What Happens When Obamacare Gets Repealed?

What Happens When Obamacare Gets Repealed?

Dec 14, 2016 | aging, elderly, finances for elders, handling money for aging parents, medicare, seniors finances

Promises to repeal Obamacare (the Affordable Care Act) abound but "replacement" still appears very murky. Many agree that repealing it is warranted (though many disagree) but few can agree on what replacement would entail. Here is a look at some of the real life effects of repeal, focused on the minimum wage worker. The articulated plans for replacement miss these workers who are most likely to lose health insurance coverage altogether when mandates are repealed.

According to the Bureau of Labor Statistics, In 2014 there were 77.2 million workers in the United States paid at hourly rates, representing 58.7 percent of all wage and salary workers. Among those paid by the hour, 1.3 million earned exactly the prevailing federal minimum wage of $7.25 per hour. About 1.7 million had wages below the federal minimum. The average American worker got paid $24.57 per hour, or $850.12 per week. And averages can be deceiving. They lump together those who may be educated with those who have less education and value in the workplace. For this discussion, we focus on those who work full time, at the low end of the wage scales.

Repeal will immediately remove the employer mandate which means that employers who do not care to undertake the expense of insurance coverage for their groups of employees would simply stop covering them. Millions of workers would lose coverage, and be expected to pay for it themselves with so called "health savings accounts" or tax credits.

Those who have announced their positions on this, particularly those most likely to influence what happens after repeal believe that health savings accounts are the answer and that everyone without insurance will then be motivated to save their money and buy coverage themselves.

Reality check: the lowest income workers do not have any money to save. It is not about motivation. It is about living at the edge of poverty. These workers spend every penny of that minimum or low end wage on food, clothing and shelter and there is nothing left to pay for insurance without the existing subsidies. The myth of health savings accounts is that there is, in fact, money available to save so you can pay for insurance yourself. Repeal will mean no health insurance subsidies, which are a controversial feature of Obamacare and one of its main pillars.

Workers who only have coverage through employers who then drop coverage would return to being uninsured. When they get sick or injured, they will not receive treatment, or they will go bankrupt with medical bills they cannot pay. Essential preventive care will not be available as it is now in all insurance policies and minor problems become major health issues, some resulting in death.

Another premise of the as yet undefined replacement plan is that offering tax credits will also motivate people to buy their own insurance when subsidies and the individual mandate, now also main pillars of Obamacare, are gone. As with health savings accounts, the same incorrect assumption applies. Low wage workers do not have enough money to advance for monthly insurance premiums to attain a tax credit at year end. Simply put they can't afford it at all and a benefit at year end does not create a higher monthly salary for them. The politicians and appointees who want to use health savings accounts and tax credits as replacements for health care insurance subsidies are the same people who vehemently oppose raising the minimum wage. The majority in power will succeed in that.

Ask any minimum wage worker: Do you have extra money left after you pay for your rent, transportation, kids' needs and groceries each month? They will say no. Anything left buys a child a pair of shoes, not health insurance. They will take a chance on never getting sick, never being in an accident and never having a family member who has a chronic or life threatening health condition. How realistic is that?

Anyone who is working full time and is not quite poor enough to qualify for Medicaid is not in the world of the cabinet picks and advisors who created the fantasy of how it is supposed to be with tax credits and health savings accounts. Perhaps the bureaucrats cannot imagine what it is like to have zero in the bank account after the most essential costs of everyday life are paid from one's paycheck. Amid that and the force that will keep wages low for the lowest on the wage ladder, where are we leaving so many who work every day but will have no health insurance?

Replacement needs to be thought out in terms of the millions of workers who stand to lose coverage altogether when the law that now helps them buy health insurance is repealed. Keeping coverage for those with pre-existing conditions sounds fine, if you can pay for the insurance premium that is. If you lose your coverage, it matters not whether the insurer would take you with a pre-existing condition. You have to be able to pay for coverage whether there is a pre-existing condition or not. And keeping coverage in place for one's children until age 26 also sounds fine, but only if you, the worker are covered and can pay for the insurance yourself or you are lucky enough to get it through your employer.

The ACA also expanded Medicaid for those living at and below the poverty line. If Medicaid is shrunk, as some politicians want, so as to "cut government spending" it will destroy the only means the least fortunate have to get any coverage at all. Must we let them die in the streets? No charity in existence buys health insurance for anyone. That is the very reason why Medicaid exists--to cover the poorest among us. As flawed as Obamacare is, that is all there is for over 21 million previously uninsured people. My hope is that better solutions can be found than completely obliterating coverage for so many. Note to politicians: get with it and figure it out!

