Medicaid Protection of Assets by Funeral Preplanning

Medicaid Protection of Assets by Funeral Preplanning

It is common knowledge that one acceptable use of funds by a person seeking to qualify for Medicaid benefits is to prepay funeral expenses. In many cases, elders go to their funeral director and pay for the expenses with cash assets or they assign life insurance to the extent necessary.

Another more flexible method is to fund an irrevocable “funeral trust”. Rhode Island and Massachusetts law allow each person to fund an irrevocable “funeral trust,” with up to $15,000. (CT law only allows $5900). Funding for this can be from the cash value of an existing life policy (a 1035 tax free exchange), or in cash.

The advantage of a funeral trust over a pre-paid funeral is the flexibility of using any funeral home or burial service in any state, with the safety of the funds being in a guaranteed life insurance policy.

The fund is exempt from Medicaid and Supplemental Security Income (SSI) “spend down” requirements as soon as it is funded. Clearly, the trust funds can be used for all usual expenses of a funeral and other events relating to the funeral. It can also be used for additional expenses such as a permanent cemetery monument, travel expenses for family members, outstanding debts or obligations, various medical and professional fees and a post-funeral gathering. There is no “extra” cost for utilizing a financial adviser to assist you in setting up the irrevocable funeral trust. The adviser will be compensated by the company holding the trust.

One of the important aspects of the trust is that it is irrevocable which means that no person (even the grantor) can revoke the trust and gain access to the funds. Often we see situations where a person plans their estate plan but it is undone due to use of a Durable Power of Attorney or by the trustees of a revocable trust. This form of funeral planning secures the wishes of the grantor.

Special thanks to Robin of ROBIN G. SMITH CONSULTING for her contribution to this article.
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The Law Offices of Jeremy W. Howe, LTD. are ElderLaw attorneys in Rhode Island who specialize in wills and trusts, estate planning, guardianship, probate, and Veterans Aid and Attendance Benefits.

They also are Newport Rhode Island Divorce lawyers, attorneys, mediators, and arbitrators providing services for family law issues such as divorce, child custody and visitation, support, and military family law.

Call them today at 401-841-5700 or visit them on the web at http://www.CounselFirst.com.

What Do the Election Results Mean for Seniors?

Now that the votes are counted and President Obama has a second term, what does it mean for seniors?

While President Obama's re-election means Medicare and Medicaid as we know them will likely be preserved at least for the next four years, many challenges are still ahead. 

One of the biggest outcomes of the election is that the Affordable Care Act (ACA – a.k.a. "Obamacare"), which candidate Mitt Romney had promised to repeal, will almost certainly remain as law and be fully implemented.  The law is already beginning to close the gap in Medicare’s prescription drug coverage known as the "doughnut hole," as well as providing free preventative care for Medicare recipients. The ACA also included a number of provisions aimed at improving long-term care and helping recipients remain in their homes rather than be forced into nursing homes, and these will continue to be carried out.

There may be some issues ahead, however.  Before the end of the year, Congress will try to avoid going over the "fiscal cliff," which is what will happen if it fails to act on continuing at least some of the Bush-era tax cuts and fails to prevent automatic spending cuts that it agreed to as part of last year's deficit reduction deal.  Many economists believe that the combination of the two could send the fragile economy back into recession.  Lawmakers are now trying to agree on a "grand bargian," alternative spending and revenue measures that will will help reduce the deficit while not damaging the economy.

Although Medicare and Medicaid will likely maintain their current structures, cuts may be made during these negotiations or later. The President still has to deal with a Republican majority in the House of Representatives, many of whom want to cut spending and entitlement programs.

President Obama reportedly offered to increase the Medicare age to 67 in last year’s budget negotiations with Republicans.  In addition, many are worried that the President may be inclined to cut Social Security benefits as well during fiscal cliff negotiations, according to a recent policy update from the National Academy of Elder Law Attorneys.  During the first debate, the President said his position on Social Security did not differ markedly from Governor Romney's.  Romney supported raising the retirement age and privatizing Social Security benefits. 

