Chapter 29 Unpleasant But Necessary—Health Care Issues for Seniors

“Get everything done before you are.”

Do I Need to Read This Chapter?

● Have I thought about what will happen to me if I become disabled ● Do I need to provide for my own long-term care? ● Am I clear on how to qualify for Medicaid in the event that I lack long-term care insurance?

● Have I considered a prepaid funeral? ● Do I understand the life insurance provision known as the accelerated death benefit?

● In the event of total incapacity,do I want my life to be artificially prolonged? ● Have I drawn up a living will?

Although we do not like to discuss death and disability,at some time these areas must be covered.Especially as a woman,the odds are that you will be alone if a severe disability hits you.Just walk through any nursing home and see the imbalance in numbers between women and men.

Is Long-Term Care Insurance Important?

All of us who own a house have homeowner’s insurance to protect us from the possibility of a fire.Yet,if you are over the age of 65,you have about 10 times the chance of going into a nursing home as you do of having your house burn down.We do not,for most of us,think of long-term care insurance (LTCI) to protect us from the possibility of the tremendous costs of a nursing home stay.

What choice do you have if nursing home care is required? Of course,you could pay for it out of your own pocket,or you could deplete your assets down to a level of meeting state requirements of Medicaid.But that would mean that you would have to give your assets away to meet the 60-month waiting period. Long-term care insurance is an answer to keeping you independent while protecting the assets you worked your entire life to acquire.

What Should I Look For in a Long-Term Care Policy?

Recognizing the market for long-term care,many insurance companies are offering some protection,usually pertaining to convalescence in nursing homes or similar health care facilities.Before purchasing such a policy,acquaintyourself with the many terms and concepts they entail: 1.Type of care. ● Skilled care. A 24-hour-a-day-care program. ● Intermediate care.Occasional nursing assistance and rehabilitative care. ● Custodial care. Helping with normal needs (bathing, eating, etc.).

Medicare does not cover this. 2. Elimination period.In order to reduce the high cost to you,an elimination period is imposed.This elimination period (from 21 to 365 days) places the cost of daily maintenance on the covered individual for the number of days you choose before the insurance begins to pay.Naturally,the longer the elimination period,the lower the insurance premium.Consider a longer elimination period if you have other assets available to get you through this initial period.Also,make certain that your daily reimbursable rate,once the elimination period is over,is at least two-thirds of the total daily cost of your care.

3. Guaranteed renewability.The policy you choose should have no termination date but should be renewable for life. 4. Prehospitalization requirement.Make certain that the policy does not require that you be hospitalized before being admitted into a nursing home. 5. Alzheimer’s and other disease coverage.Certain conditions may not be covered under the policy such as Alzheimer’s,which in insurance language is known as an “organically based medical condition.” 6. Inflation adjustment.This is a provision that will provide for automatic benefit adjustments to cover any inflationary increases in long-term cost care. 7. Medical history.Be certain you understand about any “preexisting”medical clauses in the policy. 8. Facility approval.Find out,before you sign up,if the facility you choose is approved by Medicaid so that you can qualify for future benefits. 9. Tax deduction.Just as a sidelight,a portion of the premiums for LTCI is tax deductible if you itemize your tax return.What you do is to add your premium costs to other medical expenses (not reimbursed),and if the total amount exceeds 7.5 percent of your adjusted gross income,you have a deduction.

Will Medicaid Cover My Long-Term Care Needs?

People who do not purchase long-term care insurance may eventually qualify for Medicaid,by transferring their funds to other parties.Although I am not in favor of this method of protection,let me explain the procedures.Before August 1993,people who transferred funds to other parties could be ineligible for Medicaid coverage if their transfer took place less than 30 months prior to entering a nursing home.Then the law increased the time (known as the ineligible,or look-back,period) to 36 months and added a penalty clause if the transfer was made before the ineligible period was up and the individual filed for Medicaid coverage.In 2006 the look-back period was further increased to 60 months with new penalties added.Here is some good news for married couples.Although it is true that you must get rid of most of your assets to qualify for Medicaid,you do not have to go broke entirely.An at-home spouse can keep up to half of all financial assets with a maximum reaching a bit over $70,000 (varies depending upon your state).You may,in addition,also keep the house,the car,and personal and household effects not included in the maximum figure.

Also,if you want to avoid giving everything away in order to apply for Medicaid,grant a Power of Attorney to your children,with instructions for them to enforce the power by paying for your stay out of your funds if you should enter a nursing home,keeping the balance only after you have rightfully qualified for Medicaid.

Bear in mind (depending on the state in which you live) that there could be a significant difference in the type of care facility and neighborhood you will experience under private pay versus Medicaid.That one factor alone should make you give a second thought to transferring your assets to your children and living under “artificial poverty”for an event that may never materialize.

What about Prepaid Funerals?

As I have stated before,a female will usually outlive her mate.Thus you will probably make the funeral arrangements for him;but when you die,who will do this for you?

With today’s high cost of funerals,leaving decisions to your grieving family does not make much sense.You could arrange with a funeral home for a prepaid plan where you would specify the type of casket and services you would want and then pay for it in installments or one lump sum.This type of plan is designed for those individuals who do not want to burden their family with high funeral costs or who have no family and no one to make necessary arrangements.There are,however,disadvantages to this arrangement.You may change your mind,you may move,the funeral home may go out of business,or any number of other possibilities.

Prepaid funeral programs are not considered assets for Medicaid eligibility, and so the state cannot make you use the money in the contract to pay for nursing home care. Bear in mind that the average funeral cost is about $7,000.

The best method is to plan and pay for your funeral without involving a funeral director or giving up control of your money.Simply write down what you want done,and give copies of these instructions to your family or to whomever you may appoint to enforce your power of attorney.

