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In ten years, most middle-income American seniors will not be able to afford the rising cost of independent or assisted living.

A recent analysis in Health Affairs titled “The Forgotten Middle,” took a look at how middle-income seniors will be caught in the middle financially when it comes to long-term care – too wealthy to qualify for Medicaid or subsidized housing, but unable to afford the rising cost of independent or assisted living.

The researchers defined the middle-income group as Americans from the 41st to the 80th percentile in terms of financial resources, using data from the national Health and Retirement Study. They found that in a decade, 80 percent of middle-income seniors will have less than $60,000 a year in income and assets, not including equity in their homes. By conservative estimates, the cost of assisted living and out-of-pocket medical expenses for seniors will be $62,000.

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A new smartphone app called “What’s Covered” was released in January to give Original Medicare beneficiaries an easier way to find out if medical items or services will be covered by the program.

The Centers for Medicare & Medicaid Services is launching this app as part of their “eMedicare” initiative designed to strengthen Medicare and help those covered by the program make better health decisions by making information clearer and more easily accessible online. There is also a price comparison tool available online that is part of this initiative.

“What’s Covered” focuses on Original Medicare which includes part A hospitalization coverage, Part B outpatient coverage, and optional Part D drug coverage and Medigap supplemental coverage. About two thirds of Medicare beneficiaries have Original Medicare, while about a third have Medicare Advantage (Part C) which is provided by private companies that are contracted by the government.

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Imagine receiving a phone call that your child is in the hospital thousands of miles away, and the doctors and nurses refuse to provide you with medical information about his or her condition. This is a very real situation that occurs when medical directives are not in place for adult children. Eighteen-year-olds are adults under the eyes of the law. Your son or daughter can vote, get married, make a will, sign a contract, open a bank account and get medical treatment – all without your approval. More importantly, this means that you no longer have the right to speak with your child’s doctors, make medical decisions, pay his/her bills, or access medical records without consent.

This is an ideal time to have a conversation with your child about the responsibilities of becoming an adult, and how to put plans in place to take over if they are unable to make decisions. In case of a medical emergency, the following documents will ensure that your son’s or daughter’s wishes will be carried out by the agent(s) he or she appoints.

Power of Attorney for Heath Care. This is also called a Medical Power of Attorney and Health Care Proxy. This document can be effective immediately or when one becomes incapacitated, thereby granting the appointed agent the right to obtain medical information and to make medical decisions. Without this power of attorney in place, if your college student ends up in the ER, the hospital may refuse to provide you information about your child.

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If you are moving to a nursing home and want to protect your home from Medicaid, you might think that transferring your home to your children is a good way to protect it.  Although you don’t typically need to sell your home to qualify for Medicaid coverage of nursing home care, after you die, the state must attempt to recover from your estate whatever benefits it paid for your care if Medicaid had helped cover the cost of the nursing home (this is referred to as “estate recovery”). Transferring your house to your children in order to protect it from estate recovery is not ideal for a number of reasons.

First, transferring your home can make you ineligible for Medicaid for a certain amount of time. The state Medicaid agency looks for transfers made within five years of the Medicaid application and if any transfers were made for less than market value, the state imposes a penalty period in which you are not eligible for benefits.

However, you can typically avoid this penalty when transferring your home to the following:

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Our firm is always stressing the need for Healthcare Powers of Attorney and Living Wills which are examples of healthcare directives.   Remember, that the Healthcare Power of Attorney is a document that names an agent to make healthcare decisions for you should you lack capacity to make those choices.  It not only pertains to decisions concerning life sustaining treatment if death is imminent, but also pertains to those situations where death is not imminent.

By contrast, the Living Will is a document which is restricted to those situations when death is imminent.  It is basically a written pronouncement by you that you do not want life sustaining measures taken if those procedures only delay the dying process. Unlike the Power of Attorney for Healthcare, an agent is not appointed and the health provider must continue to administer food and water.

But what if you have neither  a Power of Attorney for Healthcare nor a Living Will, your death is imminent and you lack the capacity to make medical treatment and life sustaining decisions? This is when the Illinois Healthcare Surrogate Act will apply. The Act generally allows for family members, friends, guardians and other named persons to make these type of decisions.

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For years, attorneys, accountants, financial planners, and insurance sale persons have been touting the benefits of long-term care insurance. “Buy in your 50s and you will never have to worry about your future long-term care expenses ever again” was the common refrain. It was sound advice. With the right long-term care policy your problems were solved. Daily benefit rates typically covered the lion’s share of the daily private pay rate preserving assets for much-needed extras and, in many cases, a tidy inheritance for the next generation.

