Category Archives: Life Insurance

Five Medicaid Long-Term Care Myths

November 17, 2016

Many people want to know how they would ever be able to afford long term care costs that can range anywhere from $50,000 to $120,000 per year. Few people can pay this from their regular income and retirement nest eggs can be quickly depleted. Long-term care insurance is very expensive and difficult for older people to get. Many people look to Medicaid to cover these costs but few people understand the complicated rules surrounding Medicaid eligibility. We will take a look at a few of the myths related to Medicaid.

Myth: Medicare and my supplemental health insurance will pay for nursing home care

Truth: Medicare will only pay for 20 days of full coverage and even then, only if you have spent at least three days in the hospital and then need skilled care. Then you can get an additional 80 days of partial coverage, for a total of 100 days. After 100 days, Medicare coverage stops and you are responsible for the full cost.

Myth: Medicaid will pay for all long-term care services

Truth: Unlike Medicare which is a federal program, Medicaid is a joint program by the Feds and the States. While the Medicaid minimum guidelines are established at the federal level, each State administers their own Medicaid plans and the benefits vary greatly from state to state. Some states will ONLY cover skilled nursing home care or home care for patients who would qualify for nursing home care. Other states may cover some additional services such as assisted living facilities, and in home services but many do not.

Myth: If I have to go to a nursing home, the government will take my money and my house

Truth: Medicaid is designed to be a safety net for people who can not afford to pay for long term care. It is expected that if you have assets, they will need to be “spent down” on your care before the government will start paying. So in order to qualify for Medicaid, your income and assets must below certain thresholds. If you have more than these thresholds, the government will not seize your property. You simply won’t qualify for benefits.

If there is a reasonable chance you will return home after getting nursing home care, the state will generally allow you to keep your home and still qualify for Medicaid. However, once a person receiving benefits passes away, the state can try to get the money back that that they paid in benefits from the person’s estate.

If a Medicaid recipient is married, it doesn’t necessarily mean they must spend ALL joint assets on long term care. The non-disabled spouse is allowed to keep half of the couple’s assets, up to a maximum of $119,220 in 2016. In addition, the non-disabled spouse, called the community spouse, can remain in the house, even if the value exceeds the $119,200 threshold. Disabled siblings or children would also be allowed to retain the house if they already lived there prior to the Medicaid recipient’s disability.

Myth: I can transfer money to my spouse or children to qualify for Medicaid

Truth: Medicaid will look back five years from the date of your application to see if you have transferred or gifted any assets to other people. If they find you have, they will disqualify you from receiving benefits for a period of time called a penalty period.

However, gifts to disabled children, including deaf children, are considered exempt transactions and are not subject to the penalty period.

Myth: If I qualify for Medicaid, I can choose any facility I want

Truth: Not all facilities accept Medicaid benefits so you may not have as many options as you would with private pay. In addition, many will limit the number of Medicaid beds in their facilities, although some states prohibit this. Medicaid will also not pay for a private room so if you wish to have a private room, you would have to pay out of pocket for that additional cost.

At Kramer Wealth Managers, we can help navigate the financial impact of long term care expenses and help you prepare for the unexpected. The Medicaid system is complex and should be navigated with the help of an experienced Elder Law Attorney (find one at For more information on Medicaid, go to

Although the information has been gathered from sources believed to be reliable, it cannot be guaranteed and the accuracy of the information should be independently verified. The information is not intended as tax or legal advice and should not be relied upon as tax or legal advice. Federal tax laws are complex and subject to change. Neither FSC Securities Corporation, nor its registered representatives, provide tax or legal advice. As with all matters of a tax or legal nature, you should consult with your tax or legal counsel for advice.

