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Many individuals contemplating retirement and the potential of needed, at some point in their lives needing assistance in their place of residence consider long term care insurance as a means to provide for future care.This type of insurance provides an array of services ranging from home care, assisted living, adult daycare, respite care, hospice care, nursing home and Alzheimer’s facilities.

If home care coverage is purchased, long-term care insurance can pay for home care, often from the first day it is needed. It will pay for a visiting or live-in caregiver, companion, housekeeper, therapist or private duty nurse up to 7 days a week, 24 hours a day (up to the policy benefit maximum).

Premiums paid on a long-term care insurance product may be eligible for an income tax deduction depending on the age of the covered person.  Benefits paid from a long-term care contract are generally excluded from income. One disadvantage of long-term care insurance is that traditional policies, if not used, had no payback option. The insured never received reimbursement for years of premiums paid to the insurer. Another disadvantage of long-term care insurance is that the insurance is depleted. For example, an individual purchasing daily benefits of $150 for three years would have a total of $164,250 available to cover costs associated with assisted living, nursing home care, adult day care, or homecare if a homecare provision is provided in the policy. This coverage is dependent upon the insured needing assistance with activities of daily living or when you need help because you have a severe cognitive impairment.

What Happens When the Money is Gone?

When the balance of money available is depleted, you have no more coverage. Because of the disadvantages of traditional long-term care insurance policies, many older adults choose to rely upon their own savings, arrange to have family members take care of them, or if they have adequate financial assets they self-insure by placing by setting up an investment account they self-fund during middle age.

The Hybrid or Linked Long Term Care Insurance Policy

In an effort to address the concerns with traditional long-term care policies, insurance companies have designed hybrid or linked policies. These policies combine elements of an annuity or life insurance agreement with traditional long-term care insurance. With hybrid policies, the consumer is provided the financial benefits of long term care insurance, and if care is not needed then they, or their beneficiaries, are provided a cash payout.

How does a Hybrid Policy Work?

There are several ways in which hybrid policies provide benefits to the insured. One option is to link the policy to life insurance. With this plan a set premium is deposited into a policy. Once the money is deposited, a set balance of money is created for long-term care. At the same time, an immediate death benefit life insurance policy is created. Genworth Insurance Company provides this example:

A 60-year-old purchases a $50,000 long-term care annuity with 5 percent inflation protection compounded annually with a 200 percent coverage maximum and a six-year benefit period. So, his initial long-term-care coverage maximum is $100,000 — double the premium he paid. (If he had refused inflation protection, then he could have chosen three times the premium, or $150,000.)

If he makes no withdrawals over 20 years at a 3.5 percent compound interest rate, minus administrative fees, he would have — under the 5 percent inflation-protected scenario –$265,330 available in long-term-care insurance. Or a monthly maximum of $3,685.

If this person never needs long-term care, then the annuity can be redeemed for its accumulated value when it matures at 20 years — or it can be left to accumulate further interest and the long-term care policy will remain enforce.

When this person dies, his heirs will inherit the greater of the accumulated annuity value, if there have been no withdrawals, or the single premium he paid initially less the amount of long-term care paid.

If you would like more information on long-term care insurance, visit the U.S. Department of Health and Human Services National Clearinghouse on Long-Term Care Information.

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A great deal of research has been directed at finding ways to reduce the effects or the progression of Alzheimer’s.  While some prescription drugs have been found to reduce side effects of the disease, little progress has been in finding drugs that can cure an individual who has Alzheimer’s. Recent reviews of the state of Alzheimer’s research, therefore, suggest more emphasis should be placed on reducing risk factors of Alzheimer’s prior to its onset.

The human brain is made up of billions of neurons that communicate with other neurons as part of the process that allows us to store and communicate information. When an individual has Alzheimer’s however, many neurons stop functioning, lose connections with other neurons, and die because communication, metabolism, and repair are disrupted. Initially, when one acquires the disease neurons that control memory are effected. In later stages of the disease, language and reasoning begin to be effected. Eventually one becomes unresponsive to the outside world.

No treatment has been proven to stop AD. The U.S. Food and Drug Administration has approved four drugs to treat AD. For people with mild or moderate AD, donepezil (Aricept®), rivastigmine (Exelon®), or galantamine (Razadyne®) may help maintain cognitive abilities and help control certain behavioral symptoms for a few months to a few years. Donepezil can be used for severe AD, too. Another drug, memantine (Namenda®), is used to treat moderate to severe AD. However, these drugs don’t stop or reverse AD and appear to help patients only for months to a few years.

These drugs work by regulating neurotransmitters, the chemicals that transmit messages between neurons. They may help maintain thinking, memory, and speaking skills and may help with certain behavioral problems.

Other medicines may ease the behavioral symptoms of AD—sleeplessness, agitation, wandering, anxiety, anger, and depression. Treating these symptoms often makes patients more comfortable and makes their care easier for caregivers.

In a recent special issue of the Journal of Alzheimer’s Disease it was noted that while billions of research dollars have been directed at research on dementia, little benefit has accrued for those diagnosed with the disease. Consequently, it is acknowledged that prevention may be the best option for reducing the number of individuals afflicted with the disease. Modifiable risk factors include type 2 diabetes, atherosclerosis, high cholesterol, high blood pressure, heart disorders, cerebrovascular pathology, and obesity. Generally, more than one of these risk factors will contribute to the onset of Alzheimer’s. To reduce the incidence of Alzheimer’s, medical researchers now suggest early intervention of modifiable risk factors.

