Supplemental health insurance pays off with time

Dear Bruce: My parents are questioning the need for supplemental health insurance. Ages 70 and 75, they live in Maryland, receive Medicare and have little income apart from Social Security. Their health is good, and they have only monthly expenses. Is it realistic to think saving the premium on their own, to cover the 20 percent that Medicare doesn’t, will be beneficial? As with most insurance, Dad is seeing that money go out the window with no satisfaction. Their home is paid for, and having an additional piece of real estate to sell in case of emergency is their backup, per se. Where can seniors get advice and information on handling their finances without it costing an arm and leg? Thanks for your input. – D.H., via e-mail

Dear D.H.: Both of your parents are fortunate to enjoy good health at this point in their life, and it’s very possible they will continue to be healthy. It is not realistic to think of the supplemental insurance as an expense, however. Over a period of time, in almost every case, you will take out more than you put in. I would hope they could go their entire life without ever having to file a claim. And I realize having that extra premium to pay can be troublesome for someone with a modest income, but a serious illness could be devastating.

Consider paying ill sister’s debt

Dear Bruce: I’ve just taken over temporary responsibility for my sister’s financial affairs while she recovers from a stroke. She has no savings and no credit. She has only Social Security and a small pension, and she won’t be able to work again for at least months. I was horrified to discover she is paying $50 a month on a debt that is at least 20 to 25 years old. It’s paid to a credit service that apparently bought the debt many years ago. Most of the payment goes to interest. The “buy-out” price is currently about $3,000, which she has no chance of paying.

I think there is something totally wrong about this. Is there any credit agency or government agency that would help settle this for her? Surely all those years of interest payments are more than enough. – K.C., via e-mail

Dear K.C.: I understand your discomfort with this arrangement, but debt is debt. Apparently, your sister has been paying almost nothing on the principal and while that could make the creditor very comfortable, it’s not going to help her situation. Debts don’t go away simply because the years pass. If you have the ability, you might wish to consider paying off the remaining obligation. Negotiation is possible, but there is nothing in your letter that tells me any laws have been violated here or that a government agency would have any interest in this. She is fortunate to have you looking after her affairs, but reality is, the obligation is legitimate. On the other hand, there isn’t a whole lot they can do to oppose any type of liens, since she has no assets and her Social Security is safe.

Keep assets to pay for care

Dear Bruce: I have a single grandparent, age 86, who has $125,000 in assets. This year, he moved into an assisted-living residence that costs $4,000 a month. He still receives $2,000 a month in pension and Social Security. He would like to gift many of his assets to his family in the next couple of years. Would you recommend the type of person/professional to contact to learn more about the process? – S.E., Columbus, Ohio

Dear S.E.: You’re saying the net cost to keep your grandparent in the assisted-living place is $2,000 a month, or $24,000 a year. There is enough money to pay for this through age 91, which very likely will be enough. If his assets run out at that point, then you’ll have to look into Medicaid. Why in the world do you want to start encouraging him to give away his assets now? He is comfortable and can pay his bills. To begin with, you have a look-back period to deal with, which would take us well into his fourth year toward reducing his assets. I see no reason to do this other than to try and leave something behind for his heirs and that, in my opinion, is not a responsible goal. If you did this a few years ago, it might have been a different story. But now, I would try to conserve his assets, let them earn as much as possible and use that money for his care and comfort.

Deeding property to children is a mistake

Dear Bruce: Is it a good idea to deed property to your children in case you have to go into a nursing home? I know some people are doing this to keep the government from taking the property to pay nursing-home bills. Currently, I believe the law says it has to be done three years prior to entering a nursing home. I have talked to an attorney, and he emphatically was against it. – B.L., Huntington, Tenn.

Dear B.L.: I’m on your attorney’s side. You should know that if your children get into some kind of difficulty, your home could be attached to pay their liabilities. Further, what you’re suggesting is to put yourself on welfare, which is what Medicaid is. Is that your goal? I rather doubt it. It seems to me you should keep the property in your name. If upon your demise there is something left, your kids get it. If there isn’t, so be it.

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