Johnson County Estate Planning

How to Avoid Medicaid Estate Recovery

“If you’re helping an aging parent navigate Medicaid because they don’t have long-term care insurance or you think you’ll need it yourself someday, it’s important to understand how the program works.”

Medicaid is a government program that helps seniors and others pay for long term care. However, it’s not always free, explains the article “What Is Medicaid Estate Recovery?” from AOL.com. The Medicaid Estate Recovery Program (MERP) is used by states to recover costs from estates with funds. The goal of Medicaid estate recovery is to make the program affordable for the government, but it can have a severe impact on the beneficiaries of Medicaid recipients. An estate planning elder law attorney should be contacted, if you believe you or a loved one may need Medicaid.

Seniors are eligible for Medicare when they turn 65. This program pays for many healthcare expenses, but not for long-term care in a nursing home. Medicaid is used when someone does not have long term care insurance or enough money to pay for long-term care out of pocket. Medicaid can also be used for long-term or nursing home care, if steps have been taken to protect assets. This usually includes strategies, like trusts and Medicaid Asset Protection Trusts (MAPT).

A federal law passed in 1993 (the Omnibus Budget Reconciliation Act) requires states to attempt to seek reimbursement from a Medicaid beneficiary’s estate after they have died. Some of the costs that the state will try to recover include:

• Nursing home costs
• Home and community-based services
• Medical services received through a hospital where the recipient is a long-term care patient
• Prescription drug services for long-term care recipient

The recovery program lets Medicaid pursue any eligible assets owned by the estate. While this depends upon where you live, any assets that are part of the probate estate could be attached, including:

• Bank accounts
• Your home or other real estate
• Vehicles or other real property

In addition, some states allow Medicaid to recover assets that are not subject to probate, including jointly held accounts, Payable-On-Death (POD) bank accounts, real estate owned in joint tenancy with right of survivorship, living trusts and any other assets that the Medicaid recipient had a legal interest in.

An estate planning elder care attorney in your state will know what types of assets your state tends to pursue and will help you understand what can and cannot be used for Medicaid benefit recovery.

Note that while Medicaid cannot take the primary residence while the recipient is still living, they can place a lien on the home. If the recipient passes away and a beneficiary inherits the home, they will not be able to sell the property until the lien has been satisfied.

For beneficiaries, Medicaid recovery means a smaller inheritance. However, that’s not the only thing to be mindful of. There are laws known as “filial responsibility laws” that allow healthcare providers to sue the children of long-term care recipients to recover nursing care costs. This is not commonly done as of this writing, but the costs of COVID may change this in the near future.

Strategic planning can help you or loved ones avoid the financial impact of Medicaid estate recovery. If you are eligible and can afford to buy a long-term care policy, that may help to cover most of the cost of care. Another option is to remove as many assets from the probate process as possible. An estate planning attorney will be able to help you create a plan to protect your assets.

Reference: AOL.com (February 5, 2021) “What Is Medicaid Estate Recovery?”

Protect Assets from Medicaid Recovery

“If you’re helping an aging parent navigate Medicaid because they don’t have long-term care insurance or you think you’ll need it yourself someday, it’s important to understand how the program works.”

Medicaid is a government program used by Americans to pay for nursing home and long-term care. The Medicaid Estate Recovery Program (MERP) is used to recoup costs paid toward long term care, so that the program can be more affordable for the government, says the article “What is Medicaid Estate Recovery?” from kake.com. Beneficiaries of Medicaid recipients are often surprised to learn that this impacts them directly.

Medicare was created to help pay for healthcare costs of Americans once they reach age 65. It covers many different aspects of healthcare expenses, but not costs for long-term or nursing home care. That is the role of Medicaid.

Medicaid helps pay the costs of long-term care for aging seniors. It is used when a person has not purchased long-term health care insurance or does not have enough money to pay for long-term care out of their own funds.

Medicaid is also used by individuals who have taken steps to protect their assets using trusts or other estate planning tools.

