James Lange, CPA/Attorney Interviews Julie Steinbacher, Esq.
What OBBB’s Sweeping Medicaid Cuts Could Mean for Seniors
Erika Hubbard
Hello, I'm Erika Hubbard from the Lange Financial Group.
The recently passed One Big Beautiful Bill, or OBBB, includes sweeping Medicaid cuts. According to the Congressional Budget Office, federal funding for the program is expected to drop by roughly $1 trillion over the next decade. While much of the public discussion has rightly focused on how these cuts could affect traditional Medicaid recipients, today’s conversation zeroes in on a critically under-discussed question: What will these cuts mean for the millions of seniors who aren’t on Medicaid—but still depend on it in ways they may not fully realize?
To help unpack the real-world impact, Jim sat down with elder law attorney Julieanne Steinbacher. Julieanne is a Certified Elder Law Attorney and the founding shareholder of Steinbacher, Goodall & Yurchak. Before becoming an attorney, she worked as a geriatric social worker, so she brings not just decades of legal expertise, but firsthand insight into how these systems affect seniors on the ground. Many of you may also know her as a co-author of Retire Secure for Parents of a Child with a Disability. Her firm includes social workers on staff who help clients navigate long-term care, Medicaid eligibility, and complex benefits coordination.
In this interview, Julieanne makes a compelling case for why Medicare alone may not shield seniors from the fallout of these cuts. She discusses how reduced provider payments could limit access to care, why home- and community-based services are likely to be scaled back, and how that could push more seniors into nursing homes they neither want nor can afford. She also offers some proactive steps seniors can take now, from legal planning to financial strategy, to help prepare for this shifting landscape.
James Lange
Julie, with the Medicaid cuts in the One Big Beautiful Bill Act, a lot of people are confused, and they don't know what to do. They say, "Gee, I'm on Medicare anyway, do Medicaid cuts really have an impact?" Can you give us an idea of not necessarily the people who are clearly on Medicaid or clearly need Medicaid benefits, but is this something that we should all be concerned about?
Julieanne Steinbacher
Yeah, for sure, Jim. Unfortunately, I think a lot of people do have the belief that if they are on Medicare, then these Medicaid cuts don't matter, but the system in this country is so interwoven. Part of it is that there are so many gaps in Medicare and what it actually covers. So, when we think about Medicare, we have to understand that that was built in the 1950s. And it reflects our health care delivery system in the 1950s. It does a really good job with acute care. I get sick, I go to the hospital, I need care, and I get better. Medicare works well for that.
But so much of the aging journey that all of us go through—regardless of our income and regardless of what is happening—so much of that journey includes long-term care, not acute care (I get sick, and I get better), but some long-term illnesses that we’re dealing with. And that's where Medicare doesn't really do a great job.
Every day at my office, I help people who, regardless of their income, end up benefiting from the Medicaid program in some way because they need help with long-term care. The average cost of nursing home care in my state of Pennsylvania is $12,000 a month. For many people, they're not able to cover the cost at that time, and they turn to the Medicaid system.
First of all, I think with your question, I really just wanted to start out and talk about the fact that people who are on Medicare, honestly, many times don't understand that that coverage just isn't going to cover everything that they need in their aging journey. And so, one in five people who are aging rely on Medicaid to afford access to essential health and long-term care. Without Medicaid, there are times when people who need help with daily activities can’t afford home and community-based care. Medicaid takes care of that gap, and we have to think about them as the Medicare and the Medicaid systems. They are intertwined with each other.
In addition to that, I think one of the things that we have to really understand is that these Medicaid cuts will affect Medicare because many people who are on or are duly eligible for both—many people who are on Medicare get help from a Medicaid system to help pay the premiums and those types of things. And so, we are losing some of that Medicare cost sharing. Medicare might be the first payer, but the secondary payer is Medicaid.
In addition, I think that with all of these cuts, we can get into this more later, but with all of these cuts, we're going to have less money flowing out to these services—whether it is home health or long-term care, and we're going to have providers who aren't getting that money, yet the needs are still there. My concern is that we could see provider payment rates being cut, reducing overall access to everybody.
And Jim, I live in a rural area of Pennsylvania, and we are really concerned about rural areas. I think it is going to have a little bit of a domino effect that even Medicare premiums could go up as a result of this later on with less funding to help with that. For me, I really feel that if anybody gets anything out of this interview…if somebody is on Medicare, and they think they are insulated from these cuts, that's just not true. It's going to affect people in numerous ways—whether it's because they need help with long-term care or because of provider access or what it is that they can afford through the Medicare system.
