Coffee with Michele Clark, CFP® June 2017

Come to the Community Room at Kaldi’s in Chesterfield, MO with your financial planning questions and enjoy a cup of coffee with Michele Clark CERTIFIED FINANCIAL PLANNERTM professional in St. Louis.

Financial Planning Questions Answered

There is no prepared presentation, just a casual conversation in a small group environment; your opportunity to pick our brains.  Feel free to invite family or friends who could benefit from an hour with us.  Open to registered attendees only, due to the size of the room.

Coffee with Michele Clark
Kaldi’s Coffee Chesterfield, MO
Wednesday, June, 14th, 2017
10:30 am to 11:30 am

RSVP Information
RSVP online Clark Hourly Financial Planning and Investment Management RSVP or call 636-264-0732.  Space is limited.  Coffee and pastries are complimentary.

Kaldi’s Coffee Chesterfield address and map
The Community Room is an enclosed room in the back of the coffee shop.

We hope you can join us!

American Health Care Act Passed by House

On May 4, 2017, the House of Representatives passed the American Health Care Act (AHCA). With some changes, this is essentially the same law that was pulled from consideration by the House back in March. Compared to the Affordable Care Act (ACA or Obamacare), the AHCA repeals the health insurance mandate for both individuals and large employers; caps Medicaid funding to states beginning in 2020; eliminates several ACA taxes, including those applicable to high-wage earners; and replaces tax credits and subsidies based on income with tax credits based on age and income. The House passed the AHCA prior to an updated analysis from the Congressional Budget Office (CBO) as to the budgetary effects of the law.

Some ACA provisions remain

Here’s a brief description of some elements of the ACA that remain in place under the AHCA:

  • Insurers are prohibited from discriminating against people with pre-existing conditions. However, beginning in 2019, the law allows states to apply for waivers, in which case insurers in those states could charge people in the individual Marketplace with pre-existing medical conditions higher premiums for about a year if they have a gap in coverage of at least 63 consecutive days.
  • All individual health plans purchased during open enrollment are required to be “guaranteed issue,” meaning an applicant must be offered coverage regardless of health status.
  • The requirement that health plans cover 10 essential health benefit categories remains. However, beginning in 2020, states may apply for waivers, which allow states to redefine essential health benefits for coverage in the individual and small group markets.
  • Dependent young adults can remain on their parent’s health-care plan to age 26.
  • Current lifetime and annual out-of-pocket dollar limits for essential health benefits remain the same, which can be changed for states electing a waiver.
  • Federal funding of Medicaid continues to states that extended coverage to include more people and more services through 2019. Beginning January 1, 2020, federal funding to those states will continue, but only to people who were in the Medicaid program at the end of 2019. Otherwise, beginning in 2020, Medicaid funding to states will be a fixed amount based on the total number of Medicaid enrollees (per capita), and not based on the actual cost of Medicaid services provided to individual recipients.
  • Health insurance Marketplaces and open enrollment periods remain in place.

Major changes

The following are some of the significant changes made by the AHCA:

  • The health insurance mandate and penalty for people who don’t have qualifying health insurance coverage are eliminated, retroactive to December 31, 2015, meaning the penalty would not apply to anyone who didn’t have health insurance in 2016.
  • The mandate that large employers provide health insurance to eligible employees is repealed.
  • The limit that insurers can charge their oldest enrollees for insurance premiums is changed from three times what they charge their youngest enrollees to five times the premium charge.
  • Insurers are allowed to charge a late enrollment penalty of 30% of premiums for health insurance applicants who have a lapse in insurance coverage of 63 days or longer.
  • Starting in 2020, premium tax credits and cost-sharing subsidies are replaced with a flat, age-based tax credit that can be applied to any eligible individual health insurance policy regardless of where it’s purchased (the policy wouldn’t have to be obtained through a Marketplace.) The credits would start at $2,000 for individuals up to age 29 and increase in $500 increments until capping at $4,000 for individuals age 60 and older. Credits are gradually reduced for individuals with yearly incomes exceeding $75,000 and for households that earn over $150,000.
  • Establish a State Patient and State Stability Fund for states that seek waivers of essential health benefits and health rating requirements. Federal funding is available to states electing waivers to provide financial help to high-risk individuals.
  • The 3.8% tax on unearned income for high-income taxpayers is repealed. The 0.9% Medicare payroll tax on high-wage earners is repealed effective January 1, 2023.
  • The tax-free contribution limits for health savings accounts (HSAs) are increased. Also, the provision excluding costs for non-prescribed over-the-counter drugs from reimbursement through an HSA is repealed.
  • The annual limit on contributions to health flexible spending accounts (FSAs) is repealed.
  • The Cadillac tax on high-cost employer-sponsored health plans is suspended for tax years 2020 through 2025.
  • The tax on tanning beds is repealed.
  • The taxes on health insurers and pharmaceutical manufacturers are repealed.

