Wednesday, December 26, 2007

Military retirement and disability: the candidates weigh in; military retirement and the DADT policy


A good question for military people has to do with the “don’t ask don’t tell” policy, largely discussed on the GLBT blog. What happens to their retirement if they are forced to leave?

Generally it appears that military people who leave “quietly” by resigning after the required number of years in service (20) have been able to collect pensions normally. Randy Shilts, in his book (“Conduct Unbecoming”) points out that in many cases officers or senior NCO’s have been encouraged to “leave quietly” for this reason. When military personnel are forced out early, because of DADT, they usually lose their pensions. In the civilian world, in most cases when people leave a company voluntarily, they can collect all of their unfrozen pension benefits if they were vested (with enough years of service) at the time of leaving. If they are forced out early (as with misconduct or some problem) they forfeit this.

The military has sometimes kept people, because of need, even after disclosures that violate DADT. SLDN has a story from Fort Bragg NC in February 2002, here. “By resigning, Donovan would forfeit his lifetime health benefits and his military retirement pay, now about three years away and estimated to be worth about $250,000, Conormon said,” the story reads. The link is here.

But a more obvious military retirement issue concerns has to do with veterans. Several of the Democratic presidential candidates for 2008 have made an issue of this, especially Joe Biden and John Edwards. The John Edwards campaign writes:

“While boasting of cutting waitlists for VA health care, the Bush administration has done so by excluding nearly 500,000 veterans from enrolling. Bush has strongly opposed granting our nation's veterans full disability and retirement pay. We will end the game of playing politics with funding for veterans health care by making it mandatory. We will end the "disabled veterans tax," under which military retirees who receive both veteran's pensions and disability compensation must surrender a dollar from their military retirement pay for every dollar they get for military compensation.”

The link for this statement is here.

The Edwards issues page is titled “I think we need a president who asks Americans to sacrifice,” and this link deals with national service and proposals to end DADT. So I could have put this on my GLBT blog or my issues blog. In order to address questions on military retirees on this blog, I put it here this time.

The issue of VA disability compensation in conjunction with military retirement seems complicated, and the web doesn't turn up a lot of good resources. Generally, it appears that federal law prohibits collecting both. Here is a typical discussion at BEDaily, which states "Federal law prohibits the award of VA disability compensation
concurrently with military retirement pay, except to the extent the retirement pay is waived." Obviously, this sounds like a good issue to attract the attention of military and veteran voters this year.

Sunday, December 23, 2007

Pension Protection Act of 2006 allows employers to make more aggressive investments of 401K funds automatically


The Washington Post, in a story on Business Page F1 today (Sunday Dec. 23, 2007) reports on a new law, part of the Pension Protection Act of 2006, allowing employers to enroll associates automatically in more aggressively managed 401K funds. The story is called “New Law to Expand Reach of 401(k)s: Way Is Cleared for Default Enrollment,” here.
The provisions at hand go into effect Christmas Eve, Monday Dec. 24.

The provision protects employers from liability for investment losses if they invest "automatically, by default" in one of three specific types of funds, which are riskier than the stable value funds commonly used. The concept is called “life cycle balancing” and allows riskier investments for younger associates to be made automatically. The theory is that over time these investments will yield much higher returns, able to support the associate in retirement, as economic variations tend to balance out over time. For example, more aggressive investments could be made in stocks, new technologies, companies in developing countries (especially China and India), or real estate – all of which tend to be risky in the short run but yield much better returns in the long run. As the associate gets older and closer to retirement age (however defined at the time, and it will increase with demographics) investments automatically become more conservative. Stable value investments may not yield enough returns to support associates for longer retirements. Investments also need to start taking into account the possibility of long term care or the need for long term care insurance. Associates must always have the ability to change automatic allocations, however.

My own experience was that I had quite a bit of choice of funds when I was working (for ING) and it was easy to get the changes made, although this was done and confirmed by mail. Employers have started to outsource this kind of work to companies that specialize in managing it (like Hewitt Associates).

Concepts like automatic allocation have long been known in financial services, especially in life insurance with products known as variable life.

Thursday, December 20, 2007

ABC News covers Medicare Advantage


ABC News, on both the Good Morning America and World News Tonight shows, warned senior consumers about private Medicare Advantage programs which some insurance agents have marketed aggressively to seniors, sometimes to seniors with dementia. The Medicare Advantage program is sold to replace Medicare (including Medicare premiums; it's a little hard to fathom the Part A since those eligible for full social security benefits don't pay Part A premiums; they do pay Part B and D (prescriptions). Chris Cuomo (himself an attorney) reported this morning in detail with a seven minute video. The video is called "Senior Citizens Battle Insurance." In some cases, insurance companies have refused to cover conditions that Medicare would have covered. While some Medicare Advantage plans give better benefits, the patients are at the mercy of the discretion of the insurance company.

To find the video, go to abcnews.com and search for "Medicare".

The video did relate a story where United Healthcare paid over $1 million in benefits for quadruple bypass surgery, but the patient was asked to lobby for Medicare advantage.

I did vet for the possibility of becoming an insurance agent in the spring of 2005. Medicare was not mentioned, but I suppose it could have been. Insurance agents always have to walk a fine line on ethics and can feel pressured to meet quotas.

Medicare's explanation for the plans is here.



Update: 12/21

I checked with my own ex-employer from whom I get pension and retiree health insurance. I asked what happens when I turn 65 in July. Since I am "not grandfathered" it would automatically convert to the Prescription Drug Only Plan once I am eligible for Medicare. But the premium for the quasi Part D is more than the premium I have now. I don't understand why this would be. If anyone understands how the age 65 conversion works (or what grandfathering means) I'd love to see a comment.



Update: Dec. 29: "No Premium Medicare supplements"


Another topic is supplemental Medicare coverage, which may include drug plans. Humana is advertising its Humana Gold HMO, and PPO plans that appear to be inexpensive. I have no idea how good the coverage is in practice, given these reports. The link is here.
I don't see how the premiums and benefits really match up and make sense. Comments are welcome.

Monday, December 10, 2007

SSA mailes out COLA notices, states earnings limits


It appears that Social Security recipients get a 2.33% COLA raise in 2008, starting with the January check, based on the mailing that I got last week.

The earnings limit for 2007 for someone under full retirement age for the entire year of 2007 is $12,960. If you reached full retirement age in 2007, which slides upward, the limit is $34,400. The corresponding amounts in 2008 will be $13560 and $36120. As covered before, this normally comprises only pay for work (wages, tips, most royalties), not investments, 401K withdrawals or pensions. (An important justification reference is this.

The SSA, on its mailed notification of the COLA increase, writes “We paid you benefits in 2007 based on the amount of money you estimated you would make. When your employer(s) reports your actual earnings for 2007 to us, we will adjust your benefits, if necessary. The earnings your employer reports are the amount that will be on the W-2(s) you will receive. If the earnings on your W-2(s) for 2007 include money you earned in another year, you should contact is before April 15 (2008) to let us know. We will also ask you to estimate your earnings in 2008, so we can pay you correctly.”

It does not appear that one needs to volunteer an earnings estimate unless one will go over. I covered this on March 27 on this blog. The SSA does not insist on doing federal withholding, but up to 85% if the payment can be taxable, depending on the total when other income is added.

I still wonder why bureaucratic waste over the earnings limit is necessary. If you paid into the system, why shouldn’t you be able to chose when to take it out, with just a lower amount based on actuarial life expectancy?

Monday, December 03, 2007

Seniors with high assets and low incomes renting


As we know, corporations for many years pressured associates to retire early, and to become more self-sufficient, as they gradually froze pensions and replaced these with matching 401K’s and sometimes job buyouts. Sometimes people retire early and have significant cash but rather poor income flow from that point on, unless they generate some new opportunity. The trend may change somewhat as labor shortages appear in some areas and as demographics force society to accept later retirement ages (that’s a big part of the social security debate). Nevertheless, it is a problem now.