James Lange
So if we're talking about provider access and then perhaps having less coverage for things that we are used to having covered, do you think it is prudent when people are doing their long-term planning (even financial planning and even forgetting about long-term care), that maybe they have to up the budget for likely higher medical costs and even consider concierge medicine, particularly in a rural area where you just might not be able to get doctor appointments.
Julieanne Steinbacher
Yeah, that is absolutely true. If I were planning for this, I absolutely would be thinking about increasing what it is going to cost me to pay for my health insurance and what it is going to cost me for co-payments and co-sharing because the reality of this bill is that it has cut funding, but the need hasn't been cut.
So, people are not going to have access to services because there is no money flowing into those rural hospitals (or any hospitals) to provide those things. People are going to have to either pay more or like you just talked about, Jim, get some sort of a concierge service where for some people, they may not be able to provide it. I know for me personally, Jim, planning for my retirement, this is going to increase what I think I need to set aside for that retirement and those healthcare costs that I may need in those years.
James Lange
Yeah, so I know that you're very in touch with a lot of the providers, and the people who actually do the services. Do you think it is possible that we're going to get much greater efficiency, or do you just think that there is going to be equal need, maybe some efficiency benefits, but basically, we are going to have less money paying for the same services that we still need?
Julieanne Steinbacher
Yeah, I mean, honestly, Jim, I don't see the efficiency coming out of this bill. And maybe that's something that will be thought through by the Centers for Medicare and Medicaid, but what I see are just cuts and/or additional work for government employees to do (like the work requirements). I see this as something that is just going to take away people who could be working on it, proving claim, and doing something else. And so, from my perspective, I'm not seeing the efficiencies.
Now in all fairness, in this bill—anytime something becomes law—we then will put it to the administrative agency that is designed to implement those changes and when we implement those changes, we could see that they could come up with policies or procedures that could be helpful. This is not really the mandate of the law. The mandate of the law is to cut funding, and I think that for me, the biggest thing, so much of it is, some of the funding that we have through the Medicare and Medicaid agency, it is mandated. So, it is mandated by law that every state has to provide nursing home coverage, right? Absolutely mandated.
But it is not mandated for home and community-based services. So, in-home care (in Pennsylvania, it is called the LIFE program, but in most every other state, it is called the PACE program) are programs that are not mandated. I think when we think about efficiency, we're going to have to cut some things, and the easiest thing to cut is something that is not mandated, and I think that has far-reaching effects on the quality of care and people's preference on where they get care. We really have to address this.
James Lange
Well, that actually opens up a whole can of worms, doesn't it? Because first, if I have a problem, and I cannot handle all the functions of daily life, but maybe if somebody came into my house to provide services for an hour or two (or a couple days a week), that sounds a lot less expensive than being institutionalized—where I probably don't want to be. Is this kind of what you are referring to because that sounds scary to me, and it also (with the risk of being a little bit political) doesn't seem to be a wise way to cut costs. It just sounds like it is going to cut some relatively efficient services, and now we're going to have more inefficient services and less money to pay for them.
Julieanne Steinbacher
Yeah, and I want to be clear that the bill doesn't say you have to cut home and community-based waivers. This act just said we're going to cut funding. When we're again at that agency level or at that state level, we have to decide, “Well, how do we provide what is mandated and how do we provide what is not?”
What we know that in the past, home and community-based waivers have been cut because they were not mandatory. That is maybe not what the states want to do. I know, for instance, my state of Pennsylvania is very strong in not wanting to cut home and community-based waivers because they see exactly what you said, Jim. They see the cost benefits and the efficiency. My county that I'm standing in right now, Cummings County, Pennsylvania, was one of the test cases when they came out with home and community-based waivers, and what happened was they did exactly that.
They tested it to see if this would save taxpayers’ dollars. If I give somebody a little bit of money to pay for a caregiver, can they stay home and stay out of the nursing home? And the reality is the answer to that is yes. If we fund home and community-based waivers, more people stay home. They are where they want to be. And we actually save taxpayers’ dollars.
You know, Jim, I was a social worker in a nursing home prior to home and community-based waivers. I've worked in the aging industry at a time when we didn't have home and community-based waivers. I was the head of discharge planning when I was a social worker, and I will tell you that people got stuck at nursing homes because we didn't have a little bit of money to pay for some in-home care.
