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Davidow, Davidow, Siegel & Stern, LLP
Long Island's Elder Law, Special Needs & Estate Planning Firm

Tuesday, September 18, 2007

Insurance Gaps & Unexpected Tragedies Leave Many Facing Impossible Choices

Many Americans retire early prior to reaching age 65 and receiving Medicare coverage. If they do not plan carefully, they will not have health care coverage before they can be covered by Medicare.

Many Americans retire early prior to reaching age 65 and receiving Medicare coverage. If they do not plan carefully, they will not have health care coverage before they can be covered by Medicare. Others become disabled, but have to wait 25 months prior to receiving Medicare coverage. Others are simply the victims of bad luck.

Consider the following:

A 59-year-old man falls from a second-story balcony and sustains severe injuries including brain damage. Unfortunately, he is without health insurance because he decided to retire before he was 65 in order to care for his wife who is stricken with Alzheimer's. How will he pay for his various medical bills?

A 48-year-old woman with two children suffers a stroke. Her employer's health care insurance includes an annual $50,000 benefit cap. How will she pay for her hospital stay and doctors' bills?

A 23-year-old woman is stricken with a brain aneurysm. She had just changed jobs following a cross-country move. Her recent job change has left her without the necessary insurance to pay for this care.

Many Americans suffer "gaps" in their health insurance coverage. A hospital stay or medical care for cancer or other similar diseases wreaks financial havoc for these families. Unfortunately, many learn too late that they have no health insurance, inadequate health insurance or very low caps on their insurance benefits. Some of them mistakenly think that Medicare will cover them if they are over the age of 65.

Most of these individuals have been self-supportive and typically paid into either a private health care insurance program or have been involved in an employer-sponsored plan. Their needs are not typically classified as long-term care needs. Often times, hospital/rehabilitation stays exceed $20,000 per month. According to the U.S. Agency for Healthcare Research and Quality, after adjusting for inflation, the average hospital charge increased by 24 percent from $13,900 in 1997 to $17,300 in 2002. Many of these individuals will be able to return to their homes and even to their jobs. Sadly, their lack of health care coverage or caps on benefits leave them in a near bankrupt position. In some cases, they may even be forced to end long-term marriages due to the financial hardship and strain placed on their families. These cases also adversely affect the dependent children of those without coverage.

These cases involve very common people with very uncommon injuries or illnesses. The result will shield companies from liability and shift the cost of care to the state Medicaid programs.

Elder law attorneys regularly recommend the purchase of health insurance for individuals who are considering early retirement or who are not covered by a group health care insurance policy. Many people do not plan ahead and purchase private disability insurance or exercise their COBRA rights to continue their employer sponsored health care insurance. Only if they suffer from an unexpected illness or are involved in an accident do they realize they were uninsured or underinsured.

A recently released U.S. Census Bureau report shows the number of uninsured people rose from 44.8 million in 2005 to 47 million in 2006. A report last year by the Robert Wood Foundation shows one in six adults between the ages of 50-64 are uninsured.

Elder law attorneys assist individuals in identifying current or future insurance coverage gaps. Elder law attorneys guide older adults, people with disabilities and families through an assessment of resources, needs and goals, so that they can cope with unexpected tragedies or plan ahead to access health care whenever it is needed.

For more information about elder law attorneys and the National Academy of Elder Law Attorneys, visit www.naela.org

Source: NAELA, Eye on Elder Issues, September 2007, Vol. 4, Issue 4.

Friday, September 7, 2007

Providing for Children with Disabilities

One of the major concerns for parents with children with disabilities is how to provide for their financial future. Here are some legal tips:

Buy enough life insurance. A parent is irreplaceable, but someone will have to fill in. In all likelihood, that person or family will have to pay for at least some services the parent or parents had provided when able. If the estate is not large enough for this purpose, it can be made large enough through life insurance proceeds. Premiums for second-to-die insurance (which pays off only when the second of two parents passes away) can be surprisingly low.

Set up a trust. Any funds left for a disabled child, whether from an estate or the proceeds of a life insurance policy, should be held in trust for his or her benefit. Leaving money for anyone with a disability jeopardizes public benefits. Many people with disabilities cannot manage funds – especially large amounts. Some families disinherit disabled children, relying on their siblings to care for them. This approach is fraught with potential problems. Siblings can be sued, get divorced, disagree on their responsibilities, or run off with the funds. It can also cause tax problems for siblings. The best approach is a trust fund set aside for the disabled child.

Will/appointment of guardian. While a will and the appointment of a guardian is important for anyone with minor children, it is doubly so if the child is disabled. Finding the right guardian can be difficult. In some cases, the care needs of the child may be so demanding that he or she will need a different guardian from his or her siblings. The parents need to make these determinations while they can. The will is the vehicle for the appointment of a guardian.
An adult child may also require a guardian when the parent can no longer serve in this role (whether officially appointed or not). It will probably not be legally possible to officially appoint a successor guardian. So, it may make sense to begin making the transition to a new guardian while the parent is able to assist in the process. This can be done in the form of a co-guardianship, or passing the baton to a successor guardian.

Care plan. All parents caring for disabled children should write down what any successor caregiver would need to know about the child and what the parent’s wishes are for his or her care. For example, should the child be in a group home, live with a parent, be on his or her own? Usually, the parent knows best, but needs to pass on the information. The memo or letter can be kept in the attorney’s files with the parent’s estate plan.

Coordination with other family members. Even a carefully developed plan can be sabotaged by a well-meaning relative who leaves money directly to the child with a disability. If a trust is created for the benefit of the child, grandparents and other family members should be told about it so that they can direct any bequest they may like to leave to that child through the trust.

Source: www.elderlawanswers.com; 9/6/07