Q: If I need nursing home care, will Medicare pay for it?
A: Medicare, the federally funded health insurance which you receive at 65, will only pay for skilled nursing care under certain circumstances and only for a limited period of time. Unless all of the requirements are met. Second, you must need “skilled” care for treatment of the illness or injury for which you were hospitalized. “Skilled” nursing care is care under the daily supervision of a doctor, registered nurse, physical therapist or other licensed professional. Third, the skilled care must be restorative in nature, such as physical therapy to help you to start walking after a stroke.
If all of these requirements are met, Medicare will pay 100 percent of the cost of care for up to 20 days. From the 21st day through the 100th day, Medicare will pay any amount due over $161.50 per day in 2016. Medigap insurance (supplemental health insurance coverage) may cover the $161.50. In 2017, the co-insurance payment may increase. Some Medicare HMO plans may pay for the full hundred days at 100 percent or may have a different co-insurance payment amount. Be sure to check the Medicare HMO coverage for skilled nursing home care.
Medicare only pays as long as you require the skilled nursing care. After the 100 days, or once you no longer require skilled care, Medicare pays nothing towards cost of the nursing home. Because of these limitations, Medicare only pays about 2 percent of the cost of care for nursing home residents.
It can be helpful to consult with an elder law attorney to make sure that appropriate planning is done to determine how to pay for nursing facility care if Medicare will not pay or for when Medicare payments stop. Long-term care planning can protect assets and can help a family understand how to deal with the situation when a loved one enters a nursing home.
Q: If my spouse goes into a nursing home, will we have to sell our cemetery plots and our car to be eligible for Medicaid?
A: You and your spouse may own as many burial plots as you wish and still qualify for Medicaid to pay for a nursing home. Burial plots are considered to be “exempt resources” and are not counted with regard to eligibility for benefits by the Department of Human Services.
A single car is also considered “an exempt resource” and is not counted in determining eligibility for Medicaid. If possible, it is a good idea to put the car into the name of the spouse living at home, rather than leaving it in the name of the spouse in the nursing home.
It can be helpful to consult with an elder law attorney to make sure that appropriate planning is done with regard to long-term care and with regard to your estate.
Q: If my spouse or I need nursing home care, what should we do to be sure that we have enough money to pay for our funerals?
A: If there is a possibility that you or your spouse may need long-term care, it is a good idea to pre-arrange or prepay for the funerals prior to exhausting your assets. There are several ways to do this.
One way is for each of you to open an irrevocable (which means it cannot be changed) burial reserve account at a bank. If the account owner passes away, the funeral director can withdraw the money by presenting the bank with a death certificate and a funeral bill. If the funeral costs less than the amount in the account, the funeral director will return the extra money to the family or to the decedent’s estate. Since the burial reserve account is irrevocable, it is not counted as a resource in determining Medicaid eligibility. In 2016, a sum up to $17,096.00 can be placed in an irrevocable burial trust in Allegheny County. This amount varies by county.
A second way to pre-arrange a funeral is to prepay for the funeral at a funeral home. You and your spouse would select the type of funeral you want and pay that amount. You can use cash to prepay the funeral home or transfer life insurance policies to a funeral home as the source of payment.
It can be helpful to consult with an elder law attorney to make sure that appropriate planning is done with regard to pre-arranging or prepaying for a funeral as well as to help deal with other long-term care planning issues.
Q: Should I put my child’s name on my bank accounts so that he or she can have access to my funds if I become disabled?
A: Rather than making a child a joint owner of your bank accounts, it is better to have a child listed as your agent or power of attorney on the accounts so that your child can make deposits or write checks for you if you became disabled or incapacitated.
There are several reasons why you may not want to list your child as a joint owner. First, if your child predeceases you and is a joint owner, you can end up paying Pennsylvania inheritance taxes on your own money. Second, if your child gets divorced, the joint account may be considered an asset to be divided in the property settlement. Third, if your child has a lot of debts, creditors may try to go after the money in joint accounts to pay bills. These are just a few reasons why it may not be a good idea to make a child a joint owner of your bank accounts.
