Pre-Planning for Long Term Care Costs

You may already be in a Medicaid Spend-Down

Posted on February 4, 2016 by Jim Koewler — No Comments ↓

If you are married, and you or your spouse has been in the hospital and/or rehab and/or nursing home for more than 30 consecutive days, you may already be in a Medicaid spend-down for long term care coverage. And you don’t even realize it!

Let’s start with a discussion of the amount of savings or assets that the “well spouse” can keep when the “ill spouse” asks Medicaid to pay for his or her long term care. By savings or assets, I mean what is left at the end of the month after income is received and bills are paid. Medicaid labels savings and other assets as “resources.” The amount of resources that the “well spouse” can keep at the time the “ill spouse” gets Medicaid coverage is called the Community Spouse Resource Allowance, commonly abbreviated to CSRA.

For most couples, the CSRA is half of the assets at the time the “ill spouse” had to move out of the house for medical reasons and stayed out of the house for 30 days or more. The first day of the month during which the “ill spouse” moved out is called the “snapshot date.” (That’s not the official terminology, but I like that term because it’s the most descriptive of what happens.)

Please realize that, on the “snapshot date,” the “ill spouse” is almost always still at home and may not realize that, before the month is over, he or she will be out of the house for medical care and/or custodial care for an extended period of time. (The “ill spouse” is out of the house on the “snapshot date” only if the “ill spouse” becomes ill or gets injured on that first day of the month.) The “snapshot date” on the first day of the month seems illogical because, most of the time, nothing medical happens on that day. It’s logical only when you realize that Medicaid works in whole months. It’s just too difficult to break financial records down into individual days.

If the couple had less than $47,688 on the “snapshot date,” the “well spouse” will be allowed to keep more than half of the resources because the “well spouse” is allowed to keep the first $23,844 of resources as the minimum CSRA. (Unfortunately, if the couple has less than $23,844, Medicaid will not give money to the “well spouse” to bring him or her up to the minimum.)

If the couple has more than $238,440 in resources, the “well spouse” will not be able to keep a full half because the maximum CSRA is $119,220. Any resources above the “well spouse’s” $119,220 will be attributed to the “ill spouse.”

Note: The minimum and maximum CSRA are adjusted each year for inflation (if there is inflation.) The Medicaid page at ProtectingSeniors.com is updated from time to time with these amounts and other related Medicaid eligibility figures.

If the couple has between $47,688 and $238,440, the CSRA is half of the resources.

Note: Some assets, most notably the couple’s home, are not counted in “resources.”

So, after all that, the “ill spouse’s” resources at the time he or she asks Medicaid for help is the couple’s total resources above the CSRA (that the “well spouse” gets to keep) and the $1,500 that the “ill spouse” gets to keep (expected to become $2,000 in July 2016.) All of the couple’s resources above the CSRA plus $1,500 must be spent-down before Medicaid will cover the “ill spouse’s” expenses for long term care.

So, why does all this minutia mean that someone might already be in a spend-down. It matters because the “snapshot date” isn’t tied to long term care. It’s tied only to the “ill spouse’s” absence from the home for medical reasons for at least 30 days. The “snapshot date” from an injury or illness earlier in life (but still during the marriage) may be useful to save assets if the “ill spouse” later needs long term care.

I know, you’re still confused. That last paragraph didn’t help, did it? (Some people would describe that as a good lawyer’s answer: entirely correct but completely incomprehensible.) So, let’s tell this with a story.

For the rest of this discussion, I’m going to give names to the “ill spouse” and the “well spouse” in hopes of keeping further confusion to a minimum. So, the “ill spouse” is going to be Ward, and the “well spouse” is going to be June.

Ward dropped a cleaver (sorry, couldn’t resist) on his foot 10 year ago, on January 6. He needed surgery and several weeks of rehab. He returned home on February 5 . (As long as he was out for 30 days, additional days don’t matter for this discussion.) Let’s say that Ward and June had $100,000 in resources on January 1 ten years ago (the “snapshot date” for his foot injury.)

Ward recovered and returned to work. He continued to make money, and their savings grew.

So, now, 10 years later, Ward has a debilitating stroke. June can’t take care of him by herself and needs to move Ward into a nursing home. (By the way, this scenario also applies to home care and to assisted living.) June would like to apply for Medicaid to help pay for Ward’s care. At the time of Ward’s stroke, they have $200,000 in resources (on the first of the month.)

Based on the $200,000 in current resources, Ward would have to spend-down $98,500 (the amount left after half of $200,000 is reserved for June and $1,500 is reserved for Ward) before Medicaid will pay for Ward’s care.

BUT, Ward has already had a “snapshot date.” Ten years ago, he was out of the house for medical reasons for at least 30 days. At that time, he and June has $100,000 in countable resources. As a result, Ward needs to spend down only $48,500 to get Medicaid coverage to pay for his nursing home stay after the stroke. June was allowed to keep $150,000 rather than $100,000. BIG DIFFERENCE.

Note: The “snapshot date” resulting from Ward’s cleaver accident applies only to Ward’s future need for long term care. If June, rather than Ward, has the stroke, the earlier “snapshot date” doesn’t apply. Now, if June had a significant illness or injury of her own that resulted in her own medical stay out of the house for at least 30 days at some point in the past, that would create her own snapshot date.

So, if you’ve stuck with me during this 1,000 word shaggy dog story, here’s the payoff:

If you know a couple (maybe you and your spouse) in which one of them has had a 30 day stay out of the house for medical reasons, the couple should preserve all of their financial records from that time. (For example, bank statements, investment statements, real estate values, IRA statements, life insurance cash values, and annuity statements.) Those records might be very valuable in case the same person needs long term care in the future.

