Caring Currents

The so-called "doughnut hole" coverage gap in Medicare Part D prescription drug coverage snared millions of seniors in 2007 -- and forced many to stop taking prescribed medications they would have had to pay for themselves.

In 2007, 3.4 million people, or 14 percent of all people enrolled in Medicare Part D, fell into the coverage gap, says a Kaiser Family Foundation study released last week.

According to Medicare Part D rules, enrollees pay a monthly premium, a deductible, and a co-payment of 25 percent of the total cost of their medication until they have spent $2,510 on prescription drugs. After that point -- known as the doughnut hole -- they must pay out-of-pocket for prescription drugs until they reach a "catastrophic" level of $4,050 total out-of-pocket spending. Then, Medicare coverage will kick in again. (Seniors can also purchase a private insurance plan to bridge the gap...  Read more

As Hurricane Fay hits shore, and storm warnings dominate the news, older homeowners in the affected regions may be asking themselves: What happens to my reverse mortgage if my home is damaged in the storm?

With hurricane season upon us -- and in the wake of the recent Southern California earthquake -- it's important for reverse mortgage holders to understand the implications of natural disasters and the damage they can cause.

Because the bank may very well end up owning the home in the event the mortgage holder dies, reverse mortgage lenders typically require that applicants agree to keep their home in good condition (along with a host of other requirements, including staying up to date on property taxes and homeowner's insurance) for the life of the loan.

In the event that the bank determines the house is damaged beyond repair -- even if the damage was caused by natural disaster -- the lender...  Read more

Francine Lipman teaches tax law at Chapman University, but when her mother was diagnosed with terminal cancer she realized that even with her extensive professional experience and training, she was in many ways ill-equipped to prepare herself and her family for the financial realities of her mother's death.

Lipman shares the real-world lessons she's learned about how to handle the financial implications of a parent's passing in a heart-felt and touching article originally published in 2006 in a legal journal, titled "Celebrating Life (Chai) and Taxes," which has since made its way around the blogosphere.

The most important lesson she learned? No matter how unpleasant it may seem, talk to your parents now about their wishes for the end of their life.

"As a CPA, attorney, tax professor, I clearly have an advantage regarding researching and understanding the many legal and tax issues presented for financial and estate planning...  Read more

Cash-strapped seniors have seemingly few options when it comes to getting their hands on more money. But now there may be one more possibility.

Similar in concept to reverse mortgages, LegacyLoans, soon to be offered through Legacy Funding Group, will allow older adults to take out a loan against their life insurance policy. They can use the proceeds of the loan for monthly expenses or simply to cover the costs of their life insurance premiums. When they die, the amount of the loan is deducted from the payout to their beneficiaries. There are other insurance companies, including New York Life, which are starting to offer similar products.

Seniors can already sell their life insurance policies, a transaction known as a "life settlement." For many people, this is a good way to use their existing policies to generate cash during their lifetime. The downside to life settlements is obviously...  Read more

The new mortgage bill includes provisions intended to make reverse mortgages more attractive to wary seniors. But is it a case of too little, too late?

This week President Bush signed legislation intended to address the foreclosure and mortgage mess that's devastated the housing market all year long. Included in the wide-ranging bill are dramatic overhauls to the rules governing reverse mortgages for seniors. What do these changes mean for your parents if they are considering a reverse mortgage?

To start with, under the new rules, your parents:

• Can qualify for much larger loans, depending on where they live. The previous loan limit of $417,000 has been increased to as much as $625,000 in high-cost areas.
• Can now use FHA-insured reverse mortgages to purchase second homes
• Should see reduced lenders' fees
• Are protected by new restrictions on lenders, which make it harder to cross-sell financial products...  Read more

Your parents assure you that their bank balance is in fine shape. But is it really true -- or are you worried they're actually just scraping by?

Even if your parents haven't shared the details of their financial situation, there can be tell-tale warning signs that they're feeling the need to cut back on their expenses. Home Instead Senior Care, an elder care provider, has compiled a list of signs that may indicate your parents are in need of financial help.

Here are the warning signs to look out for, according to Home Instead:

1. Is your seniors' home too warm in the summer and too cold in the winter?
2. Is the lawn not getting mowed and is the sidewalk not getting cleared in inclement weather?
3. Are they complaining about not being able to afford medications?
4. Are home repairs not getting made?
5. Is there a shortage of food in the house?
6. Are doctor’s appointments being skipped?
7. Are they staying home more and becoming isolated...  Read more

The IRS is warning taxpayers that scammers are sending out fraudulent stimulus checks and letters to lure seniors and others into giving up personal information that could then be used to access bank accounts. Luckily there are some easy -- and free -- ways to protect yourself.