If you would like to know more about Alzheimer’s, read the National Institute’s Alzheimer’s Disease Fact Sheet.

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While older adults don’t drink as much alcohol as younger people, they can still have trouble with its effects. Because the elderly are prone to acquiring chronic diseases or other health problems and are more likely to use medications, use of alcohol can cause problems that were not evident at a younger age.

The National Survey on Drug Use and Health conducted in 2008 found that about 40 percent of adults age 65 and older drink alcohol. While most elderly adults don’t have a drinking problem, some of them drink too much.

Why the Elderly React Differently to Alcohol

Elderly adults may become more sensitive to alcohol’s effects because they metabolize alcohol more slowly than younger adults. Consequently, alcohol stays in their bodies longer. This, combined with the fact that the amount of water in the body goes down with age, results in older adults having a higher percentage of alcohol in their blood than younger adults after drinking the same amount of alcohol. Aging also lowers the body’s tolerance for alcohol so some of the effects of alcohol, such a slurred speech and lack of coordination, are more evident as one ages.  An older person can develop problems with alcohol even though his or her drinking habits have not changed.

Drinking too much alcohol can cause health problems. Heavy drinking over time can damage the liver, the heart, and the brain. It can increase the risk of developing certain cancers, damage muscles and cause immune system disorders. It can also increase the chances of getting osteoporosis, a common disease in older adults, especially women. Osteoporosis makes bones weaker and more likely to break.

Drinking too much alcohol can make some health conditions worse. These conditions include diabetes, high blood pressure, congestive heart failure, liver problems, and memory problems. They also include mood disorders such as depression and anxiety. Adults with major depression are more likely than adults without major depression to have alcohol problems.

Because so many older adults consume prescription drugs, over-the-counter drugs, and herbal remedies they are more likely to notice the effects of combining alcohol and medications or herbal supplements.  Drinking alcohol can cause certain medicines to not work properly and other medicines to become more dangerous or even deadly. Mixing alcohol and some medicines can cause sleepiness, confusion, or lack of coordination, nausea, vomiting, headaches, and other health problems.

Medicines that Interact With Alcohol

Dozens of medicines interact with alcohol, with possible negative effects. Here are some examples.

• Taking aspirin or arthritis medications and drinking alcohol can increase the risk of bleeding in the stomach.
• Taking the painkiller acetaminophen in large doses and drinking alcohol can increase the chances of liver damage.
• Taking cold and allergy medicines that contain antihistamines often make people sleepy. Drinking alcohol can make this drowsiness worse and impair coordination.

• Drinking alcohol and taking some medicines that aid sleep, reduce pain, or relieve anxiety or depression can cause sleepiness and poor coordination.
• Drinking alcohol and taking medications for high blood pressure, diabetes, ulcers, gout, and heart failure can make those conditions worse.

The elderly and/or their caregiver should carefully examine the medications they are taking and discuss possible interactions with alcohol with their pharmacist or physician.

The following resources are also valuable in learning more about alcohol and the elderly.

• The federal government’s Treatment Facility Locator at 1-800-662-4357 or www.findtreatment.samhsa.gov
• Alcoholics Anonymous — see your local phone book, call 1-212-870-3400, or visit www.aa.org to find a group in your area
• Eldercare Locator at 1-800-677-1116 or www.eldercare.gov

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Aging adults are more likely to experience the effects of hot weather than younger adults. Physically, older adults cannot adjust to significant changes in temperature as can younger adults.

Combined with this are the effects of prescription drugs which also reduce the body’s ability to adjust to temperature changes.

The effects of too much heat

Heat-related illnesses that older people may experience include heat stroke and heat exhaustion. Heat stroke is the most serious illness caused by extreme heat.

Symptoms of heat stroke include the following:

• An extremely high body temperature (above 103°F)
• Red, hot, and dry skin (no sweating)
• Rapid, strong pulse
• Throbbing headache
• Dizziness
• Nausea

Tips for preventing heat-related illnesses

Prevention is critical to protecting your health. Here are tips to safeguard your health during the hot weather:

• Drink more fluids. It’s very important to keep hydrated. Don’t wait until you’re thirsty to drink. Warning: If your physician limits the amount of fluid you drink or has you on water pills, check with him on how much you should drink while the weather is hot.
• Don’t drink liquids that contain alcohol or large amounts of sugar. These types of liquids make you lose more body fluid.
• Stay indoors and, if possible, stay in an air-conditioned room. If your home does not have air conditioning, visit a shopping mall or public library. You can also contact your local health department to find out if there are any heat-relief shelters in your area.
• Electric fans may offer some comfort. However, when the temperature reaches the high 90s, fans will not prevent heat-related illness. Taking a cool shower or bath, or spending time in an air-conditioned place is a much better way to cool off.
• Wear clothing that is lightweight, light-colored, and loose-fitting.
• Visit adults at risk twice a day or more. Watch them for signs of heat exhaustion or heat stroke

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Continuing care retirement communities (CCRCs) provide provide a continuum of care for the elderly ranging from those who are able to live independently, those who require help in an assisted-living facility, and those who require more intensive care in a nursing home. These communities appeal to seniors because they can enjoy an independent lifestyle with the expectation that they will be able to stay in the same community, with their spouse, as their health deteriorates in their later years. There are currently 1,861 CCRCs in the United States,1 and the number of older adults living in CCRCs has more than doubled from 350,000 in 1997 to 745,000 in 2007.