It can be helpful to consult with an elder law attorney to make sure bank accounts and other assets are appropriately titled as well as set up a durable power of attorney to enable your child to help you if you become disabled.
Q: Can I make tax-free gifts to members of my family?
A: It is always nice to make gifts to your family. In 2009, for federal tax purposes, you can make a gift of up to $14,000.00 per person each year (in 2016), whether the gift is in cash, stock, savings bonds or other assets. This is known as an “annual exclusion gift.”
The gift is not considered to be income by the person who receives it, so it does not have to be listed on a personal income tax return. However, please be aware that large monetary gifts may affect your eligibility for Medicaid for a period of time if you need nursing home care within five (5) years of making the gift.
It can be helpful to consult with an elder law attorney to make sure that appropriate planning is done with regard to estate planning and making large gifts. Long-term care planning can protect assets and help a family deal with the situation when a loved one enters a nursing home.
Q: What estate planning documents should be prepared as part of a long-term care plan?
A: When doing a long-term care plan, it is a good idea to discuss your needs with an elder law attorney. This plan may include the preparation or review of a will, a power of attorney and a living will. You may also want to discuss having a trust prepared. It might be an irrevocable trust or a special needs trust for a disabled child. You might also want to review your insurance policies or other accounts with named beneficiaries, such as IRAs, 401(k)s or retirement accounts, to check the beneficiary designations, making sure that there are both primary and contingent beneficiaries.
It can be helpful to consult with an elder law attorney to make sure that appropriate estate planning is done with regard to the preparation of estate planning documents, taking into consideration your particular family needs, your assets and your goals. Long-term care planning can help to protect assets and can help your family deal with the situation should a loved one need to enter a nursing home or an assisted living facility.
Q: What is a last will and testament and why should I have one?
A: A last will and testament is a writing in ink, signed at the end, and dated which clearly indicates what is to be done with one’s property following death. A will gives the testator, the person for whom the document is prepared, the opportunity to decide what happens to his or her assets after his or her death. A will permits the testator can do a variety of things, such as:
- Name guardians for minor children
- Set up trusts to provide funds for minor children during their minority
- Set up special needs trust to provide funds over the lifetime of incapacitated or disabled minors or adult children
- Set up a trust for a spouse
- Give money outright or in trust to charities
- Provide money for a pet
- Make specific bequests of items of personal property or real property
A will should also indicate who is to be in charge of the decedent’s affairs, a personal representative known as an executor (male) or executrix (female). It is usually best to name one person as the primary representative and someone else as a contingent representative if the first named person cannot serve. The named person should be someone trusted by the testator to collect assets, to pay bills and taxes, and to make distributions to the testator’s beneficiaries in accordance with the terms of the will.
Without a will, the intestacy laws of the state in which one is resident at the time of death determine who receives the decedent’s property. For example, if a married Pennsylvania resident with two children dies without a will, the intestate law of Pennsylvania provides that his estate be divided, with his wife receiving the first $30,000.00 plus one-half of the rest of the estate and his two children splitting the remaining one-half of his estate. The decedent may have wanted his entire estate to pass to his wife or he may have even wanted to disown one of his children. Unfortunately, since the man did not prepare a will, the result he desired will not occur.
In addition, if a person dies without a will, an administrator or an administratrix is appointed by the Register of Wills to handle the affairs of the estate. State law determines who has the right to serve. The person indicated in the statute may not be the person the decedent would have wanted to handle these matters. For example, in the prior situation, the man’s wife would have the first priority to be sworn in to administer his estate. If she was in poor health or unused to handling financial affairs, she may not have been the person that the decedent would have selected to serve as his personal representative.
It is important to decide about who will receive your assets after death and to decide who will be in charge of handling your estate. An elder law attorney knowledgeable in the area of estate planning can help you prepare a last will and testament that follows your wishes and carries out your plans after death, rather than leaving it up to state law.
Q: When do I need to update my will?
A: It is a good idea to review your will periodically with a lawyer to ensure that it still accurately reflects your wishes. It is especially important to review your will when circumstances change, for example, if a spouse or child dies, you divorce, win the lottery, or move out of state. It is also important to review your will when the law changes, such as, when the federal estate tax is adjusted.