One issue may be housing. Someone may want to move into an apartment and have the cash to pay rent for several years worth of leases, and may not want to risk the real estate market (right now it’s a double-edged sword with falling prices and the subprime mess). They may not have the net income to qualify for the residence (with pension, often frozen or reduced by social security offset), and social security, but they may in fact be able to pay the rent. It would be possible to set aside a special bank account with an auto-debit to guarantee that the rent is paid electronically at midnight the first of every month.

I have wondered how property managers feel about this situation. In 2003, while still in Minneapolis, I checked seven properties in Northern Virginia, and five of them said the use of assets would be OK (as did the property that I left in Minneapolis); two said that it would not. The two that would not tended to be lower end older “garden” properties than generally rent to working class immigrants. That’s interesting. As it happened, I did not need to do this. Rental agenting companies have not said much, indicating that it varies from property to property, and that often a co-signer is required. I found (on the web) one property in Virginia Beach that mentioned this issue but that insists that a senior have close to a half million in assets.

I’ve also checked "over age 55" property listings (senioroutlook), and noted that 30 or 40 miles outside of the largest cities, the prices tend to become reasonable for seniors who do not need to use any special services (just want a reasonably priced secure apartment with usual residential amenities). They appear to be priced lower than some general population properties. I would hope that they would be amendable to working with people in this situation, since obviously assisted living facilities and nursing homes by definition must, and this “active” population of senior rental customers has fewer needs. I don’t know how this plays out in states with larger senior populations (like Florida).

Some people might rent individually owned houses or condos and fund themselves subject to sudden eviction if the owners default and get foreclosed on.

Anyone who knows more about how this issue plays out in practice is encouraged to comment.

Monday, November 19, 2007

More private health insurance companies market to early retirees; what happens at age 65?


MSNBC and the AP have a recent story "Insurers catering to early retirees: Baby boomers are financially stable, and they don't qualify for Medicare, yet" here (Oct. 31, 2007). Many people have been "forced" to retire early and may have inadequate health insurance, and some companies do not offer it at all.

I do have health insurance from United Health Care from ING, and it is about 2/3 company paid, but still a high-deductible plan with only 70% inpatient hospital coverage costs about $200 a month out of pocket. I am holding off on some things (like hernia surgery) until I am 65 and inpatient care is "free". Is that a market-driven decision? UHC does offer extremely effective in-network discounts for out of pocket expenses (up to 70% discount on most procedures). Medicare eligibility starts at 65, and requires a premium for Part B, but not for Part A if the employee had enough FICA credit (40 quarters) to qualify for social security. Apparently, my ING policy becomes supplementary (like many Blue Cross Blue Shield supplementary policies for seniors) when I reach 65 as Medicare would cover much of the expense, but I will have to pay a Part B premium of almost $100 and may want Part D (but my ING plan covers many prescription drugs much better than Medicare does).

Other references on Medicare eligibility: Moheban Law Firm

EMaxHealth

Medicare PDF document is here. This covers 2007. Note the discussion of Medigap policies and the copays and deductibles even for Part A hospitalization, on P 44. It conveys a sense of how difficult it is to cover unlimited health care expenses for seniors. (We [Michael Moore, anyway] ask, then, what about Canada? Britain?)

Medicare enrollment


I followed the questionnaire this morning and eventually reached this page:



The following is a listing of the Medicare premium, deductible, and coinsurance rates that will be in effect in 2008:

Medicare Premiums for 2008:

Part A: (Hospital Insurance) Premium

*
Most people do not pay a monthly Part A premium because they or a spouse has 40 or more quarters of Medicare-covered employment.

*
The Part A premium is $233.00 per month for people having 30-39 quarters of Medicare-covered employment.
*
The Part A premium is $423.00 per month for people who are not otherwise eligible for premium-free hospital insurance and have less than 30 quarters of Medicare-covered employment.

Part B: (Medical Insurance) Premium

$96.40 per month*

Medicare Deductible and Coinsurance Amounts for 2008:

Part A: (pays for inpatient hospital, skilled nursing facility, and some home health care) For each benefit period Medicare pays all covered costs except the Medicare Part A deductible (2008 = $1,024) during the first 60 days and coinsurance amounts for hospital stays that last beyond 60 days and no more than 150 days.

For each benefit period you pay:

*
A total of $1,024 for a hospital stay of 1-60 days.
*
$256 per day for days 61-90 of a hospital stay.
*
$512 per day for days 91-150 of a hospital stay (Lifetime Reserve Days).
*
All costs for each day beyond 150 days

Skilled Nursing Facility Coinsurance

*
$128.00 per day for days 21 through 100 each benefit period.

Part B: (covers Medicare eligible physician services, outpatient hospital services, certain home health services, durable medical equipment)

*
$135.00 per year. (Note: You pay 20% of the Medicare-approved amount for services after you meet the $135.00 deductible.)

The specific link was this:

Today show discusses Sandwich generation

This morning (Monday Nov 19) the NBC Today show again discussed the caregiving responsibilities of the "sandwich generation" many of whom cope with eldercare, raising children and work (with some employers who may resist family responsibility time off). Tom Nelson from the AARP appeared. I could not find the web link for this specific item yet (despite the fact that the show said it should be there) but the website for the Today show is this.

I'll add a link from "New Retirement", blog here.

Update: Nov. 24


A story on another blog mentions stability of bonds and oil prices, certainly important now to retirees, here.

I followed up on Nov. 26 with another report on a USA Today story on the same topic, and investigated further, and found some contradictions. Link.

Saturday, November 17, 2007

Life Insurance industry supports "death tax"; Senate tries to help with Long Term Care


The life insurance industry has a dirty little secret out in the open, according to libertarian-leaning columnist Timothy P. Carney (whom I met once at a Cato function, as I remember), with his column Nov. 16, 2007, “Death tax is a lifeline for insurance industry.” The article appeared in The DC Examiner Nov 16 on p 17 under commentary, link here.

There has been a lot of witchcraft (“you create your own reality”) with the death tax, which the Bushies set to disappear in 2010, to reappear in 2011. Relatively few people pay it, but those who are exposed to it spend a lot of money on financial planners (working for insurance companies or brokerage houses) to avoid it. According to the article, the life insurance industry gets 10% of its business this way.

The American Council on Life Insurance (ACLI) reported spent amount $10 million last year on keeping some form of estate tax. ACLI president Frank Keating (no relation to Peter Keating in Ayn Rand’s “The Fountainhead”) suddenly started repeating leftist talk from the collectivist 70s on the moral evils of too much “unearned” inherited wealth staying within families.

In 2005 I was approached about becoming a life insurance agent, since I have twelve years of information technology experience in the area. I did not want to “live the life” (trying to build up lists of leads, and behaving in a publicly partisan manner about certain issues) and I hardly am interested in helping “rich people” get around taxes. I can see a career in helping develop and sell long term care insurance, however.

The ACLI website should be explored for the long term care issue. For one thing, it has a story “Senate Introduces Long-Term Care Affordability and Security Act”, details here. The bill would allow long term care insurance to be included in employer cafeteria plans and flexible spending accounts. The long title of the story is “"Long-Term Care Affordability And Security Act Of 2007" Will Help Americans Prepare For Long-Term Care Needs

Thursday, November 15, 2007

Life Alert and other home emergency monitoring services: why haven't the media reported on them much?


As a never married childless older man, I have dealt with a troubling question: should I allow eldercare needs to affect where I live, where I take employment, and my strategy for dealing with employers? This sounds like a Dr. Phil topic, although I don’t see it there now (I’m thinking about email the Dr. Phil show to bring this up). I don’t want to be more specific here about personal business, other than to bring up what is a troubling question that ought to be up among the frontrunners in public policy debate. In the past, I have been pressured by others not to live out of the area where I have some eldercare issues. Is this appropriate? (I realize there could have been other options, like being able to buy a house big enough while in place.)

