Texas Estate Planning

What's the Difference Between Medicaid, Medicare, SSI, and SSDI?

If you need assistance paying for long-term care, then you need to look into Medicaid, not Medicare. But if you need health insurance, then it’s a Medicare application you’ll be submitting. And although SSI (Supplemental Security Income) refers to a specific type of program, it’s only a one letter difference from SSDI (Social Security Disability Insurance) which is a completely different benefit program for people with various types of disabilities. 

And when you look into the details of each program, it only gets more complex. So let’s break it down…

There are over one-hundred programs administered under the umbrella of Medicaid out there to help you receive the appropriate health care, insurance, and assistance that you deserve. Because of the sheer number of programs, it can be difficult to find the one best-suited for your needs. Each program has different requirements, guidelines, and limitations. 

Each program is guided by laws that change each year, if not more often, and vary from state to state, depending on the program. It can be quite helpful to get counsel from a licensed attorney in your area who stays up to date on the laws that specifically deal with the program you are applying to. The Attorneys at our Firm stay up to date through consistent continued learning experiences offered specifically for this purpose, and they ensure that every member of the team is made aware of updates and changes in the law so that we can better serve the needs of our community. 

To help you in your search for the program that best fits you and your family’s needs, here is a very quick rundown of 4 common programs that are easy to confuse: 

 

1. Medicaid: 
   • Health coverage (which is legal entitlement to payment or reimbursement for your health care costs)
   • Funded and administered jointly by the state and federal governments. This means that each state has different laws regarding Medicaid.
   • Income and asset limit 
   • Available to low-income: 
     1. Adults
     2. Children
     3. Pregnant women
     4. Elderly adults 
     5. People with disabilities 
   • Can be used for: 
     1. Long-term care 
     2. Inpatient and outpatient hospital services
     3. Physician services
     4. Lab and x-ray services
     5. Home health services 
2. Medicare: 
   • Health insurance 
   • Administered by the federal government 
   • Eligibility is based on: 
     1. Age (65 or older) 
     2. Certain younger people with disabilities 
     3. People with End-Stage Renal Disease 
   • There are various Medicare plans based on your eligibility and needs. 
3. SSI (Supplemental Security Income): 
   • Supplemental monthly income 
   • Eligibility is based on:
     1.  income and asset limits 
     2. disability
     3. Age 
        • Adults: 65+, or blind, or have a disability 
        • Children: under 18 and have physical or mental condition(s) that very seriously limits their daily activities for a period of 12 months
4. SSDI (Social Security Disability Insurance): 
   1. Supplemental monthly income 
   2. Means-tested based on disability and recent work history 
      1. Includes income and asset limits 
   3. Same medical requirements as SSI 

 

Hopefully that helps give you a better picture of where to start in your search for the programs that you or your loved ones might need. Remember that each state has their own set of laws regarding benefit programs and a licensed attorney with an understanding of these programs can be a helpful resource in navigating the application process. 

Ard Law Firm, PLLC is located in the Greater Houston Area, off I-45 south on the way to Galveston, but is able to serve all of Texas. Over the last decade, we’ve focused on Medicaid to help people transition into long-term care without large financial burdens.

We work with our clients to get their information together in order to apply for the benefits they deserve, and if obstacles come up along the way we work together to overcome them. Whether that means drafting legal documents, conducting research, or even arguing appeals, we walk with you on your journey, every step of the way.

What are the Scariest Statistics for Retirement?

