Massachusetts Estate Planning & Asset Protection Blog

Can Your Will Protect You When You Don't Die?

Posted by Massachusetts Estate Planning & Elder Law Attorney, Dennis B. Sullivan, Esq., CPA, LLM on Thu, Aug 07, 2014

 

What Happens When You Don’t Die?

medicare, medicaid, wills, spouse

 

Is your “I love you” will capable of protecting you or your spouse from long-term care costs?

You know the kinds of wills we’re talking about: The husband leaves everything to the wife, the wife leaves everything to the husband and after they both die, everything goes to the kids. This works well in situations where the spouses are healthy one day and are deceased the next. 

However, as most of us know, life usually doesn’t work that way very often. Research indicates that nearly 70% of individuals over 65 will require some kind of long-term care in their lifetimes.

Thus, many spouses worry that if they predecease an ill spouse who is currently in a nursing home or will require long-term care at some point in the near future, there will be insufficient funds available to provide for their institutionalized spouses’ needs. This is an especially relevant concern for expenses that are not covered under Medicaid such as: care managers, private nurses, single rooms, as well as certain therapies and drugs.

Another concern is that the availability of funds from “I love you” wills and trusts will disqualify the surviving ill spouse from eligibility for Medicare benefits. As you know from prior articles, Medicare (MassHealth in Massachusetts) is the only long-term-care governmental program in the United States and does not cover long-term custodial care.

To solve this problem many of our clients rely on a “testamentary trust”. This is a trust built into the will of each spouse. For many estate planners, this is counterintuitive because much of the estate planning occurs within the context of a revocable living trust. In order to preserve access to Medicaid eligibility without requiring that the surviving spouse spend down the assets and lose the chance to maintain a “rainy day fund”, creating a testamentary trust in the will of the pre-deceasing spouse is essential.

What this means is that around age 55, you have to completely revise your wills and trusts to accommodate a different paradigm of thought. The thinking process is no longer “What happens when I die?” Now the question becomes “What happens if I don’t die and live a long time with expensive long-term care?”

The new paradigm requires a new estate plan. If you consider yourself middle-class (meaning that your net worth will be significantly impacted by the cost of long-term care for you and/or your spouse) and are over age 55, we suggest that you revise and update your estate plan to reflect your current and future needs as soon as possible.

At the Estate Planning & Asset Protection Law Center, we help people and their families learn how to protect their home, spouse, life-savings, and legacy for their loved ones.  We provide clients with a unique educational and counseling approach so they understand where opportunities exist to eliminate problems now as they implement plans for a protected future.

We encourage you to attend one of our free educational workshops, call 800-964-4295 and register to learn more about what you can do to enhance the security of your spouse, home, life savings and legacy.

 Click Here to Register For Our Trust, Estate & Asset  Protection Workshop

Tags: will, living will, Estate Planning, Estate Planning, Alzheimer's Disease, Elder Law, asset protection, long term care, Medicaid, in-home care, Health Care, estate reduction, estate, elder care journey, hospice, Alzheimers Disease, medicaid qualification, Wills, assets, Medicaid penalties, alzheimer's activities, in home, incapacity, Elder Law, Attorney, myths, Alzheimer's, alzheimers, financial, Attorney, income, Alzheimer's, federal, health, surviving spouse, in-home care, long term care insurance

Massachusetts Elder Law Lawyer | Considering Retirement or Retired?

Posted by Massachusetts Estate Planning & Elder Law Attorney, Dennis B. Sullivan, Esq., CPA, LLM on Wed, Jan 30, 2013

Now Is the Time to Review Your Investments

In conducting research for our upcoming book, the Senior & Boomer’s Guide to Health Care Reform & Avoiding Nursing Home Poverty we learned that many people who are still working are giving retirement a second thought.

This is because they have to make big decisions about things such as Social Security and taxes - in advance. The world as we knew it has been turned upside-down in recent years, and this decision will affect the rest of your life.  Many are not sure they are ready - emotionally and financially - to retire.

If you're considering making the break, ask yourself these questions:

AM I REALLY READY?

