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Elder Counselor Newsletter

Donald Trump’s election and Republican majorities in both houses of Congress surprised much of the nation. With control of legislative and executive branches of government, the expectation is Republicans will finally be able to push through long-awaited legislation, as well as follow through on promises made by candidate Trump. And they are expected to move quickly.

This issue of ElderCounselor summarizes some key issues to watch out for in 2017 that affect seniors and persons with disabilities.

 

What the Election Outcome Means in Congress

The House has remained in Republican control—about 45% Democrat and 55% Republican. The majority rules, so while the Democrats may have loud opposition, they don’t have a lot of power. Currently, Republicans are mostly united, but those in the Freedom Caucus (Tea Party Republicans) are deciding how they will interact with the Republican establishment. If they split, votes may be needed from Democrats to pass legislation.

The Senate is 48 Democrats and 52 Republicans. 60 votes are needed to prevent a filibuster (where senators can talk for hours and delay votes). But with budget reconciliation, only a simple majority (51) is needed to pass legislation in the Senate. Because they are all budget-related programs, the Republicans will try to reform Medicaid, Medicare and the Affordable Care Act (Obamacare) through budget reconciliation. Individual Republican senators will have a lot of power, as some may insist on additions or deletions to secure their vote. If the Republicans do not stick together for the majority, votes may be needed from Democrats. (Note: Budget reconciliation was used to pass the Deficit Reduction Act of 2005 and OBRA 93, which enacted big cuts that changed elder law—the lengthening of the transfer penalty, the change in the time of when that penalty applies, the move from trust.)

One thing to watch is who is going to run Health and Human Services (HHS), Centers for Medicare and Medicaid Services (CMS) and the Social Security Administration, especially considering how much is related to Supplemental Security Income (SSI). The people now in charge of staffing these agencies are conservative. For example, the person in charge of staffing the political positions at the Social Security

Administration has called for privatizing Social Security in the past. Donald Trump has repeatedly said he doesn’t want to change Medicare and Social Security, but that may be changing. (See below.)

 

Tax Policy

Tax changes are expected as part of the budget reconciliation process. We are not sure yet if 2017 will bring major tax reform or just tax cuts, but tax rates are expected to decrease for both individuals and businesses. Candidate Trump called for elder care and child care tax deductions and/or credits. He has also stated his plan to eliminate the federal estate tax, then charge capital gains tax on everything over $10 million, with exemptions for family farms and small businesses.

We may also see some changes to the ABLE Act (Achieving a Better Life Experience), which passed in December 2014 and amended Section 529 Plans. Currently, ABLE allows people with disabilities developed before the age of 26 and their families to set up tax-exempt savings accounts, which can be used to cover qualified disability expenses such as, but not limited to, education, housing and transportation. Revisions in 2017 may raise the age to 46, allow those working to put in more money, and allow rollovers of these accounts.

 

Medicare Reform

President-elect Trump started by saying he was going to protect Medicare and Social Security. After meeting with House Speaker Paul Ryan, he said he will modernize Medicare. Reince Priebus, incoming chief of staff, recently insisted that Mr. Trump won’t meddle with Medicare or Social Security. Instead, he has said he will focus on 1) improving the economy, which will reduce the debt and ease entitlement concerns and 2) save Medicaid, Medicare and Social Security without cuts while eliminating fraud, waste and abuse.

But he is already encountering resistance from Republicans, who for years have claimed that a major overhaul to Medicare and other entitlements are needed to ensure they don’t go bankrupt; that entitlement reform is critical to reducing debt; and the longer they wait, the harder it becomes to solve the problems. Obama administration officials warned just last year that a central Medicare trust fund is projected to run out of money by 2028.

Yet Republicans are also encouraged by what some of the President-Elect’s Cabinet picks could mean for future entitlement reform. Representative Tom Price (R-GA), who replaced Paul Ryan as Budget chairman and sought to overhaul entitlement programs, is Trump’s pick for Health and Human Services secretary. Representative Mick Mulvaney (R-SC), a fiscal hawk and Freedom Caucus co-founder, will lead his White House budget office.

So, we will have to wait and see if President-elect Trump, his Cabinet members and leading Republicans will find a way to agree. Some reforming of Medicare may be part of the 2017 budget reconciliation, but with ObamaCare repeal and replace, tax reform and infrastructure as the immediate priorities, solving the decades-long problem of deficits in Medicare and Social Security will likely have to wait until after 2017.

In the meantime, we are seeing a tilt toward Medicare Advantage plans. These managed care plans (offered through HMOs) often have lower costs and provide benefits not covered by traditional Medicare and Medicare Supplement Plans, such as health club memberships and preventative educational programs for those with diabetes and other chronic diseases.

A long-term goal for Medicare, which has been around since its founding in 1964, is premium support. Basically, the consumer would choose a plan from those offered through an exchange. The government would provide subsidies to companies, they would lower the premiums and then people would choose their plans. It’s not likely that this will replace Medicare as we know it, but it is an idea being discussed.

 

Medicaid Reform

President-elect Trump has called for block granting Medicaid. House Speaker Paul Ryan has called for it, too, and Republicans are looking at whether they can reform Medicaid through budget reconciliation.