Seniors today look forward to living independently longer than previous generations, but they also worry about whether their assets and retirement income will cover the cost of care they may require in their later years. CCRCs provide a growing population of America’s seniors with a convenient range of housing, supportive services, health care options and the ability to age in place. Many CCRCs require fairly large entrance fees (some can be in the five or six-figure range) and additional monthly payments. The fees cover housing costs and a range of care and services, including assisted living and skilled nursing. In addition, residents can purchase a meal plan, use a variety of on-site amenities and activities, and receive additional care which they can pay for out-of-pocket or have covered by insurance.

However, these arrangements are not without risks. The CCRC model is particularly vulnerable during economic downturns, as stagnant real estate markets drive down occupancy levels in independent living units, which serve as CCRCs’ primary source of profit. Financial difficulties for CCRC providers could place a consumer’s investment at risk and raise their monthly CCRC expenditures. In addition, according to the American Bankruptcy Institute Journal, “the CCRC industry is particularly vulnerable to insolvency, and several CCRCs have failed, primarily as a result of poor financial planning.  Several high profile bankruptcy filings over the past year have cast a spotlight on these risks.

A recent investiogation into the financial stability of CCRC providers was conducted by the U.S. Senate Special Committee on Aging (Committee) The providers were selected based on the size of their assets under their management and the extent to which they were involved in a federal or state enforcement action. The information collected may not be representative of the entire CCRC industry. The following types of contracts were examined:

Type A (extensive contract) – wherein a resident typically pays an upfront fee and ongoing monthly fee in exchange for the right to lifetime occupancy in the appropriate level of care without an increase in monthly fees as the resident moves between levels of care;

Type B (modified contract) – wherein residents often have lower monthly fees than a Type A contract though the same housing and residential services are included, however, only some health care services are included in the initial monthly fee; and

Type C (fee-for-service contract) – which typically requires an entrance fee, but does not include discounted health care services.

Conclusion

The U.S. Special Committee on Aging came to a number of conclusions. First, the committee noted that  unstable market conditions and poor financial planning have lead to financial difficulties or even insolvency among some CCRCs. In addition, choosing a CCRC can be extremely complex due to disparate state regulations, and variations in the type of contract that an individual can sign. Residents need to be aware of the risks that CCRCs pose and consider retaining independent counsel to review these complex agreements.

Some of the key areas that a consumer may want to explore include: the CCRC’s ownership and fee structures; financial performance and security measures; entrance fee refund policies; protections against involuntary transfers to different levels of care or to off-campus facilities; the extent to which residents are able to participate in management decisions; the methods available to residents to address their disputes and concerns with the CCRC; under what circumstances a resident can rescind or cancel his/her contract; and whether the CCRC is accredited.

Resources

The following resources can help potential CCRC residents determine information about CCRC policies, or assist CCRC providers who wish to strengthen their financial planning and management as well as disclosure and transparency practices:

•            American Association of Homes and Services for the Aging (AAHSA) (2010). Continuing Care Retirement Communities – Suggested Best Practices for CCRC Disclosure and Transparency.

•            American Seniors Housing Association (ASHA) (2010). Assisted Living and Continuing Care Retirement Community State Regulatory Handbook 2010.

•            Commission on Accreditation of Rehabilitation Facilities – Continuing Care Accreditation Commission (CARF-CCAC) (2009). Accreditation Standards Manual.

•            Commission on Accreditation of Rehabilitation Facilities – Continuing Care Accreditation Commission (CARF-CCAC) (2007). Consumer Guide to Understanding Financial Performance and Reporting in Continuing Care Retirement Communities.

•            National Senior Citizens Law Center. Questions to Consider When Evaluation Continuing Care Contracts.

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Experiencing the end of a loved one’s life can be a tremendously difficult experience. For many individuals, they are acting as a caregiver during the last part of a loved one’s life.

By itself, that can be an overwhelming experience. Many caregivers, however, still have to balance working at the same time. Fortunately, some companies are now providing support to employees who are caregiving for loved ones.

Employee Support

Pitney Bowes is among other companies who are offering support to employees. The company provides flexible work schedules, support groups, and even legal and financial resources on hospice and palliative care.

The flexible work schedule can be a life saver for caregivers who many times have to modify their schedule at a moment’s notice to accommodate the individuals they are caring for. The article notes that 1 in 5 employees had to take a leave of absence from work for caregiver duties.

The access to resources, however, is a really a great benefit for employees. In many cases, caregiving employees do not have enough time to conduct their own research on end of life care. Getting pointed in the right direction is just one less thing for an already overwhelmed individual to think about.

Employers recognize the benefit of providing support

For some caregivers, if their workplace cannot accommodate their need to provide care for a loved one, the employee will simply quit. Not only is an employer losing a valued employee, the employee may harbor negative feelings towards the employer for not being accommodating.

As the demand for elder care services increases, this will become a more frequent issue for employers. Tackling the silver tsunami head on, and providing support for employees, certainly seems to be in the best interest for both employers and employees.