Boy, that installment was about as difficult to follow as War and Peace. Sorry about that. I couldn’t find a way to make it any simpler.

Legal Issues when someone has Dementia – Seek out an Elder Law Attorney

Posted on September 24, 2015 by Jim Koewler — No Comments ↓

This week’s blog continues the discussion of Legal Issues when someone has Dementia. The introductory installment (April 30, 2015) put forth the issue of “Who can speak for someone with dementia?” The May 14, 2015 installment discussed the situation where the person with dementia has Advance Directives in place. The May 21, 2015 installment discussed the legal issues in determining whether a dementia sufferer can choose to have new Advance Directives prepared. The May 30, 2015 installment discussed options in preparing a Health Care Power of Attorney. The June 4, 2015 installment discussed how to decide whether to prepare a Living Will. The June 11, 2015 installment discussed some of the basic issues in preparing a General Power of Attorney. The June 18, 2015 installment discussed the importance of making the General Power of Attorney “durable.” The June 25, 2015 installment discussed the importance of NOT making the General Power of Attorney “springing.” The July 2, 2015 installment discussed revoking prior Powers of Attorney. The July 9, 2015 installment discussed Do Not Resuscitate orders. The July 16, 2015 installment discussed the Right of Disposition designation. The July 23, 2015 installment discussed the Will (or Last Will and Testament.) The July 31, 2015 installment discussed beneficiary designations on life insurance policies, IRAs, annuities, etc. The August 6, 2015 installment discussed whether to pre-plan a funeral. The August 14, 2015 installment discussed choosing a final resting place. The August 28, 2015 installment discussed pre-planning the funeral ceremony. The September 3, 2015 installment discussed when and how to pay for the pre-planned funeral. The September 10, 2015 installment discussed medical insurance choices. The September 17,2015 installment discussed long term care insurance. Today’s installment will discuss obtaining the services of an elder law attorney.

Today’s installment continues the discussion of issues to manage when someone finds out that he or she has a disease that causes dementia. These issues should be managed before the dementia gets worse, before the disease takes away the person’s ability to make decisions. Along with the issues previously discussed, someone who has dementia (or his or her family) should seek the help of an elder law attorney.

Someone who has a disease that causes dementia is very likely to need long term care in the future. The costs of that long term care can use up all of the person’s life savings. If the person has a spouse, the costs of care can use up the spouse’s savings as well. An elder law attorney may be able to shelter a portion of that savings.

In addition, an experienced elder law attorney can help identify other resources or services that can help the person with dementia and his or her family. These services may allow the person to stay in his or her home longer, for example. Alternatively, certain services may help family members in understanding the disease and its symptoms, making life easier for both the person with dementia and the family.

An elder law attorney can help with the important decisions that this blog has discussed over the last several weeks. The elder law attorney can be a guide through the labyrinth of uncertainty into which the dementia has thrust the person and family.

The sooner the person with dementia and his or her family start to work with an elder law attorney, the more good can come of it. A delay is seeking out an elder law attorney takes options and opportunities off the table.

Legal Issues when someone has Dementia – Consider Long Term Care Insurance

Posted on September 17, 2015 by Jim Koewler — No Comments ↓

This week’s blog continues the discussion of Legal Issues when someone has Dementia. The introductory installment (April 30, 2015) put forth the issue of “Who can speak for someone with dementia?” The May 14, 2015 installment discussed the situation where the person with dementia has Advance Directives in place. The May 21, 2015 installment discussed the legal issues in determining whether a dementia sufferer can choose to have new Advance Directives prepared. The May 30, 2015 installment discussed options in preparing a Health Care Power of Attorney. The June 4, 2015 installment discussed how to decide whether to prepare a Living Will. The June 11, 2015 installment discussed some of the basic issues in preparing a General Power of Attorney. The June 18, 2015 installment discussed the importance of making the General Power of Attorney “durable.” The June 25, 2015 installment discussed the importance of NOT making the General Power of Attorney “springing.” The July 2, 2015 installment discussed revoking prior Powers of Attorney. The July 9, 2015 installment discussed Do Not Resuscitate orders. The July 16, 2015 installment discussed the Right of Disposition designation. The July 23, 2015 installment discussed the Will (or Last Will and Testament.) The July 31, 2015 installment discussed beneficiary designations on life insurance policies, IRAs, annuities, etc. The August 6, 2015 installment discussed whether to pre-plan a funeral. The August 14, 2015 installment discussed choosing a final resting place. The August 28, 2015 installment discussed pre-planning the funeral ceremony. The September 3, 2015 installment discussed when and how to pay for the pre-planned funeral. The September 10, 2015 installment discussed medical insurance choices. Today’s installment will discuss long term care insurance.

Someone who has a disease that causes dementia is very likely to need long term care in the future. At the same time, someone who has a disease that causes dementia might have trouble getting long term care insurance. Nonetheless, it’s worth a try. After all, insurance quotes are free.

Essentially, the availability of long term care insurance depends on whether a doctor has diagnosed the dementia or the disease that causes it and whether, without a diagnosis, an insurance underwriter can see dementia risks. If someone with a dementia causing illness applies for long term care insurance early enough, he or she may be able to get coverage. (Don’t lie on an application in order to get coverage.)

Some long term care insurers issue policies more easily than others. Some long term care insurance products are easier to get than others. Even if a “traditional” long term care insurance policy isn’t available, a non-traditional policy might be available. Some life insurance policies have a long term care rider or an option for lifetime benefits (which can act like long term care insurance.) Some annuities have long term care features.

Because of the risk of long term care that comes from a dementia related disease, someone who has the early stage of such a disease would be well served at least to try to get long term care insurance in any form that he or she can get.