Carolyn Rosenblatt, RN, Attorney, AgingParents.com and AgingInvestor.com

Podcast Interview: Common Challenges in Helping Aging Parents

Podcast Interview: Common Challenges in Helping Aging Parents

Nov 15, 2016 | aging, elderly, financial capacity, handling money for seniors, seniors finances

Interview: Common Challenges in Helping Aging Parents

Hello everyone. Welcome to better health while aging, a podcast that gives you strategies and tips about improving the health and well-being of older adults. We discuss common health problems that affect people over age 60, the best ways to prevent and manage those problems and we also often address common concerns and dilemmas that come up with aging parents and other older loved ones, like what to do if you're worried about falls or safety or memory or even the quality of a seniors healthcare.

I'm your host Dr. Leslie Kernisan. I'm a practicing geriatrician, so that means I'm a medical doctor specialized in geriatrics, which is the art and science of modifying healthcare so that it works better for older people, and for their families.

Today’s episode features a special guest and we are going to be talking about common challenges related to aging parents. My guest is Carolyn Rosenblatt. She is an attorney and a registered nurse, and for the past several years she and her husband Dr. Mikol Davis, who is a geriatric psychologist, have specialized in helping families resolve difficult issues related to older parents. They have a website at AgingParents.com.

Carolyn is the author of “The Family Guide to Aging Parents” and several other books about assisting older adults with legal, financial, and life issues. She also write a column about aging for Forbes.com.

I have read many of Carolyn’s Forbes columns over the past few years and also read her book recently as I was writing one of my own articles about advance planning for legal and financial issues. So I’m thrilled that she was able to join me today to share some of her insights on how to manage some of the common challenges and dilemmas that families often struggle with.

Carolyn, welcome to the show.

Questions:

  • Tell us about your practice and how did you come to specialize in families and aging parents?
  • What are the most common types of problems that people ask you to help them with?
  • Some common scenarios we can discuss:
    • People are sometimes concerned that their parent is losing mental abilities, or becoming “incompetent.” They also often complain that their parent is refusing to talk about the issues and refusing to go see a doctor. What are some of your suggestions to help families resolve this?
    • People worried about how their parents are spending money, and/or worried that someone else is influencing the spending (e.g. a sibling)
    • People worried about their parents driving
    • People who want their parents to plan for decline in the future but the parents refuse or avoid the subject
  • How can older adults and their adult children plan ahead to avoid many of these difficult situations? Can you share some favorite resources that are effective in helping people through this?
  • For families that have set up springing powers of attorney, there is often a requirement that a doctor or other clinician say the older person no longer has capacity to manage finances or whatever power is in question. But families often say they can’t get the person to the doctor/psychologist to obtain this assessment. Suggestions?
  • There is really a lot that families could and should do to plan ahead. If people are feeling really limited in time and energy, what do you think are the most important or high-value things to do, when it comes to older parents who are doing ok now.
    • Another angle on this: what are the things that people end up regretting not doing the most often?
  • You’ve written a lot about preventing financial abuse of older adults. What are some useful steps you recommend to prevent this from happening, or from causing serious financial losses?
  • You have a chapter on helping older parents from a distance, and you write about how you and your husband eventually hired a care manager, in order to have someone close to your mother-in-law. What do you recommend for people who feel they can’t afford to hire a care manager?
  • How can families deal with declining abilities, dementia, and physical dependency if there isn’t family to provide care or money to hire someone?
  • How have you and your husband planned for your own future? (We can skip this if it’s too personal.)

At the end I will tell people they can learn more about you and your special consultation practice at AgingParents.com.

Three Tips For Talking To Your Older Clients About Long Term Care

Three Tips For Talking To Your Older Clients About Long Term Care

Sep 20, 2016 | aging, aging investor, diminished cognition, elder investor, elderly, finances for elders, financial advisors, financial capacity, handling money for aging parents, handling money for seniors, investor, log term care, long term care insurance, senior citizen investor, senior investor, seniors finances

Three Tips For Talking To Your Older Clients About Long Term Care

When you look at an older client's portfolio, the biggest concern is probably about whether they have enough to last to the end.  You calculate the drawdown, the earnings, and you spend time on those figures.  But what about long term care?

This is the conversation the client doesn't want to have.  No one wants to think about being disabled or losing independence.

Of course, this is not realistic.  You, the planner may not want to bring up the subject because of your own discomfort, or because you aren't sure what to say, or perhaps because your client dismisses it if you do bring it up. But a competent planner and advisor must do so.

Consider this realistic typical scenario:

A health crisis happens to your client. It can be a fall, a stroke or heart attack, anything that is unexpected. First, there is a hospitalization.  OK, Medicare covers that, together with supplemental insurance. A rehab facility is next with therapy and nursing care.  Medicare covers that but only to a point. When the elder is ready for discharge, the client and family are told, sometimes a day or two beforehand, that they will have to get help for the aging loved one at home.  ”Doesn’t Medicare cover that?” they ask. Unfortunately, no, they are told.