So, somebody is in a nursing home, and the government is paying for them to be at that nursing home—paying the full freight for them to be there. They get better, they could maybe go home, but not independently, not without any care. But I couldn't discharge somebody unless they were safe.
And if there's no money for in-home care, they're going to get stuck again. And I'll be honest with you, Jim, that breaks my heart because I did that for a living in the early 1990s, and we have come so far in this country—both under the Olmstead case, which is a Supreme Court case that said, “Yeah, we should have these waivers, and we should have waiving the requirement for institutionalization to receive this government funding.” We came up with home acute based waivers and while not perfect, they're better. They're helpful. Now, please know for some people, going to a nursing home is better. I don't want to be negative about nursing homes or the industry. We definitely need that long-term care. But for some people in some diagnoses, they can get along with home and community-based waivers in home care, and they can be happier and at the end of the day, it saves taxpayers’ dollars.
But across this nation, people who have been through this before—people who have to make really tough decisions at agency levels—are of course are not going to look at the home and community-based waivers because they're not mandatory under the federal law. There is only so much money, and that is something that we're really worried is going to happen.
James Lange
My goodness—an attorney with compassion! By the way, I know that you actually have social workers on staff, which is a huge advantage. Frankly, I'm one of your clients with my daughter who has a disability, and your social workers have been wonderful and being specific, in the areas of insurance reimbursement. So, that is a great thing.
I don't know what the solution to this problem is, but you are kind of scaring me and not that I didn't know about this before, but even just thinking about it, that here you are in charge of discharging, and you know that the person maybe needs some help go into the bathroom, getting up the stairs, ordering some food, or something that does not require full-time nursing care, but you can't discharge them because you know that they can't take care of themselves. So, instead, they're stuck in the nursing home where they don't want to be, and it's going to be either more expensive for them or more expensive for the system. So, this is a terrible thing.
You mentioned Pennsylvania with Governor Josh Shapiro, who might have some sensitivity to this, but the states are not going to uniformly step up, are they?
Julieanne Steinbacher
No, they are not. I think in Pennsylvania, we're lucky under the leadership of Governor Josh Shapiro, but I also want to put a plug out there. There is also some bipartisan support in our state. I talked to my own representative, Jamie Flick, a Republican who has come up and said, "Listen, we understand these issues, and we're going to work together to save what we can in the state of Pennsylvania.” And so, I think in our state, we are really lucky.
But also, Jim, we have a huge aging issue in our state. We have had a large aging population for my entire career. And so, we also have the Pennsylvania lottery fund. I think within our state, we are kind of a little bit more advanced in providing these services.
I think in other states, it won't play out as well to be honest with you. I think in some states, they are not having those bipartisan conversations. They are being more politicized about it, and I think that in some states, they are going to lose home and community-based waivers.
I read a lot. I look into a lot of this, and I do think, unfortunately, we’re going to have state by state doing different things. And I don't think that all the states are going to have the same outcome as Pennsylvania. And even when I say that as positively as I can about the state of Pennsylvania, I don't want to stop the fact that this still has a consequence. So even if Pennsylvania says, this is a priority to take care of these aging people, there is only so much money. So, it's going to have an effect on our state.
They're going to have to take money from something else, or they're going to have to provide more tax revenue, right? So, I don't want you to think that just because I live in Pennsylvania, and I think that there is a positive response or constructive response to this for our aging population, that doesn't mean it still doesn't have an impact. It certainly does.
Money will have to be taken from someplace else if there is less money coming from the federal government, and our state decides that they want to hold on to this. But please know that they are thinking more long-term because they are thinking if we keep these home and community-based waivers, they cost us less money in the long run. And so, for the states that are more short-sighted and get rid of these things, they're going to have a higher cost later because more people are going to be institutionalized.
Yeah, and I know we're talking a lot about the aging community, but I also do special needs planning, and I want to underline how important I think home and community-based waivers are for our disability community. I know that is beyond our scope, but I just I just want everybody to know that if you have a child who has a disability (sometimes when we call them home and community-based waivers), people don't even realize that they are Medicaid funded. And so, I want people to know this is exactly what we're talking about.
If you have a child who has a disability, this is something that you should be paying attention to. I also would say that I talked to a lot of clients who have children with disabilities who have never interacted with any type of system within our state or our federal government so they haven't applied for Social Security, they haven't had their child be found disabled because they live at home, and they are able to provide those services for them.
