550 Forest Avenue Suite 205
Timothy M. Vogel, Esq.
Matthew R. Dubois, Esq.
Elder Law Q&A
Nine Steps to Long-Term Care Security
At Vogel & Associates we stress Private Sector Long-Term Care Planning. It is the answer to the question we have been asked many times: "I really do believe that the government will not take care of me as I age ... Now what do I do?"
By T. Vogel
A prior version of this article was published in the Maine Lawyers Review, January 29, 1997
Commercials tell older Americans they have earned their retirement. However, the demographics of our aging America plus the cost of long term care force older Americans to plan with diligence if they are to have any security in their future. What older persons need is answers as to how they can use the income, savings and property they have acquired over a lifetime of hard work to provide them with stable living conditions and access to quality health care and long term care for the remainder of their lives.
An Elder Law attorney focuses on helping older persons and their families. The role of the Elder Law attorney is to help clients develop strategies for their individual legal, financial, medical, and long term care issues.
To make answers that work for clients, the Elder Law attorney must coordinate the efforts of other professionals -- accountant, financial advisor, long term care insurance professional, and elder care manager. Almost all older persons, except those with the lowest of incomes and the smallest of savings, need to make plans that will use family resources and private sector financial products to plan for future long term care expenses -- in a nursing home, assisted living or at home with home health care. Such persons will have little or no expectation of assistance with such long term care expenses from state or federal governments, through such programs as Medicaid. Pressure on federal and state budgets will cause program uncertainty, managed care restrictions, and declining quality in Medicare, Medicaid and other government assistance for the elderly. Older Americans must rely on their own financial resources to create strategies to protect themselves for the balance of their lives without relying on government programs.
For the years ahead, there will be such great pressure on living conditions, health care and long term care for older persons. For many older persons and their families planning for their future care and security will become very important. Leaving an inheritance for the family or reducing estate taxes will become secondary. Here are 9 elements for older persons and their families to consider when planing for their livelihood and long term care.
Many elderly do not appreciate the significant role of their home for their future care and security. With declining government support for long term care services, it may become necessary to access the value of the home for essential long term care expenses. The financial value of the home may be made available through a home equity loan, reverse annuity mortgage, or the proceeds from the sale of the home. Many older persons desire to make either a lifetime gift or bequest of the home to their family without appreciating the financial, tax and long term case impact of such a transfer. More older persons will have to use the home to provide financing for adequate care for themselves and their spouse during the remainder of both their lives.
5. FAMILY CARE AND ASSISTANCE. With declining government assistance, family help will become essential for many older persons. When family is available locally, such help may be care giver assistance or the coordination of hired home care providers. For some older persons, financial contributions from their children and other family members may be important. However, only in limited circumstances can a child claim a tax deduction for financial support of a parent. The tax deduction is allowed only if the parent becomes the child's dependent because the child provided more than half of the parent's income. This is uncommon as very few children contribute enough to overbalance the parent's Social Security, pension and other income. Congress could improve tax law by providing children with a tax deduction for financial contributions they make to their parents.
With the decline of Medicaid and other government long term care programs, many families will discover the importance of alternative and combined housing for their older family members. There will be an increase of 'in-law apartments.' Families may be able to provide quality long term care services for their parents for a number of months or years through an in-law apartment or an addition onto either the parent's or the children's homes. It is possible to finance such improvements if the parents and the children both sell their existing homes and purchase a new property specially designed to accommodate both families.
Following the last Presidential election there has been an agreement among politicians from both parties that something must be done about Medicare. Premiums will likely grow for all Medicare recipients, and may possibly be increased more for wealthier individuals. While health insurance is well fairly defined and stable at this time, any major Medicare change will cause great uncertainty in future health care and financial planning for older persons.
With changes in Washington and Augusta, the future of Medicaid is too uncertain for financial planning. Congress may transfer much Medicaid eligibility, coverage and funding authority to the states. That will cause great variations among the Medicaid program in various states, such as Maine, Massachusetts, and Florida. Financial eligibility and coverage is likely to become much more restrictive under any new Medicaid or other government long term care program. Managed care rationing, such as the type Maine is using to cut Medicaid nursing home coverage through the strict MED96 reviews, will increase. The Medicaid Estate Claim will continue to collect for the cost of Medicaid the deceased received from the home or any other real estate left by the deceased. Congress considered, but did not pass in 1996, a bill to allow the states to make children immediately and personally financially liable when their parent receives Medicaid.
All these elements of Medicaid -- uncertainty, instability, restrictive eligibility and coverage, and increased cost recovery -- are clear messages that older persons should avoid Medicaid if at all possible. Older persons and their families will be able to rely on their own legal, financial and long term care plans much more than they can rely on federal or state programs.
Vogel & Dubois