People are living longer than ever before. The availability and complexity of government programs designed to assist the aging population is also growing. Furthermore, rising costs of health care and the increasing prevalence of debilitating diseases such as dementia make proper elder law planning more important than ever. All this means that the need for competent elder law attorneys will only continue to grow.
Elder law goals and values. Elder law attorneys take a holistic approach to preserving their clients’ autonomy and freedom through effective financial and estate planning. Given longer life spans, such planning should be designed to last, in most cases, 30 years or more. The attorney’s emphasis should be on the client’s quality of life. This means planning for and promoting adequate acute and long-term care options in the event that the client’s health begins to deteriorate. The attorney should assist the client in establishing surrogate decision-making plans that help prepare the client for incapacity.
Income during retirement. Most clients will have three primary sources of income during retirement: Social Security, 401(k)/IRA, and savings. It is important to discuss how best to use these resources during retirement. Clients should be made aware of spousal rights to Social Security benefits. A spouse may be entitled to receive benefits based on his or her spouse’s work record. At what age a claimant receives spousal benefits will affect how much such a claimant will receive each month.
Although some clients may be financially sophisticated, many will need assistance with understanding their own 401(k) and individual retirement accounts. They will face issues involved with rolling over a 401(k) into a retirement account, or taking over the retirement account of a deceased spouse. The client also may require assistance determining how to convert a savings account into an income stream, or even how to fund a trust.
Medicare. Understanding the Medicare program is essential to providing proper advice to clients, and every elder law attorney must know some basic information. Eligibility for Medicare is tied to eligibility for Social Security, but clients do not have to be taking Social Security to qualify for Medicare.
There are four primary elements to the Medicare system: Part A, Part B, Medicare Advantage, and Part D. Each element of Medicare is intended to provide benefits to address a specific type of need. Part A requires no monthly payment and partially covers costs associated with hospitalization, hospice care, and limited skilled nursing home care. Part B requires payment of monthly premiums and deductibles and covers the costs of care for doctors and some outpatient services. Medicare Advantage consists of health plans provided by private companies that contract with Medicare to supplement benefits for those who are enrolled in both Part A and Part B. Finally, Part D is offered through private insurance plans and provides prescription drug benefits to enrolled individuals. Together, these four parts make up the system commonly referred to as Medicare.
Long-term care. Planning for long-term care is essential to preserving elderly clients’ comfort and assets during their lifetimes. If asked where most clients would want to spend the final years of their lives, the most popular answer by far would be “at home.” Because of issues related to isolation and the high costs of in-home care, however, many elderly individuals may be better served by an alternative living situation.
There are three primary alternatives to in-home care depending on the client’s care needs. Continuing care retirement communities offer a level of care that adapts with the client’s needs. A client must be able to live independently on entry into such a facility, but as the client’s care needs increase, the facility has the capability to handle these increased needs. Assisted living facilities supply a second option. Such facilities allow residents to live mostly independently while providing various levels of supportive assistance. Such facilities are not licensed to provide medical care but do provide assistance with meals, housework, and some personal hygiene needs. Nursing homes are by far the most expensive institutionalized facilities providing long-term care. Nursing homes provide a high level of medical assistance, which results in a much more hospital-like atmosphere.
How to pay for it. The three primary means of paying for the high costs of long-term care (other than private pay) are Medicare, Medicaid, and long-term care insurance. Medicare provides only temporary assistance with long-term care. Medicaid is the primary means of paying for long-term care for those individuals who are able to qualify. Medicaid does not pay nursing homes the standard “private pay” rate but pays a lower rate that varies according to location. The income and asset restrictions vary depending on the applicant’s status as either married or unmarried.
One way for elderly individuals to plan for long-term care without relying entirely on government programs is through long-term care insurance. This is insurance that covers some portion of the cost of long-term care. Two things that are important to keep in mind are: (1) long-term care insurance becomes more expensive the older one gets and is generally not available to those over 80, and (2) there are many different types of policies on the market today. The assistance of an elder law attorney in reviewing these policies on behalf of clients can be extremely valuable.
Health care decision making. Elder law attorneys must assist clients with planning for health care decision making. Once a person loses capacity to make his or her own decisions, there generally are two primary types of surrogate decision makers. If no prior planning is in place or other circumstances demand, a guardian may be appointed by the courts. Alternatively, an individual can designate an attorney-in-fact under a durable power of attorney. The attorney-in-fact derives his or her authority from the incapacitated person directly, but such a document must be prepared before the principal loses capacity.
One way that the incapacitated individual can assist the surrogate decision makers to make appropriate decisions is through the execution of an advance health care directive, also known as a living will. Such a document must be prepared before the client loses capacity. Executed properly, such a document will provide surrogate decision makers and doctors with clear directions regarding the desires of the incapacitated person when he or she is incapable of making an independent expression of those desires.
Physician orders for life-sustaining treatment are often mistakenly characterized as a living will or an advance health care directive, but these are actually separate documents. A physician order for life-sustaining treatment is created by a physician in consultation with his or her patient and details the kind of treatment the patient wishes to receive toward the end of life. It is important to note that this document is not a substitute for an advance health care directive, which provides more detailed information specific to each individual, but should work in concert with such planning.
Conclusion. A well-informed client will implement advance planning that provides not only for his or her comfort and security in the final years of life but also helps to preserve assets for the next generation. These are the goals of both elder law and trust and estate attorneys, and an understanding of elder law issues will serve to enhance the ability of trust and estate attorneys to assist their clients to achieve these goals.
ABA Section of Real Property, Trust & Estate Law
This article is an abridged and edited version of one that originally appeared on page 39 of Probate & Property, May/June 2014 (28:3).
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