Don’t Go Broke to Get Help
Video Transcript: Don’t Go Broke to Get Help
“Thank you for meeting with me,” Fred said. “I really have no idea what is going on with Mom since Dad used to keep that all to himself.”
Fred was meeting me for only the second time, and the first time was nothing more than a quick introduction over the Holidays so Fred would know where to go in case anything happened to his father and his mother was still in assisted living. In the past, I had been meeting with Fred’s sister, who was the trustee in charge her parent’s assets, and still was. However, she was having trouble explaining everything to Fred, so she asked if I could speak to him.
“I’m afraid I’m pretty lost,” Fred said. “The one thing I need to make sure is that Dad didn’t somehow mess up Mom’s finances. Now that Dad is gone, I told the administrator at the assisted living center that I didn’t know what was going on with paying for Mom’s care, and they told me that my sister said it would be taken care of. When I called her, she told me to call you.”
“It’s OK,” I said. “Your sister has been working with us for the last few years and she told us it was OK to talk to you. Your father wanted to make sure that your mother’s assets were protected, that they would be available for her care, but that once his pension was gone there might not be enough income to cover the costs of care. Since your Dad was a wartime veteran, there is a monthly Aid and Attendance Pension Benefit there for your mother to help pay for her care, and the paperwork is already in motion with our colleagues at The Senior Veterans Council.”
“But I know Mom and Dad had more than a five hundred thousand dollars in accounts a few years ago, they had the house, and a lot of other possessions,” he said. “That goes to Mom, doesn’t it?”
“Actually, no,” I responded. “The accounts are already in an irrevocable trust under your sister’s control to take care of your mother without disqualifying her for the Aid and Attendance Pension Benefit. The house is already in a different irrevocable trust. Your father left nothing directly to your mother, and all of this has been planned for.”
Fred looked confused.
“Here,” I said, pulling out the copies of the documents and the plan. “Here’s what we did.”
It’s not the job of the Veterans Administration personnel to save your family money. In fact, even if you qualify under the income test (more on that later), part of their job is to advise you to pay for your own care as much as possible until your assets are below a certain level, and only then get you approved for the Aid and Attendance Pension Benefit. So if you simply follow the government’s advice in qualifying for this pension, you may end up paying for a lot more than you are legally obligated to.
There are four main ways to pay for long term care, and some are better than others depending on your situation.
Payment Method One: Personal Income
The first method of paying for long term care is simply by paying for it out of your own income. This means diverting some, most, or even all of your income to the care facility in order to cover the costs. The type of care most often needed for senior veterans asking about the Aid and Attendance Pension Benefit is home health care, extra care at a family member’s house, or assisted living care. While facility care varies greatly, the average month’s stay in an assisted living facility in North Carolina is somewhere around $3,000, but it can vary from $1,700 to $10,000 or more for skilled nursing care. For most individuals, this kind of income is not readily available, especially if there is a spouse outside the facility who needs some of the joint income for their monthly living expenses. Nonetheless, income is always considered the first way to handle paying for long term care, even if it does not cover the whole bill each month.
And so people can work their whole lives to earn a pension, reach the age to start social security, and with one bit of bad health it can all disappear. In many cases, even if 100% of a person’s income is diverted to a long term care assisted living facility to take care of them, it may still not be enough. That leads us to the second method of paying.
Payment Method Two: Liquidate Assets
In many cases, an individual or couple can spend their entire lives working hard, put money away, and then wish to leave the fruits of their labors to their children or other loved ones. Unfortunately, when it comes to expensive long term care, it can drain a lifetime of work in a few years or even months. Selling off stocks. Draining IRAs and 401ks. Cashing in savings bonds and CDs early. When not planned properly, it happens one month at a time all with the hope and prayer that you will get better. And then once you are better and can return home (if you haven’t sold the home to pay the bills), you may find most of your resources are gone and you have to live on a lot less.
Most of my clients don’t like this option, and with good reason. After all, who wants one sickness to take away everything they’ve worked for and just to give it to an assisted living facility?
Payment Method Three: Long Term Care Insurance
A third method of paying for long term care is by purchasing long term care insurance, especially in the case of veterans if it pays for home health care at all levels (not just the skilled nursing part). If you are still young and can afford to pay the premiums, then it is worth looking into. In addition to traditional long term care insurance, there are other insurance options that “add on” long term Care Assistance with some more traditional investments. However, it has become almost routine that the people who seek our help with the Aid and Attendance Pension Benefit didn’t purchase long term care insurance or did not purchase enough to cover all of the costs. And now that an illness is imminent or even in progress, they are stuck being either uninsurable or the premiums are much more than they can afford.
A few years ago, a colleague told me about how he met with a client every year about his life insurance and investments, and every year he made the same suggestion. He told his client that if he passed on his wife would be able to continue in her same lifestyle without interruption because her pension. However, the reverse wasn’t true. If she passed on and he didn’t have her pension and social security coming in, he would not be able to retire. Ever. And so he kept suggesting to his client that he get life insurance on his wife only to get laughed off that “there was no way his wife was going to die before him.”
Then one day the client walked into his office and said he finally was ready to talk about life insurance for his wife… because she was just diagnosed with stage 3 terminal cancer. Of course, life insurance was now out of the question. It is often worse when it comes to long term care insurance. While everyone realizes they will pass on one day, the thought of not being healthy enough to take care of yourself is almost unthinkable until it happens.
