ElderLaw Answers Blog

According to a Washington Post-ABC News poll conducted in mid-August, about six in 10 Americans over 65 disapprove of the way President Obama is handling health care, with 53 percent strongly disapproving. At the same time, virtually everyone over age 65 is a Medicare beneficiary, a highly popular government program. Obama’s goal is to give all Americans the health care security that makes the Medicare program so well-liked among the elderly. So why are so many seniors apparently opposed to reform? In a word, fear.

Since seniors are a key voting bloc that reliably turns out even in off-year elections, some opponents of health reform have spread the word that proposed reforms will result in cuts to Medicare and the establishment of “death panels” that will decide who among the old will be cut off from life-saving treatment. As President Obama made clear in his address to Congress last night, both of these assertions are patently false. But many of the elderly have bought into this fear mongering and are terrified. Here are the facts:

Obama and House Democrats want to cut $177 billion in federal payments to the private Medicare plans over the next decade. The federal government now pays these “Medicare Advantage” plans, on average, 14 percent more per patient than it pays for those in the traditional Medicare program. These private plans are operated by some of the nation’s largest insurers, such as UnitedHealthcare and Humana.  Obama and others argue that paying more to the Medicare Advantage plans is unfair to seniors in the traditional program.  Reducing these large handouts to private insurers who compete with traditional Medicare will only make the Medicare program financially stronger.

The House health reform bill (HR 3200) would also allegedly make Medicare benefit “cuts.” As Joseph Baker, President of the Medicare Rights Center, has explained in recent testimony: “These ‘cuts’ are actually savings that providers like hospitals have already agreed can be made in order to trim Medicare’s budget and contribute to health care reform without affecting access to care for people with Medicare.” For the past 20 years, the Medicare Rights Center has been helping Medicare beneficiaries secure the benefits they deserve. If health reform would in any way jeopardize Medicare recipients’ benefits, you can bet the Center would sound the alarm. Instead, the Center is backing health reform. Moreover, far from cutting Medicare, the House bill would invest about $320 million more in Medicare.

Now, about those “death panels”:  if you believe that, there’s a bridge in New York City you may be interested in. A provision in the House bill simply says that if a Medicare recipient wants to discuss end-of-life care with her doctor – and learn about things like advance directives, palliative care and hospice care – Medicare will pay for such counseling. The benefit is purely voluntary and payments to doctors are not based on the outcome of these talks, as some have falsely claimed. Many states have enacted or are developing similar initiatives. They recognize, as does ElderLawAnswers, that talking about end-of-life issues is better done before a crisis hits, at which point the patient may no longer be able to convey his wishes. But thanks to the “death panel” scare tactics, this worthy provision has been dropped from consideration in the Senate.

It is the greatest irony that health reform opponents – many of whom have also been longtime foes of Medicare — are telling seniors that their government-provided Medicare is threatened by government-provided health reform. Rather than buy into the message of fear, seniors should look closely at the messenger.

In a column on the Kaiser Health News website, Howard Gleckman, a Senior Research Associate for the Urban Institute, calls for getting Medicaid out of the long-term care business.  He points out that at more than $100 billion dollars a year, Medicaid pays for about 43 percent of the cost of home and nursing home care.

But it was never designed to do so.  It is the social safety net program for people who are poor and do not have health insurance from other sources.  Unfortunately, for those who do not have long-term care insurance, no health insurance currently covers long-term care, not even Medicare.  As a result, Medicaid has filled the gap, but at great costs to the states who share the cost of Medicaid with the federal government, and at great cost to seniors who must spend down their life savings before they will qualify.

As an elder law attorney who has spent more than two decades helping seniors and their families negotiate the morass of complicated and conflicting rules about Medicaid coverage of nursing home care, I could not agree more with Mr. Gleckman.  Let’s have national long-term care insurance, whether as a new program under Medicare or as an expansion of Senator Kennedy’s CLASS Act, and get elder law attorneys out of the business of helping middle-class seniors qualify for Medicaid.

As a news article on the ElderLawAnswers site details, Sen. Edward M. Kennedy’s just-released health care plan includes a new national long-term care insurance program offering basic help for the elderly and disabled. Under the proposal, Americans would pay a premium of roughly $65 per month. After they had contributed for at least five years, participants would be eligible for a benefit of not less than $50 a day that they could use for care in their home instead of care in a facility.

While insufficient, it’s a huge step in the right direction. No one wants nursing home care, Medicare generally only covers home care for a short period following hospitalization, and few people can afford long-term care insurance. (In 2006, private insurance — including Medicare supplemental policies as well as long-term care insurance — covered only 9 percent of the $180 billion spent on long-term care, according to the Kaiser Family Foundation.)

This means, that if people want to stay home, for the most part they must pay out-of-pocket. Many states’ Medicaid programs have been expanding their home health care coverage, which is a good thing. But consumers must wade through a patchwork of programs and qualify for Medicaid coverage, which has different rules in every state. The complications of this system help keep an army of elder law attorneys and other advocates in business, but it’s not good for consumers.

