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Davidow, Davidow, Siegel & Stern, LLP
Long Island's Elder Law, Special Needs & Estate Planning Firm

Tuesday, December 23, 2008


A recent tax law change designed to help address the financial burden facing those who have seen their IRAs or 401(k)s shrink is expected to be signed by President Bush, officially making it law, shortly. Depending on your particular situation, you might want to consider taking action before January.

The new law suspends the Required Minimum Distribution (RMD) requirement for 2009. This waiver, which is available to everyone regardless of your total retirement account balances, applies to all so-called “defined-contribution plans,” which include 401(k) plans, 403(b) plans, 457 (b) plans, and IRA accounts. Suspending the RMD requirement allows you to keep the money in your retirement account if you choose, possibly recovering some of the loss.

This new law does not change the requirement for 2008. So, if you have an RMD that must be withdrawn for 2008, that must still be withdrawn. If you turned 70 ½ in 2008, you can elect to withdraw your 2008 RMD by April 1st of 2009. The new legislation does not change that because it is still a 2008 RMD, not a 2009 RMD; you would still have to withdraw that amount by April 1st of 2009.

Some who withdraw RMDs annually have it set up to occur automatically in January. If that is the case for you, and if you want to take advantage of this new law, you should contact your IRA custodian immediately to take care of that before the RMD is automatically distributed.

Friday, December 5, 2008


Daily benefit. The daily benefit is the amount the insurance pays per day toward long-term care expenses. If your daily benefit doesn’t cover your expenses, you will have to cover any additional costs. Purchasing the maximum daily benefit will assure you have the most coverage available. If you want to lower your premiums, you may consider covering a portion of the care yourself. You can then insure for the maximum daily benefit minus the amount you are covering. The lower daily benefit will mean a lower premium.

It is important to determine how the daily benefit is calculated. It can be each day’s actual charges (called daily reimbursement) or the daily average, calculated each month (called monthly reimbursement). The latter is better for home health care because a home care worker might come for a full day, one day, and then only part of the day, the next day.

Benefit period. When you purchase a policy, you need to choose how long you want your coverage to last. In general, you do not need to purchase a lifetime policy, three to five years worth of coverage should be enough. In fact a new study from the American Association of Long-term Care Insurance shows that a three-year benefit policy is sufficient for most people. According to the study of in-force long-term care policies, only 8 percent of people needed coverage for more than three years. So, unless you have a family history of a chronic illness, you aren’t likely to need more coverage. If you are buying insurance as part of a Medicaid planning strategy, however, you will need to purchase at least enough insurance to cover the five-year look-back period. That way you can transfer assets to your children or grandchildren before you enter the nursing home, use the long-term care coverage to wait out Medicaid’s new five-year look-back period, and after those five years have passed, apply for Medicaid to pay your nursing home costs (provided the assets remaining in your name do not exceed Medicaid’s limits).

If you do have a history of a chronic disease in your family, you may want to purchase more coverage. Coverage for 10 years may be enough and would still be less expensive than purchasing a lifetime policy.

Inflation protection. As nursing home costs continue to rise, your daily benefit will cover less and less of your expenses. Most insurance policies offer inflation protection of 5 percent a year, which is designed to increase your daily benefit along with the long-term care inflation rate of 5.6 percent a year. Although inflation protection can significantly increase your premium, it is strongly recommended. There are two main types of inflation protection: compound interest increases or simple interest increases. If you are purchasing a long-term care policy and are younger than age 62 or 63, you will need to purchase compound inflation protection. This can, however, more than double your premium. If you purchase a policy after age 62 or 63, some experts believe that simple inflation increases should be enough, and you will save on premium costs.

Source: www.elderlawanswers.com

Tuesday, November 25, 2008


As nursing home and long-term care costs continue to rise, the Deficit Reduction Act has made it more difficult to qualify for Medicaid to pay for nursing home costs. Long-term care insurance can help cover expenses, but long term care insurance contracts are notoriously confusing. How do you figure out what is right for you? The following are some tips to help you sort through all the different options.

Find a strong insurance company.
The first step is to choose a solid insurance company. Because it is likely you won’t be using the policy for many years, you want to make sure the company will still be around when you need it. Make certain that the insurer is rated in the top two categories by one of the services that rates insurance companies, such as A.M. Best, Moodys, Standard & Poor or Weiss.

What is covered.
Policies may cover nursing home care, home health care, assisted living, hospice care or adult day care, or some combination of these. The more comprehensive the policy, the better. A policy that covers multiple types of care will give you more flexibility in choosing the care that is right for you.

Waiting period.
Most long-term care insurance policies have a waiting period before benefits begin to kick in. This waiting period can be between 0 and 90 days, or even longer. You will have to cover all expenses during the waiting period, so choose a time period that you think you can afford to cover. A longer waiting period can mean lower premiums, but you need to be careful if you are getting home care. Look for a policy that bases the waiting period on calendar days. For some insurance companies, the waiting period is not based on calendar days, but on days or reimbursable service, which can be very complicated. Some policies may have different waiting periods for home health care and nursing home care, and some companies waive the waiting period for home health care altogether.

In Part II, we will discuss Daily Benefits, Benefit Periods and Inflation Protection.