Because of the loss of our financial security-blankets in recent years, people are working longer. If you enjoy your job, maybe you should keep working.

Working will allow you more time to build up your savings for the day when you really do want to play golf instead of office politics, and more time to pay down your mortgage. Keep in mind, once you retire, it can be difficult to un-retire.

CAN I REALLY LIVE ON A SMALLER BUDGET?

If you think it was hard staying on a budget during your working life, you ain't seen nuthin' yet! In fact, it often gets more expensive to live after you retire. You've got less coming in. But you'll probably be spending money on things you never had the time to spend it on before.

You'll probably be traveling more. Seeing more movies or ballgames. Playing more golf. Going out with friends more. And perhaps buying more "toys."

The Web can be a resource.  Retirement and financial planning websites like Mint.com can help you figure out expenses that may end with retirement, and those that may begin.

Some experts encourage a trial run, by living on a projected "retirement budget" while you're still working. It's not a totally accurate method. But it might give you time to develop coping strategies.

CAN I PUT OFF TAKING SOCIAL SECURITY?

There's a natural instinct to sign up when you turn 62. But "full-retirement age" isn't until 66...and, if you start early, your benefits will be reduced. So, if you've got a bit of a nest egg, consider waiting a while. And if you can wait until 70, your benefits will be even higher.

For those eligible at age 66, waiting just one year will result in monthly benefits equaling 108% of the previous amount. And waiting until 70 would generate 132% of the regular monthly benefit!  In fact, you can nearly double the amount you'll get at 62 if you can wait until 70.

HAVE YOU SPOKEN WITH YOUR ACCOUNTANT?

Most of us speak with our accountant just once a year - at tax time. But don't consider retirement without discussing your finances with your accountant or asking us about how we can help you with retirement and tax planning.

Consider a financial planner, too. A big chunk of your IRA is going to Uncle Sam when you withdraw it.  Together, we can help you develop a strategy for your taxable and tax-sheltered accounts. And we can help you decide whether to convert to a Roth IRA, where withdrawals are tax-free, but conversions are not.

ARE YOUR INVESTMENTS SAFE AND PRODUCTIVE?

Many people especially those considering retirement or in retirement should review their portfolio with an eye towards age and risk tolerance, making sure they are in line with one and other.  Many people are sick of banks not only dropping their CD rates but their money market rates as well.  Many professionals are concerned that interest rates may be at a turning point and with the debt ceiling conversation being revisited, now may be a good time to review your investment options.  If you would like some information on safe investing for seniors, please let us know.

At the Estate Planning & Asset Protection Law Center, we help people and their families learn how to protect their home, spouse, life-savings, and legacy for their loved ones.  We provide clients with a unique education and counseling approach so they understand where opportunities exist to eliminate problems now as they implement plans for a protected future.

We encourage you to attend one of our free educational workshops. Call 800-964-4295 to learn more about what you can do to enhance the security of your family and legacy.

elder law, massachusetts, estate planning, medicaid, alzheimer's

Click Here to Register For Our Trust, Estate & Asset  Protection Workshop

Tags: retirement plans, Estate Planning, Elder Law, roth conversions, Retirement, Baby Boomers, 401(k), Attorney, senior, income

Massachusetts Estate Planning Lawyer | What Does Avoiding the Fiscal Cliff Really Mean?

Posted by Massachusetts Estate Planning & Elder Law Attorney, Dennis B. Sullivan, Esq., CPA, LLM on Mon, Jan 07, 2013

All anyone was talking about in the last days of 2012 was whether Congress and President Obama would work together to avoid an increase in taxes caused by the expiration of a number of tax breaks dating back to President Bush.  An agreement was reached at the 11th hour.  But what does it all mean?  And how does it affect seniors?

Click Here to Learn More About How to Avoid the Top Mistakes in Estate & Asset Protection Planning

First let’s talk income taxes.  The President and Republicans reached a compromise, raising the tax rate on individuals earning more than $400,000 and married couples making more than $450,000 from 35 to 39.6 percent.  Payroll taxes will increase as well, back to 6.2 percent, for all wage earnings up to $113,700 in 2013.  The past 2 years saw a 2 percent reduction in mandatory contributions to the Social Security program.  While this will impact 160 million American employees it won’t affect most seniors who are retired.