Legal Issues when someone has Dementia – Think about Medical Insurance

Posted on September 5, 2015 by Jim Koewler — No Comments ↓

This week’s blog continues the discussion of Legal Issues when someone has Dementia. The introductory installment (April 30, 2015) put forth the issue of “Who can speak for someone with dementia?” The May 14, 2015 installment discussed the situation where the person with dementia has Advance Directives in place. The May 21, 2015 installment discussed the legal issues in determining whether a dementia sufferer can choose to have new Advance Directives prepared. The May 30, 2015 installment discussed options in preparing a Health Care Power of Attorney. The June 4, 2015 installment discussed how to decide whether to prepare a Living Will. The June 11, 2015 installment discussed some of the basic issues in preparing a General Power of Attorney. The June 18, 2015 installment discussed the importance of making the General Power of Attorney “durable.” The June 25, 2015 installment discussed the importance of NOT making the General Power of Attorney “springing.” The July 2, 2015 installment discussed revoking prior Powers of Attorney. The July 9, 2015 installment discussed Do Not Resuscitate orders. The July 16, 2015 installment discussed the Right of Disposition designation. The July 23, 2015 installment discussed the Will (or Last Will and Testament.) The July 31, 2015 installment discussed beneficiary designations on life insurance policies, IRAs, annuities, etc. The August 6, 2015 installment discussed whether to pre-plan a funeral. The August 14, 2015 installment discussed choosing a final resting place. The August 28, 2015 installment discussed pre-planning the funeral ceremony. The September 3, 2015 installment discussed when and how to pay for the pre-planned funeral. Today’s installment will discuss medical insurance choices.

Because the vast majority of people who have dementia related disease are seniors, this installment will focus on Medicare options. The people who have dementia related disease that are not yet old enough to qualify for Medicare have health insurance options very similar to those available to people with special needs discussed in the March 5, 2015 installment of this blog. (Someone who becomes disabled (from the dementia related disease or from some other cause) can get Medicare 25 months after the disability is recognized by the Social Security Administration. These people have the same Medicare options as seniors.)

People who have Medicare available to them have three basic options for medical insurance. So called “straight Medicare” provides the insured person with Medicare coverage for 80% of medical costs. The insured person is responsible for the other 20% as a co-pay.

People who do not wish to pay the 20% co-pay can purchase either Advantage Plans or Medicare Supplements.

An Advantage Plan is an insurance policy that pays most or all of the 20% of medical costs that Medicare does not cover. The amount of the insured’s new co-pay depends on the Advantage Plan that the insured chooses. Generally, the higher the premium, the lower the co-pay. There are plenty of other options that change the price and co-pay as well. (An Advantage Plan actually steps into the shoes of Medicare and pays the 80% in addition to whatever costs exceed the insured’s co-pay. The Advantage Plan insurance company receives both the premium of the individual insured person and a payment from the Medicare program in lieu of Medicare’s usual 80% payment towards the insured’s costs. The Advantage Program’s coverage of Medicare’s portion of costs is generally not noticed by the insured.) Because an Advantage Plan is a “replacement” for Medicare, it can have some limitations in covered services or in approved service providers as compared to “straight Medicare.” In addition, there are many different advantage plans, each offering slightly different coverage, from which to choose.

When an insured person has a Medicare Supplement, the Medicare program pays its usual 80% pays the insured’s medical costs, and the Supplement pays the 20% not covered by the Medicare office. Medicare Supplements, because they supplement Medicare rather than replace Medicare, do not generally have any differences from Medicare in covered services or approved service providers. There are many different Supplements. The differences among Supplements generally is small, but worth examining.

Advantage Plan premiums usually cost about one-third of Medicare Supplements. (Some Advantage Plans have a $0 premium, in fact.) An Advantage Plan’s limitations on services and providers is the trade-off for a lower premium. The most glaring difference between Advantage Plans on the one hand and both straight Medicare and Medicare Supplements on the other hand is the coverage of post-hospitalization rehabilitation services.

With straight Medicare and Medicare Supplements, an insured person who has been admitted to the hospital for three days and then needs post-hospitalization rehab can have 100 days of rehab coverage. Someone on an Advantage Plan may have rehab coverage end before 100 days have elapsed. An Advantage Plan (because it has rules slightly different than straight Medicare) can determine that rehab is not helping the insured person and can end coverage. Sometimes the rehab coverage is stopped as early as day 20. Rehab can be very expensive, so Advantage Plans have a strong incentive to end rehab coverage as early as possible.

(“Admission” to the hospital rather than “under observation” in the hospital is a very important distinction in the availability of insurance coverage for rehab. That issue is not handled differently by Medicare, Advantage Plans, or Medicare Supplements, though. Consequently, the “admission” versus “observation status” issue is not important to today’s discussion. I mention it here as a side note because it is an important issue for all people insured through Medicare.)

Someone who has a dementia causing disease is likely to need much greater medical attention than before the dementia started. Accordingly, someone suffering from dementia (or his or her family) may want to change to an insurance plan with greater coverage than he or she had previously. (Open enrollment for such a switch falls between October 15 and December 7 each year, with the new policy taking effect on January 1 of the next year.)

Unfortunately, someone covered by any form of Medicare cannot switch plans on demand. (Medicare, unlike the Affordable Care Act, allows the insurance company to make underwriting decisions on individual plans.) Trying to move to a plan that provides more coverage may require a medical examination and will certainly require answering medical questions. If the dementia related disease has been identified by a doctor or is noticeable to an insurance company underwriter, a more generous plan may not be available. Accordingly, I urge anyone who believes that he or she is in the early stages of a dementia related disease to move to a plan with better coverage (if necessary) at the next open enrollment period. Generally, I urge people to move to a Medicare Supplement, if they can.

