Women experience unique economic realities. They tend to live longer and move in and out of the workforce due to career interruptions for child birth and elder parent care. This means that women often qualify for much lower pension benefits and receive lower Social Security benefits due to their years employed and salaries attained, which cannot be increased by the husband’s pension or social security if he experiences an untimely death.
Fewer years in the workforce, fewer years with a single employer, and lower pay are all factors that may contribute to a lower average pension for females, and Social Security benefits are calculated based on a person’s highest 35 years of earnings. If a benefit recipient does not have 35 years in the workforce, the Social Security Administration will add zero-earnings years to his or her record to equal 35 years.
Moreover, women often have diminished retirement savings due to the health care costs for the spouse who dies first, (usually the male.) Women most often become the caretaker for their husbands, which reaps immeasurable financial benefits by delaying the significant expense of nursing home care. But, who is there when the widowed wife needs assistance, as the average nursing home cost in Massachusetts is approximately $7,500.00?
Women must work with their husbands to implement a plan to ensure that the total health care and estate planning needs of their family is addressed. They should be guarded against the incapacity and the death of their spouse.
There are certain documents that are regarded as necessities for life in today’s active, uncertain society to protect loved ones:
- Durable Power of Attorney: This document that establishes who will attend to your financial decisions in the unfortunately event of your incapacity.
- Health Care Proxy: This document that ensures that medical decisions are carried out in accordance with your intentions in the event that you become mentally or physically disabled to the extent that you cannot make informed decisions on your own behalf.
- Will: This document provides for an orderly distribution of your assets.
However, the above documents are just the tip of the estate planning spectrum. It is also important that to consider Medicare and Medicaid (MassHealth in Massachusetts) planning, interplay between long-term care and financial planning, use of long-term care insurance and housing options and alternatives to nursing homes, to name a few.
By: Todd C. Ratner, Esquire
Elders are often concerned that the cost of long-term care will deplete their estates. Specifically, the cost of nursing home care in Massachusetts is now estimated at between $90,000.00 and $115,000.00 per year. As such, many elders turn to Medicaid, referred to as MassHealth in Massachusetts, which is a joint federal-state program that pays for nursing home care for individuals that meet their stringent financial eligibility rules.
Created in 1965, Medicaid is a Federal Program that is designed to pay for the medical expenses of financially needy people. Individuals over the age of 65 are eligible for Medicaid if they meet certain income and resource tests. However, even if an applicant is approved for Medicaid benefits, that does not necessarily mean that Medicaid can’t recover the benefits previously provided to the Medicaid recipient.
There are many disabled people in the United States who are not taking advantage of a credit offered to them by the Internal Revenue Service called the Earned Income Credit. This was originally provided as an anti-poverty program for hard working low income employees aimed at reducing taxes.
An estimated 16 million Americans find themselves sandwiched between two generations, struggling to raise their children while caring for an aging loved one. These Americans are commonly referred to as the “sandwich generation,” and they are especially stressed over the combination of caring for aging parents, raising their children and planning for their own retirement.
In many cases, a child receives Medicaid benefits if he/she is disabled before the age of 22. These benefits are normally based on the work record of the parents, who are otherwise disabled, retired or deceased. The amount of the benefit is generally calculated based on the parents’ social security records, as the child will receive a percentage of their social security benefits. This is referred to as the Social Security Disabled Adult Children’s Benefit (DAC.)
Now that the Deficit Reduction Act has been in existence for over a year, most states have enacted regulations or laws that define the extended waiting period for long-term care benefits paid by the State. Regardless of the value or intention of gifts, in many cases, a five-year waiting period for eligibility for Federal and State long-term care benefits remains a concern for most individuals who have assets that must be used for their care, even if the assets have been gifted within the previous five years.
It’s amazing how many non-legal “estate planning experts” are out there. Perhaps some of them are your friends and relatives. There are a lot of stories about what “they did” to save assets for a family member when that person was about to enter a nursing home. Here are the top 3 myths that I wish to dispel in the hope that I can help present a clearer understanding of the rules:
Annuity can be a wonderful product in some cases. It is important to note however, that they are not right for everyone. Many sellers of annuities including financial advisors, brokers, banks, insurance companies, and sometimes other persons or entities who have licenses to sell products, recommend annuities to their clients.