Bobby’s Blog

Insuring Your Biggest Asset

This blog is not intended to provide any legal, tax, or financial advice. It is a forum to discuss the daily issues of my practice.

Do you know the limits of your homeowners insurance policy? Many people I meet only have a cursory understanding of their policy. I think it has to do a lot with how people obtain their policy. Usually, a realtor or a mortgage broker will refer you to an insurance company a few days before your real estate closing and it is reflected as a prepay item on your settlement sheet. I also find that most people obtain just the basic coverage so they can keep their closing costs down.

So what does it mean to insure the biggest asset most people have (their home)? If you read your policy it will have your coverage listed on the Declarations Page. Normally, your homeowners insurance will provide coverage for both Property and Liability. Section I of most policies deal with property coverage which includes:

1) the “dwelling”that sits on your land;

2) personal property (subject to exclusions of course) owned or used by a resident, anywhere in the world, up to a certain amount of coverage (usually 50% of your coverage listed in section A of your policy);

3) additional living expenses incurred if your home becomes uninhabitabledue to damage by an “insured peril.”

4) Credit Cards (yes up to a certain limit -normally $500)

5) Collapse, BUT only as provided under the additional coverages

6) Breakage of glass or safety glazing material

7) Landlord’s furnishings (not the tenant’s) in rental property on the premises.

Section II of most homeowners policies deal with Liability. Most people think about liability when it comes to their car insurance but fail to pay attention to liability on their homeowners insurance. Coverage E on most policies will explain your personal liability coverage. The personal liability coverage provides both bodily injury and property damage coverage for “other-than-auto-related lossed (usually up to $100,000). “Other-than-auto-related losses” could cover many things, so if you ever sustain an”other-than-auto-related” loss you probably should take a look at your homeowners policy for possible coverage.

Coverage F explains how much Medical Payments are covered for injuries sustained by third parties.

If you want to know more about what the insurance you paid for on your house covers contact your insurance agent, your financial advisor, or your attorney.
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Incapacity Planning – “Don’t Count on the Government for Help” by Robert Feisee

My father is 76 years old and has alzhemier’s disease. He has been seen by doctors at Johns Hopkins Medical school who say that is chances of recovery are almost none. He cannot walk, bathe, eat, dress or go to the bathroom without the help of a nurse. He is rarely coherent and can manage only a few words if he is lucky. I would think that he would fall under the category of being “disabled” by anyone’s definition.

The emotional and monetary drain of this disease is probably the single worst thing that has happened to my family. We never expected our father to be in this state and it is hard to watch him deteriorate on a daily basis. Also, we never bothered to obtain long term care insurance so the financial burden of caring for my father rests squarely on my mother.

I called the Social Security Administration(SSA) to see if they can provide some financial assistance since my dad requires a full time nurse. Obviously this is a very big and real expense(ranging over $200/day in Fairfax County, Virginia ).

Long story short, the SSA said they will provide no assistance to my father since he is over 65 years old and has over $3,000 worth of TOTAL assets. If he were younger than 65, he would be ELIGIBLE(and I use the word eligible in the most restrictive sense) to apply for disability benefits. If anyone has ever tried obtaining Social Security Disability benefits then you know that your odds of success are very slim. I would predict that my father, who no doubt is completely disabled, would have a 30% chance of obtaining benefits if he were younger than 65 years old.

Nevertheless, there is a program offered by Social Security that offers assisstance if you are over 65 years old and disabled. It is called Supplemental Security Income (SSI) and it would provide approximately $560/month to help care for the disabled. Although it is only a drop in the bucket, when you are caring for a loved one you need every penny you are entitled to receive. There is a catch with SSI, as you will see with many government programs, that if you are disabled and 65 you cannot own more than $3000 in total assets. This virtually eliminates any individual who ever tried to make something of his life and work for a living. Your reward here is that you are not worthy of health care.

After exhausting the SSA route, I called Medicare to see what help they could offer. Short answer on this one is little if no help. After going over my father’s condition with the representative, she told me there was no program that he would qualify under. I asked her that I thought that one of the benefits provided by Medicare is home health care. (By the way, you can get a summary of medicare benefits at www.medicare.gov. The benefits are confusing and illogical so don’t get discouraged if you don’t understand them. I am an attorney and I found it difficult myself.) The representative corrected herself and said “yes you are right, I meant we offered no ‘custodial care.” There is a distinction, according to Medicare, between home health care which is “covered” and custodial care(i.e. nursing home) which is not.

My eyes actually lit up when I heard the Medicare representative actually say the words that it was a “covered” benefit. This feeling was quickly dismissed once I discovered the benefits of this “home health care” which are virtually none. Although I have no doubt my father would satisfy the requirements of disability the benefits are not useful. The process is as follows: you basically have to get a letter from your doctor confirming you are 1) disabled; 2) you need medical care at home; 3) you need intermittent skill and speech therapy or physical therapy; 4) you are home bound. Then Medicare puts you in their system to decide if you are worthy.