Q: How important is it to have beneficiary designations on certain types of assets?
A: Certain types of assets should have specific beneficiary designations. A beneficiary designation means naming the person or persons who will receive that specific asset on the death of the owner. In addition to naming a first beneficiary, it is also a good idea to name a second, or contingent, beneficiary in the event that the first beneficiary passes away first. Sometimes, a named beneficiary may be a trust for minor children or children with disabilities. It is important to properly name the beneficiaries so that the right person or persons receive the asset on the owner’s death.
The types of assets that usually have beneficiary designations include life insurance policies, annuities and IRA accounts, 401(k) accounts, or other types of retirement accounts. Savings bonds may state “payable on death” or “POD,” which is similar to naming a beneficiary.
It is most helpful to review beneficiary designations with an elder law attorney knowledgeable in the area of estate planning to make sure that the beneficiary designations are described correctly. There may also be other estate planning issues that need to be addressed.
Q: Is there a way to pass bank accounts through to my children without probating a will? Should I make the accounts joint?
A: If you want the bank accounts to pass to your child or your children after your death, and you do not want the accounts controlled by your last will and testament, you may want to have the accounts titled as “in trust for” them. The “in trust for” designation is preferred to having a child listed as a joint owner.
Making a child a joint owner of an account can give them access to your money. Joint ownership may also make the account available to their creditors or subject to division with a child’s spouse if the child gets divorced. You may even have to pay inheritance taxes on your own money if your child predeceases you.
It can be helpful to consult with an elder law attorney to make sure that appropriate planning is done with regard to the titling of assets and making beneficiary designations. It may also be helpful to discuss other estate planning and long-term care planning issues.
Q: What is a durable power of attorney and why should I have one?
A: A durable power of attorney is a legal document in which you, the principal, give authority to someone else, the agent, to handle financial matters for you (such as making deposits, writing checks, selling assets) and/or to make medical decisions for you. If the power of attorney is durable, it will remain valid even if you become incapacitated. Having a power of attorney does not take away your authority. It only enables someone else to act for you, if needed, which is why It is important to choose someone you trust as your agent.
A durable power of attorney should be prepared now so that, if you become incapacitated, your agent can act without the need for court intervention through a guardianship proceeding. A guardianship is much more costly and time consuming as well as being much harder on your family than having a power of attorney prepared. There is also less privacy with a guardianship because the guardian must file an inventory of your assets with the court and annual reports.
A power of attorney can be immediate, which means that it can be effective once it has been signed by the principal and the agent, or “springing,” which means that something has to happen to make the document effective even after all parties have signed it. For example, a springing power of attorney may require a doctor to indicate that the principal has become incapacitated for it to become operative. This information can be difficult to obtain due to privacy laws, such as HIPAA.
The laws on powers of attorney changed on January 1, 2015 so if you have an older document, you may want to have it reviewed to be sure that it still authorizes the agent to do what you, the principal, want the agent to do.
A durable power of attorney should be drafted by an elder law attorney to make sure that it contains all of the appropriate authority for the agent to do long-term care planning if you end up becoming disabled and need long-term care at home or in a nursing facility.
Q: When my child turns 18, should a power of attorney be executed by my child?
A: When a child turns 18, he or she is an adult. You, as a parent, no longer have access to your adult son or daughter’s medical or financial information without his or her consent. This lack of authority can cause problems if an adult son or daughter is in college and becomes ill or suffers from disabilities.
A durable power of attorney is a document in which an adult son or daughter, called the principal, can authorize a parent, the agent, to make medical decisions for him or her, as well as to handle financial matters (such as making bank deposits or writing checks). If the power of attorney is durable, it will remain valid even if an adult son or daughter is, or becomes, incapacitated.
A power of attorney should be drafted by an attorney knowledgeable in the area of estate planning to make sure that the power of attorney contains all of the appropriate language, especially if an adult son or daughter suffers from any disability, as there may be other issues that also need to be addressed.
Q: What is a guardianship? Is it better than a power of attorney?
A: A guardianship is costly, time consuming and hard on the family. It requires the filing of a petition with the court, obtaining medical testimony and attending a hearing. Once a guardianship has been established, the guardian is required to file annual reports with the court and ask the court for permission before taking many different types of actions. Going through the steps to establish a guardianship can be difficult for a family and the on-going court involvement once it is in place can be burdensome.
