Estate Planning

Three-Quarters of Middle-Class Seniors Priced Out of Assisted Living by 2033

Posted on by Alex Kincaid

In general, middle-income seniors have income and assets that make them less likely to qualify for Medicaid. At the same time, they may not have adequate resources to pay for the rising costs of housing and care options they need.

A NORC study done in 2019 and updated in 2022 shows that nearly three-quarters of middle-income seniors in the US will be unable to afford assisted living programs by 2033 without selling their homes. It is the first study of its kind focused on a growing health care crisis.

Data Used in the NORC Study

The researchers examined gender, race, and education and estimated people’s health, cognitive function, and mobility status using the data for these conditions in 2018.

They evaluated financial resources in 2018, starting from actual income and assets. Then grew them based on the historical changes in each category, annuitized across each senior participant’s life expectancy and their spouses.

Data for financial resources included fixed income streams, such as Social Security, and annuitized assets like retirement savings or mutual funds. The study did not assume adult children could provide support. While housing equity is considered, the reality is that some individuals may be reluctant to sell their homes or have a spouse who continues to live there. Also, many seniors may want to keep their homes as a resource to protect against outliving their assets or having a catastrophic medical event.

With 16 million middle-income seniors in 2033 and 11 million over the age of 75, the size of this demographic will double to include the following statistics:

  • Roughly 9.5 million will be unmarried, widowed, or divorced
  • Four in 10 will not have family members living nearby to offer care or support
  • Over age 75, 54% will have three or more chronic health conditions, 56% will have mobility limitations, and 31% will have cognitive impairments
  • Average financial resources of less than $65,000 in income and annuitized assets will not cover health, personal care, and housing services

Even after selling their homes, seniors in 2033 will struggle to pay for assisted living or require additional help from family members. Health limitations will make it hard to live independently. Without government assistance like Medicaid, this creates a significant problem. Clearly, efforts must be made to improve the affordability of long-term care for seniors, particularly for those of lower middle incomes.

What It Means for the Future

Without a long-term care system able to accommodate a more diverse set of older adults and families, only the individuals with the lowest incomes will be provided with care. Others will be reliant on their families.

Combined public and private policymakers should examine healthcare and housing policies to extend funding for in-home care and caregiving support to prevent middle-income seniors from spending down all their assets to transition to nursing homes. And the long-term care industry must offer more affordable senior housing and in-home care options.

An Immediate Solution

Estate planning and elder law services are necessary to prepare for long-term care costs in the future. By starting early, a thorough evaluation of income and assets can provide resources and options over time. Long-term care and Medicaid planning, including using trusts to protect assets from being spent down for care, can prevent your clients from having a financial and medical crisis.

 

Sources:

https://medcitynews.com/2022/09/report-more-than-11m-middle-income-seniors-wont-be-able-to-afford-long-term-care-by-2033/

https://www.norc.org/Research/Projects/Pages/forgotten-middle-housing-and-care-options-for-middle-income-seniors-in-2033.aspx

 

The Basics of Hospice Care and How to Avoid Providers Involved in Medicare Fraud

Posted on by Alex Kincaid

When faced with a terminal illness or condition, more people than ever are choosing hospice care over starting or continuing expensive medical treatments. Hospice care is for patients who choose not to undergo specific treatments or when they are no longer effective. Instead, the focus is on the patient’s comfort and quality of life. Care is received at home or in a facility, such as a hospital or a nursing home.

In addition to supporting the patient’s end-of-life needs, hospice care includes the needs and concerns of the patient’s family. Before opting for hospice care, patients should talk with their doctor and their family. Doctors recommend hospice care when they believe their patient has less than six months to live if their condition runs its course naturally.

The hospice care concept was brought to the United States in the 1960s by an English doctor and social worker named Cicely Saunders. It was designed to allow terminally ill patients to die with dignity in their homes surrounded by their loved ones instead of in hospitals while receiving expensive treatments that weren’t helpful. By the early 1980s, many hospice programs had become available throughout the United States. Recognizing the potential cost savings of hospice care over expensive and ineffective end-of-life treatments, President Ronald Reagan authorized Medicare to cover the costs of hospice care.

Benefits of Hospice Care

The biggest benefit for the hospice care patient is avoiding unnecessary and costly treatments when fighting a losing battle against their illness. Hospice patients can receive care that brings them pain relief and comfort while living their final days in their homes.

Though opting for hospice care means waiving treatment for the terminal illness, it doesn’t mean discontinuing all treatments. For example, if a patient has cancer that is not responding to chemotherapy but is also receiving treatment for high blood pressure, they can choose to start hospice care. Their chemotherapy would cease, but they could continue treatment for their high blood pressure. Hospice patients are less likely to receive medications and undergo tests they don’t need compared with patients without hospice care.

