Where to turn for help when parents can no longer care for themselves

As I sit here writing this piece, I am reminded that another 10,000 seniors retired today and 10,000 more will retire every single day for the next nineteen years!

If you are a baby boomer, then I'm certainly referring to you.  But if you are not, you may have a loved one who is.  If you or someone you love has been fortunate enough to reach the milestone of retirement, there is no doubt that there are at least two things on your mind;

• "Do I have enough money to live the way I want to for as long as I want" 
• "Am I healthy enough  to enjoy my retirement with no help from others?"

Woody Allen once said "if you want to make God laugh, tell him all about your plans"

For the sake of conversation, let's just focus for a moment on some options for "aging in place" if your retirement aspirations don't go exactly to plan.  For instance, what if your health declines and you can no longer take care of yourself either short or long-term?  Who will you lean on and where will you turn?  Perhaps you feel like your family owes it to you to provide the care you need or maybe you feel like it's the State's responsibility and they will provide for you when the time comes.

At the end of the day, many family members do step in when necessary to help work through a crisis, but what if the challenges are longer lasting?  How much family support is reasonable and at what point will this begin to take its toll on your family's health and well being?

Certainly, it is not my intent to be all doom and gloom because there are so many happy endings to reflect on.  It is my intent, however, to educate you on the options available and provide some pros and cons of each.  Consider the list below:

1. Skilled nursing facility- Stay here for short-tern nursing and physical therapy (PT). Typically covered under Medicare and/or private insurance.
   
2. Skilled nursing agency- Can receive nursing and PT in the comfort of your home.  Typically covered by Medicare and/or private insurance
   
3. Long Term Care (Nursing Home)- Stay here for long term nursing needs where skilled care is needed 24/7.  Covered by insurance after spend down requirements are met for personal funds leading to Medicaid.
   
   
4. Assisted Living- Stay here for long term living when medically stable; still able to transfer and ambulate with minor assistance.  Not covered by insurance and costs can range from $2500-$8000/month
   
   
5. Private Duty Home Care- This provides non-medical support in the comfort of your own home with similar services to Assisted Living including meal prep, light housekeeping, bathing, transportation etc.  Not covered by traditional insurance and rates can range from $19-25/hr.

-Phil Smith, First Light HomeCare

Prescription Drug Plans- Medicare Part D

Medicare offers prescription drug coverage to everyone with Medicare Part A and/or Part B. If you currently use prescription drugs or think you may in the future you should consider joining a Medicare drug plan.  Part D coverage is not mandatory, it’s optional.   Keep in mind that should you decide not to join a prescription drug plan when you’re first eligible, you may have to pay a late enrollment fee.   If you qualify for Extra Help in paying for your prescription drugs or have creditable prescription drug coverage at least as good as Medicare you may not be assessed the late-enrollment penalty or LEP.

There are two ways to get Medicare prescription drug coverage:

       -A stand-alone PDP or Prescription Drug Plan.  You must have Part A or Part B to join.

2.       -A Medicare Advantage Plan or Part C that includes prescription drug coverage.  These plans require that you have Part A and Part B to join and are commonly called MAPD plans.

All plans must meet the same basic guidelines created by the federal government.  Each plan can vary in cost and in the specific drugs they cover on their formulary or drug list.  You want to make sure all your medications are covered on your prescription drug plan.  You also want to know your monthly estimated drug costs,  and if you are going to hit the donut hole during the year.   You must live in the service area of the Medicare drug plan you want to join, and generally you must stay enrolled for the calendar year. 

You can enroll in Part D coverage when you first become eligible for Medicare.  For most people this is three months before the month you turn 65, the month of your birthday, and three months after.   You can also join if you get Part B for the first time during the General Enrollment period, during open enrollment between October 15^th -December 7^th each year, and at any time if you qualify for Extra Help.  If you are on a limited income and you enroll in Part D, you may qualify for Extra Help in paying for your premiums, deductibles and co-payments.  Also, there are certain situations or Special Enrollment Periods when you may be able to join, switch, or drop Medicare drug plans.  An example is if you move out of the service area.  