There was much speculation on the federal estate tax exemption and whether the $5,000,000 exemption would expire and return to $1,000,000.  Remember, at the end of 2010 we went through this when there was no federal estate tax and we waited to see if that law would expire and return the exemption to $1,000,000.  Well, this time, lawmakers decided to make the $5,000,000 exemption permanent .  That means we won’t automatically have to go through this insane process every two years of watching to see what Washington will do at the last minute.  Actually, the exemption, which is currently $5,120,000, is indexed for inflation and will rise year to year.  What Congress did do was raise the federal estate tax rate from 35 to 40 percent.

Another change for 2013, recently announced by the IRS, is that the annual gift tax exclusion, that amount that can be gifted annually per person without paying gift tax or using one’s lifetime exemption of $5,120,000, will rise from $13,000 to $14,000.  Massachusetts does not have a gift tax, however estates above $1,000,000. remain subject to the Massachusetts estate tax. Married couples with the right type of trust and funding may double the tax free amount to $2 million. This is not automatic so its important to make sure you create and maintain the proper estate plan.

Click Here to Learn More About Our 19 Point Trust, Estate and Asset Protection Legal Guide

Another change that threatened to impact seniors was avoided for at least another year.  Congress agreed to a one year extension of current Medicare reimbursement rates, avoiding what would have been a 27 percent cut in reimbursement rates for doctors participating in Medicare.

So, there you have the highlights of the law.  Looking at the bigger picture, the politicians in Washington haven’t tackled the bigger problems we are wrestling with such as the economy, budget deficits, and growing government spending.  But, in the short term, a financial crisis has been averted.

At the Estate Planning & Asset Protection Law Center, we help people and their families learn how to protect their home, spouse, life-savings, and legacy for their loved ones.  We provide clients with a unique educational and counseling approach so they understand where opportunities exist to eliminate problems now as they implement plans for a protected future.

We encourage you to attend one of our free educational workshops. Call 800-964-4295 to learn more about what you can do to enhance the security of your spouse, home, life savings and legacy.

 Estate Planning, Estate Planning Tip, Attorney, income, tax exemption, taxes, Tax Savings, tax reform, tax

Click Here to Register For Our Trust, Estate & Asset  Protection Workshop

Tags: Estate Planning, Tax Savings, Estate Planning Tip, tax exemption, tax reform, taxes, tax, Attorney, income

Massachusetts Estate Planning Attorney | The Fiscal Cliff Deal and Your Estate Plan

Posted by Massachusetts Estate Planning & Elder Law Attorney, Dennis B. Sullivan, Esq., CPA, LLM on Fri, Jan 04, 2013

What Does Avoiding The Fiscal Cliff Mean for Your Estate Plan?

Nearly 2.5 million Americans die each year, and many haven’t signed the basic documents needed to protect loved ones.  (Click Here to Learn More About How to Avoid the Top Mistakes in Estate & Asset Protection Planning).

Now that the fiscal cliff has been averted there is widespread confusion about the effect on estate planning of the 11th hour tax law passed by the Senate on New Year’s Eve, and by the House of Representatives one day later.  What Congress did in this arena was to make permanent the system that has been in effect for the past two years.

That was an important achievement because without any action the tax-free amount would have automatically reverted to $1 million per person and the rate for most estates would have gone up to 55%.  At the end of the day the only thing the lawmakers actually changed is the gift- and estate-tax rate, which has gone up to a top rate of 40% from a maximum of 35%.

Here are questions and answers on the federal estate tax after the fiscal cliff deal.

Who has to pay federal estate tax?

Once you’re worth more than a certain amount, taxes shrink your estate. Under the 2010 tax law, we can each transfer up to $5 million tax-free during life or at death, but it was due to revert to $1 million effect January 1, 2013. Recent legislature increased the tax free amount for the federal estate tax only to 5.12 million per person. Caution: Massachusetts continues to tax all estates above $1 million.