Those who want to reform Medicaid are focusing on the FMAP, the federal percentage match that states receive through federal funding. This is based on per capita income of the state. For example, a rich state like New Jersey is a 1:1 ratio, while a poor state like Mississippi is about a 3:1 ratio. This means for every one dollar that Mississippi spends on Medicaid, they will receive three free extra dollars from the federal government. This can impact states’ budget decisions. For example, if the governor of Mississippi needs to cut costs, he will more likely cut education or infrastructure by one dollar, rather than cut Medicaid spending by one dollar and lose the three free extra dollars.

The idea of block grants has been around for about 30 years. They are attractive because there are fewer federal rules to comply with and the states can use the money however they wish. But block grants shift more costs onto the states, and governors tend to oppose that.

Another idea floating around is a per capita cap, which would give the states a fixed dollar amount per individual, based on Medicaid standard lines (the blind, aged, and disabled children and adults). It was first proposed by President Clinton, who also wanted block grants. A per capita cap may force the states to control Medicaid costs over time, but there is also a demographic shift to consider—the medical needs and costs for an 85-year-old are much greater than for a 65-year-old. Nursing homes and aging disability provider groups have a huge stake in this and would likely oppose it, as would some governors.

The cost changes may not be felt right away, but they will be noticeable ten years from now and that’s what Congress must plan for. There may be increased waiver flexibility for the states and provider taxes to offset states’ losses. We may also see reforms to make it easier to manage care.

 

Affordable Care Act

Republicans are already moving to repeal and replace Obamacare. The question is: How much will be repealed? There are several programs included in the ACA, not related to traditional health insurance, that are important to elder law attorneys and their clients. For example, Medicaid expansion, a kind of Medicaid reform, is part of the ACA.

The ACA also includes programs that work toward ending the institutional bias in Medicaid. One is Community First Choice, a state plan that provides home- and community-based services. Currently it has an extremely low-income threshold so it’s a limited population, but it’s a start.

Another is Money Follows the Person, which pays for transition services. For example, it could provide extra funds to help someone leave a nursing home, by paying for a housing coordinator to find an apartment, a roommate, buy basic furniture and so on.

We are moving toward home- and community-based service, which many people favor. How will that interact with Medicaid reforms? Because they are optional, some fear that with per capita caps, these services will be among the first to go. There may be more opportunities to expand these services through block grants because they allow more flexibility in what is offered. Along this line, Senator Chuck Schumer (D-NY) has introduced a bill called the Disability Integration Act, which would make home- and community-based services a civil right.

 

Other Medicaid-Related Issues to Watch

Limiting home equity: This proposal, H.R. 1361, would take away the state option to expand the cap for single individual home owners. It would not impact people who have a community spouse living in the home or if you have a disabled child or a dependent under 21. New York and New Jersey have already implemented the home equity limit. California has not.

Medical liability reform: This could impact whether individuals get adequate access to personal injury settlements and funds that can be put into a special needs trust.

 

Long-Term Care Reform

There has been a lot of discussion on Capitol Hill about picking up the pieces on long-term care. After a decade, the market has completely collapsed. John Hancock just withdrew, and Genworth was bought out by a Chinese private equity firm. Republicans and Democrats agree on the problem, but there doesn’t seem to be common ground yet on a solution. The Senate Aging Committee is starting the process, which is a positive step. There are calls for catastrophic coverage, at least on the back end, and probably some sort of front-end coverage for two or three years. There may be some long-term care reform as part of Medicaid reform.

 

VA Benefit Rules

The new rules have been delayed again until at least April, 2017. Fixing the VA is a Trump priority. An important piece to what will happen with the VA is who Trump names to head the VA and Veterans Benefit Administration (VBA).

 

Nursing home binding arbitration rules

Nursing homes must comply with binding arbitration rules to have access to Medicare or Medicaid funds. NAELA has been working with others to push CMS to ban pre-dispute binding arbitration. The for-profit nursing home industry association is fighting it and recently won a preliminary injunction in a Mississippi district court (American Health Care Association et al v. Burwell). We do not yet know if the Trump Administration will appeal this ruling and continue with banning binding arbitration for nursing home contracts.

In Kindred Nursing Centers Limited Partnership v. Clark in Kentucky, the issue is whether federal arbitration acts overrule the state’s arbitration acts. The state of Kentucky has a law that says in order to waive the principal’s constitutional right to a jury trial, the agent must be given that specific authority within the power of attorney. Whether this is overturned is likely to hinge on President Trump’s pick to fill Justice Scalia’s vacancy on the Supreme Court.

 

Conclusion

There are a number of issues that will be addressed in 2017 that can have significant impact on seniors and their loved ones, Veterans, and persons with disabilities. If you have questions or would like to discuss any of the issues raised here, please don’t hesitate to contact us.

category: Elder Counselor (Newsletter)

Elder Counselor Newsletter

There are often situations in which an older person needs the services of an attorney and medical professionals. A recent article in Bifocal, a publication of the American Bar Association, highlighted six scenarios in which such a collaboration would be beneficial to the older patient-client’s well-being, as well as the professionals. This issue of ElderCounselor will summarize these situations.

 

Decisional Capacity Issues
When provided with adequate information, most older individuals retain sufficient cognitive and emotional ability to make autonomous, valid decisions about important aspects of their own lives. Sometimes, however, an older person’s capacity to make and express valid choices about personal (including medical or residential) or financial matters is questionable and/or questioned by others.