The AHCA now moves to the Senate, where it will be debated and possibly altered. It is also likely that the Congressional Budget Office will provide its estimate of the budgetary effects of the AHCA.

Effective 2020, the AHCA repeals tax credits available for low-wage, small employers that provide health-care coverage to their employees.

Article Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2017

Coffee with Michele Clark, CFP® and Friends May 2017

Come to the Community Room at Kaldi’s in Chesterfield, MO with your financial planning and long-term care, life, and disability insurance questions and enjoy a cup of coffee with Michele Clark CERTIFIED FINANCIAL PLANNERTM professional in St. Louis.  Michele has invited insurance brokers to be at the event to be able to answer your questions.

There is no prepared presentation, just a casual conversation in a small group environment; your opportunity to pick our brains.  Feel free to invite family or friends who could benefit from an hour with us.  Open to registered attendees only, due to the size of the room.

Financial Planning and Insurance Questions Answered

Coffee with Michele Clark and Friends 

Kaldi’s Coffee Chesterfield, MO
Wednesday, May 10th, 2017
10:30 am to 11:30 am

RSVP Information
RSVP online Clark Hourly Financial Planning and Investment Management RSVP or call 636-264-0732.  Space is limited.  Coffee and pastries are complimentary.

Kaldi’s Coffee Chesterfield address and map
The Community Room is an enclosed room in the back of the coffee shop.

We hope you can join us!

Long Term Care Planning: More than just insurance

My financial planning engagements are very detailed, especially for clients that are nearing retirement.  I find when talking with colleagues at conferences and continuing education meetings that many of them do not discuss how Medicare works, the potential cost of healthcare in retirement, or even potential Long Term Care needs.  I know that the clients who come to me, often come to me with misconceptions about these items.  Which is understandable, since they have never encountered these situations before.  I feel good about introducing them to these topics so that they can prepare.

One of the most common misconceptions that I see is, if someone needs to move into a nursing home that Medicare will cover the cost.  While Medicare will cover medical care for skilled nursing care for 100 days, they do not cover custodial care.  What I tell people is Medicare is health insurance, and if you are being rehabilitated and your health is expected to improve then that is health insurance and you are covered.  But if you are not expected to improve, and you are needing coverage to pay for Activities of Daily Living to care for you like  eating, bathing, dressing, toileting, walking/moving from the bed to a chair, then that is not health insurance, that is Long Term Care and that is covered by:

1) your savings or
2) Long Term Care insurance or
3) government benefits after you have spent your assets down (Medicaid or VA benefits.)

This information is eye opening for a lot of people who come to me.

I mention this so that you consider learning all that you can about Long Term Care.  It is more than just buying Long Term Care insurance.  It is thinking about all of your preferences and discussing them with your family.  It is preparing your home for successfully aging in place, learning about your housing options should you decide you no longer want to live at home, learning about how you can take care of yourself to prevent falls and other action steps that you can take so that you have a long and enjoyable retirement.  Planning in advance gives you control and confidence versus making hurried decisions in a crisis.  A terrific resource for learning about Long Term Care is www.LongTermCare.gov.

The information below is copied and pasted from an educational resource that I have access to called Forefield Broadridge, I hope you find it helpful.

Housing Options for Older Individuals

What is it?