If a Medicare Supplement is not available, an alternative is an Advantage Plan or even straight Medicare with a separate Hospital Indemnity policy. (The cost of an Advantage Plan plus Hospital Indemnity policy is usually less than a Medicare Supplement.) A Hospital Indemnity policy is subject to underwriting, though. If someone with a dementia related disease waits too long, the Hospital Indemnity policy may not be available either.

Without considering the cost of premiums, my preferences for medical insurance for someone who has a dementia related illness is a Medicare Supplement. My second choice is an Advantage Plan with a Hospital Indemnity policy. My third choice is straight Medicare. Finally, my fourth choice is an Advantage Plan. I realize that my preference is for the most expensive insurance. When someone learns that he or she has dementia, I suggest that he or she abandon price sensitivity and try for the best coverage. (The insurance may not be available because of the dementia or some other pre-existing condition, but, with the disease likely only to get worse, trying to get the best insurance as soon as possible is a good idea.)

Most people on Medicare keep their existing insurance plans from year to year. Someone who believes that he or she has the early stage of a disease that causes dementia should take a hard look at his or her insurance choices at the next open enrollment period.

Acknowledgement: Thanks to Michael Whitaker of Premier Solutions Group in Brookpark, Ohio for helping me understand Hospital Indemnity insurance.

Legal Issues when someone has Dementia – Consider how to Pay for a Funeral

Posted on September 3, 2015 by Jim Koewler — No Comments ↓

This week’s blog continues the discussion of Legal Issues when someone has Dementia. The introductory installment (April 30, 2015) put forth the issue of “Who can speak for someone with dementia?” The May 14, 2015 installment discussed the situation where the person with dementia has Advance Directives in place. The May 21, 2015 installment discussed the legal issues in determining whether a dementia sufferer can choose to have new Advance Directives prepared. The May 30, 2015 installment discussed options in preparing a Health Care Power of Attorney. The June 4, 2015 installment discussed how to decide whether to prepare a Living Will. The June 11, 2015 installment discussed some of the basic issues in preparing a General Power of Attorney. The June 18, 2015 installment discussed the importance of making the General Power of Attorney “durable.” The June 25, 2015 installment discussed the importance of NOT making the General Power of Attorney “springing.” The July 2, 2015 installment discussed revoking prior Powers of Attorney. The July 9, 2015 installment discussed Do Not Resuscitate orders. The July 16, 2015 installment discussed the Right of Disposition designation. The July 23, 2015 installment discussed the Will (or Last Will and Testament.) The July 31, 2015 installment discussed beneficiary designations on life insurance policies, IRAs, annuities, etc. The August 6, 2015 installment discussed whether to pre-plan a funeral. The August 14, 2015 installment discussed choosing a final resting place. The August 28, 2015 installment discussed pre-planning the funeral ceremony. Today’s installment will discuss when and how to pay for the pre-planned funeral.

Today’s installment continues the discussion of issues to manage when someone finds out that he or she has a disease that causes dementia. These issues should be managed before the dementia gets worse, before the disease takes away the person’s ability to make decisions. Following on the previous discussions [(1) whether to pre-plan a funeral, (2) choosing a final resting place, and (3) planning the funeral ceremony,] this week’s discussion will focus on paying for the funeral.

There are three choices for paying for a pre-planned funeral: Don’t pay until the funeral, pay the funeral home in advance, or buy funeral insurance. Each has some advantages and some disadvantages.

PAY AT THE TIME OF THE FUNERAL

Payment at the time of the funeral has the advantage of allowing the family to pay only for what funeral services are actually used. A pre-planned funeral is important, but the actual funeral might be smaller (i.e., less expensive) than the original plan. As we age, we outlive more of our friends and loved ones, making the cost of a funeral smaller often because of shorter calling hours and a smaller repast. Payment at the time of the funeral allows the payment to fit the actual services without the need to adjust plans to fit the pre-paid budget.

Payment at the time of the funeral also has the advantage of delaying the discomfort of dealing with the funeral any more. Pre-planning the funeral may be tough enough emotionally. Taking the extra step of paying at the time of the planning might add to the emotional weight of the task.

The disadvantage of waiting until the funeral to pay is that there may be no money left to pay for the funeral. The person’s cost of living may have used up all available funds, especially if the person needed long term care before passing away. Then, the family has to find money to pay for the funeral.

PRE-PAY THE FUNERAL HOME

Pre-paying the funeral home might lock in the costs for many of the funeral services, at least those that the funeral home provides directly. Some funeral homes make this promise for pre-paid plans. (On the other hand, some of my clients who believed that they had locked in their funeral costs by pre-payment did not, in fact, receive such a lock-in. The families had to pay more money at the time of the funerals.)

A pre-planned funeral with pre-payment at the funeral home is the easiest for the family to manage. Most of the services and most of the payment are already arranged and at the same place. It’s as close as one can get to “one stop shopping” for a funeral.

Pre-paying a funeral also has the advantage of being an allowed expense by the Medicaid rules for long term care. A person who needs long term care and who needs Medicaid coverage to pay for it is allowed (encouraged, even) to pre-pay his or her funeral. As long as the payment matches the funeral cost estimate and as long as the payment is irrevocable, the funeral fund isn’t considered an “asset” that would make the person financially ineligible for Medicaid. Pre-paying at the funeral home fits Medicaid’s requirements for a pre-paid funeral.

A disadvantage of pre-paying at the funeral home is that the funeral home may go out of business or may change ownership (to an owner whom the family may not want involved in the funeral.) Legally, the family can ask for the money in the pre-paid fund to be transferred to another funeral home. Making such a request, however, while a family member is grieving the loss of a loved one may be more difficult than the family wishes to pursue. In addition, while most pre-paid plans at a funeral home are supported by a type of funeral-specific life insurance policy, the family tends to think of the pre-payment with the funeral home, not the insurance company. If the funeral home goes out of business, the family may have no thought to look for an insurance policy. Similarly, if the person moves, the funeral may not take place at the funeral home where it was planned (because the person’s friends are near the new home.)