I would urge people—or they might get Medicaid somehow, but not because of a disability—if you have a child who has a disability to make sure that the disability is documented. It is within the Social Security Administration or the Medicaid Administration because we could have some cuts that if you have a disability, you could be in a better group, and you could be saved from some of those cuts. And I just know, Jim, there's a lot of people out there who haven't done anything. And they might be losing benefits because they can't show that their child has a disability.
James Lange
Well, it is a huge issue. By the way, I will personalize it because as you know, you did her documents, my own daughter has a disability. Before I met you or Debbie McFadden, my wife went through the process of getting our daughter qualified for SSDI, which was monumental in terms of the work. And now, she is actually up for a review, and this is very scary for the “parent of a child with a disability” community. And now you're saying, yes, for those folks, let's call it really mission critical, but even for everybody else, this is a big deal. And one of the things— and I'm looking at it from a financial standpoint—is we really have to consider spending or being prepared to spend significantly more money on medical costs.
Julieanne Steinbacher
Oh, absolutely. I know that the Center for American Progress made it clear that according to their statistics, that on average, it leaves $1,200 dollars more in annual premiums for affordable care at marketplaces. They're talking about increases in healthcare costs of 400%. They're talking about increases across the board for people, and I think that it is something that people have to spend some time looking into it.
I urge everybody to find out what this is going to mean for you—whatever your situation is. Contact your local advisors and make sure that they understand these issues because we're talking about increases in health insurance premiums, we're talking about increases in costs themselves—having to pay more for out-of-pocket costs that we’re not typically having to pay. I just think that it is important for people to really look into their unique situation.
James Lange
Well, you glossed over something that to me is really big. And I think you're referring to Chris Murphy saying that in Connecticut, he is anticipating healthcare costs going up by 400%. Well, maybe that's exaggerated, and maybe that is only Connecticut, but I think your point is “Hey, this is a big deal!”
And the other thing is—I'm talking about it in terms of money—but like you said, the need has not gone down. We didn't even talk about this, but I'm doing a lot of work in the safe withdrawal area. Bill Bengen just increased our allowance from 4% to 4.7% on safe withdrawal. But a lot of that, I fear, is going to go to medical costs if they are even available to us.
Julianne Steinbacher
Yeah, I think you're right in a great place, Jim, as you help your clients to understand that so much of their income and their assets that they have in retirement are going to go to healthcare costs and really understanding how they're going to maneuver. That is really, really important.
James Lange
Yeah, and as you know, I'm always encouraging people who have sufficient money to spend it, not die with millions of dollars, and maybe one of the things they can do is to join some type of concierge medicine practice. I know that not everybody can afford that, but I was kind of convinced of it for myself and my family members. It is just wonderful to have a place where you can call, get services, and you can get answers to an email. It sounds like I'm a shill for the concierge medicine industry, but I am concerned about both the money and the access to health care.
Julie Steinbacher
Yeah, and Jim you're so right about that because what is signified is that cutting of funding in a system that already had access issues, is just going to exasperate that. Unfortunately, this is the largest cut in healthcare that I can ever remember in my lifetime. And there is no answer to it. Well, what is the solution for it?
And I think, Jim, you're right. For those people who have money, find your own solutions, use a concierge service, and be able to get good healthcare. Because I don’t know about you, but I've had some health crisis hit my family, and it is horrible when you have a child or a parent who is diagnosed with something, and you can't get access to find out information or you can't get access to a test. It is really hard. You know my daughter was diagnosed with cancer a few years ago and locally where we live, we couldn't get the answers because we live in a rural area. We already had to go to DC. And thankfully we were able to do that, but I see this just getting worse with these cuts. And I think people who plan ahead and factor this in, are going to be farther ahead than those who either just don't know or don't want to know.
James Lange
Well, with the risk of making people even more miserable, you said something else which I think is happening—not just in the healthcare industry, but you said if there are funding cuts—let's call it specifically reduction for reimbursement for home care, then the healthcare industry isn't getting paid. And then people doing those jobs and the infrastructure that is involved in providing companies with those home health services are going to shrivel.
I use the example of the IRS. If you take out a large percentage of the senior managers and they're gone, and then even when there is a new administration, it is not like the new administration can say, “Okay, we're going to go back and re-hire all those people.”