The Medicaid Estate Recovery program allows Medicaid to be reimbursed for costs that include the costs of staying in a nursing home or other long-term care facility, home and community-based services, medical services received through a hospital when the person is a long-term care patient and prescription drug services for long-term care recipients.

When the recipient passes away, Medicaid is allowed to pursue assets from the estate. That often varies by state, but for the most part it means any assets that would be subject to the probate process after the recipient passes. That may include bank accounts, real estate, vehicles, or other real property.

In some states, recovery may be made from assets that are not subject to probate: jointly owned bank accounts between spouses, payable on death bank accounts, real estate owned in joint tenancy with right of survivorship, living trusts and any assets a Medicaid recipient has an interest in.

An estate planning attorney will know what assets Medicaid can use for recovery and how to protect the family from being financially devastated.

While it is true that Medicaid can’t take your home or assets before the recipient passes, it is legal for Medicaid to place a lien on the property. Let’s say your mother needs to move into a nursing home. Medicaid could place a lien on the property. If she dies and you inherit the home, you’ll have to satisfy the lien before you can sell the home.

Heirs need to anticipate inheriting a smaller estate. Medicaid eligibility assumes that recipients are low income or have few assets to pay for long term care. However, if parents are able to leave some amount of assets to their children, the recovery program will shrink those assets.

Strategic planning can be done in advance by the individual who may need Medicaid in the future. One way to do this is to purchase long-term care insurance, which is the strategy of personal responsibility. Another is removing assets from the probate process. Married couples can make that sure all assets are owned jointly with right of survivorship, or to purchase an annuity that transfers to the surviving spouse, when the other spouse passes away. An estate planning attorney can help create a Medicaid Asset Protection Trust, which may remove assets from being counted for eligibility.

Speak with an estate planning attorney to learn how to prepare for yourself or your parent’s future needs. The earlier the planning begins, the better chances of successfully protecting the family.

Reference: kake.com (Feb. 6, 2021) “What is Medicaid Estate Recovery?”

When Social Security Makes the Most Sense

“When should you sign up for Social Security? It is a good question. Many seniors grapple with that decision, and understandably so, since the age at which you claim benefits will dictate how much money you will receive each month during retirement.”

There’s an unfortunate tendency to focus on how to get the most out of Social Security in total benefits, but that’s not always the right approach to determine when to apply for Social Security. Everyone has the same eight-year window—from age 62 to 70—when they can start applying for benefits, as explained in the article “Why Claiming Social Security at 65 Is a Smart Bet” from The Motley Fool. The year you were born determines when Social Security sets your Full Retirement Age, or FRA.

Whether you take Social Security at age 62, which is the earliest you can take it, or at 70, after which you’ve maxed out on monthly benefits and there’s no reason to delay, depends on many different factors. For example, do you expect to live a long time based on your family history? If so, it may make sense to wait. However, if you have a number of health conditions and expect to have a shorter life span, then take your benefits early and enjoy them—you earned them.

The most common age for starting Social Security benefits is at age 62. A much smaller percentage of seniors wait until age 70 to collect benefits. Doing so locks in a higher benefit for life, but if you don’t live much longer than 70, the benefit doesn’t matter quite as much.

Going from one extreme to the other points to a choice in the middle: age 65. That’s when Medicare kicks in. Some people get these benefits confused. They think that once they are eligible for Medicare, they are eligible for full Social Security benefits. This is not true. However, 65 is still a good age to start taking Social Security benefits for a few reasons.

• You’re not taking Social Security at the earliest age possible, so you have had two years for your benefits to increase.
• You’re not taking Social Security at the latest age. Therefore, if you don’t live into your 90s, you’ll still have had those years to enjoy the fruits of your labor.

The numbers-crunchers at Social Security work to make sure that everyone gets the same lifetime benefits, regardless of when they file. The logic is simple: claim early, and get a smaller benefit, possibly for a longer lifetime. Delay your claim, and the same amount of money in total will come to you, just in fewer payments.

