Elder Planning Glossary 

    401(k) Plans

    403(b) Plans

    Abuse (Physical and Emotional)


    Alzheimer's Disease

    Assisted Living Facility

    Death Benefits


    Elder Planing Services

    Funeral Rule

    Geriatric Care Manager (GCM)


    Home Care

    Home Health Benefits

    Hospice Care

    Individual Retirement Accounts (IRAs)

    Inter Vivos or Living Trust

    Keogh Plans

    Last Will and Testament

    Living Wills

    Long-Term Care Insurance

    Lump-Sum Death Benefit


    Medicaid for Long-Term Care


    Medicare Advantage

    Medicare Benefit Period

    Medicare Claims Processors

    Medicare Supplemental Insurance (Medigap)

    Pension Plans

    Powers of Attorney

    Roth IRAs

    Skilled-Nursing Facility Benefits

    Social Security

    Statement of Funeral Goods and Services Selected

    Target Market

    Testamentary Trust


    Viatical Settlements


    401(k) Plans —A 401(k) is a tax-deferred investment and savings plan that acts as a personal pension fund for employees. It allows employees of corporations and private companies to save and invest for their own retirement. In a 401(k) the employee authorizes pretax payroll deductions to be invested in mutual funds or other investment options offered by the employer's plan. Often, employers match the employee's contributions. The contributions, the investment earnings, and any employer match may grow tax-deferred until withdrawal (assumed to be retirement), at which time they are taxed as ordinary income.   Like 403(b), assets in IRAs can be withdrawn without penalty after age 59½ and must start no later than April 1 of the year following the date that one turns age 70½ and be taken annually subject to minimum distribution requirements.

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    403(b) PlansA 403(b) is a tax-deferred investment and savings program for employees of certain tax-exempt employers. It allows employees of hospitals, educational institutions, and other nonprofit organizations to save and invest for their own retirement. Depending on the program, an employee authorizes pretax payroll deductions to be invested in a tax-sheltered annuity (TSA) or in a custodial account made up of mutual funds offered by the employer. Both contributions and the investment earnings may grow tax-deferred until withdrawal (assumed to be retirement), at which time they are taxed as ordinary income. Like IRAs, assets in a 403(b) can be withdrawn without penalty after age 59½ and must start no later than April 1 of the year following the date that one turns age 70½ and be taken annually subject to minimum distribution requirements.

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    Abuse (Physical and Emotional)Physical and emotional abuse includes neglect, abandonment, beating, restraint, deprivation of food or water, sexual abuse, humiliation, intimidation, insults, threats, and harassment. Abuse may be domestic, institutional, or self-neglect.

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    ADL —Activities of Daily Living (ADLs) refers to the basic tasks of everyday life, such as eating, bathing, dressing, going to the toilet, and transferring. When people are unable to perform these activities, they need help in order to cope, either from other people, mechanical devices, or both. Although persons of all ages may have problems performing ADLs, prevalence rates are much higher for the elderly than for the nonelderly. Within the elderly population, ADL prevalence rates rise steeply with advancing age and are especially high for persons aged 85 and over.   Measurement of the activities of daily living is critical because they have been found to be significant predictors of: admission to a nursing home; use of paid home care; use of hospital services; use of physician services; trigger of insurance coverage; and mortality.

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    Alzheimer's Disease —Alzheimer's disease (AD) is the most common cause of dementia in older people. AD affects the parts of the brain that control thought, memory, and language. It is a slow disease that starts with mild memory problems and leads to severe brain damage. People with AD lose their abilities at different rates. AD can last from three to 20 years or more after the onset of symptoms. It is not yet clear what causes AD and there is no known cure. The behavioral problems in AD are not something a person can control. They result from the brain damage that worsens over time.

    AD begins slowly. At first, the only symptom may be memory problems. People with AD may have trouble remembering recent events, activities, or the names of familiar people or things. They may ask the same question over and over again. Simple math problems may become hard to solve. Such difficulties begin to interfere with jobs or other activities. As the disease gets worse, people with AD may:

    • Forget something that just happened even though they can remember events from many years ago.
    • Become disoriented and get lost in once familiar places.
    • Become passive and lose their initiative.
    • Forget how to do simple tasks, like brushing their teeth or combing their hair.
    • Be unable to think clearly.
    • Have trouble talking, understanding, reading, and writing.
    • Stop bathing regularly or eating regular meals.
    • Have sudden, unpredictable mood changes.
    • Become suspicious and paranoid about other people's intentions and behavior.
    • Become confused, anxious or aggressive. Some may become violent or angry, while others may be docile or helpless.
    • Wander away from home.
    • Need total care eventually.  

