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May 01
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What are the Trustee’s Duties?

By News

The Trustee’s Duties

Congratulations. You have been appointed trustee of a trust. That is a strong vote of confidence in your judgment and probity. Unfortunately, it is also a major responsibility. Following is a short description of your duties.

1. Fiduciary Responsibility. As a trustee, you stand in a ‘‘fiduciary’’ role with respect to the beneficiaries of the trust, both the current beneficiaries and any ‘‘remaindermen’’ named to receive trust assets upon the death of those entitled to income or principal now. As a fiduciary, you will be held to a very high standard, meaning that you must pay even more attention to the trust investments and disbursements than you would for your own accounts.

2. The Trust’s Terms. Read the trust itself carefully, both now and when any questions arise. The trust is your road map and you must follow its directions, whether about when and how to distribute income and principal or what reports you need to make to beneficiaries.

3. Investment Standards. Your investments must be prudent, meaning that you cannot place money in speculative or risky investments. In addition, your investments must take into account the interests of both current and future beneficiaries. For instance, you may have a current beneficiary who is entitled to income from the trust. He or she would be best off in most cases if you invested the trust funds to generate as much income as possible. However, this may be detrimental to the interest of later beneficiaries who would be happiest if you invested for growth. In addition to balancing the interests of the various beneficiaries, you must consider their future financial needs. Does a trust beneficiary anticipate buying a house or going to school? Will she be depending on the trust income for retirement in fifteen years? All of these questions need to be considered in determining an investment plan for the trust. Only then can you start considering the propriety of individual investments.

4. Distributions. Where you have discretion on whether or not to make distributions to a beneficiary you need to evaluate his current needs, his future needs, his other sources of income, and your responsibilities to other beneficiaries before making a decision. And all of these considerations must be made in light of the size of the trust. Often the most important role of a trustee is the ability to say ‘‘no’’ and set limits on the use of the trust assets. This can be difficult when the need for current assistance is readily apparent.

Trustees Has Many Responsibilities

5. Accounting. One of your jobs as trustee is to keep track of all income to, distributions from, and expenditures by the trust. Generally, you must give an account of this information to the beneficiaries on an annual basis, though you need to check the terms of the trust to be sure. In strict trust accounting, you must keep track of and report on principal and income separately.

6. Taxes. Depending on whether the trust is revocable or irrevocable and whether it is considered a ‘‘grantor’’ trust for tax purposes, the trustee will have to file an annual tax return and may have to pay taxes. In many cases, the trust will act as a pass through with the income being taxed to the beneficiary. In any event, if you keep good records and turn this over to an accountant to prepare, this should not be a big problem.

7. Delegation. While you cannot delegate your responsibility as trustee, you can delegate all of the functions described above. You can hire financial advisors to make investments, accountants to handle taxes and bookkeeping for the trust, and lawyers to advise you on questions of interpretation. With such professional assistance, the job of trustee need not be difficult. However, you still need to communicate with those you hire and make any discretionary decisions, such as when to make distributions of principal from the trust to one or more beneficiaries.

8. Fees. Trustees are entitled to reasonable fees for their services. Family members often do not accept fees, though that can depend on the work involved in a particular case, the relationship of the family member, and whether the family member trustee has been chosen due to his or her professional expertise. Determining what is reasonable can be difficult. Banks, trust companies, and law firms typically charge a percentage of the funds under management. Others may charge for their time. In general, what’s reasonable depends on the work involved, the amount of funds in the trust, other expenses paid out by the trust, the professional experience of the trustee, and the overall expenses for administering the trust. For instance, if the trustee has hired an outside firm for investment purposes, that expense would argue for the trustee taking a somewhat smaller fee. In any case, it makes sense to consult with a professional experienced with trust work who can guide you on what would be normal fees considering all of the circumstances.

In short, acting as trustee gives you a wonderful opportunity to provide a great service to the trust’s beneficiaries. The work can be very gratifying. Just keep an eye on the responsibilities described above to make sure everything is in order so you no one has grounds to question your actions at a later date.

Apr 10
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Auditor’s report depicts disarray in R.I. social service programs

By News

The report issued on the roll-out of the computer system shows continued problems

The Rhode Island Department of Human Services (“DHS”) which administers the Medicaid program has been attempting to roll out a new computer system for several years. The system was designed to speed up application review and automate the application process to an on-line system. Unfortunately per the auditors report, the system is still experiencing issues. 

For those attorneys who assist elder clients with Medicaid applications this has been a challenging time. Medicaid will pay for the nursing home care needed by these elderly clients who have less than $4,000 in countable assets. It is stressful to family members who have submitted applications for coverage, who have a loved one being cared for at a nursing home, and not knowing if their application has been approved. They fear the consequence of an unexpected denial and how that may impact a spouse or the recipient.