No, you have to hire people who might take years and years to develop. And by the way, like healthcare, which is already understaffed, so is the accounting industry. They're not even going to be able to find young accountants to take IRS jobs. I think your warning to people who have some money is good, which is, “Hey, think about this, provide for this, and maybe concierge medicine is a good thing.”
Julie Steinbacher
Yeah, absolutely. I think it is really important. And I think your point is so important, Jim, for people to understand the kind of domino effect that is in place here. So, when you talked about home services, like a home health agency, I was just yesterday speaking at the request of the home health industry to a bunch of retirees.
My home health agency talked about the fact that they get a lot of people who pay privately, but they also get a lot of people who are on home and community-based waivers and veterans’ benefits. If we take away funding from them, they as a business lose that funding, and that has grave effects.
Like you talked about, they could lose workers, and they also could go out of business. And that provider part of all of this is really important. There is a lot of information out there about rural hospitals and the fact that if we lose this Medicaid, we don't lose the need. The person is still going to get sick, but they now don't have preventative care. So, they go to the ER, the ER has to provide them with some service, right? And are they going to get paid for that or not? Now we don't know.
And I think understanding the provider part of all of this is really, really important. And again, I would say to you (I talk about Pennsylvania), and I think Pennsylvania has a pretty good aging network. And part of that is because we had in-home care resources. We have things that have been started from Medicaid dollars, and although some people might privately pay for it, but when we remove those Medicaid dollars, those people may not be able to privately pay for it because those businesses might go out of business without that baseline funding. This is important for people to understand.
James Lange
Well, it is scary. Though we have been concentrating on people who have some money, what are some of the impacts on people who actually receive Medicare benefits and potentially do not have enough money to self-fund for their care and assume that they would end up getting some government benefits? Is this really bad news for folks like that?
Julie Steinbacher
Yeah, it really, really is. When we have people who are what we call “dual eligible” (they're on Medicare and Medicaid), and Medicare is that primary payer, but Medicaid often brings in things like dental, vision, and hearing for people because Medicare doesn't cover that.
Now, people could get through an Advantage plan under Medicare that might pay for some of that, but we have already talked about long-term care quite a bit but also cost sharing. Many people who have Medicare, use Medicaid to cover the deductibles (co-payments and co-insurance), and it is really important for people who have limited resources and income. We really need to know that.
I could talk to you more about medical equipment like wheelchairs and certain treatment options that Medicare might not fully cover, and Medicaid really was able to cover those expenses. And even the premiums for Medicare—we get Medicare through the Social Security Administration, but there are still premiums for Medicare. Part B that is taken out of people's Social Security checks, sometimes they don't realize it because it is taken out before they even get the check, but over 10 million seniors and people with disabilities end up saving that $185 a month. And just so you know, if you are listening and you think, “Oh, $185 a month.” But understand that this could be 10% to 20% of those people's incomes for that entire month. And so, if we lose those types of things, it is just really concerning.
And again, we don't know how all of this is going to play out for people (both from a federal agency standpoint and how the states are going to administer it), but the reality is that there will be real gaps in coverage for people. Medicaid often filled those gaps. Medicaid actually helps Medicare be better, more accessible, and more affordable for millions of people. It covered those gaps in the coverage and provides financial assistance.
I'd also say it helps prevent unneeded hospitalizations and other negative outcomes because it gives people more rights and ability to have preventative care. And again, I think that is one of those things that in a few years from now, we'll see—just like we saw during COVID—that people didn't do preventative care—and then more people ended up in acute crisis situations. And you're going to see that again. People aren't going to go to the doctor if they are not able to afford it.
James Lange
Well, that is a perfect example. For example, dental care—even just standard preventative dental care—went way down. And then after we're out of it, everybody has a mouthful of potential serious problems. And the other thing is, speaking of COVID, during that time, the medical system that remained was fantastically overloaded, overworked, and that could easily happen again. If there are hospital closings, the remaining people are going to have some of the same problems that they had during COVID.
Julie Steinbacher
Absolutely.
James Lange
Probably in a way, let's say healthcare support, nurses, administrative personnel, and even the doctors themselves, there will be a much greater need, but no greater money.
Julie Steinbacher
Absolutely.
James Lange
Alright, well, I think that this is really important, and of course, it is not like I didn't know these things, but I think you're doing a really good job of making me think, “Oh gee, this is me. This isn't just the guy down the street who has these problems.”
