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FRAUD: The “F” Word of Estate Planning

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Fraud is a label to run from – not walk from

As an attorney that practices in areas of law that have both local and national scope – reading and reviewing scholarly writings and recent case decisions is critical to staying current. From these readings, we come to learn and respect the work done by other attorneys and how they are best representing their clients and their interest.

One such article came across my desk entitled “Medicaid Planning Technique Didn’t Work Exactly as Intended” a link to the full article can be found HERE.

The article examines what could be best described as a case study of one attorneys recommendations to a client who was retained to assist the family with Medicaid planning and qualification. As the title infers, the plan did not work out as explained and the clients goals and objectives were not carried out with the suggested plan proposed and enacted by the attorney. Fraud ruins any thought of a clever estate plan – and once that genie is let out of the bottle – it is hard to get it back in.

If it seems too good to be true – it probably is

The case is a lesson for both client and attorney. Just because you can do something – does not always mean you should. Deciding on an estate plan with the goal of qualifying for Medicaid benefits is something that must weigh all of the factors and rules. Knowledge of family dynamic, conflicts, tensions, and history are as important as understanding the rules of Medicaid eligibility, assets and income.

Fraud is a badge that does not wash off easily. Having to defend yourself or others from being accused of absconding with the assets of an elderly loved one is not something anyone wants to envision. There are legal consequences – which translate into strained relationships and possibly property and certainly financial penalties with the ultimate loss of liberty.

The author of the article makes the following suggestions when selecting an elder law attorney to work with:

  1. Be careful about selecting your lawyer. Do you want someone who really knows estate planning and/or Medicaid planning? Check out their reputation, their online information, and recommendations from friends and colleagues. Did you meet the lawyer at a promotional seminar at the public library or a local restaurant? Make sure you’re not being sold something you don’t really want or need.
  2. Does a particular Medicaid planning technique sound almost too good to be true? Be suspicious and ask for input from others.
  3. When a lawyer agrees to meet with you and your family member together, that suggests something troublesome. We are supposed to represent just one person, not a whole family. Recognize that your interests and those of your family member might differ, and respect the lawyer’s efforts to maintain that separation.
  4. Recognize that even though an idea — and particularly a Medicaid planning technique — might work, it might also have unintended secondary effects.

 

Retired and looking for extra income? Embrace Technology Service Opportunities!

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Seniors looking for extra income are turning to current phone and computer technology and service opportunities such as UBER and Airbnb.

Many boomers approaching their retirement years are anxious about having enough income. But many are finding help by turning to the so-called “gig economy” – driving for Uber and renting out extra rooms in their homes to earn extra income.

Twenty-four percent of all Uber drivers are over age 50, and 3 percent report being formerly retired. Bloomberg reports that people age 60-plus are the fastest-growing and best-reviewed age group on Airbnb. DogVacay, which connects pet sitters with owners, reports that people over the age of 50 constitute 25 percent of sitters.

The JPMorgan Chase Institute reports that seniors earn about 25 percent of their income from working and that this share may rise in the future. It found the percent of seniors in the workforce has been increasing recently, from 20.7 percent in 2009 to 23.1 percent in 2015. The institute anticipates that much of the anticipated rise will come from the gig economy.

Of course, earning income in the gig economy has some downsides. Most of the time, workers are considered contractors and are responsible for paying their own taxes. In addition, the income can be quite unpredictable. However, these drawbacks may be an acceptable trade-off to earning additional spending money to supplement Social Security and other retirement income.

The article by CBS Money Watch explaining this trend can be found HERE.

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Medicare and Long Term Care

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Doesn’t Medicare Pay for Most Long Term Care Needs?

Drawing of Medicare with Stick Men and Clipping PathNo. Even though many people mistakenly believe that Medicare will take care of most long term
health needs
, it pays for less than 2% of the cost. A survey conducted by AARP (American Association of Retired Persons) showed that 79% of those expecting to need nursing home care incorrectly believed that Medicare would pay.

 

Medicare will pay for long term care in a nursing home only if the following requirements are met:

A. Skilled care is being provided to the individual in the nursing facility. Skilled care is continuous 24 hour per day care provided by licensed medical professionals under the direct supervision of a physician. Only about ½ of 1% of all nursing home residents receive skilled care. Most residents get either intermediate” (4.5% of nursing home residents) or “custodial” care (95% of nursing home residents).

