schenbew
Recycles dryer sheets
My parents have had a tough year, with both of them battling cancer. As their health has deteriorated, my brothers and sister recently became aware that their financial health is in even worse condition than their physical health. Unbeknownst to the children, they privately made a series of catastrophic financial decisions when confronted with a declining market (2008-2009) and large, uncovered medical bills in the past few years.
I'm hoping the members of this forum can assist me in finding and refining options so we, the children, can advise them on their financial issues, and allow them to focus their energy on their health issues. I don't have all of their financial details, but I am hopeful the major portions sketched out below are enough to generate some useful feedback to help us develop options and questions to ask.
Background:
1. Both parents are in their late 70s. DF just learned his Stage I lung cancer has progressed to Stage IV, and was given a 6-12 month life expectancy. He is living at home with DM, who has been battling heart disease, breast cancer, and several other chronic metabolic diseases, for a few years. DS lives, along with DS’s daughter, with them and help out a great deal.
2. They are both collecting SS and are on Medicare. DF believes they collectively receive less than $2,000/month, and is checking on this for me (he confirms they took SS at 62, so this amount seems about right).
3. They have $12K in jointly held credit card debt and no financial assets above 3 figures. This is mostly medical debt DF paid a couple of years ago, which I have advised him to NOT do anymore.
4. DF took out a joint reverse mortgage on their home several years ago of the lump sum type. DF believes the payoff amount is "about $140-150K" today with the accumulated interest.
5. DF has a Medicare supplement plan provided through his previous employer that costs him approx. $200/month and basically picks up the all the costs Medicare doesn’t for covered procedures; that’s the good news. The bad news is that the policy ends when he passes – no way to transfer it to DM, who has approx. $20K of medical debt due to previous procedures Medicare didn’t cover.
I’ve done some research for my parents, and I believe the following appear to be their main options:
1. Declare bankruptcy.
2. Investigate Medicaid eligibility. I'm certain their net worth is well into negative 6 figure territory, and with their only income from SS and below the generic Medicare threshold, I think they would qualify. I understand each state has their own Medicaid requirements, and thankfully they live in a state that has expanded Medicaid. This will be particularly important for DM once DF passes, since her income will drop and Medicare supplement policy will go away.
3. Reverse mortgage. DF and DM would like to sell the house to DS, and continue live with DS post sale. This would allow them to escape having to pay taxes, upkeep, utilities, etc. When I looked into the impact of DS “buying” the house from DF and DM, sites like elderlaw.com noted this could (maybe...) endanger their Medicaid eligibility and that an attorney specializing in elder law should be consulted before taking any action.
My plan:
1. Schedule an appointment with their local county Senior Corps to discuss their situation and options, with a focus on Medicaid eligibility.
2. Schedule a session with an elder law attorney to investigate legal options, focusing on how to sell their house with the reverse mortgage.
3. Strongly encourage them to put together a monthly budget (before and after DF’s passing) and a net worth statement.
4. Investigate/apply for Medicaid and or other state programs that could assist with their current and future medical bills.
Am I missing something? Any other options? Questions I should ask DF and DM to help further develop their options?
I appreciate any insights or lessons learned from others who’ve faced similar situations. The reverse mortgage in particular is like a black box to me since I have no experience with them, and welcome insights on how to approach this issue.
I'm hoping the members of this forum can assist me in finding and refining options so we, the children, can advise them on their financial issues, and allow them to focus their energy on their health issues. I don't have all of their financial details, but I am hopeful the major portions sketched out below are enough to generate some useful feedback to help us develop options and questions to ask.
Background:
1. Both parents are in their late 70s. DF just learned his Stage I lung cancer has progressed to Stage IV, and was given a 6-12 month life expectancy. He is living at home with DM, who has been battling heart disease, breast cancer, and several other chronic metabolic diseases, for a few years. DS lives, along with DS’s daughter, with them and help out a great deal.
2. They are both collecting SS and are on Medicare. DF believes they collectively receive less than $2,000/month, and is checking on this for me (he confirms they took SS at 62, so this amount seems about right).
3. They have $12K in jointly held credit card debt and no financial assets above 3 figures. This is mostly medical debt DF paid a couple of years ago, which I have advised him to NOT do anymore.
4. DF took out a joint reverse mortgage on their home several years ago of the lump sum type. DF believes the payoff amount is "about $140-150K" today with the accumulated interest.
5. DF has a Medicare supplement plan provided through his previous employer that costs him approx. $200/month and basically picks up the all the costs Medicare doesn’t for covered procedures; that’s the good news. The bad news is that the policy ends when he passes – no way to transfer it to DM, who has approx. $20K of medical debt due to previous procedures Medicare didn’t cover.
I’ve done some research for my parents, and I believe the following appear to be their main options:
1. Declare bankruptcy.
2. Investigate Medicaid eligibility. I'm certain their net worth is well into negative 6 figure territory, and with their only income from SS and below the generic Medicare threshold, I think they would qualify. I understand each state has their own Medicaid requirements, and thankfully they live in a state that has expanded Medicaid. This will be particularly important for DM once DF passes, since her income will drop and Medicare supplement policy will go away.
3. Reverse mortgage. DF and DM would like to sell the house to DS, and continue live with DS post sale. This would allow them to escape having to pay taxes, upkeep, utilities, etc. When I looked into the impact of DS “buying” the house from DF and DM, sites like elderlaw.com noted this could (maybe...) endanger their Medicaid eligibility and that an attorney specializing in elder law should be consulted before taking any action.
My plan:
1. Schedule an appointment with their local county Senior Corps to discuss their situation and options, with a focus on Medicaid eligibility.
2. Schedule a session with an elder law attorney to investigate legal options, focusing on how to sell their house with the reverse mortgage.
3. Strongly encourage them to put together a monthly budget (before and after DF’s passing) and a net worth statement.
4. Investigate/apply for Medicaid and or other state programs that could assist with their current and future medical bills.
Am I missing something? Any other options? Questions I should ask DF and DM to help further develop their options?
I appreciate any insights or lessons learned from others who’ve faced similar situations. The reverse mortgage in particular is like a black box to me since I have no experience with them, and welcome insights on how to approach this issue.
Last edited by a moderator:
, I'm trying to be helpful and add some details about reverse mortgages. Buyer beware on these vehicles is all I wanted to imply.
