Survey of Common Legal, Financial and Medical Issues Facing the Aging Client and Recommended Practices in

Offering Solutions

Estate Planning Council of Birmingham, Inc.February 4, 2016

Lynn CampisiLYNN CAMPISI, P.C.

3008 Pump House RoadBirmingham, AL 35243

(205) 967-1010NO REPRESENTATION IS MADE THAT THE QUALITY OF THE LEGAL SERVICES TO BE PERFORMED IS GREATER THAN THE QUALITY OF LEGAL SERVICES PERFORMED BY OTHER LAWYERS. 1

Elder Care Serving specific needs of the

aging client Legal – delegation of authority &

protection of person and property Financial – resources, public

benefits & insurance Medical – levels of care & related

costs

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Legal Financial MedicalCapacity Nest Egg

Required for Financial Independence

Affordability

Control Accessibility

Conflict Public Benefits When The Well Runs Dry

Compliant Behavior

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Legal IssuesCapacity

Understanding transaction Medical Testimony not conclusive - must be

weighed with all other evidenceControl

Authority- Decision Maker Powers of Attorney Oversight and Sanctions

Conflict Between Principal and Agent Among Family Members Outsiders 4

Capacity Common Sense Judgments The $20.00 Question

Money for a Loaf of Bread

Top Off With Doctor’s Letter

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Control…Who Decides?Healthcare Financial

Individual Individual

Healthcare Proxy Agent under Power of Attorney

(CONFLICT)

Guardian Conservator

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Control Who Decides (cont.)Healthcare Financial

OtherPayee under Social Security

Fiduciary under VA

Protective Placement By DHR Conservator Usually Appointed

Probate – Commitment and Temporary Geriatric PsychiatricPlacement

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Oversight & Sanctions Provide oversight provisions in Powers of

Attorney and Trust Documents Breach of Fiduciary Duty for Agent, Trustee or

Conservator Protecting Alabama’s Elders Act – Ala. Code

§13A-6-190, et seq.● Seven (7) Year Statute of Limitation for Financial

Exploitation● Criminal Charges of Elder Abuse and Neglect Imposed

for Emotional Abuse, Financial Exploitation, Intimidation, Neglect or Undue Influence

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Solutions Plan Early Persuasion Precedes Court Legal Structures in Place to Minimize

Conflict and Court Intervention Estate Planning Documents

Financial and Health Power of Attorney

Trusts Last Will and Testament

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Financial Power of Attorney Alabama Uniform Power of Attorney

Act – applies to all powers of attorney executed on or after January 1, 2012

Presumed durable unless expressly terminated by incapacity Best to include specific durable

language

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Financial Power of Attorney (cont.) Grant of authority for one or all of the

powers enumerated in the statute Real Property Tangible Personal Property Stocks and Bonds Commodities and Options Banks and Other Financial Institutions Operation of Entity or Business Insurance and Annuities Estates, Trusts, and Other Beneficial Interests Claims and Litigation Personal and Family Maintenance Benefits from Governmental Programs or Civil or Military

Service Retirement Plans Taxes Gifts 1

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“Hot” Powers Create, amend, revoke, or terminate an inter

vivos trust, by trust or applicable law

Make a gift to which exceeds the monetary limitations of Section 26-1A-217 of the Alabama Uniform Power of Attorney Act, but subject to any special instructions in this power of attorney

Create or change rights of survivorship

Create or change a beneficiary designation12

“Hot” Powers (cont.) Authorize another person to exercise the

authority granted under this power of attorney

Waive the principal's right to be a beneficiary of a joint and survivor annuity, including a survivor benefit under a retirement plan

Exercise fiduciary powers that the principal has authority to delegate

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Appointment of Agent Single agent

Successor agent

Co-agents Default allows joint & several action by

co-agents Requirement of joint actions must be

specifically stated

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When Effective?

