About Virginia Clay

Virginia Clay has worked as a nurse and pharmacist. She earned her Doctor of Pharmacy degree from Campbell University in 1994 and her nursing degree from Greenville Tech in 1989. After attending the Hardvard School of Public Health (MSc Health Policy and Management class of 1996) she ran her family's independent pharmacy, Hall's Drug Store in Oxford, NC after her parents were no longer well. In 2000 she closed the family business to pursue other interests. Since this time she has worked to help people understand and cope with the the complex interaction of personal finance, health care and legal needs. Families may need the advice of several professionals that may include an attorney, accountant, business consultant, financial advisor and case manager. In 2003 she obtained her health and life insurance licenses and medicare / long term care insurance licenses in NC. She has been a CERTIFIED FINANCIAL PLANNER(TM) since 2009 and is a CFA charter holder. She started a career as a financial advisor in 2006 with Smith Barney and currently works for Morgan Stanley Wealth Management. She does not provide tax of legal advice. This web site is the is part the Living and Caregiving Project which is the publication and education activites of Blackwood Administrative and Consulting Services, Inc.

Pride, Money and Friends

Margaret was 8o years old and newly widowed. Her house was not yet paid off and she lived on a modest fixed income. As a young woman, Margaret had two children. One was born with autism the other with Down’s Syndrome. One child died as a teenager.

The living child, Fred at nearly 50 years old, still lived with Margaret.  Last year, when Margaret needed surgery she was not able to drive for months.

Ten years ago, Margaret’s husband, Bruce, filed for bankruptcy due to the burden of medical expenses.  Bruce felt it very important to avoid any government handouts.

By being careful, Margaret’s only debt was her mortgage which had a balance of $40,000. She needed a better car. One of Margaret’s friends discovered that Fred was not covered by Medicaid, though it was highly likely he was eligible.

Margaret’s friend helped her call the county department of social services. After waiting a month a social worker came to visit Margaret and Fred. Documentation was obtained from his 1970s school records showing his need for special education classes. Margaret wrote a letter asking the school to release the records to her friend, so it could be delivered to the county social services department.

With the school records documenting Fred’s special needs in hand, the county case worker from social services enrolled Fred in Medicaid so that his medical care would be paid for by the Medicaid program.

The Complex State of Health Care in America

A Blackwood Adminstrative and Consulting Publication: Copyright 2012
Author: Viginia Clay, RN, PharmD, MSc, CFP(R), CFA

The Complex Business of Healthcare and Care Giving

Conducting personal business is increasingly complex. When choosing healthcare and related services and products, the complexity can cause poor decisions that adversely affect health or financial wellbeing. Healthcare services are most needed when health is poor or at risk. When sick, people often make or avoid making decisions when they are experiencing physical and emotional stress, possibly leading to many suboptimal choices.

Consider three examples of personal business we conduct outside of healthcare, and the detailed information, comprehension and language required for someone to make informed and good decisions. Many of people would benefit from a course on these topics to help them avoid miss steps that make them worse off.

1. Employers generally no longer promise retirement pensions. The onus for saving and investing for retirement is on the worker through using self-directed investments in 401(k) plans and other retirement accounts. This makes understanding stocks, bonds and the capital markets important for middle and working class America;

2. Buying a house had become very common place. About two thirds of American households are owner occupied making it important for most consumers to gain an understanding of types of mortgages, how they are sold and priced, and how our personal credit histories are established and scrutinized by lenders;i

3. The number and types of college degrees and college institutions have increased so much that it is more confusing than ever for a prospective student, young or old, to discern what curriculum will yield more personal satisfaction and future wages. Then there is the complexity of college financial aid and student loans.

Societal forces by nature have invisible momentum. One characteristic of an advanced economy that utilizes mass amounts of information is an increase in the complexity of personal business.

Choosing, accessing, using and paying for healthcare products and services have been affected by the following factors and others:

1. Mass media communications;
2. Medical Meccas;
3. Internet communication and information access;
4. Expectations of a high quality of life assisted by health benefits and entitlements programs;
5. Longer life expectancy and the medical technology that preserves and prolongs life; and
6. Simultaneous support by voters of large government health benefit programs and free market methods that allow physician and patient ability to influence treatment.