After you get through all the red tape, you will discover that your benefits aren’t worth the trouble you went through to obtain the benefits. Beside the fact that you must use an approved “home health care agency” designated by Medicare, they are only allowed to come to the house for 1 hour visits with restrictions on how they can help my father. Now tell me how a working woman, who does not have the time to stay home full time to care for her husband, is going to really benefit from someone maybe coming 1 hour a day for maybe 3 days of the week. How does that really help? Is this a good use of resources?

In my opinion, long term care and incapacity planning need to be addressed by individuals and planners long before the need arises because the government’s solution is no solution at all.

Incapacity Planning by Robert Feisee

As always, the purpose of this blog is not to solicit any business or offer any investment, legal or tax advice. It is simply a discussion forum for issues that I see in my daily practice.

I want to digress from my latest discussions on real estate to talk about an issue I have seen a lot lately. The issue deals with the expected or unexpected incapacity of a loved one. If life isn’t hard enough as it is, try facing when you know you won’t be able to make your own decisions in the near future and will not have the abilty to perform what the government calls “Activities of Daily Living” (ADL’s – dressing yourself, going to the bathroom on your own, bathing, walking, eating, grooming).

Normally (if there is anything normal in this situation) a loved one has already gone down that road towards incapacity and lacks the judgement to deal with the situation when they come to see me. How does one rationally deal with this situation? I could only hope to have the courage to even face a disease like alzheimer’s, let alone devise a plan to protect my family from emotional and financial hardship because of my illness.

I think family needs to play a big role here more than anything to provide the kind of love and support needed to deal with this harsh reality. I think after a family has “circled the wagons” they need to get some good advice on how to deal with this situation. Some of the issues I see are:

1) Management of incapacitated or incompetent person’s property – who will do it? what needs to be done legally? can i avoid a lengthy court hearing that could drain the family’s resources and morale even more? how do i deal with financial institutions?

2) Managment of an incapacitated/incomptent person’s life- who will take care of him/her? who will make the medical decisions or him/her? how will they afford this care? what needs to be done legally? does he/she have long term care insurance? is he/she able to receive governement benefits (which are limited and confusing to discern)?

In my opinion, dealing with incapacity will be a common issue for most households over the next 20 years. In this regard there is a strong likelihood there will be a lack of resources on all fronts (financially, legally and emotionally) to deal with the situation. People are living longer and we will see more people living in an incapacitated state. I believe one of the most important issues today is dealing with the long term care needs of loved ones. This problem will not go away and will hit many families hard unless they address it well before incapacity sets in.

Incapacity Planning by Robert Feisee

As always, the purpose of this blog is not to solicit any business or offer any investment, legal or tax advice. It is simply a discussion forum for issues that I see in my daily practice.

I want to digress from my latest discussions on real estate to talk about an issue I have seen a lot lately. The issue deals with the expected or unexpected incapacity of a loved one. If life isn’t hard enough as it is, try facing when you know you won’t be able to make your own decisions in the near future and will not have the abilty to perform what the government calls “Activities of Daily Living” (ADL’s – dressing yourself, going to the bathroom on your own, bathing, walking, eating, grooming).

Normally (if there is anything normal in this situation) a loved one has already gone down that road towards incapacity and lacks the judgement to deal with the situation when they come to see me. How does one rationally deal with this situation? I could only hope to have the courage to even face a disease like alzheimer’s, let alone devise a plan to protect my family from emotional and financial hardship because of my illness.

I think family needs to play a big role here more than anything to provide the kind of love and support needed to deal with this harsh reality. I think after a family has “circled the wagons” they need to get some good advice on how to deal with this situation. Some of the issues I see are:

1) Management of incapacitated or incompetent person’s property – who will do it? what needs to be done legally? can i avoid a lengthy court hearing that could drain the family’s resources and morale even more? how do i deal with financial institutions?

2) Managment of an incapacitated/incomptent person’s life- who will take care of him/her? who will make the medical decisions or him/her? how will they afford this care? what needs to be done legally? does he/she have long term care insurance? is he/she able to receive governement benefits (which are limited and confusing to discern)?

In my opinion, dealing with incapacity will be a common issue for most households over the next 20 years. In this regard there is a strong likelihood there will be a lack of resources on all fronts (financially, legally and emotionally) to deal with the situation. People are living longer and we will see more people living in an incapacitated state. I believe one of the most important issues today is dealing with the long term care needs of loved ones. This problem will not go away and will hit many families hard unless they address it well before incapacity sets in.