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The CLASS Act (Community Living Assistance Services and Support Act) is a voluntary, federally administered, consumer-financed insurance plan. It became law when President Obama signed the Patient Protection and Affordable Care Act on March 23, 2010. The CLASS plan provides those who participate with cash to help pay for needed assistance, if they become functionally limited, in a place they call home — from independent living to a nursing facility, if they choose.

When does it start?

Most provisions of the CLASS Act are “effective” January 1, 2011. But before people can begin signing up to participate, the secretary of Health and Human Services (“the secretary”) must develop the details of the plan and implement it.

The law requires the Secretary to release the details of the plan no later than Oct. 1, 2012. So it is likely that people will be able to sign up sometime after that–in 2012 or 2013.

Who will be eligible to enroll?

All Americans who are “actively at work,” age 18 and older, and not living at the time in a nursing home (or other institution) will be eligible to enroll. People cannot be excluded from enrolling due to pre-existing conditions such as having a physical disability or other health issues.

The actively-at-work requirement includes part time workers and those who are self-employed. The secretary will develop the details of the actively-at-work requirement.

How will people enroll?

For people employed by an employer who decides to participate, the employer will sign people up automatically, with premiums handled through a payroll deduction like many other benefits. Any person who chooses not to participate may do so by “opting out.”

Neither employees nor employers are required to participate in the program. Employers may pay all or part of the premiums but are not required to do so. The secretary will develop enrollment procedures for those who are self employed or whose employer chooses not to participate in the automatic payroll plan.

What are the benefits?

The plan will pay a cash benefit, no less (on average) than $50/day. The benefit cash amount will be pegged to an assessment of a person’s need for help due to a physical or cognitive limitation.

A benefit payment scale, to be developed by the Secretary, will result in higher cash benefits for people with greater need for help with basic activities of living such bathing, eating, dressing, and mobility. The cash benefit amount will increase annually to keep up with inflation.

There is no lifetime limit on the benefits. When a CLASS Act plan participant has a qualifying level of disability and begins receiving cash benefits, benefits continue until the person no longer has a qualifying level of disability. Over a life-time, a person could have several separate instances of qualifying for benefits.

What is a “qualifying level of disability”?

The law requires the secretary to determine the details of this. The law requires the secretary to choose between a loss of the ability to perform 2 activities of daily living or a more stringent point (3 activities of daily living) to serve as the minimum level of disability to qualify for benefits.

In either case, the level of disability would need to be expected to continue for at least 90 days to count as a qualifying level of disability for the CLASS Act plan. The secretary will also design the details of how the assessment process (to determine eligibility for benefits) will work.

What else, besides signing up and having a qualifying level of disability, do I need to do before I can receive the cash benefit?

In general, after signing up for the program, a participant will need to pay premiums for five years and be actively at work for three of these years before receiving benefits. So long as a person keeps paying premiums after the three years actively-at-work requirement is met, a person is still considered a CLASS Act plan participant.

For example, a person who retired from work completely after the three year period would be eligible for benefits, assuming they met the five year vesting requirement, had kept up with the premium payments, and had a qualifying level of disability. Special rules will apply for people who are enrolled for a time, drop out, but then sign up again.

What will the premiums cost?

The law requires the Secretary to develop a financially sound program with the best mix of benefits, premiums, and other features to meet customers’ needs and assure program solvency. Setting the right premium prices requires additional detailed actuarial analyses, using the most up to date information and a scientific, transparent process.

The secretary will work with an advisory council, including consumer representatives and technical experts, to develop these details, which are due to be finalized no later than Oct. 1, 2012. These features regarding premium prices are in the law:

• Premiums may be lower for younger people than for older people when they sign up. [This is likely to be how the program works because, in general, younger people will pay premiums for more years than older people who sign up at the same time.]
• Premiums are intended to remain the same for a person from the time the person signs up—there is no automatic increase in an individual’s premiums like there is for benefits.
• People with health issues or a disability may not be charged higher premiums because of those factors.
• Working students and people with low income (up to the federal poverty level) will be charged a special low premium price such as $5/month.
• Special rules regarding premium prices will apply to people who enroll, drop out, and re-enroll later.

Are there any estimates now of what those premiums might be?

During the long course of the CLASS Act plan’s development, a number of estimates were made of the premiums that could be required for a financially sound plan. These estimates vary widely depending on the version of the law (which changed as it went through the legislative process) analyzed, the data and the assumptions used.

Many commonly cited estimates reflect studies of much older versions of the CLASS Act. No analysis to date exactly matches the complete details of the CLASS plan that will be implemented, as these details have yet to be determined. As Congress debated the version of the CLASS Act that is now the law, the non-partisan Congressional Budget Office (the official “score-keeper”) provided estimates of average premiums.

The Congressional Budget Office (CBO) estimated that average premiums would be $123/month (lower for younger people, higher for older people). Naturally, the CBO estimate included assumptions about some detailed elements of the program that might be different when the final plan is ultimately determined.

In addition, the CBO assumed, among other things, that the CLASS Act plan would have relatively low enrollment, such as that found with private long-term care insurance. Higher rates of participation would, in general, lead to lower premium prices.

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Vitamin B12 is a nutrient that helps keep the body’s nerve and blood cells healthy and helps make DNA, the genetic material in all cells. Vitamin B12 also helps prevent a type of anemia called megaloblastic anemia that makes people tired and weak.

