The challenge of retirement planning is that once a big decision is made, you don’t have three or four decades to fix any mistakes. The same holds true for deciding when to take your Social Security payments. Taking it out too early, can have a long term negative impact.
Kiplinger notes, in its June article, “What to Consider Before Filing for Social Security Early,” that some Americans are beginning see the financial benefits of waiting for their full retirement age (between 66 and 67 based on your birth year). But others don’t wait because you can take them as early as 62 with reduced benefits.
Read MoreHome Health Care Services: Funding Sources
It can be overwhelming to learn that a loved one needs to receive in-home healthcare services. Will the person ever regain their ability to care for themselves? What kind of person should be taking care of your loved one? What is the best source for care? How will the care be paid for?
Miami’s Community Newspapers’ recent article, “How to Pay for Home Healthcare without Going Broke,” says that many funding resources for in-home services may cost very little or nothing. There are some funding resources for seniors who don’t qualify for government programs. However, bear in mind that some carry financial risks. An experienced Elder Law attorney can help you find the best options for your circumstances.
There are also several different types of caregivers for senior caregiving. You should learn about various roles, since their funding is from different sources.
Personal Care. There are many names for personal care assistants like home care aides, custodial care aides, personal care assistants and companionship aides. They help seniors with hygiene and grooming activities. These caregivers are self-employed and aren’t required to have any certification, licensing or insurance. They typically charge 20-30% less than workers from home health care agencies and you can usually get one on short notice. Medicare doesn’t cover funding for personal caregiving alone. As a result, most families use personal savings for this service.
Home Healthcare. Home healthcare aides (HHA) or certified nurse aides (CNA), personal care aides (PCA) and geriatric workers are considered skilled care. They perform duties like taking a pulse or monitoring blood pressure and personal care. They help with medication management and medical equipment, and provide a higher level of care. HHAs usually work with home health care agencies that have state certification to bill under Medicare and are bonded, licensed and insured.
Seniors who need these types of care, should look for funding for home healthcare in several areas:
Medicare and Veteran’s Administration. Two primary sources of funding for skilled senior care are Medicare and the Veteran’s Administration. Home health agencies take care of the billing.
Medicaid. Some in-home healthcare services may not be covered under the Medicare or Veteran’s Administration plans, so seniors with Medicaid may need to bill for some medical services separately.
State Programs. The Older Americans Act offers funding to states for Meals on Wheels and meals served in senior centers. It also funds programs for health promotion and family caregiving support.
Personal Funding. Maximize federal and state funding before you use your personal finances. There are several ways to finance uncovered costs like your personal savings, annuities, long term care insurance, a reverse mortgage, life insurance policy conversion, home care loans and a home equity line of credit.
Ask a Professional for Advice. There are a number of professionals who can help you figure out the best way to pay for the care, if you need to tap into personal funds. An Elder Lawyer or an estate planning attorney will be able to make recommendations for geriatric care managers or eldercare resource planners. An estate planning attorney will be able to help you understand payment options and how paying from personal funds will impact the person’s financial health and estate plan.
For more information, explore our website and contact us to schedule a consultation today!
Reference: Miami’s Community Newspapers (March 21, 2017) “How to Pay for Home Healthcare without Going Broke”
How Grandparents Can Help Fund College Expenses with a 529 for Grandchildren
With Grandparents Day approaching on September 10, we celebrate the special relationships between grandparents and their grandchildren. With the cost of a college education continuing to rise exponentially, a 529 plan is generous gift that you can give to your grandchild. You’ll be able to save for your grandchild’s future, get some good tax breaks and maintain control over the account, according to a recent article appearing on nj.com, “529 plan funding for a grandchild. ”The earnings are tax-free, as long as the funds are used for educational expenses.
The recipient grandchild won’t have control over the account or when distributions are made, and the owner can change the beneficiary of the account to a different member of the beneficiary’s family at any time. This can be crucial if the account’s overfunded or not used by the grandchild. The definition of family member is quite broad and includes cousins and spouses of family members. In the event that you need the funds yourself, you could take a distribution.
If you did take a distribution, there’d be a tax owed and a 10% penalty on the earnings portion of the withdrawal since it wouldn’t be used for qualified education expenses. This gives grandparents some safety, if they need access to those funds.
The grandparent owner can also use 529 plan contributions as part of his or her estate plan, because it removes funds from the grandparent’s taxable estate. The contribution is considered a gift subject to the federal gift tax, but there’s an annual gift tax exclusion. It’s currently $14,000 per beneficiary per year, which is not subject to the gift tax.
Some grandparents will also front-load a lump sum of up to five times the annual exclusion amount to each beneficiary. They must then wait five years before the total gift to that same beneficiary would be eligible for the maximum exclusion. Even if the gifts go over the exclusion amount, there is a lifetime exemption amount, which is currently $5.49 million dollars.
Some states don’t have a gift tax on lifetime transfers, but there are those that have an estate tax on estates valued in excess of a specific amount, which should be taken into account when estate planning.
It is important to be aware that you may already have estate planning in effect using the annual gift tax exclusion, with a life insurance trust or family limited partnership as part of your plan. If you’re thinking that someday you may need Medicaid assistance, your state will probably deem any 529 accounts you own to be your own assets. As a result, you’d have to deplete them before qualifying.
Finally, when your grandkids start looking at colleges, make sure to talk about these accounts with your kids. The 529 accounts –including those owned by family members—will be considered as assets belonging to the grandchildren for purposes of determining how much financial aid the school will offer.
Reference: nj.com (May 12, 2017) “529 plan funding for a grandchild”
Read MoreLong-Term Medical Care Costs May Become More of an Issue
While post-retirement medical costs are often underestimated during retirement, there are ways to cover those costs with careful planning, according to the Deseret News article, “How to cover the cost of long-term care.”
Many people planning for retirement expect Medicare to cover the costs but Medicare is very strict as to the types of long-term care it covers. The program only covers stays in skilled nursing facilities and hospice care under certain strict circumstances.
Read More