Even after starting hospice care, patients may choose to return to treatment for their terminal condition. They may choose to do this for any number of reasons. For example, they may be expecting a grandchild or great-grandchild. Later, the patient may continue with hospice care.

Medicare pays for some or all hospice care costs, and some private insurance plans may also cover certain expenses. Patients should check with their insurance provider to understand their coverage.

Some Hospice Care Providers are Exploiting the System

What started as a field of medicine primarily handled by nonprofits and charities now has a rapidly growing number of for-profit enterprises. According to a ProPublica article published in November 2022, for-profit hospice providers accounted for 30% of providers in 2000, and now they account for more than 70% of providers. The article states that between 2011 and 2019, the number of hospices owned by private-equity firms tripled.

Since Medicare covers hospice care expenses for eligible patients, providers bill Medicare for their services. Medicare pays hospice providers a set rate per patient per day, regardless of how much care they receive. Under this reimbursement arrangement, providers more interested in profiting from their patients than caring for them are incentivized to have as many patients as possible.

Since hospice patients often choose to live out the ends of their lives in their homes, a significant portion of their care is handled by family members who aren’t compensated for their efforts. Nurses aren’t required to visit more than twice a month. This makes it easy for unscrupulous providers to receive payment for minimal care.

Also, judging a patient’s eligibility for hospice care is difficult. Regulating the hospice care industry is challenging because no government agency wants to be seen as limiting a valuable service. Surveyors are only required to inspect hospice operations once every three years, allowing providers to operate with very little oversight.

A Call for More Oversight

In response to ProPublica’s article, the National Hospice and Palliative Care Organization released a statement condemning fraudulent and abusive behavior by bad actors. The NHPCO asserts that most hospice care providers are committed to the original vision of what hospice care should be: providing relief from suffering as well as comfort and support to people nearing the end of their lives.

In its statement, NHPCO referenced a letter that they, along with other national hospice care organizations, sent to the head of the Centers for Medicare & Medicaid Services (CMS) expressing concern about the rapid increase of new hospice care providers in certain states. Their letter to CMS encouraged the organization to increase federal oversight of their industry and invited them to meet and discuss suggestions for better regulation in this area of the healthcare industry.

Avoiding Hospice Care Providers Involved in Medicare Fraud

Knowing that unethical hospice care providers are out there looking for new patients can make it challenging to find a good provider. However, there are helpful resources.

A simple but effective way of finding a reputable provider is talking with trusted people. A patient’s family, friends, and members of their religious organization are a great place to start. Online reviews can narrow down the selections, along with deeper research on the top choices. Learn whether a hospice provider is a nonprofit or for-profit company, how long they have been in business, and who owns them.

NHPCO has a program called CaringInfo that is a resource for people looking for hospice or palliative care. CMS’s Hospice Center and the National Institute on Aging are other great resources for end-of-life questions.

 

 