Up to 30% of the population over 50 years of age is at risk for developing a vitamin B-12 deficiency because of changes that occur in the digestive tract.

According to the National Institutes of Health Office of Dietary Supplements, vitamin B-12 helps maintain healthy nerve cells and red blood cells.

Vitamin B-12 is contained within the protein in food. Hydrochloric acid in the stomach allows the vitamin B-12 in food to be released so that it can combine with a substance called intrinsic factor. Once combined with intrinsic factor, vitamin B-12 can be absorbed by the intestinal tract and used in the body.

Vitamin B12 deficiency symptoms, like those of many other treatable health conditions, can be virtually identical to age dementia symptoms, senile dementia symptoms and Alzheimers symptoms. As many as 20% of people over age 65 have low Vitamin B12 levels. Correcting the deficiency can help older people resume a full and normal lives.

Vitamin B12 deficiency symptoms include:

• Loss of appetite
• Diarrhea
• Numbness and tingling of hands and feet
• Paleness
• Shortness of breath
• Fatigue
• Weakness
• Sore mouth and tongue

Confusion or change in mental status in severe or advanced cases. This is sometimes confused with dementia. More importantly, even a moderate deficiency of this important vitamin and its counterpart, folic acid, may ultimate contribute to the onset of Alzheimers disease or other related dementias.

Vitamin B12 is found in almost all multivitamins. Dietary supplements that contain only vitamin B12, or vitamin B12 with nutrients such as folic acid and other B vitamins, are also available. The National Instututes of Heath Office of Dietary Supplements recommends adults obtain a minimum of 2.6 micrograms per day.

More information on Vitamin B12 can be obtained at the following:

http://ods.od.nih.gov/FactSheets/VitaminB12.asp

http://familydoctor.org/online/famdocen/home/healthy/food/general-nutrition/765.printerview.html

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Many people often assume that as one ages the onset of depression is part of the psychological and physiological changes that one undergoes. Depression, however, is a treatable medical condition, not a normal part of aging.

The increased risk of depression among the elderly is a function of the likelihood of chronic health problems with 80% of the elderly having more than one chronic illness and 50% having at least one.

Distinguishing depression from “the blues”

Healthcare professionals may diagnose symptoms of depression of an elderly adult as just a natural reaction to illness or the life changes that may occur with aging. As a result, many physicians do not treat depression as a medical condition and the elderly themselves don’t understand that they could feel better with appropriate treatment. Remember, depression is a medical condition that is treatable..

How does one know the distinction between feeling “the blues” or having depression? One symptom is the duration of the symtoms. Feeling blue is relatively short lived while depression lasts for weeks or longer. Other symptoms include the following:

• Feelings of hopelessness and/or pessimism

• Feelings of guilt, worthlessness and/or helplessness

• Irritability, restlessness

• Loss of interest in activities or hobbies once pleasurable

• Fatigue and decreased energy

• Difficulty concentrating, remembering details and making decisions

• Insomnia, early–morning wakefulness, or excessive sleeping

Depression has serious ramifications

Depression among the elderly is a serious medical condition. Studies have shown that elderly adults with depression and who live in a nursing home with at least one chronic medical condition increase their risk of death. Depression also increases the risk of suicide, particularly white men. Suicide rates in people ages 80 to 84 more than twice that of the general population. Consequently, the National Institute of Mental Health considers depression in people age 65 and older to be a major public health problem.

If you want to know more about depression and the elderly, MedlinePlus is an excellent source.

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Having a knee or hip replaced is one of the most common surgeries for elder adults. The surgery is fairly major, but many seniors consider the surgery worth it to alleviate a serious problem. A recent study, however, suggests that more and more seniors are having major surgeries more than once.

Artificial hips do not last forever

The study found that 7 percent of hips implanted in Medicare patients had to be replaced within seven and a half years. Roughly, one in fourteen people needed to have a new hip replace…their new hip.

Even if a patient has Medicare or insurance cover the operation, hip replacement is not an experience most people want to experience twice.

How to choose the right doctor

Selecting the right doctor can be the key to having a successful surgery, according to the article. In particular, “[t] the most important variable is the technical job done by the surgeon . . . ” This means you should find a doctor, through referrals, that have lots of experience.

Another study noted that doctors who higher volumes of the procedure typically have patients who encounter fewer complications. Do your due diligence and make sure you find someone who has experience. The time you spend researching may result in less complications, and a lower chance of a repeat procedure.

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The lack of an estate tax in 2010 has resulted in a number of issues for estate planners, and has allowed at least one massive estate to pass without being subject to the estate tax. According to a recent article, however, at least two legislators are working on a new estate tax plan.

Revived at a lower rate?

The two Democratic senators pushing the new plan are alleging the estate tax would be revived, but would cap at a 35% tax rate. Under the bill, the per-person exemption would rise to $ 5 million.

In 2009, when the estate tax was active, the top tax rate was 45% and the personal exemption was $3.5 million.

If new legislation is not passed, the estate tax will revive next year at a 55% top rate.

It seems likely some form will pass

Going from no estate tax to 55% estate tax will make an enormous difference on large estates. If you have any questions about your estate plan, be sure to contact a local estate planning attorney.

