Many happily married seniors are facing a previously unthinkable proposition:  terminate their marriage or risk losing a majority of their savings to medical expenses, leaving both of them with little savings to enjoy their twilight years, regardless of how well they planned in advance.  How can this happen?  With medical technology ever improving, allowing us to live longer, most individuals will spend at least a few years in a nursing or retirement facility during our lifetimes.  With the baby boomer generation approaching retirement age, more and more of us will fall into this category.  How will these long-term care expenses be paid?  The choices are private savings, long-term health care insurance, Medicaid or a combination.  This is where the dilemma occurs.

For example, consider a devoted husband and wife living financially comfortable in retirement.  Husband has a series of strokes and reaches the point physically where wife can no longer care for him.  He must move indefinitely into a retirement facility where staff is available to care for him on a full-time basis.  How will his care be paid?  The couple can pay for his care but at $6,000 per month or more the money can be depleted quickly.  The couple may have long-term care insurance; but most people don’t, and unless you purchase it at a fairly young age, it may be cost-prohibitive for older individuals.  The couple doesn’t want to deplete all of their savings leaving wife destitute.  So what then?  This is when Medicaid enters the picture.

Medicaid is the safety net available to pay for medical and long-term care expenses for individuals after they have exhausted their available funds.  What about for husband and wife?  This is where our dilemma becomes clearer.  Medicaid looks at the assets of both a husband and wife if either of them needs to apply for Medicaid.  This is so that the applicant spouse cannot transfer all assets to the community spouse and then plead poverty.  The problem is that the community spouse’s assets are put in jeopardy.  Medicaid’s answer is to allow the community spouse to keep the house, a car and half of all the liquid assets, but there is a cap of about $110,000 ($109,560 for 2010), adjusted yearly for inflation.  Assets can be given away, but this must be done at least 5 years prior to Medicaid application.  For example, our hypothetical couple has a house worth $150,000 and $850,000 in savings.  Medicaid allows wife to keep the house as long as she is living there and $110,000 of the liquid assets.  She also gets to keep her income and possibly keep some of husband’s income.  Will this be enough for her to comfortably maintain her standard of living?  What other options are there?

Long-term care insurance not only provides money to pay for long-term care but provided your state, like Ohio, participates in a long-term care partnership program, may allow wife to shelter an additional amount of the couple’s assets equal to the value of the long-term care policy.  What if long-term care insurance is unavailable or unaffordable?  Divorce is a viable option that needs to at least be considered.  Consider our couple with the $150,000 house and $850,000 in investments.  If they stay married, she can keep the house if she resides there; but if she sells it, she may have to use the proceeds for husband’s care.  She can keep $110,000 of the $850,000 in investments.  How would she fare if they terminate the marriage?  Assuming the assets are divided equitably, she would receive $500,000 in assets, much more than if they had stayed married!

What is the solution?  Obviously long-term care insurance is the best solution, but this is not always an option.  Another is transferring assets out of husband and wife’s names at least 5 years before either of them have to apply for Medicaid.  However, most people don’t want to give up ownership and control of their assets.  A final option is divorce.  However, unpleasant as it may seem, under certain situations, it may be in the best interest of both husband and wife to consider this option in order to ensure that the community spouse is taken care of and can maintain financial stability.

Here is a link to an interesting video of a segment from the TODAY SHOW televised on March 13, 2010, on this very topic. http://dld.bz/3WKV or watch the video below.

There remains great concern among seniors about how the new Health Reform Law will affect them, and it will be years before the true effect of the law among this group of citizens is known.  However, some aspects of the law are clear, and the hope is that the overall positives will outweigh the negatives when all is said and done.

Among the negatives are broad cuts in projected Medicare payments to insurance plans, hospitals, nursing homes, and other service providers.  Although many projections have been made, this is one area in which it is too early to evaluate the size of reductions or its effect.  Another negative is that those seniors enrolled in private insurance plans under Medicare Advantage will likely face higher premiums and reduced benefits.  Prior to passage of the new law, private insurers were subsidized by the government to manage Medicare programs on the government’s behalf.  The government will begin lowering the subsidies to these private plans likely resulting in higher premiums to the insured.  Also, although basic Medicare benefits will not be reduced, extras such as eyeglasses may be reduced or eliminated.

There are also significant benefits for seniors in the new health reform law.  One is the elimination of the drug prescription “doughnut hole”.  The “doughnut hole” is a gap in Medicare prescription coverage that begins when an individual has spent the first $2,830 of prescription expense in a year and continues until he/she has spent $4,550 when Medicare begins paying 95% of the expense.  This year, seniors will receive $250 to fill the “doughnut hole”.  Next year, seniors who reach the “doughnut hole” will receive a 50% discount on brand-name prescriptions and 7% on generics.  The gap will narrow each year until 2020, when the “doughnut hole” will disappear entirely.

Another benefit for seniors is expanded wellness and preventive care coverage.  Beginning in 2011, many preventive services will be available at no charge for seniors who receive Medicare.  Mammograms and other cancer and diabetes screening will be available at no charge. Also available at no charge will be annual wellness visits, allowing for individuals to receive health risk assessments and personalized prevention plans.

Other highlights of the plans, which will or may affect seniors are as follows:  basic Medicare benefits will not be cut; those with preexisting conditions will be able to get insurance coverage through the government until 2014, at which time all insurance plans must cover pre-existing conditions; makes health insurance more affordable for some-starting in 2014, many individuals and families will get tax credits to help them purchase insurance coverage.