Unfortunately, any aging population, the unexpected popularity of assisted living facilities, and a steady increases in the cost of care has made it all but impossible for insurance companies to continue to provide the promised levels of benefits without increasing premiums. It can be argued that insurance companies should have seen the baby-boomers coming but no one anticipated that so many seniors would prefer to transition to an assisted living facility foregoing the in-home care option. Insurance companies also expected a much higher percentage of customers to cancel coverage. A common theme across all types of elective insurance coverage types. The constant refrain from professional advisers to clients recommending that they retain long-term care insurance at all costs had the unintended effect of making LTC insurance untenable for insurers.

All of these unanticipated and unintended consequences has had a real impact on seniors. In some cases, premiums have as much as doubled in the past two years and Mass Mutual, one of the largest LTC insurance underwriters, is about to ask regulators to authorize an average increase in premiums of 77 percent.

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Recently, a lawsuit was filed against the Illinois Department of Human and Family Services over delays in the processing of claims for Medicaid benefits. Although the lawsuit focuses primarily on applications for community Medicaid and health insurance benefits, delays by IDHFS in processing Medicaid claims for long-term care benefits can have a dramatic effect on those seniors requiring assistance to pay for long-term nursing home care.

A quick synopsis of the Medicaid system as it applies to nursing home benefits:

Medicaid (not to be confused with Medicare) is a government program funded by both state and federal resources to help seniors and disabled individuals with limited resources pay for long-term care. Although Medicare will cover short-term stays in a nursing home for rehabilitation and some respite care, Medicare provides no benefit to those seniors that need to move to a nursing home on a permanent basis.

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The latest the telephone scam  is the “IRS Phone Call” from an IRS agent.  The scam works like this:  The caller who claims to be an IRS agent tells the person that he/she is an employee of the IRS and that he owes back taxes and must pay them immediately.  The ” agent” then tells them that the victim must pay by wire, credit card, prepaid debit or gift card.  The scammer goes on to say if these taxes are not paid immediately, they are risking losing his home, being arrested or even deported.  According to Kiplinger Tax Letter (vol.93, no.7), Seniors and low-income individuals are the most at risk. (This scam is much akin to the “grandson”  calling the grandmother (usually an older adult that has grandkids) that he is in jail and needs bail money to get out.  Of course, the grandson is a scammer who pretends to be her grandson asking for some quick money.) Most of these fraudulent calls are perpetrated around April 15th- tax time.

The truth is that the IRS never makes phone calls stating that you owe taxes or that a refund is coming your way.  The procedure is that the IRS contacts you by mail.

The latest scheme is for the scammer  to file a fake income tax return with your private information and have the refund distributed to one of your accounts.  Then the scammer calls as an IRS agent telling the victim that there was fraud in the tax return and that the victim must send the refund back to the scammer’s address or wire destination.(Business Insider, The IRS isn’t calling you-it’s a scam and here’s what to do if it happens to you, by Tanya Loudenback 4/4/18.)

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Medicaid funds long-term care services for low-income individuals, but 48 states have opted to give assisted living residents the ability to receive Medicaid benefits, mostly through Medicaid “waiver” programs that promote home health care.  More than 330,000 people in assisted living are receiving more than $10 Billion in benefits to pay for those services.  Because the number of individuals receiving long-term care services from Medicaid in ALFs is only expected to grow, the Government Accountability Office (GAO) surveyed state Medicaid agencies and interviewed officials for a report on federal oversight of these facilities.

The GAO found that there are both gaps in state reporting of cases of harm to assisted living residents–such as abuse, neglect and exploitation-and lack of guidance from the federal government on what needs to be reported.  States are required to monitor “critical” incidents that may harm a beneficiary’s health or welfare, but they have leeway in determining what the consider a critical incident. While all states considered physical assault, emotional abuse, and sexual assault to be critical incidents, three states don’t monitor unexpected or unexplained deaths and seven states don’t monitor the treat of suicide at the ALFs.

“Medicaid beneficiaries receiving assisted living services include older adults and individuals with physical, intellectual or developmental disabilities, some of whom can be particularly vulnerable to abuse, neglect, and exploitation,” the report notes.

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Medicare has terminated your coverage for a physical therapist, nurse or speech therapist.  The health care provider states that you have “plateaued” , ‘have not improved” or require “maintenance services” only.  In addition, the health care provider states that you must pay out of pocket if you want to continue these services.  However, you and your physician opine that you need these services and that they are medically necessary. So what should you do?  Appeal Medicare’s decision.

The initial document you will receive before termination is a “Notice of Medicare Provider Non-Coverage” or a” Generic Notice” from your health care provider.  When you receive this notice, immediately call the Beneficiary and Family-Centered Care Quality Improvement Organization, or BFCC-QIO.  The phone number will be on the notice that you have received.  Fax to them a written opinion by your physician that the services are “medically necessary” and that your health will be jeopardized if services are dis continued.  In addition, have the health provider deliver your records to BFCC-QIO and a copy to you.

The BFCC-QIO must make a decision within 72 hours of receipt of your appeal.  If they agree with you coverage will be continued, if they don’t then you have to pay out of pocket for those services.

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