Housing and Long-Term Care Options

The range of housing options for older persons is enormous–from staying in your
own home or apartment, to home sharing, to moving to a senior housing facility or
development. The questions and answers that follow begin by exploring an important
financial option (home equity conversion) that may help you stay in your home, and then
end by describing the wide variety of housing choices that combine shelter with some
combination of recreational and social opportunities or supportive services and health
care. In all these areas, older persons need to be aware of the personal and financial risks
and benefits involved, and, above all, their legal rights.
Home Equity Conversion


Q. I own my own home, and do not want to move, but I’m having trouble
making ends meet. What can I do?

A. Home equity conversion plans can help you add to your monthly income
without having to leave your home. These plans fall into two broad categories: loans and
sales. Loan plans permit you to borrow against the equity in your home. They include
reverse mortgages and special-purpose loans on which repayment is deferred. They should
not be confused with “home equity loans” and “home equity lines of credit,” which require
you to make monthly payments immediately or risk losing your house.


Q. How does a reverse mortgage work?

A. A reverse mortgage lets you borrow against the equity in your home, receiving
a lump sum, monthly installments, or drawing on a line of credit. The amount of the loan
you will receive is based on your age, the value of your home and your equity, the interest
rate, the term of the loan, and some other factors. Except for some special-purpose state or
local government sponsored plans, like those designed to pay for home repairs, there are
no restrictions on how you use the money.
The loan usually does not have to be repaid until you sell, die or move from your
home. In some new plans, you can continue to receive payments even if you move. When
the loan does come due, the amount to be repaid cannot exceed the appraised value of the


Q. Who is eligible for a reverse mortgage?

A. A borrower must be at least sixty-two years of age, and own the property free
and clear, except for liens or mortgages that can be paid off with proceeds from the loan.
Unlike traditional loans or home equity lines of credit, the borrower’s income is not
considered. Only single family residences (including some condominiums) are eligible;
mobile homes, multi-family dwellings (including duplexes) and cooperatives are not.


Q. Are reverse mortgages available in my area?

A. Reverse mortgages can be obtained in more than thirty-five states and the
District of Columbia. The most common product are the federally insured Home Equity
Conversion Mortgage, or HECM and the “Homekeeper Mortage” available through Fannie Mae. Other products include state-subsidized home repair plans, lender-insured
plans, and reverse annuity mortgages.A consumer guide entitled Home Made Money and a list of reverse mortgage lenders is available from the American Association of Retired Persons, 601 E. Street,
N.W., Washington, D.C. 20049, telephone, 1-800-424-3410 or visit their website at
www.aarp.org. For more information, also contact the National Center for Home Equity
Conversion at 651-222-6775 or their website www.reverse.org.


Lenders today are showing greater interest in offering reverse mortgages now that
the Federal Housing Administration (FHA) is insuring reverse mortgages. Under FHA
rules, the homeowner must be sixty-two or older and own a home that has a very small
mortgage or no mortgage at all. The FHA limits borrowing to between $121,296 and
$219,849 for the year 2000. Under FHA rules, the borrower may receive the borrowed
money as a monthly income or a line of credit. This allows the borrower to use the money
for emergencies, such as medical care. For more information, the toll-free number is 1-
888-466-3487. Before signing on the dotted line, be sure to get professional advice about
the terms and conditions of a reverse mortgage.


Q. How will a reverse mortgage affect my other benefits?

A. The income from a reverse mortgage will not affect eligibility for social
security, Medicare or other retirement benefits or pensions that are not based on need.
However, without careful planning, the income from a reverse mortgage could affect
eligibility for Supplemental Security Income (SSI), Medicaid, food stamps and some state
benefit programs.
In general, reverse mortgage payments are considered to be a loan, and will not
affect benefits if the money is spent during the month in which it is received. But if the
money is not spent during that month, it will be counted as a resource, and may lead to
termination of benefits. Be aware that payments received under the new reverse annuity
mortgage plans will be considered income, even if they are spent in the month in which
they are received.


Q. What about tax consequences?

A. There are two issues here. The first is whether the income from a reverse
mortgage is taxed. So far, it has not been, under the assumption that it is a loan advance.
Second is whether the interest can be deducted. Generally, interest cannot be deducted
until it is paid. Since the interest on a reverse mortgage is not paid until the loan comes
due, it cannot be deducted until that time.


Q. What other kinds of home equity conversion are available?

A. In addition to loan plans, you can generate income from the equity that you
have acquired in your home through sale plans. Sale plans include sale-leasebacks, life
estates and charitable annuities.


Q. What is a sale-leaseback, and how can I find someone who is interested?

A. In a sale-leaseback, you sell the equity in your home, but retain the right to
continue living there, often paying a monthly rent. The buyer usually makes a substantial
down payment to you. You act as a lender by granting the buyer a mortgage. You receive
the buyer’s mortgage payments; the buyer receives your rent payments, which are set
lower than the mortgage payments, so you gain a positive net monthly income. You
remain in the home, and can use the down payment and the mortgage payments as income.
The buyer can deduct the mortgage interest payment from his or her income, and will also
benefit if the value of the property increases.
Be aware, however, that the IRS requires that both the sale price and the rental
payments be fair market rate. Before 1986, the tax laws made sale-leasebacks good
investments, especially for adult children. Today, however, there are fewer tax
advantages, so finding an investor may be difficult.


Q. What if I sell my house, and keep a life estate?

A. In a life estate, or sale of a remainder interest plan, you sell your home to a
buyer, but keep the right to live there during your lifetime. The buyer pays you a lump
sum, or monthly payments, or both. You are usually responsible for taxes and repairs
while you live in the house but you pay no rent. At your death, full ownership passes
automatically to the buyer. This arrangement is most common within families, as part of
an estate plan. As with a sale-leaseback, it might be difficult to find an outside investor.


Q. What about a regular home equity loan?

A. A traditional home equity loan is very different from a reverse mortgage, and
can be a risk for an older person on a fixed income. As with a reverse mortgage, you
borrow against the equity you have built up in your home. But in a home equity loan, you
must make regular monthly payments, or you may lose your home.
There may be some tax advantages, however. Since it is no longer possible to
deduct interest on consumer goods such as car loans and credit card bills, many
homeowners have turned to home equity loans. With such loans, you can borrow up to
$100,000 on the equity in your first and second homes, use the money for any purpose,
and deduct all the interest you pay. You can even deduct the interest on a home equity
loan that exceeds $100,000 if you use the money for home improvements. If you’re not
going to use such a large loan for home improvements and still want to deduct the interest,
you must be able to prove that your home equity, plus improvements, equals the amount
of the loan.


Q. Is home equity conversion the only way to increase my monthly income?

A. Not necessarily. If you find that your monthly income does not meet your
expenses, you may be eligible for government benefits, such as Supplemental Security
Income, food stamps, or Medicaid. (See earlier section on income security in
this chapter). Some states also have property tax credit or deferral programs for which you
may be eligible. To find out more about these programs, call your local agency on aging.
You should consider all of the options available to you before you make your decision. If
you are already receiving public benefits, you should make sure that the home equity
conversion plan you choose does not affect those benefits.


Q. I am not sure that I can continue to live in my own home, but I would like
to stay in my community. What other choices do I have?

A. You have several choices, depending on your current and future health needs,
your financial circumstances, and your personal preferences, although not all may be
available in your community. There are home-sharing programs, in which homeowners
are matched with individuals seeking housing in exchange for rent or services; accessory
units that provide private living units in, or next to, single family homes; or assisted living
(described below), which combines a home-like setting with services designed to meet
individual needs. These programs may be privately owned and operated, government
supported, or sponsored by religious or other non-profit organizations. For information,
contact your local agency on aging.
Retirement Communities


Q. I have heard a lot about retirement communities that offer all kinds of
different services and amenities. What types of retirement community are available

A. In the last several years, there has been a large increase in the number of living
options for the elderly as both the public and private sectors attempt to respond to the
growing numbers of elders. The modern model of retirement community first sprung up in
the 1950s in the sun-belt states with senior communities that offered independent living
with a variety of social and recreational opportunities. Much has changed today. Between
the extremes of independent living and nursing home care, a variety of alternatives now
offer endless combinations of shelter plus services or amenities. Physically, facilities may
range from single-family type housing, to high-rise or garden apartment buildings, to
campus-like developments.
Facility definitions differ among states and sometimes even within states. For
simplicity’s sake, it is useful to distinguish three levels of community along a continuum
of services. At one end of the continuum are independent living communities. These offer
little or no health and supportive services, although they may have recreational and social
programs. At the opposite end are “continuing care retirement communities” (CCRCs).
These provide a fairly extensive range of housing options, care and services, including
nursing home services. In between are facilities that offer a wide variety of housing and
health or supportive services but not nursing home care. Today, these are commonly
assisted living communities, but they include facilities variously called “housing with
supportive services, “congregate care”, “board and care”, and “personal care homes” to
list just a few.


Q. Who sponsors and who regulates retirement communities?

A. Most retirement communities are developed privately, although many are
sponsored by nonprofit groups and agencies, including churches and charitable
organizations. All states regulate one or more types of assisted living, and most states
regulate continuing care communities, but the extent of regulation varies considerably
among states.




Q. What purchase or payment arrangements do retirement communities


A. Conventional independent living communities t without health services
typically involve home ownership or rental arrangements that are similar to standard real
estate purchases or rentals. Thus, these transactions are governed by local real estate or
landlord-tenant law, and residents pay the costs of their mortgage or lease, and
condominium or association fees if applicable. In facilities that promise additional
services, accommodations, or health care, the payment arrangement includes some
mechanism to pay for these added benefits. One may distinguish four basic types of
contract, based on payment arrangement, although keep in mind that state regulations may
categorize facilities differently:
1. “Turnover of assets” or “total fee in advance” contracts without monthly fees.
These types of contracts are all but extinct today. They were common in the
original continuing care communities, often called “life care” communities,
developed by religious or fraternal organizations. Many communities using this
model failed, because the assets received by the sponsors were not sufficient to
keep up with rising health care expenses of residents over their lifetimes.
2. Entrance fee plus monthly fee contracts. Entrance fees, ranging from $15,000
to over $200,000, are charged by most continuing care retirement facilities
today. An entrance fee may represent a partial prepayment for future services.
It normally does not buy an interest in the real estate. Increasingly, CCRCs are
providing greater refundability of entrance fees, even 100 percent
refundability, although this usually results in higher monthly fees. Residency
rights and obligations are governed by a long-term lease or occupancy
agreement. Monthly fees are subject to periodic inflation adjustments, and,
possibly, adjustments when the resident’s level-of-care needs change.
3. “Pay-as-you-go” contracts. With no entrance fee, these contracts are essentially
straight rental arrangements with a defined set of services included in the fee or
available when needed for an additional charge. Most assisted living and an
increasing number of continuing care facilities offer this arrangement. This
type of contract involves no initial investment, but is subject to greater changes
in monthly fees, since the resident assumes all or most of the financial risk for
4. Condominiums or cooperatives with continuing care contracts. Retirement
communities that offer an ownership interest to residents under a condominium
or cooperative arrangement with a service package included are relatively new
to the scene. These ownership/contractual arrangements are unavoidably
complex and bring with them special advantages and risks.


Q. What sorts of things do I need to consider before moving into a continuing
care community?



A. This is a major financial investment, frequently using up most or all of an older
person’s financial resources, so consider it carefully and seek professional advice from a
lawyer or financial advisor before you make a commitment. You may not be able to get
your money back. Be sure to visit the facility at length and talk to both staff and residents.
The following checklist highlights key questions you should ask:

Solvency and Expertise of the Provider
1. What is the provider’s background and experience? The provider is the person
or entity legally and financially responsible for providing continuing care.
Some facilities may advertise that they are “sponsored” by non-profit groups or
churches that in reality may have no legal control or financial responsibility.
Be wary if such illusory sponsorship is trumpeted in sales literature.
2. Is the provider financially sound? Have the facility’s financial, actuarial and
operating statements reviewed by a professional. Determine whether the
facility has sufficient financial reserves.
3. Are all levels of care licensed or certified under applicable state statutes
regulating continuing care, assisted living, and nursing home care?
4. How does the facility ensure the quality of care and services provided? Is the
facility accredited by any recognized private accrediting organization?
5. What is the entrance fee, and when can you get all or part of it back? The
facility should provide a formula for a pro rata refund of the entrance fee,
based on the resident’s length of stay, regardless of whether the facility or the
resident initiates the termination. Some facilities offer the option of fully
refundable entrance fees.
6. What is the monthly fee? When and how much can it be increased? What
happens if fee increases exceed my ability to pay? Some facilities have a
program that grants financial assistance to residents whose income becomes
inadequate to pay increasing monthly fees and personal expenses.
7. Will fees change when the resident’s living arrangements or level-of-care
needs change (for example, transfers from independent living, to assisted
living, to nursing care)?
8. What does my living unit consist of and to what extent can I change or
redecorate it?
9. What happens if I marry, divorce, become widowed, or wish to have a friend or
family member move into the unit?
Services and Health Care
10. Exactly what services are included in my regular fees? Especially inquire about
coverage, limitations, and costs of the following matters:
· meal services;
· special diets/tray service;
· utilities;
· cable television;
· furnishings;
· unit maintenance;
· linens/personal laundry;
· housekeeping;

· recreational/cultural activities;
· transportation.



Health & Personal Care:
· physician services;
· nursing care
· facility services;
· nursing services outside a nursing unit (for example, assistance with
· private duty nursing;
· dental and eye care;
· personal care services (that is, assistance with eating, dressing, bathing,
toileting, etc.);
· homemaker/companion services;
· drugs,
· medication, and
· medical equipment/supplies

11. If the facility provides a nursing unit, what happens if a bed is not available
when you need it?
12. To what extent does the facility have the right to cut back, change, or eliminate
services, or change the fees?
13. Does the facility limit its responsibility for certain health conditions or preexisting
conditions? When can you become too sick or impaired to be cared for
by the facility? A pre-existing health condition is one diagnosed or treated in a
certain period of time before entering the facility.
14. Can you receive Medicare and Medicaid coverage in the facility?

15. Does the facility require residents to buy private insurance or participate in a special group insurance program for residents?

16. What are the criteria and procedures for determining when a resident needs to
be transferred from independent living to assisted living, or to a nursing care
unit, or to an entirely different facility? Who is involved in these decisions?
Residents’ Rights
17. What rights do residents have to participate in facility management and
decision-making? How are complaints handled?
18. On what grounds can residents’ contracts or leases be terminated against their
19. What other rules and policies cover day-to-day operation of the facility?
20. Does the contract release the facility from any liability for injury to a resident
resulting from negligence by the facility or third parties? Such waivers should
be avoided.


Finding a Retirement Facility


· The American Association of Homes for the Aging publishes The Consumer’s
Directory of Continuing Care Retirement Communities, profiling not-for-profit
retirement communities around the country and providing an overview of CCRC
types, terminology, and features that consumers might want to consider. For ordering
information, contact AHAA Publications, 901 E Street, N.W., Suite 500, Washington,
DC 20004, telephone, 1-800-508-9442 or visit their website at www.aahsa.org.
· The American Association of Retired Persons has several brochures that can help you
make housing decisions. Contact AARP at 601 E. St., N.W., Washington, DC 20049,
telephone toll-free 1-800-424-3410, or visit their website at www.aarp.org.
· State or local agencies on aging frequently prepare directories or guides on housing
options for older persons and persons with disabilities. Find the agency’s number in
your local telephone book.