Working Together
The elder law attorney needs involvement from medical professionals to help recognize when decisional capacity may be compromised and to quantify the existence, degree and reversibility or alterability (for example, through medication management) of decisional impairment. The physician and other medical professionals could benefit by working with an elder law attorney who can identify and accurately describe the potential legal implications of the person’s decisional impairment. The attorney can then evaluate possible interventions such as guardianship, supported decision-making arrangements or reliance on previously created or implied advance directives or other instructions.

 

Elder Mistreatment
Many older individuals, especially those with cognitive decline, are at risk of physical, psychological and financial mistreatment at the hands of family members and others. In addition to abuse and exploitation, elder mistreatment may occur in the form of neglect, often occurring in the older person’s home or that of a relative with whom the older victim resides.

Compounding the problem is the reluctance of many older persons to cooperate in reporting and investigating their own mistreatment. They may accept physical or emotional abuse, financial exploitation or neglect of basic needs like hygiene or medications by a family member out of fear that making a report might result in being removed from the home and placed in a nursing home.

Working Together
Medical professionals are generally the first to recognize, evaluate and medically treat signs and symptoms of elder neglect, exploitation or abuse. Their input is essential in considering and effecting legally permissible options or required actions. Health care professionals often have a responsibility to monitor the quality and safety of home care provided by family caregivers or others, and a duty to report instances of suspected abuse to authorities. An elder law attorney can help both the medical professionals and the older patient/client by providing legal advice pertaining to the professionals’ responsibilities to report, confidentiality considerations, legal ramifications of failing to report, and legal immunities attached to reporting or other interventions.

 

Self-Neglect
A significant percentage of older adults, mainly living alone, do not regularly attend to their own needs or well-being when it comes to health care, hygiene, nutrition and other matters. The majority of cases reported to Adult Protective Services (APS) by health and social service professionals and family members are triggered by suspected self-neglect, and the health care system expends considerable efforts trying to intervene in these situations to prevent increased rates of hospitalization, nursing home placement and even death.

Working Together
In these situations, the medical professional’s role is vital in determining the potential problem, nature and seriousness of the risk, and identifying viable intervention strategies. Decisional capacity issues (addressed above) almost always arise in these cases. An attorney can advise the medical professional about legal reporting requirements or options, as well as legal boundaries for interventions that can be designed and conducted in a way that best respects the older person’s dignity and autonomy while still protecting the person from foreseeable and preventable self-generated harm.

 

Medical Payment Issues
When attaining appropriate medical and rehabilitative care for older patients, it is imperative to make sure that payment for needed services will be available. For most people age 65 and over, this means working with not only Medicare but potentially with state-specific Medicaid programs and/or private insurance companies.

One common problem concerns older patients who have entered hospitals through emergency departments and held for observation, instead of being admitted as in-patients, before being transferred to nursing facilities. This practice, as well as hospital discharge and readmission practices, may jeopardize coverage for subsequent rehabilitation services. Other issues may involve the interpretation and application of Medicare rehabilitation payment policy regarding the standard of need for services instead of continuing potential for benefit. There are also issues with coordinating benefits under Medicare with services covered concurrently in whole or in part by other third-party payers.

Working Together
The elder law attorney trying to obtain payment for the older patient’s medical care or rehabilitative care needs assistance from the patient’s medical professionals in order to document, clarify and argue questions about the older person’s medical condition, needs and prognosis. Conversely, the medical professional may need assistance from an elder law attorney to assert and advocate for the rights of the older person.

 

Family Issues
Families often act as caregivers, sometimes paid but more often as volunteers, for older relatives who are not fully independent. Family members may also be acting as surrogate decision makers for those with reduced decisional capacity, making choices on behalf of the older person, or as helpers to a person who is capable of making decisions with support. In cases of self-neglect, the family may find an older loved one who refuses to acknowledge mental decline and the need for help. And sometimes, families have interests that conflict with those of an older person and seek to put their own interests first, to the detriment of the vulnerable older person.

Working Together
Medical professionals are important in recognizing when the caregiver’s burden is at risk of endangering both the caregiver and the person dependent on their caring. An elder law attorney can inform all parties about public or private sources of financial and other support for family caregivers, including benefits under the federal Family and Medical Leave Act and state counterparts.

For medical decision making, whether for surrogate decision makers when the person has reduced decisional capacity or for those who help the older person make decisions, medical professionals provide information, recommendations and support in the process. An elder law attorney may work with individuals who are currently capable of decision-making and their families in the advance health care planning process. The attorney may also clarify for medical professionals the legal authority of surrogate decision makers. The attorney and medical professionals may also work together to present cases to an ethics committee or consultant when there are serious disagreements among family members, or to act as a mediator and/or patient advocate when there are disagreements about the patient’s best interests.

In cases of self-neglect, the attorney and medical professionals working together can often recommend options that will benefit both the family and the loved one.

When a family is acting on its own interests to the detriment of the older person, a medical professional will usually be the one to notify the individual’s attorney of the conflict. The attorney may initiate or threaten legal action to protect the rights and welfare of the older person in a way that also protects the ethical and legal interests of the medical professional.

 

Confidentiality

Medical professionals and attorneys have concerns about the permissible handling of personal information they learn about a particular older patient/client solely as a result of the formal relationship between professional and patient/client. For example, a medical professional may wonder about the confidentiality ramifications of his/her suspicions that an older patient is being neglected, exploited or abused.

