Finding a Continuing Care Retirement Community

Continuing care retirement communities (CCRC) are gaining in popularity across the United States. Sometimes referred to as life plan communities, the goal is to provide a long-term care option for older residents. These residents prefer to live in the same community, though in different phase locations, during their aging process. In essence, it is a continuum of care that will see you through your pre-planned stages of older life.

The selection process of this community type can be challenging as there are nearly 2,000 CCRCs throughout the country, and each offers different kinds of housing and levels of care, for a price. Most residents will begin CCRC living independently in an apartment or single-story home. As health situations present themselves, the resident will transition to assisted living and, ultimately, to a skilled nursing level. The phases of community living are among the most significant benefits of a CCRC as it provides familiarity and the stability of a wide range of activities, services, and care in one place.

The federal government provides an online public service through the US Administration on Aging known as Eldercare Locator that connects you to services for older adults and their families regarding CCRCs and much more. The service is also available via telephone at (800) 677-1116. LeadingAge is a member group association for non-profit eldercare that provides and maintains an aging services directory where you can plug in a zip code and search for local retirement communities. Caring.com and seniorliving.org also have referral search options to locate a nearby CCRC.

According to AARP, nearly two-thirds of CCRCs will charge an entry fee to join their community. The average initial payment ranges from $239,000 to over one million dollars in some communities. After an initial entry fee, residents will pay a monthly fee, typically running between two to four thousand dollars. Before putting money down, there are questions to ask. LeadingAge suggests these following questions:

• Is the CCRC for-profit or non-profit? What is the financial strength of the community?
• What does the monthly fee include?
• How do you specifically aid me in maintaining my independence and freedom?
• What types of emergency response systems are in place?
• Do you survey residents to measure levels of satisfaction? Can I see the most recent surveys?
• What type of input and feedback about the community do residents enjoy?
• How do you define independent versus assisted living, and at what point would I have to transition to assisted living?
• How is aging in place supported even if my needs change somewhat?
• Who selects community events and programs, and what are the five most popular?
• May I review your residency agreement?

If you locate a community you like, then it is time to ask more detailed questions. Is the CCRC nearby to a hospital? How far away are your medical doctors from the community? How convenient are amenities such as public transit, grocery stores, dry cleaners, and other services?

Check on the credentials of the staff at the CCRC. Is their interaction with you professional? Do they seem willing and eager to help? How available are the administrators of the community? Is their office open throughout the day to deal with issues that may arise?

What are the floor plans and options of available housing? Are residences equipped with dishwashers, washer and dryer, and microwaves? Are homes equipped with grip bars and nonslip floors? Are common areas and green spaces well maintained? Do the assisted living and nursing facilities offer private rooms with baths? What are the locations of emergency exits, sprinklers, and other security features that are in place?

Talk to the people currently living in the community and get their insights as to the value and livability of the CCRC. Ask about meals; in particular, are special diets accommodated? What are the personal services available such as housekeeping, laundry, and hair salons? Is there any transportation service?  What are the costs associated with these services? Check on recreation and social activities too. What events are regularly available? Are their clubs and common area for residents? What is the availability of an exercise facility and fitness classes? Are there opportunities for worship?

Regarding health care services, check what is available to you at each level of care. What is included in the entrance and monthly fees? Does the CCRC have specialized dementia care areas or other specific health condition areas? Is there a pharmacy on-site? Are all prescription drugs handled by qualified staff, and do they monitor the medication?

Once you have chosen a community, review the contract very carefully. A CCRC offers three basic contracts:

• Extensive life-care contract or Type A includes a full range of services but also carries the highest fee. This contract provides unlimited assisted living, medical treatment, and skilled nursing care with little or no additional costs. 
• Modified contract or Type B offers a defined but limited set of services. Any services beyond the ones in the contract will incur a higher monthly fee.
• Fee-for-service contract or Type C generally has a lower initial enrollment fee, but the residents must pay for the services they require, such as assisted living, skilled nursing, or memory care. 