Nursing Home Care


Q. What is a nursing home?

 A. A nursing home is a facility that provides: skilled nursing care and related services for
residents who require medical or nursing care; rehabilitation services for injured,
disabled, or sick persons; and health-related care and services, above the level of room
and board, that can be made available only through institutional facilities.
Often, nursing facilities make distinctions between levels of care–skilled and
custodial–for purposes of Medicare, Medicaid, or private insurance coverage. The
distinction between “skilled” and “custodial” care affects Medicare and is discussed
under “Medicare” above.
Only about 5 percent of people age sixty-five and older live in nursing homes at
any given time, but researchers estimate that older persons overall have about a 40
percent chance of spending at least some time in nursing homes. While some older
nursing home residents stay for extended periods, the majority stay in a facility less
than six months.



Q. How does living in a nursing home affect my personal rights and


A. You do not check your rights and privileges at the door when you enter a
nursing home. Although institutional care, by its very nature, substantially limits one’s
lifestyle and scope of privacy, one should nevertheless expect high quality,
compassionate, and dignified care from nursing facilities.
The federal Nursing Home Reform Amendments of 1987, and corresponding state
laws, protect residents in nearly all nursing facilities. For residents who lack decision
making capacity, the resident’s agent under a power of attorney for health care or another
legal surrogate recognized by state law (typically a family member) may exercise the
resident’s rights. Federal law requires that nursing homes meet strong basic standards for
the quality of life of each resident and for the provision of services and activities. Specific
rights guaranteed by federal and state law include the following:
Information Rights

Nursing homes must provide:

· written information about residents’ rights;
· written information about the services available under the basic rate and any
extra charges for extra services;
· advance notice of changes in room assignment or roommate;
· upon request, latest facility inspection results and any plan of correction
submitted to state officials;
· explanation of the resident’s right to make a health care advance directive–that
is, power of attorney for health care or living will–and facility policies on
complying with advance directives; (See discussion of advance directives on
under “Right To Control Your Own Affairs” below.) information
about eligibility for Medicare and Medicaid and the services covered by those
Self-Determination Rights
Each resident has the right to:
· participate in an individualized assessment and care planning process that
accommodates the resident’s personal needs and preferences;
· choose one’s personal physician;
· voice complaints without fear of reprisal, and to receive a prompt response;
· organize and participate in resident groups (such a resident council) and family
Personal and Privacy Rights
Residents have the right to:
· participate in social, religious and community activities as they choose;
· privacy in medical treatment, accommodations, personal visits, written and
telephone communications and meetings of resident and family groups;
· confidentiality of personal and clinical records;
· access to the long-term care ombudsman, one’s physician, family members,
and reasonable access to other visitors subject to the resident’s consent;
· freedom from physical or mental abuse, corporal punishment, and involuntary
· freedom from any physical restraint or psychoactive drug used for purposes of
discipline or convenience, and not required to treat the resident’s medical
· protection of resident’s funds held by the facility with a quarterly accounting.
Transfer and Discharge Rights
Residents may be transferred or discharged only for the following reasons:
· the health, safety, or welfare of the resident or other residents requires it;
· the non-payment of fees;
· the resident’s health improves so that he or she no longer needs nursing home
· the facility closes. Normally residents must receive at least thirty days advance
notice, with information about appealing the transfer and how to contact the

state long-term care ombudsman program. The facility must prepare and orient
residents to ensure safe and orderly transfer from the facility.
Protection Against Medicaid Discrimination
Nursing homes must:
· have identical policies and practices regarding services to residents regardless
of the source of payment (However, be aware that not all facilities participate
in Medicaid.);
· provide information on how to apply for Medicaid;
· explain the Medicaid “bed-hold” policy–that is, how many days Medicaid will
hold the resident’s bed, or ensure priority re-admission, after temporary
· not request, require or encourage residents to waive their rights to Medicaid;
· not require a family member to guarantee payment as a condition of a
resident’s admission or continued stay;
· not “charge, solicit, accept or receive gifts, money, donations or other
considerations” as a precondition for admission or continued stay for persons
eligible for Medicaid.


Basic Quality of Life Standard for Nursing Homes


Federal law requires each nursing facility to “care for its residents in such a
manner and in such an environment as will promote maintenance of and enhancement of
the quality of life of each resident. Federal law requires each nursing facility to “provide
services and activities to attain or maintain the highest practicable physical, mental and
psychosocial well-being of each resident in accordance with a written plan of care that… is
initially prepared, with participation to the extent practicable of the resident or the resident’s family or legal representative.”

Q. What can I do if I think a nursing home is not providing adequate care or
respecting my rights?

A. Different problems require different responses. The following steps should help
resolve most problems. The order may vary depending on the problem.
1. Keep a log of the relevant details, including dates and personnel involved.
2. Try to resolve the problem informally by talking to supervising staff.
3. Many facilities have active resident councils or family councils. Bring the
problem before these groups.
4. Contact your long-term care ombudsman. (See below.)
5. Contact the state regulatory agencies that license, certify, and survey nursing
homes. Usually, the state department of health has this responsibility.
6. Contact a community legal assistance program, other advocacy organization, or private attorney experienced in long-term care issues.


Q. What is the long-term care ombudsman program?

A. The federal Older Americans Act requires every state to operate a long-term
care ombudsman program. The ombudsman is responsible for advocating on behalf of
nursing home residents and residents of other long-term care facilities, such as “assisted
living” or board and care facilities. The ombudsman provides education on long-term care
options and residents’ rights, and investigates and resolves complaints made by or on
behalf of residents.
Most states operate local or regional programs with paid or volunteer ombudsmen.
Residents and family members often find ombudsman staff to be essential partners in
resolving problems. Federal law requires nursing homes to allow the ombudsman access
to residents and access to resident records. In addition, the ombudsman usually has special
authority under state law to inspect records and take other steps necessary to respond to



Your Right to Health and Long Term Care Benefits

The federal government provides a program of basic health care insurance for
older and disabled individuals called Medicare. Practically everyone who has a work
history and is sixty-five and older is eligible for Medicare, even those who continue
working after age sixty-five.

The federal and state governments together also provide a comprehensive medical
benefits program, called Medicaid, for qualified low-income people. Medicare and
Medicaid are not the same, though some older people qualify for both. Medicaid coverage
rules vary from state to state, but Medicare is the same all over the United States.
The questions that follow examine Medicare and Medicaid, as well as private
“Medigap” insurance commonly used to supplement Medicare coverage. The section then
turns to long-term care benefits under public programs and under private long-term care
Since Medicare and Medicaid came into being in 1965, they have been revised
many times. More revisions are certain. Current information is available from your local
Social Security Administration office. Other groups such as the American Association of
Retired Persons, local legal services programs, senior centers, and area agencies on aging
also provide useful information.



Q. What is the basic structure of the Medicare program?


A. The Health Care Financing Administration, a branch of the U.S. Department of
Health and Human Services, is the federal agency responsible for administering the
Medicare program. Regular Medicare has two main parts. The hospital insurance part, or
“Part A,” covers medically necessary care in a hospital, skilled nursing facility, or
psychiatric hospital, home health care, and hospice care.
“Part B,” or the medical insurance benefits part, covers medically necessary
physician’s services, no matter where you receive them, outpatient hospital care, many
diagnostic tests, and a variety of other medical services and supplies not covered by Part
A.The exact coverage rules and limitations are complex. The actual coverage
determinations and payments to providers of care are handled by insurance companies
under contract with Medicare. These insurance companies are referred to as “fiscal
intermediaries” under Part A and “carriers” under Part B. They determine the appropriate
fee for each service. That is why regular Medicare is referred to as a “fee for service”
Medicare beneficiaries also have the option of joining a Managed Care
Organization (MCO) or care option permitted under “Medicare + Choice.” Managed care
organizations provide or arrange for all Medicare covered services and generally charge a
fixed monthly premium and small or no co-payments. They may also offer benefits not
covered by Medicare, such as preventive care, for little or no additional cost.
Denials of Benefits
Never accept a denial of benefits without further questioning. Unfair denials of
Medicare benefits occur with surprising frequency. Medicare beneficiaries who appeal
unfair denials have a substantial likelihood of success on appeal. Your appeal rights are
explained below


Q. What does Medicare cost me?

A. Part A coverage is provided free to all individuals sixty-five and older who are
eligible for social security (even if they are still working). If you are not eligible for social
security benefits, you can enroll in Part A after age sixty-five, but you will have to pay a
sizable monthly premium.
Part B is available to all Part A enrollees for a monthly premium that changes
yearly. The Social Security Administration office can tell you the cost of the current
premium. Under both Parts A and B, beneficiaries must pay certain deductibles and coinsurance
payments, depending on the type of service, unless you are enrolled in a
managed care organization. “Deductibles” are payments you must make before Medicare
coverage begins. “Co-insurance payments” are percentages of covered expenses that you
are responsible for paying. These amounts can change from year to year.
If you meet certain income and resource tests, your state’s Medicaid program will
assist you in paying your share of Medicare costs. The income and resource tests are more
generous than the limits for regular Medicaid eligibility, so even if you are not eligible for
Medicaid, you may still be eligible for help as a “Qualified Medicare Beneficiary” (QMB)
or a “Specified Low-Income Medicare Beneficiary” (SLMB).


Q. I will turn sixty-five soon, but I do not plan to retire then. Am I still going
to be able to receive Medicare benefits?


A. Yes, but you must file a written application. This can be done in two different
ways. Your “initial” enrollment period begins three calendar months before your sixtyfifth
birthday month, and extends three months beyond your birthday month. You can
enroll at any time during this seven-month period. Your benefits will begin on the first day
of the month in which you turn sixty-five.
If you do not enroll during this time, you can enroll during the “general”
enrollment period, which runs from January 1 to March 31 of each year. However, you
will pay a higher monthly premium if you delay enrollment beyond your initial enrollment
If you are working and are covered by your employer’s health insurance program,
or if you are covered under your spouse’s plan, Medicare is the secondary payer after the
other insurance pays. If you haven’t enrolled in Medicare and you lose the other insurance,
you may sign up for the Medicare program during a “special” seven-month enrollment
period that begins the month the other program no longer covers you.
To make sure you receive maximum coverage without penalty, talk to your
employer’s benefits office or your local Social Security Administration office.


Q. Is Medicare only for older adults?

A. No. In addition to older social security recipients, younger persons who have
received social security disability benefits for more than twenty-four months are eligible,
as well as certain persons with kidney disease.
Protecting Your Rights When You Contact Public Agencies
Remember to note the name of the person with whom you speak, the date of your
conversation, and the content of the conversation. This is useful if you later need to
challenge the information provided.
Signing Up for Medicare
Enrolling in Medicare is no problem for most people. Everyone who is turning
sixty-five and applying for social security or railroad retirement benefits is automatically
enrolled in Medicare Part A. If you are receiving these benefits before turning sixty-five,
you should receive a Medicare card prior to the month you turn sixty-five. The Medicare
benefits normally begin on the first of the month in which you turn sixty-five.
If you are under sixty-five and receiving disability benefits, your enrollment in
Medicare will begin automatically as soon as you have been receiving benefits for twentyfour
months.If you are planning to work beyond age sixty-five and are covered by your employer’s
health insurance program, you must still file a written application through your local
Social Security Administration office.


Q. What does Medicare Part A (hospital insurance) cover?


A. Medicare Part A helps pay for medically necessary hospital care, skilled
nursing care, home health care, and hospice care as described below:

1. Hospitalization. This includes:

· a semiprivate room and board,

· general nursing,

· the cost of special care units, such as intensive care or coronary care units,

· drugs furnished by the hospital during your stay,

· blood transfusions,

· lab tests, X-rays and other radiology services,

· medical supplies and equipment,

· operating and recovery room costs, and

· rehabilitation services.

The coverage period for hospitalization is based upon a “benefit period.” A benefit
period begins the first time you receive inpatient hospital care. It ends when you have
been out of a hospital and have not received skilled nursing care for sixty days in a row. A
subsequent hospitalization begins a new benefit period.
On the first day of hospitalization during a benefit period, the patient is responsible for
a sizable inpatient hospital deductible ($776 during 2000). If you are hospitalized more
than once during a benefit period, the deductible does not have to be paid for the other
hospitalizations during the same benefit period. After the deductible, Part A pays for all
covered services through the sixtieth day of hospitalization. From the sixty-first through
ninetieth day, coverage continues but the patient is responsible for a daily co-insurance
payment. After the ninetieth day, Medicare covers up to sixty extra days (called “reserve
days”) during the lifetime of the patient. The patient pays a sizable co-insurance payment
during reserve days.
If psychiatric hospitalization is needed, Part A helps pay for a lifetime maximum of
190 days of inpatient care in a participating psychiatric hospital.

2. Skilled Nursing Facility inpatient care following a hospitalization of at least three
days. Your condition must require on a daily basis skilled nursing or skilled
rehabilitation services, which, as a practical matter, can only be provided in a skilled
nursing facility. You must be admitted within a short time (usually thirty days) after
you leave the hospital, and the skilled care you receive must be based on a doctor’s
Most nursing home residents do not require the level of nursing services considered
skilled by Medicare. Consequently, Medicare pays for relatively little nursing home care.
In addition, not every nursing home participates in Medicare or is a skilled nursing
facility. Ask the hospital discharge staff or nursing home staff if you are unsure of the
facility’s status.The coverage period for skilled nursing facility services is limited to 100 days. In a
benefit period, Medicare pays for all covered services for the first twenty days. For days
twenty-one through 100, the patient is responsible for a sizable coinsurance payment.


Medicare helps pay only for “skilled” nursing home care. Medicare does not pay
for “custodial” care. However, the distinction is often fuzzy, and many Medicare denials
based on a finding of custodial care can be successfully appealed. Generally, care is
considered custodial when it is primarily for the purpose of helping the resident with daily
living needs, such as eating, bathing, walking, getting in and out of bed, and taking
medicine. Skilled nursing and rehabilitation services are those that require the skills of
technical or professional personnel such as registered nurses, licensed practical nurses, or
therapists. Care that is generally non-skilled may nevertheless be considered skilled when,
for example, medical complications require the skilled management and evaluation of a
care plan, observation of a patient’s changing condition, or patient education services.


3. Home Health Care. Medicare covers part-time or intermittent skilled nursing care;
physical, occupational, and speech therapy services; medical social services; part-time
care provided by a home health aide; and medical equipment for use in the home. Both
Part A and Part B of Medicare cover some home health care. Medicare does not cover
medications for patients living at home, nor does it cover general household services
or services that are primarily custodial.
To be eligible for home health care services you must meet four conditions,
presented in simplified terms here. First, you must be under the care of a physician who
determines you need home health care and sets up a plan. Second, you must be
home bound, although you need not be bedridden. Third, the care you need must include
intermittent skilled nursing, physical therapy, or speech therapy. Finally, your care must
be provided by a Medicare-participating home health care agency.
The coverage period for home health care is unlimited with no deductible or coinsurance
payment (except for durable medical equipment) as long as you continue to
meet all four conditions.