As you grow older, your housing needs may change. Maybe you’ll get tired of raking leaves from the lawn of the house you bought 30 years ago because you liked its huge, shady backyard. You might want to retire in sunny Florida or live close to your grandchildren in Illinois. Perhaps you will need to live in a nursing home or an assisted-living facility. Sometimes, after considering your options, you may even decide to stay where you are. Deciding where to live is never easy, but if you evaluate your options carefully, you’ll find it easier to live with your decision.

Staying where you are: when there’s no place like home

Physical considerations

Are you able to take care of your home by yourself? If your answer is no, that doesn’t necessarily mean it’s time to move. Maybe a family member can help you, or maybe you can hire someone to clean your house, mow your lawn, or help you with personal care. Perhaps staying in your home is simply a matter of making it more accessible by installing wheelchair ramps, safety lighting, or new bathroom fixtures. To evaluate whether you can stay in your home or if it’s time to move, consider the following questions:

  • If you need help (or might need it in the future), how willing are you to let someone else help you?
  • Can you afford to hire help, or will you need to rely on friends, relatives, or volunteers?
  • How far do you live from family and/or friends?
  • How close do you live to public transportation?
  • How easily can you renovate your home to address your physical needs?

Emotional considerations

You may want to stay in your home because you have memories of raising your family there. However, if you are widowed or lonely, those memories may be the very reason you want to leave. Moving from a cherished house is never easy, and it might be even harder when you’re moving to a new town or a smaller place. Conversely, you might find that change is just what you need to get a new perspective on life, or to be able to relax and enjoy retirement. To evaluate the emotional impact of moving, consider the following questions:

  • How easily do you adjust to change?
  • How easily do you make new friends?
  • How does your family feel about your move? (This is important if you’re moving closer to them or further away from them.)
  • How does your spouse feel about moving?

Financial considerations

You might think you can’t afford to live in the same home after retirement and want to generate retirement income by selling it. However, selling your home is not the only way you can get income from it. Two other options you might consider if you own your own home and need more income are home equity loans and reverse mortgages.

  • Home Equity Loans or Lines of Credit–If you’re thinking about selling your house because you need more retirement income but you don’t really want to move, consider applying for a home equity loan or line of credit. You put your home up as collateral, and your bank (or other lender) provides you with a term installment loan that will give you a certain sum of money you need up front or a revolving line of credit that you can access when you need cash. When you apply for the loan you’ll probably be asked how you intend to use the money. One way to use it is to finance home improvements that will make your home safer and more accessible, so that you can stay in it instead of moving to an assisted-living facility or nursing home.
  • Reverse Mortgages–A reverse mortgage might enable you to obtain needed retirement income and remain in your home. There are many types of reverse mortgages, but here’s how one usually works. You take out a mortgage on your home, and in return the bank or person who holds the mortgage gives you a lump sum of cash or pays you a predetermined monthly amount for a set number of years (sometimes tied to your life expectancy). At the end of that period, you will owe the bank or mortgage holder the principal and interest due on the house. In order to repay the loan at that time, you (or your estate) may have to sell the house or turn it over to the mortgage holder. For more information on what to consider when choosing a reverse mortgage, visit the Federal Trade Commission website at .

After Hal retired, he found that he couldn’t live off his Social Security benefit and pension income, so he considered selling his house to raise cash. However, he didn’t really want to move, so he decided instead to take out a reverse mortgage. He found a bank that was willing to pay him $650 a month, more than enough to supplement his retirement income. In addition, Hal was allowed to live in the house for the rest of his life. After he died, the bank sold the house to pay off the mortgage.

Pulling up stakes: moving in with (or near) your child

Living arrangements

Moving in with (or near) your child may mean living in your own nearby apartment, living in a room in your child’s house, or living in an accessory apartment. Accessory apartments are either apartments within your child’s house (also known as in-law suites) or cottages that are set up on the premises of your child’s home (also known as Granny flats or Elderly Cottage Housing Opportunity).

Granny flats have become increasingly popular and can be purchased as prefabricated housing. However, since Granny flats are subject to zoning restrictions, check the local zoning laws before you decide to move into your child’s backyard.