The Cost 

So the family members and the client start scrambling to provide help at home. In some parts of the country the cost is about $30 per hour.  According to the Genworth 2015 Cost of Care study, the national median price for someone to provide help with bathing, dressing and walking or other hands-on home help is $20/hour.

When you do the math, you realize that even if your client needs just twenty hours a week at the average cost, it will add up to nearly $20,000 a year.  That is on top of other, non-covered medical expenses, such as physical therapy when Medicare stops paying, hearing aids, and many medications. And that is just the beginning.  Limited hours of home care often stretch into full time care as people  who have disabling conditions age.

Some people figure they can spend their assets and give things away so they can qualify for Medicaid.  I would not recommend Medicaid as the best way to get quality care.  First, one must be really destitute to qualify for it. And the state looks back at all financial transactions for a five year period in most states prior to the application to see what was going on, what transfers were made and if they were honestly done. Second, the care one receives under Medicaid is the most basic, may be of the lowest quality and typically is not what anyone really wants.

If you can prevent that choice, you will.  Your client could spend her last days in a three bed room in a dingy nursing home if she or anyone in her life thinks Medicaid is a fine way to pay for care.

The cost for quality care at home can be staggering.  In my own prosperous county, with a very high elder population, the cost of 24/7 care at home from non-nursing providers (home care workers) exceeds $200,000 per year.  That is on top of the ordinary costs of living a senior has, regardless of care. And she will still be paying her out of pocket costs for other things Medicare does not cover: many medications, other non-covered services, Medicare premiums, etc.

 Taking On The Long Term Care Discussion: Three things you should do

  1. You need to create a plan for how to pay for long term care in the future as part of your job of financial planning and retirement planning.  Your client is not likely to ask you about it. Do not wait to have these discussions. Cash for the unexpected need for care could be a major expense. Your client needs to know the facts and figures.  Most people grossly underestimate the costs. We have even seen financial industry publications naively state "Medicare pays for most things". It doesn't pay for what most people need to stay at home after any disabling condition arises.
  1. Educate your client about the likelihood of this need for future care.About 70% of people will need long term care in some form in their futures.  Failure to plan for it can bankrupt a person or leave them in serious debt toward the end of life. Or some investments could make cash inaccessible when needed.
  1.  Use resources to help yourself understand the real costs of home care, assisted living, and nursing home care.  In order to educate your client, you need to educate yourself first. The Genworth Cost of Care study is a good resource. Here at AgingInvestor.com, we also offer tools[1] to help you.  Be sure you have something to hand to and to discuss with your client.  The need is now for any retiree.

by Carolyn Rosenblatt, RN, Elder Law Attorney & Dr. Mikol Davis, Geriatric Psychologist

AgingInvestor.com

[1] The Family Guide to Aging Parents: Answers to Your Legal, Healthcare and Financial Questions, and Succeed With Senior Clients: A Financial Advisor's Guide To Best Practices and Working With Aging Clients, A Guide for Legal, Business and Financial Professionals. All 3 books are available at AgingInvestor.com and Amazon.com

 

Are Advisors Miscalculating Retirement Medical Costs?

Are Advisors Miscalculating Retirement Medical Costs?

Aug 31, 2016 | aging, Alzheimer's disease, elder investor, elderly, finances for elders, financial advisors, handling money for aging parents, handling money for seniors

Are Advisors Miscalculating Retirement Medical Costs?

According to CNN Money, a 65-year-old, healthy couple can expect to spend $266,600 on out of pocket costs for Medicare premiums in retirement. If that's the advice you give clients about what needs to be set aside for medical expenses you're missing some major facts.

Medicare premiums are a relatively small part of what it can cost when health issues arise as people age. No one likes to discuss the subject of possible cognitive impairment, but it has to be done. We see it as the financial advisor's responsibility to bring it up, include medical expenses in the overall financial plan and get the truth out on the table.

According to a Wealth Management article on August 30, 2016, Fidelity Investments did a survey of over 350 advisors and found that 96 percent felt unprepared to help clients who had Alzheimer's disease. This is in contrast to the reality that a person's chances of developing the disease are at least one in three from age 85 and above. And we are living longer than ever in history. More centenarians, more Alzheimer's.

What is the real cost of caring for a person with Alzheimer's? I interviewed a high end home care agency owner about this question. Many HNW people do not have long term care insurance as they plan to pay for whatever they need out of pocket. Most are not aware of the cost of best quality 24/7 care they could need with their own longevity. In our work at AgingInvestor.com, we have encountered this scenario and have seen what best quality care looks like. It's not your average home care agency.