The so-called phishing scams aren't targeted only at seniors, but since many older people filed taxes for the first time in years in 2008 in order to qualify for their stimulus check, they may be particularly suscptible to the scam.

In one such scam, phishers are calling taxpayers and impersonating IRS employees by asking for more information to complete the rebate paperwork. In another, people are receiving e-mail messages with a link to click where they fill out a form for direct deposit of the rebate. In both cases, the con artists are hunting for personal information that they can then use to "empty the victim...  Read more

Medicare recipients can breathe a sigh of relief this week: Congress finally resolved a mess that was prompting some doctors to drop Medicare patients.

To recap: Because of an outdated Medicare rule, reimbursements from the government to doctors who accept Medicare were cut by almost 11 percent on July 1. Earlier this summer, Congress went on vacation without passing a required fix, amid squabbles about how the physician reimbursements would be covered by the budget.

Meanwhile, some doctors refused to see their Medicare patients until the reimbursement problem was fixed, leaving some seniors without access to their health insurance or their doctors.

On Wednesday, Senate Democrats were finally able to pass a fix -- although President Bush has indicated he plans to veto the bill. It's unclear whether Democrats will be able to hold together a veto-proof majority.

In the meantime, what does this mean for your loved ones if they're Medicare recipients...  Read more

High banking fees are taking their toll on senior citizens, according to several new reports, which reveals that debit cards may be to blame.

The Center For Responsible Lending has found that seniors spent $4.5 billion in overdraft fees last year, in large part because many of the elderly are switching over to debit cards after years of relying on checkbooks and cash. Debit card purchases and cash advances can easily trigger overdrafts -- and the resulting bank fees -- if older account holders are confused as to how the cards work and when the electronic withdrawls will hit their accounts.

What's more, many banks follow practices that result in greater overdraft fees, according to the report, including "routinely re-ordering daily transactions to subtract highest-dollar amounts first, and holding deposits longer than necessary."

At the same time, some financial institutions are jacking...  Read more

If you haven't bothered to start saving because you're counting on a fortune (large or small) from Mom and Dad after they go, it may be time to think again.

Unlike previous generations, most of us shouldn't expect too much in the way of an inheritance, according to a post in the New York Times personal finance blog Your Money: "8 Reasons You Should Not Expect An Inheritance."

Our parents are living longer and are faced with astronomical health care expenses, blogger Ron Lieber says, pointing out that many seniors are also draining their home equity through reverse mortgages to pay for medical and monthly bills. The upshot of these developments is that there will be little for them to pass along to the next generation.

Other reasons Lieber believes your parents may have little to leave you in their will include:

• Medicare and Social Security face likely cutbacks.
• Divorces drain wealth that could be passed on...  Read more

Social Security recipients in 10 states can now get their monthly benefits loaded onto a pre-paid debit card, a change that will bring convenience -- but possibly new headaches, as well.

Previously, seniors could only get their money as paper checks mailed to their home or wired to their bank accounts via direct deposit,

Administered by Comerica Bank, the debit card will initially be available to people getting Social Security and Supplemental Security Income checks in Alabama, Arkansas, Florida, Georgia, Louisiana, Mississippi, North Carolina, Oklahoma, South Carolina, and Texas. It's expected to be rolled out across the country in coming months.

Known as the Direct Express Debit MasterCard, the new Social Security debit cards will initially be targeted at Social Security users without bank accounts (although it's assumed that if the program is successful and a money saver for the government, it will be expanded beyond this group to all Social Security users...  Read more

Medicare users may be in for a billing nightmare this summer -- unless Congress acts quickly.

Under the current Medicare rules, reimbursements to Medicare doctors will be cut by 10.6 percent on July 1, according to an article in The Hill, a Washington, D.C. news site. The reimbursement cut is the result of an outdated statutory formula that Congress has overruled in the past -- but this year they haven't managed to agree on a fix, and they're running out of time to get one passed.

For Medicare patients, this could mean big headaches.

If the cut goes into effect, Medicare patients may find themselves on the hook for a larger portion of their medical bills -- at least until the mess is sorted out. If Congress does eventually fix the billing problem, Medicare doctors and users will have to figure out who owes what retroactively. Patients who have medigap or other supplemental insurance will have to revist their claims, which may have to be reprocessed...  Read more

As the economy continues to falter, senior citizens are turning to more aggressive -- and in some cases riskier -- ways to generate cash to pay bills and buy groceries and gas, according to a front page story in the Wall Street Journal (online subscription required.)