Staying independent

You may worry that if you move in with (or near) your child, you’ll lose your much-valued independence. That’s a valid concern, but not necessarily an inevitable one. There are many ways you can move closer to your child without sacrificing your independence. For example, if you move in with (or near) your child, you can maintain your independence if your living area is accessible to public transportation or other facilities such as grocery stores and shopping centers. If you need it, look into hiring part-time help so that you don’t feel that you’re overburdening your son or daughter, or join a senior center or church group that provides activities and transportation for its members.

Physical considerations

If you are moving in with your child, will you have adequate privacy? Will you be able to move around your child’s home easily? If not, you might ask him or her to install devices that will make your life easier (such as tub or shower grab bars and easy-to-open handles on doors).

Sue wanted to live with her son John, but after only a few days at his house, Sue was ready to move out. She just couldn’t get up the stairs by herself, and she didn’t like asking John for help all the time. Fortunately, she saw an advertisement on television for a motorized chair that could be attached to John’s staircase and could easily move her up and down. She bought the chair, John installed it, and Sue was able to live with John after all.

Emotional considerations

When deciding whether or not to move closer to your child, ask yourself how you expect to benefit from the move, and how your son or daughter will likely respond. If you move closer to your child, will you expect him or her to take you shopping? Will you expect to be included in any party your son throws or in every dinner he eats at a restaurant? Even if you make your own friends, will you still want to be best friends with your daughter? Will you feel in the way? Will he or she expect you to help with cooking, cleaning, and baby-sitting, or, on the other hand, expect you to do little or nothing? Discussing your concerns before you move will help you avoid conflicts later.

Financial considerations

Money is an uncomfortable issue for many people, but one that needs to be discussed rationally. Before you move in with your child, consider the following questions: Will he or she expect you to contribute money towards household expenses? If you don’t, will you feel guilty? Will you feel the need to critique his or her spending habits, or are you afraid that he or she will critique yours? Can he or she afford to remodel his or her home to fit your needs? Do you have enough money to support yourself during retirement, and if you don’t, how do you feel about your child supporting you financially? Talking about money with your child before you move in will help avoid any conflicts or hurt feelings later.

When Jane moved in with her daughter Liz, she expected to pay for her part of the grocery bill but Liz wouldn’t hear of it. Consequently, Jane felt guilty about asking Liz to buy her favorite items at the store since she wasn’t paying for them. She grew more and more resentful toward Liz, even though Liz had no idea what was going on. When they finally had an argument one day, Liz realized how important it was for her mother to help pay her own way, and she gladly let her mother pay part of the grocery bill.

Setting out for greener pastures: independent living options

What is independent living?

Independent living communities are often apartments or townhouses that can be rented or owned as condominiums. The common areas are maintained for a fee, and the complex provides security, transportation, activities, and dining facilities.

Physical considerations

Not all independent living communities are alike, and each is governed by different rules. For example, some communities allow your guests to use the facilities, while others do not. Some may allow your grandchildren to spend a week with you, but some may not. Read the rental or sales contract carefully, and find out whether you object to the community’s rules before you decide to lease or purchase a unit in an independent living community complex.

When you need a little more help: assisted living options

What is assisted living?

The wide number of assisted-living options available makes defining the term difficult. Generally, however, assisted-living facilities offer rental rooms or apartments, housekeeping services, meals, social activities, and transportation. Their primary focus is social, not medical, but some do provide limited medical care. Assisted-living facilities can be state-licensed or unlicensed and primarily serve senior citizens who need more help than those who live in independent living communities. Other terms used to describe assisted-living arrangements are board and care homes, rest homes, and community residences. Continuing care retirement communities (CCRCs), also called life care communities, also fit loosely into this category, although they provide what other assisted-living facilities do not: long-term nursing care and guaranteed lifetime services.

How to choose an assisted-living facility

Choosing an assisted-living facility can be difficult because you may not know what kind of help you will need in the future. However, there are certain things you can consider in order to narrow down your choices. Some of the factors you should evaluate when choosing a facility are described in the following sections.

Physical considerations

Before entering an assisted-living facility, you should carefully read the contract and tour the facility. Some facilities are big, caring for over 1,000 people. Others are small, caring for fewer than 5 people. Consider whether the facility meets your needs. Do you have enough privacy? How much personal care is provided? What happens if you get sick? Can you be asked to leave the facility if your physical or mental health deteriorates? Is the facility licensed or unlicensed? Who is in charge of health and safety? Reading the fine print on the contract may save you a lot of time and money later if any conflict over services or care arises.