Think Advisor’s recent article entitled “11 Scariest Retirement Statistics: 2020” says that there is a lack of preparation, savings difficulty and general uncertainty that American retirees are facing. Here are those scary stats:
1. Just a quarter of Americans are on a trajectory to maintain their lifestyles in retirement. The other 75% will need to work longer, move to lower-cost housing and cut spending to maintain their standard of living, largely due to the coronavirus downturn.
2. The Social Security trust funds would be empty by 2023, without the payroll tax. While President Trump let employers temporarily defer the employee portion of payroll taxes, he said the deferred taxes could later be forgiven, or the cut made permanent. When he signed the order, he vowed to “terminate the tax,” if reelected. Republican lawmakers subsequently debuted a plan to fund any shortfalls from the Treasury.
3. Social Security benefits will be decreased by 21% if the trust fund runs out. Congress will have to intercede, or it could happen 10 years from now, if not sooner.
4. Those born in 1960 will have a big problem because of the complicated formula the Social Security Administration uses to calculate benefits. Pre-retirees born in 1960 will see a nearly 15% cut to their lifetime benefits from Social Security when it’s time to collect. If the pandemic suppresses the economy into 2022, those cuts will impact more pre-retirees. The impact to their Social Security benefits will also be permanent.
5. The 2021 Social Security cost of living adjustment, or COLA, will be just 1.3%. Retirees should note that rising health care costs and a potential 6% increase in Medicare Part B premiums may absorb that benefit increase.
6. More than 50% of Americans think the economy is worse now than in 2008, with 51% of Americans seeing the COVID slowdown as worse than the 2008 recession. A survey from Edelman Financial Engines also found that 26% had withdrawn money from retirement or savings for living expenses.
7. About 60% of retirement savers have fallen behind, according to a TIAA study. Among these, 30% said it was directly due to the pandemic.
8. Internet searches for “move out of the U.S.” have increased 16 times. International Living magazine says it had seen the jump in search traffic around the phrase since May. A total of 20% of respondents in a survey it conducted also said they wanted to move due to the pandemic. However, just 45% cited a desire to save money.
9. Approximately 42% of investors sold stock, and most of them (88%) of them regretted it. In response to the drop in stocks in mid-March last year, 42% of investors in a survey by MagnifyMoney sold at least one stock and 24% sold all their holdings. About 69% of those who sold stock at the start of the pandemic greatly regretted it, and 19% said they were somewhat regretful.
10. Roughly 80% of older Americans don’t understand retirement planning and don’t know the basics of how to successfully plan for a financially secure retirement, according to a study by The American College of Financial Services. The survey also found only 30% of respondents had a plan in place to fund long-term care needs, and just one in four actually had long-term care insurance.
11. About 3 million workers may have been driven into early retirement due to the pandemic. From March to August of 2020, 2.8 million older workers might have been pushed out of their jobs prematurely, with economic turmoil and poor health making it hard for them to resume their careers elsewhere, according to by the Schwartz Center for Economic Policy Analysis at the New School. The report found that 38% of unemployed older adults stopped looking for work and left the workforce, and an additional 1.1 million were expected to do likewise.
Reference: Think Advisor (Oct. 30, 2020) “11 Scariest Retirement Statistics: 2020”

Prior Planning Always a Better Alternative

None of us knows what kind of unexpected surprises will occur in our lives. We’d like to believe they will all be happy events, like winning the big Power Ball jackpot. However, unpleasant things like illness or a flood or fire often occur. We never think it will happen to us, says The Dalles Chronicle’s article “Prepare now for emergencies.” Unfortunately, these things do happen, and when they do, being prepared can make all the difference between a stressful situation and a really awful situation that could have been made, well, less awful.

For starters, have you met with an estate planning attorney to create a comprehensive estate plan that includes a last will and testament, a financial power of attorney and a health care power of attorney? The will concerns distribution of your possessions and property, the power of attorney gives a trusted person the ability to take financial and legal actions on your behalf, in the event that you become incapacitated and the medical power of attorney allows someone to make health care decisions for you, also if you become incapacitated. There are also many other tools that an estate planning attorney can help you with, such as a Special Needs Trust, if your family includes a family member with special needs, or other trusts, if they are needed.