Intermediate care refers to occasional nursing and/ or rehabilitative care under the supervision of skilled medical personnel. It is often referred to as intermittent care and may include physical therapy, occupational therapy, speech therapy, etc.

Custodial care often involves non-medical personnel such as nurses’ aides who provide assistance with the activities of daily living including bathing, eating, toileting, transferring and dressing.

B. The nursing facility is a “Medicare participating” nursing facility. Many nursing homes will not qualify under this requirement.

C. The nursing home care must follow (within 30 days of discharge) at least a three day hospital confinement. Most often those who require nursing home care do not enter directly after a hospitalization. Often individuals are simply aging and finally realize they cannot manage any more at home or in a relative’s home. Since nursing home confinement frequently does not follow a hospitalization, many states now prohibit prior hospitalization prerequisites in long term care policies.

D. In the past in order for Medicare to pay in a skilled nursing facility, the care the individual received had to be “restorative” in nature. The patient had to be getting better. However, on January 24, 2013, the U.S. District Court for Vermont approved a settlement in the case of Jimmo v. Sebelius which states that Medicare provided skilled care may not always have to meet the expectation of improvement. Generally, if an individual meets the four aforementioned requirements (of skilled care, Medicare participating facility, a 3 day prior hospitalization and care that is “restorative” in nature- now a somewhat unclear term-) Medicare will pay all of the costs of the first 20 days and the individual pays $161 for an additional 80 days (in 2016, adjusted annually). (At a current daily nursing home rate of about $250 or more, one obviously cannot depend on Medicare to pay for most of the cost for these other 80 days.) Beyond day 100, Medicare will pay nothing.

Medicare will pay for long term care in a home health care situation only if the similarly stringent and difficult to meet requirements are met. Home health care coverage includes part-time or intermittent skilled nursing care, physical therapy, and speech therapy, through a Medicare Certified Home Health Care Agency. If the patient requires skilled nursing, physical therapy, and/or speech therapy and if the individual is confined to the home and is under the care of a physician, Part A of Medicare can pay for some other services.

A typical individual who requires nursing home or home health care is someone with a physical disability who simply needs help with the activities of daily living -someone who is simply aging. Medicare will not pay for such custodial care. Alzheimer patients, Parkinsonians, stroke victims, and those who have other organically related mental disorders, form another large group of those who need long term care. Typically, since these chronic ailments of aging don’t “get better,” Medicare benefits are not available.

The bottom line is simple: A wise person will not count on Medicare to pay for long term care services.

So what is a person supposed to do? Contact our office to discuss what long term care planning means to you.

Source: This article is an excerpt from LISI Elder Care Law Planning Newsletter #17 (March 3, 2016)

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Fraud: Targeting the Elderly

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Schemes Targeting Elderly Not Limited to Tax-Related Scams

While tax-related fraud schemes aimed at seniors have been in the news, financial schemes targeting the elderly aren’t restricted to those involving Internal Revenue Service impersonation calls or tax refund fraud.Elder Fraud

The U.S. Department of Justice has filed a civil complaint alleging multiple international mail fraud schemes that have defrauded elderly and vulnerable U.S. victims out of tens of millions of dollars. According to the complaint, U.S. residents received fraudulent direct mail solicitations that falsely claimed that individual victims had won, or would soon win cash, prizes or other bonus. The solicitations appeared to be personalized even though they were really form letters mailed to hundreds of thousands of potential victims.

The solicitations typically matched one of three types:

  • False claims that the victim is the winner of a lottery or sweepstakes and will receive winnings if they pay a processing fee;
  • False claims that the victim has won a large sum of money and should purchase a “guaranteed,” “secret” method for winning lotteries and other games of chance; or
  • Solicitations allegedly from a psychic who has “seen” the victim winning large sums of money through the lottery or other contest which will only happen if with the purchase of various supernatural and divinatory objects or services.

fraud-alertIn some instances, the solicitations claim that the recipient has already been confirmed the winner of a prize in bold, prominent lettering, but then explain in smaller text that the prize drawing has not yet taken place or that there is no prize drawing. Potential prizes touted were said to be in excess of $20,000 and included cash, checks, amounts held in trust, and cars. DOJ estimates that more than half a million victims responded, netting the defendants $18 million.