Applicants can wait months or years prior to receiving an approval of their application.

Rhode Island law requires DHS to pay nursing homes for any care given patients who have applications pending for greater than 90 days. This law has allowed payments to go out, facilities to get paid, and patients to receive the care they need, until the application is approved.

Fortunately, the reports also states that things are improving and applications are being reviewed quicker and more accurately. The employees at DHS have done an admirable job overcoming a challenging roll-out but still have much work to do.

Source: Auditor’s report depicts disarray in R.I. social service programs

If you or a loved one wants to learn more about qualifying and applying for Medicaid benefits, please contact our office for a free consultation.

Apr 09
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Caretaker child exception can protect residence of Medicaid recipient

By News

Caretaker Child and Medicaid Qualification

Children are often confronted with difficult decisions when time and age catch up with their parents. Many children have been pushed into the role of being primary caregiver for their parents. The motivation stems from the very reasonable wish to keep parents at home for as long as possible despite health and medical issues of parents that indicate the parents need additional assistance with activities of daily living.

When children assume the role of caregiver to their parents with the goal of being able to avoid nursing home care for parents, there are benefits to this arrangement. Beyond the obvious advantage of the peace of mind of knowing you are doing all that you can keep your parents comfortable.

When a parent reaches the point in life where medical needs are increasing, it is prudent for the surrounding family to contact an elder law attorney who can explain the necessary and proper documents to have in place for parents so that children can assist with the parents legal and medical needs.

Children often become caregivers for parents.

In addition, the elder law attorney should be prepared to introduce you to the Medicaid program and how it works for people who are expected to need skilled nursing and long term care.

Family should advise the elder law attorney about any children living at the home caring for a parent. These facts create a unique opportunity to protect the home of the parent from possible long long term care costs while still maintaining Medicaid eligibility.

If a child lives with a parent of the two (2) year period before the parent needs to enter into a nursing home, an if the child had not been with the parent the parent would have had to live in a nursing home, the parent can transfer the home to the caretaker child without being disqualified from Medicaid benefits. The parents doctor needs to certify to this arrangement and time frame for this exception to the transfer penalty to work.

The below link to an article explains some of the things that will need to be demonstrated to take advantage of this Medicaid planning opportunity. In Rhode Island, the rules are similar to the attached article but concerned individuals should meet with an elder law attorney to discuss the caretaker child exception as it applied to their facts.

Source: James Contini column: Caretaker child exception can protect residence of Medicaid recipient

 

Want to lean more? Contact our office for a no-cost consultation.

Feb 12
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New drug to treat Alzheimer’s disease under study at Butler Hospital

By News, Uncategorized

Alzheimer’s disease and estate planning

When caring for and planning for an individual, we address the financial and legal aspects of caring for a loved elderly one. These planning considerations do not happen in a vacuum. The decisions we make rely on the medical issues, complications and opportunities available to us. Knowing about treatment options and emerging science is critical in planning for future needs. Alzheimer’s disease robs cognitive ability and causes those who are afflicted to need long-term skilled nursing care.

When medical breakthroughs are occurring on diseases the are often require long term nursing care, we must share and learn as to their success and progress. Such studies and advancements are occurring at Butler Hospital in Providence, Rhode Island as evidenced by the attached link to an article published by the Providence Journal.

Source: New drug to treat Alzheimer’s disease under study at Butler Hospital

 

Feb 06
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The Collapse of Private Long Term Care Insurance

By News

A Cautionary Tale of the Long Term Care Insurance Marketplace

By 2050, the U.S. will have almost 90 million people aged 65 and over, and more than half will need long-term care at some point. Yet only a sliver of that group can afford long term care insurance. As of 2015, private insurance covered less than 10 percent of U.S. spending on long-term care — and the private market has been shrinking.

Medicare covers only a short period of care after a person has been hospitalized. That leaves Medicaid, the state-administered program for long term care. The paperwork involved is a protracted ordeal, especially for those with physical and mental impairments, and the rules to qualify are strict and complex.

The reality is – the private insurance market is on life support so understanding Medicaid is critical. Schedule an appointment to learn the rules.

Nothing illustrates this more than General Electric and its Long Term Care Products. The company’s troubles with long-term-care insurance show the challenge of caring for an aging population.

Insurance Policy

Long-Term Care Insurance Policies have hurt many insurance companies balance sheets.