Do spouses have to pay the tax when they inherit from each other?

The new law doesn’t change this either. There is an unlimited deduction from estate and gift tax that postpones the tax on assets inherited from each other until the second spouse dies. This marital deduction, as it is called, applies only if the inheriting spouse is a U.S. citizen.

How does this relate to lifetime gifts?

The lifetime gift tax exclusion and the estate tax exclusion are expressed as a total amount, currently $5.12 million per person, and it is possible to use this exclusion (sometimes called the “unified credit”) to transfer assets during life or at death, or a combination of the two.  If you exceed the limit however, you or your heirs will owe tax of up to 40%.

The IRS requires you to keep a running tally and report these gifts. For example, if you have used $1 million of the exclusion to make taxable lifetime gifts, the unused exclusion when you die will be $4.12 million, rather than $5.12 million.

Are there lifetime gifts that don’t count?

We can each give another person $14,000 per year without it counting against the lifetime exemption.  Spouses can combine this annual exclusion to double the size of the gift.

The simplest way to use the annual exclusion is to give cash or other assets each year to each of as many individuals as you want. Another possibility is to put money in Section 529 education savings plans. Establishing these plans for relatives could relieve siblings or children of the need to save for college at a time when they are overwhelmed with current expenses.

What Did Change? 

There were several changes made by the Fiscal Cliff Deal.  First, the top personal income tax rate will increase from 35% to 41% (when factoring in the various phase outs of certain deductions for high income individuals).  Additionally, the capital gains tax will increase to 20% for individuals making over $400,000 and couples making over $450,000.

Is it time to review your estate plan? (Click Here to Learn More About Our 19 Point Trust, Estate and Asset Protection Legal Guide)

You should revisit it if there have been changes in your finances or your personal life or if you considering a trust to protect your home, spouse and life savings.  It is essential to be sure your assets are properly coordinated and that everything is in place to protect your home, spouse and life savings.  This message is even more important, as the Congressional Budget Office is considering a proposal that would extend the Medicaid look-back period from 5 to 10 years. 

To learn more about a FREE comprehensive review of your estate planning and gain the peace of mind of knowing your spouse, home and life savings will be protected, register for an upcoming workshop by calling  (800) 964-4295(24/7) or register on line.

 describe the imageClick Here to Register For Our Trust, Estate & Asset  Protection Workshop

 

Tags: Estate Planning, IRS, Estate Planning Tip, seniors, estate tax, income, 2013, plans

Massachusetts VA Benefit Attorney | Is the VA Aid and Attendance Benefit Counted as Income?

Posted by Massachusetts Estate Planning & Elder Law Attorney, Dennis B. Sullivan, Esq., CPA, LLM on Mon, Nov 19, 2012

The deadline for Medicare’s open enrollment is three weeks earlier this year that 2011, so boomers need to gather all the necessary information regarding changes and updates to care now to make the best decisions for the health and finances.

The deadline of Dec. 7 is right around the corner and the more information boomers have about the plans, the better off they will be now and down the road.

 A new federal ruling could transform the way that Medicare covers long-term care and allows more patients to receive home health care services.

I sat down with Robert Quinlan, an independent insurance agent/broker since 1986 in New Windsor, N.Y. and had him review the following: 

Boomer: Please explain how a recent court decision on Medicare services could impact boomers now and in the future.

Quinlan: The federal case in Vermont called Jimmo vs Sebelius was decided last month and expands Medicare’s skilled care services to people who needed care to maintain their health or prevent or slow further deterioration.

Prior to this decision, Medicare would not approve skilled care services to those who had no prospects for improvement in their health like people with Alzheimer’s disease, Parkinson’s disease, multiple sclerosis or patients that have had a stroke.

The potential for more Medicare paid services will be limited to skilled care, which is care provided by licensed professionals like physical therapy, respiratory therapy, speech therapy or care from registered nurses. There will be no restrictions on the types of diseases that will be covered.

