Why You Should be Concerned About Medicaid

Medicaid is the government paid medical assistance for the low income elderly, right? Yes, it is. But your client has a sizeable nestegg. So, your question should be how much money is enough? What is the threshhold amount below which Medicaid planning is advisable?

The answer is, "It depends", but let's look at some of het factors, or variables, that influence the answer. First, the fact is we are living longer, or as I have heard it put, "We aren't dying the way we are supposed to anymore." Thirty years ago the average life expectancy was somewhere in the late 60's, early 70's. Twenty years ago the average life expectancy was around the mid to late 70's, ten years ago the late 70's to early 80's. Today, living into your 90's is fairly common. I have heard numerous reports that opine that children born within the last 5 years have a better than equal chance of living well past 120. No, that is not a typo, 120.

Second, since we are living longer, the chances of developing some type of mental disability, such as Alzheimer Disease or Dymentia are on the rise.

Third, the rise in mental disability increases the average length in nursing homes because while the mind no longer works properly, the body continues to run just fine.

Additionally medical and nursing home costs are increasing every year. I won't go into exact costs in this area as it varies so wildly from individual to individual, but, you don't have to be old and reside in a nursing home to feel the bite of medical expenses. In the Chicago area the average monthly nursing home cost if between $6 - 7,000.00 per month, which equates to between $72 - 84,000.00 per year. This number does not include incidentals like hospital deductibles, drug deductibles, physical therapy, etc.

Even though we are retiring later, the average retirement age remains somewhere between 65 - 72. Retirement you no longer produce new income and are now living off your savings, pension and social security.

Now that we know some of the facts, let's apply these factors to some real life situations. Let's say Mr. and Mrs. Smith have $500,000 of assets, both are 70 and are just recently retired. They live in a house that is paid-off and are getting an unheard of rate of 5% on their investments. Between social security, a pension and interest income, they live comfortably on $30,000 per year gross without eating into any of their savings.

Ten years down the road, it is necessary for Mr. Smith to enter a nursing home because he has developed Alzheimer disease. The average cost per month has probably risen to over $7,000 per month. Mr. Smith enters the nursing home and begins self-paying for care and continues like this for the first three years. Three years at $7,000 per month equals $252,000, which does not include anything but the basic nursing home costs.

That leaves Mrs. Smith with approximately $300,000 to live on. Mrs. Smith lives fairly comfortably on social security, pension and interest income until at age 90 she enters a nursing home with dementia. By that time nursing home costs have increased to $7,500 per month and $90,000 per year, which still does not include other expenses she has to incur.

Mrs. Smithh lives for 5 years in the nursing home. Unless family helps with the bills, Mrs Smith will be forced into the Medicaid arena to help pay a portion of her continuing care. Additionally, Mr. and Mrs. Smith were unable to leave anyting for their kids. Now, the government will tell you that savings are for retirement and not to make the next generations wealthy, but I think if you talked to Mr and Mrs Smith, they would disagree to some extent. The fact is that most parents want to be able to leave something to their children, grandchildren and/or charity.

There are many strategies for protecting asssets and qualifying for medicaid and the most effective strategies involve pre-planning and maintenance. The worst outcomes stem from waiting too long and going through what is called "crisis" planning. A crisis plan is one where mom and dad are being forced to spend down their assets to become eligible for Medicaid. They find themselves having to attempt to effect changes in their portfolio now, without the benefit of pre-planning strategies.

Don't let this happen to you or ones you love. Schedule an appointment to meet with me and let me tell you what can be done to get you eligible for Medicaid and save some of your assets to give to your loved ones without incurring any fines, penalties or pay-backs.

Happy New Year

It is now officially 2010 and as I look back over the last year I find myself wondering where it went. The first part of the year seemed to drag, but the last 6 months just flew by. I know there is a list a mile long of things that I meant to get done but didn't for one reason or another. We all make resolutions and some we keep, some we don't.

I have resolved to get a handle on my health, lose weight and get in shape this year. Some may see this a several resolutions, but, I see them as so inter-connected as to be one resolution. I have been over-weight for several years now and it seems that I add a few pounds and get just a little bit more out of shape each year. I am a big guy and people have always said that when you're tall you can hide alot of weight and still look, O.K. While that may be true, it is also true that when you are over-weight your body will be more inclined to succumb to ailments and disease. You get to a certain age and you can no longer allow the body to just take care of itself. It needs help and not just occasionally. I am laying out a plan to eat right, exercise and follow-up with my doctor to make sure everything is under control.

This is analogous to estate planning. I know alot of you out there either have no estate plan, or, have an inadequate or outdated estate plan. You mean to do something about it, but, ______________, you fill-in the blank with your exuse(s).

Here are some examples:
-You had a will and some other papers done and are all set. (even though those documents were drafted over 10 years ago)
-You assigned beneficiaries to all your assets so that everything will avoid probate. (including puting your children as joint owners on your house)
-I don't have time to do it right now, I just need to get through ___________________, (again fill in the blank)
-There is always tomorrow.

Those are just a few excuses I hear and there are as many more as there are people without adequate estate planning. I understand excuses, I have used excuses to explain why I haven't taken better care of myself. I'm too busy, I'm too tired, it's too cold out, it's too hot, I'll do it later, I'll do twice as much tomorrow, it's just one cookie, chocolate, extra portion., etc.

Life has a way of sneaking up on you and time slips away until we look at ourselves one morning and wonder what happened? How did I get like this? It all happens so slowly you hardly notice it a first, but then it snowballs until, BAAM, who is that fat guy in the mirror and what did he do with the real me?

With my health, I can move forward, change my lifestyle, eat a better diet, exercise and take better control of any lingering ailments with a doctor's care. With estate planning, you can do much the same. You can move forward and resolve to plan for your future and the future of your loved ones.

You can start by realizing that by not planning, or by having an inadequate plan, you leave yourself open to results that will likely not meet your expectations and/or goals.

You need to resolve to contemplate just what you do and don't want, what your goals for your estate plan are. More simply put, you need to decide how you want to be treated when you become disabled, and, where you want your stuff to go when you die.

Consult with an estate planning attorney to find out what needs to be done so that your goals and expectations can be met.

Resolve to maintain and update your plan on an ongoing basis, and that means regularly, not once, or every 5 years so that you will be taken care of when you become disabled and your stuff goes to who you want, when you want and the way you want when you die.

Let's not make any more excuses. I resolve to get in better shape this year. You resolve to take care of your estate planning this year.