Another disadvantage of pre-paying at the funeral home comes from the possibility that the deceased may have been on Medicaid for long term care. (This is a little complicated.) A person in a nursing home usually has a personal account at the nursing home. It tends to be used for hair care, field trips, and visits to the snack bar. A person on Medicaid is allowed to keep some of his or her monthly income to save into this personal account. As the person ages and becomes weaker, his or her use of the personal account decreases, but the monthly deposits into the account continue. When a Medicaid recipient passes away, nursing homes (at least in my area) believe that they can pay that personal account to the person’s funeral home or to Medicaid (as a small repayment toward the amount that Medicaid had paid for the person’s care.) If the funeral home has received full payment for its services because of a pre-payment at the funeral home, the nursing home will send the contents of the personal account to Medicaid (because there isn’t an easily identified shortfall in the costs at the funeral home to which the personal account can be dedicated.)

The third disadvantage of pre-paying the funeral home is that the funeral home may not wish to accept pre-payment for expenses that are not directly for the funeral and burial. For example, some family members may need to travel to attend the funeral and to stay overnight in a hotel. In my experience, funeral homes do not wish to accept pre-payment for these expenses that are not run of the mill.

PRE-PAY VIA INSURANCE

The funeral-specific life insurance mentioned above in which the funeral home usually places the funds it receives for pre-payment is available (in Ohio anyway) for direct purchase by the public. Pre-paying the funeral through the purchase of such insurance has some of its own advantages and disadvantages.

Direct purchase funeral insurance can cover any identifiable funeral-related cost, including unusual costs like travel for out-of-town family. A cost for such unusual items must be documented at the time the insurance is purchased, but the coverage is available.

Direct purchase funeral insurance isn’t tied to any one funeral home. It can be used for any funeral service provider. This gives the family greater flexibility to use the pre-payment at any funeral home, protecting against a change of funeral home ownership or a funeral home going out of business. This flexibility also protects the pre-payment from the insured person moving to a new home after planning the funeral.

As discussed above, pre-paying a funeral is an allowed expense in the eyes of Medicaid. Medicaid does not care whether the pre-payment is at a funeral home or to a funeral insurance policy.

Because the funeral insurance isn’t tied to a particular funeral home, the family can capture the money in the personal account at the person’s nursing home. The family should ask the nursing home to pay the personal account to the funeral home. Then, the family uses the insurance policy to pay the rest of the funeral home’s costs and also any other insured costs.

As an added advantage, if the nursing home personal account is large and the projected costs haven’t gone up too much, the added money might exceed the planned costs. This gives the family a cushion to cover the cost of a service that was left out of the plan (and something is almost always left out at the pre-planning stage.)

Using funeral insurance does give up the opportunity to lock in the funeral home costs at the pre-paid level. (The funeral home may or may not offer such a lock-in, but the use of an outside insurance policy will not lock in the costs.)

Also, the use of outside funeral insurance makes it slightly (and I do mean slightly) more complicated to carry out the funeral plan. It’s not the one stop shopping like pre-paying the funeral home, but it’s not much less convenient.

MY PREFERENCE

I tend to have my clients use the funeral insurance. (Apologies to my friends at funeral homes that sell pre-paid funeral arrangements.) Remember, my clients hire me to help them save money on their long term care. As a result, I like the ability to capture the nursing home personal account. I also like the ability to pre-pay for the non-traditional funeral costs so that the family doesn’t have to pay for them at the time of the funeral.

NOTE

I want to offer a final note about the relationship between pre-paid funerals and Medicaid. If the person pre-planning the funeral isn’t suffering from a dementia-causing disease too badly yet so that long term care doesn’t look like it will be necessary soon, the person should go ahead and pre-pay the funeral (assuming that the emotional difficulty in dealing with the funeral plans isn’t overwhelming, as discussed above.) If, though, the disease is advanced and it seems that long term care will be necessary soon, delay the pre-payment for a bit. An elder law attorney can get shelter more of the person’s assets from the costs of long term care by arranging the TIMING of the funeral payment. (There is no right or wrong time to pre-pay a funeral. There is, though, a more advantageous time to pre-pay a funeral.) The timing is very specific to each client, so I do not intend to discuss it in detail.

Legal Issues when someone has Dementia – Pre-Planning a Funeral Ceremony

Posted on August 27, 2015 by Jim Koewler — No Comments ↓

This week’s blog continues the discussion of Legal Issues when someone has Dementia. The introductory installment (April 30, 2015) put forth the issue of “Who can speak for someone with dementia?” The May 14, 2015 installment discussed the situation where the person with dementia has Advance Directives in place. The May 21, 2015 installment discussed the legal issues in determining whether a dementia sufferer can choose to have new Advance Directives prepared. The May 30, 2015 installment discussed options in preparing a Health Care Power of Attorney. The June 4, 2015 installment discussed how to decide whether to prepare a Living Will. The June 11, 2015 installment discussed some of the basic issues in preparing a General Power of Attorney. The June 18, 2015 installment discussed the importance of making the General Power of Attorney “durable.” The June 25, 2015 installment discussed the importance of NOT making the General Power of Attorney “springing.” The July 2, 2015 installment discussed revoking prior Powers of Attorney. The July 9, 2015 installment discussed Do Not Resuscitate orders. The July 16, 2015 installment discussed the Right of Disposition designation. The July 23, 2015 installment discussed the Will (or Last Will and Testament.) The July 31, 2015 installment discussed beneficiary designations on life insurance policies, IRAs, annuities, etc. The August 6, 2015 installment discussed whether to pre-plan a funeral. The August 14, 2015 installment discussed choosing a final resting place. Today’s installment will discuss pre-planning a funeral ceremony.