The cost for caring for one person at home with Alzheimer's from that agency is $300,000 per year. The workers are specially trained and well supervised. A care manager develops a plan and the workers take their shifts, prepared to deal with all manner of difficult dementia-related behavior, including violent acts and words, wandering out the door, refusing to bathe as well as those who are unable to express themselves verbally any longer. Non-specialty home care agencies do not accept this degree of client behavioral difficulty out of fear of their workers being harmed.

The ultra HNW client can pay for these costs but for everyone else, the expenses incurred with care for a progressive disease that escalates in difficulty over time could be devastating. The cost of home care is in the category "long term care" an often poorly understood subject among those outside the health care and insurance fields.

If you have clients who are at retirement age or are retired, it is a necessity that you educate them about these risks to their savings. When you work with them on their plans, you need to include the possibility, very real, that one or the other of a retired couple could develop dementia and need expensive home care. If you think they should just go onto Medicaid, think again. Every state has different rules but in all states a person can't have much left in the way of assets and savings in order to qualify for Medicaid. And most importantly, people typically want to stay at home as they age. The quality of care they are likely to receive on Medicaid for long term Alzheimer's care is low, and likely to be in a nursing home. No one wants that!

The takeaways

  1. In developing retirement plans for clients consider the risk that your client may develop Alzheimer's disease or related dementia. Bring it up and talk about it.
  1. Plan for significant savings to be set aside in case care is needed, not just for Alzheimer's but for any long term condition or disabling illness requiring help. Use real numbers, not vague assumptions.
  1. Do not underestimate the real costs of caring for a person with this kind of dementia. It can last as long as 20 years. Do the math for your clients and show them what they would need to be cared for at home with a long term expensive illness like Alzheimer's.

The responsibility to know about long term care costs is yours. To learn more about Alzheimer's and how to spot the warning signs, get a free checklist to get you started at AgingInvestor.com.

A Retirement Must: Planning For Long Term Care

A Retirement Must: Planning For Long Term Care

Jun 17, 2016 | aging, elderly, finances for elders, long term care, medicare, seniors finances

Some people assume that we’re all living longer so it must be because we’re healthier, right? We are indeed living longer than ever due to advances in medicine and technology but what is the condition we’re in with longevity? It’s not true that we’re living healthier than the prior generation.

If you help clients plan for retirement, consider that things like obesity, in 30-35% of Boomers, are going to affect whether they need to pay for lots of things Medicare does not cover. Obesity is frequently associated with significantly greater risk for heart disease, strokes and diabetes. Boomers have the highest rates of obesity of any age group in the U.S. If you want to pick conditions that are most likely to result in the need for long term care, all of these are among them.

Retirement planning can be very tricky when it comes to considering the cost of long term care. Most people don’t want to have a conversation about what would happen if they became disabled. Most would rather change the subject quickly if the issue of possible diminished capacity is raised. “That’s not going to happen to me!” is the expected response. But the risk is real, and there are plenty of statistics to support an analysis of what it costs to care for a person with disabling health conditions.

According to the Genworth Cost of Care Survey, which comes out annually, 70% of people over the age of 65 will need some kind of long term support as they age. At AgingInvestor.com, we recommend that every financial professional have the latest study on hand and that you share it with your clients when you do retirement planning. Chances are they are not as healthy as their parents were. And what kind of care will they need?

Most people want to stay at home as they age. Many will use home care services to be able to stay at home. Here’s an example. My now 93 year old mother in law, Alice, has had numerous hospitalizations of late, for blood pressure issues, the flu and other problems. She simply isn’t safe living independently at home as she recovers and a home care worker is coming in every day for now at a cost of $25 per hour. That cost is not paid by Medicare.

She’s a good example of how we can need care with advanced age even if we do things right. She has always taken good care of herself, doesn’t smoke, doesn’t abuse alcohol, exercises regularly and keeps her weight in normal range. And yet, after this recent bout of illness she needs 24/7 care for a time. We hope she stabilizes with all efforts but there are no guarantees. Home care could be needed indefinitely at a cost even part-time of at least $20,000 per year.

The extra $20,000 she may need is for someone who has neither heart disease nor diabetes. Those put a person at even greater risk of needing expensive care. So for the financial advisor, the takeaway message is this:

Expect that anyone who reaches the age of 80 will be much more likely than not to need cash to pay for help of some kind. If your client is overweight or obese, the risk is very high. Ditto if your client smokes. Be sure to plan for assets that will be liquid enough to cover what your client may need in those later years. It’s up to you to educate that client to be realistic about future financial needs.

Educating your clients about issues that will likely affect them is just what the regulators want you to do. You can find out more about regulatory recommendations for senior clients and get ahead of any mandates from them in Succeed With Senior Clients: A Financial Advisors Guide to Best Practices. Get your copy now by clicking HERE.