Source: www.elderlawanswers.com

Monday, November 10, 2008

Crucial Elder Law Numbers for 2009

The new numbers for 2009 for Medicaid, Medicare, Social Security and other figures that are of interest to the elderly and their families have been released. In an attempt not to overwhelm everyone, we will publish the updated numbers in two separate newsletters. This is Part I and will outline Medicaid, Annual Gift Tax Exclusion and Long Term Care Premium Deductibility. Next week, in Part II, we will discuss Medicare and Social Security benefits.

Medicaid Spousal Impoverishment Figures for 2009

In 2009, the spouse of a Medicaid recipient living in a nursing home (called the “community spouse”) may keep as much as $109,560 without jeopardizing the Medicaid eligibility of the spouse who is receiving long-term care. Called the “community spouse resource allowance,” this is the most that a state may allow a community spouse to retain without a hearing or a court order. While some states set a lower maximum, the least that a state may allow a community spouse to retain in 2009 will be $21,912.

Meanwhile, the maximum monthly maintenance needs allowance for 2009 will be $2,739. This is the most in monthly income that a community spouse is allowed to have if her own income is not enough to live on and she must take some or all of the institutionalized spouse’s income. The minimum monthly maintenance needs allowance of $1,750 took effect July 1, 2008 and will not rise until July 1, 2009. The new figures are effective January 1, 2009.

Annual Gift Tax Exclusion Rises to $13,000

The annual gift tax exclusion will increase from $12,000 to $13,000 effective January 1, 2009, the Internal Revenue Service (IRS) has announced. The gift tax exclusion is the amount the IRS allows a taxpayer to gift to another individual without reporting the gift.

Long-Term Care Premium Deductibility Limits for 2009

The Internal Revenue Service has announced the 2009 limitations on the deductibility of long-term care insurance premiums from taxes. Any premium amounts above these limits are not considered to be a medical expense.

The following attained ages reached before the close of the taxable year would yield this maximum deduction:
40 or less - $320
More than 40 but not more than 50 - $600
More than 50 but not more than 60 - $1,190
More than 60 but not more than 70 - $3,180
More than 70 - $3,980

Benefits from per diem or indemnity policies, which pay a predetermined amount each day, are not included in income except amounts that exceed the beneficiary’s total qualified long-term care expenses or $280 per day (for 2009), whichever is greater.

In honor of Veterans Day, we’d like to share this trivia: Veterans Day is an annual American holiday honoring military veterans. Both a federal holiday and a state holiday in all states, it is usually observed on November 11th. It is celebrated on November 11th because major hostilities of World War I were formally ended at the 11th hour of the 11th day of the 11th month of 1918 with the German signing of the Armistice.

Friday, October 24, 2008

IRS Issues Long-Term Care Premium Deductibility Limits for 2009

The Internal Revenue Service has announced the 2009 limitations on the deductibility of long-term care insurance premiums from taxes.

Premiums for "qualified" (see explanation below) long-term care policies are tax deductible provided that they, along with other unreimbursed medical expenses, exceed 7.5 percent of the insured's adjusted gross income. These premiums -- what the policyholder pays the insurance company to keep the policy in force -- are deductible for the taxpayer, his or her spouse and other dependents. If you are self-employed, the rules are a little different. You can take the amount of the premium as a deduction as long as you made a net profit; your medical expenses do not have to exceed 7.5 percent of your income.

However, there is a limit on how large a premium can be deducted, depending on the age of the taxpayer at the end of the year. Following are the deductibility limits for 2009. Any premium amounts above these limits are not considered to be a medical expense.

Attained age before the close of the taxable year
Maximum deduction

40 or less

More than 40 but not more than 50

More than 50 but not more than 60

More than 60 but not more than 70

More than 70

What Is a "Qualified" Policy?

To be "qualified," policies issued on or after January 1, 1997, must adhere to regulations established by the National Association of Insurance Commissioners. Among the requirements are that the policy must offer the consumer the options of "inflation" and "nonforfeiture" protection, although the consumer can choose not to purchase these features. Policies purchased before January 1, 1997, will be grandfathered and treated as "qualified" as long as they have been approved by the insurance commissioner of the state in which they are sold.

The Taxation of Benefits

Benefits from reimbursement policies, which pay for the actual services a beneficiary receives, are not included in income. Benefits from per diem or indemnity policies, which pay a predetermined amount each day, are not included in income except amounts that exceed the beneficiary's total qualified long-term care expenses or $280 per day (for 2009), whichever is greater.

Source: www.elderlawanswers.com

Friday, October 10, 2008

Financial Good News?

Very recently, “The Tax Extenders and Alternative Minimum Tax Relief Act of 2008" was signed by President Bush extending an excellent charitable planning opportunity for both 2008 and 2009. This act permits an IRA owner aged 70 ½ or older to make a direct transfer to charity. The transfer may be up to $100,000 in one year (up to $200,000 for married couples) and this IRA rollover will exist for this year and tax year 2009.

It would be in the best interest of all charitable organizations to immediately make this giving opportunity known to their friends and supporters. Many non-profits have been collecting lists of donors who have given through IRAs in the past or are interested in making gifts in the future. It’s time to let all of our volunteer leadership and closest supporters know the good news of the continuance of this legislation. It’s a great opportunity to overcome current environmental/economic doubts and have an excellent finish to the 2008 tax year.

Also, there has been a temporary increase of FDIC deposit insurance for all banks. This insurance limit increase is not a permanent measure and expires by its terms on December 31, 2009. In addition, the limit applies “per owner.” As a result, a depositor who provides the proper paperwork can document the fact that funds held in an escrow or trust account belong to a specific party. An inquiry should be made as to whether that party has any other funds on deposit with the same financial institution that would exceed the available FDIC coverage.