So let me ask you this. I know that you have been involved with Medicaid Asset Protection Trusts—a way of preserving money for the family in the event somebody did have to go to an institution. And I assume that you have (maybe tens or more likely hundreds) of those documents out there.
Let's say that somebody was in the situation that a year ago you would have said, “Oh, you would be a good candidate for a Medicaid Asset Protection Trust.” Has your planning changed in terms of who you think would be a good candidate for that type of practice?”
Julieanne Steinbacher
Absolutely, Jim, and it has been changing over the years. I think this does make me think more about creative financial solutions for clients.
But before I get into that—if you don't mind doing it—I just want to take a minute or two to explain the Medicaid Asset Protection Trust because sometimes when we talk about that, people immediately think, “Oh, they are hiding money from the government. That is what we are supposed to stop.”
I just want to talk about right now: the typical client I see who really needs a Medicaid Asset Protection Trust, and then I'll talk about how that is changing.
But for me, this is the reason I do what I do. I can get goosebumps just standing here, but if you ask me what I did for a living, it is protecting particularly married couples. In this country, it is really sad but what happens to your retirement money when you are older is “diagnosis specific” in some ways.
We talked about Medicare in the beginning of this interview, and how Medicare does a really good job at some things. For example, I'm sick, I have a heart attack, and I go to the hospital, and it pays for my surgery and stuff like that, but it doesn't do a good job for other diagnoses like dementia. For example, I'm sick and I get dementia. There is nothing acutely wrong with me, but I need long-term care. And again, I'm not saying Medicare is bad. What I'm trying to get people to understand is that the system we have today doesn't pay equally, and what happens to people in their retirement is really “diagnosis specific.”
I often tell this story in my seminars, and it is true. You have two people who have lived the same lives, have about the same amount of money, and one gets a heart problem (and Medicare pays for it), and the other gets dementia (and they are left financially ruined). And it is so important for people to understand when I talk about this, my biggest goal is to protect the spouse.
So, husband and wife, let's say Fred and Martha are married, they work their whole lives, they pay taxes, they raise their kids, and then, they retire. Fred gets sick and needs nursing home care (long-term care). Their assets are available for that care. Medicare is only going to pay for up to 20 days. Let's say Fred has dementia, and he needs to go into a nursing home. And then I wouldn't even take the time to talk about everything that Martha had probably done to care for him and how difficult that journey was. But let's say she has done all of that, and now he must go into a nursing home. Their assets are available for his care at $12,000/month, but it doesn't take very long for the average American to run out of money.
The big issue is that Martha is still here, and when he dies, she is going to lose the smaller Social Security check. How is she going to survive? For me, a Medicaid Asset Protection Trust protects against that. Husband and wife—they put their house in a trust and they put some of their assets in a trust—he gets sick, but she doesn't have to be left financially compromised. We are accessing the Medicaid system. We're accessing the Medicaid system not for multi-millionaires, but for average people who have worked their entire lives, and now unfortunately have a health crisis.
I really believe in what I do, and I really believe that people need to protect themselves. We've always had a system in this country that you must protect yourself because we have not figured out how to make Medicare work today. And the way that actually happened was this interaction between Medicare and Medicaid. So how does this change?
Well, I think I would push people at lower incomes and lower asset levels to try to buy long-term care insurance. Put more money aside for this because to be honest with you, I can't guarantee that the care will be accessible, that the program will exist as it does now, and particularly not exist in a way that they have more choices of in-home care versus assisted living in some states versus the life program versus a nursing home.
When I'm talking to a client, I'm now worried that, well, their only option is going to be a nursing home with Medicaid, and that is not really what many people want to do, but they may have to. I think people should spend more time looking at alternatives, and there are a lot of different asset-based long-term care products. There are a lot of products out there that they use in Europe that are annuity-based that can help protect assets or leverage money to pay for care. I think this is something that people must look at.
Now, I still think it is just as important to do this planning because think about it as a safety net. If the worst thing in the world happens, and you have no choice but to go into a nursing home, then having that trust is going to be really, really helpful. I cannot underline this enough—to protect your spouse.
Go ahead. I'm sorry, Jim. I get very passionate about this.
James Lange
No, but one of the things that you pointed out that I think a lot of people don't understand, is that the planning is very specific. You use the example…two people financially more or less in the same position, and one has a heart attack, and one has dementia, but it is a completely different ballgame. And from my standpoint as a financial guy, if somebody has a big IRA, you can't protect that IRA unless you're willing to pay taxes on it and then take that money and try to protect it.