4. Hospice Care A hospice is an agency or organization that provides primarily pain
relief, symptom management and supportive services to people with terminal illness.
Hospice services may include physician or visiting nurse services, individual and
family psychological support, inpatient care when needed, care from a home health
aide, medications, medical/social services, counseling, and respite care for family
To be eligible for hospice care, a patient must have a doctor certify that he or she is
terminally ill (defined as a life expectancy of six months or less); the patient must choose
to receive hospice care instead of standard Medicare benefits; and the hospice must be a
Medicare-participating program.
The coverage period for hospice care consists of two ninety-day periods, followed
by a thirty-day period, and when necessary, an indefinite extension. There are certain coinsurance
payments required under the hospice benefit, but no deductibles.


Q. What does Medicare Part B (medical insurance) cover?


A. Medicare Part B covers a wide range of outpatient and physician expenses
regardless of where they are provided–at home, in a hospital or nursing home, or in a

private office. Covered services include:

· doctors’ services, including some services by chiropractors, dentists, podiatrists, and

· outpatient hospital services, such as emergency room services or outpatient clinic care,
radiology services, and ambulatory surgical services;

· diagnostic tests, including X-rays and other laboratory services, as well as some
mammography and pap smear screenings;

· durable medical equipment, such as oxygen equipment, wheelchairs, and other
medically necessary equipment that your doctor prescribes for use in your home;

· kidney dialysis;

· ambulance services to or from a hospital or skilled nursing facility;

· certain services of other practitioners who are not physicians, such as clinical
psychologists or social workers;

· many other health services, supplies and prosthetic devices that are not covered by
Medicare Part A (Part B also covers some home health services.)

Medicare does not cover:

· routine physical examinations;

· most routine foot care and dental care;

· examinations for prescribing or fitting eyeglasses or hearing aids;

· prescription drugs that do not require administration by a physician;

· most cosmetic surgery;

· immunizations except for certain persons at risk;

· personal comfort items and services;

· any service not considered “reasonable and necessary.”
Recently, Medicare Part B began covering certain preventive services under
certain circumstances. These services include:

· certain vaccinations such as those for flu, pneumonia, and hepatitis B;

· prostate cancer screenings;

· pap smear and pelvic examination;

· mammograms;

· diabetes monitoring;

· colorectal cancer screening; and

· bone mass measurements.

A. For Part B benefits, you must pay a $100 annual deductible. Then Medicare
generally pays 80 percent of Medicare-approved amounts for covered services for the rest
of the year. You pay the other 20 percent of the approved amount. There is no cap on the
patient’s share of the cost. If you are a Medicaid recipient or a qualified Medicare
beneficiary (QMB), then your physician must accept “assignment.”
If a physician or other provider charges you more than the Medicare-approved
amount, then your liability depends on whether the provider accepts assignment.
“Accepting assignment” means that the provider agrees to accept the Medicare-approved
amount as payment in full. This means that your liability is limited to the annual
deductible and 20 percent co-payment. If the provider does not accept assignment,
generally you must pay for any excess charge over the Medicare-approved amount, but
only up to certain limits. The government presently sets the limit on physician’s charges at
115 percent of the Medicare-approved fee schedule. Doctors who charge more than these
limits may be fined, and you should get a refund from the doctor.
Here is an example of the difference accepting assignment can make: Mrs. Jones
sees Dr. Brown on June 1 for medical care. She has already paid her $100 annual
deductible for covered Part B medical care this year. Dr. Brown charges $230 for the visit.
The Medicare-approved amount for such services are $200. If Dr. Brown accepts
assignment, Mrs. Jones must pay a
· $40 co-payment (that is, 20 percent of the $200 approved).
If Dr. Brown does not accept assignment, Mrs. Jones must pay:
· $40 plus the $30 excess charge. Her Payment = $70.
Note that Dr. Brown’s actual charge ($230) is within 115 percent of the Medicare
approved amount ($200) and is therefore permissible


Doctors and suppliers who agree to accept assignment under Medicare on all
claims are called Medicare participating doctors and suppliers. You can get a directory of
Medicare participating doctors and suppliers from your Medicare carrier. The directory is
also available for your use in Social Security Administration offices, state and area
agencies on aging, and in most hospitals.



Q. How are Medicare claims filed and paid?

A. For Part A benefits, the provider submits the claim directly to Medicare’s fiscal
intermediary (the insurance company). The provider will charge you for any deductible or
co-insurance payment you owe. For Part B claims, doctors, suppliers and other providers
are required to submit your Medicare claims to the Medicare carrier (the insurance
company) in most cases, even if they do not take assignment. The provider will charge
you directly for any deductible, co-insurance, or excess charge you owe. If you belong to a
Medicare participating Managed Care Organization (MCO), there are usually no claim
forms to be filed, nor any deductible or co-payment for any covered services, or the
amount is small.

Signing Up for Medicare

Part B If you are receiving Part A coverage, you will automatically be enrolled for
Part B coverage as well. If you don’t want Part B coverage, you must notify the Social
Security Administration. Also, anyone sixty-five and older can buy Part B coverage.
Enrollment periods are similar to those for Part A. Your Part B premium will be deducted
from your monthly social security check.


Q. What if I disagree with a Medicare decision? How can I appeal?


A. You have the right to appeal all decisions regarding coverage of services or the
amount Medicare will pay on a claim. If your claim has been denied in whole or in part, it
is usually a good idea to appeal, especially if the basis of denial is unclear. A surprisingly
high percentage of denials are reversed on appeal. In any case, the appeal will make clear
the reason for the denial.
Medicare Parts A and B have different procedures for appealing and several steps
in the appeal process. After the initial levels of review, Parts A and B both include the
option of a hearing before an administrative law judge and even review by a federal court
if sufficient amounts of money are at stake.
Key tips in appealing Medicare decisions:

· Denials by any Part A provider (hospital, nursing home, home health care agency, or
hospice): Do not accept oral denials. You should be given a written notice of
non coverage from the provider explaining why the provider believes Medicare will not
pay for the services. This is not an official Medicare determination. You should ask
the provider to get an official Medicare determination. The provider must file a claim
on your behalf to the Medicare fiscal intermediary if you ask for an official
determination. If you still disagree, you may make use of several additional appeal
steps if minimum threshold amounts of money are in dispute.

· Hospital coverage denials: Hospital coverage decisions are normally made by Peer
Review Organizations (PROs). PROs are groups of doctors and other health care
professionals under contract with the federal government to review care given to
Medicare patients. When you are admitted to the hospital, you will receive a notice
called An Important Message From Medicare that explains the role of PROs and
describes your appeal rights. If you disagree with a PRO decision, the initial review
will occur very quickly, usually within three days. You cannot be required to pay for
hospital care until third day after you receive a written denial of Medicare coverage.

· Part B coverage denials: These decisions will be made by the Medicare carrier. After
your doctor, supplier, or other provider sends in a Part B claim, Medicare will send
you a notice called Evaluation of Your Medicare Part B Benefits. The notice tells you
what charges were made and the amount Medicare approved and paid. It also shows
the amount of any copayments, deductibles, or excess charges that you are responsible
for paying. The notice gives the address and telephone number for contacting the
carrier and an explanation of your appeal rights. You have six months from the date of
the decision to ask the carrier to review it. If you still disagree, you may make use of
several additional appeal steps if minimum threshold amounts of money are in dispute.
Always be conscious of time limits for filing appeals (normally sixty days from the
date of the notice). You may lose your rights if you wait too long. You may want to get
assistance with your appeal from a legal services office or a private attorney, particularly
if large medical bills are involved. Nonlawyer volunteers and non lawyer staff members of
legal service programs help a number of people with benefit appeals without charging


Q. Do I need any other insurance coverage besides Medicare?


A. Yes. Most older persons need to purchase a supplemental (or “Medigap”) insurance
policy to cover some of the costs not covered by Medicare. However, there are exceptions,
explained below.
In addition, if you can afford it, you may also want to consider purchasing a longterm
care insurance policies, because Medicare and Medigap policies do not cover longterm
care. Long-term-care insurance is discussed in the next section.


Q. Who doesn’t need a Medigap policy?

A. While most people need Medigap coverage, you may already have enough coverage
without it if you belong to one of the four groups below:

1. If you are already covered by Medicaid, you do not need a Medigap policy.
Medicaid covers the gaps in Medicare and more.

2. If you are not eligible for Medicaid, but your income is low, you may be eligible
for help in paying Medicare costs under the Qualified Medicare Beneficiary (QMB)
program. Under QMB the government will pay your Medicare Part B premiums and
provide supplemental coverage equivalent to a Medigap policy if your income and assets
fall below a qualification amount (one that is more generous than Medicaid’s).
To apply contact the local office of your state Medicaid program.

3. If you get retiree health coverage through a former employer or union, you
may not need Medigap insurance. But this coverage may not provide the same benefits as
Medigap insurance and may not have to meet the federal and state rules that apply to
Medigap. Examine the coverage, costs, and stability of your coverage to determine
whether it is a better option than Medigap.

4. If you belong to an HMO, you probably do not need a Medigap policy, since
HMO coverage is normally comprehensive. But do not be too quick to give up your
Medigap coverage if you are just joining a Medicare HMO. If you can afford it, keep it
long enough to be sure you are satisfied with the HMO. If you become dissatisfied with
the HMO, you have the right to disenroll from it at any time. But if you have already
given up you Medigap coverage, you may not be able to get it again or get the same price.


Q. How do I find a good Medigap policy?

A. Since 1992, all Medigap insurance has had to conform to standardized benefit plans.
There are ten possible standardized plans, identified as Plan A through Plan J. Plan A is a
core package and is available in all states. The other nine plans have different
combinations of benefits. Check with your state department of insurance for additional
information. Many states provide buyers guides.
Purchase only one Medigap policy. Multiple policies will almost always provide
overlapping coverage for which you will pay twice but receive the benefit of only once. In
evaluating policies, decide which features would best meet your health needs and financial
situation. Prescription drug coverage, for example, may be right for you if you are on
continuing maintenance medications, even though such coverage may be expensive. When
you compare policies of the same type (A through J), remember that benefits are identical
for plans of the same type. For example, all type G plans have essentially the same
benefits. However, the premiums and potential for premium increases may differ greatly.


Q. When should I get a Medigap policy?


A. Buy a Medigap policy at or near the time your Medicare coverage begins, because
during the first six months that you are sixty-five or older and enrolled in Medicare Part B,
companies must accept you regardless of any health conditions you have, and they cannot
charge you more than they charge others of the same age. After this one-time period, you
may be forced to pay much higher premiums for the same policy due to your health status.
During this open enrollment period, companies may still exclude pre-existing conditions
during the first six months of the policy.
Different enrollment rules apply to persons under sixty-five who are eligible for
Medicare because of disability.


Q. What if I have an “old” Medigap policy and am considering a replacement? Is
that a good idea?

A. If you have a Medigap policy that pre-dates the standardized plans (before 1992), you
may not need to switch policies, especially if you are satisfied. Some states have special
regulations allowing beneficiaries to convert older policies to a standard Medigap plan.
Check with your state insurance department or health insurance counseling service for
Beware of illegal sales practices. Both federal and state laws govern the sale of
Medigap insurance. These laws prohibit high pressure sales tactics, fraudulent or
misleading statements about coverage or cost, selling a policy that is not one of the
approved standard policies, or imposing new waiting periods for replacement policies. If a
sales agent offers you a policy that duplicates coverage of your existing policy, the
duplication must be disclosed to you in writing. If you feel you have been mislead or high
pressured, contact your state insurance department, your state’s health insurance
counseling program, or the federal Medicare Hotline at 1-800-MEDICARE (1-800-633-


Obtain a free copy of the booklet Guide to Health Insurance for People with Medicare
from your local Social Service Security Administration or from the Consumer Information
Center, Department 70, Pueblo, CO 81009 (719) 948-3334 or at the website at

www.pueblo.gsa.gov. This guide:

· explains how Medigap insurance works;

· explains the ten standardized plans;

· tells how to shop for Medigap insurance;

· lists addresses and phone numbers of state insurance departments of state insurance
departments and state agencies on aging. Most states offer free insurance counseling


Q. What is Medicaid?


A. Medicaid is a medical assistance program for poor older or disabled persons
whose income and assets fall below certain levels set by federal and state law. Unlike
Medicare, which offers the same benefits to all enrollees regardless of income, Medicaid
is managed by individual states, and the benefits and eligibility vary from state to state.


Q. Is it possible to receive both Medicare and Medicaid?

A. Yes, if you qualify for both programs. Even if you do not qualify for Medicaid,
the Medicaid program may still assist you in paying for all or part of the Medicare
premium, deductibles and co-insurance payments if you meet the special income and
resource tests under the “Qualified Medicare Beneficiary” (QMB) program or the
“Specified Low-Income Medicare Beneficiary” (SLMB) program.


Q. If I qualify for Medicaid, what sorts of services do I get?

A. Medicaid covers a broad spectrum of services. Certain benefits are mandated by
federal law. They include:

· inpatient and outpatient hospital services doctors’

· nurse practitioners’ services inpatient nursing home care

· home health care services

 · laboratory X-ray charges.

Other services may include private duty nursing; services from podiatrists,
optometrists and chiropractors; mental health services; personal care in your home; dental
care; physical therapy and other rehabilitation; prescription medications; dentures;
eyeglasses; and more. In all cases, you may receive these service only from a Medicaidparticipating
provider. As with Medicare, providers may choose whether or not to
participate in Medicaid, and they must meet certain standards.
Some states have contracted with managed care organizations to provide
comprehensive care to Medicaid-eligible individuals.

Qualifying for Medicaid

Medicaid programs in each state have different standards to determine whether
needy individuals are eligible for assistance. All states require that older adults be at
least age sixty-five, blind or disabled, and that they meet income and asset tests. In
most states, persons eligible for Supplemental Security Income (SSI) or Temporary
Assistance to Needy Families (TANF) are automatically covered. Most states also
cover some people whose income falls below a certain level after they “spend down”
their income on medical bills. Medicaid eligibility rules are so complicated that it is
advisable for older persons with low incomes or with high medical expenses to talk
with someone with expertise in Medicaid–such as a legal services lawyer, paralegal,
or social worker, or a private attorney experienced in handling Medicaid issues.


Q. Does owning a home disqualify me from Medicaid?


A. No. All states exempt your home as an asset as long as you or your spouse
lives in it. If you must leave your home in order to receive nursing home care or other
long-term care, the state may still exempt it, but state asset exemption rules differ from
state to state and can be complex. Besides your home, all states allow you to keep a
very limited amount of cash and personal property.


Q. What does Medicaid cost me?

A. Medicaid does not require you to pay premiums or deductibles like Medicare.
Providers may not charge Medicaid patients additional fees beyond the Medicaid
reimbursement amount. However, states are permitted to impose a nominal deductible
charge or other form of cost-sharing for certain categories of services and prescription
drugs. No Medicaid recipient may be denied services by a participating provider because
of the patient’s inability to pay the charge.
Individuals whose income or assets exceed the state’s permissible Medicaid
amount may be eligible for Medicaid only after “spending down” their income or assets to
a poverty level by incurring medical expenses. These “spend down” amounts can be very
high, especially for nursing home residents whose income far exceeds the Medicaid
eligibility level but who face enormous monthly expenses for care.