In record numbers, seniors are raising money by turning to products like:

• Reverse mortgages
• REX loans, which pay out lump settlements in exchange for a chunk of future equity gains
• Life insurance settlements
• 401k loans and hardship withdrawls

Though these loans and products may seem like a convenient way for income-strapped seniors to get quick money, some carry tax consequences and higher fees than traditional loans and home equity financing. The article blames the trend on the usual culprits: falling home prices, dwindling jobs, and a sharp increase in food and energy prices.

Seniors who buy into these types of products won't necessarily...  Read more

This spring, many senior citizens filed taxes for the first time in years so they could qualify for the government's tax rebate. But for some, the rebate check never arrived.

Many senior citizens who don't typically file returns (because they don't meet the minimum income level for filing) reversed course this year to ensure that they would receive the tax rebate -- up to $600 for individual filers and $1,200 for couples. The minimum rebate of $300 is available to people who made up to $3,000 last year -- whether it came from earned income, Social Security, or Veteran's benefits -- as long as they filed a return.

But there have been scattered reports of rebate mishaps -- especially with filers who elected to receive their payment electronically.

Newsday reported earlier this month that up to 15,000 tax rebates have been sent to the wrong bank account, primarily because of mix-ups with taxpayer Social Security Numbers...  Read more

Trying to figure out how to pay for nursing home care in this country can be a major headache. Jayantibhai Patel's father would certainly agree.

Mr. Patel, of Foster City, Calif., allegedly hit his 81-year-old father over the head with a hammer in what local authorities are saying may have been a misguided attempt to get his father admitted into a nursing home.

"He was under a belief, we don't know why, that you can't go straight into a nursing home without being in the hospital," says Steve Wagstaffe, San Mateo County's chief deputy district attorney, in the San Francisco Chronicle

But Mr. Patel wasn't entirely incorrect, according to blogger Felicia Curran. Under Medicare regulations, government health insurance will pay for nursing home care -- but only after a three day stay in the hospital.

As she explains in her post at the Elder Neglect Blog, "there was a method to his madness...  Read more

If you're looking into a reverse mortgage, two new articles may give you pause.

Under a reverse mortgage, the homeowner converts the equity he has built up over time into cash, in the form of either a lump sum, a monthly payment to the owner, or a line of credit. Unlike a traditional home loan, a reverse mortgage has no monthly payments -- no repayment is required until the owner sells the home or is no longer using it as a principal residence. Many homeowners like the flexibility and cash that come with reverse mortgages, but the loans do come with a price: notoriously high closing costs.

Now, The Los Angeles Times is reporting, some homeowners are opting for something known as a deferred payment loan. As the paper explains, with deferred payment loans, "there are no origination fees, and insurance and premiums and closing costs, if any, are very low." Interest rates are also capped at low rates, and part or all of the loan may be forgiven if the homeowner stays in the house for a long period of time...  Read more

Many of us want our parents to have a cell phone to use in case of an emergency. But some older adults can get intimidated and overwhelmed by complicated cell phone calling plans and tiny phones with even tinier buttons and jam-packed with extraneous features they don't need or want, like digital cameras, MP3 players, and wireless Internet access.

Enter Jitterbug, a phone designed specifically for seniors and manufactured by Samsung. On this phone, there are no YouTube videos or Beyonce ringtones. Instead, its features include:

• Large, backlit buttons
• Bright screens with large text
• One-touch access to an operator for 24 hour assistance
• Pre-paid service plans requiring no contracts

The only problem? The target audience isn't so keen on buying a device marketed as a "senior phone." Shelly Kneupper Cupper, explains on her blog, This Eclectic Life:

"...It is exactly what I need. It’s got large buttons for my pitiful arthritic fingers to punch...  Read more

Although the April 15th tax deadline has come and gone, your parents may still be eligible for this year's rebate check -- even if they haven't filed a return.

Right about now, many taxpayers are anxiously watching their mailboxes for the government's rebate checks, the first batch of which were reportedly sent out this week. Individual filers can expect to receive up to $600, while couples may get back as much as $1200. But, as reported last month, many people who don't typically file returns because they don't meet the minimum income level for filing are still eligible for this year's gift from Uncle Sam.

If your parents make $3,000 a year -- whether it comes from earned income, Social Security, or Veteran's benefits, they may qualify for the minimum rebate of $300 for individuals and $600 for couples. All they have to do is file a return -- and not even by April 15th.

As the IRS explains on its Web site: "...  Read more

This week The New York Times tackled "Retirement" in a special section, with a number of stories focused on the unintended emotional and financial consequences of leaving work behind.

