Life Tax vs. DeathTax

As I understand it, there is a 1 in 4 chance a person will end up in a nursing home. As it stands now, this means running through the family's assets to pay for the nursing care before becoming eligible for any government support. In effect, have a stroke and die, your kids inherit. Have a stroke and live but end up in a nursing home, and everything you've saved up goes to pay for your care first, then when you're impoverished, the government picks up the tab. There are ways around this, but some Republican congressmen are working fevershly to block what they refer to as "millionaire's loopholes". This is because the insurance companies want us to buy policies to cover nursing home care.

My proposal. Every time a Republican brings up the so-called "Death Tax" (estate tax), we should start talking about the "Life Tax". The Death Tax hits very few people. The Life Tax hangs over every family that's managed to clear the mortgage on the family home.

insurance. It's just common sense.

but sadly for most of us, those things are priced way out of our reach.

I guess common sense is just another of those unaffordable commodities reserved for the wealthy, thanks to 35 years of pushing wages down.

the nursing home stay, that's for sure.

My health insurance is too high, but I still pay for that.

My car insurance is pretty pricey, but I still pay for that.

My life insurance isn't too bad. Would be cheaper if I'd lose some weight. But I still pay for that.

I'm just saying that some things make sense to pay for, even when it's a sacrifice, when you consider the alternative.

long term care insurance.

the "Trust Fund continuity" . . . or the "Paris Hilton slush fund"

starting with the least wealthy.

I wonder if they actually think about this.

There will probably be a reverse means test for insurance too - if you have too many assets you won't qualify for insurance either. It would certainly keep their loss/risk pool downward-adjusted.

Too many assets means, if your mortgage is paid off you won't qualify for insurance until your house is sold to pay for your MRI and two aspirins.

Or anybody else for that matter. That's why my wife and I care for my elderly mom. It's not that hard, you just have to decide what your priorities are. New Lexus and a European cruise every year or take care of mother?
It was an easy choice for us.
Will our kids do the same for us? My wife and I? I doubt it and I'm not counting on them either.

Sometimes things just don't work out the way we'd like. The sick person may be too sick to be at home or the caregiver may not be physically able to give the care. What about the couple working to put the kids though school confronted with an elderly relative with dementia? What if there is one parent with dementia and another with Parkinson's? What about a divorced mother with kids and two sick parents? Life gets very untidy very fast.

As for insurance, I don't even want to guess the cost when the odds are 1 in 4. Right now I'm still paying off a mortgage and sending my kids to school and trying to save for my retirement. Insurance? Ha!

Even when Clinton was in office I saw what was going on around me and decided to plan AHEAD of time rather than LATER for long-term health concerns and estate planning. Things I'm in control of, not the government so that they can threaten to take it away if I don't vote for this party or that party, yadda, yadda.

BTW- sending all three of my kids to a local college versus out of state saved me at least $30k each.

sponsered healthcare. I've been a member of 3 different UNIONS for 40 years, I'll NEVER depend on the government to take care of me or my family. Raising chickens?

especially something as unreliable and unpredictable as government.

Self-reliance, when one is able, seems to be going out of style.

It was based on the idea that sometimes self reliance isn't enough.

What if your insurance company screws you over?

"The Government" ought to be "We the People." Government-haters love to hark back to the Good Old Days!

There is no real evidence that the system will run out of money in the near future. If the gov would stop stealing money from its funds, it would never run out of money.

Please explain.

as long as Congress keeps spending like drunken sailors.

The other issue is demographics. 76 million baby boomers are getting ready to retire.

It's really not that different from all the private pension plans that are going broke. It's costing much more to provide benefits to retiring workers than those companies expected. And, they invested the pension funds too conservatively to keep up with inflation.

In all my years working with 401(k) plans, I didn't meet more than a handful of people who were under age 40 who expect to get much from Social Security.

I may be pleasantly surprised. But I'm not going to bank on it.

When I was in college everyone "knew" we would never collect on our Social Security Insurance. We were being told by Democrats that SSI is going to run out if we didn't vote them into office to save it. While Republicans told us SSI is going to run out, so why would we want to continue paying into something from which we will never be able to collect.

Of course, anyone who has paid the slightest bit of attention to this issue knows that the only threat to losing SSI is political. Financially it is sitting pretty.

The fact is that when SS began, there were approximately 16 workers supporting every retiree. Now there are about 4. When SS began, the average life expectancy was 66. Today, it's more than 76.

And Congress has continued to put IOU's into the trust fund and spend those contributions on other programs.

I'll gladly continue to pay into the system, because my parents will be using that for their retirement.

Unless we get some serious-minded politicians, though, I'm just not expecting to get any myself. I'm investing on my own.

I want to remind people that at one time there was something like 1 farmer for every townsman and now it's something like 1 for ever 100. Changes in productivity can render such comparisons meaningless. Either we can support our elderly or we can't. The real question is whether we are willing to take the steps necessary to ensure a distribution of the wealth so that everyone can live decently.

What government spending would you recommend be cut? As you've been advising people on their 401(k) plans, I can see why you'd encourage gloom & doom about Social Security.

You do realize that very people can afford a, "new Lexus and European cruise every year," I hope?

but no one here agrees it looks like! Do we have to buy insurance for everything? I mean, my God, how many different kinds of insurance can I buy before I can't aford to eat? I hate to see the government pick up the tab for everyone's nursing home. That's no answer, but it's not right to work all your life and have nursing homes take everything in only a couple years. It's a good issue at any rate.

to run through your assets pretty quickly. The government will end up picking the tab anyways after only a few months depending on how much you've managed to accumulate and how pricey your care is. The only difference is that due to the Life Tax, you have nothing to show for all your work and nothing to leave your children!

I'm sorry, but that's bull***t!

Why should I have to pay for someone's end of life care so that they can leave $$$ to their children or grandchildren?

A responsible person sets aside money and insurance for their care if they are able to. Those with nothing are cared for by taxpayers.

This "requirement" to leave money to one's children is weird. You're required to take care of yourself first. If there's money left, great. If not, no big deal.

The children didn't earn it. You don't owe it to them.

The right-wing has got everyone obsessing over this. It's only the wealthy aristocracy who benefit from this! It's not a game the rest of are even playing in.

your dad keels over from a heart attack, but not if he's paralyzed by a stroke? I guess we're going to play a new kind of morbid lottery in this new millennium. I mean I know not everything in life is fair but why would we enable nursing homes to take everything from anyone?

By the way , I'm not talking about a big inheritance. But why is the family farm or family business sacrosanct while the family home - which represents the lifetime earnings of a couple - subject to a total spend down. Most people like the idea of passing down something to the kids. We're generally talking about splitting something well under $100,000 several ways after paying off any remaining bills. Generally it comes through about the time the "kids" are facing some heavy bills of their own - sending the grand kids to school or getting ready for retirement themselves, etc.