 

Elder Abuse from Children – the Opioid Crisis

Reports of suspected elder abuse in Massachusetts have surged over the past five years, according to state figures — a troubling increase that law enforcement and elder advocates say is fueled in part by the opioid crisis and addicted adult children exploiting parents and other relatives. Since 2011, abuse reports have climbed 37 percent, with more than 1,000 additional cases reported each of the past five years to protective services offices. The Executive Office of Elder Affairs, the agency that tracks and investigates abuse, recorded nearly 25,000 cases last year, but the state’s numbers do not delineate how many involved opioids. More adult children addicted to opioids are moving back in with their elderly parents, Middlesex District Attorney Marian T. Ryan said. Retired parents, with their monthly Social Security and pension checks, become easy targets for financial, physical, and emotional abuse.

Protecting the Elderly from Fraud

Want to protect your elderly loved one? While people certainly have the right to choose where they spend their money, we don’t want our loved ones prayed upon and taken advantage of. Keep in close contact with your loved one.  Watch for any changes in spending or behaviors. Review mail received for any solicitations that are seeking donations of payments. If irregularities are noted, inquire into spending habits. If possible, review banking and financial records.

Consider executing a Durable General Power of Attorney to address any competency issues. A fully considered and executed estate plan will often minimize the chance that the Elderly will be targeted by fraudulent activity.

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Why Medicaid Planning should be on your mind!

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There are many reasons, but most are due to:

(1) Americans are living longer;thinking about medicaid

(2) it is costing a lot more than expected for them to live; and

(3) long term care is not solely a “senior” issue:

  • By 2025, for every 100 middle aged individuals, there will be 253 seniors;
  • There is a 70% probability that an individual over age 65 will become cognitively impaired or unable to complete at least two activities of daily living-including dressing, bathing or eating over his or her lifetime.
  • On the aggregate, of those who enter a nursing home, 50% will stay an average of 2.5 years; 10% will stay there five years or longer.
  • Currently, individuals over the age of 50 control 75% of the nation’s wealth and half the discretionary income.
  • 40% of people who need long term care are working-age adults between 18 and 64

Although we are living longer, “living longer” is not always synonymous with “living better.” The longer we live, the more likely it is that at some point in our lives, we will need someone to help take care of us.

Insurance and other financial services companies, following these trends, realize the enormous importance of the “senior” market. “Senior” is a difficult term to define since people polled at various points in their lives who were asked to define “senior” varied greatly in their response. Those in their 20’s and 30’s tend to define senior as an individual 65 or over. People in their 40’s and 50’s often describe seniors as those in their late 60’s or 70’s. The 60 and 70 year olds questioned defined seniors as those in their 80’s and 90’s.

In spite of the fact that many seniors would be considered by many as “wealthy,” long term care costs are enormous and a lifetime of savings can be quickly exhausted when long term health care becomes necessary.

  • 70% of single people who enter a nursing home are impoverished within one year.
  • 50% of all couples are impoverished within one year of one spouse entering a nursing home.
  • Private rooms in a nursing home in 2015 cost an average of $113,150 per year ($310 per day) from a high of $443 per day to $190 per day in the Providence-Warwick area.

THE WORST CASE SCENARIO

What would you do if you were suddenly faced with an additional yearly expense of $113,150 or more? (This could double for a couple both of whom needed care simultaneously) How would this impact on your retirement planning? How long could you afford these costs? How would this additional expense affect the estate you wish to leave behind? How can we assure that you maintain your financial security and independence?”

Medicaid Planning and possibly Long term care insurance for those who qualify and can afford the policies are a partial answer to some of these troubling questions. Although it is estimated that in 2010 seven to nine million people had already purchased private long term care insurance, that number comprises only about one quarter of the 37 million Americans over age 65. The reason few obtain this insurance links back to the cost associated with the policies, the ready availability of them and the overall concern with their long term existence, meaning, will the policy be there when I need it?

Medicaid Planning as this site is dedicated to discussing and explaining, is an option for those who do not qualify or cannot afford a Long Term Care Policy, yet still seek to protect the assets they have earned during their lifetime.

Schedule a free consultation with our office to discuss what Medicaid Planning would entail for you.  

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