Today’s installment continues the discussion of issues to manage when someone finds out that he or she has a disease that causes dementia. These issues should be managed before the dementia gets worse, before the disease takes away the person’s ability to make decisions. Continuing the current topic of pre-planning a funeral, this week’s discussion will focus on the steps to take when planning the funeral ceremony itself.

The plan for the funeral should be written down. The person choosing his or her own funeral arrangements won’t be available to provide clarification. (In addition, in our ongoing discussion of someone with dementia, the person making the funeral arrangements may not be able to remember them very long after making them.) It can be written down anywhere on anything, as long as it can be FOUND when needed. The plan should also include projected costs so that pre-funding can be considered as well. (The next installment will discuss payment options.)

The first part of the written funeral plan is to find a pre-need funeral checklist or shopping list. There are pre-need checklists online. (You can find many of them through a search engine.) Funeral homes (and funeral providers that don’t have a funeral home) have pre-need checklists available as well. Pre-need checklists are often a sales tool for funeral services, so they focus on the services offered by funeral homes.

Unless the person trying to pre-plan the funeral can find a satisfactory checklist online, the person should identify a funeral home that he or she would like to use. The choice of funeral home at this point isn’t necessarily final for the eventual funeral services. The family can choose a different funeral home, if they wish, when the person eventually passes away. When that funeral home has been identified, the person should visit (if possible) and get a pre-need checklist.

The person planning the funeral can use the pre-need checklist for a large portion of the planning necessary for the funeral. If the pre-need checklist came from a funeral home, it will almost certainly make available all of the services that the funeral home offers. The person planning the funeral can choose or refuse most of those services, but if the funeral home offers a service, the pre-need checklist will probably include it among the choices.

Depending on the final resting place chosen (discussed in the August 14, 2015 installment,) certain services may be required. These potentially mandatory services include enbalming and a burial vault. (The vault may or may not appear on the pre-need checklist and may depend on whether the funeral home has a long-standing relationship with one particular or a few particular cemeteries.)

One of the items almost certain to be on the pre-need checklist is a choice of casket. A funeral home will have many models available (in full-size versions, child-size versions, or photographs) from which to choose. When choosing a casket, the model name will usually be written on the checklist I suggest that a photograph be taken of the inside and the outside of the casket as well. The model chosen may no longer be in production at the time of death. The photographs will help identify a substitute that is close the the original choice. (I assume that caskets go out of production because a less expensive material or manufacturing process was devised. A casket isn’t like a car which people replace every three or four years. Styles don’t seem to have changed much over the years either. Nonetheless, casket models do go out of production, so photographs are a good addition to the pre-need checklist.)

The clothing chosen for the deceased is usually listed on the pre-need checklist. In addition, the list also usually includes places to list readings and songs that the person would like. If the pre-need checklist does not include these, the written plan should include them.

In addition to the burial vault and enbalming mentioned above, a few other items may or may not be included on the pre-need checklist. (If the funeral home doesn’t make money from a particular funeral-related service, the funeral home does not have an incentive to include that service on the checklist.)

For example, flower arrangements are usually purchased from a florist. If floral arrangements aren’t listed on the pre-need checklist, the planner should visit a florist and choose what he or she wants. (Flowers are a staple of funerals, so most pre-need checklists include them. Some lists don’t, though.)

Pre-need checklists don’t always include a minister as an available choice. (This is rare, but it does happen sometimes.) If the funeral needs a particular minister or a minister of a particular denomination, the plan should make sure to include that choice. (If a particular minister is desired, the plan should include a back-up. That one particular minister may not be available.)

Similarly, the pre-need checklist may or may not ask about a place of worship. If there is a particular place where the funeral should be held, that place should be listed on the funeral plan. If a memorial service is preferred over a funeral, that choice should be made clear on the plan. (Obviously, a place of worship and a choice of minister often go hand-in-hand, but not always.)

If there will be a burial or placement into a mausoleum, there will probably be a charge for opening and closing the grave. Unless the funeral home is affiliated with a particular cemetery, this item is unlikely to be included on the pre-need checklist. To avoid a last-minute surprise, this cost should be obtained from the cemetery and included on the plan.

The repast (the meal after the funeral and sometimes called the funeral breakfast) is often left off the pre-need checklist. This can be a big cost if catered or can be no cost at all if provided by church members or friends. The planner should think about the meal plans and include the necessary description (and likely cost, if any) in the funeral plan.

Travel needs should also be considered. If the deceased person will need to be transported for burial (most often back to a family home,) the arrangements should be described in the plan and cost projections included. If loved ones will need to travel to the funeral, the plan should include how those loved ones will travel and how much that travel will cost.

Finally, the plan should include a list of people who must be told of the person’s death. If possible, the plan should include contact information for those people.

Similarly, the plan should include a draft death notice. The person planning his or her own funeral should get a chance to have the death notice say what he or she wishes.

Planning a funeral can be traumatic, or it can be cathartic. Either way, a person facing dementia should get a chance to plan the funeral he or she wants before that chance is taken away by the dementia.

With dementia already affecting the person and, because of the dementia, long term care likely in the future, planning a funeral is more important and more pressing. If the costs of long term care force the person to seek Medicaid coverage, the Medicaid application process will almost certainly ask about funeral plans and also about pre-payment.