Working Together
A medical professional can educate the attorney about the health care information collected on an individual patient, how and where the information is documented and stored, how to interpret it, clinical uses to which it is applied, and who has access to the information. The attorney can educate and counsel the medical professional about legal parameters of information collection, maintenance and sharing under common law confidentiality principles, state statutes and regulations, the federal Health Insurance Portability and Accountability Act (HIPAA) and other legal provisions. The attorney can also explain different expectations and rules for protecting patient privacy as they apply to members of different professions. For example, a social worker employed as staff in an elder law office who suspects elder mistreatment may be subject to reporting requirements while the attorney is not.

Inter-professional communication about confidentiality can also be beneficial to the older patient/client. Accurately informed medical professionals and attorneys are well-positioned to protect the autonomy and privacy interests of older persons to whom they owe fiduciary duties, while at the same time allowing the sharing of relevant information to authorized recipients so that services for the older person can be maximized.

 

Conclusion
There are, of course, other situations when it is advisable and beneficial for medical professionals and elder law attorneys to work together for the safety and well-being of their older patients/clients. For example, it might be necessary to manage a situation involving unsafe driving by an older person who resists voluntarily restricting personal use of an automobile.

Generally speaking, elder law attorneys and the medical professionals who care for older patients/clients often have a genuine calling to work with the elderly. And when the professionals work together to serve their older patients/clients, everyone benefits. If you know of someone who could benefit from the advice of an elder law attorney, please contact us. We are ready to help.

 

category: Elder Counselor (Newsletter)

According to a recent study, elderly drivers who stop driving and have no transportation alternatives become less socially active and risk isolation. This can lead to a decline in both physical and mental health.

Teja Pristavec, a sociology researcher at Rutgers University in New Brunswick, NJ, sought to determine the effect of driving mobility on the social participation of older Americans. Her results were published online in May 2016 in The Journals of Gerontology Series B: Psychological Sciences and Social Sciences (available here).

Pristavec defines driving mobility as a combination of being able to drive oneself and receiving rides. She looked at driving habits and social activities of more than 4,300 adults over age 65, using survey data collected in 2011 and 2013 by the National Health and Aging Trends Study (www.nhats.org).

Compared to seniors who had stopped driving, she found that frequent drivers are more than three times more likely to visit friends and family, and almost three times as likely to participate in social outings like going to the movies. They were also more than twice as likely to attend religious services or organized group activities. But when they lost the ability to drive and had no transportation alternatives, their participation in social activities declined to the same level as those who never drove at all. A decrease in driving frequency, from frequent driving to occasional driving to not driving, lowers social participation.

 

Benefits of Social Participation for Seniors

Pristovec notes that with a longer life expectancy, older adults can remain socially engaged in later years. Those who do so report being in better health, experience lower mortality risk over time, and have lower rates of depression, dementia and other cognitive impairments. Social participation is also linked to greater life satisfaction, self-esteem and positive effect. For these reasons, maintaining participation in social, economic, cultural, spiritual and civic affairs is part of healthy, active and successful aging.

 

Fewer Older Drivers

Driving is a way of life in the U.S. and is often crucial for social participation and having access to services. Approximately 85% of individuals 60 years and older currently drive, but the proportion of those still driving decreases with age. In 2011, 93% of adults age 60-69 held a driver’s license, compared with 60% of those age 85 or older. With life expectancy increasing, the number of years older adults spend not being able to drive is also lengthening. Pristovec notes that at 70 years, men have a total life expectancy of 18 years, but a driving life expectancy of 11 years, resulting in a gap of seven years. For women, the gap is about ten years. In a time of their lives when they could still be active social participants, older adults are likely to experience limited driving mobility.

Physical and mental decline in later years eventually lead to a decision to reduce and cease driving. In the U.S., over 600,000 older individuals stop driving every year and must rely on other transportation.

 

Limited Driving Leads to Cessation

Most older adults start ceasing to drive by limiting their driving behaviors. They drive less frequently, shorter distances and to fewer destinations, adapt speed, and restrict trips to familiar roads and particular hours. How long they can continue to drive, even occasionally, will likely depend on their confidence, capabilities, and whether they live in a city or rural area. A smaller town usually means less traffic and a slower pace, making it safer for a senior to drive more slowly and cautiously. City driving, of course, is stressful for persons of all ages.

Some need a little help in making the decision to stop driving, and family members can watch for signs. For example, the driver may start making all right turns in order to avoid turning left at an intersection, or insist on having a navigator so he or she can concentrate solely on driving. A driver who becomes disoriented or has trouble following directions may also need to be discouraged from driving. At some point, it becomes a safety issue—both for the senior and for the public at large.

 

Social Activities Become Limited

Physical changes and health issues in later life may not only affect the ability to drive, but can also restrict the range of activities in which seniors can participate. Many also find their savings have to stretch farther than they anticipated. As their health, finances, and social contacts decline, they often choose to focus on fewer select activities instead of maintaining their previous participation levels. They may engage in one or two activities they find most rewarding, require fewer resources, or are nearby. Attending religious services, or visiting family and friends, often become more important than going to the movies, out to dinner, and other outings simply for enjoyment.

In short, even if they don’t drive, seniors will try to find ways to continue participating in activities they value and cut back on those they deem less important. Social activities may just become too difficult and too expensive, and therefore less enjoyable.