There are a number of home monitoring products that seniors who live alone but who may be at risk from sudden accidents or emergencies can purchase. Recently, Life Alert has been advertising on CNN with a spot by former Surgeon General (under the Reagan Administration) C. Everett Koop. This spot promotes the use of the device (with Koop’s blessing) for seniors in this circumstance. That gives it some credibility. The website has relatively little information and encourages the consumer to call an 800 number for a brochure. I did so. I await the brochure in the mail, but a salesman, who said that he was himself 64, called me back. He says that the service has been in effect for 25 years.

Life Alert claims that the average age for entering a retirement home is 79, but for their clients it is six years later, 85. The link is here. That statistic by itself does not support the notion that single adult children can rest easy living away from elderly parents indefinitely, Koop's promotion of the product notwithstanding.

It’s curious, then, that the major media have not discussed home monitoring devices much when presenting the eldercare issue. There are plenty of stories in the media of teenagers caring for their parents, and of adult children in the “sandwich generation.” I’m surprised that I haven’t heard more about this in the major media.

There have been a few stories, and I recall at least one that required that the customer’s computer run a monitoring application and webcam all the time. Life Alert would not require that.

Apparently, according to a quick Internet search, there are a number of such products, some of them cheaper than Life Alert. (Typically the hardware, including wearable pendant, costs a few hundred dollars, and there is a monitoring contract with a monthly fee, similar to a home security company). One such website is this.

There have also been some complaints about Life Alert, discussed on ConsumerAffairs.com by Joseph S. Enoch, “Seniors' Fear of Falling Keeps Life Alert Flush”, Former U.S. Surgeon General cashes in on seniors' fears, here. The visitor will have to judge the veracity of these for herself. The tone of the article (the title) seems to miscast the problem.

The question remains, however. There is an increasing population of older Baby Boomer adults with no parenting experience of their own who may need to carry eldercare responsibilities as their own parents live longer, and this can affect major decisions that they make for themselves. There seems to be little public discussion of this yet. That seems surprising, and that will probably change. Monitoring will handle some perils, such as when an elder falls but is conscious and can press a pendant button to call for help. It can also provide home security when an elder is home alone. It does not provide custodial care itself, guarantee the taking of medication, or meet any number of other needs. That is why the cost and availability of home health aides (complicated by immigration issues perhaps) and assisted living are becoming important problems, as is long term care insurance.—all in conjunction with the likelihood that some states might become more aggressive in enforcing filial responsibility laws.

A comparable suggestion could be that an senior living along gets a cell phone and learns how to use if (if able, not always the case). In my own situation, as I look back over the past ten years or so, I can see that I was not as aggressive or as resourceful as I could have been in seeing how these newer communications devices could have helped me manage my issues. I had a clumsy cell phone in 1998, but didn’t start using them much until 2002 when they were smaller. I can recall stopping at convenience stores on the road and calling for messages from pay phones, or from motel phones (which charge a lot). No more.

Wednesday, November 14, 2007

Questions on social security offset (from pension payments) continue


I get emails about the social security offset on pensions, which I discussed on July 1. Many people approaching retirement are shocked to learn about this concept. It seems to be especially an issue in airlines. Unions will normally become concerned about this issue in collective bargaining.

Since employers match the social security taxes of their employees, many employers believe that it is proper to recover this contribution from the person's pension. So they subtract an amount from the pension based on the person's expected social security benefit at the same age the pension starts. The offset is based on the number of years of service, just as the pension itself is, and is less if retirement is started early. It will be less if the pension was frozen. In some companies the offset, as a percentage, is much less than in others. Some companies offer a "social security bridge" until age 62 for early retirement.

The picture gets more complicated when there have been acquisitions, and the pension calculation is the sum of many separate components.

Saturday, November 10, 2007

Alternative Minimum Tax relief; Are reverse mortgages in jeopardy?


On Friday Nov. 9 the House of Representatives passed a bill to provide some relief from the alternative minimum tax, which has started to affect more moderate income families that take lots of certain kinds of deductions. The tax was originally constructed to make sure that richer people pay some tax, but was not correct with regard to inflation. The House also approved moderate income families that do not itemize deductions getting a home mortgage deduction in some cases.

The shift in policy is supposed to be paid for by treating “pyramid” income in certain sales businesses (mostly financial products and hedge funds) as work income rather than capital gains. It’s not clear if this could affect agents, renewal commissions, or partial volume offsets paid to distributors in many businesses. These are important to retirees, since many people go into sales businesses after formal retirement and earn commissions this way.

The story is by Jonathan Weisman, p A01, The Washington Post, Sat. Nov. 10, “House Passes Bill to Ease Alternative Minimum Tax,” link here.

The AMT could become important in the future to adult children if states start enforcing filial responsibility laws and adult children find ways to take extra deductions.

David S. Hizenrath has a story “Fannie Mae Expenses Up Sixfold from Bad Loans: Mortgage Firms Declines Contribute to Market Loss,” p D01 on today’s Washington Post, here.

The company doesn’t expect housing prices to mount a stable recovery until the endo of 2009. Many parts of the country may see a real estate recession similar to what struck Texas at the end of the 1980s and lasted well into the 90s. Many seniors have taken home equity loans and reverse mortgages and these could come.

Update: Nov. 13, 2007


The Washington Times has an op-ed on p A23 by Sen. Jeff Sessions (R-Alabama) "Families First: Tax Reform where it counts". He argues that even the reform bill will leave in place a system that favors high state taxes and penalizes families with children in those states. He believes that personal exemptions should count in figuring an AMT.

Monday, October 29, 2007

AARP and Genworth offer long term care insurance: does it compute?


Today, I received a piece of mail from the Genworth Life Insurance Company in Richmond, VA offering long term care insurance to AARP members in the 50-79 age bracket. The mailing did not specify premiums, but included a business reply mail form, which I sent in out of research curiosity. The form letter notes that the average cost today of a year in a nursing home is over $69000 and is not covered by Medicare, and that Medicaid pays it only when one has depleted assets – a topic (along with filial responsibility laws) that I have been developing on this blog.

I looked up a premium calculator (here) and found that at my age, a maximum lifetime benefit of $109500 and daily benefit of $100 would cost about $80 a month at my age (64). So a year’s benefit would cost about $160 a month and the payout would last only about two years. I sent away the reply envelope to El Paso, TX and I suspect that the AARP rates are better. But it’s obvious that long term care insurance isn’t very affordable if started late in life.

This begs another public policy question. States are experimenting with mandatory personal health insurance; Hillary Clinton wants to experiment with that at a national level. Suppose there were mandatory long term care insurance? The mandatory aspect to stop at a certain age (since it so quickly becomes unaffordable from an actuarial point of view). It’s even possible that a particular state could, in combination with filial responsibility laws, could make it mandatory only for the childless or at higher ages for the childless. How do you like ‘dem apples? Scary. But imagine where this debate can go. At least into the land of Jonathan Swift novels.

It's also notable that today, The Washington Times has an article on p A1, "AARP magazine targets 'new 50': Boomers spur 'youth' move", by Andrea Billups.

Update: There is a follow-up on Jan. 16, 2008
on this blog.

Tuesday, October 09, 2007

USA Today / AARP reports on baby boomers starting social security next year


Today, Tuesday, Oct. 9, 2007, USA Today has a major front page story by Richard Wolf, “Social Security hits first wave of boomers: Drain on the system picks up in January, when millions born in 1946 start taking benefits,” here:

That’s because in people born in 1946 turn 62 next year, and the way many corporate retirements are set up (with social security offsets), retirees often feel pressured to start social security as soon as possible, when actuarial formulas have them collecting 75% of what they could collect if they waited until full retirement age. Waiting until age 70 can mean a collection of 32% additional monthly benefit over the full benefit, so the difference between an age 62 and age 70 benefit is a 176% increase at 70. The demographics could become less favorable for early retirement as people live longer. Early retirees also have to be careful about the tricky rules of earnings limits (and as to what counts toward them, written about in this blog before) until they reach full retirement age. Those rules harken back to the FDR days when social security was regarded ideologically more as a welfare program than as a retirement system that one pays into over life and then collects from.