Q. How do I apply for Medicaid?

A. Contact the state or local agency that handles the Medicaid program. Its name
will vary from place to place. It may be called Social Services, Public Aid, Public
Welfare, Human Services, or something similar. You can also call your local agency on
aging or senior center for information.
When you apply, you will have to document your financial need in detail, as well
as your residency. The application form can be lengthy and complex, but the Medicaid
agency can help you complete it. If you are homebound, a Medicaid worker can be sent to
your home to help you apply. If you are in a hospital or other institution, a staff social
worker should be made available to help you apply. Don’t let inability to get to the public
agency keep you from seeking assistance. Since the start of benefits is linked to your date
of application, it is important to establish an application date as soon as you need
Medicaid assistance. Almost any written request with your signature may be enough to
establish your application date, even if you have not yet completed the full application
form. The effective date can be retroactive, up to three months.


Q. How are Medicaid claims filed and paid?

A. Medicaid providers always bill Medicaid directly. The state Medicaid program
reimburses providers according to the state’s particular reimbursement formula. Providers
cannot charge you additional amounts for covered services, but states may opt to charge
you small deductibles or fees for certain items such as prescriptions.


Q. If I disagree with a decision made by my Medicaid program, what can I

A. You have the right to appeal all decisions that affect your Medicaid eligibility
or services. When a decision about your Medicaid coverage is made, you should receive
prompt written notice of the decision. This will include an explanation of how you can
appeal the decision. The appeal process includes a right to a fair hearing before a hearing
officer. You may need a lawyer or public benefits specialist experienced in Medicaid law.


Q. What federal programs will pay for long-term care in a nursing home?


A. Medicare does not pay for a significant amount of nursing home care. Coverage
of skilled nursing care, as described above under “Medicare,” is narrowly
defined and limited to twenty days of full coverage and a maximum of eighty additional
days with a large co-insurance payment.
Medicaid, on the other hand, pays a substantial portion of the nation’s nursing
home bill (over 40 percent). Medicaid, however, pays only when most other funds have
been depleted. Medicaid will cover nursing home expenses if your condition requires
nursing home care, the home is certified by the state Medicaid agency, and you meet
income and other eligibility requirements to receive this benefit.
Many persons who normally are not eligible for Medicaid become eligible after a
period of time in a nursing home. This happens because the high cost of nursing home
care forces many individuals to spend down their assets and income to a level that
qualifies them for Medicaid in many states. The rules and availability of this option vary
from state to state.
The Department of Veterans Affairs (VA) pays for some nursing home care for
veterans in VA facilities and private facilities, but the benefit is limited to the extent that
resources and facilities are available. Priority is given to veterans with medical problems
related to their military service, and to very old veterans of wartime service, and very poor
veterans. Contact your local VA office for more information.


Q. What if I don’t want to live in a nursing home? Are home care services
available under Medicare or Medicaid?

A. Yes, but to a limited extent.
The home health care benefit under Medicare focuses mainly on skilled nursing and
therapeutic services needed on a part-time or intermittent basis. The benefit is described
above under “Medicare.”
Medicaid home health care is usually quite limited, too. But in addition to home
health, several state Medicaid programs also provide “personal care” services to Medicaideligible
individuals who need help with normal activities of daily living, such as dressing,
bathing, toileting, eating, and walking. Many states also have instituted Medicaid “waiver”
programs that allow the state to use Medicaid dollars for home and community based
services that would not normally be covered under Medicaid. These waiver programs
usually target persons who would otherwise have to live in a nursing home. Some of the
services covered under Medicaid waiver programs include personal care, adult day care,
housekeeping services, care coordination and management, and respite care. Respite care
enables primary care-givers to take a break from their responsibilities. Check with your
local office on aging or department of human services about the options available in your


Q. What happens if my husband needs nursing home care but I am still able
to live independently? Will all our income and assets have to be used for his support
before Medicaid will help pay expenses?


A. If your spouse resides in or may be entering a nursing home, Medicaid has
special rules that allow the spouse remaining in the community (community spouse) to
keep more income and assets than permitted under the regular eligibility rules. The
specifics vary from state to state, but the general structure is as follows:
The community spouse can keep all income, no matter how much, that belongs
exclusively to the community spouse. Joint income is another story. The state may require
all or part of joint income to help pay nursing home expenses, depending upon the
particular state’s rules.
Most of the income of the nursing home spouse is considered available to pay for
nursing home care. However, a portion of the nursing home spouse’s income may be kept
by the community spouse as a “minimum monthly maintenance needs allowance” if the
community spouse’s income is below a spousal allowance figure set by the state. States
must establish a spousal allowance of at least 150 percent of the poverty level for a twoperson
household. Thus, for 2000, this calculation results in a minimum spousal allowance
of $1406 per month that could be kept by the community spouse (Alaska and Hawaii have
higher figures). States also permit the community spouse to keep a shelter allowance, if
shelter costs (rent, mortgage, taxes, insurance and utilities) exceed a specified amount.
Assets or resources are treated quite differently. The state applies a two-step rule.
First, Medicaid counts all resources owned by either spouse. This inventory will exclude a
few resources. The excluded resources are: your home, household goods, personal effects,
an automobile, and a burial fund of up to $1,500.
Second, from the total countable resources, Medicaid permits the community
spouse to keep one-half, as long as the one-half falls between a specified floor and ceiling
amount, adjusted yearly. If the one-half falls below the floor (about $16,824 in 2000), the
community spouse may keep more of the couple’s resources up to the floor amount. If the
one-half exceeds the ceiling (about $84,120 in 2000), the excess will be considered
available to pay for the cost of nursing home care. Thus, the community spouse is
permitted to keep no more than the ceiling amount even if it equals far less than half of the
couple’s assets.
Another special rule applies to your home. Even though your home is an excluded
resource, the state, in limited circumstances, can place a lien against your home equal to
the amount of nursing home expenses paid. The rules are complicated and vary by state;
the advice of a lawyer experienced in Medicaid law is advisable. Moreover, almost all
these rules have hardship exceptions in special circumstances.


Q. If I have assets that exceed my state’s Medicaid eligibility requirements,
can I transfer these to my children or to a trust in order to qualify? After all, these
are assets I intend to leave to my children when I die.

A. The law on transferring assets before making a Medicaid application is
complex. Such transfers can result in a period of ineligibility for Medicaid benefits.
Several strategies are available to shelter or preserve some of your assets, but there are a
number of legal, financial, ethical, and practical consequences to any such transfer of
property. Anyone considering such transfer should seek advice from a lawyer experienced
in Medicaid law.


Q. Must children pay for parents in nursing homes?


A. There is no legal obligation for children to pay for their parents’ care. Only a
spouse may be held legally responsible to help pay for the cost of nursing home care, and
as a practical matter, the responsibility is often difficult to enforce against an unwilling
spouse. If Medicaid enters the picture, the special rules for spousal responsibility
described above will apply.
Children sometimes feel pressured to help pay for a parent’s nursing home cost
because of the shortage of nursing home beds, especially Medicaid covered beds. Some
nursing homes give preference to admitting “private pay” patients over Medicaid patients
because private-pay rates are often higher than the amount Medicaid pays. While
admission priority for private pay patients is permissible in some states, it is illegal in
others. In all states, federal law prohibits nursing homes from requiring a private payment
from families, or a period of private payment, prior to applying for Medicaid coverage.
Federal law also prohibits nursing homes from requiring patients to waive their rights to
Medicare and/or Medicaid.


Q. What is long-term care insurance?

A. Long-term care insurance helps pay for nursing home care and usually home
care services for a period of two or more years. Long-term care insurance is still a
relatively new type of private insurance, so the features of this type of insurance continue
to change frequently. For example, newer policies may cover assisted living facilities,
adult day care, respite care, or other long – term care services.
Most individual policies are available for purchase only to persons between ages
fifty and eighty-four, and a medical screening of applicants is typically required. Not
every older person needs or can afford a long-term care insurance policy. Policies are
appropriate for those with substantial income and assets to protect, and who desire to buy
this form of protection against the potential costs of long-term care.
Most long-term care policies are structured as indemnity policies. That is, they pay
up to a pre-set cap for each day of a covered service. The specific provisions of these
policies should be closely examined before purchasing one, since the possible conditions
and limitations on coverage can be complex.
How much health insurance do I need?
Some people covered by Medicare think they need several additional policies to
cover Medicare gaps, specific diseases, and long-term care. That is probably not a good
strategy. Chances are the policies would duplicate too many benefits to justify the cost.
That is why insurance companies are no longer permitted to sell duplicate Medicare
supplement policies. The consumer may purchase only one of the A-J policies.
The best recommendation for someone on Medicare, who is not also on Medicaid,
is to purchase one good “Medigap” policy, and possibly one long-term care insurance
policy if you can comfortably afford the cost of a good long-term care policy. Lower
income persons are likely to qualify for Medicaid if they need long-term care, so
purchasing private long-term care insurance may be a waste of money.


Q. How are the costs of a long-term care policy determined?


A. The cost of the premium is determined in part by your age, the extent of
coverage you purchase, and your health history. Age is clearly the single greatest factor
because the risk of needing long-term care increases significantly with age. The premium
for a seventy-five year old can be double or triple that for a sixty-five year old.


Q. How do I evaluate a long-term care policy?

A. Compare more than one policy side by side. Your state’s insurance department
should have names of companies offering long-term care insurance. Many states are
beginning to set minimum standards and consumer protection guidelines for these
policies. In addition, federal law provides favorable tax treatment of federally qualifies
long-term are policies — that is, policies that meet minimum federal standards.
Guides for evaluating long-term care insurance may be available from your state
insurance department or state office on aging.

Keep in mind the following tips in evaluating policies:

· Make sure your policy will pay benefits for all levels of care in a nursing home,
including custodial care.

· A good policy will pay benefits for assisted living and home care, including in-home
personal care. Personal care refers generally to help with activities of daily living, such
as dressing, bathing, toileting, eating, and walking.

· Consider whether the amount of daily benefits will be adequate now and in the future.
Many policies give you a range of daily benefit amounts to choose from. Make sure
the policy has an “inflation adjustor” under which benefits increase by a certain
percentage each year to keep pace with coverage. The “right” amount depends in part
on the amount of assets you have to protect inflation.

· Do not assume that more years of coverage is always better. Some policies offer
benefit options of six, seven, or more years. It is possible to buy too much coverage.

· Avoid policies that exclude coverage of pre-existing conditions for a lengthy period.
Six months is considered a reasonable exclusion period for pre-existing conditions.

· Policies should allow payment of nursing home or home health benefits without
requiring a prior period of hospitalization as a condition of coverage.

· Most policies impose waiting periods that restrict the starting time of benefits after you
begin receiving nursing home care or home care–twenty to ninety days is a common
waiting period. A longer waiting period will lower the premium cost. First day
coverage will increase your premium.

· Be sure your policy covers victims of Alzheimer’s disease and other forms of
dementia. About half the residents of nursing homes suffer some form of dementia.

· Be sure that the premium remains constant over the life of the policy and that the
policy is guaranteed renewable for life.

· Buy a policy only from a company that is licensed in your state and has agents
physically present in your state. Out-of-state mail order policies often leave you
powerless to remedy problems if anything goes wrong.


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Social Security and Supplemental Security Income

Q. What types of social security benefits are available?

A. Qualified workers are eligible for old age and disability benefits. Benefits are
also available for the spouse and dependents of a retired or disabled worker. When a
worker dies, benefits can be collected by the surviving family who qualify.
Social security is the United States’ most extensive program to provide income for
older and disabled Americans. It is paid for by a tax on workers and their employers. The
program is complicated, and the law and regulations change from time to time.
Contact your local office of the Social Security Administration (SSA) for literature
about social security benefits or to ask specific questions about your own case. They are
listed in the United States Government section of your telephone directory. Or, call 1-800-
772-1213, or see the SSA Internet site at www.ssa.gov.


Q. Who is covered?

A. Over 95 percent of American workers, including household help, farm workers,
self-employed persons, employees of state and local government and (since 1984) federal
workers. Railroad workers are covered by a separate federal program, railroad retirement,
that is integrated with social security.


 Q. Will my social security benefits be enough for me to live on?

A. You won’t get as much as when you were working, so it is important to start
financial planning for retirement early. Social security was not set up to be a complete
source of retirement income, but rather to provide only a floor of protection. You will
probably need other sources of income, such as a pension from your employer or union, a
part-time job, or income from your life savings. Social security benefits do rise with the
cost of living.


Q. Who qualifies for social security?

A. Individuals must meet two fundamental qualifications to collect social security
benefits. First, a worker must be “insured” under social security. The simplest rule-ofthumb
is that ten years of work in covered employment will fully insure a worker for life.
However, there are alternative measures of insured status that enable many workers with
less than ten years of covered employment to be eligible, too. Second, you must meet the
status requirement for the particular benefit (for example, age, disability, dependency on a
worker, or survivorship).


Q. Just how much money will I get when I retire?

A. That depends on how much money you have earned over your lifetime, your
age at the time of retirement, and other factors.
The Social Security Administration will prepare an estimate, called a Personal
Earnings and Benefit Statement, even if you are some years from retirement. Simply get a
Personal Earnings and Benefit Statement Form from your local Social Security
Administration office or by calling the Social Security Administration, toll free, at 1-800-
772-1213. It’s a good idea to request this every few years, not only to see how your
benefits might change but to make sure your employers have been depositing to the Social
Security Administration your share and theirs of the social security tax.


Q. When can I retire?

A. The “normal” retirement age is sixty-five. But this age will be raised gradually
starting in the year 2000. By 2002, you will have to be sixty-seven to retire and collect full
You can collect partial benefits as early as age sixty-two if you are fully insured.
The benefits are reduced, because you potentially have more years of retirement to cover.
Early retirement benefits will not be raised when you turn sixty-five, except for normal
cost-of-living adjustments.
If you delay retirement until you are older than sixty-five, your benefits will be
increased, because you will not have as many years of retirement in which to collect.
Of course, you can retire whenever you want or can afford to, but you will not
receive social security retirement benefits until you are at least sixty-two.


Q. I want to retire, but then take a part-time job. Will this affect my benefits?

A. Yes. If you are under full retirement age (which is gradually rising from 65 to
67, see question above) and receiving benefits you may earn only a certain amount of
wages before your social security benefits are cut. There are two cut-off points–one for
workers age sixty-two through sixty-four, another for age sixty-five up to full retirement
age. For retirees age sixty-two through sixty-four, one dollar of benefits is withheld for every two dollars you earn above the cut-off point. For retirees sixty-five up to retirement
age, one dollar of benefits is withheld for every three dollars you earn above the cut-off
point. The cutoff point changes annually. Check with the Social Security Administration
office to see what it is when you take your new job. If you have reached the full retirement
age, you may earn an unlimited amount and still receive your full retirement benefit. Note
that the cut-off point applies only to wages. Your benefits will not be affected by any
money you earn from savings, investments, insurance, and the like.


Q. When the worker dies, who is eligible for benefits?


A. These family members qualify for disability benefits: a spouse who is at least
sixty years old; a disabled spouse who is at least fifty; children who are under eighteen (or
under nineteen if attending elementary or high school full-time) or are disabled; and
parents who are sixty-two or older and who received at least half of their support from the
worker at the time of his or her death.


Q. When are spouses of retirees entitled to collect benefits?

A. Depending on the situation, a husband or wife may collect benefits based on the
other’s work record. A husband or wife need not prove that he or she was dependent on the
other. In general, spouses qualify if they are at least sixty-two years old. They also qualify
if they are under sixty-two but are caring for a worker’s child who is either under sixteen
years old or who has been disabled since before age twenty-two. The amount the spouse
receives is usually one-half of what would have been paid to the worker. However, if the
spouse is entitled to benefits based on his or her own work record, the spouse will receive
the higher of the two benefits.


