Retain control of workers' comp medical benefits

Dear Bruce: I am preparing to go through mediation with the insurance company for workers’ compensation for medical benefits. They would like to get rid of me and, of course, I would like to get out of having to deal with them. Should I accept a settlement of cash and invest the money, or should I put the money into an annuity, which will pay enough to cover my monthly medical expenses for my lifetime? – X.D., via e-mail

Dear X.D.: You must consider a number of variables before making a decision. The first one, of course, is the interest rate on the annuity option. If converted, what would your monthly payment be? Upon your demise, would the annuity decease or would there be some payment to your survivors? You didn’t mention age, but obviously the older you are, the higher the annuity payment – especially when considering it would recapture its investment eventually. On balance, I would prefer to invest the cash myself. If you use the money for some other purpose, it is your right to do so. Furthermore, the money is yours to become part of your estate. In general, an annuity is a good thing for those who have little financial acumen and/or discipline. But if you have the ability to invest and the discipline to handle funds correctly, the cash option likely will work to your advantage.

Niece’s gift may affect benefits

Dear Bruce: I own a home and wish to put my aunt on the deed. This would enable her to take over the home with minimum difficulty if I precede her in death. She could either live in the home or sell it and have money for herself. She is currently in a nursing home, and Medicaid supplements her expenses. She has never owned a home or car. Would her name on the deed affect her Medicaid benefits? Would that affect my ownership in any way? I am just trying to make things easier for her to get ownership, with the minimum cost involved. – C.R., Clearwater, Fla.

Dear C.R.: While your heart is in the right place, you are likely getting some bad advice. Your aunt is in a nursing home, so the likelihood is that she will not need your house to live in. She is receiving Medicaid, so by putting the house in her name, you are in essence writing a postdated check to the state of Florida. They will rightfully attack that asset if it’s given to her. Having an asset might also affect her Medicaid benefits. In no way would I consider transferring the title to your aunt now or ever. I’m sure you would like her to be the beneficiary of whatever you leave behind, but that has to be done carefully.

Perhaps the best thing to do would be to sit down with a trust attorney who is knowledgeable about Medicaid and the tax consequences of what you’re considering. The house probably should remain in your name. The beneficiary of your estate would be the trust if you precede your aunt in death. The trust would then have the responsibility of using the money to your aunt’s best interest. You would also have to consider, after your aunt’s demise, who would be the subsequent beneficiary of the trust that would probably be broken up at that point. I urge you to have the appropriate professionals set it up for you.

Too late for long-term-care insurance

Dear Bruce: I am writing to ask your advice about helping my retired parents to protect their assets. My 57-year-old mother is in a fairly late stage of multiple sclerosis. As of now, my 60-year-old father has been able to care for her needs in their home, but owing to the degenerative nature of the illness, she may need nursing-home care at some point. The problem is that a nursing-home facility will take my father’s generous pension as well as his retirement savings and their home to pay for the expenses. I understand that care facilities are for-profit and need people to pay for this care, but I don’t want my father to lose everything he worked hard for all of his life. Is long-term care insurance an option at this point? How about transferring assets to me as a gift, or selling me their house for a token sum? – J.H, via e-mail

Dear J.H.: Your family situation is certainly not unique and one that must be addressed by all of us collectively. Long-term care insurance is not an option. That’s like asking the insurance company to insure the house against fire as the flames are leaping out of the roof. There are look-back periods that have to be met before you can avoid paying until your dad is broke. That’s a tragedy in itself. The home is an asset of your mother’s, and at this point, selling it for anything under market value would not satisfy any look-back requirement. The home cannot be attached as long as your dad is alive, so that is not an immediate problem. It would reduce whatever estate he leaves, but since he is a young guy, that really is not a consideration. His responsibility for your mother’s expenses, unfortunately, is a reality, and I don’t know any way to avoid that. The system is broken, but I have yet to see any reasonable suggestions as to how to repair it.

Illness doesn’t cancel debt

Dear Bruce: My father is 85 years old and just received a letter from some attorneys stating that he owes a credit card company $15,000. He said he couldn’t remember when he used the card. It turns out he has been getting several letters concerning the account but didn’t want to tell me. He is very ill. He has just received his second pacemaker. He has a heart condition and diabetes. He takes more than 20 pills a day just to stay alive. He only gets about $400 a month from Social Security, and that pays for his medicine. He has no savings or any kind of income. He has a $5,000 life-insurance policy that will probably pay for his funeral. He has lived with me for about five years now and cannot drive anymore, so I drive him to many doctor appointments. Am I responsible for my father’s debt? Please let me know as soon as possible, because the letter seems to imply they are going to bring him to court. – T.W., via e-mail

Dear T.W.: Your dad clearly has the obligation but has no means to meet it. Your best bet is to write to the collection agency and explain that your father is 85 years old, his only income is Social Security (which they cannot attach) and he has no savings and no assets. It’s a different matter if your father has a home or some other property. They could get a lien against the house, and his estate would have to meet their obligations before the process of that estate can be divided. If he is totally without any funds, there is nothing they can do. The life-insurance policy is not attachable. If his assets are as accurate as you described, you have no personal responsibility and he has no money to pay the bill. In this instance, the credit-card company is stuck.

State may seek assets for care

Dear Bruce: Will the state that a person resides in take their home after their death to be reimbursed for the medical expenses paid by Medicaid? My daughter says we should take our names off the deed to our house so she will be protected. – Reader, via e-mail

Dear Reader: If you have exhausted your resources and collect under Medicaid, it is very possible that upon your death the state will seek to recover some of the money expended on your behalf. If you wish to impoverish yourself, you are free to do so, but you have to meet the “look-back” requirements, which means that you have to get it done early enough. Otherwise, they will come to your estate to look for reimbursement. Medicaid is charity/welfare. As I have said many times, why should the public bear the cost of providing this service in order to protect your children’s inheritance? Tough question; I don’t have the answer.

Bruce Williams is a national radio talk show host and syndicated columnist. He can be reached at bruce@brucewilliams.com.[[In-content Ad]]