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We all forget things. But as we age many people begin to notice they have increasing difficulty in remembering information, or it takes a longer period of time to learn new information. Mild forms of forgetfulness such as losing one’s glasses or keys are mild forms of forgetfulness and generally do not indicate serious memory problems.

Misconceptions about dementia

We all fear the possibility that as we grow older we will experience more debilitating problems such as losing the capacity of our memory and other cognitive skills. Often, mild signs of forgetfulness are perceived as the onset of dementia, a term that is often misused and misunderstood. Dementia is used to describe a group of symptoms that affect the brain. Dementia is not a specific disease; rather it is used to describe a condition of one’s cognitive functioning. Individuals with dementia may not be able to think well enough to do normal activities, such as getting dressed or eating. They may lose their ability to solve problems or control their emotions. Their personalities may change.

They may become agitated or see things that are not there. And while memory loss is a common symptom of dementia, the loss of memory, by itself, does not mean an individual has dementia. People with dementia have serious problems with two or more brain functions, such as memory and language.

Dementia can be caused by a variety of other diseases

Many different conditions can cause dementia and are treatable such as underactive thyroid, vitamin B 12 deficiency, heavy metal poisoning, side effects of medicines or drug interactions, some brain tumors, some cases of chronic alcoholism, depression and anxiety, and HIV/AIDS.  Other causes of dementia are generally not treatable.

These include Huntington’s disease, vascular dementia that is a result of high blood pressure or hardening of the arteries, brain injuries from impact sports or accidents, some cases of MS, and certain infections such as mad cow disease, and later stage syphilis. Prescription drugs for treatment of Alzheimer’s and some other progressive dementias are now available.

While these drugs will not reverse existing brain damage, they can slow the progress of the disease thus allowing some increase in the quality of one’s life and potentially delaying care by a residential facility. Many people with dementia, particularly those in the early stages, may benefit from practicing tasks designed to improve performance in specific aspects of cognitive functioning.

For example, people can sometimes be taught to use memory aids, such as mnemonics, computerized recall devices, or note taking.

How to reduce age-related changes in memory

• Engage in hobbies or tasks that keep your mind engaged and active. Make your brain engage itself!
• Engage in physical activities. Research shows better brain functioning and the possible delay of Alzheimer’s with routine exercise. Exercise can all reduce the effects that depression and anxiety of on one’s memory.
• Limit alcohol use. While there is some evidence that moderate use of alcohol can have positive health effects, heavy use can effect one’s cognitive functioning.More information on dementia can be found at the following:

The National Institute on Aging: http://www.nia.nih.gov/

MedicineNet.com: http://www.medicinenet.com/dementia/article.htm

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Scams among elderly adults are increasing with the anticipation they will accelerate in the coming years as the elder population increases. According to a recent study by the MetLife Mature Market Institute, the elderly lose at least $2.6 billion to thieves, many of who are their own family members.

Scams are underreported

Unfortunately, these estimates are likely low as many elderly are afraid to report a scam or a theft by family members for fear of being viewed as being incapable of making financial decisions or being incapable of living independently.

Many of today’s scammers are themselves elderly adults who have a keen understanding of the elderly’s habits and are more likely to be viewed as trustworthy by the elderly than their younger counterparts.

One of the most popular scams is to approach the elderly to initiate a reverse mortgage then use that money to purchase an annuity or pooled insurance policies (similar to the bundled mortgages that contributed to the housing collapse) where the policies themselves do not exist.

What to watch for

If you are the adult child or a relative of an elderly adult there are a number of behaviors you can watch out for that may provide clues if your loved ones are being victimized. These include the following:

• The elderly individual receives considerable junk mail advertising for free trips or prizes.
• The individual receives frequent phone calls from individuals offering free trips, money-making opportunities, or charitable donations.
• The individual is approached at home by a contractor or repairperson who just happens to be in the neighborhood and notices the individual needs a new roof, windows, doors or gutters,
• The individual has acquired many cheap items that they purchased in order to win something.
• The individual has written numerous checks or made repeated withdrawals for payment to unfamiliar out of state companies.
• The individual has exhausted their liquid assets and is now having difficult paying bills or buying food.

How to guard against scams

First, have a calm and direct conversation about the various types of fraud and make a list of these frauds and what to do if a scam artist approaches the elderly person.

Second, provide the elderly individual with a list of questions they should ask when called by telemarketers and what information they should obtain from the caller. Have them call a friend or relative of they believe a scammer has solicited them.

Third, post a “no solicitation” sign on the door and if a solicitor appears have the elderly individual contact the police or a relative.

Fourth, assist the individual in having their name placed on state and national do not call lists.

Fifth, if the elderly use the Internet warn them not to purchase anything with their credit card or assist any individual who contacts them by email with a financial offer. If they wish to purchase something, tell them you will provide them assistance.

Finally, encourage the individual to hang up on phone solicitors and do not answer the door when someone appears uninvited.

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Congress has not passed new estate tax legislation, which has caused havoc on many people’s estate plans. For one family, the lack of Congressional activity has resulted in a financial boon.

2010 is free of the estate tax

Because Congress has not passed new estate tax legislation, 2010 is free of the estate tax—which amounts to an enormous free pass. Dan Duncan was an oil tycoon, and ranked as the 74th wealthiest person in the world. His estimated worth was $9 billion.

