Delivering News and Updates on Wills, Trusts, and Estate Administration Matters |
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In this edition of our newsletter, learn how genetic information can be used for you and against you, discover how to ensure money in your Health Savings Account is appropriated properly, check out the Tip of the Day, mark your calendar for an upcoming discussion on Medicare options and long-term care costs (a real worry for most!), and much more! |
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Do these Genes Make Me Uninsurable?
If you are a true crime aficionado like Amy, Sara, and Kim, then you probably already know that DNA-testing played a major role in catching the Golden State Killer. If you are unfamiliar with the details, here’s the Cliffs Notes version:
Law enforcement secured a DNA profile of the Golden State Killer from genetic material recovered from one of his victims. They uploaded the DNA profile to two different DNA genealogical sites. Investigators discovered a familial link (second cousins) to the DNA profile. They visited one of the genetic relatives, obtained a DNA sample direct from her, and began building out a family tree. Investigators identified six male cousins as potential culprits, and from there, narrowed it down based on eye color. Joseph DeAngelo Jr. was the only cousin with blue eyes. You can read more about the use of DNA testing for the case here.
The legal implications of the case are quite interesting considering that the genetic material submitted by individual consumers to these genealogical sites—and the ancestral links revealed—are supposed to be private. Yet, law enforcement was able to find a notorious serial killer because his second cousin submitted her DNA to one of these companies. Fascinating!
Genetic testing is not just about finding long lost family members or criminal masterminds, though. It’s also commonly used to reveal molecular and chromosomal abnormalities (mutations) that could signify certain health issues. For example, 23andme.com advertises that, through genetic testing, they can discover if you have an increased risk for certain health conditions, help you understand how your body processes certain medications, and identify if you are a carrier for various genetic variants that could affect your children.
This is all good news, right? Isn't this helpful information for us to know about ourselves? Well, the answer might not be so clear-cut considering the negative impact test results could have on your insurability.
The good news is that the Genetic Information Nondiscrimination Act (GINA) prohibits health insurance providers from considering your genetic information when evaluating your health insurance eligibility. GINA also forbids genetic discrimination for employment, though it is important to note that GINA does not apply to small companies with fewer than 15 employees.
The not-so-good news is that GINA does not apply to all types of insurance. If you are applying for long-term disability, short-term disability, long-term care insurance, or life insurance, for example, then the insurance company can request your medical history and can also require you to reveal the results of any genetic testing.
Suppose your genetic test reveals you are at risk for Huntington's Disease or Alzheimer's Disease or aggressive cancer. The insurance company may decide you are too much of a risk and decline coverage or charge you a higher premium for its products.
For its part, the insurance industry claims not to be interested in direct-to-consumer genetic tests, only those tests ordered by a medical provider and completed by a clinical lab. Still, it doesn’t hurt to be cautious. If you are considering applying for new insurance, then perhaps hold off on opening that at-home DNA kit a little while longer since it is unlikely that the insurer will cancel your coverage—once you have been approved—based on the results from your genetic test. But if you do the test and fail to report the results, that could be sufficient grounds for the insurer to revoke the policy.
One last warning: many of these companies (AncestryDNA and 23andMe included) monetize your
medical data by partnering with biomedical research firms. So, be sure to read all the fine print about
how your genetic information can be used before you swab your cheek!
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Can I Add a Beneficiary to My
Health Savings Account?
Not only can you add a beneficiary to your Health Savings Account (HSA), but you should add a beneficiary! If you fail to name a beneficiary, then any funds remaining in your HSA after your death will have to pass through probate. Acceptable beneficiaries for HSAs include:
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Your spouse: Your Health Savings Account actually becomes your spouse’s account. There are no major tax implications to be considered if your spouse inherits your HSA. For spouses under the age of 65, they may use the money, tax-free, for qualified medical expenses. For spouses over the age of 65, their use of HSA funds is less restricted.
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Your adult child or other family member: Technically, the Health Savings Account itself cannot pass to a non-spouse. Instead, the HSA will be closed, and the named beneficiary will inherit the value of the account. The monies received will be considered income that the beneficiary has to report on his or her taxes. However, the adult child or other family member is allowed to use the HSA funds to pay your qualified medical expenses for up to 12 months after your death. Any amounts paid on your behalf would reduce the amount subject to taxation.
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Your trust: Having a trust as the beneficiary operates similar to how it works for non-spouse family members. The HSA will be closed, the value of the account distributed to the trust, and the trust reports the taxable income (though if the income is distributed back out to the trust beneficiaries, this would likely be reflected on a K-1 Schedule and the trust beneficiaries would ultimately be responsible for any income taxes owed).
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Charity: There are no tax implications when naming a charitable organization as the beneficiary to your HSA. The charity would receive 100% of the remaining HSA funds.
Although it is allowable to name your estate as the beneficiary of your HSA, designating your estate as beneficiary is the functional equivalent of not naming a beneficiary at all. Either way, HSA funds become a probate asset that must pass through the court before it gets to your heirs. In addition, the full value becomes taxable income that is reported on the estate income tax return.
Most people do not keep large balances in HSAs, which is all the more reason why you should consider your beneficiary options. With careful planning, you can stretch a little a long way.
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The Land Trust Initiative allows you to work directly with Wildlife and Outdoor Recreation Foundation staff to select the usage and management of the land you are gifting, including naming rights and recognition. When you support the Foundation with a contribution of land, your benefits include:
- The ability to choose how your gift is used.
- The opportunity to see the results of your generosity.
- The qualification for an income tax deduction for the full value of your gift when you itemize.
The donation of land is a gift that will continue to give, while conserving wildlife resources and their habitat. To get started creating your legacy through the gift of land, visit the Wildlife and Outdoor Recreation Foundation or call (919) 614-5126.
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Did you spy something different in last month's newsletter? We are trying out a newsletter logo, and we would appreciate your feedback on the new look.
Thanks for your time (and your honesty)!
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For reference, see the "In a Nutshell | August 2022" logo above, in the top right corner.
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Yes, and I like it just fine.
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Are you worried about funding your health and long-term care needs as you approach retirement? Are you sure your current Medicare plan is the best for you? |
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If these are questions you wrestle with, mark your calendars for an important discussion on "Health Care and Your Retirement" hosted by Financial Advisor Maria Litzinger with Edward Jones in Apex. The presentation will address:
> Medicare coverage and traditional medical expenses;
> Long-term medical care expenses; and
> Strategies for addressing uncovered expenses.
DATE: Tuesday, September 20 (RSVP by September 13)
TIME: 6:00 - 7:00 p.m.
LOCATION: 800 W. Williams St, Suite 205, Apex, NC 27502
This is not a Privette Legacy Planning-sponsored or -affiliated presentation. To RSVP or to learn more about this event, contact Kendra Crews at (919) 924-0411.
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