General Electric’s multi-billion-dollar loss in a unit that sold long-term-care insurance is a blow from which the iconic company is still reeling. But it’s also a harbinger of a much greater challenge for society at large: paying to care for the growing number of Americans who can’t look after themselves.

GE’s travails stem from the early 1990s, when insurance companies began developing a new line of business, offering policies that, in return for regular premium payments, would cover the cost of a nursing home or other long-term care if the need arose. With the baby-boom generation approaching retirement, sales took off. By 2007, some 7 million policies were in force, generating almost $10 billion a year in premiums.

The insurers miscalculated. Claimants lived longer than expected — perhaps because people prudent enough to buy the insurance were more careful about staying healthy. But longer lives meant more people needing long-term care. Medical costs rose, and investment returns fell short. To cover their obligations, companies had to increase premiums (as far as regulators allowed) and, like GE, take big charges against earnings. Penn Treaty was forced into liquidation, leaving policy holders to rely on meager state guaranty funds.

Tempting as it may be to blame regulators, that wouldn’t be fair. True, they could have allowed more premium increases sooner, and they should always demand that companies have ample equity to absorb losses. They’ll need to investigate GE’s accounting. But new insurance products are inherently risky, and companies are bound to make mistakes. Officials shouldn’t be expected to catch risks that actuaries can’t foresee.

Rather, the debacle illustrates a troubling truth: Private insurance can’t handle this problem by itself.

Understanding the rules as to the Medicaid program is critical for all persons. Failure to anticipate long term care nursing costs can wipe out an entire lifetime of savings. Call us to discuss how to protect your lifetime savings while still qualifying for Medicaid.

CLICK HERE TO READ THE ENTIRE ARTICLE ON BLOOMBERG.

Jan 25
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Home Care Agencies Often Wrongly Deny Medicare Help To The Chronically Ill

By News

Federal law requires Medicare to pay indefinitely for home care

Colin Campbell needs help dressing, bathing and moving between his bed and his wheelchair. He has a feeding tube because his partially paralyzed tongue makes swallowing “almost impossible,” he said. He has Medicare.

Colin Campbell at his home in Covina, Calif., on Dec. 18, 2017. Campbell was diagnosed with ALS eight years ago. He has Medicare due to his disability but can’t use it for home care and instead is paying $4,000 a month for that service. His adjustable wheelchair allows him to recline, which makes breathing easier. (Heidi de Marco/KHN)

Campbell, 58, spends $4,000 a month on home health care services so he can continue to live in his home just outside Los Angeles. Eight years ago, he was diagnosed with amyotrophic lateral sclerosis, or “Lou Gehrig’s disease,” which relentlessly attacks the nerve cells in his brain and spinal cord and has no cure.

The former computer systems manager has Medicare coverage because of his disability, but no fewer than 14 home health care providers have told him he can’t use it to pay for their services.

That’s an incorrect but common belief. Medicare does cover home care services for patients who qualify, but incentives intended to combat fraud and reward high quality care are driving some home health agencies to avoid taking on long-term patients such as Campbell, who have debilitating conditions that won’t get better, according to advocates for seniors and the home care industry. Rule changes that took effect this month could make the problem worse.

“We feel Medicare coverage laws are not being enforced and people are not getting the care that they need in order to stay in their homes,” said Kathleen Holt, an attorney and associate director of the Center for Medicare Advocacy, a nonprofit, nonpartisan law firm. The group is considering legal action against the government.

Federal law requires Medicare to pay indefinitely for home care — with no copayments or deductibles — if a doctor ordered it and patients can leave home only with great difficulty. They must need intermittent nursing, physical therapy or other skilled care that only a trained professional can provide. They do not need to show improvement. Those who qualify can also receive an aide’s help with dressing, bathing and other daily activities. The combined services are limited to 35 hours a week.

Medicare affirmed this policy in 2013 when it settled a key lawsuit brought by the Center for Medicare Advocacy and Vermont Legal Aid. In that case, the government agreed that Medicare covers skilled nursing and therapy services — including those delivered at home —to maintain a patient’s abilities or to prevent or slow decline. It also agreed to inform providers, bill auditors and others that a patient’s improvement is not a condition for coverage.

Campbell said some home health care agencies told him Medicare would pay only for rehabilitation, “with the idea of getting you better and then leaving,” he said. They told him that Medicare would not pay them if he didn’t improve, he said. Other agencies told him Medicare simply did not cover home health care.

Medicaid, the federal-state program for low-income adults and families, also covers home health care and other home services, but Campbell doesn’t qualify for it.

Securing Medicare coverage for home health services requires persistence, said John Gillespie, whose mother has gone through five home care agencies since she was diagnosed with ALS in 2014. He successfully appealed Medicare’s decision denying coverage, and afterward Medicare paid for his mother’s visiting nurse as well as speech and physical therapy.