For many seniors, religious services remain a high priority in their lives. Research has shown that religious involvement remains stable until the end of life, and there are known health and well-being benefits of religious participation. Pristovec found that those with higher self-driving mobility (including occasional drivers) are more likely to attend religious services than those who ceased driving and those with lower self-driving mobility. For those non-driving seniors who value religious services, efforts should be made to find rides so they can continue participating

 

Receiving Rides Can Help Prolong Social Participation

Receiving rides, a component of driving mobility, is a crucial alternative transportation option for older adults as their own ability to drive declines. Pristovec found that providing regular rides is likely to prolong social participation into later life. Family members, friends and caregivers are often best able to provide flexible, supportive, door-to-door service, with escort assistance that best meets the older individual’s changing needs.

Unfortunately, many older individuals do not have children living nearby, and a smaller social network may mean fewer people are willing or able to provide rides. Family and friends may also be reluctant to assist due to limited time, money, and competing work or other family obligations.

Further, seniors are often hesitant to ask for rides because they fear being a burden to others. When they do ask for help, they tend to request rides for basic needs, like doctor visits and grocery shopping, not for social activities.

 

Public Transportation

Those who live in metropolitan areas may have public transportation options, including buses, taxis, and Uber or Lyft. Some areas provide transportation specifically for seniors, such as community buses and mini-buses on fixed, circular routes; Dial-A-Ride services; point-to-point services for those with disabilities; and volunteer drivers. Many are provided at low senior rates. Some neighborhood senior community centers provide free transportation and a mid-day meal.

However, public and community transportation are often unsuitable for older individuals due to limited schedules during non-peak times, limited service to nonwork destinations, poor accessibility, low availability, inadequately trained drivers and limited personal assistance. Additionally, many seniors and their families are simply not aware these options exist.

 

Senior Living Centers

Social interaction can also be provided in community living centers, whether for active seniors or for those requiring some assistance with daily living activities. Most provide field trips and outings, in addition to on-site activities and community dining. These can be a good, albeit often costly, choice to encourage social participation if transportation options are limited.

 

Conclusion

Keeping seniors socially engaged is vital to their physical and mental well-being in later years. Pristovec’s study illuminates the need for seniors to have transportation options when their driving abilities lessen and cease, pointing to the need for developing transportation alternatives that are accessible and non-stigmatizing. These options could facilitate continued participation without older adults feeling burdensome or risking their safety (and the safety of others) with prolonged self-driving.

We specialize in assisting with legal issues that affect seniors and their loved ones.  If you or someone you know would like to learn more, please don’t hesitate to contact us.

About The National Health and Aging Trends Study

Pristavec based her findings on survey data provided by the National Health and Aging Trends Study (www.nhats.org), a new resource for the scientific study of functioning in later life. The study is being conducted by the Johns Hopkins University Bloomberg School of Public Health, with data collection by Westat and support from the National Institute on Aging. In design and content, NHATS is intended to foster research that will guide efforts to reduce disability, maximize health and independent functioning, and enhance quality of life at older ages.

Starting in 2011, NHATS has been gathering information on a nationally representative sample of Medicare beneficiaries ages 65 and older. In-person interviews collect detailed information on activities of daily life, living arrangements, economic status and well-being, aspects of early life, and quality of life. Among the specific content areas included are: the general and technological environment of the home, health conditions, work status and participation in valued activities, mobility and use of assistive devices, cognitive functioning, and help provided with daily activities (self-care, household, and medical).

Study participants are re-interviewed every year in order to compile a record of change over time. The content and questions included in NHATS were developed by a multidisciplinary team of researchers from the fields of demography, geriatric medicine, epidemiology, health services research, economics, and gerontology.

As the population ages, NHATS will provide the basis for understanding trends in late-life functioning, how these differ for various population subgroups, and the economic and social consequences of aging and disability for individuals, families, and society.

 

category: Elder Counselor (Newsletter)

Elder Counselor Newsletter Top Reasons Everyone Needs a Comprehensive Power of Attorney

The benefits of a highly detailed, comprehensive power of attorney are numerous. Unfortunately, many powers of attorney are more general in nature and can actually cause more problems than they solve, especially for our senior population. This issue of the ElderCounselor highlights the benefits of a comprehensive, detailed power of attorney, including some of the provisions that should be included. A proper starting point is to emphasize that the proper use of a power of attorney as an estate planning and elder law document depends on the reliability and honesty of the appointed agent.

The agent under a power of attorney has traditionally been called an “attorney-in-fact” or sometimes just “attorney.” However, confusion over these terms has encouraged the terminology to change so more recent state statutes tend to use the label “agent” for the person receiving power by the document.

The “law of agency” governs the agent under a power of attorney. The law of agency is the body of statutes and common law court decisions built up over centuries that dictate how and to what degree an agent is authorized to act on behalf of the “principal”—in other words, the individual who has appointed the agent to represent him or her. Powers of attorney are a species of agency-creating document. In most states, powers of attorney can be and most often are unilateral contracts – that is, signed only by the principal, but accepted by the agent by the act of performance.

Much has been written about financial exploitation of individuals, particularly seniors and other vulnerable people, by people who take advantage of them through undue influence, hidden transactions, identity theft and the like. Prior issues of the ElderCounselor have addressed guardianships and conservatorships and discussed the benefits of court supervision of care of vulnerable people in such contexts. Even though exploitation risks exist, there are great benefits to one individual (the principal) privately empowering another person (the agent) to act on the principal’s behalf to perform certain financial functions.

A comprehensive power of attorney may include a grant of power for the agent to represent and advocate for the principal in regard to health care decisions. Such health care powers are more commonly addressed in a separate “health care power of attorney,” which may be a distinct document or combined with other health topics in an “advance health care directive.”

