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                Last week I was talking about life insurance as it affects eligibility for Medicaid.  While term insurance has no value while the insured is alive and only provides a payment at the death of the insured, other types of life insurance – namely whole life and universal life – havea cash value.  It is that value that counts as an asset towards Medicaid’s $2000 asset limit.                 What are the Medicaid applicant’s options then if he/she owns a policy with cash value?  One is to surrender the policy for the cash surrender value and then spend down that amount in accordance with Medicaid’s spend down rules.  When the applicant dies there will be no death benefit because the policy has been surrendered.                 This is a reasonable option where the cash surrender value is the same – or close to the same  – value of the death benefit.  If, for example, the cash surrender value is $9500 and the death benefit is $10,000 not much is lost in value if the policy is surrender.  In fact, if the policy is not “paid up” but requires continued premium payments, the death benefit minus the continued premiums may turn out to be less

                Medicaid requires the applicant to spend down all assets to under $2000 before approving an application for benefits.  The question comes up frequently about life insurance.  Is it an asset and if so, what is the value?                 In order to answer that question, we must examine what kind of life insurance we are talking about.     Term life insurance is a type of insurance in which a premium is charged and paid – usually on an annual basis – and if the insured dies while the policy is “in force”, the death benefit is paid to the designated beneficiary.  For Medicaid purposes, this type of life insurance has no monetary value to the owner while he/she is alive, so it is not an asset and does not count towards the asset limitation.                 There are other life insurance policies, however, that have a cash value.  The idea is that as the premium is paid to the insurance company some of that amount goes towards the cash value which builds up over time.  This cash value can be taken out by the policyholder as a loan.  If the policy is no longer needed or desired, then the policy can be cancelled and

                Two weeks ago John Hancock, one of the largest providers of long term care insurance announced it is withdrawing from the market.  It will stop selling new long term care insurance policies.  John Hancock currently has sold more than 1.2 million policies nationwide.                 What does it all mean?  Hancock is the latest in a long line of insurance companies that have left the traditional long term care insurance market.  The number of companies selling these “use it or lose it” types of policies is down to less than 20.                 Why have so many insurance companies left the market?  Because they are losing money on these types of policies.  They set initial premiums too low.  They also underestimated how long people would live, how much long term care would be needed , how much the cost of that care would increase over time and overestimated how many people would drop their policies before collecting benefits.  Finally, the interest earned on premiums they have invested to pay out future claims hasn’t been as high as anticipated.                 What does it mean for someone who currently has a John Hancock policy?  Existing policies remain in effect although you are likely to continue to

            Last week I was talking about changes in loved ones we may notice around holiday time, simply because we may be returning home after some time away.  So what can or should you do about it?             A physical and neurological exam should identify any medical issues. A Geriatric Care Manager (GCM) can help assess the options available that will allow your loved one to continue to live a full, fruitful and safe life.  Suggestions may include a home health aide, adult day care, and personal organizer to help with money management.             If your loved one can no longer live alone, possible alternative living arrangements include another family member’s home, assisted living, senior housing or nursing home. Each choice has pros and cons and expense is often an issue.  Planning should be done as early as possible to determine how to pay for what could, in the future, be several thousand dollars or more a month in long term care expenses.   That might include self funding with the purchase of financial products or qualifying for government benefits such as Medicaid and Veteran’s benefits or possibly both.            Because the family is together once again, the holidays are a good time to begin discussing

Once again the holiday season is upon us, a time of joy but also stress.  I’ve written about this issue in the past but it bears repeating.  We often visit family members we haven’t seen in some time and that’s when changes in older loved ones become more noticeable.  Some of the changes that may indicate your loved one needs some extra help: Weight loss Deterioration in personal hygiene Unusually dirty or messy home Unusually loud or quiet, paranoid or agitated behavior Local friends and relatives noticing changes in behavior Self-imposed isolation, stops attending activities Signs of forgetfulness such as unopened mail, piling newspapers, missed appointments, unfilled prescriptions Signs of poorly managed finances, such as not paying bills, losing money, paying bills twice Unusual purchases So what should you be doing if you see any of the above? Next week I’ll share that with you.

                Last week I told you that Dave called because his dad needs to go to a nursing home and he is now in “spend down mode”.  He plans to sell the home, spend down the proceeds from the sale and then apply for Medicaid.                 A straight forward, sound approach?  No, it’s not.  At least not in Dave’s case.  That’s because Dave told me about gifts his Dad made to help out his brother Joe when he was out of work and Dad’s preference to draw out and use cash to meet many of his expenses.                 Dave figured that he would use the cash from the sale of the home and when that is spent down to under $2000 he would simply apply for Medicaid with no problem.  What Dave does not understand is how Medicaid’s lookback and penalty work.                 The transfers to Joe will carry a penalty because Dad didn’t receive anything of equal value back in product or service.  They are considered transfers for less than fair value.  Many of the cash transactions, because they are not traceable, will also be considered transfers for less than fair value.  Unless Joe can document that these funds were spent on