Archive for the 'SSI/SSDI/Medicare' Category

American Recovery and Reinvestment Act of 2009 – Part Deux: Helping The Less Fortunate

Greg Herman-Giddens has given us another nice summary of some of the provisions of the American Recovery and Reinvestment Act of 2009 as it relates to “to individuals receiving Social Security benefits, Railroad Retirement benefits, Veteran’s benefits, or Supplemental Security Income (SSI) benefits.”

In addition, up to $2,400 of unemployment compensation benefits received in 2009 will be excluded from gross income for federal income tax purposes. And, for individuals who lose their jobs on or after September 1, 2008, and before January 1, 2010, the Act offers assistance in the form of subsidized COBRA premiums–those who qualify will have to pay only 35% of the COBRA premiums needed to continue their health coverage, for up to 9 months.

The Act also features new and modified tax credits and deductions, including:

  • A new “Making Work Pay Tax Credit” for 2009 and 2010 equal to 6.2% of earned income, up to $400 ($800 in the case of a married couple filing jointly); withholding schedules will be adjusted to increase current take-home pay to reflect the credit. The credit is phased out for individuals with modified adjusted gross income exceeding $75,000 ($150,000 for married couples filing jointly).
  • A revised Hope education tax credit for 2009 and 2010, renamed as the American Opportunity Tax Credit. With an increased annual limit per student of $2,500, the credit is now available for the first four years of post-secondary education, and up to 40% of the credit is refundable. The credit is phased out for individuals with modified adjusted gross income exceeding $80,000 ($160,000 for married couples filing jointly).
  • A revised first-time homebuyer tax credit, extended to include qualifying home purchases through November of 2009. The maximum credit is increased to $8,000, and the rules requiring that the credit be repaid are waived for qualifying homes purchased after December 31, 2008, and before December 1, 2009, as long as the home continues to serve as the individual’s principal residence for 36 months. The credit continues to be phased out for individuals with modified adjusted gross income exceeding $75,000 ($150,000 for married couples filing jointly).
  • A new standard deduction for state sales and excise tax related to the purchase of a qualified motor vehicle after February 17, 2009 and before January 1, 2010. Individuals who itemize deductions will claim the deduction as part of state and local taxes paid, reported on Schedule A of IRS Form 1040. The deduction is capped at the tax attributable to a maximum purchase price of $49,500, and is phased out for individuals with modified adjusted gross income exceeding $125,000 ($250,000 for married couples filing jointly).

In addition, the Act increases the refundable portion of the child tax credit, and makes changes to the earned income tax credit that benefit families with three or more qualifying children, and married couples filing joint returns. Also, 2008 provisions relating to the alternative minimum tax (AMT), bonus first-year depreciation, and IRC Section 179 expensing were all extended through 2009.

Thanks Gregg…  This one is very helpful.

Reverse Mortgages, Probate Liquidity and Medicaid Eligability

One of my favorite bloggers, Joel A. Schoenmeyer of the Death & Taxes Blog writes here about “the reverse mortgage probate problem and liquidity.”

A reverse mortgage results from a home owner age 62 or older converting the equity in their home into tax-free income without having to sell the home, give up title, or take on a new monthly mortgage payment. The reverse mortgage is aptly named because the payment stream is “reversed.” Instead of making monthly payments to a lender, as with a regular mortgage, a lender makes payments to you. It can be especially useful for the home owner but, as Joel points out, a real headache for their heirs after they pass away. The payments can be used to support a standard of living – which is nice – but I think the most powerful benefit from the reverse mortgage is that the income stream is not necessarily a countable resource for Medicaid eligibility.

Joel writes:

I’ve encountered this situation in the probate context a few times recently: mom dies, reverse mortgage is now due, and guess what? The house can’t be sold because of the bad real estate market.

The bigger problem, of course, is one of estate liquidity. When a person dies, there are bills that have to be paid. Some of those bills are small, and some of them can be avoided. But certain bills can’t be avoided, and are going to cause a real headache for your survivors if you’ve left them with no liquid assets.

Which is all well-observed… Its a cost-benefit analysis really, done with the help of your financial planner and an attorney experienced in probate and Medicaid eligibility that can help determine if its a good fit for your situation. Its risky, but it may be worth it near the end.

Thanks Joel.

Recent Medicaid News Roundup… Not Looking Good

3 stories from 3 of the best T&E bloggers out there recently caught my eye:

First from Michael J. Keenan and The Connecticut Elder Law Blog comes, Big Problems for Medicare in 11 Years.

It appears that the Medicare program will become unable to pay full benefits starting in 2019, and the same problem will arise for Social Security in 2041 […], according to the trustees of those programs.

He links to this article in the LA Times about the presidential candidates being silent on the impending Medicaid crisis which means that the likelihood of imminent reformation is rather slim.