Sen. Kennedy’s proposal for a broad-based insurance plan for long-term care will help address the huge challenges millions of seniors and their families face every day. While $50 a day is insufficient to pay for the care many seniors and others need, it can help fill the gap. For many middle-income Americans, it may be just enough to make the difference and allow them to stay at home or to afford assisted living care.

In addition, it should be politically palatable because it doesn’t replace the long-term care insurance market. More affluent seniors may still want long-term care insurance to pay for all of their care. And it may make long-term care insurance more affordable for middle-income Americans since they won’t have to buy as much coverage. Finally, under Kennedy’s plan, taxpayers can opt out if they choose. This may undercut the social insurance model, but also may help blunt opposition to the plan.

The ElderLawAnswers home page includes a survey that we change every month or so.  The survey question usually solicits opinions on some aspect of law or public policy relevant to older Americans, but last month’s survey asked site visitors a more basic question: “Which term do you prefer for those age 65 and older?”  We listed as possible responses “Seniors,” “Elderly,” “Aged,” “Old” and “None of these.” 

To our surprise, it wasn’t even close – three-quarters of the respondents (74 percent, to be exact) favored “Seniors.”  A distant runner up was “None of these,” with 18 percent of the vote, followed by “elderly” (4 percent), “old” (3 percent) and “aged” (1 percent). 

Clearly, visitors to our site have spoken.  To what extent we should change our own references to the, ahem, elderly in our news articles and reviews is another question.  After all, our site is called “ElderLawAnswers” and attorneys who specialize in this area of law are professionally known as “elder law attorneys.” 

In referring to people older than 65 in our articles, we have usually used “elderly,” while throwing in the occasional “senior” or “older American” for variety’s sake.  We have always regarded “senior” as a euphemism best reserved for someone in their final year of college.  But I imagine that given these overwhelming results, we’ll start making more liberal use of “seniors.”  And if you were among the 18 percent who answered “none of these,” we’re open to further suggestions.

If you’re reading this blog, you are active on the Internet.  You may have a LinkedIn or Facebook account.  You may bank and pay your bills on-line.  And you may save and share photographs on line through a number of services.

So, what happens to all of these accounts if you die or become disabled?  Does your spouse, a child or a friend have access?  Do they know your usernames and passwords?

It’s important that you record all of them and either share them with someone you trust.  Of course, that may defeat the purpose of all of these security protections if someone you don’t trust gets access to the information.

It’s no surprise that there’s now a company, Legacy Locker, that has come up with a digital solution.  For $29.99 a year, you can record all of your usernames and passwords on line so that your designated person or people can gain access when and if needed. 

The bottom line is that you need a system, whether it’s on line or you use the old fashioned pen and paper method.

I recently had a call from a prospective client in his early 60s who had been diagnosed with prostate cancer.  His doctors estimated his life expectancy at about 10 years.  Fortunately, the man feels healthy now.  But this news has changed his life choices dramatically. 

No longer does he have the the life expectancy of the average 60-year-old American male of 21 years.  As a result, he had decided to retire early and to make the most of his remaining healthy years.

Fortunately, most of us do not have this man’s death sentence.  But unfortunately, at least for estate and financial planning purposes, we don’t know how long we will live nor how long we will be healthy and able to work.  We don’t know if we will live to a ripe old age in perfect health, or suffer many years of disability and dementia.

According to the Society of Actuaries, a man who reaches age 65 has a one in two chance of living beyond age 85 and a one in four chance of living beyond age 92. Women are likely to live even longer. For a couple reaching age 65, there’s a one in two chance that one spouse will reach age 92 and a one in four chance that one will reach age 97.

That is a huge longevity risk.  These numbers indicate that a single person needs to plan to live to at least 90 and a married couple needs to plan for on spouse reaching age 100. 

But not all individuals have the same life expectancy.  They are affected by their own health — as in the case of my prospective client — their lifestyles, and their genetics.  A family history of longevity would argue for financial planning that anticipates needing resources to last to an old age.  A family history of Alzheimer’s disease would guide an individual to purchase long-term care insurance.

While we cannot know our future exactly, we can determine the likelihood of living a certain number of years, as well as the likelihood of being healthy or ill during that time.  Companies make these predictions in the context of personal injury law suits and for insurance companies.  They can do it for planning purposes as well.  Companies that provide these “Longevity Curve Reports” include 21st Services, which will provide a report for as little as $60.

Other on-line services will also provide a life expectancy estimate at no charge.  But these will be based on self-reported information as opposed to an examination of medical records and they will provide on a single number, rather than likelihood of reaching various ages.  For instance, it may say that you can expect to live until age 86, rather than saying that you have a 25 percent chance of dying by age 80, and a 25 percent chance of living beyond age 90.  One of these free calculators can be found at the web site Living to 100.

Whether you purchase a report, use a free service, or make your own estimate based on your health, lifestyle and family history, an idea of how long you will live can help guide your estate and financial planning.

A number of politicians and writers have predicted that the nation will go bankrupt because our Social Security, pension, Medicare and Medicaid commitments far exceed our ability to pay for them.  This imbalance will be most extreme when the big cohort of Baby Boomers stops working and starts drawing on their Social Security and Medicare benefits — especially in their later years, when their Medicare-covered care will be most expensive.