Some CCRCs even offer a rental contract known as Type D and a Type E equity agreement where you purchase a share of your unit instead of an entry fee. No matter what contract type you select, all CCRC contracts are notoriously complex, so it is imperative to retain an attorney to review the specifics to protect your finances and future residency.

There is a lot to consider when joining a continuing care retirement community. Share your expectations and thoughts with family and loved ones and ask for their help. Do extensive research on several potential communities before finalizing your decision. Ask a lot of questions when you visit each community. Carefully review any CCRC contracts or agreements before you sign them. A CCRC can be an enjoyable living experience when you find the one that meets your criteria and needs.

If you have questions or need help reviewing a contract or agreement with any type of facility, we would be happy to help. We can also discuss a plan for how to pay for care on a long term basis and how to protect your savings from being depleted.  Just give us a call at 1.800.660.7564 or email us at info@covertlaw.com.

Technologies to Help Seniors Stay Emotionally Healthy During the Coronavirus Pandemic

In the best of circumstances, adults in senior living communities and long-term care facilities combat loneliness and some degree of isolation, which is linked to anxiety, depression, cardiovascular disease, and other ailments. During the COVID-19 pandemic, the Centers for Disease Control and Prevention (CDC) senior facility guidelines have increased problems of isolation for the more than one million American adults who live in assisted living facilities and nursing homes. These seniors and those in private homes who are sheltering-in-place are experiencing the absence of direct connection to family and friends. Today it is more important than ever to provide mechanisms for their health and happiness while practicing social distancing during the coronavirus quarantine.

For those in long-term care facilities, now that visitation has ceased, the only human contact is with the facility staff and doctors who present themselves wearing full personal protective equipment (PPE) such as masks, gowns, and gloves. The minimal contact is with staff that no longer looks familiar and may even appear scary to residents, particularly those with cognitive impairment. Social distancing practices and wearing masks in a loved one’s home have a similar effect and create frustration as cherished hugs are not permissible. The longer the threat of infection from COVID-19 goes on, the more likely that loneliness will become a mental health problem. Intelligent and creative use of technology can alleviate the stresses for many of these seniors by providing entertainment and communication.

Most seniors prefer structure and reliability, so coordinate daily check-in times with your loved one. It can be as simple as a phone call or text. For seniors who are comfortable with more advanced technology, Skype, Facetime, WhatsApp, WeChat, Loop, and Zoom all provide video content as well as voice. Don’t forget the option of a group text to include multiple family and friends at the same time, and if you are using Facetime or Zoom, you can create a “family dinner” experience. Even the cooking aspect of the meal can be integrated into the video chat.

Wellness devices that track exercise like Apple watch, Garmin, Kardia, or Fitbit are great prompters for seniors to keep moving and exercise. These devices can be set for modest 10-minute group exercises, which are important to keep blood flowing, stimulate brain function, improve the immune system, and reduce depression. Activity level notifications can be sent to your phone, providing the opportunity to nudge your loved one out of sedentary behavior. During quieter moments, a carefree companion pet like Hasbro’s Joy for All Companion Pet can bring fun, companionship, and comfort for your loved one. These may be robots, but they are soft and cuddly with realistic fur and respond to petting and hugging motions creating a give and take relationship. If your senior prefers a dog, Joyforall has a companion pet golden pup that can also bring comfort. These robotic pets offer a soothing and joyful experience that often prompts fond memories of a senior’s beloved pet.