Some highlights:

• A Longer Goodbye: Many major companies, including Dow Chemical, Pitney Bowes, and IBM are coming up with innovative programs to keep employees on in some capacity after they reach traditional retirement age. If everyone 65 years or older retires, “companies could lose everyone who remembers how they handled the last economic downturn,” notes one expert, who says it is in most companies' -- and employees' -- best interest to keep older workers so they can transfer knowledge to younger employees. That raisies a question: Do you have family members who would have benefited from staying on to impart their accumulated wisdom -- even if it meant delaying retirement?
• Making...  Read more

If your parents are covered under Medicare and need to find a new doctor, they may be out of luck.

In a recent Washington Post column, Martha M. Hamilton highlighted the growing dismay among Medicare recipients who move or need to switch primary care physicians but find it difficult to identify new doctors who accept the government's health insurance.

Although the vast majority of doctors accept Medicare, many do place limits on how many Medicare patients they'll take in their practice because the government reimburses them at a relatively low rate (compared to private health insurance). Your parents may not experience any problems switching over from private insurance to Medicare if they're continuing on with the same doctor. But if they're already enrolled in Medicare and have to find a new doctor -- whether because they've recently moved or want to switch physicians for other reasons -- they may find that there are few doctors out there accepting new Medicare patients...  Read more

What do you do when your parent's insurance company denies coverage for the care that his doctor has ordered?

If you're anything like "Dona" and her mother, you'd file an appeal to make sure that your father could recover from his triple bypass surgery in the cardiac rehab center his doctor had ordered. According to Dona, who shared her story with the consumer finance blog Consumerist.com:

"My father's doctors, along with the hospital's case worker and my mother, tried to get their health insurer, Anthem Blue Cross/Blue Shield to approve off-site cardiac rehab. They initially approved the request and made arrangements at an approved facility. The day before checkout, March 19, Anthem changed it's mind. My father's doctors kept him another day to execute an emergency appeal. But to no avail, Anthem determined my father was "too healthy" and would have to go home (and basically perform self-care)...  Read more

Members of Facebook, take note: You can now alert designated loved ones of your last wishes all from the convenience of your Facebook account.

As lovers of Scrabulous well know, Facebook offers extra applications that let members of the social networking site play games and share photos and favorite movies with one another. And now, blogger Joel Schoenmeyer of the Death and Taxes Blog alerts us to another application that lets you share personal information with your online friends: "My Own Last Wishes." Just as the name implies, My Own Last Wishes helps members let their (online) loved ones know:

• Their preferences for funeral service, including flowers, songs, readings and epitaph
• Who they want to care for their pet
• Whether they have a will or trust
• What investment or insurance accounts they hold
• Any other final instructions or special messages

Online reaction to the program has been mixed...  Read more

Bosses, want loyal employees? Give them access to employer-sponsored backup childcare and elder care referalls.

That's the conclusion of a new poll conducted by LifeCare Inc., a company that -- coincidentally -- provides these services to employers. Eighty-eight percent of working parents who responded to the poll said that these types of benefit programs would make them more loyal to their employers. Only 6 percent of respondents said such a program wouldn't make them any more loyal.

Backup elder and childcare can also help reduce employee absenteeism and productivity losses, noted LifeCare CEO Peter G. Burki in a statement. That's a nice way of saying that employees who have access to backup care providers don't have to skip work to take their parent to the doctor or spend hours on the phone keeping tabs on their kids when they're supposed to be working.

Burki says that the number of employers offering these types of benefits has doubled in recent years, although he didn't give any numbers...  Read more

Starting in May, taxpayers will start eagerly looking for their rebate checks in the mail. But some of our parents won't get their check for one simple reason: They haven't filed their taxes in years and don't know that they need to do so in order to get their rebate check.

Blogger Deirdre Wheatley of the You and Yours Blawg reminds us that many low income and retired people don't file yearly federal income taxes. But if they make $3,000 a year -- whether it comes from earned income, Social Security, or Veteran's benefits, among other sources, they may qualify for the minimum rebate of $300 for individuals and $600 for couples (most other taxpayers will receive up to $600 for indivdual filers and $1200 for couples.) The only catch? They have to file a return this year.

If your parent hasn't filed in years but doesn't want to miss out on our government's little gift to taxpayers, here's a few...  Read more

Reverse mortgages--a loan for people ages 62 and older that pays homeowners based on the equity they've built up in their house--can be a great way for our parents to pay off medical bills, pay for home improvement projects, or take that trip they've been dreaming of for years.But the loans aren't right for everyone, as the New York Times reminds us in an article about the pitfalls of reverse mortgages. Although the loans are highly regulated (homeowners are required to meet with an independent counselor before even applying) some lenders still deploy sleazy sales tactics including:

• Rushing through the fine print and glossing over closing costs and interest rates
• Offering financial incentives to so-called independent mortgage counselors
• Pushing homeowners into questionable investments with the proceeds of the reverse mortgage

If you're concerned because your parents are thinking about taking...  Read more