Just to clarify: The Federal Deposit Insurance Corporation (FDIC) is an independent agency of the United States government that protects against the loss of insured deposits if an FDIC-insured bank or savings association fails. FDIC deposit insurance is backed by the full faith and credit of the United States government. Since the FDIC was established, no depositor has ever lost a single penny of FDIC-insured funds.

FDIC insurance covers funds in deposit accounts, including checking and savings accounts, money market deposit accounts and certificates of deposit (CDs). FDIC insurance does not, however, cover other financial products and services that insured banks may offer, such as stocks, bonds, mutual fund shares, life insurance policies, annuities or municipal securities. There is no need for depositors to apply for FDIC insurance or even to request it. Coverage is automatic. If you have questions about FDIC coverage limits and requirements, you can either visit www.myFDICinsurance.gov , call toll free 1-877-ASK-FDIC or ask a representative at your bank.

Friday, September 26, 2008

Long Term Care Insurance Rises

Just when America was warming up to the idea of purchasing long term care insurance to protect family assets from the devastating costs of custodial care, the three largest insurance companies have shaken up the market by raising prices on existing policies, not just on policies to be sold in the future. How should that impact your planning?

Long term care insurance policies are sold with the “assumption” of level premiums that won’t increase much over the years. That’s the incentive to buy when you are young, healthy, and prices are lower. Insurers have the right to go to state insurance commissioners to seek approval of a price increase on everyone who bought a certain policy, if claims significantly exceed expectations.

When insurers first created long term care policies, it was hard to predict how their costs would turn out. But as insurers gained more experience in the last 10 years, it has been expected that the risk of price increases on the more recently issued policies would be slim and that any premium increases would be minimal.

Those who bought early to “lock in” lower prices are now being surprised by significant premium increases.

In the last year, Genworth requested increases ranging from 8 percent to 12 percent on some policies already owned by its customers. John Hancock announced a 14 percent increase in some policies in May. Nearly all of these policies were issued before 2000. But last week, MetLife announced it will raise annual premiums an average of 18 percent for policyholders who were younger than 70 when they purchased their policies from 1998 through 2005.

In effect, the insurers are admitting they made a pricing mistake. The only other explanation is that they priced policies artificially low to compete for business.

David Acselrod, MetLife Vice President, long term care and critical illness insurance, said: “Quite simply, we expect to pay out substantially more in claims than we originally anticipated. Some of the assumptions that drive LTC pricing include policy lapses, interest rates, the number of people requiring care and the duration of care, to name a few. Following a review of our experience, we concluded that we had to make changes to ensure that we are pricing the products appropriately on behalf of all of our policyholders.”

Isn’t it the job of the insurance company to assess trends that impact pricing before they go to market?

The ultimate cost
In 2007, according to the American Association for Long Term Care Insurance, 180,000 Americans received benefit payments through long term care insurance. Executive director Jesse Slome says: “The total value of claims paid in 2007 was $3.5 billion – money that families didn’t have to pay, and money that taxpayers didn’t have to pay for impoverished seniors.”

The population of Americans over age 65 is expected to more than double in the next 15 years. Few of the soon-to-be elderly have saved enough to cover home health care, assisted living, or nursing home care – approaching $100,000 a year in major cities.

Steve Moses, President of the Center for Long Term Care reform, a national policy think tank, defends private insurers, saying: “The government has not set aside any money for the future to back up its promises that Medicaid will care for frail seniors. At least, the private insurance industry has bitten the bullet and is increasing prices so they will have adequate reserves to pay the claims when they start coming in.”

Moses suggests the market for private LTC insurance will never expand, as long as the government is “giving away” the same service insurers are trying to sell. He points out that the middle class and even the affluent have learned the tricks of qualifying for Medicaid nursing home coverage.

They’ll be surprised when they learn that Medicaid provides care primarily in nursing homes that will only become more underfunded and understaffed. Moses says the burden of long term care needs will crush the system, wiping out the possibility of such government-provided benefits in the future.

It’s quite likely that state insurance commissioners will approve the requested increases. Unfortunately, a side effect is likely to be that fewer people will buy long term care insurance. Then, when the real burden of caring for aging baby boomers hits in the next 10 or 15 years, the states will have to shoulder the cost through their Medicaid programs as boomers run out of their own money.

Still good deal
Buying long term care insurance still makes sense. If locking in rates is a concern, consider a 10-pay policy where your coverage is fully paid up in 10 years. Janice Axelrod, an independent long term care insurance broker in Chicago, says this is particularly attractive for some businesses (C-corporations) that are allowed to deduct the annual payment.

Don’t bury your head in the sand about the very real possibility that in your old age you’ll need help dressing or bathing or getting out of bed. Can you count on your children to be there for you? Would you even want them to do that? Or will you run out of money trying to pay for care on your own? Those are questions to ask yourself as you consider the value of long term care insurance.

Source: Chicago Sun Times, September 15, 2008, by Terry Savage.

Friday, September 19, 2008


How to Enroll for Health Benefits
You can fill out the form to enroll for health benefits online at https://www.1010ez.med.va.gov/sec/vha/1010ez or you can receive the form by calling 1-877-222-VETS (8387). Once you complete and sign the form, mail it to your local VA health care facility.

Disability Benefits
The VA offers two disability programs. Disability compensation is available only for veterans with service-connected disabilities, while the disability pension benefit is available to anyone who served during wartime and has a disability. The disability does not have to be related to military service.

