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R E S T A U R A N T A N D B A R Fine Dining 1140 R OUTE 315, S UITE 101 W ILKES -B ARRE , PENNSYLVANIA 18711 O PERATING H OURS : D INNER : M ONDAY T HROUGH T HURSDAY 5:00 PM - 10:00 PM F RIDAY - S ATURDAY 5:00 PM - 11:00 PM L UNCH : M ONDAY T HROUGH F RIDAY 11:00 AM - 2:00 PM F OR R ESERVATIONS , P LEASE C ALL 570.270.9292 The ethics of asking for Medicaid By Lynn Evans When does it become ethical to “spend down”your assets to qualify a loved one for Medicaid? Is there ever a “right”set of circumstances to do so? Is entitlement to these benefits a right of every American? Or should your end-of-life care and its attendant costs be your responsibility? Many financial professionals today are facing these and more difficult questions when their clients or their clients’ children come to them for help in making Mom or Dad qualify for government aid in nursing care costs. The dilemma is in the question. Is it ethical to do this? Suppose the family assets consist of a farm, which has been in the family for the last two hundred years. If the next generation is actively farming the land and generating a living from the farm, is it right for the government to be the auctioneer at the death of the elderly farmer who had no assets, in an effort to recover the costs for his stay in a nursing home? If not, then what about the children of the corporate executive who expected to inherit Dad’s generous stock portfolio when he passed on and demanded from their attorney that he make Dad eligible for Medicaid to preserve their inheritance? Do we have a sense of right for the first case and disdain for the second? Why? What about being responsible for our own medical care and its costs? Is that concept as irrelevant a moral standard as the mortgage-free home? Probably so. In the last generation, people had multigenerational households with the traditional wife/mother at home. The daily care of all family members fell on her shoulders with children doing their fair share. The multi-generational family rarely exists anymore and care of elderly parents is relegated to the occasional visit from the progeny who live hours or days away.Grandchildren are committed to sports, music lessons and private tutoring to guarantee great SAT scores. Our current societal values dismiss the inclusion of care for the elderly as a top priority, so we transfer that responsibility and cost to the local agencies and the federal government. And then we rail against the authorities when they deny the care for free. What’s missing in this equation? Maybe the answer is a better long-term care program, which gives incentive to the American public to pay the premiums for care that extends into the home, rather than only the traditional Clorox-perfumed, heaven’s waiting rooms we call nursing homes. Not to put the knock on the nursing home industry. They do a heroic job with limited funds. Very limited funds. And the work is not fun. Given that no one among us wants to be in these dreadful places, it tears at our heartstrings to make the decision to put Mom or Dad in one and wonder why there is no alternative. There could be. As the Baby Boomer generation nears the age where the nursing home looms as a distinct possibility, their immense Evans power as a consumer group will affect the choices we now have. But until that happens, where do we draw the line? Granted, the needs of the “community spouse” (a lovely euphemism for the spouse left at home when the other is in a nursing home) have to be taken care of and being able to preserve some type of financial security for that person is paramount. So how much is enough? Elder care attorneys who specialize in this type of planning have some tried and true methods to make this happen. And still within the guidelines of the federal government, but it’s not that much. Even though the Feds set the guidelines, the state has the ultimate say in what that amount is. It currently lands somewhere around $90,000 in assets (the house?) and only $2,000 in cash. So should that person be penalized because his or her spouse needs long-term care? Is it fair to force poverty on this community spouse in order for her husband to get the care he needs, which she can’t provide? What happens if she then has to go into a nursing home, too? There are lovely options like gifting to children, trusts, inter-spousal transfers, immediate annuities, and so forth. Although all of them are legitimate options, each of them carries great risk of coming back to haunt you. The only viable option is a long-term care policy, which allows for home medical care as well as nursing home stays. Lynn S. Evans, certified financial planner, is president of Northeastern Financial Consultants, a Clarks Summit-based firm and licensee of financial life planning tools and materials.Visit the company on the Web at www.nefci.com. or e-mail info@nefci.com. PNC Foundation presents gift to Marywood University Representatives of PNC Bank recently presented a check in the amount of $20,000 from the PNC Foundation to Marywood University. The funds represent the bank’s final payment of a $100,000 pledge. Seen at the check presentation were, left to right, Peter J. Danchak, president, PNC Bank Northeast Pennsylvania; Sister Mary Reap, I.H.M., president, Marywood University; and Paul Kosiba, PNC Bank, vice president, institutional investment group. 6 • NORTHEAST PENNSYLVANIA BUSINESS JOURNAL • SEPTEMBER 2003
