to prove economic damages to a family due to the death or injury of an older and possibly disabled person, often leave families with little recourse when a loved one is the victim of neglience in an elder care home.

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