There is another advantage for claiming Social Security around the same time you switch over to Medicare. Your Part B premiums will be directly paid from Social Security benefits. That means you’ll have some protection against rising premiums. That’s because of what’s known as the “hold harmless provision.” It is a provision that attempts to limit how much of a bite Medicare premiums can take out of Social Security benefits. It’s not a perfect solution, but it’s a little bit of a help.

Reference: The Motley Fool (July 10, 2020) “Why Claiming Social Security at 65 Is a Smart Bet”

Social Security and Medicare and the Impact on Retiree Taxes

“Medicare has a series of income limits that trigger increasingly higher payments for retirees. And it’s not just the rich who are affected.”

A 70% increase in Medicare premiums to $559 was a complete surprise to a woman who became a single taxpayer when her husband died. She felt like she was being punished for being a widow, she said in a recent article titled “Retirees, Beware These Tax Torpedoes” from Barron’s. With a 2018 modified adjusted gross income of $163,414, a combination of required minimum distributions, Social Security and her husband’s pensions, she went from being in the third-highest Medicare bracket into the second highest Medicare bracket. All it took was $414 dollars to exceed the $163,000 limit.

This is not the only tax trap awaiting unwary retirees. Lower- and middle-income taxpayers get hit by what’s commonly referred to as “tax torpedoes,” as rising income during retirement triggers new taxes. That includes Social Security income, which is taxed after reaching a certain limit. The resulting marginal tax rate—as high as 40.8%—is made worse by a Medicare surtax of 0.9% on couples with taxable income exceeding $250,000. Capital gains taxes also increase, as income rises.

It may be too late to make changes for this tax-filing year, even with a three-month extension to July 15. However, there are a few steps that retirees can take to avoid or minimize these taxes for next year. The simplest one: delay spending from one year to the next and be extra careful about taking funds from after-tax accounts.

What hurts most is if you’re on the borderline of a bracket. Just one wrong move, like selling a stock or taking a distribution, puts you into the next bracket. You need to plan carefully.

One thing that won’t be a concern for 2020 taxes: required minimum distributions. While many retirees get pushed into tax traps because of taking large RMDs, the emergency legislation passed in response to the coronavirus crisis (the CARES Act) eliminated RMDs for this year.

However, the RMDs will be back in 2021, so now is a good time to start thinking about how to avoid any of the typical tax torpedoes. RMDs used to start at age 70½; the SECURE Act changed that to 72.

If you don’t need the money from an RMD in 2021, one workaround is to take it as a qualified charitable distribution. That avoids triggering higher taxes or higher future Medicare premiums. The administrator of the tax-deferred account needs to be instructed to make a donation directly to a charity.

An even better strategy: take steps long before Medicare income limits or tax torpedoes hit. If you can, live on after-tax savings, Roth IRA accounts or inherited money. Spend that money first, before tapping into tax-deferred accounts. You can then take advantage of being in a lower tax bracket to convert money from tax-deferred money to convert to Roth IRAs.

Another story of a tax hit that was avoided: a man with an income of about $80,000 prepared to take $4,000 from a tax-deferred account for a vacation. The couple’s normal top tax bracket was 12%, but they hit the income limit on Social Security taxes. The $4,000 in additional income would have caused $3,400 in Social Security income to be taxed, making his marginal tax rate 22.2% instead of 12%. With the help of a good advisor, the couple instead took $3,000 from a Roth IRA and sold a stock position for $1,000, where there were practically no capital gains generated.

Incomes at all levels can be hit by these tax and Medicare torpedoes. A skilled advisor can help protect your retirement and Social Security funds.

Reference: Barron’s (July 6, 2020) “Retirees, Beware These Tax Torpedoes”

Quirk in Medicare System’s Observation Status

“Unfortunately, over a decade, the number of observation stays has increased exponentially and is being used, even when patients have a diagnosis and have been admitted by their own physicians.”

There’s a troubling quirk in the Medicare system that occurs when older patients are hospitalized and instead of being officially admitted, they are placed on “observation status” reports the article “Caught Paying for Rehab Due to Observation Status? Medicare May Owe You” from The National Law Journal.

