Retirement Planning

Create a Contract for Family Care

Here is a nice article by Mary Kane of Kiplinger:

 

By Mary Kane, Associate Editor   

 

From Kiplinger's Retirement Report, August 2017

 

Family caregiver contracts can range from informal to complex professional contracts drawn up by lawyers. Here's what you should know to decide what's best for you. 

 

When the caregiver whom Amy Goyer, of Phoenix, hired for her 93-year-old father seemed particularly tired recently, Goyer realized she had been so busy she wasn't aware her employee needed a vacation.

 

As it happens, that caregiver is also her sister."A loved one who provides care can get burned out, too, just like any other caregiver," says Goyer, who is also AARP's family and caregiving expert. "We worked out ways for her to have paid time off."

 

Goyer, age 56, and her sister, age 59, already had created and signed a simple caregiving agreement. And even though Goyer is "on the same page" as her sister, it's still hard to get everything right. "It can get tricky," says Goyer, who holds power of attorney for her father. 

 

Family caregiver contracts, also called personal care agreements, range from informal, like Goyer's, to complex professional contracts drawn up by lawyers. Families usually create them when one relative is handling most of the care for an elderly parent. A contract enables family members to spell out payment, a work schedule and expected duties.

 

Another benefit: members formalize the compensation for a relative who is making financial sacrifices in order to provide care. A family caregiver may have quit her job or cut back on hours. Adding to the financial hit, a 2016 AARP study found family caregivers spend about $7,000 a year on out-of-pocket costs relating to care. And the contract may avoid future conflicts—assuaging any hard feelings, for instance, when a relative providing the bulk of care inherits a parent's home.

 

But, sometimes, drawing up a contract stirs up emotions tied to sibling rivalries and past disputes. Non-caregiving family members may resent paying a relative whom they see as living rent-free in a parent's house. And families often don't draw up contracts until a crisis arises. "Sometimes we have to call a mediator in," says Springfield, Mass., lawyer Hyman Darling, president of the National Academy of Elder Law Attorneys.

 

If your family is considering a caregiving contract, there are ways to avoid some of the acrimony. First, the relative who is the caregiver should explain to the family how much work he or she is doing and what kind of help is needed, says Amanda Hartrey, a family consultant with the Family Caregiver Alliance, a nonprofit caregiver resource and advocacy organization. 

 

Call a family meeting to discuss the contract. Set an agenda, and keep it narrowly focused. At the meeting, make the point that "this should be treated as a business meeting and not a therapy session," Hartrey says.

 

Note a starting date in the contract, and specify a work and payment schedule, such as hourly or bi-weekly. Check with local home health care companies to set a fair pay rate. Caregivers also should be required to keep a daily, detailed journal documenting their hours and care provided, says Kerry Peck, a Chicago elder law attorney. That will help if any questions arise about the contract, particularly if a parent later files for Medicaid. Families need to have written proof the money they paid a relative was for caregiving duties, not a gift to spend down assets to qualify for Medicaid.

 

Set boundaries, as you would for any other paid caregiver, Goyer advises. If a parent has a nonsmoking household, specify whether the rule applies to family caregivers. Designate responsibility for expenses, such as whose car will be used to take a parent to appointments, and who will pay for gas and parking. Work out issues such as paid time off and sick leave.

 

Include an escape clause, Goyer says. A caregiver might find the work too overwhelming if a parent's health or mobility declines. Or a parent may go into a nursing home or assisted living.

 

Goyer says that she and her sister like working together. But "we're sisters," she says. "We're still going to quibble."

 

Robert J. Pyle, CFP®, CFA is president of Diversified Asset Management, Inc. (DAMI). DAMI is licensed as an investment adviser with the State of Colorado Division of Securities, and its investment advisory representatives are licensed by the State of Colorado. DAMI will only transact business in other states to the extent DAMI has made the requisite notice filings or obtained the necessary licensing in such state. No follow up or individualized responses to persons in other jurisdictions that involve either rendering or attempting to render personalized investment advice for compensation will be made absent compliance with applicable legal requirements, or an applicable exemption or exclusion. It does not constitute investment or tax advice. To contact Robert, call 303-440-2906 or e-mail info@diversifiedassetmanagement.com.

