Category: Nursing Home

Professor Researching the Brain to Find Location of Financial Competency Issues

The National Institute on Aging has announced that scientists are now using magnetic resonance imaging of the brain to examine those parts associated with money managing abilities. Because aging makes seniors more vulnerable with financial decisions, those with Alzheimer’s or dementia are at special risk—even in the early stages. 9-15-2016

“Can we actually see a picture of this?” asks Forbes in its article, “Will Brain Images Tell You If Your Aging Parent Can't Handle Money Any More?”

The NIA report cites a prominent researcher, neuropsychologist and lawyer, Dr. Daniel Marson, who says that it’s “the $18.1 trillion problem.” Dr. Marson, a professor of neurology at the University of Alabama at Birmingham, is referring to an estimate of household wealth held by U.S. adults age 65 and older.

Although they haven’t yet found a way to pinpoint an exact spot in the brain that says a person is or isn’t competent with finances, the report details the efforts using MRIs to find out more about the brain and financial capacity. The professor says that changes in some parts of the brain are linked to loss of financial capacity.

The report also cites director Nina Silverberg, who commented that “Novel neuroimaging studies, along with studies involving cognitive measures, are providing intriguing data on why older adults—even those who were previously quite savvy about finances—may lose their money-managing abilities.” Silverberg is the program director of the Alzheimer’s Disease Centers at NIA’s Division of Neuroscience.

Here are some takeaways to help with an aging parent who has signs of dementia or related illness:

When the first indications of a memory issue arise with your loved one, try to be more involved in monitoring their spending and money management. Get online access to their bank accounts—even if you just watch what comes in and goes out. That way you can intervene if a problem arises.

You can also offer to pay bills for your aging parents, and it may even be a relief for them. Handling money can be confusing when a parent declines cognitively, serving as a sign of cerebral impairment.

Get to know your aging parent’s financial advisor, attorney and others involved in his or her financial life, and ask your parent for written permission to talk with them. A notarized power of attorney or a letter granting you access to financial information would be required. Tell these professionals about any concerns you have and keep in touch. An ethical professional will want what is best for the client.

A piece of that $18.1 trillion Dr. Marson cited may include some of your potential inheritance, so you’ll want to act to help preserve it. Don’t assume that if your aging parent is okay now that it will stay that way. Even without the science, you should realize that some folks will experience cognitive disorders as they get older—your aging parents just might need your help now and in the future.

Reference: Forbes (July 27, 2016) “Will Brain Images Tell You If Your Aging Parent Can't Handle Money Any More?”

Look out: Medicare Changes on the Way!

8-25-2016Can you believe that Social Security’s 60 million-plus beneficiaries are scheduled to get a miniscule 0.2% cost-of-living adjustment next year? In addition, some Medicare recipients could be in line for some steep premium increases, according to the annual trustees reports about the financial health of Social Security and Medicare as reported in AARP.org’s article, “Social Security COLA Projected for 2017.”

The long-term outlook for Social Security old-age and disability benefits is still good, with promised benefits payable until 2034. Without any changes to the law, 79 % of promised benefits will be payable through 2090. However, the trust fund that finances Medicare’s hospital coverage is fully funded until 2028—that’s two years less than projected a year ago.

Social Security annually weighs whether to give beneficiaries a cost-of-living adjustment based on inflation compared to the last year that a cost of living allowance (COLA) was awarded. Beneficiaries didn’t receive a COLA for 2016 because the inflation rate fell, which is the third time since 2010 they didn’t get an increase in payments. The 0.2% COLA that the trustees project for 2017 still could change with inflation. We’ll need to wait for the final word to come in October.

Medicare beneficiaries want to know what will happen to the Part B premium in 2017. With no COLA for 2016, about 70% of Medicare beneficiaries were “held harmless” from cost increases and are paying the same standard premium as they did in the previous three years at $104.90 a month. The remaining folks are required by law to share the load of increased costs; they must pay much more. But Congress came through with a solution that limited the impact of the increases for this year.

The small COLA now projected for 2017 would still have an effect on Part B premiums. Standard premiums for most of those in the 30% not currently held harmless would jump by about $27.00 to $149.00 a month next year. The other 70 % would pay $107.60 a month in 2017, which is $2.70 more than they pay now.

Among the 30% impacted next year are those who didn’t have their premiums deducted from Social Security checks in 2016, including those new to Medicare in 2017, and those who already pay higher premiums because they have higher incomes. The higher-income beneficiaries would see even higher jumps in premiums next year. Those look to increase from $166.30 to $204.40 a month for the lowest affected tax bracket and from $380.20 to $467.20 for those in the highest.

One other group, which includes low-income people whose states pay their Part B premiums, aren’t personally affected. However, their states will face some additional costs.

Part B premiums are to cover 25% of total costs. The federal government will contribute the remaining 75% out of general revenues. The increased income-related premiums are set to cover 35%, 50%, 60% or 80% of the costs, depending on income level. The increase in Medicare costs, which means increases in Part B premiums, is primarily due to the high prices of some recently developed prescription drugs.

