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 Answers to Frequently Asked Questions About Elder Law:

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Q:    Who would you set up as agent under a Medical Durable Power of Attorney

A:    You can appoint anyone you wish, so long as that person is at least 18 years of age. I would recommend choosing someone who will be available when they are needed; someone whose judgment you trust; and someone whom you feel will carry out your wishes regarding medical decisions for yourself. This might be a parent, child, sibling or close friend. You cannot appoint your physician or any person who is employed by a medical facility in which you are receiving treatment.

Q:    Why is traditional Medicare better than an HMO?

A:    I should begin by pointing out that there are times when receiving your Medicare benefits through an HMO may be preferable to traditional fee-for-service Medicare. Usually, however, I recommend that people stick with traditional Medicare for several reasons.

    First, when new Medicare laws were first enacted several years ago about how managed care companies provide Medicare benefits under the Medicare Advantage program, many HMO’s decided not to renew their contracts with Medicare. Thus many beneficiaries were in the position of having to find a new provider or else return to traditional Medicare. These changes could be traumatic and often resulted in delays in essential medical services.  Although Medicare has since changed the laws on Medicare managed care by replacing the old Medicare+Choice plans with the Medicare Advantage plans, there is still the risk that whichever provider you choose may not renew its contract with Medicare if capitation payments from Medicare are insufficient.

    Second, when your benefits are administered by an HMO or other managed care organization, the decision as to what care you can receive is, to varying degrees, taken away from your doctor and turned over to the HMO. Then needed care may be denied or delayed unnecessarily, especially when the care that is needed is expensive or is fairly new. While there are procedures to appeal adverse care decisions, they can sometimes be burdensome and confusing. In addition, many people are justifiably concerned that an insurance company is vested with the power to govern what medical services they can receive.

    Third, when you receive your Medicare benefits through an HMO or other managed care organization, you often have a limited choice of providers. You may not be able to continue to use your regular doctor or hospital if they do not participate in the HMO.

Q:    My mother, who is 77 years old, is paying over $400 per month out of pocket for prescription medications. This is a heavy financial burden for her. Do you have any suggestions that might help her?

A:    This is the type of situation where your mother might actually be better off receiving her Medicare benefits through an HMO. Often, Medicare HMO’s will offer coverage of items such as prescription medications that are not covered under traditional Medicare Part A or Part B. You mother may also be able to purchase a Medigap policy that will cover at least some prescription medications. It may also be worthwhile to review your mother’s financial situation to see if she might qualify for Medicaid benefits. Medicaid will cover many prescription medications for seniors who qualify. There might also be local charitable programs through your mother’s church or community that could assist with her medication costs.

Currently, Medicare is in the process of implementing its new prescription drug benefit program.  The final version of the program is scheduled to go into effect on January 1, 2006.  The details of the benefit program are somewhat confusing and there are some gaps in coverage.  However, the plan will provide some much-needed assistance to beneficiaries like your mother.

Finally, it is possible that your mother might be eligible to purchase private insurance or coverage under a group health insurance policy that would cover her prescriptions, but the premiums she would have to pay may be prohibitive.

Q:    What is the best way to contribute to a disabled family member?

A:    It is likely that a disabled family member will need to rely at some point upon a financial needs based benefit program, like SSI or Medicaid. If you leave a large gift outright to a disabled beneficiary, you could inadvertently be destroying his or her Medicaid or SSI eligibility and forcing the expenditure of the gift or inheritance on items that otherwise would have been provided by a public benefit program.  I often recommend setting up a supplemental needs trust in your will which can receive and hold a beneficiary’s inheritance and use that money to pay for those non-support items that Medicaid and SSI will not cover. You can also set up a Sole Benefit Trust for the beneficiary to receive gifts and inheritance from third parties, but no property of the beneficiary may ever be used to fund the Sole Benefit Trust, even partially. 

Q:    I work for a large company from whom I can purchase a long term care insurance policy as an benefit of my employment. It is okay to buy that insurance or should I buy from an independent insurance company?

A:    Many insurance companies these days are offering long term care insurance policies. You certainly should purchase a policy that is underwritten by a company you trust to stand behind the policy financially. What you should do is research several long term care insurance policies. Ask around about the policy itself and about the company behind it. Compare different long term care policies. Be an educated consumer. That way, you can choose a policy that offers the coverage options you want from a reputable underwriter and with premiums that are affordable to you. If the best deal turns out to be the policy offered through your employer, it would make sense to choose that policy. 

Q: Should I put all of my assets in joint tenancy?

A. No! Putting all your assets in joint tenancy, especially without proper planning, can be disastrous. Your joint tenant isn’t just a signer, he or she owns an undivided one-half (½) of your assets. Nothing prevents a joint tenant from clearing out all of your bank account; and nothing prevents a creditor of your joint tenant from executing judgments against your joint tenant's interest in your property. Putting your assets in joint tenancy will not protect them from Medicaid and certainly won’t solve your estate planning issues. If your will says "leave everything to my daughter," but your assets are in joint tenancy (with right of survivorship) with your son, then your son will take everything when you die; not your daughter.

Q: Do I need to change my will if I moved here from Virginia?

A: Not necessarily. But you should have your will reviewed by a Colorado attorney to ensure that the will complies with Colorado laws; and to ensure that you are taking full advantage of any Colorado laws that do not exist in Virginia.  Further, if you have special provisions, such as a Testamentary Special Needs Trust for a Medicaid beneficiary, these provisions may need to be amended to comply with Colorado Medicaid laws. 

You will also need to change your will if you fall into one of the 21 situations listed below:

1. The birth or death of a child, grandchild, parent or spouse;

2. A change in whom you want to name as a trustee or personal representative or guardian;

3. You have minor or disabled children or grandchildren and you don’t have a will which names a guardian or creates a trust;

4. You have a disabled spouse and you have not provided for a trust, or a trust in your will;

5. You have a parent who is disabled and there has been no planning for long-term care;

6. Your estate has increased in value, or you have inherited property, but you have not provided for any estate tax planning in your will;

7. You have moved from a community property state to a common law state, or you have moved from a common law state to a community property state;

8. You have adopted a child, or your child has adopted a child;

9. The surviving spouse’s share of the estate is based upon a formula marital deduction clause;

10. There has been a change of ownership or operation in the family business;

11. You own a treasured piece of real estate (the vacation cabin?) Or the family home, that you want preserved after your death;

12. Your child has filed for divorce or bankruptcy;

13. You have an estate subject to federal estate tax and your will uses a pre-1981 marital formula clause;

14. You have purchased or sold property that was specifically devised in your will;

15. You have required assets in another state that you have not placed in a trust;

16. Someone in your family has entered or is about to enter a nursing home;

17. You have recently married or divorced;

18. You have married and you have children by a prior marriage and/or children by a second marriage;

19. All of your children are now adults;

20. You need to take advantage of the family estate tax business exclusion; or

21. You are contemplating making significant gifts to your children.

Q:    I was my mother's agent under a General Financial Durable Power of Attorney when she died.  Do I need to open a probate estate, or can I distribute her assets under the power of attorney?

A:    A power of attorney becomes void upon the death of the principal.  Since your mother passed away, you no longer have legal authority to act as her agent.  If she had assets in excess of $60,000 or real estate in her name when she died, a probate estate will need to be opened.  Otherwise, you may be able to distribute her assets under a "small estate affidavit."

Law Offices of John J. Campbell, P.C.

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jcampbell@jjcelderlaw.com

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