Medicare Part D has four drug payment stages.

Stage 1 – The annual deductible stage.  The deductible varies from plan to plan.  If your plan has a deductible, you must pay the annual deductible before the plan will pay for your prescription drugs.  Once the deductible is met you move to the initial coverage stage.

Stage 2 – The initial coverage stage.  In this stage you pay a co-payment or coinsurance (percentage of the drug’s total cost), and the plan pays its share for each covered drug until the combined amount which includes the deductible reaches $3310 in 2016. 

Stage 3 – Coverage gap stage which is often called the donut hole begins once your total drug costs reach $3310 for 2016.  At this stage, you pay 45% of the cost of brand name drugs, and 58% of the cost of generic drugs.  What you pay and the discount paid by the drug company in the donut hole counts as out-of-pocket spending.   You continue in this stage until your total out-of-pocket costs reach $4850 for 2016.  Your total out-of-pocket costs are the amount you pay and what others pay on your behalf beginning January 2016. The total out-of-pocket does not include your monthly plan premium.

Stage 4 - Catastrophic Coverage – After your total out-of-pocket costs reach $4850 for 2016, your coverage gaps ends and you only pay a small co-payment or coinsurance amount for each covered drug until the end of the year.

-Jackie Greene, IEN Risk Management

Protecting your income past age 65

The Problem:

·         When protecting income, what usually comes to mind is protecting our loved one’s, in particular young families, through the purchase of life insurance.  This is typically the solution to protecting  income since final expenses, mortgage protection, college education, income replacement are all needs for spouses and dependent children. 

·         Many parents, wanting the best for their families, have also sought to provide their children the opportunity to go to college by helping their children financially.  Although this limits the college financial aid loan repayments awaiting the graduate, this strategy often succeeds at the expense of saving for their own retirement.

·         Income replacement for the 60 something’s is easily overlooked.   The death of an income earning spouse can still cause the household to suffer a real economic loss.

·         This working spouse provides income for current needs, contributions to retirement plans accounts, and provides other benefits such as healthcare, that may be lost with the death of the worker.

In order to make up for a reduced retirement savings, whether due to a lack of planning, or market declines, workers are now planning to retire at an older age.  The expected retirement age of many workers has gone up as has life expectancy. Please see the below table with information from the CDC.    

Exhibit 1: Historical Data for Remaining Life Expectancy at Age 65

	Male	Female
1950	12.8	15
1960	12.8	15.8
1970	13.1	17
1980	14.1	18.3
1990	15.1	18.9
2000	16	19
2010	17.7	20.3
SOURCE: Center for Disease Control
http://www.cdc.gov/nchs/data/hus/2011/022.pdf

The Solutions:

The life insurance industry has seen the evolving of their life insurance company product portfolio’s.  The longer life expectancy, and newfound needs for insurance protection have created some new products, with new applications for customers.  Term life insurance, generally associated with the needs of younger generations, is now commonly used as a solution to protecting the income needs of the 60 somethings.  

If insurable, purchasing a 10-15 year term life policy, can be a cost effective solution.  In many cases, a permanent (whole life or universal life) can be combined with a term policy to provide both short and longer term protection needs.

Although the best solution for a guaranteed death benefit will always be life insurance, some people cannot pass the underwriting requirements. This is where some unique annuity legacy strategies can provide the desired death benefit, and can be a positive addition to your planning.

With many annuities, a death benefit rider can be added at the time of application. Although there is usually an annual fee for this benefit, it can provide for the life of the policy, an annual growth rate that can be left to the beneficiaries. The fee is taken out of the accumulation value, and not the actual death benefit amount.

In addition to guaranteed death benefits, it is also possible to leave an income stream to your beneficiaries as part of your overall legacy plan. This benefit can provide an income to a surviving spouse for the rest of his or her life. 

-Ken Jones, IEN Risk Management