Hapbee is available for pre-order and is an augmentative wearable device emulating normal molecular interactions in the body’s small, specific magnetic fields that can replicate different feelings. There are six general mood categories; alert, happy, pick me up, calm, relaxed, and sleepy through safe, low energy magnetic signals. Worn as either a headband or loosely around the neck, a senior can use Hapbee to guide their feelings to their desire. Another technology that can help during this pandemic is the HumanCharger light therapy device made by Valkee. This device is a powerful tool for those people over the age of 60 experiencing lack of sunshine, melatonin production, reduced energy levels, and difficulty getting restful sleep. The HumanCharger stimulates the photosensitive receptors in the brain using calibrated white light. This light passes through the ear canals and structure, and this stimulation affects the brain’s neural circuits via neurotransmitters like dopamine, serotonin, and noradrenaline. In just 12 minutes a day using the Valkee device and LED earbuds, a senior can experience the needed dosage of sunlight to re-establish the body’s natural circadian rhythms by resetting a person’s natural internal clock.

Finally, do not overlook the world of online gaming to keep a senior engaged during the COVID-19 pandemic. Word Cross, Candy Crush, Words with Friends, Cookie Jam, Minecraft, and more can provide hours of entertainment. If your senior is a retired pilot, try a flight simulator, or if they prefer chess, they can play against a computer or individuals worldwide. Your loved one can watch favorite TV shows, movies, or keep up with family and friends via Facebook. Video games and computer use, in general, promote hand-eye coordination, mind training, and memory, and raise endorphin levels that keep blood flowing. While your senior is engaging in the online world, however, be sure they do not fall prey to a self-destructive behavior known as “doomscrolling.” The onslaught of dystopian stories relating to the coronavirus pandemic combined with stay at home orders can find a senior binging on bad news, trapping them in cycles of negativity. So, in your daily check-in, ask where your senior is spending their time online to ensure they don’t spiral into a vicious cycle of negativity which creates anxiety and depression.

Encourage your senior loved one to employ technology to help reduce feelings of isolation and loneliness. Many seniors are unaware of just how varied and robust online entertainment and personal technology has become. All these technologies can help a senior maintain emotional balance and wellness during this pandemic and beyond.

If you would like to discuss how we help families deal with issues relating to long term care, please don’t hesitate to reach out by calling us at 1.800.660.7564 or by emailing us at info@covertlaw.com.

New Drug Therapy Gives Hope to Alzheimer’s Prevention

Researchers at the Lewis Katz School of Medicine at Temple University recently announced that pharmacological “chaperone therapy” can prevent Alzheimer’s disease (AD) in mice. Alzheimer’s is a chronic neurodegenerative disease that currently has no cure. Abnormal clumps (amyloid-beta plaques) and tangled fiber bundles (neurofibrillary or tau tangles) create brain disorder that slowly destroys memory and thinking skills. Loss of connections between neurons that transmit messages to different parts of the brain, and brain to organs and muscles in the body, are compromised. 

A simple example to help imagine the disease is to think of a wadded up ball of pieces of tape stuck together. Excessive amounts of proteins in the brain begin to lose shape and, like a tape ball, stick, and clump together. This clumping stops the transport of the excess proteins to “recycling sites” within the cells. Trapped in the wrong cellular compartment, they accumulate and eventually bog down cellular mechanisms creating significant disruptions. 

To keep the brain’s molecular machinery capable of doing its job sorting through proteins, identifying defective ones, and removing or stabilizing them, scientists developed small drug molecules known as pharmacological chaperones. These chaperones may fulfill a critical role in the prevention of and therapy for Alzheimer’s. The Temple University study cites the journal, Molecular Neurodegeneration, showing that a chaperone drug can productively disrupt the abnormal brain processes that damage neurons and fuel memory loss that ultimately gives rise to Alzheimer’s in animals prone to developing it.

This particular chaperone drug can restore appropriate levels of the sorting molecule called VPS35, permitting the continued moving of proteins out of endosomes, which can be thought of like the sorting stations or recycling sites for damaged proteins allowing for normal cell functioning. Dr. Praticò and colleagues at Temple University who previously had identified how VPS35 actively clears the brain of the harmful proteins amyloid beta and tau most recently have determined that in Alzheimer’s disease, VPS35 levels were significantly reduced. Non-efficient processing of these damaging proteins led to the clumps, or deposits, that interrupt neuron activity, thus contributing to Alzheimer’s and other neurodegenerative disorders. 