It is best to prepare a power of attorney with an experienced elder law attorney while one is able to do so to avoid the time, cost and lack of privacy of a guardianship.
Q: What is a living will and why should I have one?
A: A living will speaks when you cannot and indicates to a doctor or to hospital personnel and to your family what medical treatment you want, or do not want, in the event that you have an end-stage medical condition and/or are permanently unconscious. It may also be effective if you have severe brain damage or brain disease. Having a living will can make it easier for your family to handle end of life decisions.
A living will includes choices for CPR, mechanical breathing, tube feeding and water, surgery, blood transfusions, antibiotics, pain medication and the making of other medical decisions. It allows you to name a substitute decision maker with whom your doctor may discuss your situation when you are unable to speak for yourself.
A living will should be drafted by an elder law attorney to make sure that it is individualized to meet your particular needs and goals as well to help you plan how to deal with life’s other eventualities.
Q: Why is it important to do long-term care planning?
A: It is important to consider how one would pay for the cost of long-term care and to plan how to protect assets if one needs long-term care. A long-term care plan may involve a variety of tactics, such as prepaying for funerals, making burial arrangements, setting up trusts, purchasing long-term care insurance, etc. What is appropriate for a relative’s or friend’s family may not be appropriate for your family.
Long-term care planning can be done ahead of time, while there is time to consider all of the options, or it can be done in a crisis situation, when the options may be more limited. However, even in a crisis, there are choices to be made to help protect your family and your assets.
Consulting with a Certified Elder Law Attorney to be sure that appropriate long-term care planning is done is the best way to protect your family from the high cost of long-term care.
Q: Can Veterans’ Benefits help to pay for long-term care?
A: It is best to contact the Veterans Administration directly to inquire about the extent of these benefits since their availability depends on a number of factors, including the veteran’s classification, extent of a service related disability, discharge status, etc. Aid and attendance benefits from the VA can help the veteran or his spouse.
Q: Is there a way for someone to have access to my medical information or to be able to talk to my doctors?
A: A HIPAA Authorization is a document in which a patient allows another person or persons access to his or her personal health information in accordance with the federal privacy regulations. Everyone going to a doctor or hospital today has to sign these types of papers before medical care is provided.
A patient may not want to provide a full medical power of attorney to someone but may wish that person to have access to only certain medical information. HIPAA authorizations may be signed as part of an estate planning process to enable your attorney or some other person to access medical information, such as to help make a springing power of attorney operative.
Q: What is a revocable living trust?
A: A “revocable living trust” is a legal entity which you can create to which your assets, such as bank accounts, investments, your home or other assets, can be transferred. A trust is managed by a person known as a trustee. The trustee can be you, a family member or a bank or trust company. The trustee manages your assets in accordance with the written instructions contained in the trust document.
Living trusts are usually revocable (easily canceled), which is why they are usually called revocable living trusts. However, a trust can also be irrevocable (noncancellable). It is important to know which type of trust will best help. Examples of different trusts include:
- Testamentary trusts — trusts contained in a last will and testament
- Revocable living trusts (RLT) — set up during a person’s lifetime; the person who sets up an RLT, the settlor or grantor, can revoke or cancel the trust at any time
- Irrevocable trusts — once one is set up, it cannot be revoked or changed without permission from a court or all of the involved parties; can be useful to give up control of certain assets for estate or long-term care planning situations
- Special needs trusts — set up to provide funds for a disabled beneficiary, often a minor or an adult disabled child; there are different types of SNTs depending on who provides the money to fund the trust and what happens to the money after the beneficiary’s death
- Charitable trusts — set up to benefit a charity or charities
- Tax shelter trusts — often part of a last will and testament to help use up federal estate tax credit on the death of the first spouse and used to pass assets to beneficiaries such as children free of federal estate tax
A trust has beneficiaries — the people who receive the benefit of the income or the trust and who may eventually own the assets of the trust. It is important to consider the purpose of the trust to determine who the beneficiaries and contingent beneficiaries will be.