If Mr. Duncan had passed away in 2009, his estate would have been subject to an estate tax of at 45%. If he had lived into 2011, his estate would been subject to at least a 55% estate tax. But because he passed away during the tax-free year, the estate will pass tax free to his heirs.

The estate tax only affects a small number of estates

The article suggests that only 5,500 estates each year are actually subject to the estate tax. But in Mr. Duncan’s case, it resulted in billions not going to the federal government. According to one critic of Congress’s inaction, because of the lack of an estate tax this year “[t]he ultrawealthy in this country will still be able to pass on enormous wealth to the next generation . . . ”

Will the lack of estate tax alter people’s decisions?

By far, perhaps the most disturbing possibility of the lack of estate tax is that it may alter individual’s life and death decisions. Some estate planning attorneys wondered if relatives would keep sick relatives in life-support solely to prolong their life into 2010, in order to obtain the favorable tax rate. At the same time, it is possible individuals would urge relatives not to go on such life-sustaining treatment this year. While there are no reported incidents to date, with millions, perhaps billions of dollars at stake, it is certainly something worth keeping an eye on.

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With the much-anticipated increase in older adults in our population, concerns have been raised about the capacity of nursing homes, senior living facilities, and long term care facilities to deal with the ever-increasing number of elderly. Because the majority of older adults would rather stay in their homes, more attention has been directed at home modifications in an effort to reduce potential hazards, and simplify the living situation without sacrificing an individual’s independence.

A number of modifications can be made in an effort to reduce falls, which are a serious public health problem. In the United States, one of every three persons over age 65 falls each year and two-thirds of those who fall do so again within six months. Among people age 65 and older, falls are the leading cause of injury deaths and serious injuries. About 9,600 older adults died in 1998 from fall-related injuries. Among seniors with osteoporosis, falls can cause devastating injuries such as hip fractures; 75%–80% of hip fractures are sustained by women. Half of all older adults hospitalized for hip fracture cannot return home or live independently after their injuries.

Easy modifications you can do yourself

• Remove all small area rugs, thick doormats, and bathroom rugs.

• In the bathroom install grab bars in the shower or bathtub area and on both sides of the toilet, place anti-slip rubber decals in the bathtub or shower, install a shower chair if the elderly individual is unsteady on their feet and a wand shower head so water can be brought down to their level. Consideration should be given to carpeting the bathroom to add warmth and provide a sense of security for the elderly individual.

• Stairs should be well lit (add lighting where necessary), and handrails should be installed on both sides of the stairs where possible. Stairs should always be free of any obstacles and the material that covers the stairs should not be slippery. Make certain switches for stair lighting are readily accessible at both the top and bottom of the stairs.

• Thresholds should be removed throughout the home.

• Hallways should be free of furniture or clutter, well lit, and be equipped with handrails.

• Kitchens should not have highly polished or waxed floors, and should be free of appliance cords that may get in the way. Make certain all items are within easy reach to avoid the possibility the elderly individual may have to stand on something to access an item.

• Living and dining areas should be free of electrical cords or telephone cords that could cause a fall. Make certain chairs and couches are easy to get in and out of, and remove casters wheels from furniture.

• Bedrooms should have a bedside light with a switch that is easy to turn on and off, a telephone that is readily accessible from the bed, a firm chair to use for dressing or to sit.

Consider assistive technology to help monitor the home

Another comprehensive option is to install sensor-technology, like WellAWARE, that will keep you apprised on what is going inside the house. While the sensors will not prevent falls, they will provide a level of security to the elder resident, and can also alert nurses and others monitoring the house in the event of a fall.

If you would like more information on falls among older adults, the Center for Disease Control and Prevention (CDC) has an excellent Web site that can be accessed at http://www.cdc.gov/homeandrecreationalsafety/falls/index.html

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For many seniors, Medicare and Medicaid is what allows them to see a doctor and receive the medical care they need. More and more doctors, however, are refusing to accept Medicare patients.

The source of the problem

Under the current Medicare budget formula, the formula does not work. If doctors cost Medicare too much, their pay is reduced to make up for the overspending. This creates a reverse incentive for doctors—the more they treat a patient, the more it costs it Medicare, which can lead to reduced payments to doctors.

Under the current budget, Congress must pass new legislation to avoid cutting doctors pay by 21 percent. Such a drastic cut will make the current problem worse.

Fewer doctors accept Medicare

The article tells the story of a woman who called 40 doctors, none of which would accept Medicare. If an individual needs critical care, this is a serious problem. Even if an elder just needs routine care, having to call that many doctors can be an extremely frustrating process.

Resolving the situation may be difficult

Something has to give, either doctors will have to take pay cuts, or the Medicare problem will continue to operate with a massive budget deficit. Realistically, a compromise on doctor pay is the most likely outcome. Until the issue is resolved, however, both doctors and their patients will continue to be frustrated.

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Planning for the future can be an overwhelming task. There are concerns about legal matters, living situations, and health care considerations to take into account. Every persons situation is different, but as a tool for our readers, we have created a checklist to assist individuals in planning for the future.

Legal matters

Have you created a will? If not, there is no time like the present. Take time to consider who should be listed as a beneficiary from the will, and who will be named as the executor of the will. If you have already created a will but have recently moved, make sure your will is still valid in your new state. If you have other estate planning concerns, such as tax consequences, be sure to talk with an attorney who handles estate planning.