Anxiety and Family Dynamics Compound Difficulties

The desire to be well, experience quality of life and the reality of dying are why we use doctors, hospitals, nurses and therapists. Personal anxiety and questions regarding health, dying and relationships all exist naturally. Interacting with a complicated and fragmented healthcare benefit system can create an additional layer of anxiety.

Consider the common tensions of parent-child or spousal relationships. When one is or becomes a caregiver, these family dynamics may be fraught with resentment and distrust, adding a layer of personal stress and emotion.

American society has created a difficult to navigate healthcare system. Each hospital, physician or home care entity is a separate business, whether it is not for profit or not is usually irrelevant. It is fair to describe they system we have as fragmented and often confusing.

Much responsibility ultimately lies with the patient and family to coordinate the best combination of services and understand reimbursement for the care. Often, smart and educated consumers cannot understand the billing arrangements without great effort so simply do not reconcile insurer notices and medical bills which may be rife with errors in favor of the healthcare provider.

Consider a young adult faced with helping a parent make arrangements for long-term care services in the parent’s home. Suddenly the child suddenly needs to know many details. What kind of home health or care agency to contact and what kind of reimbursement the agency will accept and what kind of private and government benefits the parent has and is eligible for and how to obtain those benefits without risking assets or any foregoing a valuable benefit by taking a benefit that was less valuable.

This reimbursement oriented information is just the beginning of what a caregiver should optimally know. Poor decision making may negatively affect quality of care and may create unnecessary caregiving and financial hardship for a family.

Decisions about Income and Assets Affect Health Benefits

Many aspects of personal finance may interact with healthcare benefits. A variety of government health benefits and entitlements interact with one another. Many misperceptions exist as well about who can use which benefits.

Consider a simple example. A new widow continued receiving her social security check based on her own work history. She had never filed for her spouse’s benefit even though it was higher. Now, she could file for her widow’s benefit based on her deceased husband’s much more lucrative earnings history. She received $800 per month based on her own work history.

With a such low income, the government subsidized her Medicare Part-B and Part-D premiums. She received food stamps and lived in low-income housing. The housing was located where there was good public transportation and easy access to a senior center with good activity programming one-mile away.

Her daughter suggested she should take her widow’s benefit. She began to receive $250 more per month, but suddenly she was no longer eligible for some benefits and others were reduced. Her rent increased by the amount of the check increase.

Another not uncommon story concerns veterans’ benefits. A veteran is advised by an insurance agent to purchase an annuity in the form of a monthly cash payment in exchange for some cash savings. He is told by the agent this will not affect any benefits he is eligible to receive. He and his wife have another $100,000 in their local bank.
A year later, he needs to go live in an assisted living community for a cost of $2,500 per month. He finds the annuity payment is just enough additional income to prevent eligibility to receive Veterans Administration help for paying care in the Assisted Living community. The $100,000 in savings probably would not interfere with eligibility if the life expectancies of him and wife are long enough to justify keeping the savings.

Many people can more optimally combine the use of Medicaid, Medicare, Social Security Disability and retirement benefits, veterans and military benefits and private health plans. Often affluent families miss opportunities to use benefit programs because their rules are so numerous.

Sometimes the missed opportunity is very simple. For example, a retired spouse over age 65 remained on the working spouse’s employer group insurance plan. In addition, the retired spouse was enrolled in Medicare Part-A which covers hospitalization.

The retired spouse anticipated surgery which fell out of the group plan network so that the hospital and physician coinsurance payments were large. He enrolled in Medicare Part-B in order help cover the out-of-network coinsurance charges from the multiple physician charges he incurred during the hospitalization and post operatively at home.2

Eldercare and Elder Law
Eldercare often requires the involvement of several or many people to help meet the caregiving and personal business needs of an older adult. Friends, family, and health care providers have much to communicate to one another. Sometimes, the family does not know the medical, health care billing, financial or legal language needed to ask for what is wanted or discuss it well.

Elder Law attorneys3 may positively contribute to better use of health benefit and entitlements, income and assets. Some financial planners may also positively contribute but, their work should be done as

part of a team of advisors to a client. A team of advisors could include elder law attorney, tax advisor, 4 financial planner or advisor,5 social worker or nurse case manager and a trusted family member or friend and, of course, the client.
The most basic Elder Law legal package may include a will, power of attorney document, healthcare power of attorney document, healthcare directive, HIPPA Authorization for Release of Medical Information and maybe a letter prescribing what is to be done with remains at death.
Middle class and affluent families may benefit from more nuanced planning to help them gain access to government benefit programs such as Medicaid. Some Medicaid programs use medical need as opposed to financial need for their primary test of eligibility.
Not knowing this, many people may not attempt to access these programs or they do access the program only after forfeiting unnecessarily certain assets that a spouse for example, truly needs.