The article has a subheading, “a retiree for every couple,” as we head for the day when every retiree is supported by only two workers. According to the article, Medicare will get into fiscal trouble sooner than Social Security itself.

Update: Oct. 10, 2007: The AARP Bulletin for Oct. 2007 has an excellent sidebar by Stan Hinden on p 23, "Your Money: The Question Everyone Asks: When Should I Take My Social Security Benefits?" Hinden points out that the arguments for postponement are becoming more critical than anyone expected a few years ago. Here is the link.

Barbara Basler has an important story on understaffing for customer service at the Social Security Administration, "The Line Starts Here," p 30, here. She recommends calling the 800 number later in the day or later in the month. My wait at the Arlington VA office in March 2006 was about an hour.

Tuesday, October 02, 2007

Filial Responsibility Laws -- New Jersey, North Carolina


In July (7 and 12), on this blog, I went through the filial responsibility laws of a number of states and gave the references. Remember that the change in 2005 to Pennsylvania law to move filial responsibility from the “welfare code” to the “family code” was seen as politically and socially provocative, although it’s not clear that it has been enforced since then.

Today, I looked up New Jersey (which, ironically, has made significant gains in equality for same-sex couples, like Massachusetts), and North Carolina.

New Jersey is here:
(or plug in "101" at the end of the URL) on a legal website called HelpLineLaw.

The text is as follows:

"44:4-100. Ascertaining and obtaining or compelling assistance of relatives Upon application for the relief of a poor person the county welfare board shall ascertain if possible the relatives chargeable by law for his support and proceed to obtain their assistance or compel them to render such assistance as is provided by law.

"44:4-101. Relatives chargeable a. The father and mother of a person under 18 years of age who applies for and is eligible to receive public assistance, and the children, and husband or wife, severally and respectively, of a person who applies for and is eligible to receive public assistance, shall, if of sufficient ability, at his or their charge and expense, relieve and maintain the poor person or child in such manner as shall be ordered, after due notice and opportunity to be heard, by any county director of welfare, or by any court of competent jurisdiction upon its own initiative or the information of any person. b. The provisions of this section shall apply to the minor children of a mother whose husband shall fail properly to support and maintain such minor children when by reason thereof they are likely to become a public charge. c. The provisions of this section shall not apply to any person 55 years of age or over except with regard to his or her spouse, or his or her natural or adopted child under the age of 18 years. Amended by L.1968, c. 446, s. 2, eff. Feb. 19, 1969; L.1975, c. 1, s. 2, eff. Jan. 14, 1975; L.1979, c. 401, s. 2, eff. Feb. 8, 1980."

It’s interesting that in New Jersey the filial responsibility process would start when a parent applies for welfare, and would not apply to adult children over 55 (I haven’t seen that exception yet with other states).

The North Carolina reference is as follows. (PDF file)

Here is the text. It is fairly typical for these laws, providing some criminal penalties and being structured as a “poor law.”

"14-326.1. Parents; failure to support.
If any person being of full age, and having sufficient income after reasonably providing for his or her own immediate family shall, without reasonable cause, neglect to maintain and support his or her parent or parents, if such parent or parents be sick or not able to work and have not sufficient means or ability to maintain or support themselves, such person shall be deemed guilty of a Class 2 misdemeanor; upon conviction of a second or subsequent offense such person shall be guilty of a Class 1 misdemeanor. If there be more than one person bound under the provisions of the next preceding paragraph to support the same parent or parents, they shall share equitably in the discharge of such duty. (1955, c. 1099; 1969, c. 1045, s. 3; 1993, c. 539, s. 227; 1994, Ex.Sess., c. 24, s. 14(c).)"

Original reference giving statute numbers for all states on "Everyday Simplicity" blog: here.

Update: Oct. 14, 2007

I have not seen any specific state laws on how filial responsibility is to be divided among adult children in a family. This would seem to be at the discretion of officials. I have not seen any statutes that specify a greater liability for adult children without their own children, for example (the "family slave" problem). At least one state (NJ) limits liability at age 55, and another (Va) limits it to 60 months.

It is not clear how filial responsibility laws work when the adult children live out of state. The "lookback period" laws depend on federal statutes and would apply, but the "poor laws" that don't necessarily involve prior "giveaways" might be harder to enforce out of state. There is still a "full faith and credit" issue that works with other laws like this (for example, "alienation of affection" judgments, that can only come from some states, can be enforced out of state -- see the Dr. Phil show on Oct. 19, 2007).

Monday, September 10, 2007

Federal employees who were switched to social security in 1980s claim to be cheated


I got a comment this morning from a former federal employee who does not like the way the Federal Employees Retirement System (FERS) has worked since the change in the 1980s. The components are Social Security Benefits, Basic Benefit Plan, and Thrift Savings Plan. The basic Office of Personnel Management Link for this is called "New Employee Benefits" and is here.

The comment was left on my main blog entry, here, in response to a form letter from a lobbyist preserve social security without privatization. The comment mentions filial responsibility -- the need to hire caregiving for other family members.

Update: Oct. 29, 2007

The Washington Metro Transit Authority now advertises The National Active and Retired Federal Employees Association, particularly a subsite that reads "Federal Employees: Laws Can Change, So Can your RETIREMENT."

Sunday, August 26, 2007

The Gifters: retirement years on "the same side"


USA Today for this weekend Aug. 24-26 has a story by Mindy Fetterman, “Giving while living’ reshapes inheritances: for family and charity, more Americans are passing on their money long before they die.” This story was also reported on ABC Good Morning America Sat. Aug. 25.

The story emphasizes the desire of many families to hold themselves together, and that many parents, and not just the super rich, are setting up private foundations and appointing adult children to them. Of course, some kids may feel that they are being tethered, and may feel that strings are being attached to making the money they need.

This subject was touched on Friday night (Aug 24) on ABC 20/20 “Cheap in America” also, where giving was discussed and the role of adult children in wealthy families was presented.

The other side of this issue is, of course, the middle class and the lower income populations, who face increasing eldercare problems (let alone the issues with the medically uninsured.) For persons of more moderate means, it can be dangerous to give money to kids, and then run out of money for nursing home care, as federal law has now increased the lookback period to as long as six years.

Further, as noted in earlier posts on this blog (back to July 7) state filial responsibility laws may hit adult children in the future even with no money passed on at all.

"Giving," "Gifting," "Grifting" -- they are separate concepts.

Friday, August 24, 2007

Long Term Care Insurance: Overview


One of the most important strategies for answering the questions about filial responsibility (and personal responsibility) is going to be long term care insurance. This started to get offered and discussed in insurance circles in the late 1990s. Obviously, from an actuarial point of view (with out concept of personal “moral hazard”), individuals who are advanced in age or in poor health would not be able to purchase such insurance at a reasonable price. Younger people, and especially people starting their working careers, have the opportunity to consider purchasing it over a lifetime when it could be cheap in the beginning. Of course, this gets added on to other expenses faced by young adults, such as college loans, and ordinary health insurance. One possible direction of this issue is to expect working adults to manage this issue for their parents.

In fact, I think that health care reform, however the debate evolves (especially in the 2008 presidential election, where the Democrats (most of all Hillary Clinton) will talk about universal coverage, and Republicans will talk about tax exclusions or credits to pay for premiums, and where some states like Massachusetts and California implement some kind of mandatory health insurance), needs to embrace long term care insurance. Even Canada and Britain, so extolled by Michael Moore as paradigms of virtue in providing universal health insurance, are facing the same problem with custodial nursing home and assisted living care. Lower population replacement (among resident populations) and the need to extend the work career (demanding changes in behavior by employers) are also factors.

It’s important to note that Health Reimbursement Accounts (HRA’s) managed by employers already allow tax deferrals for LTC premiums. Visit this link at ING: It’s likely that conservative lawmakers will try to propose more tax deferrals to help with caregiving and long term care issues, as already there are deferrals for some childcare and eldercare situations. (But remember, the Family and Medical Leave Act only authorizes unpaid leave for caregiving situations and has been criticized in comparison to European practices.)