Next, your emergency preparations should include having important documents assembled in a notebook, on a memory stick and/or a safe location. Imagine there was an emergency evacuation and you had to leave your home immediately. What documents would you need? Here’s a checklist:

• Contact information for family members, doctors, attorneys, dentist, insurance broker, financial advisor.
• Cash, so if ATMs are not working, you will have cash on hand.
• Identification documents, including originals of your birth certificate, marriage license, divorce papers, passport, Social Security card, health insurance cards (or Medicare or Medicaid cards).
• A video of your home and all of your possessions on your mobile phone. Consider emailing it to a family member or friend who lives in a different location.
• Insurance policies for home, auto, disability, long-term care, etc. Include contact information for either 800-numbers or your local agent, if you need to file a claim.
• A copy of recent financial statements for credit cards, banks, brokerage firms, retirement accounts, car loans, mortgage and similar types of accounts.
• Copies of the last three years of tax returns. If you work with a CPA, they should have them on a secure portal, but a hard copy will be useful to have.
• Legal documents for your estate plan, including the will, power of attorney and health care power of attorney, as described above.
• Other legal documents, including car registration, car title and property deed to your home.

These documents should all be organized in a folder that is placed in your home where you and your spouse know where it is and can grab it on your way out the door.

One more item that should be noted in this digital age: if you use a laptop or tablet that contains websites that you use frequently for personal finance, investments, etc., be mindful of its location in the house, so you can grab it and a charger cable quickly. If you have passwords for accounts—and most of us do—you should print them out and include them in your file folder for easy access. You can almost always re-set a password, but how much easier will rebuilding your life be if you have them on hand?

If you do ever face a catastrophic emergency, having these materials will save you hours of time and stress.

Reference: The Dalles Chronicle (July 16, 2019) “Prepare now for emergencies”

Financing Assisted Living by Saving, Planning and Insurance

Part of the increase in the number of people who live long enough to be of retirement age, is because life expectancies have increased. The average U.S. life expectancy has increased from 68 years in 1950 to 79 years in 2013, according to the Population Reference Bureau cited in an article from U.S. News & World Report titled “How Should I Finance Assisted Living?”

The combination of increasing life expectancies and improvements to healthcare, means that more people are living longer after they stop working. This has led to a financial crisis for many Americans: how can they pay for the increased cost of healthcare and assistance needed, as they enjoy these additional years, and in some cases, decades.

It’s like a math problem. If you retire at age 65 and need to enter an assisted living facility 10 years later, how much money will you need to pay for the health care you’ll need by the time you reach 84? It’s impossible to calculate, because there are so many unknown factors.

Those factors are exactly what Americans need to consider, because most facilities primarily rely on private payments and Medicare does not cover the cost of assisted living facilities. It only pays for rehabilitation in a nursing home for the first hundred days. After that, the only assistance available is Medicaid. 

Medicaid coverage is supposed to kick in, only when a person has spent down all of their assets and is basically destitute.

One survey by a major financial company reports that the median monthly cost for an assisted living community is $3,750 or $45,000 a year. Long-term care by a home health aide can top $4,000 monthly or nearly $50,000 a year. 

These kinds of numbers demonstrate the need to save and plan well for retirement and for the possibility of needing to pay for assisted living. However, boomers are not at all positioned well for either retirement or assisted living. By the time people start thinking about retirement, they are usually in their 50s or 60s.

No matter when you start, starting is better than not doing anything. When you meet with your estate planning attorney, discuss how your estate is structured, in terms of paying for long-term care. Does it make sense for you to purchase an insurance policy to protect your assets and should it be owned by you or by a trust? What kind of trust?

Your estate planning attorney also is likely to have a network of professionals who help families navigate this complex world of care facilities. Understanding this system and the individual’s needs, can go a long way in making a difficult and expensive process much easier.

Reference: U.S. News & World Report (Oct. 10, 2018) “How Should I Finance Assisted Living?”

Retirement Benefits Becoming a Tax on the Poor?

