The average age of a Reston adult is about 40, which means their parents are approaching retirement age.
While 40-somethings are focused on career and making sure their kids are getting prepared for college, are they also making sure their parents are prepared for retirement?
Our parents will inevitably need some form of long term care during their retirement years, so careful estate planning is important. Notably, the key word in estate planning is planning. Surprisingly, too many people do not have an adequate plan.
However, Medicare (Part A) only pays for care in a long term care hospital, Medicare-certified skilled nursing facility under certain conditions for a limited time or through Medicare-certified home health services like intermitted skilled nursing care or hospice care. It will never pay for in-home custodial care, nursing home, continuing care retirement community, or assisted living facility.
Suppose your parent has dementia or Alzheimer’s and is fully mobile but cannot be left alone? Long term care for your parent can range from $2,000 to more than $6,000 a month. These costs are paid out of retirement funds and can easily exceed the average person’s retirement budget.
Although rare, there are organizations that provide affordable options like flat monthly fees for basic, mid-level and advance wellness packages to fit different budgets.
In some families, a family member becomes the caregiver, usually a spouse or a child. Even when family members step up to become the caregivers, respite or additional help is also frequently required. For those who plan ahead, purchasing long term care insurance is a great way to manage these costs while being able to remain in one’s home. Another option is designating a family member to be the care giver.
Consider what happens when your parent cannot afford the cost of care or does not have a family member to provide care. The only option is nursing home or home health care covered by Medicaid.
To qualify, your parent’s monthly income cannot exceed 300% of the SSI amount for an individual, or $2,205 per month for 2017 and Medicare will require any assets to be used to pay for care, unless the assets were transferred or liquidated 5 years prior to applying for Medicaid.
A popular strategy to deal with the 5-year “look back period” is to transfer the deed to the home to a child. This may solve the Medicare problem, but it has drawbacks. In most cases, the child will pay higher taxes if he or she later sells the property.
Be proactive in 2018. Contact us via email or call me at (703) 712-8000 set up a consultation and take the necessary steps to protect yourself and your family.
I am sure I will have some commentary on the outcome of the November 7 election in future columns, but as I write this column results are not yet known. No matter the outcome, I share the frustration experienced by many with the negativity that seems to inevitably overtake campaigns with high stakes. Political operatives who provide the advice upon which campaigns are planned continue to insist that negative advertising wins elections as it gets people’s attention and creates a fear or anger that moves voters to take part. I am not sure if anyone has measured how many people get turned off and decide not to vote because of the vicious ads.
Even more concerning to me than the half-truths and falsehoods that have slipped into campaigning is the cruelty that has moved into the operation of government. After years of complaining about the Affordable Care Act while in complete control of the Congress and now also the presidency, the Republicans have not been able to repeal and replace what they came to call Obamacare. The reason might simply be that provision of health care to all with coverage for pre-existing conditions in a developed nation is the right thing to do. Failing to achieve legislative success, the administration has set about trying to kill the program through administrative actions and neglect. That is where the cruelty sets in.
The first effort at killing the program came with an executive order to withhold subsidies which allowed insurance companies to keep premium increases to a minimum. With the loss of the subsidies, Anthem pulled out of Virginia in August leaving 60 jurisdictions with no insurer offering coverage; they reversed their action after intense efforts by Governor McAuliffe. The loss of federal support will be devastating in Virginia where 240,000 Virginians rely on subsidies to be able to afford insurance. There clearly must not be a lack of money in Washington with the huge tax cuts now being proposed for the very wealthy.
The cruelty does not end there. To reduce the program further the advertising budget to remind persons about open enrollment was slashed by 90 percent, and the time to enroll was reduced from 12 weeks to 6 weeks. The open enrollment started November 1 and will close on December 15. Tell anyone you know who might be eligible and spread the information through social media programs in which you participate that open enrollment ends on December 15.
A final crippling blow could be the administration announcement that it will not enforce the individual mandate that has been critical to keeping costs down by spreading the risk across a wide pool of participants. As though this is not enough, the Republican Congress and administration failed to reauthorize the Children’s Health Insurance Program (CHIP) that provided care to 65,000 children and 1,100 pregnant mothers in Virginia. We have a new insurance program in place in this country; it is called Trumpcare. It is a very cruel system!