“There is going to be the fight of our lifetime to maintain Social Security, Medicare and Medicaid,” says Eric Kingson, a professor of social work at Syracuse University quoted in a Huffington Post article titled "Obama's Second Term and Older Americans."

According to a Reuters article, congressional Republicans are also expected to ask for concessions from the ACA, including delaying and scaling back the planned expansion of Medicaid.  In addition, state lawmakers, many of whom are Republican, will decide how the ACA is carried out. Thirty states have Republican governors, some of whom have said that they will opt out of the Medicaid expansion provided for in the ACA. But President Obama's re-election may boost the prospects for expansion. According to Kaiser Health News, his win may prod reluctant states to move forward with the expansion.

The National Consumer Voice for Quality Long-Term Care warns that "hard budgetary decisions made by the President along with Congress could potentially cause some long-term care consumers to face higher care costs or a decline in access to services." The National Coalition on Health Care, a group of consumer groups, unions, and employers, has released a plan to control spending without cutting Medicare or Medicaid. More proposals and compromises are likely to be considered in the coming months.

Read original post HERE on our newsletter.

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The Law Offices of Jeremy W. Howe, LTD. are ElderLaw attorneys in Rhode Island who specialize in wills and trusts, estate planning, guardianship, probate, and Veterans Aid and Attendance Benefits.

They also are Newport Rhode Island Divorce Lawyers, Attorneys, Mediators, and Arbitrators providing services for family law issues such as divorce, child custody and visitation, support, and military family law.

Call them today at 401-841-5700 or visit them on the web at http://www.CounselFirst.com.

Medicare Premium Rise Lower Than Expected

The Centers for Medicare and Medicaid has announced the new Medicare premiums, deductibles, and coinsurances. 

The standard Medicare Part B premium is increasing by $5 to $104.90 a month, smaller than the $9 per month increase predicted earlier in the year.

As previously reported, Social Security recipients will receive a 1.7 percent increase in payments in 2013. Most people have their Medicare premiums deducted from their Social Security benefits. The smaller-than-expected hike means that most Medicare recipients will still receive a modest boost in Social Security benefits.

Here are all the new Medicare figures:

    Part B premium: $104.90/month (was $99.90)
    Part B deductible: $147 (was $140)
    Part A deductible: $1,184 (was $1,156)
    Co-payment for hospital stay days 61-90: $296/day (was $289)
    Co-payment for hospital stay days 91 and beyond: $592/day (was $578)
    Skilled nursing facility co-payment, days 21-100: $148/day (was $144.50)

As directed by the 2003 Medicare law, higher-income beneficiaries will pay higher Part B premiums. Following are those amounts for 2012:

•     Individuals with annual incomes between $85,000 and $107,000 and married couples with annual incomes between $170,000 and $214,000 will pay a monthly premium of $146.90 (was $139.90).
•     Individuals with annual incomes between $107,000 and $160,000 and married couples with annual incomes between $214,000 and $320,000 will pay a monthly premium of $209.80 (was $199.80).
•     Individuals with annual incomes between $160,000 and $214,000 and married couples with annual incomes between $320,000 and $428,000 will pay a monthly premium of $272.70 (was $259.70).
•     Individuals with annual incomes of $214,000 or more and married couples with annual incomes of $428,000 or more will pay a monthly premium of $335.70 (was $319.70).

Rates differ for beneficiaries who are married but file a separate tax return from their spouse:

Those with incomes between $85,000 and $129,000 will pay a monthly premium of $272.70 (was $259.70).

Those with incomes greater than $129,000 will pay a monthly premium of $335.70 (was $319.70).