Disability Compensation
If you have an injury or disease that happened while on active duty or if active duty made an existing injury or disease worse, you may be eligible for disability compensation. The amount of compensation you get depends on how disabled you are and whether you have children or other dependents. You will need to look at the current compensation rates. Additional funds may be available if you have severe disabilities, such as loss of limbs, or a seriously disabled spouse.

Disability Pension Benefit
The VA pays a pension to disabled veterans who are not able to work. The pension is also available for surviving spouses and children. This pension is available whether or not your disability is service-connected, but to be eligible you must meet certain requirements. In addition, your income must be below the yearly limit set by law; called the Maximum Annual Pension Rate (MAPR). The MAPR for 2008 are below:

Veteran with no dependents...........$11,181
Veteran with a spouse or a child....$14,643
Housebound veteran with no dependents....$13,664
Housebound veteran with one dependent...$17,126
Additional children..........$1909 for each child

Your pension depends on your income. The VA pays the difference between your income and the MAPR. The pension is usually paid in 12 equal payments.

Example: John is a single veteran and has a yearly income of $5757. His pension benefit would be $5424 (11,181 - 5757). Therefore, he would get $452 a month.

Your income does not include welfare benefits or Supplemental Security Income. It also does not include unreimbursed medical expenses actually paid by the veteran or a member of his or her family. This can include Medicare, Medigap, and long-term care insurance premiums; over-the-counter medications taken at a doctor’s recommendation; long-term care costs, such as nursing home fees; the cost of an in-home attendant that provides some medical or nursing services; and the cost of an assisted living facility. These expenses must be unreimbursed. This means that insurance must not pay the expenses. The expenses should also be recurring - this means they should recur every month.

Aid and attendance
A veteran who needs the help of an attendant may qualify for additional help on top of the disability pension benefit. The veteran needs to show that he or she needs the help of an attendant on a regular basis. A veteran who lives in an assisted living facility is presumed to need aid and attendance.

A veteran who meets these requirements will get the difference between his or her income and the MAPR below (2008 figures):

Veteran who needs aid and attendance and has no dependents.......$18,654
Veteran who needs aid and attendance and has one dependent.......$22,113

How to Apply
You can apply for both disability benefits by filling out VA Form 21-526, Veteran’s Application for Compensation Or Pension. If available, you should attach copies of dependency records (marriage & children’s birth certificates) and current medical evidence (doctor & hospital reports). You can apply online at http://vabenefits.vba.va.gov/vonapp

Source: www.elderlawanswers.com

Friday, September 12, 2008



There are no costs for certain veterans and low-income veterans. The following veterans are eligible to receive cost-free health care benefits automatically:

-A service-connected veteran receiving VA compensation benefits
-A veteran seeking care for a specific service-connected disability
-Former POWs
-Purple Heart Medal recipients
-A veteran with conditions related to exposure to herbicides during the Vietnam-era, ionizing radiation during atmospheric testing, ionizing radiation during the occupation of Hiroshima and Nagasaki
-A veteran who sustained a service-related condition while serving in the Gulf War, in combat in a war after the Gulf War, or during a period of hostility after November 11, 1998
-A veteran with military sexual trauma
-A veteran with cancer of the head or neck caused by nose or throat radium treatments given while in the military
-A veteran who is participating in a VA approved research project

If you don’t fit into one of those categories, the VA will ask you to provide your household income and net worth from the previous year. If your income is below certain thresholds, you will not have to make a co-payment. In addition, you must not have more than $80,000 in property. Those whose income exceeds the threshold or who refuse to submit to the means test may have to make a co-payment.

Unlike the Medicaid program, there is no penalty for transferring assets before applying for veterans benefits, including long-term care. Remember, however, that if you do transfer assets it may affect your eligibility for Medicaid.

Even if your income is above the threshold, you do not have to make co-payments for the following services:

-Special registry examinations offered by the VA to evaluate possible health risks associated with military service
-Counseling and care for sexual trauma
-Compensation and pension examination requested by the Veterans Benefit Administration
-Care that is part of a VA-approved research project
-Out-patient dental care
-Readjustment counseling and related mental health services for Post Traumatic Stress Disorder
-Emergency Treatment at other than VA facilities
-Care for cancer of the head or neck caused fro nose or throat radium treatments given while in the military
-Publicly announced VA public health initiatives, i.e. health fairs
-Care related to service for veterans who served in combat or against a hostile force during a period of hostilities after November 11, 1998
-Laboratory services such as flat film radiology services and electrocardiograms

Out-patient co-payments
The following are the out-patient co-payments for non-service-related conditions:

-Services provided by a primary care clinician are $15 (in 2008) for each visit
-Services provided by a clinical specialist are $50 (in 2008) for each visit

Preventive care services (such as screenings and immunizations) are free.

In-patient co-payments
The inpatient co-payment is calculated by adding:

-$10 per day of hospitalization (in 2008), and
-$1,024 for the first 90 days of hospitalization and $512 for each additional 90 days (in 2008).

There is a reduced co-payment rate (20 percent of the full in-patient rate) for certain individuals whose income is above the VA income thresholds, but below the Geographic Means Threshold (GMT).