Immediately – power is effective immediately unless otherwise noted

Springing – effective upon incapacity Principal may name person to

determine incapacity

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Formality Signed by Principal in presence of

attesting Notary Public Signature is presumed genuine if

notarized

Photocopy has same legal effect as original document

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Advance Directive for Health Care: End of Life Decisions

Falls under Alabama Natural Death Act

Part 1 – Living Will

Part 2 – Appoint Proxy

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Advance Directive for Health Care(Part 1: Living Will)

Allows you to clearly specify in writing what medical treatments and/or life support measures you do or do not want during a future terminal illness or a persistent vegetative state

“Terminally Ill or Injured”

“Permanently Unconscious”

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Advance Directive for Health Care(Part 2: Appoint Proxy)

Allows you to delegate someone (called a health care proxy or agent) in writing to make medical decisions for you if you are unable to make those decisions for yourself Temporary Situations

under anesthesia during routine surgery

Permanent Situations dementia, mental incapacity

Should add HIPAA release of medical information19

Health Care Power of Attorney Falls under Alabama Uniform Power of

Attorney Act – applies to all powers of attorney executed on or after January 1, 2012

May delegate end of life decisions Signed by Principal in presence of two

witnesses Photocopy has same legal effect as

original document

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Beneficiary Designation Forms Your Last Will and Testament only controls

your probate assets Many of us have non-probate assets such as:

Life insurance 401(k) plans Individual retirement accounts (IRA) POD & TOD accounts

For non-probate assets, make certain that your beneficiary designation forms reflect your current wishes.

CAUTION: An individual, trust (with qualifiers) or charity is always a better named beneficiary than your estate.

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Estate Planning Considerations Funeral, Burial and/or Cremation

Instructions

Medicaid Eligibility

Trust Planning Minor children or grandchildren Special needs beneficiary Spendthrift beneficiary

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Financial Framework Personal Resources – income, savings,

qualified & non-qualified funds, home equity conversion

Public Benefits – Medicaid & VA

Insurance – health insurance, Medicare, supplemental, drug & long term care

Health (Medicare, Supplemental and Drug) Long Term Care Accelerated Benefits and Viatical Settlements

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What Does Long Term Care Cost? (Nursing Home).

5 years long term care at highest level:

Year Monthly Cost Annual Cost

2015 $7,500 ($250/day) $90,0002016 $8,000

$96,0002017 $8,500

$102,0002018 $9,000

$108,0002019 $9,500

$114,000

5 year total:$510,000

Less average retirement & SS of$2,000/month for 60 months ($120,000)

TOTAL$390,000

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Levels of Care / Costs

Home / Sitters: $15 - $17 per hour

Assisted Living: $3,000 - $4,000 per month

Specialty Care: $4,000 - $5,000 per month

Nursing Home: $6,500 - $7,500 per month

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Private Caregiver Add On for “Demanding Resident”

$17 per hour

24/7 = $408 per day

$12,240 per month

$146,880 annual

$734,400 - Five (5) years

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Nest Egg Required for Financial Independence?

$1,000,000 plus

5 years minimum

Nursing Home (net Social Security): $ 390,000

Private Caregiver: $ 734,000

$ 1,124,000

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Public Benefits Medicaid nursing home benefit – a

means tested benefit

Veterans Affairs – Wartime Vets & Widows Pension and Aid & Attendance Nursing home

For the Vet only; assets are not restricted; Better choice for Spouse at home (does

not require spend-down)

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Medicaid Skilled need

Income limit = $2,199 (otherwise, qualified income trust necessary)

Resources Individual limit = $2,000 Spousal limit = maximum of $119,220 for the

spouse at the house Formula = minimum of $25,000 or ½ of the couple’s

countable assets up to a cap of $119,220 for 2016

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Financial Products

Are Financial Products Resources? Resource = anything that can be converted to

cash within 30 days

Life Insurance with long term care feature = net cash / surrender value counts

Annuities = surrender values count

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Annuitization & Medicaid

Should not count as resource or transfer if:

Irrevocable Payable for life expectancy of the annuitant Beneficiary is spouse, disabled child or Medicaid Unsellable or unassignable

Medicaid can still contend that contract is sellable

Note: Company allowed cash out of present value of remaining annuity payments for 89 year old Required indemnity & nondisclosure of the transaction

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Exempt Resources Home - if spouse lives there

Car – if used for essential activities

Some trusts – with Medicaid payback if settled by spouse or self

Some burial32

Burial $5,000 burial fund (includes cash value of life

insurance) (face value over $5,000) Life insurance face value $5,000 or less, cash and/or

funeral service

Non-Countable Opening & closing Marker Headstone Burial plot Casket

Irrevocable Burial Contract most retail is $10,000+ Exempt if IRREVOCABLE 3

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Look Back Penalties for gifts & transfers for no

consideration for 5 years prior to Medicaid application

Penalty – no Medicaid benefits paid for each $5,800 of gifts/transfers

Penalty begins in month otherwise qualified for Medicaid – no money left to pay

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Self Settled Asset Protection Trusts for Medicaid & VA Virtually forfeits all ownership of assets 5 year private pay necessary to cover

look back period Tax consequences of liquidating assets

to fund trusts Trusts primarily benefit heirs Heirs pay your bills Dependency on heirs Is there any protection for YOU?