Another important preliminary consideration about powers of attorney is “durability.” Powers of attorney are voluntary delegations of authority by the principal to the agent. The principal has not given up his or her own power to do these same functions but has granted legal authority to the agent to perform various tasks on the principal’s behalf. All states have adopted a “durability” statute that allows principals to include in their powers of attorney a simple declaration that no power granted by the principal in this document will become invalid upon the subsequent mental incapacity of the principal. The result is a “durable power of attorney” – a document that continues to be valid until a stated termination date or event occurs, or the principal dies. Absent durability provisions, the power of attorney terminates upon the principal’s death or incapacity.

Having covered the explanation of what a durable power of attorney is, let us look at the top benefits of having a comprehensive durable power of attorney.

1. Provides the ability to choose who will make decisions for you (rather than a court).

If someone has signed a power of attorney and later becomes incapacitated and unable to make decisions, the agent named can step into the shoes of the incapacitated person and make important financial decisions. Without a power of attorney, a guardianship or conservatorship may need to be established, and can be very expensive.

2. Avoids the necessity of a guardianship or conservatorship.

Someone who does not have a comprehensive power of attorney at the time they become incapacitated would have no alternative than to have someone else petition the court to appoint a guardian or conservator. The court will choose who is appointed to manage the financial and/or health affairs of the incapacitated person, and the court will continue to monitor the situation as long as the incapacitated person is alive. While not only a costly process, another detriment is the fact that the incapacitated person has no input on who will be appointed to serve.

3. Provides family members a good opportunity to discuss wishes and desires.

There is much thought and consideration that goes into the creation of a comprehensive power of attorney. One of the most important decisions is who will serve as the agent. When a parent or loved one makes the decision to sign a power of attorney, it is a good opportunity for the parent to discuss wishes and expectations with the family and, in particular, the person named as agent in the power of attorney.

4. The more comprehensive the power of attorney, the better.

As people age, their needs change and their power of attorney should reflect that. Seniors have concerns about long-term care, applying for government benefits to pay for care, as well as choosing the proper care providers. Without allowing, the agent to perform these tasks and more, precious time and money may be wasted.

5. Prevents questions about principal’s intent.

Many of us have read about court battles over a person’s intent once that person has become incapacitated. A well-drafted power of attorney, along with other health care directives, can eliminate the need for family members to argue or disagree over a loved one’s wishes. Once written down, this document is excellent evidence of their intent and is difficult to dispute.

6. Prevents delays in asset protection planning.

A comprehensive power of attorney should include all of the powers required to do effective asset protection planning. If the power of attorney does not include a specific power, it can greatly dampen the agent’s ability to complete the planning and could result in thousands of dollars lost. While some powers of attorney seem long, it is necessary to include all of the powers necessary to carry out proper planning.

7. Protects the agent from claims of financial abuse.

Comprehensive powers of attorney often allow the agent to make substantial gifts to self or others in order to carry out asset protection planning objectives. Without the power of attorney authorizing this, the agent (often a family member) could be at risk for financial abuse allegations.

8. Allows agents to talk to other agencies.

An agent under a power of attorney is often in the position of trying to reconcile bank charges, make arrangements for health care, engage professionals for services to be provided to the principal, and much more. Without a comprehensive power of attorney giving authority to the agent, many companies will refuse to disclose any information or provide services to the incapacitated person. This can result in a great deal of frustration on the part of the family, as well as lost time and money.

9. Allows an agent to perform planning and transactions to make the principal eligible for public benefits.

One could argue that transferring assets from the principal to others in order to make the principal eligible for public benefits–Medicaid and/or non-service-connected Veterans Administration benefits–is not in the best interests of the principal, but rather in the best interests of the transferees. In fact, one reason that a comprehensive durable power of attorney is essential in elder law is that a Judge may not be willing to authorize a conservator to protect assets for others while enhancing the ward/protected person’s eligibility for public benefits. However, that may have been the wish of the incapacitated person and one that would remain unfulfilled if a power of attorney were not in place.

10. Provides immediate access to critical assets.

A well-crafted power of attorney includes provisions that allow the agent to access critical assets, such as the principal’s digital assets or safety deposit box, to continue to pay bills, access funds, etc. in a timely manner. Absent these provisions, court approval will be required before anyone can access these assets. Digital assets are also important because older powers of attorney did not address digital assets, yet more and more individuals have digital accounts.

11. Provides peace of mind for everyone involved.

Taking the time to sign a power of attorney lessens the burden on family members who would otherwise have to go to court to get authority for performing basic tasks, like writing a check or arranging for home health services. Knowing this has been taken care of in advance is of great comfort to families and loved ones.

Conclusion
This discussion of the Reasons Why Everyone Needs a Comprehensive Power of Attorney could be expanded by many more. Which benefits are most important depends on the situation of the principal and their loved ones. This is why a comprehensive power of attorney is so essential: Nobody can predict exactly which powers will be needed in the future. The planning goal is to have a power of attorney in place that empowers a succession of trustworthy agents to do whatever needs to be done in the future. Please call us if we can be of assistance in any way or if you have any questions about durable powers of attorney.

 

category: Elder Counselor (Newsletter), Power of Attorney

Elder Counselor Newsletter The Future of Long Term Care and How to Finance It

Long-term care is becoming an important issue for our nation to address.  We have 78 million aging baby boomers.  The costs of long-term care to these baby boomers can be catastrophic and few people have sufficient resources to pay for needed long-term care.