Next comes Professor Berry from the Wills, Trusts & Estates Prof Blog and his post about the Trustee’s same report. He quotes the following from the Trustee’s press release issued March 26, 2008:

In their annual report, the Medicare Trustees today announced that both the Medicare Hospital Trust Fund and the Supplementary Medical Insurance Trust Fund expenditures are growing faster than the rest of the economy. The Trustees report expenditures were $432 billion in 2007, or 3.2 percent of gross domestic product (GDP), and are projected to increase to nearly 11 percent of GDP in 75 years.

The Trustees report that Medicare’s Hospital Insurance (HI) Trust Fund will become insolvent earlier in 2019 than reported last year. HI expenditure growth is estimated to average 7.4 percent each year over the next 10 years, a higher rate than either Gross Domestic Product (GDP) or Consumer Price Index (CPI) growth. This year the HI Trust Fund will spend more than its income, and from 2009 through 2017, about $342 billion will need to be transferred from the Federal treasury to cover beneficiaries’ hospital insurance costs.***

Yikes

Finally, David Goldman writes in his Florida Estate Planning Lawyer Blog about Medicaid Cuts Threaten Nursing Homes in Florida.

This week both the Senate Health and Human Services Appropriations Committee and the House Healthcare Council introduced their 2008-09 budgets. The Senate reduced nursing home funding $163 million and the House reduced funding $278 million.

Florida legislators approved landmark elder-care facility reform legislation in 2001 that mandated increased minimum staffing requirements, tougher regulation and quality improvement, and risk management programs. Since then, nursing home quality has steadily improved. Now, Medicaid funding cuts threaten this progress and the vulnerable elderly who have nowhere else to go.

Doing Away With Mandatory Arbitration Provisions in Nursing Home Admissions Agreements

J. Michael Young writes here on his Texas Probate Litigation Blog about the The Fairness in Nursing Home Arbitration Act proposed by Sens. Herb Kohl (D-WI), the chairman of the Special Committee on Aging, and Mel Martinez (R-FL). According to this article, the proposal is really an amendment to The Federal Arbitration Act of 1925

.

Originally designed as a way to allow businesses to bypass judge and jury trials to settle disputes, the Federal Arbitration Act is now also used by many nursing homes to avert costly trials if charges of neglect, abuse or wrongful death are brought against them.

Picking up on Mr. Young’s post and running with it is Deirdre R. Wheatley-Liss who publishes the You and Yours Blawg. Ms. Wheatley-Liss has previously addressed the issue of the need to be very careful when reviewing nursing home admission agreements in this post and continues her good advice:

[…] a careful review of these contracts is a must. A growing concern is that they are drafted to take advantage of a family in the direst of circumstances by using the terms of the the contract to limit their own liability. This can leave a family with no contractual recourse when their loved one does not receive the care they deserve. One example of this is a damages limitation clause to $10,000 – this is obviously inadequate to address damages from a sub-standard level of care. Another favorite is the mandatory arbitration provisions – which eliminates the family’s right to go to court. Instead, any disputes are decided by a panel of industry experts.

These mandatory arbitration clauses are dangerous things for a number of reasons. First, arbitration can be even more expensive than trial since you’re not only paying your own attoryney’s but, as the Plaintiff, you are also paying the arbitors. Additionally, Mr. Young points out that:

Defendants often prefer mandatory arbitration because the arbitrators are drawn from the industry and perceived to be more conservative than a jury in awarding damages. For that reason, mandatory arbitration clauses are often attacked as unfair, particularly when the parties are in positions of unequal bargaining.

According the above article, while the FNHA act would not bar the use of arbitration agreements under all circumstances. It would prevent nursing homes and assisted living facilities from insisting prospective residents sign them as a pre-requisite for care. Mr. Young speculates :

I imagine this bill has a decent chance of passage, but would likely face a veto from President Bush.

What’s that you say?! A sensible bill may fall under the ill-advised veto-pen of our glorious leader? Shocking.

Kaplan’s Top Ten Myths of Social Security now available via SSRN

From The Elder Law Prof Blog and Kim Dayton comes a link to Dick Kaplan’s Top Ten Myths of Social Security:

(1) there is a trust fund,
(2) Social Security does not increase the federal budget deficit,
(3) retirees are only recovering their own money,
(4) Social Security will not be there when one retires,
(5) retirement benefits are proportional to one’s lifetime earnings,
(6) Social Security favors two-income married couples,
(7) Social Security favors long-lived marriages,
(8) one could do better investing directly,
(9) working after retirement makes financial sense, and;
(10) retirement benefits are taxed more heavily than other pension payments.

The full paper (from SSRN) is available here.

Thanks Kim!