The federal government (and US Military) have a well-organized web presence on this issue for its own employees. Check the OPM website here for Federal Long Term Care Insurance Programs (FLTCIP). Link.

The Web is quickly developing a large repository of sites from companies entering the business. One can search. One site that looks interesting is Mr. Long Term Care:

Over time, I expect to add more details on this subject on this blog, in connection with the concern over filial responsibility laws (see the last several postings back to July 7).

Sunday, August 12, 2007

Filial responsibility laws and issue in Canada, Australia; more references


The Canadian Journal of Family Law, Vol. 17, No. 2, here: has an article by Christa Bracci, “The Ties that Bind: Ontario’s Filial Responsibility Act.” Link is here. Despite the Canadian single payer system for ordinary medical care, custodial nursing home care could fall on the families of the elderly, a topic not mentioned in Michael Moore’s recent film “Sicko.” The article here is ambiguous, and it appears that in Canada, as in the US, enforcement is difficult.

A Journal of Applied Psychology article back in 1997 discusses filial responsibility in Australia Filial Responsibility and the Care of the Aged, Michael Collingridge &
Seumas Miller, here. (requires purchase).

A search ("filial responsibility laws") finds a lot of other activity. The EverydaySimplicity blog maintains that adult kids are being sued for their parents’ care: link
Although it’s not clear factually that this is really happening much yet.

And another source discusses "filial responsibilty" in a more conceptual fashion, assuming that physical presence for caregiving is an ethical responsibility that would encourage adult children to become more proactive in planning for their parents' care well in advance of other decisions.

And this article from Massachusetts Law Updates, while discussing the increase in the lookback period, goes on to discuss Elderlaw’s concerns that adult children will be on the hook anyway.

Generally the public reaction to this issue on message boards is one of disbelief and anger. It claims that this will hit the "sandwich" generation of the middle class, and that sounds like a reasonable assessment.

Update: Oct. 30, 2009

See "Bill on International Issues" (Blogger Profile), Oct 30, 2009, for discussion of filial responsibility laws in Singapore (the "Maintenance of Parents Act").

Thursday, July 12, 2007

A look at filial responsibility laws in six more states


Today I looked at a few more states listed on this website:

Everyday Simplicity: Filial Responsibility Laws: List of States Having Them:

Connecticut is interesting. The basic statute seems to be “Relatives obliged to furnish support, when”, link here.

The law seems to have been rewritten and revised, as shown in a complicated explanation in the statute. Curiously, I cannot find a concrete statement in this statute that literally says that adult children must support indigent statement. But a related statute refers to this idea by listing exceptions in the case of abandonment or emancipation, here. “No liability for support of deserting parent".

"Sec. 46b-219. (Formerly Sec. 17-326). No liability for support of deserting parent. No person shall be liable under any provision of the general statutes for the support of a parent who wilfully deserted such person continuously during the ten-year period prior to such person reaching his majority. For the purposes of this section, wilful desertion means total neglect of parental responsibility in failing to provide reasonable support and care within the financial capability of the parent. Any person claiming the provisions of this section as a defense shall have the burden of proof of such willful desertion."

Massachusetts, the only state to fully accept gay marriage at present, has a filial responsibility law, 273/20, "Neglect or refusal to support parent" here under "Non-Support, Desertion and Illegitimacy," modified as recently as March 2006. (see also the index to all related Mass. laws).

Section 20. Any person, over eighteen, who, being possessed of sufficient means, unreasonably neglects or refuses to provide for the support and maintenance of his parent, whether father or mother, residing in the commonwealth, when such parent through misfortune and without fault of his own is destitute of means of sustenance and unable by reason of old age, infirmity or illness to support and maintain himself, shall be punished by a fine of not more than two hundred dollars or by imprisonment for not more than one year, or both. No such neglect or refusal shall be deemed unreasonable as to a child who shall not during his minority have been reasonably supported by such parent, if such parent was charged with the duty so to do, nor as to a child who, being one of two or more children, has made proper and reasonable contribution toward the support of such parent.

Iowa is interesting in its simplicity. The requirement for support can extend to grandparents and grandchildren (“remote relatives”). Here is the basic statute.

252.2 Parents and children liable.
The father, mother, and children of any poor person, who is unable to maintain the poor person's self by labor, shall jointly or severally relieve or maintain such person in such manner as, upon application to the board of supervisors of the county where such person has a residence or may be, they may direct.

But then this extends to other family members, at least grand-relatives; link.

252.5 Remote relatives.
In the absence or inability of nearer relatives, the same liability shall extend to grandparents, if of ability without personal labor, and to the grandchildren who are of ability by personal labor or otherwise.

South Dakota also includes the duty to support siblings in some cases. Notice the wording in 7-28 to make it look like a personal entitlement from an impoverished sibling. This is “loyalty to blood” taken to the soap opera level. Here is the basic statute.

25-7-27. Adult child's duty to support parent when necessary--Notice required. Any adult child, having the financial ability to do so, shall provide necessary food, clothing, shelter, or medical attendance for a parent who is unable to provide for oneself. However, no claim may be made against such adult child until the adult child is given written notice that the child's parent is unable to provide for oneself, and such adult child has refused to provide for the child's parent. Notice required by this section shall be given within ninety days after the necessary food, clothing, shelter, or medical attendance, claimed in the notice, was first provided for the parent. However, in the case of fraud or misrepresentation, notice shall be provided within ninety days after such fraud or misrepresentation is known or should have been known. If the parent or someone acting on behalf of the parent makes application for assistance pursuant to chapter 28-13, the county shall give the written notice required herein within ninety days after it receives the application or notice required under § 28-13-1, 28-13- 32.3, 28-13-32.4, or 28-13-34.1, whichever is sooner.

South Dakota mentions remote relatives, but apparently in the context of going after other siblings to share support. Here is the law.

25-7-28. Adult child's right of contribution from brothers and sisters for support of parent-- Notice required. In the event necessary food, clothing, shelter, or medical attendance is provided for a parent by a child, he shall have the right of contribution from his adult brothers and sisters, who refuse or do not assist in such maintenance, on a pro rata share to the extent of their ability to so contribute to such support; provided that no right of contribution for support shall accrue except from and after notice in writing is given by the child so providing for his parent.

There was a complicated and convoluted case in South Dakota, reported in 2003 by Fleming & Curti, “Attempt to Force Children to Pay Father’s Hospital Bills Fails,” link here.

Ohio

The law is 2919.21 "Non Support or contributing to non-support of dependents.

(A) No person shall abandon, or fail to provide adequate support to:

(3) The person’s aged or infirm parent or adoptive parent, who from lack of ability and means is unable to provide adequately for the parent’s own support.; (E) It is an affirmative defense to a charge under division (A)(3) of this section that the parent abandoned the accused or failed to support the accused as required by law, while the accused was under age eighteen, or was mentally or physically handicapped and under age twenty-one. (G)(1) Except as otherwise provided in this division, whoever violates division (A) or (B) of this section is guilty of nonsupport of dependents, a misdemeanor of the first degree. If the offender previously has been convicted of or pleaded guilty to a violation of division (A)(2) or (B) of this section or if the offender has failed to provide support under division (A)(2) or (B) of this section for a total accumulated period of twenty-six weeks out of one hundred four consecutive weeks, whether or not the twenty-six weeks were consecutive, then a violation of division (A)(2) or (B) of this section is a felony of the fifth degree. If the offender previously has been convicted of or pleaded guilty to a felony violation of this section, a violation of division (A)(2) or (B) of this section is a felony of the fourth degree.

The link is here.