Beneficiary mistake #4: Backup Beneficiaries

August 8, 2014

Many assets allow you to name a beneficiary, that is, whom you would like to receive the asset in the event of your death. Life insurance policies and retirement accounts are common examples but some other account types such as bank accounts and non-retirement investment brokerage accounts also may allow you to name beneficiaries through a Pay on Death (POD) or Transfer on Death (TOD) form. While these forms are generally straight forward, they often lead people to make inadvertent errors. We have identified six common mistakes people make when preparing for the distribution of their assets after death. This is PART FOUR OF SIX.

Misunderstanding contingent beneficiaries. Most companies allow you to name a contingent (backup) beneficiary should your primary beneficiary pre-decease you. It is important to understand that contingent beneficiaries will only receive a benefit if ALL of the primary beneficiaries pre-decease you. For example, if you name your four children as primary beneficiaries equally and your eight grandchildren as contingent beneficiaries, and one of your children dies before you, his/her share will NOT go to his/her children. Instead, it will go to the remaining three surviving children.

Example: John Doe has two children, Jack and Jill. Jack has two children, Hansel and Gretel. Jill has two children, Jacob and Wilhelm. John has named his two children, Jack and Jill, as primary beneficiaries- 50% each. Then he has named his four grandchildren, Hansel, Gretel, Jacob, and Wilhelm as contingent beneficiaries- 25% each. Jack passes away before John, leaving behind his wife and Hansel and Gretel. Later, John dies.

In this example, Jill would receive 100% of John’s life insurance policy as the only surviving primary beneficiary. Jack’s two sons, Jacob and Wilhelm, would not receive any of Jack’s share of their grandfather’s life insurance policy. After Jill dies, the money will go to her own beneficiaries.

This can be avoided by using a per stirpes designation. Per Stirpes is a latin word meaning, “per issue” and is a legal term that would allow the deceased beneficiary’s benefit to go to his/her children

Being aware of this type of common mistake can help you better prepare to ensure your wishes are followed in the event of your death. At Kramer Wealth Managers, we can help you coordinate with an estate planning attorney to make sure your estate goals and financial planning goals are in line with your personal WealthPath.

While the tax or legal guidance provided is based on our understanding of current laws, the information is not intended as tax or legal advice and should not be relied upon as tax or legal advice. Neither FSC Securities Corporation, nor its registered representatives, provide tax or legal advice. As with all matters of a tax or legal nature, you should consult with your tax or legal counsel for advice.

How Much Life Insurance Is Enough?

April 7, 2014

Choosing the right life insurance death benefit can be as simple or as complex as you want it to be. It’s just a matter of determining who your intended beneficiary is and then deciding what you want to help them do after you’re gone.

Choosing a Beneficiary

The person (or people) you choose as beneficiary will drive the decision surrounding the amount you need. If your beneficiaries are individuals who rely on you to support them, then you may want to make sure that your policy will pay enough to replace several years’ salary.

If, on the other hand, the beneficiary is going to be a distant relative or friend handling your arrangements, you might just want to choose a benefit that will pay for your final expenses.

How to Help Your Beneficiary

Your life insurance benefit can help your heirs in many different ways. You may want to ensure that your policy helps your children pay their college tuition expenses or assists your spouse in paying off debt. You may want the money to fund your surviving spouse’s retirement or to help your family go through counseling to deal with your loss. If you anticipate your estate being subject to estate taxes, then you may want to add that to the total death benefit as well.

Stay-at-home parents might want to provide enough in death benefits that their surviving spouse will be able to afford to hire support service providers who can do the things the deceased spouse once did, such as laundry, after-school child care, meal preparation and so on.

Considering Your Legacy

Another consideration in determining your death benefit is the kind of legacy you want to leave behind. If you want to leave money to your favorite charity or organization, set your children up with a trust fund that can help them finance their own family expenses far into the future or to provide a small, short-term scholarship to would-be students of your favorite educational institution, you can add this amount to your policy benefit.

At Kramer Wealth Managers, we can help you determine the objectives you have for your life insurance policy. We can walk you through the various options available to protect yourself and your loved ones through death benefit, riders, and cash values. Contact us today so we can get started.