Tips for efficient debt collection The grim reality for many businesses is the eventual need to deal with slow-paying or nonpaying customers. In fact, an otherwise thriving small business can find itself facing financial difficulties when fees for services or products are not collected on a timely basis.To avoid this situation, the Pennsylvania Institute of Certified Public Accountants recommends that you have a plan in place for collecting and monitoring accounts receivable and following up on unpaid invoices. Start with a clear policy Firmly establish your company’s payment terms and put them in writing. Before you take an order or start a project, let clients know when and how you expect payment. Be clear about your acceptance of such things as personal checks and credit cards, and the forms of identification required when using these. Also, be sure the policy includes deadlines for payments, along with penalty clauses for large amounts that remain unpaid. To avoid having your cash flow disrupted by slow or nonpaying customers, consider asking for payment up front. Depending on the type of business, this can be full or partial payment, deposit, or retainer.Advance payment not only will help your cash flow, but also will secure the relationship between your company and the customer. Check customer’s creditworthiness If you sell high-priced items or services that will be paid over time, it’s especially important to check the customer’s creditworthiness.When you provide an item or service to be paid at a later date, you are extending credit.You need to be sure that customers are creditworthy. Credit application forms can be purchased at most office supply stores, but a better idea is to have an attorney draw one up. In addition to providing you with basic contact information and bank account numbers, a good credit application gives you permission to order credit reports and check trade references. Once the prospective customer has completed the application, be sure to verify the information supplied and call the references to check on their payment experiences. Invoice promptly Billing promptly and accurately is key to the timely collection of fees. Don’t wait until the end of the month to bill. If there is a long lag time between completion of the work or shipment of the order and the date of the invoice, the message to your customer is that it’s OK to be slow. Before sending out invoices, take the time to carefully check them and be sure the due date, description, amount, and terms are clearly stated.An error will compromise your image and encourage slow payment. Another way to ensure prompt payment is to follow your customer’s invoicing instructions to the letter. Many large companies have precise methods for invoicing.Whether that means sending the bill to one department and a copy to the person who requested the service or including a special vendor identification number, adhering to the rules results in a more prompt payment. Monitor and follow up on payment due There are many accounting software packages available that will give you tools to monitor your accounts receivable. Basically, you need to know who owes what and for how long. It is advisable to develop a timetable for handling overdue bills. Mail a second invoice, with a notation or stamp that says “past due” or “second notice,” and then follow up with a phone call. Send late payment reminders early and frequently.Typically, the longer a bill goes unpaid, the less likely you are to recover the funds. Getting outside help Sometimes having an attorney send a letter to the overdue account is enough to hasten payment. If that doesn’t work, you may need to resort to small claims court or a collection agency. Keep in mind that, in most states, small claims courts typically cap the amount for which you can sue at a few thousand dollars, and the process can be time-consuming. If you refer overdue accounts to a collection agency, be aware that the amount collected will be less than what you’re owed. This is because the collection agency may negotiate down the amount due and take a percentage as its fee. It can pay to be flexible Although it is vital to have specific policies in place, from time to time it’s wise to be flexible. For example, if a customer who has made timely payments in the past suddenly experiences financial difficulties, consider working out a flexible payment plan. Just be sure to collect some amount each month until the overdue amount is completely paid. CPAs point out that while payment in a timely matter is important, so is maintaining good relationships with long-standing clients. This article was provided by the Pennsylvania Institute of Certified Public Accountants, a professional association of more than 19,000 CPAs who work in public accounting, industry, government, and education.Visit www.picpa.org. Tobyhanna Army Depot gets new commander Col. Tracy L. Ellis (left) accepts the Tobyhanna Army Depot flag from Maj. Gen. William H. Russ, commanding general of the U.S. Army Communications-Electronics Command. The change of command ceremony took place July 31 on the front lawn of the Headquarters Building. Ellis will serve as depot commander for three years. His most recent previous assignment was as chief of staff, Friendly Forces Coordination Cell at the U.S. Central Command (forward) in Saudi Arabia. U.S. Army photo by Charlie Cardimona It doesn’t get more business-friendly than this! Need a home for your growing or relocating small to mid-size business? You won’t find a better place than Columbia County’s Empire Zone. You’ll enjoy almost tax-free operation for up to ten years, as well as special, reduced electric and gas rates. Plus, our Empire Zone areas offer abundant, shovel-ready land, or existing industrial and commercial buildings. A skilled workforce and ample power and water resources are additional assets. With its clean air, natural beauty, rich history, cultural venues, and year-round recreation, Columbia County’s exceptional quality of life is an added bonus. For more information, call us today. 1-518-828-4718 Columbia County... The Heart of TechValley Columbia Hudson Partnership, 444 Warren Street, Hudson NY 12534-2415, ccez@mhcable.com NORTHEAST PENNSYLVANIA BUSINESS JOURNAL • SEPTEMBER 2003 • 7
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