Pennsylvania

There is an important paper online, "Finances, Families, and 'Filial' Laws: The Real World as Classroom," by Katherine C. Pearson, Professor of Law and Director, Elder Law and Consumer Protection Clinic, Penn State Dickinson School of Law," dated December 2006. The series is called "Family Focus on: Families and the Future." The article says that in Pennsylvania, a law was passed on July 7, 2005 to move Act 43 "indigent support" rules from the Welfare Code to the Domestic Relations Code, "placing it side-to-side with child support and spousal support laws, which duplicates it in those respects, making it clear that adult children's support of a parent is the real goal." The article notes that much of the Pennsylvania Bar Association wanted to repeal this law, and the article notes well the practical difficulties with enforcement. Here is the link.
There is another reference on Pennsylvania from the National Council on Family Relations in Minneapolis (ironically, Minnesota does not have such a "poor law") here, where it reads "Act 43 exists as a potential creditor's claim anytime someone believes a particular adult child or financially solvent 'statutory' family member should be the payer for the 'indigent person.'" Presumably, although this is speculative, such a person in Pennsylvania could get a call from a debt collector demanding payment for a parent's debt.

I could not find the text of the 2005 Pennsylvania statute Act 43-2005 online, but I found a Pennsylvania Bulletin reference that implies that the state could force an adult child to support an indigent parent even if the parent is not on welfare. The link is this. Mark D. Freeman has an elderlaw site and discusses the PA law in his "New Nursing Home Law Update" here, although it appears that the law's scope isn't limited just to nursing homes.

Apparently New York does not have such a law, although in the 1970s Ed Koch (when a Congressman, before he became mayor in 1978) told constituents that he thought adult children should have such responsibilities.

General Remarks:

Other good sources are:

Katie Wise. “Caring for the Elderly: Sharing Public and Private Responsibility for the Elderly.” NYU Law School, May 3, 2002. (The PDF link no longer works. Do a search on "'Katie Wise' 'Caring for the Elderly' and read the cached HTML of a word document.) (Note: The document has appeared again in a new location, here.) This dates back to 2002. On page 573 (page 11 on the pdf file) there is a section "The Current Status of Filial Responsibility Laws" with a count of 28 states (as of 2002) with such laws, with their never having been enforced in 11 of the states. The article presents balanced arguments for individual filial responsibility and societal or socially shared responsibility, which could parallel some of the debates on health care (even though custodial nursing home care is not part of Medicare). It also gives international comparisons. It warns that changing demographics is likely to make the issue politically more volatile. It also presents somewhat libertarian arguments that adult children should not have legal filial responsibility because they did not enter into voluntary "contracts" to be born and raised. One's identity and consciousness also seems like a spiritual given.

Other additional sources: Katherine Pearson, Pennsylvania State University, School of Law (new link given above), “Agency and the Elderly: The Responsible Thing to Do about “Responsible Party” Provisions in Nursing Home Arrangements
Kisten B. Wilson, Bar Journal, 1999 Family Law Issue, “Filial Responsibility: A New Look at an Old Legal Concept”.

The National Center for Policy Analysis has a 2005 paper that argues that something like 1/3 of Medicaid nursing home expenses could be saved by states enforcing these laws.

Many of these state laws seem to be worded in an archaic manner, and reflect an assumption, unchallenged before modern times in the latter half of the 20th Century, that blood relationships trump, that procreation is essentially mandatory (or else one stays home and takes care of those who do bear children) and a life activity so fundamental and essential that anyone who does not engage in it is in a sense “disabled.” Given the demographics of lower birth rates and longer life spans, states are bound to start looking at these laws, even outside of the better known issue of preventing people from giving away assets to kids to qualify for Medicaid (the look-back period problems). It could give a whole new spin (by reviving an old spin) on “family values”, the gay marriage debate, and the social significance of sexual intercourse itself.

Earlier correspondence: Sept 7, 2006, from the National Council of Family Relations, blog link.

Practical burdens, mention of major New York Times late 2006 story here.

In June 2007 on that "Major Issues" blog I covered the USA Today series on eldercare.

In my Urchin reports for doaskdotell.com (where I have this essay on filial responsibility laws) I find plenty of evidence of concern (from the search arguments) by visitors for this issue, especially in California.

Please refer to a related post on Saturday July 7 on this blog.

(There are more states on this blog on Oct. 2, 2007.)

Tuesday, July 10, 2007

Life companies would like some retirees to help sell to other retirees -- but what about the ethics?


I spent the last twelve years of my information technology career, before I “retired” at the end of 2001, were spent in a life insurance company, acquired twice. In the spring of 2005, I was approached by a different major life insurance company about becoming a life insurance agent in my area.

On a Saturday morning I took a multiple choice personality test, which I passed (I could tell what answers they wanted), and then started the first of four sessions. The general plan would have been to obtain the life insurance license quickly and be able to sell life policies. The longer term plan was to become a financial planner. In retrospect, it does appear that this particular company intended that the agent take the fill three or four year course to become a Certified Financial Planner or Chartered Financial Analyst. The compensation would have been by commissions, but for three years was to include a substantial “training bonus.” This compensation appeared to constitute a bridge until the time one could be fully certified. In life insurance sales, over time a substantial income could come from renewal commissions. Another concept is cross-selling (as a result of corporate mergers and consolidation of insurance companies as financial services companies) to the same customer of different financial products, and that involves the expertise and licensure issue discussed below.

The job would have required getting a ‘fast start” and an exercise to generate 200 or more leads. I think this would involve trolling existing social networking contacts, which I do not have to an appropriate level for this kind of exercise; I get emails all the time offering insurance sales leads as a leftover from this episode and I can see how lists for "prospecting" (and maybe "cold calling") are "traded". In general, new agents often have to hustle to find customers. (When I was working and saw the sales literature, one of the techniques expected of agents in the early 90s was to set up weekend kiosks at shopping malls to attract and collar prospects.) One issue that came up in the third interview, and which led me to stop the process, was that no outside income was allowed (except for an existing pension from a previous job). The company claimed that this was a requirement of Sarbanes-Oxley if they paid a training bonus. Obviously, then, I could not have continued blogging for ad revenue, and probably the public exposure from my domains and blogs would have been perceived as interfering with the public reputation that I would need as an agent. But I question if they could legally prevent me from earning money from selling my own separate intellectual property (novels or screenplays) having nothing to do with the job, because I own the copyright to anything I produce myself with my own resources. (Comments anyone?)

Indeed, in many communities, the life insurance agent is somewhat of a social lynchpin, particularly in smaller communities, as in the Gulf area after the hurricanes. In this case, it appeared that the company wanted to expand in rural and exurban areas.

In 2003, while still in Minnesota, I had been approached by another company for a narrower idea: getting people with whole life policies to switch to term. This was said to be a $40 trillion treasure chest. In fact, I had first gotten a call from this company on Sept. 13, 2001, a curious harbinger of the economic dislocations to come after Sept. 11.

But all of these ideas, to perspective employers, seemed motivated by the idea of using the business background that I had gained in twelve years of working as an individual contributor in a life insurance company. In most cases, especially with younger applicants, they have to train their sales people with all of the business knowledge.

For me, the practical question is, with all that business and technical knowledge, why wouldn’t I be interested in trying to sell it? That’s not an idle question. In 2003, I was still drawing some unemployment (in Minnesota it was generous and flexible) and I could have been pressured to work in direct sales.

Now, as a matter of personal temperament, I do not like to manipulate people, to buy things or for anything else. I am much happier with analyzing and researching something and presenting it as truth. But one can see that it is natural for corporate America to believe that sales is a natural progression in a career, particularly when so much manufacturing and productive infrastructure has been offshored.

The New York Times, on p A1 on Sunday July 8, 2007, Charles Duhigg has an article, “For Elderly Investors, Instant Experts Abound.” Here is the link (will require NY Times registration and perhaps purchase). Several life companies (none of them among the two mentioned earlier her) are mentioned as promoting quick-and-dirty certifications in elder-oriented financial advice, including “Certified Senior Adviser,” “Certified Retirement Financial Adviser”, “Registered Financial Gerontologist”, “Certified Retirement Counselor” The courses were usually a few days for a few thousand dollars, and certification was obtained by passing very easy and common-sense multiple choice tests. It does not appear that the life company that contacted me in 2005 was pushing these short-circuited pseudo-financial-planner titles.