Q. Are divorced spouses eligible?

A. Yes. As long as the divorced spouse is sixty-two or older, was married to the
worker for at least ten years, and has not remarried. Divorced spouses who have been
divorced for at least two years may draw benefits at age sixty-two, as long as the former
spouse is eligible for retirement benefits; the former spouse does not actually have to be
drawing benefits. A divorced spouse may also be eligible for survivor benefits if the
worker dies while being fully insured or while receiving benefits.


Q. Which children can receive benefits?

A. A deceased or disabled worker’s unmarried children under eighteen years old
are eligible. Children under nineteen who attend elementary or secondary school full-time
can also collect. Also, a disabled child of any age can receive payments equal to
approximately one-half of the worker’s benefits, as long as the child became disabled
before age twenty-two.


Q. When should I file my claim to collect social security benefits?

A. If you are retiring, you should file two or three months before your retirement
date. Then, normally, your first social security check will arrive soon after you quit
working. It is important not to delay filing for either retirement or survivor benefits
because you will get paid retroactive benefits only for the six months prior to the month
you file your application, provided that you were eligible during those months. Retirement and survivor benefit applications take two to three months to process. Disability benefit
applications, however, take longer.


Q. What documents should I bring with me to apply for benefits?


A. A worker applying for retirement or disability benefits should bring his or her
social security card or proof of the number; a birth certificate or other proof of age; W-2
forms from the past two years or, if you are self-employed, copies of your last two federal
income tax returns; and, if applicable, proof of military service, since you may be able to
receive extra credit for active military duty.
Spouses applying for benefits from the worker’s account should also bring a
marriage certificate. Divorced spouses should have a divorce decree.
Children or their guardians seeking benefits need a birth certificate and evidence of
financial dependence.
Dependent parents who want to collect benefits must bring some evidence of
financial dependence.
Finally, spouses, children or parents seeking death benefits need the worker’s death


Q. If I am filing for disability benefits, what other documents should I bring
with me?

A. In addition to the documents listed above, you should try to bring a list, with
addresses and telephone numbers, of the doctors, hospitals, or institutions that have treated
you for your disability; a summary of all the jobs you have held for the past fifteen years
and the type of work you performed; and claim numbers of any checks you receive for
your disability.


Q. What if I check on my benefits or file my claim and discover that the Social
Security Administration has made an error in the number of quarters I worked or
the amount of wages I was paid? Can I fix mistakes?

A. Yes. You have approximately three years from the year the wages were earned
to fix mistakes. However, mistakes caused by an employer’s failure to report your earnings
have no time limit.
You can fix these mistakes any time, but you will need proof. A pay stub, written
statement from the employer, or form OAR-7008 (Request for Correction of Earnings
Record) are all acceptable types of proof.
What to Remember When Dealing with the Social Security Office
As with any large government office, the best way to work with the Social Security
Administration is to keep a full, organized account of your communications or
conversations. Make a note of when you had each conversation, who you spoke with and
what was said. When you file a claim, you are automatically assigned a SSA worker. Keep
this person’s name and telephone number handy in case you need to contact the SSA for
any reason.
Before you submit any forms or documents to the SSA, make sure you keep copies
for yourself. That way if anything is lost, you have a backup copy.Since the SSA keeps records by social security numbers, all forms or documents
you submit should have your social security number on the top of each page. Then if any
page becomes separated, it will still be placed in your file.


Q. What if I am under sixty-five and become disabled? Am I entitled to
benefits from social security?


A. Yes. Social security protects all workers under sixty-five against loss of
earnings due to disability. However, you must meet certain strict requirements for the
number of years employed, the age at which you became disabled, and the severity of your


Q. How does the Social Security Administration define a disability?

A. A disability is defined as the inability to engage in substantial gainful activity
by reason of any medically determinable physical or mental impairment that can be
expected to result in death or that has lasted or can be expected to last for a continuous
period of not less than twelve months. The disability must be medically certified. Some
illnesses or handicaps are so serious that the Social Security Administration automatically
treats them as disabilities, such as severe epilepsy or blindness; SSA has a list of such
impairments. If you believe you are disabled but your impairment is not on the list, you
will have to prove that it is just as severe and disabling as the ones on the list.


Q. If I become disabled, how long may I get benefits?

A. Once you qualify for disability benefits, they will continue for as long as you
remain medically disabled and unable to work. Your health will be reviewed periodically
to determine your ability to return to work.


Q. What about my family?

A. If you are disabled, your unmarried children under age eighteen (or nineteen, if
still in high school full time) may be eligible for benefits from social security. In addition,
unmarried children over eighteen who are themselves disabled will also be eligible. If
your spouse is caring for a child who is either under sixteen or disabled, he or she may be
eligible, as is a spouse who is sixty-two or older. In some cases the disabled widow or
widower or the divorced spouse of a deceased worker may become eligible for disability
benefits. Check with your local Social Security Administration for specific eligibility
Claims Decisions and Appeals


Q. How will I know the outcome of my application for benefits?

A. You should receive written notification informing you whether your claim has
been approved or denied in sixty to ninety days.If your claim is approved, you will be told how much your benefits will be and
when to expect your first check. If, however, your claim is denied, your letter should list
the reasons.


Q. Can my social security benefits be reduced or terminated?


A. Yes. Benefits may be terminated if: you leave the United States for more than
six months; you are deported; you are convicted of certain crimes, such as treason and
espionage; or, you are an alien.
Convicted felons cannot receive retirement benefits while in prison. Disability
benefits can be terminated when the recipient recovers or refuses to accept rehabilitation
In any case, however, you should receive a letter notifying you of the reduction or
termination before SSA takes any action.


Q. If my claim is denied, or my benefits reduced or terminated, can I appeal?

A Yes. You have sixty days from the date on the written notification of denial to
appeal. Make sure the SSA gives you a written denial; you cannot appeal an oral


Q. Should I bother to appeal?

A. Since a large number of claim decisions are reversed on appeal, it is probably
worth your time and effort. Also, if you do not appeal, the claim decision becomes final
and you give up the chance to appeal later.


Q. Do I need a lawyer to appeal?

A. A lawyer is not required for an appeal. However, you should consider the
complexity of your case and the amount of money you are seeking before deciding
whether to hire one or not. If your appeal goes all the way to a federal court, you probably
should have a lawyer to represent your interests. Attorneys who take Social Security cases
usually receive up to 25 percent of back benefits if the claim is successful. The SSA must
approve the fees. An experienced advocate who is not an attorney can also represent you.


Q. If I cannot afford a lawyer but want legal representation, what should I

A. You may be able to obtain legal representation through an organization that
provides legal services to low-income or older persons. Check with your local agency on
aging or bar association to see if such an organization exists in your area.


Q. What if I just need some assistance in my appeal but do not want to hire a

A. Check with your state or local area agency on aging. They may be able to
direct you to a community group that can provide help.


Q. How do I appeal?

A. The first step in the appeal process is to file a written request for
reconsideration of your claim within sixty days of the notification of denial, reduction, or
termination of benefits. This reconsideration is an examination of your paperwork by an SSA employee other than the one who first decided your claim. You may add more
documents to your file if you think they will help.
You should receive written notice of the reconsideration decision within thirty
days. However, reconsideration of disability benefits will take longer, usually two to three


Q. What is the next step?


A. If you are dissatisfied with the outcome of the reconsideration, your next step is
to file a written request for an administrative hearing. You have sixty days after the
reconsideration decision to make such a request. Normally, however, the hearing will not
take place for several months.


Q. Who acts as the judge at these administrative hearings?

A. An administrative law judge of the SSA’s Office of Hearings and Appeals will
preside over your case. The administrative law judge is a lawyer who works for SSA but
has not been involved in your claim thus far.


Q. What should I do to prepare for an administrative hearing?

A. Before the hearing you can, and should, examine your file to make sure it
contains every document you have filed. At the hearing, you can represent yourself or be
represented by a lawyer or non-lawyer advocate. You should provide evidence, such as
documents or witnesses, about your medical condition and why you cannot work, and
your own explanation of why the decision at the reconsideration level should be reversed.
The hearing will be a new examination of your case, conducted by an impartial


Q. What if witnesses refuse to appear on my behalf?

A. You can ask that witnesses be subpoenaed (ordered to appear before the judge).
You must request subpoenas at least five days before the hearing.


Q. Will the SSA be represented by a lawyer at the administrative hearing?

A. No, the office does not have a lawyer presenting its side of the case.


Q. How long does it take to receive a decision from an administrative

A. You should find out within two to three months after the hearing. You will
receive a written decision. If your claim is approved, you may be able to collect benefits
dating back to when you filed your original claim. For disability, back benefits may date
as far back as 12 months prior to the application date.


Q. Can I appeal an administrative hearing decision?

A. Yes. You have sixty days to file a written appeal with the SSA Appeals Council
in Washington, D.C. The Council will review the file and issue its decision. You and your
representative do not appear before the Appeals Council, but you can add additional
information to your file. If you wish to appeal the decision further, you must sue the SSA
in federal district court.


Q. Should I file a federal lawsuit?


A. That depends. You must take into account the expense of filing a lawsuit, the
amount of benefits you are claiming, and your chances of winning. And, although you are
not required to have a lawyer, it is highly recommended that you do.


Q. If I do want a lawyer, how do I find one who specializes in social security

A. You can contact your local legal services or Older Americans Act program (see
page xxxx in a later section of this chapter), your local bar association or the district Social
Security Administration office, or call the National Organization of Social Security
Claimants’ Representatives toll-free at 1-800-431-2804.


Q. What if I receive a notice from SSA that I have been overpaid?

A. If you disagree that you were overpaid, make a written request for a
reconsideration of your claim. If you cannot repay the amount, first ask for a waiver
within thirty days of notification of overpayment. You will be asked to fill out an
“Overpayment Recovery Questionnaire.” Try to show that the overpayment was not your
fault, and that you are unable to repay the amount without hardship.

Getting Your Checks

Social Security checks are normally mailed on the first day of each month.
However, the SSA strongly encourages you to have your check deposited directly in your
bank. This is safe and convenient. The money is available a day or two earlier than if you
get a check in the mail. It’s handy if you have trouble getting to the bank. And it makes it
impossible for a thief to take the check out of your mailbox.

Supplemental Security Income


Q. I have virtually no money. I don’t qualify for regular social security or
disability benefits. Can social security help me anyway

A. The Supplemental Security Income (SSI) program pays benefits to persons who
are aged (sixty-five or over), disabled, or blind and who have very limited income and
personal property. The SSI program is run by the Social Security Administration.
However, it is supported with income tax dollars rather than social security taxes on
workers’ wages.
SSI benefits are not large and the eligibility requirements are strict. You must have
very little income and own very little property. If you think you qualify, check with your
local Social Security Administration office. One of the benefits of getting even a dollar in
SSI is that in most states you become eligible for free medical care through Medicaid.
To apply you will need your social security number, proof of age, and a wide
variety of financial information. You’ll want to have a record of your mortgage and
property taxes, records of your utility costs and food costs, payroll slips, income tax
returns, bank books and insurance policies.
If you are applying because of disability or blindness, you will also need copies of
your medical records. Be sure to have the names and addresses of physicians who have
treated you and hospitals where you have been a patient. If you have worked with a social
service agency, give the name of a worker who knows you.


Q. I think my elderly father is eligible for SSI, but he is much too ill and
confused to visit an office or complete an application. How can he receive benefits?


A. If you know someone who should be receiving SSI benefits but can’t apply for
himself, you can do it for him. However, you will still need to bring all the information
described above.


Q. If I am declared ineligible for SSI, are there any benefits I might be eligible

A. Yes. Even if you are not eligible for SSI, you may be able to have your
Medicare premiums, deductible, and co-payments paid for you, depending on the amount
of your income and assets.


Q If I am denied benefits, can I appeal?

A. Yes, the appeals process is essentially identical to appealing a social security
claim, as described above.



Q. Is my employer or union required to set up a pension plan?

A. No. The law does not obligate an employer to have a pension plan. While many
small companies do not have pension plans, most large employers and unions do. Most
pensions are governed by rules of the Employee Retirement Income Security Act of 1974
(ERISA), which sets minimum standards for pension plans that already exist and new
pension plans that are created. Small companies can set up simple pension plans for their
employees called “SEPs.” These plans require very little paperwork.


Q. Does ERISA apply to all pension plans?

A. No. It does not cover pension plans for federal, state, and local public
employees, nor for church employees. Most ERISA provisions apply to plan years
beginning in 1976. As a result, it does not protect workers who stopped working or retired
before 1976. However, the terms of an employee’s pension plan, as well as state law, do
offer some protection.


Q. What are the different types of pension plans?

A. There are two major kinds, and they are quite different. One kind, called a
defined-benefit plan, guarantees you a certain amount of benefits per month upon
retirement. For example, a defined-benefit plan might pay you ten dollars a month per
year of service. Under that plan, a person who retires after ten years of service would
receive $100 per month in pension benefits.
Under the other kind of plan, called a defined-contribution plan, the employer
and/or the employee contribute a certain amount per month during the years of
employment. The amount of the benefit depends on the total amount accumulated in the
pension fund at the time of retirement. And that amount depends not only on how much
you and your employer contributed, but on how much that money earned when it was
Typically, pension trustees invest the fund’s money in stocks, real estate, and other
generally safe investments. If those investments do well over the years, the fund grows
and your monthly benefits may be relatively high. But if the investments do poorly, the
fund may not grow much or may even shrink. In that case, your monthly benefits may be
far smaller. (See a later section in this chapter on the requirement that plans
make prudent investments.)
Even in the defined-contribution plan, your benefit will be determined by some
formula that takes into account your age, how long you worked for the employer, and how
much you were paid.
The choice of defined-benefit or defined-contribution plan is not yours to make.
The employer decides.


Q. I am fifty-five years old and I want to retire now. Can I start collecting my
pension at once?

A. Maybe. All pensions set a “normal” retirement age, often sixty-five. They
usually set a minimum retirement age as well, perhaps fifty-five, sixty or sixty-two. Check
with your pension plan administrator. You may be able to collect benefits now or you may
have to wait until you are older. Remember that benefits are usually calculated partly on
the basis of your age. The younger you are when you retire, the smaller the benefits, but
presumably you will get them for a longer period.



Q. Do I get to choose how my pension will be paid to me?


A. Yes, to some extent.The most common type of payment is called the joint and survivor annuity. It pays
the full benefit to a married couple until one dies, then pays a fraction of the full benefit to
the survivor as long as he or she lives. The fraction typically is half or two-thirds. The
Retirement Equity Act of 1984 requires this kind of disbursement unless the worker’s
spouse signs a waiver. The waiver permits payment of a higher benefit, but only as long as
the retired worker lives. When he or she dies, the benefits end and the surviving spouse
gets no more.
The joint and survivor annuity may allow you some options. You might be able to
have benefits guaranteed for a certain number of years. For example, if the guarantee is for
fifteen years, benefits would be paid as long as one or both spouses are alive. But if both
die before fifteen years have passed since retirement, benefits would continue to be paid to
their beneficiary until the 15th year. Other guarantees might be for longer or shorter
periods; the longer the guarantee, the lower the benefit.
There are some other kinds of pension disbursements as well. One pays a fixed
amount for a fixed number of years, which means you could outlive your benefits and get
nothing in your oldest years. Another pays all your benefits in a single lump sum when
you retire, which could cost you a lot in income taxes.