“You have to have a good doctor and people who will help fight for you to get the right company,” said Gillespie, of Orlando, Fla. “Do not take no for an answer.”

Yet a Medicare official did not acknowledge any access problems. “A patient can continue to receive Medicare home health services as long as he/she remains eligible for the benefit,” said spokesman Johnathan Monroe.

But a leading industry group contends that Medicare’s home health care policies are often misconstrued. “One of the myths in Medicare is that chronically ill individuals are not qualified for coverage,” said William Dombi, president of the National Association for Home Care and Hospice, which represents nearly half of the nation’s 12,000 home care providers.

Part of the problem is that some agencies fear they won’t be paid if they take on patients who need their services for a long time, Dombi said. Such cases can attract the attention of Medicare auditors who can deny payments if they believe the patient is not eligible or they suspect billing fraud. Rather than risk not getting paid, some home health agencies “stay under the radar” by taking on fewer Medicare patients who need long-term care, Dombi said.

And they may have a good reason to be concerned. Medicare officials have found that about a third of the agency’s payments to home health companies in the fiscal year ending last September were improper.

Shortages of home health aides in some areas might also lead an overburdened agency to focus on those who need care for only a short time, Dombi said.

Another factor that may have a negative effect on chronically ill patients is Medicare’s Home Health Compare ratings website. It includes grades on patient improvement, such as whether a client got better at walking with an agency’s help. That effectively tells agencies who want top ratings “to go to patients who are susceptible to improvement,” Dombi said.

This year, some home care agencies will earn more than just ratings. Under a Medicare pilot program, home health firms in nine states will start receiving payment bonuses for providing good care and those who don’t will pay penalties. Some criteria used to measure performance depend on patient improvement, Holt said.

Another new rule, which took effect last Saturday, prohibits agencies from discontinuing services for Medicare and Medicaid patients without a doctor’s order. But that, too, could backfire.

“This is good,” Holt said. “But our concern is that some agencies might hesitate to take patients if they don’t think they can easily discharge them.”

This article was written with the support of a journalism fellowship from New America Media, the Gerontological Society of America and the Silver Century

Foundation.https://khn.org/news/home-care-agencies-often-wrongly-deny-medicare-help-to-the-chronically-ill/

Jan 18
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Co-pays proposed as part of $166M in Medicaid cuts

By News, Uncategorized

Co-Pays and Not Changes to Eligibility Proposed

Gov. Gina Raimondo has proposed balancing next year’s $9.38-billion budget with nearly $166 million in cuts to Medicaid. None of the changes will affect eligibility or benefits, officials said. Co-Pays and other cost reducing strategies will be implemented.

A plan to “rebalance” long-term care and nursing home services would account for another $18.2 million in savings. That includes “modernizing” the eligibility process for long-term care. The budget also calls for a 1-percent increase to nursing home reimbursement rates. In recent years, those rates have seen as much as a 3-percent increase.

Asked if he expected backlash from the nursing homes, Beane said, “I think, frankly, the nursing homes will be pleased to see that some part of the COLA is going to be included here. That’s the first time the governor’s proposed budget has included an increase. She has said in her cover letter to this budget that if revenues are up, this is an area she’d like to see more investment.”

Source: Co-pays proposed as part of $166M in Medicaid cuts

As the long term care insurance market continues to struggle with its future, knowledge as to the rules of Medicaid eligibility that will pay for long term skilled nursing is critical. Individuals can only have $4,000 of countable resources to qualify for Medicaid. Your home, car and personal property is not a countable resource and is protected. Under the proposed budget, those rules appear to remain unchanged. However, what are you to do with savings, investment accounts, a second home or investment property? Will you be forced to liquidate those assets and spend them down on my long term nursing care below $4,000 before I qualify for Medicaid? Without  a plan and proper advice, the answer is likely yes for most. However, with a proper plan, these assets can be protected for yourself, your spouse and your heirs. Contact us to discuss how.

Nov 01
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Medicare and Late Sign Up Penalties

By News

Medicare Should Warn Enrollees on Steep Late Sign-up Penalties

For many Americans entering retirement, it comes as an unwelcome surprise: Medicare premiums become much more expensive if you do not sign up on time. The program tacks on a 10 percent penalty on monthly Part B premiums for each full 12-month period of late enrollment, and you keep on paying the penalties for the rest of your life.

The aim is to avoid “adverse selection,” which occurs when people sign up for coverage only when they think they will need it. That helps keep premiums lower for all Medicare enrollees.