What seems galling is that retirees are believing that they can become public advocates for other seniors with such superficial strategies. Barbara Ehrenreich had warned about such corporate rah-rah mentations in her book “Bait and Switch.” One practice criticized in the article was the selling of deferred annuities to other seniors. This has been seen as deceptive. Perhaps a deferred annuity makes sense to a senior who is still working, in good health and with a long enough life expectancy to collect all of the premium back with interest. Sometimes "agents" have been caught in the middle, and become liable for possible civil accusations of fraud, as their companies deny wrongdoing. As a whole, the life insurance industry has strict rules against practices like twisting and churning.

A huge area of potential elder-oriented financial advice would deal with long term care insurance. This is a complicated subject, as a recent USA Today series demonstrates. Long term care could become more critical if states start enforcing filial responsibility laws, beyond what they must do now because of increased federal look-back rules regarding asset spend-down.

A related story appears in the Monday July 9, 2007 The Washington Times, “Morally sound stocks sought: investors can specify religion,” by Julia Duin. One investment advisor company mentioned was Stewardship Partners. Companies could be excluded if they supported stem-cell research and gay rights. A more obvious application of this concept ought to be green-friendly companies.

Update: May 28, 2008

The "no outside income rule" seems to be related to the conflicts that occur in some insurance operations where some people act as brokers (paid by clients) and still might earn contingent commissions. There is a paper in "Insurance Journal" Nov. 16, 2004, "Independent Insurance Agents Defend Themselves at Senate Hearing over Broker Compensation," link here.

The US Government Printing text of the Sarbannes-Oxley law is here. The closest match to a provision in the laws may occur in Title II on p 28. In general, an insurance company, when providing various kinds of contingent or draw-like compensation to new agents, might have difficulty making sure that the agent did not break rules regarding acting as a broker and "agent" at the same time if it did not have a "no moonlighting" policy. In theory, even an income-earning blog could be perceived as giving "advice", at least indirectly, to clients who knew the agent.

Saturday, July 07, 2007

Filial Responsibility Laws -- Virginia, Maryland, California


Filial Responsibility Laws in different states, starting with the Commonewealth of Virginia

The Code in Virginia is 20-88, and is available online at this (in the online copy of the code of Virginia) reference:

The Virginia statute ("Support of parents by children") states quite bluntly:

“It shall be the joint and several duty of all persons eighteen years of age or over, of sufficient earning capacity or income, after reasonably providing for his or her own immediate family, to assist in providing for the support and maintenance of his or her mother or father, he or she being then and there in necessitous circumstances.”

Later it reads:

"To the extent that the financial responsibility of children for any part of the costs incurred in providing medical assistance to their parents pursuant to the plan provided for in § 32.1-325 is not restricted by that plan and to the extent that the financial responsibility of children for any part of the costs incurred in providing to their parents services rendered, administered or funded by the Department of Mental Health, Mental Retardation and Substance Abuse Services is not restricted by federal law, the provisions of this section shall apply. A proceeding may be instituted in accordance with this section in the name of the Commonwealth by the state agency administering the program of assistance or services in order to compel any child of a parent receiving such assistance or services to reimburse the Commonwealth for such portion of the costs incurred in providing the assistance or services as the court may determine to be reasonable. If costs are incurred for the institutionalization of a parent, the children shall in no case be responsible for such costs for more than sixty months of institutionalization.

"Any person violating the provisions of an order entered pursuant to this section shall be guilty of a misdemeanor, and on conviction thereof shall be punished by a fine not exceeding $500 or imprisonment in jail for a period not exceeding twelve months or both.”

The statute does allow for the possibility of emancipation in the case of abandonment. It is not clear what would happen in “gay-related” cases.

32.1-325 appears to refer to Medicaid.

But it would appear from reading this law that filial responsibility could be assessed, for at least up to five years of nursing home care, even if the parent had no assets to “spend down.” Again, I have not yet heard of any cases where this has been enforced (it would be particularly problematic it the adult child is out of state), but I am surprised that the major media (including gay media) have slept on this for so long.

I’ll start checking some other states in the near future.

The federal lookback period, extended to 60 months and discussed in the previous posting, would appear to related to the Federal Share of Medicaid nursing home expenses. The rules are quite complicated. I worked on the New York State Medicaid Management Information System (for Bradford National Corporation as the consultant) from 1977-1979 on the MARS (Management and Administrative Reporting), and many of the reports dealt with federal shares for indigent elderly in nursing homes, with various rules about SNF’s and ICF’s, that programmers had to become quite conversant about in doing system tests for the State.

(Oct. 10, 2009): The first paragraph of the Virginia statute would seem to address filial responsibility as a "social contract" issue or as if it were part of a family code, as well as serving the purpose of a "poor law" and dealing with abuse of Medicaid. That is, an adult child must provide for himself/herself plus created family and children (if any), and in addition, facilitate the care of the parent properly in an unpaid manner (or sometime a paid manner), although the parents' funds can be used for the parents' care without commingling once the adult child performs according to this section (including not behaving in a manner as to jeopardize acquiring and keeping this care). It would appear that the law could be used to make the childless experience more "family responsibility" no matter what disruption occurs in their own lives. The law does take into proper account past parental neglect or abuse, but does not consider a disabled parent "morally" accountable for his or her own problems because of lifestyle or past behavior (alcohol, drugs, smoking, HIV, etc); the adult child must own the "moral responsibility". The law also needs to be interpreted in connection with disabled adult neglect laws, which are somewhat similar to child neglect laws. One can be a responsible party "in fact" without formal custody or guardianship.

It's also instructive to look at the statute in Virginia for "neglect of an incpacitated adult". Although there are some caveats toward the end, it is worded generally enough that, in conjunction with the filial responsibility statute, it could conceivably be used against an adult child who someone believes is not "diligent" enough, link (18.2-369). The adult services departments of a number of states, including Virginia, have (third-party-written, probably) literature that suggest that "lack of affection" could be construed as neglectful or abusive, a concept we normally connect to (voluntary) marriage.

The Virginia law does not appear to be predicated on the marital status (or possible history of divorced) of the parents. Generally, that's true of filial responsibility laws in general. The "moral obligation" (and legal obligation) comes from procreation itself, not from the martial relationship that society may believe should be backing up having children.

Maryland


The basic statute is 13-102 in Family Law. The link is here: The master index to Maryland statutes is here.

It reads:

"(a) If a destitute parent is in this State and has an adult child who has or is able to earn sufficient means, the adult child may not neglect or refuse to provide the destitute parent with food, shelter, care, and clothing.

(b) If a destitute adult child is in this State and has a parent who has or is able to earn sufficient means, the parent may not neglect or refuse to provide the destitute adult child with food, shelter, care, and clothing.

(c) A person who violates any provision of this section is guilty of a misdemeanor and on conviction is subject to a fine not exceeding $1,000 or imprisonment not exceeding 1 year, or both."



California:


The basic link to the California Family Code Section 4400-4405 is this. The basic California Family Code Index is this. Yes -- how ironic -- to use "The 4400" as a pun!

The text reads bluntly:

"4400. Except as otherwise provided by law, an adult child shall, to
the extent of his or her ability, support a parent who is in need
and unable to maintain himself or herself by work."

Again, these requirements seem to be independent of any previous viatical spend-down gifts to adult children. Conceivably, in some states, once a Medicaid nursing home bill has been paid, an adult child's debt might exist and the adult child could get a call from a debt collector, although I haven't heard that this has really happened (yet). Imagine the emotionality of this issue.

The District of Columbia (Washington DC) does not appear to have such a law.

In general, these statutes emphasize poverty or destitution of the parents with non-impoverished adult children.

I certainly welcome detailed comments from visitors. This is a real “sleeping dog” and probably at Rottweiler. I have a related post with three more states on Thurs. July 12.