Prescription co-payments
Prescription co-payments are charged only for out-patient treatment. The following veterans do not have to pay anything for medications:

-A veteran who is 50 percent disabled or more with a service-connected disability
-A veteran who has been determined by the VA as unemployable due to his service-connected conditions
-A veteran who needs medication to treat a specific service-connected disability
-Former POWs
-A veteran whose income is below the maximum annual rate for a VA pension
-A veteran who needs medication to treat conditions related to a veteran’s exposure to herbicides during the Vietnam era ionizing radiation during atmospheric testing, or ionizing radiation during the occupation Hiroshima and Nagasaki
-A veteran who served in the Gulf War, in combat after the Gulf War, or during a period of hostility after November 11, 1998, and who needs medication to treat a service-related condition
-A veteran who needs medication to treat a military sexual trauma
-A veteran with cancer of the head or neck caused by nose or throat radium treatments given while in the miliary
-A veteran participating in a VA approved research project

If you don’t fit into one of these categories, you must pay $8 (in 2008) for each 30 days or less supply of medication. If you are in one of the Priority Groups 2 through 6, there is an annual limit on the amount you have to pay for prescriptions. You will not be charged more than $960 during the calendar year. If you are in Priority Groups 7 and 8, you will have to pay the full co-payment amount, with no annual limit.

The Medicare prescription drug benefit
As part of the new Medicare law enacted in December 2003, Congress added a modest prescription drug benefit, which took effect January 1, 2006. The benefit is available to anyone who is eligible for Medicare Part A or B coverage. The benefit is completely voluntary, so you must decide whether you want to participate in a plan or not based on your own situation. If you decide to participate in the Medicare plan, your VA prescription drug coverage will not be affected.

Most Medicare beneficiaries must choose a plan or be subject to significant financial penalties for late enrollment. However, because the VA prescription drug coverage is considered “creditable coverage,” you will not face a penalty if you do not sign up for the Medicare plan. If you disenroll or lose your VA prescription drug coverage, you will have 62 days to sign up for a Medicare plan without being subject to a penalty.

Long term care co-payments
The first 21 days of long term care are free. Co-payments start on the 22nd day. Long term care co-payments are calculated differently from other co-payments - they are set based on the individual veteran’s financial status. Veterans must fill out a financial assessment to determine their co-payments. This is a separate form from the form veterans had to fill out to determine if they were eligible for free health care. This form assesses your current income as opposed to the previous year’s income. The co-payment will be adjusted for each individual veteran based on his or her ability to pay. Once you have submitted a form, a social worker will contact you to let you know how much your co-payments will be.

What to do if you can’t afford co-payments
There are several options if you cannot afford your co-payments. One option is to request a waiver. You will have to submit proof that you can’t financially afford to make payments to the VA.

If your income changed since you applied for free health care, you can request a hardship determination. This will change your priority group assignment. To do this, you will need to provide current financial information to the VA.

Another option is to request a compromise and make a partial payment. Most compromise offers that are accepted must be for a lump sum payment payable in full 30 days from the date of acceptance of the offer.

Source: www.elderlawanswers.com

Friday, September 5, 2008


Medical Care
The Veterans Administration (VA) provides health care benefits to veterans. The plan covers a number of health care services, including preventative services, diagnostic and treatment services, and hospitalization. It may also cover nursing home and other long term care options.

Who is Eligible?
To receive care, most veterans must be enrolled in the VA health system. Eligibility for the health system depends on a number of factors, including the nature of your discharge from military service, your length of service, whether you have service-connected disabilities, your income level and available VA resources, among others.

To be eligible, you must not have been dishonorably discharged from the military. Your length of service may also be important. Former enlisted persons who started active duty before September 8, 1980, and former officers who first entered active duty before October 17, 1981, do not have a length-of-service requirement. Otherwise you must have 24 months of continuous active duty military service, though there are several exceptions for reservists, national guard members, service-connected disabilities, and hardship discharges, among others.

Certain veterans do not need to be enrolled in the VA health system to receive benefits if: you are 50% or more disabled from a service-connected disability, you are seeking care for a VA rated service-connected disability, or it has been less than one year since you were discharged for a disability that the military determined was caused or aggravated by your service, but the VA has not yet rated the disability.

The VA has limited resources, so if you are eligible for services, you will be assigned to a priority group. The priority groups range from 1-8 with 1 being the highest priority for enrollment. As of Jan. 17, 2003, veterans assigned to priority 8 are not eligible for enrollment or care for non-service connected conditions.

What is Covered
The standard benefits package includes: Preventative care services, out-patient diagnostic and treatment services (including mental health and substance abuse treatment), in-patient diagnostic and treatment services, prescriptions, and long term care (including nursing home care for some veterans).

Long Term Care: The VA offers a number of long term care options through its health plan.

All enrolled veterans are eligible for the following services:

-Geriatric evaluation - provides either an in-patient or out-patient evaluation of a veteran’s ability to care for him or herself
-Adult day health care - a therapeutic day care program that provides medical and rehabilitation services to veterans
-Respite care - provides either in-patient or out-patient supportive care for veterans to allow caregivers to get a break
-Home care - nursing, physical therapy and other services provided in the veteran’s home
-Hospice/palliative care - provides services for terminally ill veterans and their families

Some services are limited to certain veterans: nursing home care and domiciliary care are not automatically available to all veterans enrolled in the VA health plan.