Legal Issues when someone has Dementia – Choosing a Final Resting Place

Posted on August 14, 2015 by Jim Koewler — No Comments ↓

This week’s blog continues the discussion of Legal Issues when someone has Dementia. The introductory installment (April 30, 2015) put forth the issue of “Who can speak for someone with dementia?” The May 14, 2015 installment discussed the situation where the person with dementia has Advance Directives in place. The May 21, 2015 installment discussed the legal issues in determining whether a dementia sufferer can choose to have new Advance Directives prepared. The May 30, 2015 installment discussed options in preparing a Health Care Power of Attorney. The June 4, 2015 installment discussed how to decide whether to prepare a Living Will. The June 11, 2015 installment discussed some of the basic issues in preparing a General Power of Attorney. The June 18 installment discussed the importance of making the General Power of Attorney “durable.” The June 25 installment discussed the importance of NOT making the General Power of Attorney “springing.” The July 2 installment discussed revoking prior Powers of Attorney. The July 9 installment discussed Do Not Resuscitate orders. The July 16 installment discussed the Right of Disposition designation. The July 23 installment discussed the Will (or Last Will and Testament.) The July 31 installment discussed beneficiary designations on life insurance policies, IRAs, annuities, etc. The August 7, 2015 installment discussed whether to pre-plan a funeral. Today’s installment will discuss choosing a final resting place.

Today’s installment continues the discussion of issues to manage when someone finds out that he or she has a disease that causes dementia. These issues should be managed before the dementia gets worse, before the disease takes away the person’s ability to make decisions. Following on last week’s discussion on whether to pre-plan a funeral, this week’s discussion will focus on what to consider when deciding on a final resting place.

First, the person must choose between traditional burial and cremation. This decision can turn on his or her personal preference and/or religious beliefs. It can also turn on cost. (I don’t mean to be crass, but cost is always a factor.)

Second, the person must choose his or her final resting place. Whether he or she chooses cremation or traditional burial, the location is an important step. The location decision can also be the most time-sensitive decision. (Because the final resting place decision is time-sensitive, the choice between burial and cremation is time-sensitive because the final resting place decision depends in part on the cremation/burial decision.)

If the person chooses to have a cremation and have his or her ashes (called “cremains”) scattered or kept somewhere personal, the placement of the cremains can be treated as part of the ceremony. If, however, the person chooses to have his or her remains (whether cremated or not) placed in a cemetery or other location where other people may have their remains placed, the location must be reserved ASAP. If he or she wants to be placed in a prime location (such as “under the big oak tree,” or next to Mom, or in the niche at eye level in the mausoleum) he or she should buy that location NOW before someone else buys it first. The placement of remains in a cemetery is a real estate transaction. The three most important parts of the real estate transaction are “location, location, and location.” If someone gets your favorite spot before you do, it’s not your spot.

The decision to scatter cremains or to be buried or placed in a mausoleum is, like the cremation decision itself, largely based on personal preference and often on religious beliefs. Cost (as always) is a factor as well.

If religious beliefs or costs do not dictate the choice, then personal preference controls. The personal preference might be based on a wish to be placed where loved ones can visit. It might be based on a desire to stay with loved ones, such as cremains kept in a family member’s home. It might be based on an important event in the person’s life. (A friend’s father was an avid golfer. He asked that his cremains be scattered on a golf hole where he scored a hole-in-one.) The decision might also be an acknowledgement of a lifelong interest, such as having ashes scattered in a favorite meadow or forest.

The decision of a final resting place is deeply personal. Someone with the early stages of dementia should get a chance to make that decision before the opportunity gets away.

Legal Issues when someone has Dementia – Consider whether to Pre-Plan a Funeral

Posted on August 6, 2015 by Jim Koewler — No Comments ↓

This week’s blog continues the discussion of Legal Issues when someone has Dementia. The introductory installment (April 30, 2015) put forth the issue of “Who can speak for someone with dementia?” The May 14, 2015 installment discussed the situation where the person with dementia has Advance Directives in place. The May 21, 2015 installment discussed the legal issues in determining whether a dementia sufferer can choose to have new Advance Directives prepared. The May 30, 2015 installment discussed options in preparing a Health Care Power of Attorney. The June 4, 2015 installment discussed how to decide whether to prepare a Living Will. The June 11, 2015 installment discussed some of the basic issues in preparing a General Power of Attorney. The June 18 installment discussed the importance of making the General Power of Attorney “durable.” The June 25 installment discussed the importance of NOT making the General Power of Attorney “springing.” The July 2 installment discussed revoking prior Powers of Attorney. The July 9 installment discussed Do Not Resuscitate orders. The July 16 installment discussed the Right of Disposition designation. The July 23 installment discussed the Will (or Last Will and Testament.) The July 31 installment discussed beneficiary designations on life insurance policies, IRAs, annuities, etc. Today’s installment will discuss whether to pre-plan a funeral.

A person who finds out that he or she has dementia should consider pre-planning his or her funeral, if it is not already planned.

The person may be reluctant to talk about his or her funeral, but it can be a cathartic experience. Nonetheless, some people feel that planning the funeral, like preparing a will, is tempting fate. That’s okay. While I think it’s a good idea to pre-plan a funeral, it’s not going to change how the person’s disease will be managed. If the discomfort thinking about a funeral is too great, then the person should not do it.

There are, however, several good reasons to pre-plan one’s funeral.

First, pre-planning a funeral allows the person to have the funeral that he or she wants. If the person doesn’t leave instructions, then his or her loved ones must make their best guesses on the funeral details that the person would have wanted.

Second, pre-planning a funeral allows the person to set aside money for the funeral. With a plan for a funeral, the person can have confidence that the money set aside is the right amount.