Observation status originally was meant to serve as a temporary status for people who were receiving medical care and tests in a hospital setting until they were either sent home or a diagnosis was made, and they were officially admitted.

However, in the past 10 years or so, the number of patients in hospitals deemed to be in observation status has increased enormously, even when patients have received a diagnosis and their doctors have admitted them to the hospital. This is a direct result of the Medicare claims review process, where hospitals risk not being paid because of inpatient services being billed without documents of certain diagnoses and levels of care.

The hospital seeks to protect itself, by designating a patient as observation status. There’s no downside to the hospital, since this is covered by Medicare, just under Part B, rather than Part A.

However, for the patient, it’s not that simple. First, the denial of Part A inpatient coverage means that the patient has to pay for each and every deductible and copay for each service. Prescription drugs received while the patient is in the hospital are billed separately and aren’t included under the Part A inpatient payment.

 It gets worse. Medicare coverage for post-hospital care is denied or extremely limited for observation status patients. Medicare only covers rehab costs in a facility, if the patient was admitted to the hospital for at least three days.

Observation status days do not count towards those qualifying days. It doesn’t matter if the treating physician had the patient admitted to the hospital, because hospitals can change the status of the patient retroactively.

Until recently, there was no recourse for patients. However, a recent class action suit in Connecticut may see that begin to change. A federal judge held that Medicare beneficiaries whose hospital stays were changed to observation status may appeal to Medicare for reimbursement of their payments to rehabilitation facilities. As a result of Alexander v. Azar, patients have the right to recover payments for their nursing home rehabilitation stays.

Patients whose doctors placed them on observation status still are not permitted to appeal.

Speak with your elder law estate planning attorney, if this scenario applies to you or family member.

Reference: The National Law Review (May 26, 2020) “Caught Paying for Rehab Due to Observation Status? Medicare May Owe You”

This Social Security Pit Could Be Costly and Stressful

“The Social Security hell morphed into Medicare hell and, will, not doubt, morph into federal income tax hell and then state income tax hell.”

A cautionary report about a man who simply wanted to apply for Social Security appears in a recent article from Forbes, “A Social Security Application Mistake or A Malicious Policy with Frightening Consequences?”

Last September, a man who turned 70 in November called the local Social Security office to request that his benefits be initiated when he turned 70. The Social Security employee explained to him that if he took his benefit early, he would receive a six-month retroactive payment. The problem with taking this retroactive payment, is that it establishes an earlier start date for monthly benefits. It, therefore, reduces the monthly benefit that is received for a lifetime, and eliminates the entire reason for delaying taking benefits until age 70.

The gentleman said no. He knew that this would give him more money in the short run, but less over the long haul. The article reports that Social Security seems to have a policy of contacting people close to age 70 and offering to start their benefits retroactively. This may save Social Security some money but creates a world of problems for recipients.

The man stuck to his guns, insisting that he did not want the early benefits and wanted his retirement benefit to begin on November 2019,.This meant that his first check would arrive in December 2019. Social Security benefits are always one month behind.

For whatever reason, he maintains that the Social Security employee did the exact opposite of what he wanted. She specified that his retirement benefit should begin nine months before he called, dating back to January 2019. Ever since then, the man has been trying to undo this mistake. Here’s what happened as a result:

A lump-sum payment was directly deposited into his bank account in October 2019.

He went to the Social Security office and filed a form to withdraw his initial benefit application, requesting to start his new retirement benefit as of November 2019. He was told to repay the lump sum, but to wait until he received a letter from the Mid-Atlantic Program Service Center in Philadelphia. The letter arrived December 3, and he sent a check for the exact amount and included a copy of the letter.

In October, Social Security stopped automatically deducting his Medicare Part B premium from his checking account. He realized this and began sending Medicare the premium directly. Had he not done this, he could have lost his coverage entirely.

On Jan. 10, 2020, Richard’s check was cashed.

On Feb. 20, he received a letter from Social Security stating that he could be paid the correct amount.