It is still very unclear how Medicare cuts will affect the quality of as well as the cost of private health insurance.  Chris Pulos, a principal at Brower Insurance Agency in Dayton, is very knowledgeable on this subject. He has spent extensive time reading and reviewing every page of the law.  Pulos shared his thoughts and said, “Although this Bill is now law, the situation is still fluid.  I believe over the course of the next few years there will be many changes to the legislation.  As we approach 2014, (where the real teeth in this Bill exists) our politicians and the public will have to address and maneuver through the complexities of executing the provisions within the law; and we are hopeful that they will be able to simplify this process for the public good, prior to that target date.”  We all hope that the new health care reform will overall put the Medicare program in a better position over the long term than it has been before or would be without the reform legislation. Time will tell.

You may not be aware that, years after you have prepared a separation agreement, it may have a direct bearing on whether your clients are covered under their auto or homeowners’ insurance policies in a variety of accident scenarios.

Here’s a typical scenario. Months or years after Mom and Dad are divorced, one of them hands the car keys to “Junior,” who negligently wrecks the car and injures another motorist. One or both parents, thinking that Junior is covered under their auto policy, turn the claim into their insurer, only to be shocked that the insurance company denies the claim.

There are two principal reasons why the claim might be denied: Junior is not a “named insured” or a “resident relative” under the policy. If the denial holds water, Junior and perhaps his parents may be exposed to personal liability, and the distinct prospect of bankruptcy. The question is: Is there anything the divorce attorney can do to ensure or increase the likelihood that minor children will be covered in a future accident under one or both parents’ insurance policies?

This accident scenario has been frequently litigated. Courts examining this issue have focused on what constitutes “residing” with a particular parent for purposes of satisfying the “resident relative” requirement of the insurance policy. One factor courts will examine is the language of the divorce or dissolution decree or separation agreement. For example, if the agreement provides that the minor “alternately resides with each parent under a custody or visitation arrangement,” it may carry persuasive weight as to whether the minor was a resident of one or both homes.

In situations where the insurance policy did not define the term “resident,” courts have also considered an ordinary definition of that term as “one who lives in the home of the named insured for a period of time of some duration of regularity, although not necessarily permanently, but excludes a temporary or transient visitor.” Indeed, under this definition, courts have recognized that the concept of a minor’s “dual residency” is a frequent reality in shared parenting plans (especially for school purposes).

It is not uncommon these days, with flexible parenting agreements for a child to have access to both parents’ vehicles in their separate homes. The divorce attorney is, therefore, in the unique position to take some simple steps to ensure potential coverage for future accidents. Obviously, one step is to make explicit in any written agreement that the minor will be considered a resident of both homes.

Secondly, due diligence might dictate that the attorney apprise his/her clients of the possibility that minors might not be covered for any future accidents, and advise them to contact their insurance agent about adding the minor as a named insured under the policy.

Insurance coverage issues like these constitute a unique intersection of domestic relations and personal injury law. Unfortunately, minors causing accidents and coverage disputes are a recurring scenario, given the frequency of divorce, and the propensity of inexperienced minor drivers to cause accidents (we need only look at our insurance premiums as evidence of this fact). They can also burden families with dire financial consequences if it is determined that there is no insurance coverage for the harm caused by the minor driver.

But with a little foresight and advance planning, you just might be able to protect your clients by ensuring that their insurance policy will protect them if “Junior” makes a driving mistake. If that happens, your clients will no doubt appreciate your good lawyering.

Brian R. Wilson is the publisher of The Bull’s-Eye Blog and the author of two books, “How to Buy Car Insurance in Ohio to Protect Your Family” and “Your Ohio Accident . . . And How You Can Level the Playing Field.” To go to his blog, click here.

While not directly on the topic of family law per se, Attorney Joe Balmer, head of the estate planning and probate department at Holzfaster, Cecil, McKnight & Mues, has written an important article on Medicaid planning that warrants reading.

Thanks to Ohio’s Long-term Care Partnership Program, which became effective in September of 2007, it is now possible to protect more of one’s assets from Medicaid spend down through the use of certain long-term health insurance policies. However, certain criteria must be followed and it is important to purchase any such policy from an experienced long-term health care insurance professional.

Long-term health care services include help with activities of daily living, home health care, respite care, hospice care, adult day care, nursing home care and assisted living facility care. Neither Medicare nor most traditional health care insurance plans cover most costs of long-term care.  Statistics show that the current life expectancy of a 65 year old is 18 additional years and in 2005, 5 percent of all people 65 years or older resided in a nursing home.  Therefore, if affordable, long-term, health care insurance should be a consideration in anyone’s estate planning. Due to Ohio’s Long-term Care Partnership Program, additional consideration should be given to acquiring long-term health care insurance. Now, if certain criteria are met, an individual can protect one additional dollar of assets from Medicaid for every dollar used in long-term care insurance benefits. For example, if an individual receives $200,000 in long-term care insurance benefits before he or she exhausts his or her benefits and has to look to Medicaid, he or she can shelter an additional $200,000 of other assets from the Medicaid spend down process. To be eligible, the insurance must meet the following criteria:

1. Must be issued after September 10, 2007;
2. The insured must be a resident of Ohio when coverage first becomes effective;
3. The policy must be a federally tax qualified plan base on IRS Code;
4. The policy must meet strict consumer protection standards and
5. The policy must include certain protections against inflation.

As one can see from the criteria listed above, a policy should only be acquired after discussions with a long-term care insurance professional and only acquired through such a professional. However, if appropriate and economically feasible to an individual,a long-term care insurance policy through the Ohio Long-term Care Partnership Program may provide tremendous savings and asset protection against future health care needs. If interested, you should discuss this further with your estate planning and elder law attorney and financial advisor. To read the Ohio Administrative Regulation pertaining to the Ohio Long-term Care Partnership Program, click here.