Revocable living trusts are heavily sold by some attorneys and others as substitutes for wills. However, a living trust may or may not be right for you. A living trust is not something you buy from a salesperson at your door or from a brochure you receive in the mail. A revocable living trust will not usually save taxes, whether these taxes are inheritance taxes, federal estate taxes or income taxes.
A revocable living trust may have a Tax Identification Number, just like a person or a business, and may be required to file an income tax return. To set up revocable living trust, assets will have to be retitled into the name of the trust, which may cost something. A revocable living trust may or may not make the handling of a deceased person’s affairs easier. It is not usually a good way to handle real estate. It is best to avoid fast talking salespeople who are selling revocable living trusts door-to-door or following a “free seminar” or lunch. Whether a trust is appropriate or not or what type of trust is appropriate are questions best answered by an experienced elder law attorney.
The best way to determine whether or not you need a living trust is to consult with an elder law attorney who will review your needs and your family situation.
Q: What is long-term care insurance?
A: Long-term care insurance is a policy bought to help deal with the costs of long-term care. Some of the factors affecting the cost include the daily benefit amount ($150/day or higher), the term of the coverage (how many years the policy will pay for) and the length of the elimination period (when the coverage starts), the type of inflation protection and the age at which the policy is purchased.
Some of the purposes and uses of LTC insurance are to:
- Shift risk to the insurance carrier
- Protect a lifetime of savings
- Provide security to family
- Make long-term care choices easier
- Protect estate plans
It is important when considering a Long-term care insurance policy to compare and review policy features for several policies through the use of a long-term care insurance broker. It is also important to compare the costs of different policies and check on the financial strength of the companies using a rating service.
An experienced elder law attorney can discuss long-term care insurance with you or help you review policies so that you can decide what coverage, if any, is best for the needs of you and your family.
Q: What is probate or estate administration?
A: When a person dies owning assets in his or her name alone, an estate must be opened. If he or she has a will, it must be “probated,” which means the will must be filed at the local Register of Wills office and the person named in the will to administer the estate, the executor, must be sworn in. If a person dies without a will, estate administration must be started by swearing in a family member as the administrator at the Register’s office.
The administration of an estate consists of collecting the assets that belong to the estate and by paying the debts of the decedent. Pennsylvania inheritance taxes may need to be paid. Lastly, the remaining property in the estate is distributed to the heirs or beneficiaries in accordance with the terms of the will, or in accordance with state law if there was no will.
The loss of a loved one can be overwhelming. It is best to work with an elder law attorney to help you probate a will or to administer the estate. This facilitates the transfer of assets to the proper heirs of a decedent and ensures that the entire process goes as smoothly as possible.
Q: On what assets must Pennsylvania inheritance taxes be paid? When are the taxes paid?
A: Pennsylvania inheritance taxes are paid on the assets owned by a decedent at the time of death. The taxes are calculated on the net value of the assets after the payment of debts and expenses of the estate. Such taxes may also be due on jointly titled assets, bank accounts held in trust for another person or on assets one inherits as a beneficiary, such as an annuity contract. Some assets, such as life insurance, are not subject to inheritance taxes.
The Pennsylvania inheritance tax rate is 4.5 percent for lineal heirs (children, grandchildren, parents, etc.), 12 percent for siblings and 15 percent for everyone else, including nieces and nephews, cousins, friends, etc.
Inheritance taxes must be paid within nine months of the date of the decedent’s death. If the inheritance taxes are paid within three months of the decedent’s death, there is a five percent discount on the taxes due.
It can be helpful to consult with an elder law attorney on a decedent’s estate to make sure that inheritance taxes are paid in a timely manner and so that all appropriate tax deductions are taken so as to save taxes. It may also be helpful to discuss estate planning and long-term care planning issues.
Q: What other issues should be considered as part of a long-term care plan?
A: When going through the long-term care planning process, it may be a good idea to review insurance policies and the coverages each policy provides, such as:
Life (various types — term, whole, universal, variable) —
Is there enough insurance? How much?
Who are the beneficiaries?
Are there primary and contingent beneficiaries?