He immediately sent a letter requesting Social Security to immediately initiate the correct payment and to send him a corrected 1099, since he had received a 1099 from Social Security, indicating that he needed to pay federal and state taxes on the lump sum that he had wrongly been sent.

It hasn’t gotten much better for the man. Incorrect amounts have been reported to the IRS, Social Security has not sent corrected 1099s, his past benefits have not been corrected and a series of directly related issues have been created with Medicare. Meanwhile, his wife is seriously ill, and this has led to more stress than either of them needed.

Be careful when applying for Social Security benefits, and document every step of the way, just to be sure.

Reference: Forbes (April 1, 2020) “A Social Security Application Mistake or A Malicious Policy with Frightening Consequences?”

Protecting Adult Children with Disabilities

“Adults with disabilities are living much longer than in the past, which means their aging parents must plan for the day when their dependent children outlive them.”

One in four Americans has some kind of disability, and an increasing number of children are being diagnosed with some form of autism. The life expectancy for people with Down syndrome has increased from living to age 12 in the 1940s to nearly 60 today. Most children born with cerebral palsy live into their thirties. For parents of these children, it is more important than ever to create a plan and a community, says the article “How to build support system for adult children with disabilities” from The San Diego Union-Tribune.

Financial resources and support services need to be put into place, for when parents are no longer able to provide care. Here are the key points to address:

Preserving the child’s eligibility for government assistance programs, including Supplemental Security Income (SSI) and Medicaid, through the use of a Special Needs trust. Any amount of money can be placed in the trust, and the funds don’t count when determining eligibility. If parents leave money directly to a child, they will lose their ability to get SSI and Medicaid benefits.

Start early. A Third-Party Special Needs trust should be set up before the child turns 18. It doesn’t need to be funded, but it needs to be created.

Be a stickler for the rules. If the child receives SSI, money from the trust may not be used for food and housing, but it can be used for other costs, like therapies that are not covered by Medicaid, or even extras, like a cellphone or vacation. An experienced elder law attorney will be able to help the family with planning and learning the intricacies of these rules.

Name a trustee and a successor trustee. Selecting someone to manage the trust on behalf of the child is a critical decision, and not always an easy one. The trustee should be someone responsible who cares about your child’s well-being. It could be a sibling, if the relationship is good, or a family member. The person should be younger than the parents, so they will be around after the parents have passed.

Open an ABLE Account—Achieving a Better Life Experience account. These are accounts that work in much the same way as a 529 account. They can be established for a disabled person at any time, but the child must have the qualifying disability before age 26. Money from a Special Needs trust can be moved into an ABLE account, and the beneficiary can use it for any qualified disability expense.

Prepare a letter of intent or guidance. This is not a legally binding document, but rather a way of sharing information with others about your child: their preferences, routines, comfort levels and wishes. It can also be used to provide information about caregivers, medical providers and others who are a good fit with your child. You may also wish to share information about what and who they don’t like. Update the letter every year or two.

Power of Attorney. Having a power of attorney for a disabled individual is far more flexible and less costly than a conservatorship or guardianship.

Housing options. Where will your child live? That depends on what kind of disability the child has and the family’s financial resources. Ideally, the child can transition from the family home to another place while the parents are still living. If feasible, the parents could leave the family home to the child in the Special Needs trust, but they’ll also need to leave enough money for ongoing expenses and maintenance of the house. Some disabled adults live in group home settings, where counselors and other staffers help residents live on their own.

An elder care lawyer will be able to connect the family with many different resources and help with creating a Special Needs trust.

Reference: The San Diego Union Tribune (Jan. 9, 2020) “How to build support system for adult children with disabilities”

If You Plan to Retire This Year, Be Prepared

“Many people are looking forward to 2020, simply because it's the start of a new decade. However, if you plan to retire in 2020, then you clearly have your own set of reasons to get excited for the year ahead.”

If you’re sure that you are going to leave the working world and start your retirement life in 2020, better not put in your notice at work until you’ve done your homework. The Motley Fool article “Retiring in 2020? 3 Things You Need to Know” covers three important steps.