The Social Security Administration uses the income reported two years ago to determine a Part B beneficiary's premiums. So the income reported on a beneficiary's 2011 tax return is used to determine whether the beneficiary must pay a higher monthly Part B premium in 2013. Income is calculated by taking a beneficiary's adjusted gross income and adding back in some normally excluded income, such as tax-exempt interest, U.S. savings bond interest used to pay tuition, and certain income from foreign sources. This is called modified adjusted gross income (MAGI). If a beneficiary's MAGI decreased significantly in the past two years, she may request that information from more recent years be used to calculate the premium.

Those who enroll in Medicare Advantage plans may have different cost-sharing arrangements. On average Medicare Advantage premiums are expected to rise $1.47 per month in 2013.

For more information on the Medicare Part A numbers and the Medicare Part B numbers, click HERE to be taken to the original article.

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The Law Offices of Jeremy W. Howe, LTD. are ElderLaw attorneys in Rhode Island who specialize in wills and trusts, estate planning, guardianship, probate, and Veterans Aid and Attendance Benefits.

They also are Newport Rhode Island Divorce Lawyers, Attorneys, Mediators, and Arbitrators providing services for family law issues such as divorce, child custody and visitation, support, and military family law.

Call them today at 401-841-5700 or visit them on the web at http://www.CounselFirst.com.

Medicare's Open Enrollment Season Is Coming

It is that time of year again -- time to reassess whether your Medicare plan is working for you. 

Medicare's open enrollment period runs from October 15 to December 7.

During this period, you may enroll in a Medicare Part D plan or, if you currently have a plan, you may change plans. In addition, you can switch out of a Medicare Advantage (managed care) plan and return to traditional Medicare (Parts A and B), enroll in a Medicare Advantage plan from traditional Medicare, or change Medicare Advantage plans.  If you are in traditional Medicare, are happy there and don’t have or want a prescription drug plan, you don’t need to do anything. 

Beneficiaries can go to www.medicare.gov or call 1-800-MEDICARE (1-800-633-4227) to make changes in their Medicare prescription drug and health plan coverage.

During the open enrollment period, you should review your current plan by looking at the costs and coverage for next year to determine if it is still the right plan for you. It is especially important to shop around for the best drug plan. The Washington Post is reporting that prescription drug plan premiums are expected to go up significantly. According to an analysis by Avalere Health, seven of the current top 10 prescription drug plans will have double-digit increases in premiums.

Remember that fraud perpetrators will inevitably use the Open Enrollment Period to try to gain access to individuals' personal financial information.  Medicare beneficiaries should never give their personal information out to anyone making unsolicited phone calls selling Medicare-related products or services or showing up on their doorstep uninvited.  If you think you've been a victim of fraud or identity theft, contact Medicare.  For more information on Medicare fraud, click here or here. 

In addition, you can now get the same information found in the handbook "Medicare & You" online.

Find out what’s new for the year, how Medicare works with your other insurance, get Medicare costs, and find out what Medicare covers. The handbook information on the Web is updated regularly, so it will always find the most up-to-date Medicare information.
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 The Law Offices of Jeremy W. Howe, LTD. are ElderLaw attorneys in Rhode Island who specialize in wills and trusts, estate planning, guardianship, probate, and Veterans Aid and Attendance Benefits.

They also are Newport Rhode Island Divorce Lawyers, Attorneys, Mediators, and Arbitrators providing services for family law issues such as divorce, child custody and visitation, support, and military family law.   

Call them today at 401-841-5700 or visit them on the web at http://www.CounselFirst.com.

Medicaid Expansion: What If a State Opts Out?

 Affordable Care Act News (ObamaCare)

One of the key provisions of the Affordable Care Act, the new health reform law, gives money to states to expand Medicaid to adults and families with low incomes – a total of about 17 million additional people.

However, the Supreme Court recently ruled that the federal government cannot effectively coerce states into accepting the Medicaid expansion by withdrawing all a state’s Medicaid funds if it refuses.  Although elderly and disabled individuals who currently receive Medicaid aren't affected by the Court's ruling, it could leave millions of others without any options for health coverage -- and possibly cost lives.

