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My Dad who was 67 recently passed away. Since he was not married at the time of his death, his four children are his beneficiaries. The company that has his IRA sent us a "Beneficiary Retirement Account Application" and told us that my Dad ws taking distributions so our only option is to choose the "Life Expectany Payments".

My Dad is going to have huge medical bills and the money is needed to pay them. In research I read that even though he took the distributions, he wasn't required to so our options of taking the money all at once are available.

Any help would be greatly appreciated. I understand my tax liability. The important issue to all of his children are that his bills be paid which are only hospital at this time.

Thank you
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My condolences. You said you father passed away recently. Have the medical bills been processed through Medicare and any supplemental insurance?

When my FIL passed away, there were about $40,000 in medical bills. The charges were reduced by Medicare and they paid most of the remaining balance. The estate paid less than $2,000 of the balance.

Debra
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When my FIL passed away, there were about $40,000 in medical bills. The charges were reduced by Medicare and they paid most of the remaining balance. The estate paid less than $2,000 of the balance.

I would second waiting to pay any of these bills. My mother died in January and I'm still getting explanations of benefits from medicare and the gap insurance.

rad
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Thank you. My Dad's supplemental insurance was to kick in November 1 so the only insurance is through medicare. Did not realize that they reduced the bills. Was this something you asked for? or do they just automatically reduce it because of the death?

He went from a very healthy 67 year old one week, diagnosed with a brain tumor the next week, died the following week so a shock to all and totally unexpected as I guess most deaths are.

Thank you again for your help. Much appreciated.
Kelly
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My Dad's supplemental insurance was to kick in November 1 so the only insurance is through medicare. Did not realize that they reduced the bills. Was this something you asked for? or do they just automatically reduce it because of the death?

Usually what happened was that the bill was submitted to medicare, medicare paid what they pay. If there was something left, it was usually covered by the gap insurance. Some docs, etc accept whatever medicare pays as full payment and it is something you could ask for if they don't. Medicare & You(publication) explains what's covered. It was tough to find the 07 one online - here's the large print one - http://www.medicare.gov/Publications/Pubs/pdf/10050_LE.pdf

and my guess is that will change to 08 soon. Here's the main page : http://www.medicare.gov/default.asp and you can find info there as well.

rad
P.S. You need to pull together all of the healthcare costs in case, it's enough to deduct(I'm assuming a personal return needs to be filed for him for this year but hopefully someone who actually knows will chime in)
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My Dad's supplemental insurance was to kick in November 1 so the only insurance is through medicare. Did not realize that they reduced the bills. Was this something you asked for? or do they just automatically reduce it because of the death?

As with most medical insurance, the provider agrees to specific charges for services. Frequently the amount they initially charge is above the agreed upon amount. The difference is written off by the provider. Medicare will pay their part. The remainder is the patients responsibility.

You won't know the balance due until the bills are processed by Medicare. The advise to try to handle the medical bills before the end of year is good, but probably unrealistic. My FIL died in November. It was well past the end of year before all of the medical bills were processed by Medicare.

Debra
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First, sorry for the loss of your father.

With regards to the medical expenses, if your father was on Medicare they will cover the bulk of the expenses if your father went to a doctor who accepts Medicare's terms and conditions, most doctors do, they would be crazy not too. As far as what Medicare covers, Part A should cover most of the expense of staying in a hospital, with the exception of the $992 deductible. Medicare Part B will cover generally 80% of the approved amounts after the $131 deductible. There is no coverage for drugs though, unless he had a Part D plan.

As for the IRA you hae three options when you inherit an IRA from someone other than a spouse.

1) Take a lump sum distribution, pay all the taxes at once.
2) Take a payout over 5 yrs.
3) Payout over the life expectancy of the oldest beneficiary, this is the best option as you can spread the taxation out over a longer time period. With this option though, you are not restricted to the minimum distribution, you still have the right to withdraw any amount you want.
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Thank you to everyone who took the time to reply. You have helped so much and I appreciated your kindness.
Kelly
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Any help would be greatly appreciated. I understand my tax liability. The important issue to all of his children are that his bills be paid which are only hospital at this time.

An understandable sentiment, especially when everything's so raw, but slow down and get your ducks in a row.

First, as has already been said, pay nothing until the dust settles on all the medical charges. That means Medicare and any other insurance have processed everything and the providers have made all the adjustments. If "recently" means within the last couple of months, I doubt everything will be resolved before the end of the year. I'm still waiting for a final bill from the hospital for surgery done in 2005.

Second, these are not your debts, although the providers will certainly want you to see them as yours. They are your father's debts, and they are payable only from his assets. The last place you should be looking for the money to pay them is his retirement accounts, which will create a tax liability for you.

If you haven't done so already, you need to talk to a lawyer.

Phil
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Thank you Phil,

I've actually have done exactly what you are suggesting and have learned so much. With $156,000 hospital bill so far and only having Medicare, we all assumed that we owed 20%. I've since gained access to my father's account and the amount that shows "may be billed" is only $1400. Huge relief. I myself am not touching my share of the money and have shared the advice from my accountant/attorney and what I have learned here to my siblings.

We learn so much from the death of a loved one. I know I need to take care of some things in my own life that I didn't think about until my Father's death.

It's nice that there is a place that we can obtain good solid advice from through forums like this from people that have experienced what I am going through.

Again THANK YOU
Kelly
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