Payment Method Four: Care Assistance and the Aid and Attendance Pension Benefit
There are various programs run through federal, state, and possibly local agencies designed specifically to help people pay for long term care. While this sounds great to many people faced with losing all of their income and assets to a nursing home or assisted living facility (and also finding that long term care insurance is not an option), qualifying for these programs can be very complex. Especially for the Aid and Attendance Pension Benefit if you want to save some of your assets for your family and/or make sure some of your income is available to support a spouse. But as a wartime veteran, spouse, or widow or widower of such a veteran, the Aid and Attendance Pension Benefit is supposed to be there for you if you qualify.
But even that qualification is complicated because we also need to look ahead for the possible need for Medicaid. For Medicaid alone, there are more than 200,000 rules that are changing all the time. That is why it makes sense to work with professionals who both understand the Aid and Attendance Pension Benefit and Medicaid Planning. Even if you believe you’ll never need Medicaid to pay for nursing level care, you want to make sure you understand how Medicaid could be impacted by strategies used to qualify for the Aid and Attendance Pension Benefit.
It is also important to note that one integral component of Aid and Attendance Pension Benefit planning is possibly (maybe even probably) using one of those long term care investment alternatives to make sure that assets are not going to be risked in the market. But it is by no means the only solution. Again, it may only be one of the 200,000 pieces of the puzzle, but we will discuss that piece in more detail later.
There are four main ways to pay for long term medical and assisted living care, but as you’ve read most people would prefer to save something for themselves for when they get out of a facility or to save for the family when they pass on. There is no need to go completely broke to qualify for the Aid and Attendance Pension Benefit OR Medicaid, but like most things in life it is not always easy to get the help you need without working with the right professionals.
If you do have further questions, you can email them to my office or call me directly. Call my office at 919-518-8237 and ask for Jeff, but please mention you are calling in response to my V.A. Pension Benefit Planning e-mails. Thanks again and enjoy the information. The next section will be on the service requirements to obtain the V.A. Pension Benefit.
Jeffrey G. Marsocci
The Care Assistance Center, LLC
8406 Six Forks Road, Suite 102
Raleigh, NC 27615
Jeffrey G. Marsocci was born in Fort Worth, Texas but was raised in Lincoln, Rhode Island and graduated from Mount Saint Charles Academy High School. He graduated from Hofstra University with an undergraduate degree in Business, and two years later earned his law degree from the same school. He also earned a Certificate Degree in Non-Profit Management from Duke University in 2004, he was the Alumni of the Month for Hofstra University in June of 2013, and his firm was honored by the City of Raleigh with the 2011 Human Relations Business Award. Mr. Marsocci also became a Certified Medicaid Planner™ in 2014, a certification granted by the CMP™ Governing Board*, and he is an attorney accredited by the Veterans Administration to practice before the V.A. and its applicable administrative and legal tribunals.
In addition to working in his estate planning, estate administration, and Care Assistance Planning practice in Raleigh, NC since 1996, Mr. Marsocci is the author of numerous books including Estate Planning Basics, The Veteran’s Long Term Care Solution and other planning books found on Amazon.com. Mr. Marsocci frequently holds seminars for clients, financial advisors and other attorneys on topics related to the life and estate planning field as well as developing and presenting continuing legal education courses for attorneys and life insurance agents. Mr. Marsocci is a member of the North Carolina Bar Association, the Wake County Bar Association, and the National Italian American Bar Association. He and his wife Kathleen live in Raleigh, North Carolina and work with various charitable and non-profit groups including Kiwanis. Both are recipients of the President’s Call to Service Award through the Points of Light Foundation for completing more than 4,000 hours of service during their lifetimes.
*Certification is granted based upon a qualified candidate demonstrating a mastery of the skills and knowledge of the subject matter. To achieve certification, a CMP™ must meet certain education and/or experience requirements, show proficiency in Medicaid Planning through a thorough examination, and commit to adhere to the highest in professional standards. A CMP™ also subjects himself or herself to discipline by the CMP™ Governing Board. A Certified Medicaid Planner™ is not necessarily an attorney, so this designation is not governed or regulated by any state bar association.
Professional advice on how to access Medicaid and VA Benefits without giving up the house or assets using a trusted step-by-step process that literally walks you through a complex and bureaucratic system.
Get your free information packet “How a Little Known VA Benefit Can Provide Monthly Financial Support”
David Cole of the Senior Veterans Council and I have put together a useful packet of information along with my book “The Veteran’s Long Term Care Solution: The Truth Behind Long Term Care Planning for Veterans with the Aid and Attendance Pension Benefit” which includes:
- 20-minute DVD outlines how the benefit can provide financial assistance towards the cost of in-home care, Assisted Living, or possibly independent living facility costs.
- VA Aid and Attendance Benefit Rate Table
- How to access immediate funds while applying for government assistance
- Using a NOVA Professional Advocate to Pre-Plan Your VA Claims
- Special Industry Report: Medicaid Secrets Reveals: Learn proven strategies to save your home and protect your life savings from devastating nursing home costs
- The Promise to America by Lyndon B. Johnson
- National Care Planning Council
- Book by Jeffrey G. Marsocci – The Veteran’s Long Term Care Solution: The Truth Behind Long Term Care Planning for Veterans with the Aid and Attendance Pension Benefit
Disclaimer: The information contained in this email is provided “as is” with no warranties or guarantees. This information should not be considered as actual legal, tax or investment advice and you should always contact a certified accountant, tax professional, or attorney before making any financial decisions. While every attempt has been made to provide current and accurate information, neither the author nor the publisher can be held accountable for any errors or omissions. You agree that you are solely liable for any and all reliance, use, or action on this information.