I'm excited about AI too, but at this point, I think actually having judgment and particularly somebody who kind of gets it and does care and is sensitive, and you know a lot more about money than the vast majority of attorneys—sorry about that, attorneys—but I think that this is really important.
This isn't making your life easier, is it?
Julieanne Steinbacher
No, I think for everybody, and I think it is good. I've always really respected financial advisors in the financial services industry and accountants. I think it is more and more important for us as professionals to work together to navigate what is the best outcome for this family. What products, what creative financial solutions are out there that can be beneficial tax wise, or provide leveraging money for this, and then what protection?
You ask your attorney, “What can I do to protect this?” I think the best outcomes for people are when that team of people work together and are able to respect each other—not compete against each other, but respect what we all bring to the table and how can we work together?
Jim, certainly working with you, I've learned a lot about that IRA just sitting there, and I can't put it in my trust because like you about, it's going to create a tax benefit, but you're willing to do the hard work of saying, “Okay, but what can we do about that? Can we take some out year by year? Can we look at a different product within that IRA?”
And so, for your clients, they're getting the benefit of somebody who is willing to do that hard work of thinking about, “Well, if that is the problem, what are the other ways to find a solution and not be afraid of taking that IRA money out and doing something different with it.”
James Lange
Well, at the risk of—which I was not even planning—but at the risk of putting in a little plug for our book, I should say that Julie, I, and Debbie McFadden did come up with a book called Retire Secure for Parents of a Child with a Disability, and we did exactly what Julie was talking about—having different areas of expertise. Debbie McFadden gets kids and adults qualified for SSI or SSDI, Julie addresses the special needs trust and the special needs planning that must be part of planning for a child with a disability, and then, I cover the financial aspects.
Let me ask you this. You have done a lot of these types of trusts, they are very common, and I know you even have a network of attorneys who do these types of trusts. What would you say to either the client who has already had one of these done, or the attorneys who might not be as sensitive or knowledgeable as you, what if anything needs to be done for the people who already have this type of planning done?
Julieanne Steinbacher
Yeah, I mean, it's a great time, Jim, for people to go back and look at the planning that they have done and have a review that deals with where they are right now in their life and what has changed. But honestly, what is the impact of the passage of this bill? Does the plan still cover them enough? Does it make sense in face of this?
I think everybody needs to be looking at this individually. There is nobody who is going to come out and do this for you. And Jim, I spend my days dealing with people who—the worst thing in the world that they ever thought was going to happen has happened, and they have a diagnosis of cancer or a diagnosis of dementia—and sometimes it is harder late in the game to make the changes.
The more people are prepared, and they look at this, and they keep it up to date, the better off they will be. These are some of the most sweeping changes in healthcare in our country. The ramifications of it are going to be, now over the next few years, both as the federal level figures it out and as the states then respond to that, what does it mean? And for some, it could mean living in a different state.
We already, in Pennsylvania, have an issue as people live here, they make their money here, and in my experience as an attorney, many people retired to Florida, but when they get sick, they often come back to Pennsylvania because we have better services here. And thinking about where you are going to get your healthcare and your long-term care and what access you are going to have and what it is going to cost are really important things to be thinking about.
James Lange
I love that—a plug for Pennsylvania. So, we have a governor who is sensitive to these issues and though he can't make it whole, he is going to try to do what he can. I have people thinking that they are going to be much happier in Florida, then “Oh my goodness, I have a medical problem. I better get back to Pennsylvania where I can get some benefits.” And from a financial standpoint, Pennsylvania is actually a great state in which to retire because Pennsylvania does not tax IRA distributions or Social Security and other states do. I have clients who are moving to New York or California, not even necessarily because they want to be there, but because sometimes their adult children are there, and they don't want to be left home. They might need some, let's call it, child-for-parent care.
Julieanne Steinbacher
Yeah, Jim, they're not following their children—they're following their grandchildren.
James Lange
Well, that is fair enough. But by the way, I'm getting more of that than ever. And this is something that is probably a good example of something that a more sensitive attorney would pick up on. If you're trying to talk money and all the client is talking about is their grandchild—and I know that one of the great things about you, and which I think goes without question, but I'll say it anyway is that you are true fiduciary and if it is appropriate even if you lose some business—I know how you have a very busy office and for you to tell people, “Yeah, it is time to come in for a review,” it is not because you're sitting around twiddling your thumbs waiting for people to knock on your door. I think that you have also shown your compassion, and that was one of the things that was always attractive to me, is that you started as a social worker. I don't think that is a very common background for an estate attorney.