The Affordable Care Act expands Medicaid eligibility starting in 2014 to individuals and families with incomes up to 133 percent of the poverty line, which is $14,856 for an individual in 2012. (Most states currently limit Medicaid to certain categories of people at or below the poverty line, including children, pregnant women, parents of eligible children, people with disabilities and elderly needing long-term care.) The federal government will pay the complete cost for the Medicaid expansion for three years for newly eligible beneficiaries, and 90 percent of a state’s costs thereafter.

Read more HERE

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 The Law Offices of Jeremy W. Howe, LTD. are ElderLaw attorneys in Rhode Island who specialize in wills and trusts, estate planning, guardianship, probate, and Veterans Aid and Attendance Benefits.

They also are Newport Rhode Island Divorce Lawyers, Attorneys, Mediators, and Arbitrators providing services for family law issues such as divorce, child custody and visitation, support, and military family law.   

Call them today at 401-841-5700 or visit them on the web at http://www.CounselFirst.com.

MEDICAID DIVESTMENT PENALTY DIVISOR UPDATE

Medicaid Divestment Penalty Update

One of the most important pieces of advice that we give to those clients who come to us for Medicaid planning is to be extremely cautious when making gifts or transfers for less than fair market value.

When a nursing home resident applies for Medicaid assistance, one of the first questions he or she is asked is whether any gifts or transfers were made within the past five years.  This is the infamous “look-back” period which can result in a penalty imposed upon the applicant.

For example:  Mr. Smith is a resident of a nursing home and is otherwise eligible for Medicaid assistance.  However, three years ago, he gave his daughter $100,000.00 as a gift.  The state uses the current divisor of $8,492.00 (up from $7,777.00 previously) to determine how many months Mr. Smith will have to wait before he can receive Medicaid.  $100,000 divided by $8,492.00 equals 11.8.

For the next 11.8 months, Mr. Smith will be ineligible for Medicaid assistance to pay for his nursing home care.  The penalty will create a huge problem for Mr. Smith and his family if the family has no other means of paying for nursing home care.

Before you or your parents make any gifts or transfers for less than fair market value, consider how these gifts may impact Medicaid assistance in the future. 

Please call our office if you have questions about the Medicaid application process or how the rules might affect you.


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The Law Offices of Jeremy W. Howe, LTD. are ElderLaw attorneys in Rhode Island who specialize in wills and trusts, estate planning, guardianship, probate, and Veterans Aid and Attendance Benefits.

They also are Newport Rhode Island Divorce Lawyers, Attorneys, Mediators, and Arbitrators providing services for family law issues such as divorce, child custody and visitation, support, and military family law. 

Call them today at 401-841-5700 or visit them on the web at http://www.CounselFirst.com.

New Bottom Limit of the Minimum Monthly Maintenance Needs Allowance

Minimum Monthly Maintenance Needs Allowance

Announced by the Department of Health and Human Services 

If a nursing home recipient of Medicaid assistance is married, he or she is called the Institutionalized Spouse (IS) and his or her spouse is the Community Spouse (CS). The income of the CS is not deemed available to the IS at any time for the IS’s care. Although the CS is able to keep all of his or her own income, if the CS has no income or insufficient income, then other rules apply. In such a case, the CS is entitled to receive a Minimum Monthly Maintenance Allowance which is comprised of a basic monthly allowance and a monthly excess shelter allowance.

The Department of Health and Human Services recently announced new poverty income guidelines for 2012. The new guidelines mean that the lower limit of the Minimum Monthly Maintenance Needs Allowance will rise to $1891.25, effective no later than July 1, 2012. The current amount is $1838.75.

Please call our office if you have questions about the Medicaid application process or how the rules might affect you.
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The Law Offices of Jeremy W. Howe, LTD. are ElderLaw attorneys in Rhode Island who specialize in wills and trusts, estate planning, guardianship, probate, and Veterans Aid and Attendance Benefits.