Complicating this matter further, is the fact that Medicaid is administered on the state level alongside a number of state specific benefits that many perceive to be part of the Medicaid program. The result is guidance and legal advice needs to be state specific relative to estate, elder care and government benefit programs.

Elder Law versus Estate Planning Attorneys
Estate plans may incorporate some of the same asset protection measures that Elder Law may employ. However, a good estate planning attorney may not be a good elder law attorney.
For affluent families desiring to protect assets from long-term care expenses an intimate knowledge of how many aspects of personal wealth and healthcare business interact is required, including: income, assets, private insurance, investments, real estate, legal titling, transactions, private insurance coverage, Medicaid, Medicare, social security, Veterans benefits and so forth.

All wills and power of attorney documents are not equivalent. If these documents are crafted in a way that is not consistent with the asset, income and benefit strategies under consideration, the documents can be limiting if not counterproductive.

From Home Economics to Life Economics
In the 1980s and 1990s Home Economics curriculums began to disappear from high schools and colleges. Most Home Economics courses are a part of history since they were associated with the domestication of women.

High schools, community colleges and universities have never replaced the home economics curriculum with one focused on other practical aspects of life such as healthcare and financial fluency. Detailed knowledge and comprehension is required to conduct personal business in and outside of the home.

Creating this curriculum this could have been a natural progression from Home Economics to Life Economics. Extension Offices continue to teach much of this basic curriculum.

From Child Rearing to Caring for Adults at Home
In 1970, the median age of Americans was 28 years compared to 37 years in 2010. During the same period the proportion of the population under age 18 decreased from 34% to 24%.ii In 2009 the US Population was about 305 million and there were approximately 115 million households. In the same year, 11.8 million people had long-term care needs.

Of the 11.8 million needing long-term care, 10 million resided in the community. So on average about 9 out of 100 homes has at least one resident needing help with some long-term care. These care needs could be as simple as help with meals or as demanding as help with bathing, dressing and toileting each day.iii

Shifts in age, low birth rates and increased participation of women in the work force has increased the demand for teaching personal care skills used in residential care communities serving the elderly. According to the US Department of Labor Bureau of Labor Statistics, the number of people employed as nursing aides will increase by 20% between 2010 and 2020.

Residential care communities serving the elderly with long-term care needs employ almost 60% of nursing aides. While teaching hands-on caregiving skills gives people the skills to do the hands on work of personal care it does little to address the need understand how to plan, arrange for and pay for long-term care.

To the average person the way hospitals, residential communities, doctors, pharmacies, nursing agencies collect their payments is poorly understood. Likewise the manner in which health and disability entitlements and insurance plans interact and work is poorly understood. There remains a need to help people acquire the skills needed to cope with the complexity of personal healthcare business in America.

1 The Veterans Administration accredits attorneys and others to give advice about claiming benefits. These Accredited attorneys and claims agents may be found in not for profit, for profit and government entities.
2 When the employer has 100 or more employees, the group plan pays first and Medicare pays second.
3 An Elder Law attorney for this purpose has proficiency in estate planning but in the context of using and accessing various government and private health benefits and entitlements while sometimes protecting assets and income. There are other Elder Law experts that focus on other issues such as nursing home abuse.
4 A tax advisor is often a CPA but may be a tax attorney.
5 The two most recognized and respected designations for financial planners are the Chartered Financial Consultant and the CERTIFIED FINANCIAL PLANNER(TM) designations. Many other designations are much less rigorous. The Chartered Financial Analyst designation is probably the most rigorous investment oriented designation.

i National Multi Housing Council. Quick Facts: Resident Demographics. Last accessed October 15, 2012: http://www.nmhc.org/Content.cfm?ItemNumber=55508.
ii Howden, LM, Meyer, JA. Age and Sex Composition 2010. US Census Brief; May 2011.
iii Health Affairs Health Policy Brief: May 12, 2011.