How to transfer an inheritance
Dear Liz: I may inherit $500,000 but do not necessarily need the money for my retirement. Is there a way to pass that inheritance, or a part of it, to my two children without incurring a taxable event for myself or for them? I may want to ask my parents to add that to their trust or will.
Answer: You can “disclaim” or refuse to accept all or part of an inheritance. If you do so correctly, the assets will pass to the next beneficiary as dictated by the estate documents (or by state law, in the absence of a will or living trust). If you think you’ll want this option, discuss this with your parents and their estate planning attorney so the documents can be set up properly. Keep in mind that few families have enough wealth to be affected by gift or estate taxes. Only people who give away millions of dollars in their lifetime have to pay gift taxes, for example.
If you decide not to disclaim and later give the entire $500,000 to your kids, you wouldn’t have to pay gift taxes until you gave away considerably more. Plus, gifts are tax free to the recipients.
Gift and estate laws are always subject to change, so definitely consult a tax pro before making any decision regarding either.
Pros and cons of Medicare plans
Dear Liz: You posted a letter against Medicare Advantage plans. The letter suggested that you had to go to their doctors, which is false. You can go out of network with a higher deductible. I will also tell you that most of those same doctors accept your innetwork deductible. I do this all the time when I’m at my summer home.
Answer: As mentioned earlier, Medicare Advantage plans are offered by private insurers as an alternative to traditional Medicare. The plans can differ in what they cover and how.
For example, if your Medicare Advantage plan is a preferred provider organization, you may have some coverage if you use a medical provider outside the plan’s network. If the Medicare Advantage plan is an HMO, it may not cover out-of-network care except in an emergency. HMOs also may require you to get a referral to see a specialist.
Contrast that with traditional Medicare, which allows you to see any medical provider that accepts Medicare (which is most of them). One of the downsides to traditional Medicare is the coinsurance, including deductibles and co-payments. However, you can purchase a supplemental, or Medigap, policy from a private insurer to cover those. There are a number of Medigap plans, but what they cover is standardized.
Medicare Advantage plans often pay for things that Medicare does not, such as hearing, eye care and dental. Many people who sign up for Medicare Advantage are, like you, pleased with their coverage. Others are not, though. Read on.
Dear Liz: Regarding the pros and cons of traditional Medicare versus Medicare Advantage options, I want to share a horror story about my parents. Both are deceased, and I went through hell dealing with their Medicare Advantage plans.
These plans mail classy color brochures to seniors approaching 65, inviting them to a free lunch to hear all about the excellent care they supposedly will receive when signing up with these health plans — all with no extra monthly premiums! My parents fell for the promises of these “free” plans.
As you wrote in your response, there are serious and inconvenient limitations to the quality of care and the hospitals and doctors covered in these networks. It was frustrating.
My mother’s primary care doctor always seemed exhausted and never explained anything correctly. He seemed to be annoyed when we asked him to repeat information. My dad’s plan told him it was not contracted with the hospital closest to him and referred him to a hospital much farther away. His primary care physician was rude, disrespectful and uncaring.
As my father’s health advocate, I was always arguing with his insurer. My dad became depressed at the poor quality of care and the lack of support from this company. I think he just gave up. He passed away in 2018 of prostate cancer, which had spread into his lower back. Had he received proper testing when it was supposed to be done, the cancer may have been caught early and treated.
If you stay with traditional Medicare, there are supplemental health plans that cost a few hundred dollars a month. I have heard from friends and relatives that the care is better through paid supplemental plans.
Bottom line: You get what you pay for. Probably best to stick with plain, old Medicare — you might just live longer.
Answer: Medicare Advantage plans can vary dramatically in quality. You can’t assume that one person’s experience with Medicare Advantage will be the same as another’s.
You can assume that any insurance with lower upfront costs will have higher costs or more restrictions, or both, if you need a lot of care. If you want more freedom to choose your medical providers and can afford the premiums, traditional Medicare with a supplemental policy may be a better fit.