They also are Newport Rhode Island Divorce Lawyers, Attorneys, Mediators, and Arbitrators providing services for family law issues such as divorce, child custody and visitation, support, and military family law. 

Call them today at 401-841-5700 or visit them on the web at http://www.CounselFirst.com.

Losing the Forest for the Trees

Can't See the Forest Through the Trees?

This common quote means that if you are so engrossed in looking at individual trees, you might forget that each tree is one of thousands and thus lose sight of the big picture-the forest.

It is much the same in elderlaw. For example, if you focus on the rules of the VA in order to obtain Aid & Attendance Benefits, you can make a mistake and jeopardize your Medicaid eligibility in the future (if you should require assistance to remain in a nursing home).

In elder-law, the trees are Medicaid rules, estate & gift tax laws, income tax laws, VA Aid & Attendance rules, state Probate rules, state statutes and case law. The forest is the comprehensive view of a clients needs, goals, health, and desires or the estate plan of a client.

We saw an example this week. Our client's son and daughter had been advised to spend down their mothers assets by making gifts in the allowed annual amount of $13,000 so that she would qualify for Medicaid nursing home assistance in the future due to lack of assets.

Our clients advisors were confusing one tree (Medicaid allowable spend-down) with another tree (estate & gift tax law). Her gifts would disqualify her from receiving Medicaid assistance for five years from the date of the gifts due to the penalty period imposed by the Medicaid rules. Our client would never have had an estate tax issue because her assets would never reach $900,000, the approximate Rhode Island credit amount.

On the other hand, it was possible that she could run out of funds within the five years and need Medicaid assistance to remain in a nursing home but not be qualified for that assistance due to the penalty.

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The Law Offices of Jeremy W. Howe, LTD. are ElderLaw attorneys in Rhode Island who specialize in wills and trusts, estate planning, guardianship, probate, and Veterans Aid and Attendance Benefits.

They also are Newport Rhode Island Divorce Lawyers, Attorneys, Mediators, and Arbitrators providing services for family law issues such as divorce, child custody and visitation, support, and military family law. 

Call them today at 401-841-5700 or visit them on the web at http://www.CounselFirst.com.

TAX DEDUCTION FOR FAMILY CAREGIVER SERVICES

TAX DEDUCTION FOR FAMILY CAREGIVER SERVICES

The following Article was written by: Kim Boyer, CELA, BOYER LAW GROUP, www.elderlawnv.com and provided to our office via the Veterans Advocates Group of America monthly e-newsletter called VAGA News.
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Many times family members or friends provide care to a loved one for a fee. These family members or friends are typically unlicensed caregivers. Can the person paying for the care deduct the payments as a medical expense on their income tax return?

Medical expenses, not compensated for by insurance or otherwise, may be allowed as a deduction to the extent that the expenses exceed 7.5% of the taxpayer's adjusted gross income. Medical care can include amounts paid for "qualified long-term care services" as defined herein. The taxpayer must be certified as "chronically ill" by a licensed health care professional. The services must be provided pursuant to a plan of care prescribed by a licensed health care professional.

The U.S. Tax Court recently ruled on the issue of whether payments to unlicensed care providers were deductible. Estate of Lillian Baral v. Commissioner of Internal Revenue (July 5, 2011).

The tax court examined whether payments totaling $49,580 made by Lillian to Ms. Pzevorski and Ms. Jakubowski were deductible. Neither of them were licensed healthcare providers. Thus, the payments were not deductible as medical expenses. However, the court found that payments to them could be deducted if their services qualified as "long-term care services" as defined under the tax code.

After analyzing the tax code, the Court found that the care provided constituted "maintenance or personal care services" for a "chronically ill individual" provided pursuant to a "plan of care prescribed by a licensed health care professional." Thus, Lillian could deduct $43,273 of the payments made to the care providers (the amount paid which exceeded 7.5% of her adjusted gross income).