If you were born in 1958, then this is the year you celebrate your 62^nd birthday—which means you are eligible to collect Social Security. However, if you do, your benefits will be reduced as you have not yet reached your “Full Retirement Age” or FRA. People born in 1958 need to be 66 and eight months to reach that important milestone. At that point, you can collect your full benefit. Collect earlier, and your monthly benefit is reduced for the rest of your life.

Born in 1954 or earlier? Full retirement age for you is 66, if you were born between 1943 and 1954. If if you were born at the tail end of this range, then you can collect your full Social Security benefit this year. However, it still may pay to hold off on claiming benefits.

The longer you can delay tapping your Social Security benefits, the better. From the time you reach your FRA until age 70, your monthly benefit grows by about 8% each year. Few investments today have that kind of guaranteed yield. Some advisors recommend tapping retirement accounts first and delaying Social Security benefits as long as possible. It’s worth taking a closer look to see how this can be of benefit.

If you are planning to retire, but you’re not 65, you’ll need to find and pay for health insurance until you celebrate your 65^th birthday. You can enroll in Medicare a few months before your 65^th birthday, but if you’re 62, then you have a three-year health insurance gap. Private health insurance is extremely expensive, there’s no way around it. Before putting in that letter to HR that you’re retiring, get some real numbers on this cost. If your employer will consider having you work part-time so that you can maintain your employer-covered health insurance, it may be a good idea.

If you’re closer to age 65, then COBRA is a consideration, although it may still be expensive. Typically, COBRA allows you to retain your existing health coverage if you change jobs, or are fired, for a certain amount of time. However, you have to pay for the full cost of health coverage.

If your gap is only three months, then COBRA might make sense. However, if your gap is a year or more, then you need to be realistic about health coverage options. Pre-existing conditions and a limited marketplace for individual coverage may make this the reason you keep working until 65. You should also check the rules of going from COBRA to Medicare—they may not be the same as going from an employee plan to Medicare.

The more prepared you are for retirement, the more you’ll be able to relax and enjoy this new phase of your life. If these three points have made it clear that you’re not yet able to retire, understand that it is better to work a little longer to reach your eventual goal of retirement, then to find yourself struggling to pay bills and jeopardize a lifetime of savings because of unexpected expenses.

Reference: The Motley Fool (Dec. 28, 2019) “Retiring in 2020? 3 Things You Need to Know”

How Does Enrolling for Medicare Work with Social Security?

“Social Security and Medicare are social safety programs that Americans pay into during their working years through taxes.”

These two programs are interrelated and both will have a definite impact on your finances when you are retired, reports U.S. News & World Report in the article “How Social Security and Medicare Work Together.” Both were designed to help seniors and distribute wealth to the disabled and their families. Social Security was created to help with financial support, and Medicare helps with healthcare costs, like doctor visits, hospital stays and other treatment. They are separate but intertwined in some ways. Understanding how they work together can be helpful, when planning for retirement and while taking benefits.

Eligibility for Social Security and Medicare Both are federal programs managed by agencies within the government. The Social Security Administration determines who is eligible for Social Security benefits and who is eligible for Medicare. The SSA also carries out many administrative functions for Social Security, which can get people a little confused.

To be eligible for Social Security, you must earn enough credits during your working years. The minimum number is 40 credits. One credit is equivalent to $1,360 in earnings in 2019, and you can earn up to four credits per year.

To obtain Medicare benefits, you must be 65 or older, although it is sometimes available to younger people with disabilities and those with permanent kidney failure who require dialysis or a transplant. There are several different parts, including Part A for hospital or nursing home visits and some home health care, Part B for doctor services, outpatient care, and medical supplies, and Part D for prescription drugs. Medicare does not cover all needed health services, however, including long-term care, dental visits, eye exams and hearing aids.