 

The views, opinion, information and content provided here are solely those of the respective authors, and may not represent the views or opinions of Diversified Asset Management, Inc. The selection of any posts or articles should not be regarded as an explicit or implicit endorsement or recommendation of any such posts or articles, or services provided or referenced and statements made by the authors of such posts or articles. Diversified Asset Management, Inc. cannot guarantee the accuracy or currency of any such third party information or content, and does not undertake to verify or update such information or content. Any such information or other content should not be construed as investment, legal, accounting or tax advice.

10 Things You Must Know About Medicare

Here is a nice article provided by the Editors of Kiplinger’s Retirement Report:

 

By the Editors of Kiplinger’s Retirement Report | Updated May 2017

 

Heading into your retirement years brings a slew of new topics to grapple with, and one of the most maddening may be Medicare. Figuring out when to enroll, what to enroll in and what coverage will be best for you can be daunting. To help you wade easily into the waters, here are ten essential things you need to know about Medicare.

 

Medicare Comes With a Cost

Medicare is divided into parts. Part A, which pays for hospital services, is free if either you or your spouse paid Medicare payroll taxes for at least ten years. (People who aren't eligible for free Part A can pay a monthly premium of several hundred dollars.) Part B covers doctor visits and outpatient services, and it comes with a monthly price tag -- for most people in 2017, that monthly cost is about $109. New enrollees pay $134 per month. Part D, which covers prescription drug costs, also has a monthly charge that varies depending on which plan you choose; the average Part D premium is $34 a month. In addition to premium costs, you'll also be subject to co-payments, deductibles and other out-of-pocket costs.

 

You Can Fill the Gap

Beneficiaries of traditional Medicare will likely want to sign up for a medigap supplemental insurance plan offered by private insurance companies to help cover deductibles, co-payments and other gaps. You can switch medigap plans at any time, but you could be charged more or denied coverage based on your health if you choose or change plans more than six months after you first signed up for Part B. Medigap policies are identified by letters A through N. Each policy that goes by the same letter must offer the same basic benefits, and usually the only difference between same-letter policies is the cost. Plan F is the most popular policy because of its comprehensive coverage. A 65-year-old man could pay from $1,067 to $6,772 in 2017 for Plan F depending on the insurer, according to Weiss Ratings.

 

There Is an All-in-One Option

You can choose to sign up for traditional Medicare -- Parts A, B and D, and a supplemental medigap policy. Or you can go an alternative route by signing up for Medicare Advantage, which provides medical and prescription drug coverage through private insurance companies. Also called Part C, Medicare Advantage has a monthly cost, in addition to the Part B premium, that varies depending on which plan you choose. With Medicare Advantage, you don't need to sign up for Part D or buy a medigap policy. Like traditional Medicare, you'll also be subject to co-payments, deductibles and other out-of-pocket costs, although the total costs tend to be lower than for traditional Medicare. In many cases, Advantage policies charge lower premiums but have higher cost-sharing. Your choice of providers may be more limited with Medicare Advantage than with traditional Medicare.

 

High Incomers Pay More

If you choose traditional Medicare and your income is above a certain threshold, you'll pay more for Parts B and D. Premiums for both parts can come with a surcharge when your adjusted gross income (plus tax-exempt interest) is more than $85,000 if you are single or $170,000 if married filing jointly. In 2017, high earners pay $187.50 to $428.60 per month for Part B, depending on their income level, and they also pay extra for Part D coverage, from $13.30 to $76.20 on top of their regular premiums.

 

When to Sign Up

You are eligible for Medicare when you turn 65.

If you are already taking Social Security benefits, you will be automatically enrolled in Parts A and B. You can choose to turn down Part B, since it has a monthly cost; if you keep it, the cost will be deducted from Social Security if you already claimed benefits.

For those who have not started Social Security, you will have to sign yourself up for Parts A and B. The seven-month initial enrollment period begins three months before the month you turn 65 and ends three months after your birthday month. To ensure coverage starts by the time you turn 65, sign up in the first three months.

If you are still working and have health insurance through your employer (or if you’re covered by your working spouse’s employer coverage)you may be able to delay signing up for Medicare. But you will need to follow the rules, and must sign up for Medicare within eight months of losing your employer’s coverage, to avoid significant penalties when you do eventually enroll. (See also: FAQs About Medicare.)