For Medicaid purposes the payments will be considered gratuitous when provided by a family member, unless there is a written contract. It is advisable that there be a written contract providing for reasonable compensation and specifying the nature of services to be provided.

**This article/newsletter is not intended as a substitute for VA, legal, or other professional advice. Every effort has been made to make the content of this newsletter accurate; however, neither VAGA, nor any of its founders, assume any responsibility for errors in content or damages that may occur as the result of using the information contained within this newsletter or from any associated website or e-mail links.
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The Law Offices of Jeremy W. Howe, LTD. are Elder Law Attorneys in Newport, Rhode Island who specialize in Wills and Trusts, Estate Planning, Guardianship, Probate, and Veterans Aid and Attendance Benefits.

They also are Newport Rhode Island Divorce Lawyers, Attorneys, Mediators, and Arbitrators providing services for Family Law issues such as divorce, child custody and visitation, support, and Military Family Law.

Call them today at 401-841-5700 or visit them on the web at http://www.counselfirst.com

New Medicare and Medicaid Allowances for 2012

New Medicare and medicaid Allowances for 2012

ElderLaw Answers reported today that the Centers for Medicare & Medicaid Services has announced that the community spouse resource allowance (CSRA) and the maximum monthly maintenance needs allowance will rise in 2012,.  The Medicaid home equity limits will go up as well. These allowances have remained flat for two years.

The new minimum CSRA is $22,728 and the new maximum is $113,640. The new maximum monthly maintenance needs allowance is $2,841. The minimum monthly maintenance needs allowance remains $1,828.75 until July 1, 2012.

In addition, the minimum and maximum home equity limits used by Medicaid will increase to $525,000 and $786,000, respectively.

The new figures are effective January 1, 2012, and reflect an increase in the Consumer Price Index (CPI) of 3.7 percent from September 2010 to September 2011.

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 The Law Offices of Jeremy W. Howe, LTD. are ElderLaw attorneys in Rhode Island who specialize in Wills and Trusts, Estate Planning, Guardianship, Probate, and Veterans Aid and Attendance Benefits.

They also are Newport Rhode Island Divorce Lawyers, Attorneys, Mediators, and Arbitrators providing services for Family Law issues such as Divorce, Child Custody and Visitation, Support, and Military Family Law. 

Call them today at 401-841-5700 or visit them on the web at http://www.CounselFirst.com.

Medicare Assistance

Medicare Assistance

Health care and health care reform continue to be hot topics of conversation with particular attention being paid to the high costs of care. Individuals who are 65 years of age or older, or who have reached the 25th month of a permanent and total disability, are eligible for Medicare, the federal health insurance program. Payment for Medicare insurance is usually deducted from a person's social security.

Many people do not realize, however, that limited assistance is available for low income Medicare beneficiaries. This limited coverage helps eligible individuals pay for some or all of their out-of-pocket Medicare expenses, including Medicare premiums, deductibles and co-pays. Eligibility depends on income and resource limits.

As of April 2010, the basic resource limit for an individual is $6,600 and $9,910 for a couple. The income limits are based on the Federal Poverty Guidelines and vary according to the specific assistance program.

While many of our clients are concerned with planning for the future in terms of Medicaid (state assistance for nursing home or in-home care), it is important to remember the availability of the assistance for Medicare - another way to help in difficult economic times.
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The Law Offices of Jeremy W. Howe, LTD. are ElderLaw attorneys in Rhode Island who specialize in Wills and Trusts, Estate Planning, Guardianship, Probate, and Veterans Aid and Attendance Benefits.

They also are Newport Rhode Island Divorce Lawyers, Attorneys, Mediators, and Arbitrators providing services for Family Law issues such as Divorce, Child Custody and Visitation, Support, and Military Family Law. 

Call them today at 401-841-5700 or visit them on the web at http://www.CounselFirst.com.