The lawsuit was brought by a class of individuals receiving Medicare services and other organizational plaintiffs like the National Multiple Sclerosis Society and the Paralyzed Veterans of America. The case’s defendant was Kathleen Sebulius, U.S. Secretary of Health, and Human Services who represents the federal government’s Medicare program. 

The ruling will not expand other Medicare services today. For example, nursing home coverage will still be limited to 100 days. Medicare costs for skilled care services are expected to rise in the short term, but longer-term costs for nursing homes and hospitals could be lower if more people receive better care at home and avoid more costly care later. 

Why does this case matter? People with chronic illnesses and accidents have been denied skilled care under Medicare because their condition was not improving. Now there is the likelihood that these people will receive more robust care that has eluded them in the past.

The final settlement of the case must be approved by the court which is expected to take several more weeks. Stay tuned! 

Boomer: Are there tax benefits available for small business owners who want to buy long-term care insurance?

Quinlan: Yes, there are federal tax benefits when you purchase long term care insurance (LTCI) as a business owner. If you are:

  • Self employed: you can deduct 100% of your long-term care insurance premiums up to the IRS’s “Eligible Premium” amounts. For example, the 2012 tax deduction limit is $350 starting at age 40 or less, going to $3,500 if you are age 61 but not yet age 71 and $4,370 for people age 71 and older.
  • Partnership, LLC or subchapter S corporation: The partnership, LLC or Subchapter S pays the LTCI premium. You may deduct up to 100% of the age-based Eligible Premium like the self employed person with no age criteria.
  • Subchapter C corporation – entitled to a 100% deduction of the LTCI premium as a business expense on the total premium paid. The deduction is not limited to the “Eligible Premium” schedule.
  • Individuals:  LTCI premiums are considered medical expenses for individuals . For a person who itemizes tax deductions, medical expenses are tax deductible if they exceed 7.5% of the person’s adjusted gross income in tax year 2012. The amount that can be deducted as a medical expense is limited to the IRS’s “Eligible Premium” that is referred in the above “Self Employed” section.

 In addition to these federal tax benefits, your state may also have a tax benefit for LTCI premiums. For example, New York State permits tax payers to take a 20% tax credit (better than a tax deduction) on the LTCI premiums with no 7.5% adjusted gross income rule or age threshold. For example, if you paid an annual premium of $4,000 for your long term care insurance, you would receive $800 tax credit ($4,000 times 20%) on your NYS tax bill.

 The above information is only intended as general information. As in all tax matters, check with your own tax/financial advisor before taking action.

Boomer: I have seen many ads about Medicare insurance plans since September, and I have noticed that some Medicare insurance plans offered by private insurance companies have zero or low premiums, namely Medicare Advantage plans (Part C). How is that possible? Do these plans offer comprehensive coverage like coverage in original Medicare Parts A and B?

Quinlan: Medicare Advantage plans are provided by private insurance companies that are required by law to have comparable services as the original Medicare Parts A (hospital insurance) and B (medical insurance). Plus they also offer additional services like prescription drug coverage and vision care. Some plans will also pay for membership in gyms. The premiums for these Medicare Advantage plans are often low premiums or no premiums (not a misprint). How is this possible? The federal government pays the private insurance companies to offer these services to local communities across the US. About 25% of Medicare eligible Americans are covered by these plans today. 

Your doctors and hospitals must be part of the network in your Medicare Advantage plan. You will pay more money for out of network services. Insurance companies may not offer these plans in every county in your state. Check with your local insurance company or insurance agent/broker if these plans are offered in your county. You must also be enrolled in Medicare Parts A and B to enroll in these Medicare Advantage plans. You will not need to purchase a Medicare supplement plan.

 Now until December 7, 2012 is a good time to review your current Medicare coverage to make any plan changes during this year’s Medicare open enrollment period. New plan coverage will become effective January 1, 2013.



Read more: http://www.foxbusiness.com/personal-finance/2012/11/15/what-boomers-need-to-know-about-medicare-changes/#ixzz2CgaTfuN5

The deadline for Medicare’s open enrollment is three weeks earlier this year that 2011, so boomers need to gather all the necessary information regarding changes and updates to care now to make the best decisions for the health and finances.