In an effort to deal with this growing concern, the Long-Term Care Financing Collaborative (the “Collaborative”) began meeting informally in 2012 for the purpose of finding a solution.  They have since become a formalized group made up of a variety of national experts and stakeholders with varying ideological stances.  Their common goal is to improve the way Americans pay and prepare for non-medical care (Long-term supports and services) needed by the elderly and those living with disabilities.  On February 22, 2016, the Collaborative announced its third and final set of recommendations.[1]

ABOUT THE COLLABORATIVE

The diverse group[2] is made up of policy experts, consumer advocates and representatives from service providers and the insurance industry.  In addition, the group consists of senior executive branch officials in both the Democratic and Republican administrations, former congressional aides, and former top state health officials.

THE COSTS INVOLVED

The statistics surrounding long-term care or long-term supports and services (“LTSS”) are eye opening.  According to the Collaborative, there are between 10 and 12 million adults today who require LTSS and that number is expected to double by the year 2030.  More than two-thirds of older adults will need some assistance before they die and nearly half will have a high enough need that they will be eligible for private long-term care insurance or Medicaid to pay the bill.  More than 6 million older adults need that level of care today and nearly 16 million will need it in 50 years.

The Collaborative defines Long-term supports and services (“LTSS”) as non-medical assistance.  This would include help with such things as food preparation, personal hygiene, assistive devices and transportation, bathing, eating and the like.

Cost to the Elderly or Disabled:

The elderly or disabled persons who find themselves in need of LTSS try to pay for it out of their savings or income from their retirement along with help from family members.  Often, this is insufficient to cover the costs and many people have to turn to Medicaid for help.  The overall spending on LTSS is expected to double by 2050, which will cause even more people to depend on Medicaid to pay for it.

Few people have saved sufficiently for LTSS.  In fact, the Collaborative reports that a typical American between the ages of 65 and 74 has financial assets of $95,000 and about $81,000 in home equity.  This does not include retirement savings, which vary widely across the country.  To pay for one’s lifetime medical expenses with a 90% certainty requires savings of about $130,000 and an additional $69,500 for LTSS costs.  With this in mind, it is easy to see how people are running out of money.

Over all, individuals pay for about 55% of LTSS expenditures; Medicaid pays about 37%; and Private LTSS insurance pays for less than 5%.

Cost to Family and Friends:

In addition to the financial stress this places on the elderly and disabled, it also significantly affects their families.  The Collaborative estimates that in 2013, family and friends provided 37 billion hours of uncompensated LTSS to adults.  This care calculates to up to $470 billion, which is three times the amount Medicaid spent on LTSS the same year.

When family members provide caregiving to a loved one, it often comes at the cost of their job or a portion of their job.  On average, the Collaborative reports, a woman in her 50s who leaves a job to care for her aging parents does so at a cost of $300,000 of income over her lifetime.  The Collaborative states that “unpaid family caregivers lose an estimated $3 trillion in lost lifetime wages and benefits.”

Cost to Employers of Family and Friends:

The Collaborative reports that employers experience a loss of $17.1 to $33 billion in productivity due to absenteeism alone.  In addition, they state that “costs of turnover and schedule adjustments for caregiving workers add an additional $17.7 billion in costs.”

THE COLLABORATIVE’S RECOMMENDATIONS

The Collaborative was able to agree to five key recommendations in three key areas.  This final set of recommendations focused significantly on:  1) A need for universal catastrophic insurance; 2) Private market initiatives and public policies to revitalize the insurance market to help address non-catastrophic LTSS risk; and 3) Enhanced Medicaid LTSS for those with lower lifetime incomes.

The Collaborative calls for a strong government role in the solution.  The group considered voluntary and universal insurance programs and came to the conclusion that universal was the only viable, long-term solution as it spread the risk across the entire population and avoided challenges of adverse selection.  The Collaborative noted in the report, “As a result, universal insurance appears to offer broad-based insurance at a comparatively low lifetime cost.”

In addition to recommending universal catastrophic insurance, the Collaborative also recommended taking some actions to revitalize the private insurance market.  These included suggestions of employers offering long-term care insurance as part of their benefits packages.  In addition, the group suggests that regulatory changes in the insurance industry, creating more standardization in policies, would save costs to consumers.  The specifics of the regulatory change suggestions include increasing premiums and benefits as the individual ages.  There is also a suggestion that this type of insurance be sold in conjunction with Medicare supplemental programs.  Finally, the group suggests that policymakers continue to encourage and support efforts by the insurance industry to experiment with more hybrid products, combining long-term care insurance with other products.

Another recommendation given by the Collaborative was to encourage increased private savings for retirement.  This encouragement might come in the form of ease of enrollment through employers’ benefits programs, expanded retirement products, tax subsidies and education.

Of note was a recommendation made by the Collaborative was to modernize Medicaid financing and eligibility.  This recommendation is really one to expand Medicaid coverage to include more people, in more settings, for more care.  Eligibility would be based on a functional assessment and a needs assessment rather than requiring an institutional level of care.

CONCLUSION

The Collaborative leaves us with a final recommendation to provide more education about LTSS.  Many people are in denial about the possibility that they may need it some day and do not plan.  While it is encouraging that the nationwide issue is being studied more and taken more seriously now, the problem is far from resolved.  Until there is a firm solution, individuals must take responsibility and plan ahead.

If you or someone you know has questions about how to plan for the costs of long-term care, please feel free to contact our office.