The following veterans automatically qualify for unlimited nursing home care:

-Veterans who are seeking nursing home care for a service-related condition
-Veterans with a service-connected disability rating of 70% or more
-Veterans who have a service-connected disability of 60% and are unemployable

A service-connected disability is a disability that the VA has officially ruled was incurred or aggravated while on active duty in the military and in the line of duty. The VA must rule that your illness/condition is directly related to your active military service, and it assigns each disability a rating. The ratings are established by VA regional offices around the country.

The VA may provide nursing home care to other veterans if space permits. Veterans with service-connected disabilities receive priority.

There are also state-run veteran’s nursing homes. The VA provides funds to states to help them build the homes and pays a portion of the costs for veterans eligible for VA health care. The states, however, set eligibility criteria for admission.

A Domiciliary is a VA facility that provides care on an ambulatory self-care basis for veterans disabled by age or disease who are not in need of acute hospitalization and who do not need the skilled nursing services provided in a nursing home. Domiciliary care is available to low-income veterans with a disability.

Careful planning by a knowledgeable elder law firm is crucial in applying and becoming eligible.

Part 2 will discuss Co-Payments.

Source: www.elderlawanswers.com

Thursday, July 31, 2008

Learn the Ins and Outs of Being an Executor or Trustee

Learn the Ins and Outs of Being an Executor or Trustee

Taking on the job of executor or trustee is not a role to be taken lightly. If you ignore certain problem signs, you could be setting yourself up for aggravation, red tape, years of work, angry battles with family members and even lawsuits, according to an article on the MSN Money Web site.

"I think people would be shocked to know what's often involved", is often stated by many elder law attorneys.

"Often the most difficult part is not dealing with the money or the lawyers or the courts; It's the personal property. People have been known to fight over Tonka toys."

An executor is a person designated in a will to see that the deceased's last wishes are carried out and to settle the deceased's probate estate. An executor's job typically lasts from a few months to two years. If you're asked to be the trustee of an ongoing trust, by contrast, your job could go on for decades. A trustee is in charge of investing the money in the trust, making distributions and filing tax returns. Attorneys say the trustee's job is often harder and has the potential for more conflict.

"If you're held to have mismanaged the trust, then you're held personally responsible, you're required to make the trust whole out of your own pocket." Executors can be sued as well.

All this doesn't mean you should necessarily say no when asked to be an executor or trustee. Very few wills or trusts are contested in court -- fewer than 3 percent -- and a competent elder law attorney can help guide you.

But the article identifies a number of red flags that should prompt you to think twice before saying yes:

You can't obtain a copy of the will or trust to read beforehand. Browning recommends that you also sit down with the lawyer who drafted the document to discuss your duties and the situation you're likely to face.

Someone's being disinherited

There is already family tension

The person who's asking you isn't well organized

The trust was created with a kit or software rather than by a lawyer

You're being put in charge of a sibling's money.

Source: MSN Money article, 6/08.

Thursday, July 10, 2008


Earlier this year (March 13, 2008), the Senate voted on four amendments to the estate tax that were filed as a part of the budget resolution debate. As background, the budget resolution gives Congress non-binding fiscal guidelines for the upcoming year. These budgetary guidelines are passed by a simple majority, rather than the 60 votes it takes to survive a filibuster and pass a bill. Given the non-binding nature of the budget resolution and the amendment, they can only serve as an indication of what the Senate might do when voting on actual estate tax reform legislation.

Senator Baucus (D-MT) proposed the first amendment, which prevents the estate tax from rising above the 2009 levels ($3.5 million exemption and a top estate tax rate of 45%). Senator Baucus’ amendment passed the Senate with a vote of 99-1.

Senator Caucus’ amendment was followed by an amendment proposed by Senator Graham (R-SC) that provided for a $5 million exemption and a maximum estate tax rate of 35%. The Senate voted against this amendment 47-52.

Senator Ken Salazar (D-CO) introduced an amendment that was “revenue neutral,” by setting aside reserve funds in order to reach a $5 million exemption with a 35% maximum estate tax rate. The Salazar amendment failed by a vote of 38-62.

The final amendment was proposed by Senator Jon Kyl (R-AZ) and it set the exemption at $5 million with an estate tax rate of no higher than 35%. Senators Lincoln (D-AR) and Landrieu (D-LA) joined the Republicans in the voting with Senator Voinovich (R-OH) voting with the Democrats. This amendment failed with a 50-50 vote because the Vice President was not present to break the tie.

The Senate Finance Committee also held the second of three planned estate tax hearings, this one discussing the inheritance tax regime versus the current estate tax regime. While none of the Senators present seemed receptive to the idea of an inheritance tax, all of the witnesses at the hearing expressed philosophical support for wealth redistribution through an inheritance tax system.

Despite the national attention given to estate tax reform in general, there has been a dramatic reduction in the number of estate tax returns filed. The IRS Statistics of Income Bulletin (IR 2007-153) indicated that in 2005, when the estate tax exemption was $1,500,000, the number of estate tax returns filed fell by 58% to about 45,000 returns, down from about 108,000 returns filed in 2001. The total amount of assets represented by those returns fell by 14% to $185 billion in 2005 and from $216 billion in 2001.

Friday, June 20, 2008

Medicaid Announces Resource Level Revision

Recently, Medicaid announced that they are raising the Resource Level to $13,050 for a single individual and to $19,200 for a couple on Medicaid.

The increase of the Medicaid resource allowance from $4,350 to $13,050 for a single individual (and from $6,400 to $19,200 for a couple) may make it more possible for some individuals and couples to qualify for Medicaid and to access Medicaid nursing home and home care services.

