Bob Rosenblatt's Tips on

Medical and Financial Issues Important to Seniors

Bob Rosenblatt, formerly a financial writer for The Times in Los Angeles and Washington, now writes about Medicare and other topics important to seniors. He sent along the following "memo for aging folks" about three important issues for his fellow OFSers.

Medicines: Be Careful as You Get Older

When we age, our kidneys and liver become less efficient in getting rid of medications you are taking. Since age-related problems can mean we are more likely to be taking several medications, this reduced ability to get them out of our systems can cause problems. Certain drugs have increased risks of serious problems such as delirium, gastrointestinal bleeding, falls, and fracture.

That warning comes from the American Geriatrics Society, the group for geriatricians, doctors who specialize in health issues of older people. 

The  AGS has compiled  a special report, based on a review of hundreds of studies  dealing with drugs and their risks for older people. Click here to see the report, which lists dozens of drugs, and their potential problems:

(And on the topic of potential problems with prescription drugs, a nurse friend of mine sent along news about benzodiazepines, which are drugs used to combat anxiety and help with sleep.)

Going to the Hospital

“Medicare: Inpatient or Outpatient? Staying in the hospital without being formally admitted can cost you thousands of dollars” That is the headline from a recent AARP story.

Medicare will cover your costs in a rehab facility (where you might go to recover after getting a hip or knee replacement  IF you have sent three days in a hospital as an inpatient. However, hospitals increasingly are admitting people under the classification of “observation,” which DOES NOT COUNT toward the three-day rule for rehab.

Even if you get a room, and lots of doctors and  nurses see you, your stay may still be considered  an “observation” stay.  If you go to rehab without three days of hospital stay, you will pay the hefty rehab bill.

As an AARP headline said: “Staying in the hospital without being formally admitted can cost you thousands of dollars”

Here is AARP's advice:

• Ask about your status each day you are in the hospital, as it can change (from inpatient to observation status, or vice versa) at any time.

• Ask the hospital doctor to reconsider your case or to refer it to the hospital committee that decides status.

• Ask your own doctor whether observation status is justified. If not, ask him or her to call the hospital to explain the medical reasons why you should be admitted as an inpatient.

• If, after you are discharged, you need rehab or other kinds of continuing care but you learn that Medicare won't cover your stay in a skilled nursing facility, ask your doctor whether you qualify for similar care at home through Medicare's home health care benefit, or for Medicare-covered care in a rehabilitation hospital.

• If you go to a skilled nursing facility and have to pay for it yourself, you can try formally appealing Medicare's decision. When you receive your quarterly Medicare Summary Notice, make a copy and highlight the facility's charge. Send this to the address provided on the notice with a letter saying you want to appeal Medicare's decision of non-coverage on the basis that you should have been classified as an inpatient during your hospital stay and not placed under observation. If this is denied, you can go to a higher level of appeal, following instructions on the denial letter.

Save your kids thousands in taxes when they inherit Your IRA

When people die, their heirs typically close out bank accounts, stock and bond accounts, and move them into their own accounts.

This SHOULD NOT BE DONE with Individual Retirement Accounts (IRAs),  the  IRAs you opened years ago, or the IRA into which you rolled a 401 (k) when you left a job.

Your spouse can inherit these accounts with no problems. Not so with your kids, or any other non-spousal beneficiaries.

The kids should leave the accounts at the financial institution, and simply re-title them to avoid a big tax bite. Here’s a the explanation from financial guru Jane Bryant Quinn, writing for AARP.

“Say you're a child receiving an IRA from a parent. You cannot roll the money into an IRA in your own name. If you decide to cash out, two bad things happen: (1) You'll owe income taxes, if it's a traditional IRA. (2) You will lose the glorious, multiyear (even multi-decade) tax shelter that an inherited IRA can provide."

Your heirs should re-title the account as an "inherited IRA." For example, say John Jones leaves his IRA to his daughter, Joan. After he dies, Joan should re-title the account "John Jones IRA (deceased Aug. 1, 2012) for the benefit of Joan Jones, beneficiary." If the money will be divided among heirs, each recipient should retitle his or her share.

Every year, Joan may be required to make a minimum withdrawal, based on her age. She can take more if she wants. Remember, withdrawals are taxed; the rest accumulates tax-deferred.

Now let's say that Joan dies, after naming her son, Jack, as beneficiary. Jack can re-title the account as an inherited IRA and continue the withdrawals on the same schedule that Joan began. The family tax deferrals could last for decades more!

What if you inherit a 401(k)? That, too, can be re-titled as an inherited IRA.

Correct titling is critical, says James Lange, author of Retire Secure! Pay Taxes Later. If you get it wrong, you'll be taxed immediately, on the whole amount. The lawyer who handles the will can help heirs re-title the IRA. Or they can send a letter to the mutual fund group that holds the IRA, specifically asking that it create a separate "inherited IRA" for each beneficiary.

Bottom line: Anyone holding an IRA or 401(k) should leave a note explaining the importance of re-titling. You want your heirs to get as much tax deferral as they can from the money you leave them.”

The Old Farts Society © 2012   info@OFSLA.com