Before she entered Mayfield Community Retirement Village, Helen researched the facility. She was pleased with the grounds and the decor, and the staff seemed friendly. However, when she read the contract she was required to sign, she was uncomfortable. She saw that if her mental health deteriorated, she would be asked to leave, but the terms were vague, so Helen decided to go over the contract with her lawyer before she signed it.

Emotional considerations

When you move into an assisted-care facility, you may feel that you have given up a measure of independence. You may think that the staff is intrusive, or that you have less choice when it comes to what you eat and who you see every day. In addition, the facility you choose may have rules that you do not like. For example, you may not be allowed to have house guests (especially children) stay overnight, or your guests may not be allowed to use facilities such as the dining rooms and the swimming pools. Because assisted-care facilities vary widely, it’s very important to make sure you can live with the emotional implications before you sign a contract.

Financial considerations

Some housing units at assisted-living facilities are more expensive than regular residential apartments, but not all are. There is a wide range of care available at a wide range of prices. CCRCs are significantly more expensive than other assisted-living options, for example, and usually require an entrance fee above $50,000, in addition to a monthly rental fee. In addition, don’t expect Medicare to cover your expenses at these facilities, unless those expenses are health care related and the facility is licensed to provide medical care.

When you need a lot more help: nursing homes

What are nursing homes?

Nursing homes are licensed facilities offering 24-hour access to medical care. They provide care at three levels: skilled nursing care, intermediate care, and custodial care. Skilled nursing care may be provided to individuals who need intensive medical care but not hospitalization. Intermediate care may be provided to individuals who need some medical care in addition to custodial care. Custodial care is provided to individuals who need some help eating, bathing, dressing, or taking medications due to physical or mental deterioration. Individuals in nursing homes generally cannot live by themselves or without a great deal of assistance.

Physical considerations

Privacy in a nursing home may be very limited. Private rooms may be available, but rooms more commonly are shared. There is a great deal of variation in quality and atmosphere, depending upon the facility selected. A nursing home may be hospital-like or home-like. When you choose a nursing home, pay close attention to the quality of the facility.

Emotional considerations

Due to the high cost of nursing home care and media reports of mistreated nursing home residents, you might fear entering a nursing home. However, the quality of life in nursing homes varies widely. To allay your fears about nursing homes, select one before you need care. Visit several facilities in your area, and talk to your family about your needs and wishes regarding nursing home care. In addition, remember that most people don’t live their lives in a nursing home. If your physical or mental condition improves, you may be able to return home or move to a different type of facility.

Financial considerations

Nursing homes are expensive. If you need nursing home care in the future, do you know how you will pay for it? Will you use private savings, or will you rely on Medicaid to pay for your care? If you have time to plan, consider purchasing long-term care (LTC) insurance to pay for your nursing home care.

Will care be there when you need it?

Nursing homes and assisted-living facilities often have long waiting lists. In addition, many nursing homes do not accept Medicaid right away from a resident; using private funds or LTC insurance may help you get into a nursing home. Many people don’t plan for long-term care because they don’t think they will ever need it. However, you will grow old, and as you do, your health challenges will increase. You may never need long-term care, but if you plan ahead for it, you’ll be much better off physically, emotionally, and financially.

Questions & Answers

Will Medicare pay for nursing home care?

Medicare will pay, in part, for the medical care you need, but not for custodial care. If you need skilled nursing care, Medicare will pay for it (with certain limits) up to 100 days. Before you rely on Medicare coverage to pay your nursing home bills, however, research your coverage.

What if you move into a retirement community and don’t like it?

The first move you make after you retire probably won’t be your last. If you live 20 years past retirement, you may even make several moves. Despite the fear some people have that once they move into a retirement facility they will be lost and forgotten, this is usually not the case. Decisions to move are not permanent. However, because of waiting lists, you may, for example, find it difficult to move from one nursing home to another, or you may have difficulty getting out of a CCRC once you enter it, due to the large sum of money you paid up front. Before you move into any retirement facility, research the facility thoroughly and go over the contract with an attorney.