Sunday, June 8, 2008

Income Tax Deductions for Families with Special Needs Children

Deduction for Dependents. The most common, and often the most important, income tax benefit is the deduction provided for an individual who is dependent on you for support. Of course minor children, whether suffering from a disability or not, provide dependent deductions. Not all parents realize that adult children with a disability can also qualify as dependents for income tax purposes, as well.

In fact, not only children of the taxpayer qualify as dependents. A stepchild, foster child, grandchild, nephew, niece or sibling can also be a dependent. The taxpayer must provide more than half of the dependent's support, and the dependent's own income can not exceed the exemption amount ($3,400 for tax year 2007, and $3,500 in 2008).

If a married but dependent child files a joint income tax return, he or she can not qualify as a dependent on your return. Similarly, if he or she is not a U.S. citizen or resident, or a citizen of Canada or Mexico, the dependent deduction is not available.

There are a few other categories available, so even if the dependent is not described here it may be worth making further inquiry. The key element: if you provide more than half of the support for another person, you may be able to list them as a dependent on your tax return.

Medical Conferences and Seminars. Did you attend a specialized program to learn more about your child's disability and treatment? If so, you may be able to deduct the registration fees and travel costs as medical expenses. To perfect this deduction, you should have your child's doctor give you a written recommendation for the seminar. Make sure the program is specific to the condition from which your child suffers, as a general program about healthy practices or living will not qualify.

School Expenses. If your child attends a special school designed to prepare him or her to compensate for or overcome a disability, the school costs may be a deduction. The key element here is that the program must be specifically geared toward helping your child prepare for future mainstream education or living arrangements. It is not enough that the school is specialized and offers supportive and focused education. If, however, the school is properly focused tuition may qualify as a medical deduction.

Remember that all medical deductions must exceed 7.5% of your income before the deduction is available at all (for federal tax purposes -- state taxes may have different limits or no limitations). What kinds of specialized schools qualify? The IRS has provided a few specific examples, including Braille or lip reading programs, focused training programs for the developmentally disabled, boarding schools for the psychologically disabled and staffed by psychiatrists, psychologists and social workers.

Work Expenses. Do you suffer from a disability yourself? Does your child earn enough income to be required to file an income tax return? You might need to consider deductions for expenses that enable the person with disabilities to maintain employment.
Deductions in this category might include attendant care or adaptive equipment. The most important element: these expenses are categorized as unreimbursed employee expenses, not medical expenses. That means they are not subject to the 7.5% limitation on the latter category.

Conclusion: These are only a few of the income tax deductions available to individuals with disabilities and the family members who provide their support. If you have questions about the specifics of any of these, you should contact your accountant or an attorney familiar with income tax and disability issues.

Another important resource: the Internal Revenue Service website. Perhaps surprisingly, it is helpful, easy to navigate and well constructed. One good entry point: the IRS "frequently asked questions" (FAQ) page.

Source: www.specialneedsalliance.com

Tuesday, May 20, 2008

Legislation to Protect the Elderly

Governor David A. Paterson announced the signing of legislation to help
curb predatory attacks on New York's elderly. Governor Paterson was joined for the bill signing at St. Margaret’s House on Fulton Street by Assembly Speaker Sheldon Silver and several members of the State Legislature, which overwhelmingly approved the legislation.

The law, known as “Granny’s Law,” was sparked in part by last year’s brutal beatings of 101-year-old Rose Morat and 85-year-old Solange Elizee of Queens. If an assailant is 10 years younger than a victim, the bill will increase the penalty for assaulting a person 65 years or older from a class A misdemeanor to second-degree assault – a Class D violent felony that is punishable by up to seven years in prison. “It is unconscionable that anyone would assault a senior citizen, but we continue to witness these disturbing acts of violence,” said Governor Paterson. “

I am pleased that my colleagues in the Legislature worked together to pass
this legislation, and that this bill provides a measure of safety for our
elderly.” Under current law, an intentional assault that causes physical injury to the victim constitutes third-degree assault, a Class A misdemeanor punishable by up to one year in jail. The charge is elevated to second-degree assault if there are certain aggravating factors, such as intentionally causing “serious”physical injury, intentionally causing physical injury with a deadly weapon, or causing injury to particular types of victims (i.e. police or peace officers, students, or teachers) who are more likely to be targeted by criminals.

Senate Majority Leader Joseph L. Bruno said: “Last year, 101-year-old Rose Morat and 85-year-old Solange Elizee were brutally attacked within a half-hour of each other, and New Yorkers were outraged by the cowardly, despicable act. As elected officials, our biggest responsibility is protecting our most vulnerable citizens, and I’d like to commend Senators Golden, Maltese, and Padavan for their tireless dedication in getting this legislation passed and signed into law. It’s truly horrendous when criminals seek out and assault the elderly – with this law we are ensuring they will be properly punished.”