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Testamentary Trust-Special Needs Trust for Disabled Beneficiary

Established by Last Will and Testament

Beneficiary is Spouse or Disabled Child

No Transfer Penalty

No Medicaid Payback Required

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Limited Medicaid – Medicare Savings Programs (QMB, SLMB, QI-1) No resource test in Alabama

Limited or low income

Pays copays, Part B Medicare Premiums & Medicare Deductibles

Apply to Medicaid District37

Medicare Savings Programs Qualified Medicare Beneficiary Benefits (QMB)

2015 Income Cap = $1,001.00 Individual / $1,348.00 Couple Pays Medicare Part B Premium = $104.90 per month Pays Medicare Part A Hospital Deductible = $1,288.00 per benefit period Pays Medicare Part B Physician Deductible = $166.00 Pays Medicare Part A premium ($411.00) unless you get free Part A Pays Medicare Co-Insurance = 20%

 Specified Low Income Medicare Beneficiary Program (SLMB) Income Cap = $1,197.00 Individual / $1,613.00 Couple Pays Medicare Part B Premium = $104.90 per month

Qualifying Individual (QI–1) Income Cap = $1,345.00 Individual / $1,813.00 Couple Pays Medicare Part B Premium = $104.90

Caps change in February each year38

Insurance Health – Medicare, group & retiree health,

supplemental & prescription drugs

Long Term Care – covers home care, assisted living & nursing home

Medicaid – allows additional exempt resources equal to benefits paid for nursing home costs paid by long term care insurance Ex: LTC pays $3,000/month x 36 months =

$108,000Additional = exempt = $108,000No estate recovery

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Medicare – Parts A, B, C & D Part A: hospital = free to worker & spouse

with 40 quarters

Part B: physician = $104.90 (plus income adjustment for high income)

Part C: Advantage – bundle of Parts A, B & D

Part D: prescriptions = $30 - $90 (plus income adjustment for high income)

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Medicare – Parts A & B – Additional Supplement Parts A & B

You pay deductibles & 20% copay Medicare pays 80% Medicare pays 20 days rehab

Additional Supplement – can pay deductibles & 20% copays (monthly premiums cost $150 - $250) Plan F Supplement pays additional 80

days of rehab 41

Medicare – Part C

Allows minimum deductibles

Higher copays

Better for healthy individuals

Move to Parts A & B with a Supplemental when usage & hospitalizations are more frequent

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Medicare – Part D Premiums = $30 - $90 monthly

Deductibles = approximately $300 - $500 $0 for higher premium plans Copay $30 - $90 per prescription

Formulary – drug must be listed for coverage Initial Coverage = up to approximately $3,000

of total drug costs You pay copay

Gap or Donut Hole – after deductible & initial coverage, you pay up to $4,700 in out-of-pocket costs

Catastrophic Plan – after GAP, pays most through December 31

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Enrollment

October 15 – December 7 for January 1 coverage

3 months before & after reaching age 65

Special enrollment periods during institutionalizations (hospital or nursing home stay)

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Medical Issues Affordability of Medical Insurance and

Care

Accessibility - Money cannot buy everything

Compliant Behavior - demanding residents get the polite boot – “we cannot provide adequately for your loved one’s plan of care”

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Solutions Plan early for long term care

Long Term Care Insurance does help

Concierge Physicians

Safety First-Hazards and isolation in the home

Protect the Nest Egg

Continuum of care facilities with a generous deposit – some can provide long term care for life

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Secure the Team1. Estate / Elder Law Attorney

2. Financial Planner Insurance Professional Banker Trust Officer

3. Care Geriatric Manager Geriatric Doctor Concierge Doctor Medical & Long Term Care Insurance Advisor Psychiatrist Rabbi, Preacher, Priest & Clergy

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