Testing the effects of this pharmacological chaperone on young mice that are engineered to develop Alzheimer’s disease as they age allowed the scientists to check for effects on memory and learning as the mice grew older. The treated animals had far better memory and behaved like normal aging mice when compared to untreated mice that readily progressed into Alzheimer’s symptoms, creating a practical technique of Alzheimer’s disease modification for the first time. The test results were confirmed when researchers examined the neurons from the treated mice that had significantly decreased tau tangles and amyloid-beta plaques. Further analysis showed VPS35 levels to be restored, and neuron synapses were fully functional thanks to the chaperone therapy. 

“Relative to other therapies under development for Alzheimer’s disease, pharmacological chaperones are inexpensive, and some of these drugs have already been approved for the treatment of other diseases,” Dr. Praticòsaid. “Additionally, these drugs do not block an enzyme or a receptor but target a cellular mechanism, which means that there is a much lower potential for side effects. All these factors add to the appeal of pursuing pharmacological chaperone drugs as novel Alzheimer’s treatments.”

Before moving to clinical trials in humans, Dr. Praticò and his colleagues will first investigate the effects of this pharmacological chaperone therapy in older mice as their first study was a preventative investigation. Testing older mice exhibiting Alzheimer’s symptoms can identify if the treatment can work for patients already diagnosed with AD. 

These studies conducted at Temple University and partially funded by the National Institutes of Health grants bring hope to the millions of people who already have Alzheimer’s disease and to the tens of millions who are projected to get the disease. Finding relatively inexpensive prevention and treatment techniques of the illness can bring about amazing changes not only to patients and their families but can lessen the increasing cost burden for caring for Americans with Alzheimer’s.

We help families who have a loved one with Alzheimer’s. We can help create a legal plan that will help protect a loved one’s savings and their home in the event extensive long term care is required. If you would like to learn more, please give us a call at 1.800.660.7564 or email us at info@covertlaw.com.

Medicare Coverage for Long Term Care

Most people understand that by paying into Social Security throughout their careers, they can receive health care benefits through Medicare starting at age 65.  Individuals under age 65 who qualify to receive Social Security Disability benefits are also covered under Medicare, as well as anyone of any age who has Lou Gehrigs disease, known as Amyotrophic Lateral Sclerosis (ALS), or has been diagnosed with permanent kidney disease (end-stage renal disease) that requires dialysis or a kidney transplant.  But many people may not understand what is covered when long term care is needed.

In general, long term care is medical and non-medical care provided to a person who is unable to perform the basic actions needed on a daily basis to function independently.These basic actions are called activities of daily living and include bathing, dressing, eating, toileting, managing bowel and bladder function, and having enough physical mobility to be able to move safely to and from a bed or a chair, called transferring.  For people with chronic diseases, permanent injury such as from a stroke, or are suffering from the effects of aging, long term care is provided indefinitely without the expectation that the patient will recover.  

Often patients receiving long term care services reside in a nursing home to be able to have their basic needs met.  For others who have become incapacitated due to an illness or injury, skilled nursing care may be needed with the goal of recovering to independent functional status.Medicare will pay for medically necessary acute care services and some long term care services that meet specific criteria.  Most long term care non-medical services are not covered by Medicare, such as nursing home expense or the services provided in the home for custodial-type care.  

There are four specific types of long term care services, listed below, that Medicare will pay for, though certain conditions apply for most services to be covered:

• Care in a skilled nursing facility for up to 100 days per benefit period
• Services to treat medical conditions
• Services to prevent further decline due to medical conditions
• Hospice care

For a Medicare recipient to qualify for a skilled nursing home stay, the patient must have been provided acute care in a hospital for three consecutive days (often referred to as three midnights) prior to transferring to a skilled nursing facility or must be placed in a skilled nursing facility within 30 days of that qualifying acute care stay.  Being held on observation status for three consecutive days is not enough for Medicare to pay for additional care.