ABOUT THE COLLABORATIVE

The diverse group[3] is made up of policy experts, consumer advocates and representatives from service providers and the insurance industry.  In addition, the group consists of senior executive branch officials in both the Democratic and Republican administrations, former congressional aides, and former top state health officials.

THE COSTS INVOLVED

The statistics surrounding long-term care or long-term supports and services (“LTSS”) are eye opening.  According to the Collaborative, there are between 10 and 12 million adults today who require LTSS and that number is expected to double by the year 2030.  More than two-thirds of older adults will need some assistance before they die and nearly half will have a high enough need that they will be eligible for private long-term care insurance or Medicaid to pay the bill.  More than 6 million older adults need that level of care today and nearly 16 million will need it in 50 years.

The Collaborative defines Long-term supports and services (“LTSS”) as non-medical assistance.  This would include help with such things as food preparation, personal hygiene, assistive devices and transportation, bathing, eating and the like.

Cost to the Elderly or Disabled:

The elderly or disabled persons who find themselves in need of LTSS try to pay for it out of their savings or income from their retirement along with help from family members.  Often, this is insufficient to cover the costs and many people have to turn to Medicaid for help.  The overall spending on LTSS is expected to double by 2050, which will cause even more people to depend on Medicaid to pay for it.

Few people have saved sufficiently for LTSS.  In fact, the Collaborative reports that a typical American between the ages of 65 and 74 has financial assets of $95,000 and about $81,000 in home equity.  This does not include retirement savings, which vary widely across the country.  To pay for one’s lifetime medical expenses with a 90% certainty requires savings of about $130,000 and an additional $69,500 for LTSS costs.  With this in mind, it is easy to see how people are running out of money.

Over all, individuals pay for about 55% of LTSS expenditures; Medicaid pays about 37%; and Private LTSS insurance pays for less than 5%.

Cost to Family and Friends:

In addition to the financial stress this places on the elderly and disabled, it also significantly affects their families.  The Collaborative estimates that in 2013, family and friends provided 37 billion hours of uncompensated LTSS to adults.  This care calculates to up to $470 billion, which is three times the amount Medicaid spent on LTSS the same year.

When family members provide caregiving to a loved one, it often comes at the cost of their job or a portion of their job.  On average, the Collaborative reports, a woman in her 50s who leaves a job to care for her aging parents does so at a cost of $300,000 of income over her lifetime.  The Collaborative states that “unpaid family caregivers lose an estimated $3 trillion in lost lifetime wages and benefits.”

Cost to Employers of Family and Friends:

The Collaborative reports that employers experience a loss of $17.1 to $33 billion in productivity due to absenteeism alone.  In addition, they state that “costs of turnover and schedule adjustments for caregiving workers add an additional $17.7 billion in costs.”

THE COLLABORATIVE’S RECOMMENDATIONS

The Collaborative was able to agree to five key recommendations in three key areas.  This final set of recommendations focused significantly on:  1) A need for universal catastrophic insurance; 2) Private market initiatives and public policies to revitalize the insurance market to help address non-catastrophic LTSS risk; and 3) Enhanced Medicaid LTSS for those with lower lifetime incomes.

The Collaborative calls for a strong government role in the solution.  The group considered voluntary and universal insurance programs and came to the conclusion that universal was the only viable, long-term solution as it spread the risk across the entire population and avoided challenges of adverse selection.  The Collaborative noted in the report, “As a result, universal insurance appears to offer broad-based insurance at a comparatively low lifetime cost.”

In addition to recommending universal catastrophic insurance, the Collaborative also recommended taking some actions to revitalize the private insurance market.  These included suggestions of employers offering long-term care insurance as part of their benefits packages.  In addition, the group suggests that regulatory changes in the insurance industry, creating more standardization in policies, would save costs to consumers.  The specifics of the regulatory change suggestions include increasing premiums and benefits as the individual ages.  There is also a suggestion that this type of insurance be sold in conjunction with Medicare supplemental programs.  Finally, the group suggests that policymakers continue to encourage and support efforts by the insurance industry to experiment with more hybrid products, combining long-term care insurance with other products.

Another recommendation given by the Collaborative was to encourage increased private savings for retirement.  This encouragement might come in the form of ease of enrollment through employers’ benefits programs, expanded retirement products, tax subsidies and education.

Of note was a recommendation made by the Collaborative was to modernize Medicaid financing and eligibility.  This recommendation is really one to expand Medicaid coverage to include more people, in more settings, for more care.  Eligibility would be based on a functional assessment and a needs assessment rather than requiring an institutional level of care.

CONCLUSION

The Collaborative leaves us with a final recommendation to provide more education about LTSS.  Many people are in denial about the possibility that they may need it some day and do not plan.  While it is encouraging that the nationwide issue is being studied more and taken more seriously now, the problem is far from resolved.  Until there is a firm solution, individuals must take responsibility and plan ahead.

If you or someone you know has questions about how to plan for the costs of long-term care, please feel free to contact our office.


[1] Full report:  http://www.convergencepolicy.org/wp-content/uploads/2016/02/LTCFC-FINAL-REPORT-Feb-2016.pdf

[2] For a list of members of the collaborative:  http://www.convergencepolicy.org/ltcfc-participants/

[3] For a list of members of the collaborative:  http://www.convergencepolicy.org/ltcfc-participants/

 

 

category: Elder Counselor (Newsletter)

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