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    Assisted Living Facility —Assisted living is a combination of housing and health care services for individuals needing assistance with some of the activities of daily living (eating, walking, bathing, etc.). Assisted living is a general term for living arrangements in which some services are available to residents (e.g., meals, cleaning, and medication reminders), but residents still live independently within the assisted living complex. 

    • The first is independent living in a small home on the grounds. The home can be a patio home, condominium, cottage, ranch, or an apartment in a high-rise building. In many CCRCs there is a choice between renting an apartment or buying a home. Residents of these facilities are normally in fairly good health and lead quite independent lives, coming and going as they please.
    • The second phase of a CCRC is an assisted living facility. Residents receive some help with daily living and dressing, for example. Depending on the facility, the resident may just have a room and bath or an apartment with a small kitchen. Either way, there is always a dining room where the resident(s) may eat meals if they so choose.
    • The third phase of a CCRC is a nursing home, which offers 24-hour skilled care. Each CCRC is different, with its own appearance, rules and regulations, health care coverage, and cost. Some will only allow an individual to move in during the independent living phase.  

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    Death Benefits —Money and/or in-kind benefits paid to the survivors of the deceased (also called survivor benefits). These benefits are usually provided to eligible survivors of the deceased upon receipt of proof of death, such as a copy of the death certificates. Amounts may be paid in one lump sum, as in life insurance policies and the Social Security lump-sum burial expense payment, or they may be paid over time, as in Social Security survivor benefits.

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    Dementia —Dementia refers to a group of symptoms that are caused by changes in brain function. Signs of dementia include changes in memory, personality, and behavior. Dementia makes it hard for a person to carry out normal daily activities. A person with dementia may ask the same questions repeatedly and get lost in familiar places. He or she may be unable to follow directions, be disoriented about time, people, and places; and neglect personal safety, hygiene, and nutrition. Older people with dementia were once called senile, and it was thought that becoming senile was just part of getting old. But dementia is not a normal part of aging. It is important to find out the cause of a person's dementia. Some causes of dementia can be treated and reversed. Others are due to irreversible changes in the brain and cannot be cured.

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    Elder Planning ServicesThe Elder Planning Services brand is transitioning to make it easier for clients to see the connection between traditional services and the more global approach to the services that older clients need. The new focus on Elder Planning Services leverages existing strengths and competencies in cash flow planning and budgeting, pre- and post-retirement planning, insurance reviews, and tax planning. The new positioning allows CPAs to broaden their focus to include pre-retirement age clients, and to benefit from the greater revenue potential of this expanded market and from the longer term of the potential revenue stream.

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    Funeral Rule —This rule requires funeral homes to give consumers accurate, itemized price information, and various other disclosures about funeral goods and services. The Federal Trade Commission's Funeral Rule applies to pre-need and at-need funeral arrangements.  



    The key to the FTC Funeral Rule is the "General Price List". The General Price List should be printed or typewritten, and must contain the following identifying information:

    • The name, address, and telephone number of the funeral provider’s place of business, including (where relevant) the address and telephone number for each branch;
    • The caption: "General Price List;" and
    • The effective date of the price list.  

    The following three disclosures must appear on the Statement. They should be set out, word-for-word, exactly as the Rule prescribes. They are 1) Legal Requirements, 2) Embalming, and 3) Cash Advance Items.

    The Funeral Rule prohibits specific misrepresentations in six areas: Embalming, Casket for Direct Cremation, Outer Burial Container, Legal and Cemetery Requirements, Preservative and Protective Value Claims, and Cash Advance Items.

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    Geriatric Care Manager (GCM) —Generally, a geriatric care manager is a person who develops and implements a plan for all aspects of long-term care to assist an elderly person and, indirectly, the person's family members upon whose shoulders this task would otherwise fall. 

    Although not required, a geriatric care manager will have some form of graduate degree, social work and nursing seem to be the most common, and may be ( although not required) certified or licensed by a professional organization or by state statute or regulations.