You should also take time to create a heath care directive and power of attorney. Most importantly, make sure that your family members have a copy of, or have access to these documents.

Living situations and health care considerations

Do you know if you will qualify for Medicaid or Medicare? Will you be relying on those services to pay for a care facility? If you want to stay in your home as long as possible, have you estimated the costs of doing so? Have you had a frank discussion with your family members about what to do when you can no longer live independently?

Many of these topics are difficult to think about and discuss with family members. But preparing for them in advance will allow everyone to be more prepared and able to deal with them in the future.

Click here to download our Planning for the Future checklist.

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Two things are nearly certain with elder individuals: (1) they regularly need to take medicine; and (2) elders grow more forgetful with age. According to a recent article, one way to help people remember to take their medicine is financial incentives.

Medical providers like the idea

Some doctors, hospitals, and other medical providers are on board with the concept. The reason? For many patients, regularly taking medications will keep them healthier. As a result, they will hopefully need fewer visits to the doctor or hospital. For the individuals, this keeps medical costs lower. Theoretically, it can also help avoid higher cost procedures, and expensive hospital stays.

It provides a valuable incentive

Even if an elder’s insurance or medical provider does not participate in this type of program, you can still provide your own program. For example, let’s say your elder parent receives two weekly visits from a home care nurse. If their pillbox shows they took all their meds, you can provide your elder parent with a monetary reward. If money does not work, another type of incentive–dinner at their favorite restaurant perhaps?

In addition, providing incentives may be cheaper than hiring a nightly service to call and provide reminders. It puts more of a responsibility on you, but it could be cheaper. It also may help empower elder individuals and encourages them to take charge of their situation.

Another advantage is it can help an elder stay at home. Regularly taking medication helps individuals stay healthy. Staying healthy makes home care a realistic possibility. This perhaps the greatest incentive of all.

Congress has not passed new estate tax legislation, meaning it is scheduled to return at unfavorable rates in 2011. There is still time for Congress to change things, but it is making things difficult for people to plan their estates.

Return to the old rates?

If Congress does not pass new legislation, the estate tax will return to its rates from 10 years ago; almost every analyst agrees, that is not a good thing. Under the old (and possibly returning) rates, $1 million is exempt, and the tax on the remainder is 55% (60% in a certain phase-out range).

Including a house, many families could be close to the $1 million dollar threshold than they think.

The price of wealth

The upside is that leaving property to a spouse or charity is not subject to the estate tax. The downside, however, is that inheritances that pass to children are subject to the tax.

For example, you are married and have two wonderful kids. You suddenly pass away, and everything you own passes to your spouse and is not subject to the estate tax. The value of everything passed onto your wife is $1.5 million. Suddenly your wife passes away, and the total value of her assets (including yours) was $1.8 million.

The first million is exempt, but the remainder of $800,000 is subject to the old estate tax rate of 55%.

How to deal with the uncertain estate tax

To be on the safe side, contact a local attorney to ensure your estate plan is properly worded so as to not create unintended problems in a year without an estate tax.

(photo: AMagill)

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How you manage your assets is a critical aspect of estate planning. A trust is a legal relationship where one person holds property for another. Generally, a trust involves three people. The grantor, the person who initiates the legal relationship, and places their assets in the trust. The trustee, who holds the property in trust. Lastly, the beneficiaries are the individuals who receive the benefits of the trust.

A trust is an excellent tool to prepare for a change in asset management responsibilities and to possibly protect your assets from health care expenses depleting your resources. Trusts are also many times favorable because they can be used to avoid the probate process.

As you review the information below, please know that there is no “standard” Trust package that can be applied to every situation.  The type of trust that is right for your particular situation will depend greatly on your wishes, your estate planning goals, conversations with your family, and the analysis of experienced professionals.  After you have had an opportunity to review the information below with your family, please feel free to consult our office with any questions you may have.

Irrevocable Living Trust

An irrevocable living trust is a trust that is created to hold your assets during your lifetime where it cannot be canceled or modified.  Your assets are locked in the Trust as a management tool; with the additional feature that the principal is beyond the reach of a Medical Assistance claim so long as the assets comprising the principal were placed in the Trust sixty (60) months before the first Medical Assistance dollar is spent on your care. Similarly, if you gift assets to an individual, such as the remaining interest in property when creating a life estate for yourself, the Medical Assistance look back period is increasing on a monthly basis, and on January 1, 2011, the look back period will be 60 months.

While no one wishes to be in a nursing home for any long period, or have major health problems that might eat up your investments, estate, and savings, that possibility does exist.  By transferring all or part of your estate into an irrevocable trust, those assets are protected and maintained for your beneficiaries and only the income distributions so defined by the Trust are available for payment of long-term care.

Revocable Living Trust

If you do not feel comfortable committing to an irrevocable trust, you may wish to consider a revocable living trust instead.  With a revocable living trust you are free to make modifications to Trust terms as you see fit during your life.  While this type of trust cannot protect your assets from a Medical Assistance claim, a revocable living trust allows you the opportunity to tailor the terms of your trust for your personal needs during your life.

This type of trust may not protect your assets from forced expenditures later in life, but it will allow you set up a plan that will provide a stream of income during your life that can be revised to meet your specific life needs.