Once in a skilled nursing home, payment for services is based on length of stay with only a portion of the cost is covered after the first 20 days, and Medicare will not pay for the cost of the skilled nursing facility after the 100^th day.These days of stay do not need to be consecutive.

When services to treat medical conditions are deemed medically necessary by a physician, Medicare will pay indefinitely on certain services as long as the physician writes an order for continued services every 60 days and these services remain medically necessary.   Services covered include intermittent or part-time skilled nursing care, therapy services provided by a Medicare-certified home health agency, medical social services, and medical supplies and durable medical equipment (of which 80% of the approved amount is covered).  For patients with conditions that may not improve, such as debility from a stroke, Parkinson’s disease, Alzheimer’s disease, Multiple sclerosis or ALS, Medicare will pay for services that could prevent further decline in their health status.   Hospice care for those with a terminal illness who have chosen to stop all active treatment and are not expected to survive longer than six months is also covered with Medicare.   This care includes medications for pain control or relief from the symptoms of the illness, as well as hospice care by a Medicare-approved hospice provider not only in the home but in a nursing home or a hospice care facility.  Lastly, some short-term hospital visits may be covered.

Understanding how to pay for long term care can be overwhelming. We help seniors and their loved ones plan for the possibility of needing long term care, including how to access and pay for it. If we can be of assistance, please don’t hesitate to reach out by calling us at 1.800.660.7564 or by emailing us at info@covertlaw.com.

Sources:

www.acl.gov

www.medicare.gov

www.ltcFeds.com

What is a Continuing Care Retirement Community?

There are three distinct living phases associated with a continuing care retirement community (CCRC). The first is independent living when a resident enters into the community with few if any disabilities requiring limited assistance. In this phase of independent living, community residents typically take advantage of the broad range of social, physical, and intellectual offerings. The second phase is assisted living, which includes long-term personal senior care support services that include help with activities of daily living like medication management, bathing, meals, dressing, and transportation. The third phase is nursing home care, also known as a skilled nursing facility. This third phase addresses a resident’s requirement for 24-hour monitoring and medical assistance in the case of serious injury or severe illness. Nursing home care locations within the CCRC are usually located near an associated hospital if the need arises for acute care or hospitalization. The linked three phases of a CCRC provide a continuum of care so that a resident can spend the rest of their days moving between the levels of care as needed. 

These residencies are also referred to as life plan communities, active adult community homes, and lifetime communities. CCRC’s vary from state to state and have no licensing by one oversight entity. There is no reliable data as to how many seniors are living in CCRC’s, but it is evident that continuing care within one inclusive community is gaining popularity. One way to distinguish a well maintained and safe CCRC is through the Commission on Accreditation of Rehabilitation Facilities (CARF). This organization is America’s only accrediting body for these types of communities and is an independent, non-profit organization focusing on advancing the quality of services to meet the residents’ needs and provide the best possible outcome. The Continuing Care Accreditation Commission, also known as CARF-CCAC, is a valuable reference when researching a move into a CCRC.

Opting to live in a CCRC is a costly senior housing option and requires due diligence and careful financial planning optimizing the experience. Payment plan specifics are different at each CCRC; however, an entrance fee is required. These entrance fees can be as little as $10,000 and as expensive as $500,000. Most CCRC’s do not allow ownership of the residence; however, a monthly maintenance fee requires additional monies ranging between $200 and $2,000. The residence is just one part of the contract negotiation. Health care coverage and costs are typically broken down into three fee schedule options. The first is an extensive contract, which is the most expensive. It provides the resident with unlimited access to healthcare with little or no monthly maintenance fee increases. The second is a modified contract which offers a resident unlimited access to healthcare, but health care is paid for as needed, and monthly maintenance fee increases offset this pay for health care as needed approach. The third is a fee-for-service contract, and while it seems like a conservative spending approach if the aging resident eventually requires extensive healthcare, it is costly. This fee schedule option allows residents to pay for all health care costs separately.