Medicare Enrollment Form

But a heads-up would be nice. And that is the intent of the Beneficiary Enrollment Notification and Eligibility Simplification Act (BENES Act), a bill introduced with bipartisan support last week in the U.S. Senate (companion legislation was introduced in the House of Representatives earlier). It would require the government to send a notification letter in the year before your 65th birthday – the first date of Medicare eligibility.

The letter would explain the enrollment rules, and – importantly – how Medicare interacts with other insurance coverage you might have.

Roughly 750,000 Medicare beneficiaries paid late enrollment penalties in 2014, according to the Congressional Research Service (CRS). That is less than 2 percent of enrollees, but for those who do pay the penalties, the bite is painful. On average, total premiums for late enrollees were 29 percent higher, CRS reported. 

Medicare is the primary source of health insurance for seniors, and choosing the correct Medicare plan is important. However, it only provides for 100 days of skilled nursing care. Planning for those potential costs are a critical component for anybody, regardless of when you sign up for Medicare.

Want to discuss your plan for paying for your care needs today and in the future? Contact us to discuss how you can plan for future long term care needs that are not covered by Medicare.

Matt Leonard

Sep 14
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Long-Term Care Insurance Market Issues

By News

Traditional Insurance Market Declines

Forbes is reporting that only about 89,000 people bought private long-term care insurance in 2016, a nearly 14 percent decline from 2015, according to an industry survey.  Nearly all were bought in the individual market, though about 15,000 people purchased coverage through their jobs.

The sales decline continues a stunning trend. At the market’s peak in 2002, consumers bought 750,000 traditional policies, eight times what they purchased last year. For the second year in a row, the total number of people covered by long-term care insurance fell slightly as more dropped coverage, died, or exhausted benefits than bought new policies. Roughly 7 million people currently own traditional policies, a number that has not changed in a decade even as the population of those 55 and older (those most likely to buy or use long-term care insurance) has grown by 30 million.

While fewer people bought traditional insurance last year, more purchased policies that combined life insurance with long-term care benefits. More than twice as many consumers bought policies that typically add long-term care benefits to annuities or whole life plans than purchased stand-alone coverage. Some consumers continue to want to hedge against personal care costs in old age, but not with traditional, stand-alone policies.

Traditional Long-term care insurance market is crumbling.

 The authoritative industry survey by the actuarial firm Milliman Inc. reported that 17 carriers sold traditional long-term care policies in 2016. Measured by premium, the top two carriers, Northwestern Mutual and Mutual of Omaha, accounted for nearly half of all sales last year. Strikingly, Genworth, the long-time industry leader that generated nearly one-third of all new premium dollars as recently as 2014, sold only 12 percent in 2016. The survey results were published in the trade journal Broker World (firewall).

Average premiums fell slightly in 2016, from $2,497 to $2,480. That may reflect a mix of several factors. They include slightly younger buyers and slightly less generous daily benefits, though the average length of policy benefit period rose a tick from 2015. Consumers also purchased less generous inflation protection, with many choosing a feature known as Future Purchase Option that allows them to buy more coverage in future years instead of getting automatic annual benefit increases.

 About 40 percent of buyers bought three-year policies last year. Eighty-five percent bought coverage for five years or less. While most insurers focused on shorter-tem policies, one reported selling eight-year coverage, though those policies accounted for less than five percent of those sold.

One carrier, using a back-to-the-future marketing strategy, sold single-premium lifetime policies. This product, popular a decade ago, allows consumers to make one upfront payment and avoid future premium increases. But nearly all carriers abandoned the design because of the big, and difficult to predict, risks they were taking on.

In 2016, insurers were also underwriting prospective customers more strictly, with more carriers reviewing consumer’s medical and medication records and doing telephone interviews and cognitive assessments. Other research suggests that as many of one-third of those who want to buy long-term care insurance are unable to do so because they cannot pass underwriting.

Traditional long-term care insurance is disappearing as a way for middle-income people to prepare for their personal care needs in old age. It is too expensive for many consumers, and too difficult to buy, especially for those who wait until their 60s when they are likely to have pre-existing conditions that may disqualify them. At the same time, most large life insurance companies — which were once the core of the business — are unwilling to sell long-term care coverage at all.

The rise of combination products suggests that people still want protection against long-term care costs. But without big changes, stand-alone long-term care insurance is likely to play only a modest role in this market for the foreseeable future.

READ THE FULL ARTICLE ON FORBES HERE.

If Long-Term Care Insurance is not an option for you, then planning to qualify for Medicaid benefits is critical. Contact our office to discuss what planning to qualify for Medicaid would mean to you.

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