“High cost drugs are a major driver of Medicare spending growth,” said Medicare’s acting administrator, Andy Slavitt. “For the second year in a row, the spending growth for prescription drugs dramatically outpaced cost growth for other Medicare services.”

Reference: AARP.org (June 22, 2016) “Social Security COLA Projected for 2017”

Personal Finance Myths Debunked!

8-18-2016You want to prosper by following tried-and-true principles of effective wealth creation and asset management—not myths passed down from older generations or heard around the office water cooler. Kiplinger’s “8 Urban Myths of Personal Finance” unravels several urban legends of personal finance that have gained credence over the years.

Myth: There’s No Need to Start Saving for Retirement Until You’re 40. Did you know that 25% of Americans ages 30 to 49 have saved nothing for retirement and that 59% say they plan to save more aggressively “later” to make up for that shortfall? The long-term effects can be disastrous if you don’t put away money in a retirement savings plan as soon as you start earning a paycheck. The truth is the sooner you start saving and investing, the better.

Myth: Social Security Won’t Be Around When I Retire. Many people in the U.S. (55%) have this fear. The truth is Social Security isn’t going away. But remember that Social Security was designed as a supplemental retirement insurance program, not a pension per se.

Myth: I Can Borrow from My 401(k) When Needed. More than 20% of 401(k) plan participants who are eligible to take loans against their retirement savings had outstanding balances in 2012. But there’s a problem in doing this—you’re borrowing pre-tax dollars set aside in your 401(k) and paying the loan back with after-tax money. That money will be taxed once again when you withdraw from your savings after you retire! If you quit your job, are laid off or are fired, you’ll need to pay the loan back—usually within 60 days. If you can't pay it back, the outstanding balance is deemed a taxable distribution, and you’ll get dinged with a 10% early-withdrawal penalty if you are under 55. The truth is that while you are permitted to borrow from your 401(k) to make a down payment on a home or in cases of financial hardship, you’ll take a huge hit on your nest egg.

Myth: Only Rich People Need a Will. About one half of all Americans ages 55 to 65 don’t have a will. If you should pass away without one, a judge will decide how to divvy up your assets and who will raise your children. The truth is everybody should have a will, even if it’s just to detail funeral and burial wishes.

Reference: Kiplinger (May 2016) “8 Urban Myths of Personal Finance”

Planning Ahead for Medicaid

The good news is that you’re going to live a long life. The bad news is that you may face the difficult transition of requiring nursing home care without having the assets to pay for this. If you have no assets, Medicaid will pay for nursing care—but only after you’ve spent most of your own resources.


The US News article, “What to Consider If You May Depend on Medicaid for Nursing Care,” says that trying to qualify for Medicaid can be tough, and it may leave your spouse or heirs with less than you’d imaged. For that reason, you should plan for the possibility that you’ll outlive your assets for years or decades.

Your planning should start while you’re still young.

8-01-2016

Almost every American, regardless of income or assets, is eligible for Medicare to cover his or her health care in retirement. Medicare covers doctor visits, treatments, hospitalization, and drugs. It also covers a short-term stay in a nursing home for rehab, but it does not pay for any type of long-term care.

The cost of nursing home care averages $225 a day for a semi-private room, which will quickly consume a modest estate. Medicaid covers medical care for poor people of any age and will pay for long-term care in a nursing home. However, this is only for those who meet specific asset and income guidelines, which vary by state. Medicaid is designed to protect those with limited incomes, but planning could be the difference between keeping the family home for the next generation and being forced to sell.

Planning for end-of-life care should be part of retirement and estate planning. Talk with an attorney who specializes in Medicaid planning.

Remember that not all facilities accept Medicaid patients, and they’re not required to accept it. Some facilities only have a certain number of beds for Medicaid patients.

Eligibility rules and asset limits vary by state, and most let you keep your house and some assets and still qualify for Medicaid. However, the state will look back five years to determine your eligibility for Medicaid, meaning the state will analyze the assets you’ve given away or otherwise disposed of in the past five years.

Also, if you sell assets at less than market value to heirs or otherwise give away assets, it might delay your Medicaid eligibility. The asset calculations will consider a healthy spouse. Typically, a healthy spouse can keep half of the joint assets up to a certain ceiling plus enough income to live on when his or her spouse qualifies for Medicaid. This amount may vary by state and situation.

In addition, the state may try to recoup its cost after your death, either through filing a claim against the estate or filing a lien against property; however, the property usually is safe as long as the surviving spouse is living.

Transferring assets to children may have tax consequences, such as capital gains and gift taxes. Typically, it’s not a good strategy to gift highly appreciated assets. You may want to spend down assets on long-term care insurance if you expect to outlive your assets. This might be preferable to Medicaid. Some hybrid products combine life insurance and long-term care or annuities and long-term care. The size of the death benefit is based on if the long-term care is used.

Reference: US News (June 9, 2016) “What to Consider If You May Depend on Medicaid for Nursing Care”