Social Security and Medicare have been extraordinarily successful in achieving their primary purpose of alleviating elderly poverty in the U.S. Since the inception of the programs, elderly poverty has decreased dramatically since they ensure that older Americans have money to live on and receive health care.

While wealthier Americans are seeing an average increase in lifespan, the least well off white Americans are, on average, beginning to live shorter lives. Financial Advisor points this out in "The Rich Are Living Longer And Taking More From Taxpayers."

The result of this trend is that wealthy Americans are receiving a disproportionate amount from the Social Security system. However, when all government benefit programs are considered, the lowest income levels and the wealthiest receive about the same overall.

The problem is that the Social Security system needs to be fixed, to make sure it remains solvent.

One way to fix it is to increase the retirement age, but that will make the problem worse. Wealthier Americans will not be affected as much as many poorer Americans who will not live to see any benefits. This will effectively make their payments into the system a tax on them for the benefit of the wealthy.

Another solution is through means-testing Social Security, but the program was designed without means-testing to make it more difficult to cut later on.

There is not an easy solution to the problem and the best result might be to improve the diminished life-expectancy of poor Americans.

Reference: Financial Advisor (April 24, 2017) "The Rich Are Living Longer And Taking More From Taxpayers."

Older Americans and the ACA Replacement

The non-partisan Congressional Budget Office recently released its evaluation of the impact of the proposed American Health Care Act, the congressional replacement for the Affordable Care Act proposed by House Republicans and backed by President Trump.

Proponents of the bill dispute some of the findings of the CBO, such as that it will lead to 24 million more people without health insurance. Nevertheless, they are pleased that the non-partisan evaluation found that eventually health insurance premiums would drop by 10%.

How the bill would do that, however, is a concern for older Americans as The New York Times explains in "No Magic in How G.O.P. Plan Lowers Premiums: It Pushes Out Older Americans."

The AHCA would allow health insurers to charge older people considerably more for insurance than they are currently allowed to charge. It would also offer a smaller subsidy for many people to help pay for that insurance.

Many Americans between the ages of 50 to 64 would potentially pay much more out of pocket to maintain health insurance coverage. However,  since many could not do so, they would eventually stop purchasing insurance.

What would be the likely result?

Insurance pools would be dominated by younger people who are cheaper to cover and thus their premiums would go down.

This could also be a concern for the viability of Medicare,  since presumably people between 50 to 64 who could not afford insurance, would join Medicare with more health problems in need of treatment than they do now.

Reference: The New York Times (March 14, 2017) "No Magic in How G.O.P. Plan Lowers Premiums: It Pushes Out Older Americans."

The Costs of Alzheimer's

The mostly costly disease to treat is Alzheimer's.  A total of one out of every five dollars is currently spent by Medicaid and Medicare to treat the disease.

If the costs are not brought down dramatically, the future of both programs could be in jeopardy. Why? Americans are living longer and longer, which means that more people are or will be in need of Alzheimer's treatment.

If the current trends continue, in the future one out of every three dollars spent by Medicaid and Medicare will go toward treating Alzheimer's, according to FOX News in "Could Alzheimer's really bankrupt Medicare and Medicaid."

Both programs are already extremely expensive and face financial difficulties in the future. With their present funding, they will not be able to afford a large increase in Alzheimer's diagnoses and treatments.

What does this mean?

Research into preventing and curing the disease is more important than ever.  The development of new less expensive treatment methods would also be helpful.

This is another of the many ways that an aging population could threaten the country's current institutions and practices, unless action is taken. Our programs were not designed with a substantial increase in longevity in mind.

Other issues include paying for nursing home care, the health of the Social Security system, the availability of home health aides and a cultural change brought on by people having to wait longer to receive their inheritances.

Reference: FOX News (March 1, 2017) "Could Alzheimer's really bankrupt Medicare and Medicaid."

How Might Trump Policies Affect the Elderly?