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    Guardianship —There is a legal relationship between a ward and a guardian. Wards are usually persons who have been declared incompetent by the courts to make particular decisions on their own behalf. Court appointed guardians act as surrogate decision makers for the ward.

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    Home Care
    —These are services provided in the home to promote, maintain, and restore health or to minimize the effects of illness and disability. Home care can be for short-term purposes, such as rehabilitative care after a hospital discharge or care for the terminally ill. The can also be used for long-term purposes, such as assistance with activities of daily living for persons with chronic disabilities. 

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    Home Health BenefitsIf an individual is homebound and requires skilled services on an intermittent basis, Medicare will cover up to 35 hours per week of home health aide and skilled-nursing services. Skilled nursing services include the administration of medication, IV therapy, tube feedings, catheter changes, and wound care. Intermittent usually means less than five days per week, but certain people may receive services seven days per week.  

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    Hospice Care —A hospice is a public agency or private organization that is primarily engaged in providing pain relief, symptom management, and supportive services to terminally ill individuals. Hospice care includes both home and inpatient care.   Under the Medicare hospice benefit, Medicare covers costs of daily care and permits a hospice to provide appropriate custodial care, including homemaker services and counseling.

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    Individual Retirement Accounts (IRAs)
    —An IRA is a tax-deferred investment and savings account that acts as a personal retirement fund for people with employment income. In a traditional IRA, contributions may be deductible or nondeductible, and the earnings may grow tax-deferred until withdrawal (assumed to be retirement), at which time they are taxed as ordinary income. IRAs are designed for individuals with earned income or married couples, in which only one of the spouses has earned income and the couple files a joint return. (See Roth IRA.)

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    Inter Vivos or Living Trust
    —This type of trust is generally established as a revocable trust in which the maker places his/her assets into the trust, and is the trustee of the trust. A successor trustee may manage those assets if the maker of the trust becomes incapacitated and will distribute the assets of the trust when the maker dies. The successor trustee is the fiduciary, and has a legal duty to follow the terms of the trust as set out by the maker. This type of trust may allow the maker to avoid probate at death and conservatorship in the event of incapacity.

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    Keogh Plans —A Keogh is a tax-deferred retirement plan designed to help self-employed workers or individuals who earn self-employed income establish a retirement savings program. There are two different types of Keoghs, profit-sharing or money purchase plan. Under Keogh regulations the money purchase plan contribution is mandatory and the same percentage contribution is made each year, whether there are profits or not. The profit sharing contribution may change each year, and individuals may contribute to both types of plans in the same year. The most attractive feature of Keogh plans is the high maximum contribution (currently up to $40,000) and it will now be indexed for inflation. The self-employed person makes contributions, and these along with investment earnings grow tax-deferred until withdrawal (assumed to be retirement), at which time they are taxed as ordinary income.  

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    Last Will and Testament — A will is perhaps the most well-known means of disposing of property at death. Every state has its own rules for the making of a valid will, but at the very least, they involve a written document that is:

    1)      Signed by the person making it (called the testator or, if female, the testatrix), and

    2)      Witnessed by at least two disinterested people (those who do not stand to inherit under the will).

    The person nominated by the testator to wind down the affairs of the decedent is called the executor or, if female, the executrix. When a person with a will dies, he/she is said to die testate. This means, simply, that the will governs the disposition of that person's property. The "alternative" to dying testate is dying intestate. A person dying intestate has no last will and testament.

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    Living WillsA living will is a directive to physicians allowing an individual to express his or her desire not to be kept alive by extraordinary means when he or she is determined to be in a terminal condition. This document directs the physician to give or withhold life sustaining medical care. The principal should state in the living will, the conditions under which treatments should be continued or discontinued, and what types of life sustaining efforts should be made.  

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    Long-Term Care Insurance Long-term care insurance covers an individual for many of the costs of home health care, the costs of community-based care (such as assisted living), and the costs of nursing home care. It rarely covers the costs of medical care, such as doctors or hospitals. This coverage works in conjunction with Medicare and/or private health insurance. A long-term care insurance policy is a contract between an individual and an insurance company. In exchange for the payment of premiums, the insurance company provides for the payment of a daily benefit to cover the costs of long-term care.  

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    Lump-Sum Death Benefit When a Social Security recipient dies, a lump-sum death benefit is payable either to the surviving spouse or to a qualifying child [42 USC §402(I)]. A qualifying child is one who was entitled to receive benefits as a result of the wage-earner’s Social Security benefits.