Websites that offer advice on senior living options like aPlaceforMom suggest that the admission agreement for a CCRC should cover 

• The three residence phases
• Fee schedule options
• Health care coverage
• Cancellations and refunds
• Services
• Insurance requirements
• Conditions for transfer within the community to other levels of care
• What the CCRC’s responsibility is if a resident becomes unable to pay fees.

Contract review by a trusted lawyer or financial advisor is of the utmost importance. Contracts should include a clause that addresses refunds in the event a resident leaves the CCRC and, like the fee for service health care options, most CCRC’s have multiple agreement choices that offer varying degrees of refundability. In the past, most continuing care retirement communities were non-profit organizations, but today, many CCRC’s are a for-profit business. Check into the possibility that the business entity of your retirement living arrangement may one day be sold and understand how that would affect a residential contract.

It is essential to ask relevant questions when researching a particular continuing care retirement community, such as:

• What if assisted living and nursing home facilities that are part of the CCRC are full when I need them?
• Is there a reciprocal agreement between the CCRC and nearby communities?
• What type of background checks are done for staff members?
• What is the staff-to-patient ratio in each phase of living?
• How can a resident participate in the organization’s decision making? 
• What type of memory impairment (or dementia) services are available?

The above questions are good starting points to learn everything possible about a particular CCRC. Some items will be specific to your health, financial situation, and family relationships. We often help families with determining the right type of living situation for senior family members.  If we can assist you or a loved one, please don’t hesitate to reach out by calling us at 1.800.660.7564 or by emailing us at info@covertlaw.com.

Long Term Care Myths

According to the U.S. Department of Health and Human Services, someone turning age 65 today will have a 70 percent chance of requiring some long-term care (LTC) service and support during the remainder of their life. In the case of women, the typical LTC need will last about 3.7 years compared to men who will need about 2.2 years of care. While approximately one-third of today’s 65-year-olds may not ever need long-term care 20 percent of those who do will require it for more than five years. 

The statistics are clear; older Americans should be carrying a long-term care insurance policy to protect their future but only about 7.2 million Americans 65 years or older currently own a traditional long term care policy, and this number has held steady for the last seven years. While LTC insurance is overall considered expensive and finding the right plan for you in the myriad of insurance products available can be confusing and vary from state to state. According to A Place for Mom, there are seven myths about long term care that anyone age 50 or more should understand. 

One myth is that a person has to get rid of all of their assets to receive Medicaid which will qualify them for federally available LTC benefits. In general, the rule is a person is not allowed to keep more than $2,000 in countable assets to be eligible for Medicaid. Exemptions in some states can include your home (if a spouse, minor or disabled child still lives there), assets that cannot be converted to cash, and burial plots or spaces. Also, personal property, one vehicle, and prepaid funerals generally qualify as exemptions. The Community Spouse Resource Allowance rules permit the non-applicant spouse to keep a portion of the couple’s countable assets to prevent them from becoming destitute. Before making any attempt to spend down assets to qualify for Medicaid speak to an elder law attorney as the federal five year “lookback” rules have penalties and exceptions. 

No, Medicare will not pay for long term care expenses except in the most specific and narrow of circumstances. Medicare will cover skilled in-home care from a nurse, occupational therapist, physical therapist, speech therapist or social worker for up to 21 days if ordered by a physician. In the case of a skilled nursing facility, Medicare pays for the first 20 days with no co-pays but if the stay is between 21 to 100 days, Medicare only pays a portion, and the beneficiary must pay the balance.  

Another myth is that a person thinks they are too young to think about long term care insurance let alone the need to pay for it. The truth is that even under the age of 65 if the person has a chronic illness like diabetes or high blood pressure or in the event of an accident, long term in-home or residential care services may be needed. According to the US Department of Health and Human Services on average, about 8 percent of people age 40 to 50 have a disability that may require long term care services.

