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The Changing Landscape of Aging and Healthcare Financing

The 1960s Woodstock generation, who often care for their elderly parents, are now older citizens enrolling in Medicare. Changes in demographics such as the baby boomer bubble, the drop in worker-to- retiree ratios and increased longevity are some of the factors that have created increasingly stringent health care financing frameworks.

Our federal and state budgets are bursting at the seams in large part because of Medicare and Medicaid costs. In response, federal and state authorities have taken steps to tighten their belts. Medicare cost saving measures such as a hospital stays at Cooley Dickinson "for observation" are now commonplace and often preempt the ability to obtain health insurance coverage for a subsequent discharge to a rehab facility.

What happens when an elderly Hadley resident become frail and is no longer able to live independently? Where does he live, who takes care of him and who pays for that care? This is an enormously complex question. Our governments want the middle class to solve the problem by self-insuring or purchasing long term care insurance. But often the elder is either clinically ineligible or finds the premiums intolerable. There has been an explosion of home care providers who are ready to provide a huge part of the solution to society's problem. But home care is generally paid for with savings which elders loathe to part with.

The following are a few recent indicators of our government’s distaste for the middle class availing themselves of Medicaid, a needs-based program that covers both community and facility based care. 1) New regulations proposed by Medicaid disallow a type of Trust known as a Pooled Supplemental Needs Trust for those over 65. 2) Medicaid now employs an asset locator program to scour financial records for assets. An intake worker on a recent case located New York real estate sales that had occurred within the prior 5 years which my client had failed to alert me to. 3) Medicaid now requires that previously allowable annuities purchased by the community spouse contain language authorizing health care expenses paid on behalf of the nursing home spouse to be recouped by the Commonwealth.

The funding of long term care is a rapidly evolving and vexing area of our aging society and economy which underscores the wisdom of engaging in creative estate and financial planning.

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