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    Medicaid Medicaid is a medical assistance program intended for those who have no other means to pay for necessary health care services. Entitlement is based on need alone and no premium payments are required. Medicaid is primarily administered by the states with a federal contribution that ranges between 50 percent and 80 percent of the funds paid out by the state for Medicaid services.  Although specific regulations governing Medicaid vary from state to state, each state must comply with strict requirements in the Medicaid statute regarding eligible services, eligibility of participants, estate recovery, and other matters.

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    Medicaid for Long-Term Care Medicaid may be used to supplement Medicare for what is sometimes referred to as "community Medicaid benefits".   Community benefits are traditional medical services delivered by physicians, hospitals, and other health care providers outside of nursing homes.

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    Medicare Medicare is a federal health insurance program for people aged 65 and older, those with certain disabilities, some under 65, and people of any age who suffer from permanent kidney failure. It is intended to provide basic insurance protection against health care costs, not to cover all medical expenses nor long-term care. An eligible individual may choose to get benefits under Medicare through the traditional fee-for-service system (sometimes called Medicare) or through a managed care program, Medicare+Choice.

    The traditional Medicare program has two parts. Part A is Hospital Insurance, and Part B is Supplementary Medical Insurance. Part A pays some of the costs of hospitalization, very limited nursing home care, and some home health services. Part B primarily covers doctors' fees, most outpatients, and certain related services. Part A is free to qualifying participants. A small monthly premium ($66.60 per month in 2004) is charged for Medicare Part B coverage.

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    Medicare Advantage As a result of legislation passed in 1997, beneficiaries could (starting in 1999) opt out of the "traditional" Medicare program in favor of a private managed care plan or private fee-for-service plans. Medicare had been experimenting with managed care, specifically HMOs, for some time prior to the adoption of this legislation and a large number of Medicare beneficiaries have had coverage through HMOs for a number of years. To be eligible for Medicare managed care plans, an individual must:

    • Have both Part A (Hospital Insurance) and Part B (Medical Insurance) coverage,
    • Not have end-stage renal (kidney) disease (unless they were already in a managed care plan prior to the enactment of the legislation), and
    • Live in the service area of a Medicare managed care plan.

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    Medicare Benefit Period —Deductible and co-payment amounts for Medicare Part A are determined per benefit period. A benefit period begins when a participant enters the hospital and continues until after the patient has been out of the hospital or skilled nursing care for 60 days. After that time, a new benefit period begins. Consequently, there may be several "benefit periods" in a year under Medicare Part A.

    Co-payments and deductibles under Medicare Part B are computed on an annual basis without regard to the "benefit period" provided in Medicare Part A.

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    Medicare Claims Processors —Medicare claims processors are known as "fiscal intermediaries" and "carriers". Medicare intermediaries process hospital insurance (Part A) claims for institutional services, including inpatient hospital claims, skilled nursing facilities, home health agencies, and hospice services. They also process hospital outpatient claims payable under supplementary medical insurance (Part B). Examples of fiscal intermediaries are the Blue Cross and Blue Shield Association and commercial insurance companies.

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    Medicare Supplemental Insurance (Medigap)Traditional Medicare coverage does not pay all medical expenses. There are deductibles, coinsurance amounts, un-allowable charges, and uncovered services. If an individual is covered through the traditional Medicare program, additional health insurance is needed to fill the gaps in coverage. Many retired persons and/or their spouses have protection that is provided by their former employer. Others purchase supplementary insurance policies, referred to as Medigap insurance.  

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    Pension Plans —This is a traditional retirement plan offered by some employers that pays a set amount each year during retirement. Also called a defined benefit plan, company pensions guarantee a specific amount of benefits to employees, calculated using a formula that typically includes the employee's final salary, years of service, and a fixed percentage rate.

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    Powers of AttorneySimply put, a power of attorney is a document whereby one person (called the "principal") authorizes someone else (called the "agent", or the "attorney-in-fact") to act on his/her behalf. A power-of-attorney may be "general", granting broad authority to make decisions concerning investments, tax matters, and property transactions, or it may be "specific", granting only limited authority to perform one of more specific duties. Every state has legislation authorizing the creation and use of powers of attorney. In all cases, the principal must be competent when the power-of-attorney is executed.