New Poverty Guidelines Will Affect Medicare/Medicaid Eligibility

As if it wasn’t bad enough already for those relying on Medicare/Medicaid:

New federal poverty level (FPL) guidelines published January 23, 2008 will affect eligibility levels for many public benefits, including health benefits for older people and people with disabilities. 73 Fed. Reg. 3971, (January 23, 2008).

The best part is that “the new numbers are effective when published, but each program that relies on them may use a different effective date.” I don’t know what that means either.

According to Professor Kim Dayton of The Elder Law Prof Blog in this post:

The published poverty levels merely state a dollar figure for different sized family units. They do not address issues of what income is included, what deductions from income are allowed, who is included in a family unit or other use issues. These questions are addressed by the individual programs relying on the poverty guidelines. The amounts given below apply to the 48 contiguous states and Washington, DC. Rates for Alaska and Hawaii are slightly higher. A complete list of FPLs is available here.

Professor Dayton did the research already in her post – check it out here.

Thanks Professor.

Medicare’s Overspending Habits

This really burns me up.

Today’s New York Times is running an article called, “Oxygen Suppliers Fight to Keep a Medicare Boon.” The title is somewhat obtuse as it obscures the underlying bad habits of Medicare and their frequent overpayment for everything from oxygen equipment to walking canes.

Despite enormous buying power, Medicare pays far more. Rather than buy oxygen equipment outright, Medicare rents it for 36 months before patients take ownership[…].

[…]

Medicare spends billions of dollars each year on products and services that are available at far lower prices from retail pharmacies and online stores, according to an analysis of federal data by The New York Times. The government agency has paid above-market costs for dozens of items, a comparison of Medicare figures with retail catalogs finds.
[…]

[L]ast year Medicare spent more than $21 million on pumps to help older and disabled men attain erections, paying about $450 for the same device that is available online for as little as $108. Even for a simple walking cane, which can be purchased online for about $11, the government pays $20, according to government data.

And as if this isn’t bad enough:

But when officials and politicians have tried to cut these costs, they have often encountered a powerful foe: the companies that sell these devices, who ask their elderly customers to serve, in effect, as unpaid lobbyists, calling and writing to their representatives in Congress, protesting at rallies, and even participating in political attacks against individual lawmakers who take on the issue.

So first they mislead the elderly who need these services by telling them that the government is going to wholly do away with these benefits rather than just fix them (which is patently untrue) and then they recruit the same group of people to work for free to perpetuate the very system that is harming them by its inefficiency. Outrageous.

The worst lobbying offenders are:

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Medicare Reimbursement For Hospice Providers

This story from today’s NYT is another in the long line of disturbing stories about Medicare payback requirements:

Hundreds of hospice providers across the country are facing the catastrophic financial consequence of what would otherwise seem a positive development: their patients are living longer than expected.

Over the last eight years, the refusal of patients to die according to actuarial schedules has led the federal government to demand that hospices exceeding reimbursement limits repay hundreds of millions of dollars to Medicare.

The charges are assessed retrospectively, so in most cases the money has long since been spent on salaries, medicine and supplies. After absorbing huge assessments for several years, often by borrowing at high rates, a number of hospice providers are bracing for a new round that they fear may shut their doors.

MetLife Surveys The Cost of Assisted Living

Deidre Watchbrit previously posted to tell us about MetLife‘s annual efforts to track the cost of assisted living across the severl states. Performed by the MetLife Mature Market Institute® “the numbers can be helpful for families planning to provide for a person with developmental disabilities who may not be able to live without 24 hour care.”

The study is available for download here:pdf_icon.jpg

The Problems of Joint Tenancies

Stan Rule of Kelowna, British Columbia, CA writes, in his Rule of Law Blog about “Another Joint Tenancy Gone Bad.”

It is amazing how many elderly people who, out of genuine concern for their children, transfer the title of their home to a joint-tenancy with their kids. The ostensible logic underlying the transaction is that, if they have to go into a nursing home, or if something else happens to them, they don’t want to lose their home – they want their kids to have it. Sometimes they just want it to pass to their children outside of probate… I wish it were so simple. The first concern, that of losing the home to either the government or a debt collector trying to recover the cost of unpaid medical care, requires a much broader analysis and the solution is almost always more complicated. The second concern is best accomplished with the use of a Transfer-on-Death Deed (something that is not available in all jurisdictions but is in Ohio — and apparently Nevada also).

Mr. Rule has already written a well-considered article on the same subject (applying Canadian law). His most recent post on the subject is about the recent case of Schoennagel v. Schoennagel and Gateway Automotive, 2006 BCSC 1830 which should serve as a useful scare tactic when all other reason and logic has failed to explain why this planning tool is a bad idea most of the time.

Thanks Stan.