Thursday, July 05, 2007

As look back period for Medicaid nursing home care increases, wonder about filial responsibility laws


Last week financial and investing consultant John Waggoner wrote a column for USA Today (Friday June 29, p 3B), “When it’s time to tap your assets, order is important.” This is in reference to the spending of a parent’s assets by adult children providing the parent with eldercare and often paying for funds to care for assisted living or nursing home care.

As often noted, Medicare does not pay for custodial care. It only pays for Skilled Nursing Facility (SNF) care (for a specific number of days) when the patient is expected to get better. Often private supplemental insurance will extend the number of days of SNF care, and this may be part of a long term care policy or a separate coverage.

So adult children find themselves spending down a parent’s assets until Medicaid can pick up nursing home care (or sometimes Home Health Aides). The article gave some tax advice on various kinds of withdrawals. IRA’s (traditional, and Roth, which behave differently), and home equity, and unconverted 401K’s. The article also discussed homestead. In many states, a spouse can draw Medicaid to pay for the other legal spouse’s custodial care without selling the house, whereas a single person could not.

One great concern that I have is “filial responsibility laws” which in theory mean that adult children can be pursued for their parents’ custodial care expenses. I have a major reference here. Some books claim that this was commonly required in the days before Medicare, which is hard to grasp since Medicare, as noted above, doesn’t normally pay for nursing home care. There is a particular reference, the Kabb Law firm, that one can explore now. There is a sub headline “New Medicaid Law Means Parents Could Be on the Hook for Parents’ Nursing Home Bills”.

Much of the concern has to do with federal tightening of the "Look Back Period" in the Deficit Reduction Act of 2005, S. 1932, and the provision “SEC. 6011. LENGTHENING LOOK-BACK PERIOD; CHANGE IN BEGINNING DATE FOR PERIOD OF INELIGIBILITY” The visitor can study the provisions in detail in footnote [6] on that file.

Social Security gives this link on S 1932 (Hr 4241)
Apparently, this bill was signed into law Feb. 8, 2006,
The govtrack references is S. 1932 in the 109th Congress, link here.

What matters to many people, of course, is what happens when a parent has few assets, assuming these rules are in effect. If an adult child has assets (that is, other than those that were "given" to the child during the "lookback period", and particularly from parents who have no assets to "give away"), can a state go after the adult child? The Waggoner USA Today article doesn’t say that states can, but some websites do. Could there be triage (if there a siblings, an adult child without his own children is more “at risk” than another sibling with kids – again, what about legal marital status? Imagine where this could go (with gay marriage)?

I haven’t heard of cases where this has actually happened yet, even though the texts of some state laws seem to suggest it is possible. Here is a typical link.

What is clear is that the demographics are absolutely scary. Medicine makes it possible to keep people alive longer, without maintaining a comparable level of self-sufficiency-maintaining life skills. Alzheimer’s Disease can turn into the catastrophe that we predicted with AIDS twenty years ago. Medical progress with pharmaceuticals is slow but steady, and encumbered by liability concerns. Furthermore, in an age of individualism, “personal responsibility” has tended to stay within the confines of adult cognition, to the extent that many adults isolate themselves from filial responsibility by not marrying and having their own children. This does seem like a matter of time…

The inability of the Senate to pass a "pseudo-amnesty" bill regarding immigration also heightens the eldercare concern, as many of the people available to work in nursing homes and as home health aides are immigrants, sometimes "illegal". Conceivably adult children could be penalized for hiring them in the future. There could be more pressure on adult children to make themselves present to provide actual physical care, or modify their own homes to be able to do so. Today (July 5, 2007) the DC Examiner Blog Board had an editorial by La Shawn Barber, "Now that amnesty is dead, locals must act against employers."

I’ll dig more into the legal facts in the near future and place more specific material as I find it. I welcome constructive comments.

See Aug. 1, 2008

See the 8/1/2008 entry on this blog more discussion of how look-back works (based on Kiplinger). The actual law is very tricky and both lengthens look-back and changes the date from which it applies. It's designed to force beneficiaries to treat "give aways" as "loans."

Section 6011 of Chapter 2 of S 1932 has the exact rules (link given above). The Congressional Research Summary reads as follows:

"Subchapter A: Reform of Asset Transfer Rules - Amends SSA title XIX (Medicaid) to revise requirements relating to long-term care.

Section 6011 -
Lengthens from the usual 36 months to 60 months, or five years, the look-back period for counting for eligibility purposes all income and assets disposed of by the individual for less than fair market value after this Act's enactment.
Changes the start date of the ineligibility period, for all less-than-fair-market-value transfers made on or after enactment of this Act, to the first date of a month during or after which assets have been transferred, or the date on which the individual is eligible for Medicaid and would otherwise be receiving institutional level care based on an approved application but for the application of the penalty period, whichever is later, and which does not occur during any other period of ineligibility as a result of an asset transfer policy.
Specifies the criteria by which an application for an undue hardship waiver shall be approved.

Requires each state to provide for a hardship waiver of the transfer of assets requirement in specified circumstances for individuals residing in nursing facilities. Authorizes the state to make bed hold payments for hardship waiver applicants."

Sunday, July 01, 2007

Social security offset, and social security bridge: related, but different concepts


A note about the social security offset and social security bridge.

It’s important to realize that social security offset and social security bridge are related but separate concepts.

Suppose someone has worked for a typical company and retires after 25 years at age 66, at full retirement age. (Actually, it’s probably not a very typical company in today’s global economy, if one could stay there so long and never be laid off.) Suppose his last five years his or her salary or credited service income had been $6000 a month.

A typical pension might pay 2% a year for every year of service (up to 25 years, and then much less for each year – a typical pension is not a whole lot more than 50% even for a very long term person). That would be 50% here, or $3000 a month.

But many companies take off a social security offset. Not every plan does, but many do. The theory is that a retirement income is supposed to be based on a combination of pension, 401K or IRA withdrawals, other investments (maybe even home equity), and social security. Now that idea is getting to be socially objectionable, perhaps, to those who argue (credibly) that social security is a pyramid that could crumble. Companies, they say, should not ride on this concept.

A typical retirement plan might offet 2% a year of one’s expected social security benefit. If this individual expects a benefit of $1400 a month, in this example, the offset would be 2 x 25% or 50%, or $700 a month. The resulting pension would be $3000 - $700 = $2300.

The social security offset can be assessed even when the person waits until full retirement age, or later.

What happens if someone retires much earlier? Many companies, even in the go-go 90s, started encouraging “early retirement” for highly salaried employees in the 50s and offering buyouts at 55 or even 50. It’s typical that someone can collect early retirement after age 55, with a certain minimum years of service (often that is ten years). If someone retires, say, at 58 with 12 years of service, the base pension might start out as 12 x 2% x $6000, or $1440. This will get reduced in early retirement by an actuarial formula based on life expectancy and the increased expected number of payments (in a “life annuity”). The reduction could be more complicated with spousal survival benefits (“with x years certain”) – typically spousal benefits reduce the base benefit slightly. In this example, the reduction could be something like 30% or so, bringing the total base amount down to about $1000. But some companies offer (or used to offer) a “social security bridge” until age 62. That would negate a lot of the offset (maybe even most of it) until age 62. The assumption was that the individual, if still not working elsewhere, would file a protective SSA statement and start benefits, which, however, are actuarially reduced by early start. It’s also likely that the company will compute the (penalizing) social security offset more favorably, because the expected social security benefit at 62 would be less than if the person started at full retirement age.

Of course, all of this is becoming mute point as companies are finding it harder to fund pension plans, all with stricter accounting rules (after the various scandals in 2002), and with people living longer. This is especially serious with state and local governments and school districts, and large labor unions. Pensions are rapidly being frozen and eliminated for newer employees. That is why the individual savings plan, heavily tax deferred and geared to encourage ample saving during one’s young adulthood, have become some important in conservative and libertarian plans for the coming retirement crisis. Of course, this all runs into problems like student loan debts and health care debts, so thoroughly vetted by liberals like Michael Moore in his recent film “Sicko.”

There was an earlier discussion of the offset on Feb. 27 2006 on this blog.