Yet the most sensible method to set aside money for a funeral is to open a Totten trust.In this type of trust,you state that upon your demise,the funds should go to the person designated,who is responsible for your funeral.No lawyer is needed to establish this trust.Because the trust is revocable,you can add or take out money anytime (you may decide that a wooden deck is preferred to a wooden casket),but taxes must be paid on any income from the trust.Although the proceeds will be included in your estate,this trust is not subject to probate,and so the money can immediately be spent.Any investment vehicle can be used.A simple bank account with a paid-on-death (POD) beneficiary may be all that is needed.

What Is the Accelerated Death Benefit?

The accelerated death benefit, also known as ADB (see Chapter 16),is a provision in a life insurance policy that allows a living person (the insured) to collect tax free a partial value of the death benefit of the policy while he or she is still alive.This situation can occur if the insured is terminally ill and needs money immediately.For the first time in life insurance history,a person does not have to die to make the death benefit available.What a wonderful idea to be able to have some of that money now so that the insured could close his or her life accomplishing some long-held dreams (vacations,gifts,debts paid,etc.) that he or she would never have been able to do were it not for this clause in the policy.

However,ADB defeats the major purpose of life insurance,which is to provide for the surviving beneficiary,who must live after the insured passes away. An alternative to the accelerated policy is to borrow against the policy’s cash surrender value,if only because that income is not taxable.

Do You Need a Living Will?

A living will takes care of you as you die,not afterward. And that is so important to understand.

I believe that a living will should be drawn up by an attorney.Prepared forms can be obtained from various organizations and may be acceptable,but since the area of living wills is so debatable,I would choose the attorney route for the small additional cost involved.After the will has been completed,I urge you to discuss its contents with your family so that they will understand in

absolute terms that it is your intent to have your instructions carried out regardless of how they may feel.

A living will should state that you do not wish to have any medical procedure done for you that would artificially prolong your life.“No extraordinary measures”is a phrase commonly used.A while back I came across a letter describing the feelings of an individual regarding “right of choice,”and thought it appropriate in this chapter.

To my family and/or caregivers:

Realizing that death is a certainty and as much a part of life as being born, if the time comes when I can no longer take part in decisions for my own future, I wish this statement to stand as an expression of my wishes while still of sound mind. I fear the indignities of deterioration, dependence and hopeless pain more than death itself. I therefore ask that medication be mercifully administered to help relieve my suffering. And if there is no reasonable expectation of my recovery, I request that I be allowed to die with dignity and not be kept alive by artificial means or heroic measures.

What to Think About

In effect,a living will expresses your wishes and enforces your decisions when you are no longer able to do so for yourself.Far from a token gesture, it is a document to be taken seriously and administered with the utmost care. As you contemplate the creation of your living will,take these issues into account:

1.Different states have different requirements for completing and signing a living will. 2.The necessary number of witnesses may vary. 3.Some states specify that witnesses may not be related to you. 4.A notary public may need to attest to the signing of your living will. 5.In some states,living wills are valid for limited periods of time and thus must be updated regularly. 6.Do you live in different states at various times of the year? If so,you must create separate living wills and medical proxy documents (health care proxies) for each state where you reside—not just the one you claim as your primary residence.This is the only way to be sure your wishes will be honored, regardless of quirks in laws from state to state.

A health care proxyis a written document granting an individual (agent), designated by you, to make decisions (if you are not able to do so) for you in all medical situations based upon your predetermined wishes and beliefs.

Will My Living Will Affect My Insurance Policies?

I have been questioned about insurance coverage and the living will.Public policy and state statutes explain that living wills cannot affect an individual’s insurance contract.A person’s personal decision to have life-support systems withheld or withdrawn is not to be considered suicide and thus in no way can invalidate any life insurance policy.But there is much more to say about feelings of choice.I firmly believe that it is each patient’s right to decide on his or her life and death.With a person’s expectations for life,a person’s feelings of pain,and a person’s expenditure of money,that person is the one who will ultimately pay the price.Therefore,to that person belongs the right to call the tune.But it doesn’t always happen that way.

Many adult children or even spouses will not permit the disconnection of a feeding or breathing machine regardless of the wishes of the patient,because most of us do not wish to let go.“Perhaps later,”we may say,“after a forthcoming rite of passage (anniversary,graduation,wedding,birth of a grandchild,etc.),but not now.”We therefore attempt to extend the time by machines and tubes and insane efforts to keep the patient breathing a few more days or weeks.A desperate need born of guilt.All of us must learn to close and say good-bye.Closing does not mean shutting the door and turning away.Closing is the realization that there is our own life after the death of a loved one.It is in the form of memory,and becomes our responsibility to carry that memory while living life to the fullest.Every family member must understand this.

And on the topic of life and death,there is nothing that nature has made necessary which is more easy than death;we are longer coming into the world than going out of it.There is not any minute of our lives wherein we may not reasonably expect death.The more complete one’s life is,the less one fears death. People are not afraid of death,per se,but of the incompleteness of their lives.

It’s a Wrap

● Long-term care insurance can protect your estate from being depleted by long stays in a nursing home or similar facility. ● Study the provisions of any long-term-care policy very carefully,using the guidelines in this chapter as a starting point. ● Medicaid,a type of government health insurance,will pay for long-term care under certain conditions,but be aware of the stringent requirements. ● Each state,through its office of aging,has a public official who can help guide individuals and families through the maze of long-term complexities. ● The most sensible way to set aside money for your funeral is through a simple and revocable vehicle known as a Totten trust. ● Certain life insurance policies offer an accelerated death benefit,allowing you to collect on your policy while you are still alive. ● By creating a living will,you can gain control over medical procedures that would artificially prolong your life.

“The fear of death keeps us from living,not from dying.”