Every new Administration brings uncertainty and questions about how changes in government policies and programs will us and our most vulnerable citizens – the elderly and those with special needs. Michael Gilfix, a nationally known authority in the field of law, aging and estate planning, recently shared his insights and those of his Trump Policy Analysis Group (TPAG) in the digital publication, Wealth Management.

Here are some of their observations in regard to policies affecting seniors, veterans and the “medically needy.”

• Social Security and Medicare: Trump has stated that he does not want to change Social Security and Medicare. However, he has not stated what, if anything, he will do to ensure that the programs remain solvent. Many of his Republican allies would like to reduce or privatize both programs.
• Medicaid: TPAG has examined some of the proposals which are designed to restrict protective planning – making it much more difficult for older Americans to protect their homes and other assets while qualifying for Medicaid, particularly in a Long Term Care setting. They recommend all seniors, and their families, stay up-to-date as more information becomes available.
• Tax Proposals: As a candidate Trump proposed many changes in the tax code, including to the estate tax and the capital gains tax. These changes could have a dramatic impact on estate planning and require that many current plans be revisited.
• Special Needs: No proposals have yet been made that would directly affect services for special needs children and adults. However, changes in the way federal Medicaid dollars are dispensed to the states could impact programs on a state-by-state basis.
• Veterans’ Benefits: While candidate Trump advocated supporting and even expanding services to veterans, there are currently proposals in Congress to restrict access to needed programs such as Aid and Attendance.

Reference: Wealth Management (January 6, 2017) "How Trump Policies Could Affect the Elderly and Those With Special Needs"

The Human Cost of Cutting Elderly Benefits

One of the major causes of suicide in the United States is worry over financial troubles. When people do not have enough money to make ends meet and are not certain how they can get the money, some of them despair and turn to desperate means including suicide.

Most of the time the people who commit suicide for these reasons are working age people. Thanks to Social Security and Medicare, most elderly people in the United States have a level of protection that they can rely for their basic needs.

However, if those programs are cut or have their benefits reduced, that could change as Financial Advisor discusses in "Senior Suicides Could Rise If Social Security And Medicare Cut, Experts Warn."

Experts have concerns for two reasons.

The first is that there could be a devastating psychological impact for some elderly people who were promised benefits they will no longer receive. The second is that cuts to benefits could lead to more elderly people struggling financially.

Both of these problems could lead some people to commit suicide.

Of course, it should be noted that most proposals to reduce Social Security and Medicare benefits do not apply to those currently receiving benefits or those who will soon be receiving them. Most proposals apply only to younger people.

Reference: Financial Advisor (January 5, 2017) "Senior Suicides Could Rise If Social Security And Medicare Cut, Experts Warn."

Elderly Parents More Costly Than Kids

Everyone knows that kids are not cheap. To raise a child from infancy to high school graduation puts enormous strains on families.

New government data has recently revealed that the average family spends $234,000 to raise a child to the age of 17. While that might seem like a lot, it is nothing compared to the costs of taking care of an elderly person.

The average cost of just four years of long-term care for an elderly person is $140,000, according to Forbes in "Families Spend More To Care For Their Aging Parents Than To Raise Their Kids."

As the article points out, parents receive a lot of government support to help offset the costs of raising children. The support comes in the form of tax credits and exemptions, in some cases. Lower income families receive support in other ways, such as food stamps and free school lunches.

While there is some support for taking care of the elderly because of Social Security and Medicare, there could be a lot more. Medicaid only pays for the long-term care of elderly people who do not have assets.

Families need to be aware of the high cost of caring for the elderly, so that they can plan accordingly. Money needs to be saved to cover the potential costs.

It might also be a good idea for elder advocates to use this data to argue for more support for families who care for their elderly relatives.

Reference: Forbes (Jan. 18, 2017) "Families Spend More To Care For Their Aging Parents Than To Raise Their Kids."