Automobile — liability, uninsured motorist coverage, underinsured motorist coverage
It may also be a good time to discuss making funeral arrangements and/or prepaying for them, as well as dealing with the purchase of cemetery plots, prepaying for grave opening and closing or perpetual care, prepaying for and designing the grave marker, or even writing obituaries.
It may be a good time to discuss possibly becoming an organ or tissue donor while preparing a long-term care plan. Discussing the family situation with an experienced elder law attorney can help you to see if any other concerns that need to be addressed, such as children with special needs, family members going through divorce or financial difficulties, etc.
Q: What is the difference between Medicare and Medicaid?
A: Medicare is a federal health insurance program administered by the Centers for Medicare & Medicaid Services (CMS). To obtain more information about Medicare or about the Medicare Part D prescription drug plan: call 1-800-Medicare (1-800-633-4227) or visit www.cms.gov or www.medicare.gov.
Medical assistance (Medicaid) is a joint federal and state welfare program governed by the Social Security Act and various state regulations. It is also administered by CMS. In Pennsylvania, the Department of Human Services (DHS) manages medical assistance using local County Assistance Offices (CAOs). For more information about medical assistance in Pennsylvania, contact your local County Assistance Office.
Medigap insurance is private supplemental insurance designed to help pay Medicare cost sharing (coinsurance) amounts. It is sold to cover the gaps in the coverage provided by Medicare. There are nine standard policies, Plans A through G, K and L. Each offers a different combination of benefits.
Q: What is a reverse mortgage, and do I need one?
A: While a regular mortgage requires you to make monthly payments to a lender, a reverse mortgage allows you to receive money from the lender based on the equity in your house. You generally do not have to pay back this money for as long as you live in your house. Instead, the loan is repaid when you die or sell your house, or your house is no longer your primary residence. Once the loan is repaid, any remaining equity is retained by you or your heirs.
The proceeds from a reverse mortgage are generally tax-free and do not affect your eligibility for Medicare or Social Security, but may affect eligibility for other government benefits. A reverse mortgage is not income or credit-based, but you must be at least 62 years old, and meet other requirements to qualify. Lenders often charge a number of additional fees, including origination and service fees and closing costs, to provide you with a reverse mortgage, which is also subject to interest rates which will increase your total outstanding debt over time. However, a reverse mortgage allows you, not the bank, to own your house as long as you live there, and most reverse mortgages include a provision which prevents you from ever owing more than your house is worth.
These are just some of the considerations involved in deciding if a reverse mortgage is right for you. More information on reverse mortgages is available for free through AARP, the Federal Trade Commission, or your local Housing and Urban Development Office.
Q: What are Social Security Disability Income (SSDI) and Supplemental Security Income (SSI)?
A: Social Security Disability Income (SSDI) is an entitlement program for disabled people who have worked for at least 10 years. There is no income or asset limit to receive SSDI. The monthly income payment from SSDI is based on the recipient’s contributions to Social Security over his or her lifetime, and is available to medically qualified persons. Anyone receiving SSDI can receive Medicare after a 24-month waiting period. Medicare pays for doctors, hospitals, and other medical expenses, including 100 days of nursing home care and Part D prescription drug benefits for SSDI recipients of any age.
Supplemental Security Income (SSI) is a welfare program for people who receive up to $674 income per month (in 2009). To receive SSI, one must have assets less than $2,000. Anyone receiving SSI is also eligible for Medicaid (medical assistance), which helps to pay for medical bills and long-term nursing home care for persons over age 65.
Q: Should I put my child’s name on my house?
A: There are several reasons why you may not want to make your child a joint owner of your house. First, if your child predeceases you and is a joint owner, you can end up paying Pennsylvania inheritance taxes on your own house. Second, if your child gets divorced, the house may be considered an asset to be divided in the property settlement. Third, if your child has a lot of debts, creditors may try to go after the money in joint accounts to pay bills. It is also possible that transfer of ownership of your house may affect your eligibility for Medicaid for a period of time if you need nursing home care within three years of the transfer. These are just a few reasons why it may not be a good idea to make a child joint owner of your house.
It can be helpful to consult with an elder law attorney to make sure assets such as your house are appropriately titled for your particular family circumstances.