The deadline of Dec. 7 is right around the corner and the more information boomers have about the plans, the better off they will be now and down the road.

 A new federal ruling could transform the way that Medicare covers long-term care and allows more patients to receive home health care services.

I sat down with Robert Quinlan, an independent insurance agent/broker since 1986 in New Windsor, N.Y. and had him review the following: 

Boomer: Please explain how a recent court decision on Medicare services could impact boomers now and in the future.

Quinlan: The federal case in Vermont called Jimmo vs Sebelius was decided last month and expands Medicare’s skilled care services to people who needed care to maintain their health or prevent or slow further deterioration.

Prior to this decision, Medicare would not approve skilled care services to those who had no prospects for improvement in their health like people with Alzheimer’s disease, Parkinson’s disease, multiple sclerosis or patients that have had a stroke.

The potential for more Medicare paid services will be limited to skilled care, which is care provided by licensed professionals like physical therapy, respiratory therapy, speech therapy or care from registered nurses. There will be no restrictions on the types of diseases that will be covered.

The lawsuit was brought by a class of individuals receiving Medicare services and other organizational plaintiffs like the National Multiple Sclerosis Society and the Paralyzed Veterans of America. The case’s defendant was Kathleen Sebulius, U.S. Secretary of Health, and Human Services who represents the federal government’s Medicare program. 

The ruling will not expand other Medicare services today. For example, nursing home coverage will still be limited to 100 days. Medicare costs for skilled care services are expected to rise in the short term, but longer-term costs for nursing homes and hospitals could be lower if more people receive better care at home and avoid more costly care later. 

Why does this case matter? People with chronic illnesses and accidents have been denied skilled care under Medicare because their condition was not improving. Now there is the likelihood that these people will receive more robust care that has eluded them in the past.

The final settlement of the case must be approved by the court which is expected to take several more weeks. Stay tuned! 

Boomer: Are there tax benefits available for small business owners who want to buy long-term care insurance?

Quinlan: Yes, there are federal tax benefits when you purchase long term care insurance (LTCI) as a business owner. If you are:

  • Self employed: you can deduct 100% of your long-term care insurance premiums up to the IRS’s “Eligible Premium” amounts. For example, the 2012 tax deduction limit is $350 starting at age 40 or less, going to $3,500 if you are age 61 but not yet age 71 and $4,370 for people age 71 and older.
  • Partnership, LLC or subchapter S corporation: The partnership, LLC or Subchapter S pays the LTCI premium. You may deduct up to 100% of the age-based Eligible Premium like the self employed person with no age criteria.
  • Subchapter C corporation – entitled to a 100% deduction of the LTCI premium as a business expense on the total premium paid. The deduction is not limited to the “Eligible Premium” schedule.
  • Individuals:  LTCI premiums are considered medical expenses for individuals . For a person who itemizes tax deductions, medical expenses are tax deductible if they exceed 7.5% of the person’s adjusted gross income in tax year 2012. The amount that can be deducted as a medical expense is limited to the IRS’s “Eligible Premium” that is referred in the above “Self Employed” section.

 In addition to these federal tax benefits, your state may also have a tax benefit for LTCI premiums. For example, New York State permits tax payers to take a 20% tax credit (better than a tax deduction) on the LTCI premiums with no 7.5% adjusted gross income rule or age threshold. For example, if you paid an annual premium of $4,000 for your long term care insurance, you would receive $800 tax credit ($4,000 times 20%) on your NYS tax bill.

 The above information is only intended as general information. As in all tax matters, check with your own tax/financial advisor before taking action.

Boomer: I have seen many ads about Medicare insurance plans since September, and I have noticed that some Medicare insurance plans offered by private insurance companies have zero or low premiums, namely Medicare Advantage plans (Part C). How is that possible? Do these plans offer comprehensive coverage like coverage in original Medicare Parts A and B?