Relying on the hope that family will take care of a long term care need is often a myth. While many older Americans are successfully aging in place, in part due to the benefits of technology, unpaid family member caregivers and community organizations are typically not willing and available for long term, intensive caregiving. A family discussion is needed if there is an expectation that a family member is willing and able to take on a long term caregiver role. While many family members are eager to provide oversight through the use of technology, the intensive requirements of long term care are usually more than they are willing to accept.  

Most health insurance policies will not cover long term care expenses to any meaningful degree. Some plans will have minimal home care and skilled nursing benefits; however the nature of the plan is short term and is intended to produce recovery and rehabilitation while long term care is generally custodial in nature for the safety, maintenance and well being of a person with a chronic condition. Even some long term care insurance policies will not cover all long term care expenses. There are elimination periods which function as a deductible or after a policy benefit has been exhausted. Specific coverage in long term care varies widely from policy to policy.

Finally, many aging Americans feel that their retirement savings will cover the costs of their long term care. The website A Place for Mom has a financial calculator to help individuals understand their specific needs to cover long-term care costs. Currently, the average US national median long term health care cost is about $50,000 for a home health aide which is above and beyond all other living costs. In many situations, in particular with residential care, costs can run hundreds of thousands of dollars over a few short years. Unless a person is independently wealthy, most retirement savings will be spent down very quickly.

Chances are you will need long term care during your lifetime. Being educated about what is best suited to meet your personal financial and health background needs is a significant first step. Next, understand what legal options are available to help you in the event you need significant long term care and may run out of money trying to pay for it. We are here to help. Contact our office today and schedule an appointment to discuss how we can help you with your planning by calling us at 1.800.660.7564 or by emailing us at info@covertlaw.com.

Will Social Security and Medicare Programs Run Out of Money?

According to the American Association for Retired Persons (AARP), every single day 10,000 baby boomers are turning 65 years old. The deluge of aging Americans and the increase in longevity in the already 65 plus population are the main reasons why the Social Security and Medicare programs are expected to have financial insolvency issues in the coming decades. Unsurprisingly, the vast majority of baby boomers agree that it is critical to preserve Social Security benefits even if it requires an increase in taxes paid into the system by working Americans. Payroll taxes by far account for the majority of monies available to pay for social security benefits.

The boomer generation is keen to preserve social security benefits as many of them are not well prepared for retirement. The financial retirement picture for nearly half of the younger boomers (ages 55 – 64) is bleak with reportedly no retirement savings at all. The US government is also unprepared to sustain full benefit payments. By the Social Security Administration’s admission in 2034, the program will run out of reserves at which time benefits would have to be reduced by 25% unless the government can fix the programs long-term funding shortfall.

This same group of unprepared boomers also appears to have uncertainty as to how much of their income health care costs are projected to absorb. Health View Services states “HealthView Services’ Retirement Healthcare Cost Index, which calculates the percentage of Social Security benefits required to address total lifetime retirement healthcare expenses, reveals the impact of expected healthcare costs on retirement budgets. The index shows a healthy 66-year-old couple retiring today will need 48% of their lifetime Social Security benefits to address total lifetime healthcare expenses.” Additionally, about half of baby boomers believe Medicare will cover the cost of long-term care, but that is not the case.

How federal government institutions face the challenge of covering the costs of social insurances like Social Security benefits and Medicare costs to a burgeoning boomer population will determine whether many citizens will be able to age successfully. Beyond the more significant problem of funding these social programs, the government is looking to technology to cut costs for senior care. Virtual assisted living that can help families care for older adults and smart devices appear to be some of the technological saviors for the American baby boomer population. 

Joseph Coughlin, Ph.D., director of the MIT AgeLab in Cambridge, MA, and others testify before the Senate Special Committee on Aging as debate about policy and program funding for American seniors can no longer be put off. Coughlin recommends that virtual reality (VR) become a standard device among senior living communities, assisted living and nursing homes. Not only did residents engaging with VR have fun, but there is also less depression and more engagement in active conversations with other residents as a by-product of the technology. 