Q. Will my pension benefits rise over the years?

A. Perhaps. Your union may negotiate cost-of-living increases with your employer.
Or a non-union employer may increase benefits voluntarily. But generally your benefits
are frozen at the level they were when you retired. You will also probably be collecting
social security benefits, however, and those benefits do rise with the cost of living.


Q. What if I get sick after retiring? Will I still have health insurance?


A. Companies are not required to continue to provide health insurance after
retirement. But when they have promised to do so, some courts are requiring them to keep
that promise. Under a 1985 federal law known as COBRA (“Consolidated Omnibus
Budget Reconciliation Act”), you must be notified when you retire that you may continue
coverage, but your employer may require you to pay the premiums. Coverage generally
lasts for eighteen months after you stop working, but may be extended up to twenty-nine
months if you are found eligible for social security disability or Supplemental Security
Income (SSI) disability benefits. You will also be eligible for Medicare at age sixty-five or
possibly earlier if you qualify for disability under social security or SSI.


Q. Can my company’s pension plan cover some employees but not others?

A. Yes. Some companies establish pension plans only for certain kinds of workers.
A plan might cover assembly line workers, for example, and not file clerks. There might
or might not be a separate plan for the clerks. But a plan cannot discriminate against
employees who are not officers, shareholders, or highly compensated. For example, a
supermarket’s plan could not include only the company’s president and top executives
while excluding the managers, baggers, and cashiers. The Internal Revenue Service (IRS)
determines whether a plan is complying with these complicated “nondiscrimination” rules.




Q. What rules govern when an employee can participate in a pension plan?

A. ERISA sets up two criteria for when employers must permit workers to begin
earning credit toward pensions. The employer must permit the earning of credit toward a
pension if the worker is at least twenty-one years old and has worked for the employer for
at least one year. ERISA calculates a year of employment as 1,000 or more hours of work
in twelve months. Once employees satisfy these two requirements, they must be allowed
to begin accruing credits that will affect the amount of their pensions.
Of course, as with all ERISA requirements, these are the minimums allowed by
law. Individual pension plans can have more generous credit-earning policies. For
example, they can permit beginning employees to start earning pension credits from their
first day on the job, and they can permit workers younger than twenty-one to earn pension
credits also.



Q. Once I become a participant, how do I know what my rights are under the

A. ERISA requires that participating employees be given detailed reports and
disclosures. Within either ninety days of becoming a participant or 120 days of the plan’s
beginning, the employee must receive a summary plan description. This gives details of
the employee’s rights and obligations, gives information on the trustees and the plan’s
administration, sets conditions for participation and forfeiture, and outlines the procedure
for making a claim and the remedies available to employees who appeal claims that are
denied.A summary of the plan’s annual financial report must also be distributed. If you do
not receive a summary, you should ask the plan’s administrators for it. Or you can obtain
one by writing the Department of Labor, PWBA, of Public Disclosure Room, Room N-
5638,2000 Constitution Ave., Washington, D.C. 20210


Q. How are years of accrual determined?

A. After you meet the participation requirements, each year you work for an
employer counts as a year of accrual time. A year is defined as 1,000 or more hours of
work in twelve months. You can work the 1,000 hours at any time during the twelve
month period; it need not be evenly distributed during the year. Days taken for sick leave
or for paid vacation count toward the 1,000-hour minimum.
It is important to note that, depending on your company’s policy, the first year you
work for an employer does not have to count toward your years of accrual. Thus, your
years of accrual will not always equal the number of years you worked for an employer.


Q. If I stop working for an employer and later return, do I get credit for my
previous years of service?

A. That depends on the length of this break in service. An employer can discount
the years of your previous service if two conditions are met: First, your break lasts five or
more continuous years: and second, your break is longer than the years you previously
worked for the employer. If, for example, after six years of work, you took a seven-year
break in service, you may be out of luck. However, an employer can have more lenient
rules than the ones set out by ERISA. These rules on breaks in service are complex, so you
should consult an expert if you think they apply to you.



Q. Is my right to collect my pension guaranteed?


A. You always have the right to money you contributed to the pension fund. If you
leave a company after only a few years, that money should be paid back to you in a lump
sum. If you work for the employer long enough, you will have “a vested interest” in your
pension, meaning your benefits cannot be denied even if you quit. If the total value of
your pension is $3500 or less, your plan can require that you take it as a lump sum


Q. When are my pension rights vested?

A. Amendments to ERISA in 1989 changed the vesting rules. Now, your pension
rights must either vest completely after five years–meaning that you have a right to 100
percent of the benefits you have earned–or partially after three years of service. Complete
vesting after five years is called cliff vesting. If you work less than five years under cliff
vesting, you are not entitled to any pension benefits. Partial vesting is called graded
vesting. Under this system, your rights become 20 percent vested after three years of
service, 40 percent vested after four years, and so on up to 100 percent vested after seven
With graded vesting, you have the right to 20 percent of your earned benefits after
three years and 100 percent after seven years. Under the other system, you have no rights
to benefits until five years, and then you have rights to collect full benefits.
You do not get to choose which vesting method applies. The employer decides.


Q. I want to change jobs. May I take my pension benefits with me to my new

A. Generally, if you change jobs before your pension has vested, you usually lose
all the benefits you built up in your old job, although your employer must refund money
you put into the fund. If you change jobs after your benefits have vested, you are entitled
to those benefits. You may put (or “roll over”) those funds into an IRA or some other type
of retirement program (to avoid taxation) or transfer the funds to the new employer’s
pension plan if possible. It is often not possible, though some unions have reciprocal
agreements that allow you to change employers and transfer your benefits. There are also
some state or nationwide pension systems that allow job changes with continued
participation in a unified pension program (such as Teachers Insurance and Annuity
Association, known as TIAA-CREF).


Q. What if I join an employer at age sixty-two and retire at age sixty-five?

A. ERISA assures older employees that their rights will completely vest at normal
retirement age, regardless of the number of years they have worked for an employer.
Also note that since 1988, employers have been required to make contributions to
the plan for workers aged sixty-five and over.


Q. If I retire and begin receiving my pension, can I still work?

A. Yes. You can retire, collect your pension, and work full- or part-time. However,
if you work for the same employer that is paying your pension, you are limited to fewer
than forty hours a month.



Protection Against Being Fired Right Before Your Pension Vests


ERISA prohibits an employer from firing you or otherwise treating you unfairly in
order to stop the vesting of your pension rights. However, the burden is on you to show
that you were not fired for legitimate reasons but because your employer did not want to
guarantee you a pension.


Q. Can my employer change an existing pension plan?

A. Yes. ERISA permits an employer to change the way in which future benefits
are accumulated. However, the employer may not make changes that result in a reduction
of benefits that you have already accrued. In addition, ERISA specifically prohibits plan
amendments that alter vesting schedules to the detriment of employees.


Q. What protection does ERISA offer when my company is sold or taken

A. This area of law is not entirely clear. In a growing number of cases, “successor
liability” is found and the company must continue the plan. If such liability is not found,
your new employer is under no obligation to continue an existing pension plan. The new
employer can go without a plan, set up a new plan, or continue the existing plan. If the
new employer decides to continue the plan, however, ERISA requires that previous years
of service be counted.
And you still have a right to all the benefits earned under the old employer. If the
new employer abandons the plan, though, you will not continue to earn benefits.


Q. Do I have a right to know how my pension plan is investing money?

A. Yes. You should receive a summary of the plan’s annual financial report. Each
year, a report summarizing the plan’s financial operations must be made to both the
Internal Revenue Service and the Secretary of Labor.
Also, ERISA requires that the people in charge of investing your plan’s money use
care, skill, and prudence and invest only in the interest of participants and beneficiaries. A
requirement for investment diversity minimizes the risk of losses. ERISA forbids several
investment practices. For example, the pension directors cannot invest more than 10
percent of the fund in the employer’s stock or real property. They cannot personally buy
the fund’s property or lend the fund’s money to their friends.


Q. What should I do if those in charge of investing my plan’s money violate

A. First, you should contact the nearest office of the U.S. Department of Labor.
Then, if needed, ERISA permits you to file a lawsuit in federal court to enforce its rules.


Q. I am worried about my pension plan going broke. Do I have any protection
against such a disaster?


A. You might have some protection. ERISA established the Pension Benefit
Guaranty Corporation (PBGC). If your company has a defined-benefit plan, it must pay
insurance premiums to the PBGC. If the plan goes broke, the PBGC will pay vested
benefits up to a certain limit, but it may not pay all you are owed. If the pension plan is
still functioning but in danger of going broke, the PBGC will step in and take control. It
will use the plan’s remaining money and the insurance premiums paid by other plans to
keep your benefits flowing.
Certain pension benefits are not covered, particularly for highly paid people and
for those who retire before being eligible for social security.
If your plan is of the defined-contribution type, the PBGC will not get involved. If
that plan goes broke, you may be out of luck. You should keep an eye on how the
administrators are handling the fund’s money, because ERISA requires that plan trustees
act in the best interests of participants. Trustees can be sued by the Secretary of Labor or
plan participants if they act improperly.


Q. When must I begin to collect my pension?

A. Each plan sets a normal retirement age. However, if you choose to retire later,
you must begin collecting your pension by April 1 of the year after you turn seventy and
one-half years old.


Q. Does the amount of social security payments I collect affect my pension

A. It might. Some pension plans allow a reduction of benefits depending on how
much you receive from Social Security. You should check with your plan’s administrators.
Under federal law, plans subtracting social security payments from pension benefits must
leave you with at least half your pension. However, the law applies only to years worked
after 1988.
Claiming Your Pension
Each individual plan establishes the procedure for submitting pension claims. To
find out about your plan’s filing procedure, check the plan summary provided by your
employer. To claim your pension, follow the procedure. You should then receive a
decision about your claim.


Q. If I do not agree with the decision on my claim, how do I appeal?

A. The claims and appeal processes are regulated in ERISA. The plan summary must also
contain information on the plan’s appeal process. All plans must give written notice of
the claim decision within ninety days of receipt of the claim. If the plan notifies you
within ninety days that it needs an extension, one ninety-day extension is allowed. If
you do not receive a written decision by the deadline, consider your claim denied.
If your claim is denied, the decision must give specific reasons for the denial. You
then have sixty days to file a written appeal. The plan must make available important
documents affecting your appeal, and you must be allowed to submit written support
for your claim. The plan then has 120 days to issue a written decision on the appeal.If you are still dissatisfied after going through this process, you have the right to
sue in federal court to recover unfairly denied benefits. However, you may not get the
opportunity to present additional evidence in court, so be sure to submit all relevant
information and documentation in your appeal to the trustees. If you need to file a
court case, the Pension Rights Center has referral lists of attorneys with expertise in
this field. (See the resource list at the end of this chapter.)


 Q. What if I die before retiring? What are my spouse’s rights to my pension?

A. If you are vested and if you have been married for at least a year, your spouse is
entitled to pension benefits. Typically, he or she will receive an immediate annuity for
the rest of his or her life. However, if you and your spouse have executed a written
waiver of survivor benefits, your spouse will not be entitled to survivor benefits.


Q. What are a divorced person’s rights to an ex-spouse’s pension benefits?

A. In order to be eligible, the divorced person must have been married to the worker for at
least one year. The pension rights of divorced spouses are governed by state law. In
most states, these benefits are part of the marital property divided during the divorce.
If a divorced spouse is granted a share of pension benefits either through a property
settlement or a court order, he or she can collect the appropriate sum when either
· the worker has stopped working and is eligible to start collecting the pension (even if
he or she hasn’t yet applied for it);
· or the worker has reached the earliest age for collecting benefits under the plan and is
at least age fifty.


Age Discrimination on the Job


Q. Can I be forced to retire from my job when I reach a certain age?

A. Not if you are at least forty years old and work for either: a private employer
with twenty or more employees, or the federal government or any local government.
If you meet these criteria, you are protected by the Age Discrimination in
Employment Act cannot be (ADEA) and cannot be forced to retire. The U. S. Supreme
Court has held that the ADEA cannot be applied to state governments. However most
states have statutes that provide similar protections.


Q. My employer says that I do not have to stop working at age sixty-five.
However, I will have to accept a job with less responsibility and less pay. Is this

A. No, the ADEA also protects you in your present job situation. Your employer
may not force you to take a less responsible job or accept a lower salary.


Q. Are there exceptions to the rule that employees may not be forced to

A. Yes, the ADEA does not protect two categories of employees. One is
government officials who are elected or appointed to a policymaking level. This exception
includes the non-civil- service staff of these officials. The other is persons in bona fide
executive or high policymaking positions.


Q. Must I retire if I become ill or disabled?

A. The law protects you only from being forced to retire because you have reached
a certain age. If an illness or disability prevents you from doing your job satisfactorily, the
ADEA does not prevent your employer from requiring you to retire, regardless of your
age. However, other federal and state laws–including the 1990 Americans with
Disabilities Act (ADA)–forbid discrimination against persons with disabilities or
handicaps, including those associated with certain illnesses. So, if the ADEA does not
cover you in these circumstances, you should consider whether you are being unfairly
treated because of disability.



Q. Are there any circumstances in which age discrimination by an employer is

A. Yes. If the employer can prove that age is a bona fide occupational qualification
(BFOQ), discrimination is allowed. One obvious example of age as a BFOQ is a part in a
movie requiring a child actor. The possibility of age as a BFOQ is most likely to arise in
jobs directly involving public safety or public transportation personnel. However, the
BFOQ exception is rare, difficult to prove, and the burden of proof is on the employer.
The employer must show: first, that the job qualifications are reasonably necessary to the
essence of the employer’s business; and second, that substantially all persons over the age
limit cannot perform the job safely and efficiently, or that it is impossible or highly
impractical to assess fitness on an individualized basis.


The Breadth of Age Discrimination in Employment

The ADEA does not offer a concrete definition of discrimination. Instead, the Act
prohibits employers from doing anything that harms an older worker’s status because of
his or her age. This may range all the way from offensive age-related jokes to using age as
a factor in hiring, firing, layoff, promotion, demotion, working conditions and hours,
training opportunities, compensation, or benefits. Historically, most ADEA lawsuits have
involved firings or layoffs of older workers.


Q. If I am part of a company division or class of employees being laid off, does
the ADEA protect me?

A. Yes, if the employer considered age a factor in the layoff. Employers may make
layoff decisions based on reasonable factors other than age. However, sometimes those
factors merely mask age discrimination. For example, if an employer lays-off only higher
paid employees, it is possible that the employer is unlawfully discriminating against older
employees. Higher pay is often synonymous with higher age.


  • Q. Can my fringe benefits, such as employee insurance benefits, be reduced
    because I am older?

A. Normally no, although the law gives employers some flexibility in applying this
rule. The general rule, with some exceptions, requires employers to provide all age groups
the same benefit, or alternatively, provide a benefit that costs the same for all age groups.
For example, if a given life insurance benefit actually costs the employer more for older
workers, then the employer may provide older workers a smaller insurance benefit, as long
as the cost of the benefit to the employer is the same as that offered to younger workers.
As to health insurance, employers must cover older workers and their spouses
under the same conditions as younger workers. Your benefits cannot be lowered just
because you become eligible for Medicare. In fact, the employer insurance must remain
the primary insurer. Medicare will cover you as a secondary insurer while you continue


Q. Can I be denied new training that younger workers are receiving?


A. No. Older workers must be given the same privileges of employment as
younger workers. These privileges include training.