 

A Quartet of Enrollment Periods

There are several enrollment periods, in addition to the seven-month initial enrollment period. If you missed signing up for Part B during that initial enrollment period and you aren't working (or aren’t covered by your spouse’s employer coverage), you can sign up for Part B during the general enrollment period that runs from January 1 to March 31 and coverage will begin on July 1. But you will have to pay a 10% penalty for life for each 12-month period you delay in signing up for Part B. Those who are covered by a current employer’s plan, though, can sign up later without penalty during a special enrollment period, which lasts for eight months after you lose that employer coverage (regardless of whether you have retiree health benefits or COBRA). If you miss your special enrollment period, you will need to wait to the general enrollment period to sign up. Open enrollment, which runs from October 15 to December 7 every year, allows you to change Part D plans or Medic are Advantage plans for the following year, if you choose to do so. (People can now change Medicare Advantage plans outside of open enrollment if they switch into a plan given a five-star quality rating by the government.)

 

Costs in the Doughnut Hole Shrinking

One cost for Medicare is decreasing -- the dreaded Part D "doughnut hole." That is the period during which you must pay out of pocket for your drugs. For 2017, the coverage gap begins when a beneficiary's total drug costs reach $3,700. While in the doughnut hole, you’ll receive a 60% discount on brand-name drugs and a 49% federal subsidy for generic drugs in 2017. Catastrophic coverage, with the government picking up most costs, begins when a patient's out-of-pocket costs reach $4,950.

 

You Get More Free Preventive Services

Medicare beneficiaries can receive a number of free preventive services. You get an annual free "wellness" visit to develop or update a personalized prevention plan. Beneficiaries also get a free cardiovascular screening every five years, annual mammograms, annual flu shots, and screenings for cervical, prostate and colorectal cancers.

 

What Medicare Does Not Cover

While Medicare covers your health care, it generally does not cover long-term care -- an important distinction. Under certain conditions, particularly after a hospitalization to treat an acute-care episode, Medicare will pay for medically necessary skilled-nursing facility or home health care. But Medicare generally does not cover costs for "custodial care" -- that is, care that helps you with activities of daily living, such as dressing and bathing. To cover those costs, you will have to pay out of pocket or have long-term-care insurance. Traditional Medicare also does not cover routine dental or eye care and some items such as dentures or hearing aids. For more on tests, items or services that Medicare doesn't cover, check www.medicare.gov/coverage/your-medicare-coverage.html.

 

You Have the Right to Appeal

If you disagree with a coverage or payment decision made by Medicare or a Medicare health plan, you can file an appeal. The appeals process has five levels, and you can generally go up a level if your appeal is denied at a previous level. Gather any information that may help your case from your doctor, health care provider or supplier. If you think your health would be seriously harmed by waiting for a decision, you can ask for a fast decision to be made and if your doctor or Medicare plan agrees, the plan must make a decision within 72 hours.

 

Robert J. Pyle, CFP®, CFA is president of Diversified Asset Management, Inc. (DAMI). DAMI is licensed as an investment adviser with the State of Colorado Division of Securities, and its investment advisory representatives are licensed by the State of Colorado. DAMI will only transact business in other states to the extent DAMI has made the requisite notice filings or obtained the necessary licensing in such state. No follow up or individualized responses to persons in other jurisdictions that involve either rendering or attempting to render personalized investment advice for compensation will be made absent compliance with applicable legal requirements, or an applicable exemption or exclusion. It does not constitute investment or tax advice. To contact Robert, call 303-440-2906 or e-mail info@diversifiedassetmanagement.com.

 

The views, opinion, information and content provided here are solely those of the respective authors, and may not represent the views or opinions of Diversified Asset Management, Inc. The selection of any posts or articles should not be regarded as an explicit or implicit endorsement or recommendation of any such posts or articles, or services provided or referenced and statements made by the authors of such posts or articles. Diversified Asset Management, Inc. cannot guarantee the accuracy or currency of any such third party information or content, and does not undertake to verify or update such information or content. Any such information or other content should not be construed as investment, legal, accounting or tax advice.