Other technologies on display include smartphone apps with health functions, smart glasses that can help prevent accidental falls for seniors with limited eyesight, and a pen that can help people with reduced vision identify items. Using these and other tech devices can create a better aging experience and reduce the need for hospitalization for many seniors. Technology provides a net benefit for programs like Medicare that routinely pay for hospitalization costs that include injuries due to falling, reactions from incorrect prescription dosages, and other emergent care needs that can be avoided with practical technology applications.

While no one can discount the importance of funding social programs that benefit aging Americans, applications of specific technologies for seniors can reduce overall costs associated with the baby boomer generation. As the federal government begins to tackle the issues at hand for seniors, there is a lesson to be learned. Putting off planning for or relying on some other entity to solve retirement and health care issues is a dangerous proposition.  If you have any questions, please give us a call at 1.800.660.7564 or email us at info@covertlaw.com. 

Social Security and Funding Uncertainty

Social Security benefits, which are funded through 2 trusts, may not be available for much longer. The US Social Security Administrations funding trusts are known as the Old-Age and Survivors Insurance (OASI) Trust Fund and the Disability Insurance (DI) Trust Fund. In their annual report to Congress, the Board of Trustees has published some startling detail about projected insolvency for the Social Security Program. As reported, short term results indicate that beginning in 2020 and all subsequent years after; the program cost will exceed non-interest income. Because the OASI Trust has no authority to borrow money, asset spending will have to occur to cover the costs of social security benefits and deplete the reserves of both OASI and DI trusts. Considering each trust separately, the funds for the OASI Trust will be exhausted by the year 2034 and the DI Trust by 2052. 

If you are 50 years of age or older and have worked, you have been participating in the funding of the Social Security Program for decades expecting protection against economic hardships that sometimes happen in retirement; protection promised to you by the federal government. The current actuarial status means that without significant changes to the OASI Trust, funding for your scheduled benefits is at risk of being reduced or possibly not there at all by 2034. It is a stunning admission by the Trustees of the unsustainability of a federally managed program handling your retirement money. 

Many economists have likened social security to a Ponzi scheme, and now that the bulk of the population (baby boomers) are receiving benefits with fewer and fewer participants in younger generations paying into the system the entire program is in jeopardy. Increasing numbers of retirees, increasing longevity, and a shrinking workforce leaves the yearly intake of monies (receipts) and accrued interest less than the outlays to cover scheduled benefits. The law of large numbers works well until the pool of paying participants shrinks. 

The current report suggests at the time of depletion of the combined trust reserves the Social Security Administration will be unable to pay scheduled benefits in full and on time in 2035. There is a suggestion in this report that it will suffice to pay between 77 to 80 percent of scheduled social security benefits. Legislative action is required to stop reserve depletion and preserve full payment of scheduled benefits to retiring and already retired Americans who have faithfully paid into the system. There is not a lot of time to get the fix in place because of the scale of the monies involved. Future beneficiaries may have a benefit reduction as a possible strategy to help shore up the program. Raising the rate of payroll taxes that both workers and employers have to pay is also a potential strategy. All of these proposed solutions are not likely to make voters happy since the essence of the fix is for the American taxpayer to receive less and pay more. Currently, the political gridlock in Congress does not give much hope that the social security benefit funding problem it will be quickly resolved. 

In the event the OASI Trust becomes insolvent how will that affect your retirement plan? Very soon the federal government will have to take action and make significant changes so that Social Security Administration can continue benefit payments in full. Knowing that the government historically privatizes gains and socializes losses the brunt of the financial burden may well fall to individual Americans. 

We help families prepare for retirement, and the possibility of needing long term care. If we can be of assistance, please don’t hesitate to reach out by calling us a 1.800.660.7564 or by emailing us at info@covertlaw.com.