One economist who has calculated this unfunded obligation is Professor Laurence J. Kotlikoff in The Coming Generational Storm.

Now, Henry Aaron of the Brookings Institution debunks these dire predictions in a blog entry on the Brookings site.  He argues that there is no general “entitlement” problem.  “Rather, the nation faces a daunting health care financing problem that bedevils private insurers and public programs alike.”   He explains that this distinction is critical because the definition of the challenge we face will influence the solution.

According to Congressional Budget Office projections, as a percentage of GDP non-health care entitlement spending will increase by 1 percent over the next four decades.  At the same time, all health care spending — governmental and private — is projected to increase from the current already high level of 16 percent of GDP to 37 percent.  Even at the current level, we spend about twice as much per capita as other developed countries, with worse results.  According to Aaron,

“Patients receive only a little over half of recommended care during typical contacts with doctors or hospitals. Huge amounts are spent on interventions that yield negligible benefits, while opportunities to achieve sizeable health improvements at little cost go unexploited. And as the projections indicate, at least on the cost front, things will get worse. And there is also that continuing national shame—that 46 million people are uninsured and lack adequate financial access to standard care.”

Aaron concludes by calling for a debate focussed on health care reform, not entitlement reform: “Reaching agreement will be difficult and slow. But a debate about a bogus ‘entitlement crisis’ misdirects public discussion. Not incidentally, it would threaten the adequacy of social security benefits that during the current financial turmoil have proven to be the only source of income on which the retired and disabled can count with absolute security.”

Mediation, which has been increasingly used to resolve business disputes and in divorce, has been increasingly used in family disputes around elder care issues.  These disputes can arise among children who have different views about the care a parent needs and how their financial resources should be spent and between a parent and children when the children believe that the parent needs assistance and the parent disagrees or cannot give up control.

If these disputes go to court, typically in the context of a guardianship proceeding, ususally no one wins (except perhaps the attorneys who can end up spending a lot of time and charging large fees).  If the parties are willing — a big if — these disagreements can often be resolved through mediation in a way that is quicker, cheaper and somewhat gentler on the participants feelings than litigation over guardianship.

National Public Radio recently featured our friend, Rikk Larsen, of Elder Decisions in a program on this topic.  You can listen to it by clicking here.

Our problem, despite our believe in mediation as the best method of resolving disputes, is that all parties must be willing to come to the table to make mediation possible.  Often not everyone is willing.

Should estate planning attorneys provide financial advice?  Almost all attorneys will say “no”. 

They see a clear line between counseling on tax avoidance and asset protection planning and investment advice.  Attorneys provide the former and financial professionals provide the latter.

This clear line breaks down where the attorney acts as trustee.  In that case he or she has a clear fiduciary duty to provide financial and investment advice, at least over the assets in trust, as well as legal counsel.

The distinction that is so clear to lawyers, also may not be so clear to clients.  Many recognize no difference between financial planning and estate planning.  When they show their list of investments to their attorney, they may expect some advice.  And the attorney may even offer an opinion based on his or her knowledge and experience about financial matters, which is often greater than the clients. 

If the attorney makes some comments on financial matters, does she take on greater responsibility on this issue?  Probably not if she is careful to couch it in terms of advising the client to seek expert financial advice.  For instance, the attorney may remark that an elderly client is highly invested in the stock market and that it would make sense to consult with a financial advisor about whether that is a good plan.

Attorneys can protect themselves with clear fee agreements delineating what they have been hired to do — advise on and prepare estate planning documents — and what they have not been hired for — financial and investment planning.   The distinction, however, still may be unclear to many clients.

This issue comes to the fore in an article in The Boston Globe  about attorneys at major Boston law firms, whose clients were invested with Bernard Madoff.  All of the firms mentioned either act as trustees or have or had separate subsidiaries providing financial advice.  It’s not clear whether any of these unfortunate investors were clients of the firm’s financial services arms or simply of its estate planning departments.  The question in either case is whether the firm had any duty to investigate and advise on whether it was appropriate to invest with Madoff.

The experts quoted in the article suggested that the law firms probably have no liability.  First, if they were providing only legal advice, they were not hired to advise on investments.  Presumably the clients had other advisors to counsel them on that question.  If, on the other hand, the firm’s financial arms were involved, the defense is that Madoff was so effective in his fraud that no one can be faulted for being hoodwinked.  After all, the SEC investigated him and said he was clean.

Of course, the clients are still left holding their empty Madoff account statements.

At the recent annual conference of the Academy of Special Needs Planners, participants spent a day focussing on the legal issues surrounding the settlement of personal injury law suits, including lien resolution, the creation of qualified settlement funds and Medicare set aside trusts, structured settlements, and issues around the creation of special needs trusts to shelter and manage the lawsuit proceeds.  While many special needs planning attorneys have been working with personal injury attorneys on these issues for many years, the body of law involved has been growing in both depth and breadth. 

At the conference in San Diego, participants began speaking of this body of law as Special Needs Settlement Planning, or “SNSP ” services, and the rubric stuck.  The first user of this name may be Patrick Hindert on his S2KM blog.