Third, pre-planning one’s own funeral relieves the emotional burden of one’s family to plan it at the time of death. Just as the worst time to shop for groceries is when hungry, the worst time to shop for a funeral is when grieving. If my mother were to die (sorry, Mom,) I might feel the need to show the world how much I loved my Mom by getting her the platinum casket with the silk lining and the gold accents and spend tens of thousands of dollars for it. My mother, might have wanted a simple maple casket costing much less. Now, I know that my Mom has a funeral plan already prepared. If she didn’t have a funeral plan, though, my grief might cause me to spend much more on her funeral than she would have wished and cause me to arrange a funeral very different than what she would have wanted.

In summary, I urge anyone with early stage dementia (frankly, anyone over retirement age as well) to consider pre-planning his or her funeral. Someone with early stage dementia has more of a timing concern before the dementia advances, but any senior should consider whether to pre-plan his or her funeral.

Legal Issues when someone has Dementia – Consider a Will

Posted on July 23, 2015 by Jim Koewler — No Comments ↓

Please remember, the last several week’s installments have discussed the decisions and preparations that someone can make when he or she has dementia but the dementia isn’t advanced. The dementia hasn’t yet taken away the person’s decision-making capacity. Today’s discussion of a Will continues in that same vein.

A Will may not seem as though it’s important to the care that a dementia sufferer might require in the future or to the handling of that dementia sufferer’s medical and legal affairs as the disease progresses. That impression is correct. The Will isn’t important for a dementia victim’s medical or legal affairs related to the disease. The Will might, though, be important to the person’s peace mind.

Someone with dementia is likely to have few or no financial assets when he or she dies. The medical and custodial services of long term care that dementia requires could use up the person’s savings and income before his or her death (especially if the person did not get help from an elder law attorney.) Alternatively, the person’s assets might be protected from the costs of long term care (usually through the help of an elder law attorney,) but the sheltered assets rarely belong to the dementia sufferer after they’ve been sheltered. So, either way, someone with dementia should not expect to have financially significant assets at the time of death. So, one might ask, what good is a Will to someone with dementia.

First, some people facing what will be their final illness want to avoid worrying if their “affairs are in order.” No matter how little someone with dementia might expect to have when they die, they still might want to make provisions for what there will be at that time. It can help anyone (suffering from dementia or not) feel as though he or she has done all in his or her power to look out for loved ones whom they will leave behind. Often, there is a cathartic value in such preparations.

Second, the value of a will isn’t just financial. It is true that most people think of a Will as divvying up the bank accounts, land holdings, corporate ownership, automobiles, and valuable antiques that belonged to someone who has passed away. For many (perhaps even most) families, though, the Will is how items of sentimental value find their new homes. Almost no heir cries when receiving a stock portfolio. Many heirs cry, however, when they receive Great-Grandma’s wedding band, the antique desk that belonged to a beloved uncle, or some other piece of the family heritage. These sentimental or historical family heirlooms don’t mean much to the bankers and credit card companies that served our parents and grandparents, but they often mean a great deal to us, our children, and our grandchildren. One cannot place a dollar value on a shared family heritage or a sentimental memory.

To make it easier for someone to designate heirs on sentimental items, in some states, a formal Will isn’t necessary. Some states allow a simple list of items and heirs that does not need witnessed or notarized or whatever other method might be required to authenticate a formal Will. Preparation of this informal list can have the same cathartic effect as a Will.

To be sure, it is better to have a Will than not to have one. Plenty of people (with or without dementia) failed to prepare Wills thinking that their assets would not justify the trouble. Often, these people overlooked some of their assets or assumed a wildly low value for some of their assets. Other people have inherited assets late in life, after dementia has taken away their decision-making ability, and it was too late to create a Will. To avoid these problems, a simple Will is a good idea (even if a list of heirs for the sentimental items is prepared separately.)

A simple will should designate an executor or executrix. (Executor is male, like steward. Executrix is female, like stewardess.) It should also name one or more successors, in case the designated executor or executrix can’t serve or can’t complete the job.

A Will should also the ability to dispose of (sell, give away, etc.) any assets that aren’t already designated in the Will or in the list of personal/sentimental items. Disposition of real estate should specifically be listed in the powers of the executor or executrix. Including these powers can, in some states, help the executor/executrix avoid seeking probate court permission to dispose of these assets. (The necessity to seek court permission adds costs and delays to the probate process.)

A Will should also include a “residual beneficiary” clause. A residual beneficiary is the heir (or heirs) designating who gets anything from the estate that isn’t specifically listed somewhere. The beneficiary, though, isn’t really the important part of this clause (expect, perhaps, to the beneficiary or beneficiaries.) The important part of the clause is the “residual” part. The “residual” part, because it catches any asset that wasn’t specifically listed elsewhere, keeps the previously-overlooked asset (like a forgotten bank account) or the late-in-life acquisition (like an inheritance received after the dementia had advanced) from being lost in limbo, without an instruction what to do with it.

In summary, even though a dementia sufferer may not expect to have significant financial assets, a Will can be valuable. It can provide peace of mind and the cathartic feeling of having things settled. It can also provide for sentimental or historical items. Finally, it can make preparations for surprises that might happen after the dementia has advanced.

Even a dementia sufferer should consider a Will if he or she still can.

Legal Issues when Someone has Dementia – Leave Instructions about your Long Term Care Planning

Posted on May 7, 2015 by Jim Koewler — No Comments ↓

This week’s discussion is brief. It doesn’t take much explanation. It states what should be obvious, but many people still overlook these issues.

When you need long term care, you may not be in a position to tell your family about the setting that you prefer in which to receive care (, nursing home, assisted living, or in your home with a home care company.) Likewise, you may not be in a position to explain to your family the strategy you adopted for dealing with long term care costs. (If you’ve bought long term care insurance or set up a trust, for example, your family may not know. In addition, you might qualify for VA benefits, but your family may not know where to find your discharge papers.)

Leave instructions, or talk over these issues with someone before hand.