Quinlan: Medicare Advantage plans are provided by private insurance companies that are required by law to have comparable services as the original Medicare Parts A (hospital insurance) and B (medical insurance). Plus they also offer additional services like prescription drug coverage and vision care. Some plans will also pay for membership in gyms. The premiums for these Medicare Advantage plans are often low premiums or no premiums (not a misprint). How is this possible? The federal government pays the private insurance companies to offer these services to local communities across the US. About 25% of Medicare eligible Americans are covered by these plans today. 

Your doctors and hospitals must be part of the network in your Medicare Advantage plan. You will pay more money for out of network services. Insurance companies may not offer these plans in every county in your state. Check with your local insurance company or insurance agent/broker if these plans are offered in your county. You must also be enrolled in Medicare Parts A and B to enroll in these Medicare Advantage plans. You will not need to purchase a Medicare supplement plan.

 Now until December 7, 2012 is a good time to review your current Medicare coverage to make any plan changes during this year’s Medicare open enrollment period. New plan coverage will become effective January 1, 2013.



Read more: http://www.foxbusiness.com/personal-finance/2012/11/15/what-boomers-need-to-know-about-medicare-changes/#ixzz2CgaTfuN5

The deadline for Medicare’s open enrollment is three weeks earlier this year that 2011, so boomers need to gather all the necessary information regarding changes and updates to care now to make the best decisions for the health and finances.

The deadline of Dec. 7 is right around the corner and the more information boomers have about the plans, the better off they will be now and down the road.

 A new federal ruling could transform the way that Medicare covers long-term care and allows more patients to receive home health care services.

I sat down with Robert Quinlan, an independent insurance agent/broker since 1986 in New Windsor, N.Y. and had him review the following: 

Boomer: Please explain how a recent court decision on Medicare services could impact boomers now and in the future.

Quinlan: The federal case in Vermont called Jimmo vs Sebelius was decided last month and expands Medicare’s skilled care services to people who needed care to maintain their health or prevent or slow further deterioration.

Prior to this decision, Medicare would not approve skilled care services to those who had no prospects for improvement in their health like people with Alzheimer’s disease, Parkinson’s disease, multiple sclerosis or patients that have had a stroke.

The potential for more Medicare paid services will be limited to skilled care, which is care provided by licensed professionals like physical therapy, respiratory therapy, speech therapy or care from registered nurses. There will be no restrictions on the types of diseases that will be covered.

The lawsuit was brought by a class of individuals receiving Medicare services and other organizational plaintiffs like the National Multiple Sclerosis Society and the Paralyzed Veterans of America. The case’s defendant was Kathleen Sebulius, U.S. Secretary of Health, and Human Services who represents the federal government’s Medicare program. 

The ruling will not expand other Medicare services today. For example, nursing home coverage will still be limited to 100 days. Medicare costs for skilled care services are expected to rise in the short term, but longer-term costs for nursing homes and hospitals could be lower if more people receive better care at home and avoid more costly care later. 

Why does this case matter? People with chronic illnesses and accidents have been denied skilled care under Medicare because their condition was not improving. Now there is the likelihood that these people will receive more robust care that has eluded them in the past.

The final settlement of the case must be approved by the court which is expected to take several more weeks. Stay tuned! 

Boomer: Are there tax benefits available for small business owners who want to buy long-term care insurance?

Quinlan: Yes, there are federal tax benefits when you purchase long term care insurance (LTCI) as a business owner. If you are:

  • Self employed: you can deduct 100% of your long-term care insurance premiums up to the IRS’s “Eligible Premium” amounts. For example, the 2012 tax deduction limit is $350 starting at age 40 or less, going to $3,500 if you are age 61 but not yet age 71 and $4,370 for people age 71 and older.
  • Partnership, LLC or subchapter S corporation: The partnership, LLC or Subchapter S pays the LTCI premium. You may deduct up to 100% of the age-based Eligible Premium like the self employed person with no age criteria.
  • Subchapter C corporation – entitled to a 100% deduction of the LTCI premium as a business expense on the total premium paid. The deduction is not limited to the “Eligible Premium” schedule.
  • Individuals:  LTCI premiums are considered medical expenses for individuals . For a person who itemizes tax deductions, medical expenses are tax deductible if they exceed 7.5% of the person’s adjusted gross income in tax year 2012. The amount that can be deducted as a medical expense is limited to the IRS’s “Eligible Premium” that is referred in the above “Self Employed” section.

