RETIREMENT SECRETS: Simple Steps to Get Organized for 2016


karl kimBy KARL KIM, CFP, CLTC

Summer has gone and the chill of fall is in the air. With the change of seasons comes the time of year when seniors are more vulnerable to illness.

Sometimes it means a hospital stay followed by rehab care then long-term care in a nursing home.

With the average monthly long-term care facility costs from $7,000 to $10,000, many families are not prepared to deal with this cost. An option that many choose to help pay for this cost is Medi-Cal.

But, as with many government programs, the amount of paperwork to fill out can be overwhelming. One of the most difficult tasks for the family is the gathering of the necessary information that Medi-Cal requires for the approval of benefits.

Being prepared for the unexpected is the smart thing to do.

The following list will help you to be prepared if such an event should occur. Information for both husband and wife are required, not just for the person applying for Medi-Cal. Copies are fine.

  1. Social Security card
  2. Medicare card
  3. Health insurance card
  4. Valid California senior identification card (available at DMV) or valid driver’s license. If none are available, then a recent utility bill such as an electric bill in the applicant’s name.
  5. Birth certificate
  6. Resident alien card or naturalization certificate
  7. Most recent health insurance bill showing the name of the insured, premium amount, and frequency of payment. If applicant belongs to the Southern California Gardeners’ Association, make a copy of the bill before paying the premium.
  8. Payment stubs or statements showing the “gross” pension before taxes and other deductions. Automatic deposit into a bank account is not proof of payment.
  9. “Your New Benefit Amount” statement from Social Security that will come in December showing what your “gross” payment will be for 2016.
  10. Previous four months’ bank or credit union statements. All pages must be included even if the last page is blank.
  11. Closing statement of any bank or credit union accounts. A printout of the computer screen showing that the account is closed is acceptable.
  12. Proof of deposit of the closed account proceeds to the applicant’s bank or credit union account.
  13. Closing statement of any investment, annuity or life insurance account. Must show a $0 balance or state that the policy has been fully surrendered.
  14. Proof of deposit of the closed account proceeds to the applicant’s bank or credit union account.
  15. Previous four months’ brokerage, mutual fund or other investment account statements. All pages must be included even if blank.
  16. Current statement for any life insurance with cash value account or annuity.
  17. Final expense policy paperwork
  18. Deed for burial plot
  19. Deeds and tax bills for all real estate
  20. Living trust, including Schedule A
  21. Proof of redress (can be obtained from our office)

Keep copies in a safe place that can be easily accessed in time of crisis. Also, keep a signed copy of your Durable Power of Attorney for Asset Management and Advanced Healthcare Directive handy.

It doesn’t have to be fancy. Use a big cardboard box and throw everything in there. At least you’ll know that everything is in one place. We use a custom-designed, extra-heavy-duty and extra-wide three-ring binder.

One of the most frustrating tasks is showing the trail of money when an account such as a certificate of deposit is closed. When a Medi-Cal application is submitted, Medi-Cal pulls up all of the past three years’ 1099s even if you haven’t been filing your tax returns.

If a 1099 shows up for an account that hasn’t been disclosed on the Medi-Cal application, Medi-Cal will want to know if the account is still open or closed. Proof has to be provided.

If an account is closed, they want a closing statement showing a $0 balance. Then Medi-Cal wants to know what happened to the funds and you must show proof of the disposition of the money through deposit receipts or statements.

Also frustrating for the uninformed is that Medi-Cal wants to see all of the pages of your bank, credit union and investment statements. For instance, let’s say that there are four pages in the statement. The pages are numbered 1 of 4, 2 of 4 and so on.

The last page is typically blank or has disclosures. Most normal people would throw away the last page to save space in their files.

Bad move.

Medi-Cal wants this page if it is numbered as one of the pages of the statement. So, the moral of the story is “save everything.”

Dealing with banks on behalf of a person that is legally incapacitated can be time-consuming and frustrating even if you have an attorney-drafted Durable Power of Attorney for Asset Management. This makes planning ahead a smart thing to do.

It is the policy of banks that unless a Power of Attorney card is on file, then the person taking care of the finances for the incapacitated person will not have access to the account(s).

Once again, this needs to be done ahead of time, not when a crisis happens.

A very easy solution that doesn’t cost anything except your time is to have the bank account owner and person that is going to handle the bank account(s) get a Limited Power of Attorney card filled out for each bank where there is an account. Both have to go to the branch.

This way the attorney in fact has immediate access to the accounts in case of incapacity of, for example, a parent.

This is a great way for parents to make sure that their kids can take over without them actually being a joint tenant on the account.

As the attorney in fact, if the child gets divorced or sued, the parent’s funds are safe because the child is not a joint owner.

This does not apply to credit unions, investment accounts, life insurance and annuities. These companies will accept your attorney drafted Power of Attorney.

Another issue that has come up recently is due to a new federal called the Patriot Act.

Let’s say that you are a widow and have a brokerage account titled in the name of your living trust.

Your checking account is titled in your name only.

You close your brokerage account. The brokerage company will give you a check made payable to your living trust.

Did you know that you wouldn’t be able to deposit this check into your checking account because it titled in your name only and not in the name of your living trust?

It’s true because of the Patriot Act. In order to deposit the check from the brokerage company titled in the name of your living trust, your checking account would have to also be titled in the name of your living trust.

I call this the “Like to Like” rule.

To take this example a step further, if you wanted to deposit this brokerage check you would have to open checking account titled in the name of your living trust. This wouldn’t be a problem if you were healthy.

But what if you were incapacitated and in a long-term care facility, couldn’t walk and didn’t have a valid California identification?

Your family would be stuck because you wouldn’t be able to open a new bank account to deposit that brokerage check into.

This is a very common problem that we see. There are straightforward ways to avoid this problem if you plan ahead.

Your accounts should be titled in your name only if single and joint if married. A Limited Power of Attorney card must be completed so a trusted person can manage these accounts in case of incapacity.

A beneficiary must also be added to the account. The funds would go to the beneficiary without probate in case of death just like a living trust.

If you don’t want to be a burden on your family if a healthcare crisis happens, taking these simple steps now will avoid a lot of heartache in the future.

Karl Kim, CFP®, CLTC is the president of Retirement Planning Advisors, Inc. and a Medi-Cal specialist. He is the author of “Don’t Go Broke Paying the Nursing Home,” available on Amazon. His office is located in La Mirada. He can be reached at (714) 994-0599 or at He has submitted over 1,000 Medi-Cal applications over the past 20 years with a 99.9% success rate. This is meant to be an educational article. Do not make any decisions solely on the information in this article. Consult your tax advisor, financial advisor or attorney before taking any action. We are not responsible for any inaccuracies or misinformation.



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