Q. What are older workers’ rights to promotions?

A. Under the ADEA, older workers must be given the same chance to receive
promotions as all other workers. But age does not entitle a person to a promotion; an
employer may have a valid reason, apart from age, for promoting a younger person rather
than an older one.


Q. Can a change in job assignments be considered a form of discrimination?

A. Yes. Employers cannot use terms or conditions of employment to discriminate
against older workers. If a change in job assignments is used for this purpose, it is


Q. What if my age is only one of the reasons I was discriminated against?

A. As long as age is a determining factor for the discrimination, you are protected
by the ADEA. Age does not have to be the sole factor. Other unlawful forms of
discrimination, based on factors such as race or sex, are covered by other laws.


Q. If I work in a foreign country, does the ADEA protect me?

A. Yes, if you work for an American corporation or its subsidiaries and if the
ADEA does not directly conflict with the law of the country you work in.
Employment Agencies and Unions
The ADEA also applies to employment agencies and labor organizations. These
organizations may not discriminate on the basis of age in referrals, notices,
advertisements, or membership activities.

Overqualified or Discriminated Against?

Could a prospective employer say that you are overqualified for a job? Is this
legal? It depends. Sometimes it might be reasonable to deny you a job because you have
too much experience or education. For example, it is reasonable to assume that someone
with a Ph.D. in education is overqualified for a teacher’s aide position that requires only
two years of college education. In other cases, a court might decide that calling you
“overqualified” is just an employer’s pretext (excuse) to avoid hiring an older worker.
Therefore, be wary if a potential employer says, “I’m sure that with your long experience,
you wouldn’t be interested in this entry level position.”


Q. Can an advertisement state that only younger workers are wanted for a


A. Not unless age is a bona fide occupational qualification (BFOQ). Except for this rare exception, advertisements are not allowed to exclude or discourage older workers from applying. Although courts differ as to which phrases are permissible and which are not, a general rule is that ads can not imply that only certain age groups are wanted for the job.

What to Do if You Are Discriminated Against

Q. What can I do if I have been forced to retire, fired or otherwise
discriminated against because of my age?

A. You should file a “charge” of age discrimination in writing with the federal
Equal Employment Opportunity Commission (EEOC). If your state has an age
discrimination law and enforcement agency (not every state has one), you should consider
filing the charge with both the EEOC and your state agency. (The reason for hesitation is
that in some states, filing a charge may prevent you from obtaining certain types of legal
relief otherwise available to you. Before filing a charge, consult an attorney in your state.)
In many cases, filing a charge with either the EEOC or the state agency is
automatically treated as filing with both. To be on the safe side, you should usually take
the initiative and file with both.
If you file a charge, your name will be disclosed to the employer. If you wish to
remain anonymous, you can file a “complaint” instead. A complaint may start an EEOC
investigation; however, the government gives complaints lower priority than charges. In
addition, even if EEOC intervention leads an employer to correct its discriminatory
practices, your own past unfair treatment may not be remedied if you filed only a


Q. What is the EEOC?

A. This federal agency has the power to investigate, the duty to mediate, and the
option to file lawsuits in order to end practices of age discrimination. See
the chapter titled “Law and the Workplace” for more about the EEOC.
Finding the Closest EEOC Office
EEOC offices are listed in the telephone directory under United States
Government. You may also find the location of the office nearest you by calling a nationwide
toll-free number: 1-800-669-4000 or by connecting to the EEOC Internet site

Q. Do I have to contact the EEOC with my claim, or can I file my own

A. You must file a charge with the EEOC first. After sixty days, if the EEOC has
not filed a lawsuit, you may do so.




  • Q. What information should be included in my charge?


A. You should include as much relevant data as possible. Be sure to include
information about how to contact you, the name and address of the discriminating party,
the type of discrimination, relevant dates and witnesses, and specific facts. If pertinent,
you might also include employment contracts, brochures or similar documents that
demonstrate company policy. Before you file the charge, make sure you sign it.


Q. How long do I have to file a charge with the EEOC?

A. Normally, you have 180 days from the date of the violation or reasonable notice
of it (whichever occurs first). It is important to understand the time limits. If you are given
notice of layoff on January 1, to take effect March 1, the time limit begins to run from the
earlier date and not the date of layoff.
If your state has an age discrimination law and enforcement agency, the time limit
may be extended to 300 days, but every effort should be made to act within the 180 days
to be on the safe side. You may file your charge with your state’s agency.


Q. What happens once I file a charge with the EEOC?

A. The EEOC is required to contact the discriminating party and attempt
conciliation between the parties. They also have the power to investigate charges and file a
lawsuit to enforce your rights. However, the EEOC files lawsuits in only a small
proportion of cases. It is important to realize that the EEOC does not make findings on
your charge. Only a court can do that.


Q If the EEOC files a lawsuit on my behalf, can I still sue separately?

A. No. Once the EEOC begins a suit, private individuals are prohibited from
bringing their own action.
Special Procedures for Federal Employees
Federal employees or applicants for employment who believe they have been
discriminated against have these options:
· They may file a complaint with the EEOC or the federal agency they believe has
discriminated against them.
· They may proceed directly to federal court by filing a “notice of intent to sue” with the
EEOC within 180 days of the discriminatory action. The individual then has the right
to file a lawsuit thirty days after filing the notice.


Q. If the EEOC does not file a lawsuit, is there a limit to how long I have to
sue the discriminating party?

A. Yes. The statute of limitations is two years from the time you knew or should
have known of the violation. If the violation was willful, you have three years to file a
Sometimes it is hard to determine when a person should have known of the
violation. Other times, however, the exact date is easy to pinpoint. For example, suppose
you receive a letter on March 12 from your labor union stating that you are expelled, and
you do not open the letter. On April 12, when your union dues are not taken out of your
paycheck, you call and discover your expulsion. March 12 is the date when you should
have known of the violation, and so that is when the statute of limitations began to run.

 Early Retirement Incentive Programs


Early retirement incentive plans are frequently offered by employers to reduce
their work force. Generally, such plans are lawful if they are voluntary and otherwise
comply with federal law. They often provide substantial benefits to employees willing to
retire early. However, giving up employment also has great disadvantages, economically
and personally. You should be given sufficient information and plenty of time to consider
an early retirement offer. Review your options with a financial advisor if possible.

Waiving Your ADEA Rights

Some companies ask employees who accept an early retirement offer or other exit
incentive to sign a “waiver” of their rights under the ADEA, including the right to sue the
employer. Waivers are legal only if they are “knowing and voluntary” and the employer
follows specific procedures required by the Act. The required procedures involve
extensive notices, disclosures of information, and time periods to ensure the employee has
sufficient time to make a decision.


Q. Are state age discrimination laws identical to the ADEA?

A. Not necessarily, and not all states have such laws. It is important to check the
applicable laws in your state. Some state statutes offer different protection or more
protection against discrimination than the ADEA. If this is the case, you may be able to
bring an action under a state law that you would not be able to bring under the ADEA.


Q. How do I know if my state has an enforcement agency?

A. f you are unsure whether your state has an enforcement agency, contact your
state’s department of labor or an EEOC office in your area.


Q. What should I consider in deciding whether to file a private lawsuit under
the ADEA?

A. If you have suffered significant loss as a result of age discrimination and you
are willing to invest substantial time and money, filing a private lawsuit may be
worthwhile. The costs of such a lawsuit should be weighed realistically ahead of time.
ADEA cases can involve a great deal of legal analysis, discovery, and effort. Generally,
attorneys do not take ADEA cases on a contingency basis (that is, payment when and if
the case is decided favorably). However, if your lawsuit is successful, the ADEA permits
you to seek attorney’s fees from the discriminating party.


Q. What role will the EEOC play in my lawsuit?


A. If the EEOC files a suit either on its own or on your behalf, the Commission
enforces your rights and you can no longer file a private lawsuit. If the agency does not
file a suit, you may do so sixty days or more after the date you file a charge with the
EEOC. Unlike other areas of civil rights law, you do not have to wait for a right-to-sue
notice from the EEOC. Your own lawsuit will be a private one, and you must bear the
court costs and attorney fees. A big advantage of a suit filed by the EEOC on your behalf
is that you would not be required to pay its costs.


Q. What if my employer retaliates against me because I file a charge?

A. The ADEA forbids such retaliation.


Q. If there is already a lawsuit against my employer for age discrimination,
can I join it?

A. Yes. The ADEA allows class-action lawsuits. However, unlike many other
class-action cases, you are not automatically part of the subject class. You must opt in by
consenting in writing. By sending in the consent form, you can become part of the existing
lawsuit against your employer.
Your Right to a Jury Trial
In most lawsuits, the type of relief you seek can affect whether or not you will
receive a jury trial. The ADEA, however, grants a right to a trial by jury on any issue of
fact, even if they seek only equitable (non-monetary) relief. A party wanting a jury trial
must specifically ask for one. If not requested, a jury trial is automatically waived.


Q. What will happen if I win my case?

A. The court will order the employer to make up to you what you lost through
discrimination. This might include:
· the awarding of back-pay for salary you did not receive while unemployed;
· the awarding of future pay or “front pay” for a period of time has been recognized by
some courts;
· compensation for lost benefits, or reinstatement of lost benefits–such as seniority
rights, health or insurance benefits, sick leave, savings plan benefits, expected raises,
stock bonus plan benefits, and lost overtime pay;
· reinstatement in your former job, with your former salary and benefits;
· double damages in cases of willful violations of the ADEA.
If you win your case, the company that discriminated against you may have to pay for
your lawyer and other expenses, as well as for court costs.



The Rights of Older Americans

IN THE PAST, most of us viewed sixty-five as the age of retirement. Today, more
people are choosing to continue working full or part-time well into their seventies or even
eighties. Many even change their careers in later life. The contributions of older workers
testify to their vitality.


I. Age Discrimination on the Job
The Age Discrimination in Employment Act (ADEA) ensures that older workers
receive equal and fair treatment in the workplace. It protects most workers forty years of
age and older from arbitrary age discrimination while on the job. It also seeks to support
the employment of older persons based on their ability rather than age. See
the chapter titled “Law and the Workplace” for a detailed discussion of the


Age Discrimination on the Job




Social Security and Supplemental Security Income


Your Right to Health & Long-Term Care Benefits


Housing and Long-Term Care Options


Rights of Persons with Disabilities


Right to Control Your Own Affairs


Finding Legal Help


The Older Americans Act and Services


Where to Get More Information

online pharmacy Tegretol


Requirements of Getting Married


Q. Legally, what is marriage?

A. Most states define marriage as a civil contract between a man and woman to become
husband and wife.
The moment a man and woman marry, their relationship acquires a legal status. Married
couples have financial and personal duties during marriage and after separation or divorce. State
laws determine the extent of these duties. As the United States Supreme Court said about
marriage in 1888: “The relation once formed, the law steps in and holds the parties to various
obligations and liabilities.”
Of course, marriage is a private bond between two people, but it is also an important
social institution.
Today, society also recognizes marriage as:
· a way to express commitment, strengthen intimate bonds, and provide mutual emotional
· a (comparatively) stable structure within which to raise children;
· a financial partnership in which spouses may choose from a variety of roles. Both spouses
may work to support the family, the husband may support the wife, or the wife may support
the husband.
As our society becomes more complex, there is no longer a short answer to the question
“What is marriage?” Definitions and opinions of the proper functions of marriage continue to
change. The women’s rights movement and gay rights movement have changed some people’s
ideas of marriage and created new forms of relationships, including Adomestic partnerships@ and
Acivil unions@ for same-sex couples. Marriage will remain, but it will also continue to evolve.


Q. What are the legal requirements for getting married?

A. The requirements are simple, although they vary from state to state. In general, a man and
woman wishing to marry must obtain a license in the state in which they wish to be married,
usually from a county clerk or a clerk of court. The fee usually is low.
Some states require the man and woman to have blood tests for venereal disease–but
not for AIDS–before the license is issued. Some states do not require this test if the two have
already been living as husband and wife. If the test shows that a would-be spouse has a
venereal disease, certain states may not issue a license. Other states will allow the marriage if the
couple knows the disease is present.
In some states a couple must show proof of immunity or vaccination for certain diseases.
A few states demand a general physical examination.
If one or both of the parties have been married before, the earlier marriage must have
been ended by death, divorce, or annulment.
Parties who wish to marry must have the “capacity” to do so. That means the man and
woman must understand that they are being married and what it means to be married. If
because of drunkenness, mental illness, or some other problem, one of parties lacks “capacity,”
the marriage will not be valid.
Close blood relatives cannot marry, although in some states, first cousins can marry. Of
those states that allow first cousins to marry, a few states also require that one of the cousins no
longer be able to conceive children.
Most, but not all, states require a waiting period, generally one to five days, between the
time the license is issued and the time of the marriage ceremony.



Q. At what age may people marry?


A. In most states, a man or woman may marry at age eighteen without parental consent. Most
states also allow persons age sixteen and seventeen to marry with consent of their parents or a


Q. When does a couple truly become married?

A. Most states consider a couple to be married when the ceremony ends. In a few states, lack
of sexual relations may allow a spouse to have the marriage annulled (see below). In most
states, however, non-consummation does not affect the validity of the marriage. In all states, the
proper official must record the marriage license. Recording the marriage license acts as proof
that the marriage happened.


Q. Is a particular type of marriage ceremony required?

A. A marriage ceremony may be religious or civil. The person or persons conducting the
ceremony should indicate that the man and woman agree to be married. A religious ceremony
should be conducted under the customs of the religion, or, in the case of a Native American
group, of the tribe. Most states require one or two witnesses to sign the marriage certificate.


Q. Who may conduct a marriage ceremony?

A. Civil ceremonies usually are conducted by judges. In some states, county clerks or other
government officials may conduct civil ceremonies. Religious ceremonies normally are
conducted by religious officials, such as ministers, priests, or rabbis. Native American
ceremonies may be presided over by a tribal chief or other designated official. Contrary to some
popular legends, no state authorizes ship captains to perform marriages.


Q. Are common-law marriages allowed?

A. In most states, no. In times past, particularly the frontier days, it was common for states to
consider a woman and man to be married if they lived together for a certain length of time, had
sexual intercourse, and held themselves out as husband and wife, even though they never went
through a marriage ceremony. Today, only about one-fourth of the states recognize commonlaw
marriages. In order for there to be a legal common-law marriage, the couple must clearly
represent themselves to others as being husband and wife; merely living together is not enough
to create a marriage.
In states that recognize a common-law marriage, the partners have the same rights and
duties as if there had been a ceremonial marriage. Most other states will accept as valid a
common-law marriage that began in a state that recognizes common-law marriage.
A legal common-law marriage may end only with a formal divorce.



Q. Does the law recognize same -sex marriages?

A. No. As of the year 2000, no state has passed a law recognizing homosexual
Amarriages@ per se. If two members of the same sex were to go through a marriage ceremony,
the courts would not consider the marriage to be valid, and, in the event the parties split up, they
could not seek a legal divorce. The Vermont legislature has enacted a statute that allows samesex
couples to form Acivil unions@ to give same-sex couples the same benefits and protections as
opposite-sex couples who enter into marriages. The law is being challenged in the courts by
persons opposed to same-sex unions. The Vermont Supreme Court has already ruled, however
that same-sex couples should have the same rights as opposite-sex couples.
A decision by the Hawaii Supreme Court in the 1990s made it appear that Hawaii would
become the first state to authorize same-sex marriages. The state, however, amended its
constitution to preclude such marriages.


