A new report by the Center for Retirement Research at Boston College finds that nearly two-thirds of U.S. households are at risk of being unable to maintain their standard of living in retirement when possible long-term care costs are taken into consideration.

The report, "Long-Term Care Costs and the National Retirement Risk Index," looks at the percentage of households that would fall significantly short of their target retirement income if they do what they can to prepare for the possibility of long-term care costs, on top of health care and other post-retirement expenses.

If those who could afford to do so purchased a comprehensive long-term care insurance policy with a $3,500 annual premium, researchers found that 64 percent of households would still be at risk of a lowered standard of living in retirement. When the researchers assumed that households would instead pay for long-term care using the equity in their homes through a reverse mortgage, 65 percent would still be at risk in retirement.

The report's authors conclude that their findings "raise major concerns about the retirement security of baby boomers and succeeding generations."

For a link to the report, which analyzes 2006 data, click here.

Just about everyone who gets Social Security, Social Security Disability Insurance (SSDI), Supplemental Security Income 
(SSI), or a Railroad Retirement or Veterans Administration disability pension, will receive a one-time payment from the U.S. government of $250 as part of the American Recovery and Reinvestment Act of 2009 (aka the stimulus bill). The extra payment is scheduled to arrive by the end of May the same way you receive your usual benefit.

Among those receiving the one-time stimulus payment will be long-term care facility residents on Medicaid/Medi-Cal who draw Social Security benefits. (But note that SSI beneficiaries who live in a nursing home and get a monthly SSI benefit of $30 are not eligible for the payment.)

Medicaid/Medi-Cal-eligible long-term care facility residents and their families should know that the stimulus payment is not considered income and will not be counted as a resource for 10 months (including the month of receipt) in calculating benefits under Medicaid/Medi-Cal (or any other federal program or state program with some federal financing). The $250 will also not count as gross income for tax purposes. Recipients can save the payment if they want to, but they should make sure that it will not put their combined assets over the asset limit for any program benefits they may receive as of February 2010. Moreover, a Medicaid/Medi-Cal nursing facility resident shouldn’t see an increase in his or her share of cost for the month the payment is received.

"This money is yours. Your home or facility is not allowed to take it to pay your bill, even if you get help from your state paying for your care," says the National Council on Aging (NCOA) in an informational handout directed at residents of nursing homes, assisted living facilities and board and care homes. If the nursing home takes your $250, NCOA advises contacting your state long-term care ombudsman immediately.

For NCOA's page on the payment, click here

For Social Security's explanation of the payment and Frequently Asked Questions, click here.

For NCOA's handout for long-term care facility residents, click here.

Many people believe that joint accounts are a good way to avoid probate and transfer money to loved ones. Such accounts are sometimes referred to as "the common person's estate plan." But while joint accounts can be useful in certain circumstances, they can have dire consequences if not used properly. Adding a loved one to a bank account can affect Medicaid/Medi-Cal planning as well as expose your account to the loved one's creditors.

When a person applies for Medicaid/Medi-Cal long-term care coverage, the state looks at the applicant's assets to see if the applicant qualifies for assistance. While a joint account may have two names on it, California will  assume the applicant owns the entire amount in the account.  If you claim any sums in the account were not the applicant’s, you must prove the contributions of the third party.

In addition, if you are a joint owner of a bank account and you or the other owner transfers assets out of the account, this can be considered an improper transfer of assets for Medicaid/Medi-Cal purposes. This means that either one of you could be ineligible for Medicaid/Medi-Cal for a period of time, depending on the nature of the transfer.

Another problem with joint accounts is that the account is vulnerable to all the account owner's creditors. For example, suppose you add your daughter to your bank account. If she falls behind on credit card debt and gets sued, the credit card company can use the money in the joint account to pay off your daughter's debt, including debts of her spouse. And, if your daughter and son in law are having marital difficulties, it could also become an issue in their divorce proceedings.

Finally, you need to be sure you can trust the joint account holder because he or she will have full access to the account. Either account owner can take money out of the account regardless of who contributed to the account.

“If your purpose is simply allowing someone to help you with your finances,” says San Diego Elder Law Center attorney Philip Lindsley, “I can’t think of any good reason you wouldn’t want to simply use a power of attorney rather than a joint tenancy. That’s a simple form at the bank, or that can be prepared by your attorney.  There’s nothing a joint tenant can do that an agent under a power of attorney couldn’t, other than lawfully withdraw the money and head to Cancun.”

There are better ways to conduct estate planning and plan for disability. A power of attorney will ensure family members have access to your finances in the case of your disability. If you are seeking to transfer assets and avoid probate, a trust may make better sense. We can help you. For more information on how, visit us here.