Legal Considerations for Farm Owners

Posted on by Alex Kincaid
Farming brings to mind kinship with nature and a simpler way of life. But the farming industry is highly regulated, and navigating the applicable laws and regulations can be far from simple. A rising world population creates greater demand for food and the farmers who produce it. With the age of the average farmer hovering around sixty years old, younger farmers and ranchers are also needed. Those who want to break into the farming business may do so to carry on a family tradition or start a new tradition as a farmer. But before a single seed is planted or an animal is raised, farmers should familiarize themselves with the legal landscape that impacts their operations.
Is My Farm a Hobby or a Business?
Perhaps you started a backyard garden to supplement store-bought produce and discovered that you have a green thumb. You quickly accumulated more food than you and your family needed, and you gave away the excess to friends and neighbors. So far, your garden is still strictly in the realm of a hobby. But let’s say that, instead of giving the food away, you set up a booth at a local farmer’s market and sell it. You expand your garden to generate more food, and you begin to earn income—albeit supplementary to your primary income—from the food sales. At this point, you may have gone from gardening for fun to farming as a business in the eyes of the Internal Revenue Service (IRS). The IRS has strict rules about what is considered a business and what is considered a hobby. According to IRS Publication 225, you are in the farming business if you “cultivate, operate, or manage a farm for profit, either as owner or tenant.” See footnote 1.
As a for-profit farmer, you must pay taxes on any income you generate from farming. However, being a farmer also comes with tax benefits, such as special income tax deductions. Tax considerations may have a major effect on the timing of farm income and deductions and, as a result, they can be a significant factor in determining the structure of certain farm transactions (i.e., acquiring new equipment). Farmers should be aware of taxes and tax laws to avoid mistakes that reduce their after-tax income, says the Land Grant University Tax Education Foundation. See footnote 2.
Choosing a Farm Business Structure. 
If your farm is a for-profit business, the type of business structure you choose for your farm has legal and tax implications and should be chosen carefully based on your situation. For example, sole proprietor farmers do not have to register their business with the state or file any paperwork to set up their business the way that businesses formed as separate legal entities do. But if sole proprietor farmers are sued or owe debts to creditors, their personal assets may be at risk. As a farmer, you can choose any type of business form for your farm, including the following:
●Sole proprietorship
●Partnership
●Limited liability company (LLC)
●Corporation (including S corporation and C corporation)
●Nonprofit corporation
●Cooperative
The Small Business Administration gives a brief overview of these different business structures.  See footnote 3.  The website Beginning Farmers recommends that new farmers consult with an attorney and a certified public accountant that understand the farming laws where the farm is located. See footnote 4.
Federal Farming Laws.
The US Department of Agriculture (USDA) regulates farming and ranching, as well as food quality, safety, and nutrition labeling. It consists of twenty-nine agencies that oversee everything from food safety and inspection, to crop and livestock insurance regulations, to the national biotechnology regulatory framework. Many of these farming regulations are set forth in the farm bill—a legislative package that Congress passes about once every five years. The farm bill is the primary way that the government sets agricultural and food policy. It has a huge impact on how food is grown, the types of food produced, and farmers’ livelihoods. Once a farm bill is passed, the USDA writes the rules for how its programs will be implemented. The 2018 Farm Bill, which expires in 2023 and provided $428 billion in funding, covers the following topics:
●Price and income support for farmers
●Natural resource conservation
●Federal loan programs for farmers
●Farm and food research and education
●Rural farm development
Farm bill assistance is provided to farmers through a variety of programs.  See footnote 5.
For example, you may qualify for financial assistance if you are a veteran, minority, or woman farmer or rancher. The USDA is not the only federal department that oversees agricultural practices. The Environmental Protection Agency (EPA) also has several programs that are relevant to farmers.  See footnote 6.  Some of these programs only apply to farm operations of a particular size or in a specific location.
The regulatory burdens imposed on farms vary, but may involve application, permitting, planning, labeling, testing, waste management, and other requirements. The EPA has the authority to impose civil and criminal penalties on noncompliant farmers. Violations of the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA), for instance, which relates to pesticide application, can result in fines up to $50,000 and a year of imprisonment.
State Farming Laws

The EPA notes that many states’ requirements may be broader in scope or more stringent than those of the EPA. Because state laws vary considerably, farmers must remain up to speed on state agricultural statutes, which deal with much more than environmental issues. The National Agricultural Law Center notes that these laws touch on a wide range of farming topics.  See footnote 7:

  • Agricultural liens
  • Biofuels
  • Climate change
  • Fence law
  • Grain sales and storage
  • Noxious weeds
  • Ownership of agricultural lands
  • Recreational use
  • Tax assessment of agricultural land
  • Unmanned aerial vehicles (i.e., drones)

To place just one of these issues under the spotlight, more than forty states—in addition to the federal government—have statutes addressing climate change in agricultural production.

Legal Support for Farmers.

For most farmers, the hard work is more than made up for by the reward of knowing they are helping to feed the world. But the demands of farming go beyond the long hours and physical toil: understanding the many federal and local farming laws presents a very different type of challenge. You might need a hand not only at harvest time, but any time you have legal questions about farming. Our attorneys are knowledgeable about the laws that affect farmers. Whether you are just starting your farm or are a long-time farmer wanting to expand or change your operation, we are here to help. Please contact us to schedule an appointment.

Footnotes:
1About Publication 225, Farmer’s Tax Guide, Internal Revenue Serv., https://www.irs.gov/forms-pubs/about-publication-225.
2Tax Guide for Owners and Operations of Small And Medium Size Farms, Land Grant Univ. Tax Educ. Found., Inc. (Philip E. Harris & Linda E. Curry eds., 2011), https://ruraltax.org/files-ou/taxguidetosmallmidsizefarm.pdf
3Choose a business structure, U.S. Small Bus. Admin., https://www.sba.gov/business-guide/launch-your-business/choose-business-structure.
4Farm Incorporation, Beginning Farmers, https://www.beginningfarmers.org/farm-business-planning/farm-incorporation/.
5Farmers’Guide to Farm Bill Programs, U.S. Dep’t of Agric. (July 2019), https://www.farmers.gov/sites/default/files/documents/FarmBill-2018-Brochure-11×17.pdf.
6Laws and Regulations that Apply to Your Agricultural Operation by Farm Activity, U.S. Env’t Prot. Agency, https://www.epa.gov/agriculture/laws-and-regulations-apply-your-agricultural-operation-farm-activity.
7State Law Clearinghouse, The Nat’l Agric.Law Ctr., https://nationalaglawcenter.org/state-compilations/.