If you are eligible for Social Security, you can start taking benefits at any time between age 62 and 70. However, the longer you wait, the higher your monthly benefit will be. If you start taking benefits before your full retirement age, you’ll get a reduction in your benefits. If you wait until full retirement age, you’ll get an increased benefit. If you wait until age 70, you’ll get the maximum benefit.

Medicare coverage for seniors begins when they celebrate their 65^th birthday. If you’ve taken Social Security by the time you turn 65, then you’re automatically enrolled in Medicare Parts A and B, when you turn 65. If you haven’t taken Social Security yet at age 65, then you’ll need to contact the SSA to apply.

Medicare has to be paid for by the individual. The amount owed is different for everyone. It is based on the person’s retirement income and the health plan they select. Most people don’t pay a premium for Part A, and Part B premiums are income dependent. Part D is also based on income.

The SSA looks at income listed on tax returns from two years before the person is enrolled in Medicare. If they got a big bonus in 2017 and retired in 2019, their Medicare premium may be increased. People have to let SSA know they retired and what their earned income is.

If you are receiving Social Security benefits and enroll in Medicare, note that your premiums will be deducted automatically from your Social Security payments. It’s easy and convenient. However, if you aren’t yet taking Social Security, you’ll receive monthly or quarterly bills for premiums.

Reference: U.S. News & World Report (December 4, 2019) “How Social Security and Medicare Work Together”

How to Protect Your Retirement From Spendthrift Parents

“Her elderly mother, who had already drained a modest 401(k) and tapped the family home for a home equity line of credit, wanted Clark and two siblings to subsidize her living expenses.”

Denise Clark was flabbergasted and not without reason. Her mother wanted her children to buy her a brand new car and expensive birthday gifts for extended members of the family. Her mother thought nothing of asking for several hundreds of dollars each month from each of them to maintain her lifestyle. The Clarks are not the only family facing this issue, as reported in “How to Support Your Retired Parents Without Sinking Your Own Retirement Plans” from Money. A study from TD Ameritrade found that 13% of Americans are supporting a parent, including 19% of millennials.

This particular mother may have to find another money tree to shake. Clark doesn’t want to turn over the funds that she has saved over time, by careful budgeting to a parent who has a history of living beyond her means. All of the siblings have worked hard to attain financial security, devoting decades to building healthy nest eggs.

How can this family and others help aging parents, without sacrificing their own retirement or financial security?

Set boundaries, and stick to them. The role reversal of a child setting limits with a parent makes this a challenging set up, but it’s critical for the child to say no. The last thing you want is to go broke helping an elderly parent, and then finding yourself in the same situation with your own children years from now.

Address harmful money habits straight on. Spending as a hobby may be a symptom of depression or boredom. If that’s the situation, discuss it and consider getting the help of a professional counselor.

Don’t give cash directly to the person. If you can help out with small expenses and don’t want the money to be lost, pay a bill for them. The bill will be paid and the money won’t go elsewhere.

Try an approach of collaboration. Ask for their help in figuring out their financial future. Be encouraging, without scolding. If you’ve never talked about money, then be patient. It may take a while for them to accept your input, even if they are all too eager to accept financial gifts.

Check out government support programs. The Medicare Savings Program can help low-income seniors, who also qualify for Medicaid, afford a Medicare prescription plan. HUD runs a number of housing plans, although wait lists are often long.

If housing costs are a problem, look to alternatives. Are they willing to take on a roommate or two? The added rent money and socialization could alleviate some issues, although you have to be careful about who lives with your parent. A “Golden Girls” living situation might work.

Don’t overlook filing for bankruptcy. If their credit card debt, medical bills or underwater mortgage are overwhelming, bankruptcy might be a welcome relief.

Finally, if your own financial situation permits, consider setting up a trust with an estate planning attorney to benefit your aging parents. Inside a revocable living trust, a certain percentage of money or a set dollar amount can be distributed on a controlled basis, with a trustee who can be given the discretion to decide when assets should be distributed. If there are gambling or other abuse problems, restrictions should be built into the trust.

Reference: Money (December 3, 2019) “How to Support Your Retired Parents Without Sinking Your Own Retirement Plans”