    Note: There are different kinds of powers of attorney that are also called advanced directives.

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     Roth IRAsThe Taxpayer Relief Act of 1997 introduced a new option for IRAs, the Roth IRA. The Roth IRA offers higher income limits and more relaxed eligibility rules than available with a traditional IRA. In addition to these differences the Roth IRA turns the traditional IRA formula on its head. Retirement contributions are not deductible up front, but withdrawals can be made tax-free after age 59½.  

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    Skilled-Nursing Facility BenefitsMedicare provides up to 100 days of care in a Medicare-certified skilled nursing facility (SNF) per benefit period, if the individual was an in-patient in an acute care hospital for at least three days during the 30 days immediately prior to admission to the SNF and it was determined the person was in need of daily skilled services.   Medicare defines "daily" as needing seven days per week of skilled nursing care and at least five days per week of skilled therapy. Medicare pays for the first 20 days in a SNF. For days 21 through 100 a co-insurance amount ($109.50 per day in 2004/2003) is due.  

    Note:  The dollar information is subject to change; practitioners should update their references as changes are issued.

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    Social SecurityIndividuals qualify for Social Security retirement benefits as early as age 62 if they have held a job and paid Social Security taxes for at least 10 years. It provides monthly cash benefits to retirees and their dependents, to disabled workers and their dependents, and to surviving dependents of deceased workers and retirees.  

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    Statement of Funeral Goods and Services SelectedThe Statement of Funeral Goods and Services Selected (Statement) is an itemized list of the goods and services that the consumer has selected during the arrangements conference. The Statement allows consumers to evaluate their selections and to make any desired changes.

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    Target MarketThere are two target markets for this service: older adults and caregivers for older adults (usually their children). A typical older client for Elder Planning Services is someone without an adequate local system of support. This may be because a spouse is deceased or incapacitated, or there are no children living in the area who are capable of, or willing to, assist the parent. Profiling the caregivers, usually adult children, is a more difficult matter. Individually, children may not have sufficient resources, but if they pool their resources, Elder Planning Services may be affordable.    

    The target markets described above apply to potential clients for the full range of ongoing Elder Planning Services. The potential market for clients who would benefit from planning for the costs of long-term care and evaluation of care options is much greater. Clients at every income level can benefit from planning for these costs and the earlier a client plans, the greater choices they will have in the future.

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    Testamentary TrustA testamentary trust is created by the maker's will, funded by the estate, and administered by a trustee named in the will. Its primary goal is to appoint someone to manage the assets included in the trust. Incidental to this goal is the saving on estate taxes.  

    There are several advantages to using a testamentary trust. One is that the maker can determine how the assets will be paid to the heirs. Sound financial management of the assets may also allow the assets to grow and produce additional income. 

    Also, a by-pass trust may be structured. In this arrangement the spouse can benefit from the trust during their lifetime, in which the principal is held in trust for other beneficiaries. Any remainder, even if it has doubled or tripled in value, produces no new estate taxes because the value of the trust was set for tax purposes at the time of death.

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    TrustsTrusts are an important element in the management of a client's estate. Trusts are legal arrangements by which the legal ownership and the beneficial ownership of assets are separated. Trusts can be divided into two major categories —revocable or irrevocable. Irrevocable trusts can not be changed (with very few exceptions) once they are put in place. They can be important in tax planning for larger estates, sometimes taking the form of insurance or a charitable trust. Each can take on many forms or variations. Revocable trusts are one of the most common estate planning tools for individuals. They can be amended and/or changed at any time before the person making the trust becomes incapacitated or dies. When working with an older client, it is important to continuously review and update any revocable trusts that may exist in order to prevent conflicts and misunderstandings as well as to ensure the client's wishes be carried out in the event of incapacitation or death.

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    Viatical SettlementsViatical settlements refer to situations where an individual sells the benefits of their life insurance policy to a third party at a discount in order to get cash to pay for costly health care services. Viatical settlement companies may pay 60 percent of the face value of a policy to a person with a life expectancy of two years or less or as much as 80 percent to an individual with a life expectancy of six months or less. The industry generally uses the term "Viatical Settlement" to refer to a transaction involving a terminally- or chronically-ill insured and a "Life Settlement" to refer to a transaction involving an insured who is not terminally or chronically ill, generally over the age of 65.  

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