Julieanne Steinbacher
Yeah, I started as a social worker. And when I started my law practice, I tried to figure out how to bridge from that social services world into the legal world because just doing the legal world in a vacuum doesn't work.
My bachelor's degree is in gerontology, which is the study of the aging process and how we, as a society, should respond to this. It is funny that my background has really done wonders for me because it is exactly what is going on as we think about the passage of this bill that has become law in this country. What does it mean? What does it mean to the aging network? What does it mean to people as they age and in our society? And these are really important questions for us to be thinking about—both for thought leaders to be thinking about, but also for people individually to understand how this is going to impact them.
James Lange
Well, I think you've given us a lot of great information. And I think that you have scared me even more than I was scared before, but I think that this is valuable. And for me, from a financial standpoint, in a way, I have two things that are offsetting. One is Bill Bengen is saying, “Hey, we can go from 4 % to 4 .7%, which if you do the math, works out to a 17.5 % increase of how much money you can safely withdraw from your portfolio.” But at the same time, “Hey, maybe we need some of that 17.5% increase or all of it (or maybe even more than all of it) for potential additional healthcare costs.
Julieanne Steinbacher
Absolutely.
James Lange
So, you've given us a lot of great information. Is there anything that I haven't asked? And as you know, I did have a script prepared, and you just kept hitting the points one by one. I'm looking at the script. Oh, I can't ask that question, she already answered that!
Is there anything that I didn't ask that you think would be important for our listeners (and I genuinely hope that this interview gets significant distribution, and I’m going to try to do everything I can)? I know that you have some marketing people who are good with YouTube and social media, etc., and I'm sure you'll help with that.
But is there anything that we haven't touched on that you think might be an important area for people to think about?
Julie Steinbacher
No, I don't really think so, Jim. I think your questions were good, and I just really want to thank you for the opportunity to speak about this topic. It is so hard—in this playful environment—that we speak about actions and things that have happened, but I have pledged my life to protecting seniors. It's what I do for a living—protect seniors. And so, I appreciate the opportunity because if somebody listens to this and they take action, it helps them make better decisions for their personal life. I think that our time together was worth it.
James Lange
Okay, and if somebody is interested in talking with you, and I know that in terms of the actual practice of law that you're licensed in Pennsylvania, but you also have this network (and by the way, your network has proven very valuable to me personally, and I don't mean the network of the attorneys, but you knew people who knew people in Massachusetts where my daughter resides who were very helpful with her medical benefits), but if somebody is interested, could you give them contact information of how they could contact you, and what would be the best approach for either a Pennsylvania resident or a non-Pennsylvania resident?
Julie Steinbacher
Yeah, absolutely, Jim. The best way to contact me is simply to email me at JSteinbacher@PAElderCounsel.com. That is JSteinbacher@PAElderCounsel.com.
And I would also say, Jim, I'm happy if people contact me even to give them a referral. We also do have a website called https://PlanningandProtecting.com and that website contains good resources. It also has lists of attorneys in different states who I know that really are able to approach the practice of law in the same way that I do. I urge people to go the that website and contact them.
And lastly, Jim, I just want to put a plug out there for these topics that we're talking about, particularly more on the social work side and the caregiving side. My daughter, Courtney Steinbacher and I have a podcast called Hey Woman. I'd encourage people that if you're in the middle of caregiving and are a little overwhelmed, I encourage you to reach out to that Hey Woman podcast and listen more about thoughts and ideas we have to make your caregiving journey easier.
James Lange
Yeah, and I'll just mention this. We have been talking about Medicare and Medicaid for the general population, but I know that one of your biggest areas (other than elder law) is helping parents plan for a child with a disability. And the information that is in this book is just wonderful. You did a great job with this book. And then I know people have followed up, and I've heard nothing but good things.
So, I want to thank you for doing that work. I am more enlightened. And could you just give your email one more time, and then I'll let you get back and help some more people.
Julieanne Steinbacher
Yeah, great. So, it is JSteinbacher@PAElderCounsel.com.
James Lange
Alright, well, thank you so much.
Julie Steinbacher
Thanks, and take care.