 In addition to these federal tax benefits, your state may also have a tax benefit for LTCI premiums. For example, New York State permits tax payers to take a 20% tax credit (better than a tax deduction) on the LTCI premiums with no 7.5% adjusted gross income rule or age threshold. For example, if you paid an annual premium of $4,000 for your long term care insurance, you would receive $800 tax credit ($4,000 times 20%) on your NYS tax bill.

 The above information is only intended as general information. As in all tax matters, check with your own tax/financial advisor before taking action.

Boomer: I have seen many ads about Medicare insurance plans since September, and I have noticed that some Medicare insurance plans offered by private insurance companies have zero or low premiums, namely Medicare Advantage plans (Part C). How is that possible? Do these plans offer comprehensive coverage like coverage in original Medicare Parts A and B?

Quinlan: Medicare Advantage plans are provided by private insurance companies that are required by law to have comparable services as the original Medicare Parts A (hospital insurance) and B (medical insurance). Plus they also offer additional services like prescription drug coverage and vision care. Some plans will also pay for membership in gyms. The premiums for these Medicare Advantage plans are often low premiums or no premiums (not a misprint). How is this possible? The federal government pays the private insurance companies to offer these services to local communities across the US. About 25% of Medicare eligible Americans are covered by these plans today. 

Your doctors and hospitals must be part of the network in your Medicare Advantage plan. You will pay more money for out of network services. Insurance companies may not offer these plans in every county in your state. Check with your local insurance company or insurance agent/broker if these plans are offered in your county. You must also be enrolled in Medicare Parts A and B to enroll in these Medicare Advantage plans. You will not need to purchase a Medicare supplement plan.

 Now until December 7, 2012 is a good time to review your current Medicare coverage to make any plan changes during this year’s Medicare open enrollment period. New plan coverage will become effective January 1, 2013.



Read more: http://www.foxbusiness.com/personal-finance/2012/11/15/what-boomers-need-to-know-about-medicare-changes/#ixzz2CgaTfuN5


Read more: http://www.foxbusiness.com/personal-finance/2012/11/15/what-boomers-need-to-know-about-medicare-changes/#ixzz2CgaTfuN5

I get this question frequently.  Does Medicaid count the VA benefit as income for eligibility purposes is more specifically the question.  The answer is “no, it is not”.  There is a specific Medicaid Communication (25 years old) that states that VA Aid & Attendance benefits are not counted as income.  Please be aware that there are other VA benefits, however, that may be treated as income and also be aware that it is the aid and attendance portion of the benefit that is not countable.  How much that turns out to be depends on each individual case.  You must examine your award letter.

                Please also note that the VA benefit will drop to $90 per month when the recipient qualifies for Medicaid.  When there is a spouse at home, the community spouse may be entitled to receive more than $90 per month.   Our practice with our elder law clients is to notify the VA when Medicaid is approved (but not when we file the application since we don’t want the benefit to stop until Medicaid is approved).

I get this question frequently.  Does Medicaid count the VA benefit as income for eligibility purposes is more specifically the question.  The answer is “no, it is not”.  There is VA, veteran, Medicaid, benefita specific Medicaid Communication (25 years old) that states that VA Aid & Attendance benefits are not counted as income.  Please be aware that there are other VA benefits, however, that may be treated as income and also be aware that it is the aid and attendance portion of the benefit that is not countable.  How much that turns out to be depends on each individual case.  You must examine your award letter.

                Please also note that the VA benefit will drop to $90 per month when the recipient qualifies for Medicaid.  When there is a spouse at home, the community spouse may be entitled to receive more than $90 per month.   Our practice with our elder law clients is to notify the VA when Medicaid is approved (but not when we file the application since we don’t want the benefit to stop until Medicaid is approved).

For more information go to www.SullivanVeteransReport.com, which contains important information on the “Hidden Benefit” available to veterans and their spouses, and the steps you should be taking right now to find out if your loved one qualifies.

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