Q. What is a domestic partnership?

A. Some cities have passed laws providing for “domestic partnerships” which can be used by
homosexual couples and by heterosexual couples who are living together without being married.
To become domestic partners, the couple usually must register their relationship at a government
office and declare that they are in a “committed” relationship. Domestic partnerships provide
some–but not all–of the legal benefits of marriage. Some of the common benefits are the right
to coverage on a family health insurance policy, the right to family leave to take care of a sick
partner (to the same extent a person would be able to use family leave to care for a sick
spouse), bereavement leave, visiting rights to hospitals and jails, and rent control benefits (to the
same extent a spouse would retain reduced rent if his or her partner died).


Q. Does a woman’s last name change when she gets married?

A. Only if she wants to change it. In the past, some people assumed that a woman would
change her last name to her husband’s name when she married. Now society recognizes a
woman’s right to take her husband’s name, keep her original name, or use both names. The
general rule is that if a woman uses a certain name consistently and honestly, then that is her true



Q. What if someone thinks he or she has a genuine marriage but it turns out to be

A. Sometimes people who live as a married couple learn that their marriage is not legal. For
example, one supposed spouse may have kept a prior marriage secret, or both may have
thought incorrectly that an earlier marriage had ended in divorce or the death of a spouse. Or a
marriage may be invalid because it is between close relatives, underage persons, or people
incapable of entering into the marriage contract because of mental incompetence.
In some states the putative (supposed) spouse doctrine offers some protection if the
parties went through a ceremonial marriage. A putative spouse may be entitled to the benefits
and rights of a legal spouse for as long as she or he reasonably believes the marriage to be valid.
In states that do not accept the putative-spouse doctrine, people who mistakenly believe they
are married usually have the same status as unmarried couples who live together.
Sometimes people discover that their marriage is invalid only when filing for divorce. After
a long union that a couple believed was a valid marriage, a court may refuse to declare the
marriage invalid and require a divorce to end the marriage.


Q. What other legal rules affect invalid marriages?

A. Sometimes the law treats an invalid marriage as valid if one person tricked the other into
thinking they are married. If so, a court might not allow the deceiver to declare the marriage
invalid. In legal terms, the court “estops” the deceiver from denying that the marriage exists. In
addition, a court may find that the doctrine of laches (long delay) prevents even the innocent
party, who originally did not know about the invalid marriage, from having the marriage declared
invalid if he or she did nothing for a long time after learning that the marriage was not valid.

Q. What is a premarital agreement?

A. A premarital or antenuptial agreement is a contract entered into by a man and woman before
they marry. The agreement usually describes what each party’s rights will be if they divorce or
when one of them dies. Premarital agreements most commonly deal with issues of property and
support–who is entitled to what property and how much support, if any, will be paid in the
event of divorce.


Q. Why do people enter into premarital agreements?

A. Sometimes persons intending to marry use premarital agreements as a way of clarifying their
expectations and rights for the future. Another reason for making such agreements is to try to
avoid uncertainties about how a divorce court might divide property and decide spousal support
if the marriage fails. A man or woman who wants a future spouse to enter into a premarital
agreement often has something he or she wants to protect, usually money. One or both partners
may want to avoid the risk of a major loss of assets, income, or a family business in the event of
a divorce. For people marrying for a second or third time, there might be a desire to make sure
that a majority of assets or personal belongings are passed on to the children or grandchildren of
prior marriages rather than a current spouse.


Q. What does the less wealthy spouse give up by signing a premarital agreement?

A. The less wealthy spouse is agreeing to have his or her property rights determined by the
agreement rather than by the usual rules of law that a court would apply on divorce or the death
of the wealthier spouse. As will be discussed later, courts have certain rules for dividing
property when a couple divorce. In some states (such as California), courts automatically divide
equally the property acquired by the husband and wife during the marriage. In more states,
courts divide property as the court considers fair, and the result is less predictable; the split
could be fifty-fifty or something else. If one spouse dies, courts normally follow the instructions
of that person’s will, but the surviving spouse usually is entitled to one-third to one-half of the
estate regardless of what the deceased spouse’s will says. If the husband and wife have signed a
valid premarital agreement, that agreement will supersede the usual laws for dividing property
and income upon divorce or death. In many cases, the less wealthy spouse will receive less
under the premarital agreement than he or she would receive under the usual laws of divorce or



Q. Why would the less wealthy spouse sign a premarital agreement if he or she would
receive less under the agreement than under other laws?


A. The answer to that question depends on the individual. Some people prefer to control their
fiscal relationship rather than to leave it to state regulation. They may want to avoid uncertainty
about what a court might decide if the marriage ends in divorce. For some, the answer may be
“love conquers all”–the less wealthy person may just want to marry the other party and not care
much about the financial details. For others, the agreement may provide ample security, even if it
is not as generous as a judge might be. Still others may not like the agreement, but they are
willing to take their chances and hope the relationship and the financial arrangements work out
for the best.


Q. What is necessary to make a valid premarital agreement?

A. Laws vary from state to state. In general, the agreements must be in writing and signed by
the parties. In most states, the parties (particularly the wealthier one) must disclose their income
and assets to each other. This way the parties will know more about what they might be giving
up. In some states, it may be possible to waive a full disclosure of income and assets, but the
waiver should be done knowingly and it is best if each party has a general idea of the other’s net
The agreements also must not be the result of fraud or duress. An agreement is likely to
be invalid on the basis of fraud if one person (particularly the wealthier one) deliberately
misstates his or her financial condition. For example, if a man hides assets from his future wife so
that she will agree to a low level of support in case of divorce, a court probably would declare
the agreement invalid. Similarly, if one person exerts excessive emotional pressure on the other
to sign the agreement, a court also might declare the agreement to be invalid because of duress.


Q. When should the agreement be signed?

A. Most states do not set a specific time at which premarital agreements must be signed.
Generally, it is better to negotiate and sign the agreement well before the wedding, to show that
each person has considered it thoroughly and signed it voluntarily. If the wealthier person shows
the agreement to the prospective spouse only one day before the wedding, a court may later
find that agreement invalid because of duress. While a last-minute premarital agreement is not
automatically invalid, timing may be a significant factor in determining whether the agreement is


Q. Must the parties to a premarital agreement be represented by lawyers?

A. No, but lawyers can help make sure that the agreement is drafted properly and that both
parties are making informed decisions. The lawyer for the wealthier party usually prepares the
initial draft of the agreement. The less wealthy party does not need to have a lawyer in order to
have a valid agreement, but the agreement is more likely to be enforceable if that person’s
interests are represented and some back-and-forth negotiations take place.




Q. Do premarital agreements need to provide for a certain amount of support?

A. No, the law does not set a specific amount. In some cases, a court may decide that an
agreement is enforceable even if it leaves one spouse with no property and no support from the
other party. If, when the marriage ends, the less wealthy party does not have marketable job
skills or is not able to work, a court would be likely to refuse to enforce an agreement denying
support. Some states will enforce an agreement to provide no spousal support, so long as
waiver of support does not leave the less wealthy party so poor that she or he is eligible for
Many courts will apply broader notions of fairness and require support at a level higher
than subsistence. Some states provide that the support cannot be “unconscionably” low. That is
a vague term that means different things to different courts.
Many lawyers think it is a good idea for premarital agreements to contain an “escalator
clause” or a “phase-in provision” that will increase the amount of assets or support given to the
less wealthy spouse based on the length of the marriage or an increase in the wealthier party’s
assets or income after the agreement is made.


Q. May premarital agreements decide future issues of custody and child support?

A. No. A court may consider a premarital agreement the parties have reached regarding child
custody or support, but the court is not bound by it. Broadly speaking, courts do not want
parties to bargain away rights of children, particularly before children are even born. (A later
section of this chapter on child support will discuss child support guidelines.)



Q. Are one or both spouses required to work outside the home?


A. No. While the husband and wife are married and living together, a court is not going to get
involved in private family decisions of who works and who does not. That’s left to the husband
and wife to sort out. Today, more than half of married women–including women with
preschool-age children–work outside the home. A husband or wife cannot, as a matter of law,
force his or her partner to work.


Q. If the wife and husband separate or divorce, can a court require them to work
outside the home?

A. No, not directly. If a wife and husband separate or divorce, a court still cannot directly order
one or both of them to work. The court can, however, declare that one or both parties owe a
duty of financial support to the other party or to the children. A duty of financial support means
that person who is supposed to pay support must come up with the money somehow — usually
from work or from savings. If the person who is supposed to pay support does not pay the
money and does not have a good excuse why the money has not been paid, that person could
be held in contempt of court. The possible penalties for being held in contempt of court include
payment of fines and incarceration. Payments of child support and alimony will be discussed


Q. Are there legal remedies if a husband or wife refuses to have sexual relations with
his or her spouse?

A. In some states, the refusal to have sexual relations with a spouse is a specific ground for
divorce or annulment of the marriage. In other states, refusal to have sexual relations could be
considered a ground for divorce because it is an “irreconcilable difference” or “mental cruelty.”
A court, of course, would not order a person to have sexual relations with his or her spouse. In
fact, in many states, a spouse who forces sexual relations with a partner can be charged with
rape under the state’s criminal laws.


Q. What is loss of consortium?

A. Loss of consortium refers to the loss of companionship and sexual relationship with one’s
spouse. (The concept also can apply more broadly to the loss of companionship and affection
from other family members such as a child or parent.) In personal injury actions, plaintiffs may
seek monetary damages for loss of consortium in addition to payment for other losses such as
medical expenses, lost wages, and physical pain and suffering. For example, if a man is injured
in an auto accident caused by a negligent driver and the man is unable to have sexual relations
with his wife for two years because of the accident, both the husband and wife may seek
damages for that loss.


Q. May wives and husbands sue each other?

A. Yes. They can sue each other, of course, in connection with a divorce. They also usually can
sue each other in connection with financial deals in which one may have cheated the other. A
growing number of states also will allow one spouse to sue the other for deliberate personal
injuries, such as those suffered in a beating. Some husbands and wives may try to sue each
other in connection with an auto accident in which one of them, as the driver, accidentally
causes injury to the other, who was a passenger. In effect, the person suing may be trying to
collect money from an insurance company rather from the person’s spouse. Many states do not
allow such lawsuits.


Q. Can a husband or wife testify against each other in court?

A. Yes. Husbands and wives routinely testify against each other in divorce cases. There is an
old rule of law in many states that husbands and wives cannot testify about communications
between themselves made during the marriage. Although the rule may be applied in some
circumstances, it generally does not apply if the husband and wife are involved in a lawsuit
against each other.


Q. Can two people live together without being married?


A. Of course. The Census Bureau reports that such arrangements are quite common. Some
zoning laws do prohibit more than three unrelated persons from living together in one house or
apartment, but two unrelated people generally can live together anywhere they want. A few
states still have laws on the books prohibiting “fornication”–sexual relations between a man and
woman who are not married–but such laws are virtually never enforced. Some states also have
laws against “sodomy” which, among other things, prohibit sexual relations between people of
the same sex. Those laws are rarely enforced if the conduct is private, consensual, and between
adults (although in 1986, the United States Supreme Court in a divided decision did uphold a
Georgia law criminalizing private sexual relations between two men.)


Q. May two people who are living together enter into agreements about sharing
expenses or acquiring property?

A. Yes. The law allows people to enter into many types of contracts. If two people want to
agree about who will pay what and how they will share in property that they might acquire, such
an agreement can be valid and enforceable by courts in most states. From a legal standpoint, it
is best to make the agreements specific and in writing. An oral agreement might be enforceable,
but it is more difficult to prove. Each party to the agreement should give some benefit to the
other party, such as agreeing to pay a certain portion of expenses. If an agreement looks as
though it is only creating a gift from one party to the other with the recipient giving nothing in
return, the agreement might not be enforceable.


Q. Will a court enforce an agreement by which one unmarried partner agrees to keep
house and the other promises financial support?

A. Probably not. To begin with, such agreements rarely are in writing, so they are hard to prove
in court. Second, to the extent that one person is promising financial support to the other, that
promise usually is contingent on a continuation of the relationship. If, for example, one partner
says, “I’ll take care of you,” the statement may be too vague to be enforceable; if it means
anything, it probably means something along the lines of “I’ll support you financially as long as
we are living together.” So, if the couple breaks up, a court probably would not find an
enforceable promise for continued support.
There is a potential third problem: if a court thinks an agreement amounts to providing
financial support in exchange for sexual relations, the court will not enforce it. Such an
agreement is uncomfortably close to a contract for prostitution.
Courts are more inclined to enforce agreements for tangible items, such as payments of
expenses or rights to property. A promise of housekeeping services or emotional support for a
partner may be sincere, but it is much more amorphous than a promise to pay half the phone bill
or share the proceeds of a condominium sale.





FAMILIES. State legislatures have passed many laws regulating the requirements for getting
married and for obtaining a divorce. In addition, today’s laws also affect couples who live
together outside of marriage.
It is hard to give simple answers to many of the legal questions that a person may have
about marriage, parenthood, separation, or divorce, because the laws change and vary from
one state to another. In addition, judges in different states with identical laws may decide cases
with similar facts in different ways.
This chapter describes the laws and court rulings common to most states. If you have
other questions, contact a lawyer in your state. You may wish to contact a specialist. Many
lawyers (particularly in urban areas) work only on family law or make it a large part of their
general practice. Lawyers specializing in family law also may refer to themselves as specialists in
“domestic relations” or “matrimonial law.”




Guide About Lawyers

Alternatives to Lawsuits

Q. I am considering filing a lawsuit against someone. Is there anything I can do to avoid

A. Yes, you can try to negotiate. Before you even think of going to court, try to talk with the other
person in the dispute. Most potential suits are settled long before they go to court. The next chapter
discusses steps to take in settling your case.
You can also explore other low-cost, informal alternatives that probably exist in your
community–mediation, arbitration, and small claims court. The next chapter also provides practical
information about each of these options.
Sidebar: Listen to the Other Person
Keep an open mind to possible solutions and listen to the other person’s side of the story.
Remember that, with or without the help of lawyers, most people settle their legal disputes out of


Q. I have already hired a lawyer and filed a lawsuit. Is it too late to negotiate a

A. No. It’s almost never too late to settle. Judges and lawyers encourage those involved in a
lawsuit to reach an agreement between themselves. If you reach an agreement after filing your case,
let the court know you have settled the matter, and the case will be removed from the court’s
calendar. If you have hired a lawyer, he or she should do this.
Sidebar: After You Settle
It is important to get your settlement in writing, and it is best if you and the other person involved
sign the final agreement. Suppose that, after filling a lawsuit, the two of you are able to work out the
main problem such as who owes how much to whom. It still may be necessary to appear before a
judge to determine a method or schedule of payment. It is usually best to get the advice of a lawyer
about any settlement before you put it into writing and sign it.


Q. Can my case be thrown out of court because it is too old?

A. Yes, every state has a time limit within which a case must be filed. The logic behind such limits,
called statutes of limitations, is that most lawsuits are more easily and more fairly resolved within a
short time. This is another reason that it is important to act as soon as you and your lawyer feel that
you may have a valid legal claim. The time limits vary for different types of cases.