Assembly Speaker Sheldon Silver, who sponsored the legislation in the
Assembly, said: “This legislation is a simple matter of dignity, justice and
respect. After lifetimes spent working jobs, raising their families, paying their taxes, serving their communities, and defending this nation, our senior citizens deserve all of the respect, all of the protection, all of the compassion, and all of the assistance this government can provide. The enactment of this law puts New York at the forefront of ensuring that those who prey upon the elderly and the frail are punished swiftly and severely.” Senator Martin Golden, the bill’s lead Senate sponsor, said: “Millions of New Yorkers were outraged by the despicable and cowardly attacks against Rose Morat and Solange Elizee. A person capable attacking the elderly is not simply a mugger – they are a dangerous menace to society who should be kept behind bars for as long as possible. The bottom line is that anyone who physically attacks a senior citizen should be severely punished, and that’s why the additional penalties provided for by this law are very much needed.” Senator Serphin Maltese said: “We cannot allow seniors to be targeted and assaulted simply because they are not physically able to defend themselves. When
anyone gets mugged and assaulted, I consider it to be a serious crime, but assaulting the elderly is an outrageous and potentially life-threatening crime that clearly calls out for more severe penalties. We have an obligation to protect the most vulnerable in our society.”

Senator Frank Padavan said: “Last year the brutal muggings of my constituents Rose Morat and Solange Elizee sparked outrage across the entire country and illustrated the need for stronger state laws to combat crimes against elderly. Now with the enactment of 'Granny’s Law' today, New York will have the criminal penalties needed to put any cowardly delinquent who attacks a senior citizen behind bars.” Assembly Codes Committee Chair Joseph R. Lentol said: “This legislation sends
a message in New York we intend to protect our seniors from those who seek to prey on our most vulnerable citizens.” Assembly Judiciary Chair Helene Weinstein said: “Seniors often appear as soft targets for criminals. Like all citizens, they must be afforded the protection to live and work safely, and to enjoy retirement and family after years of hard work without falling prey to those who may cruelly exploit their age. With the enactment of this legislation, New York helps ensure our seniors that
the law stands with them and that crimes against them are recognized for
their sheer brutality and senselessness.” Assemblywoman Janele Hyer-Spencer said: “Elder abuse should not be tolerated, and these measures take steps to stop this shameful behavior. Our seniors deserve, at the very least, peace of mind. We must do all we can to protect them and to provide them with that peace of mind, and one way to do that is to
deter potential crimes from occurring.”

Friday, April 25, 2008

Bill Would End Nursing Homes' Growing Practice of Asking Nursing Home Patients to Arbitrate

Two U.S. senators have introduced legislation that would end the practice of nursing home residents signing away their right to a trial before any actual dispute with the facility has arisen.
Nursing homes are increasingly asking -- or forcing -- patients and their families to sign arbitration agreements prior to admission. By signing these agreements, patients or family members give up their right to sue if they believe the nursing home was responsible for injuries or the patient's death. The Fairness in Nursing Home Arbitration Act, introduced by Sens. Mel Martinez (R-FL) and Herb Kohl (D-WI), chairman of the Special Committee on Aging, would make arbitration agreements signed before a dispute arises unenforceable, although it would still permit the parties to agree to arbitration after a dispute over care has arisen.
"When a family makes the difficult decision to help a loved one enter a nursing home, among the primary considerations is quality care. Forcing a family to choose between quality care and forgoing their rights within the judicial system is unfair and beyond the scope of the intent of arbitration laws," said Sen. Martinez. "This effort restores the original intent and tells families that they don't have to sign away their rights in order to access quality care."
The increased use of arbitration agreements has been paying off for the nursing home industry, according to a recent article in the Wall Street Journal. A study by Aon Global Risk Consulting projects that nursing homes' average costs per claim will drop from about $226,000 for incidents that took place in 1999 to about $146,000 for incidents that took place in 2006.
Theresa Bourdon, one of the study's authors and an Aon managing director, says that out of more than 200 claims she looked at that were subject to arbitration, none has yielded a multimillion-dollar payout. "We are not seeing big pops," Ms. Bourdon says.
But as industry litigation costs have been dropping, claims of poor treatment are on the rise, the Wall Street Journal reports. Meanwhile, patient advocates say that those seeking admission to a nursing home are in no position to make a determination about giving up their right to sue. Courts have sometimes struck down arbitration agreements as unfair, but others have upheld them. In Ohio last year, a court upheld an agreement signed by a woman who had entered a home from a hospital and was suffering intermittent bouts of confusion.

Source: www.elderlawanswers.com; 4/14/08

Friday, April 11, 2008

New Tax Break Helps Surviving Spouses

Widows and widowers who don't want to sell their house right away will get a tax break under a new law. The law gives surviving spouses two years to sell their house and receive the full $500,000 capital gains exclusion that married couples are entitled to.

Couples who are married and file taxes jointly can sell their main residence and exclude up to $500,000 of the gain from the sale from their gross income. Single individuals can exclude only $250,000. Under the previous law, if a spouse died, the surviving spouse could file jointly -- and therefore get the full $500,000 exclusion -- only for the year in which the spouse died. The new law allows surviving spouses to get the full $500,000 exclusion if they sell their house within two years of the date of the spouse's death and other ownership and use requirements have been met. The result is that widows or widowers who sell within two years may not have to pay any capital gains tax on the sale of the home.

Tuesday, April 1, 2008

Estate Planning for Families with Special Needs Children

Introduction: Families with special needs children must exercise extra care in making their estate plans. This is true whether their special needs child is still a minor or now an adult, and particularly so when the child is – or in the foreseeable future will be -- receiving needs-based public benefits such as SSI or Medicaid. While planning considerations for such a child will vary depending upon the child’s age, competency, and other family considerations, the goal is always the same: parents want their estates utilized to enhance and enrich the life of their special needs child while maintaining the child’s enrollment in essential public benefits programs. These goals can be met through the use of a properly prepared special needs trust.

The essence of all special needs estate planning is to ensure that the portion of the parents’ estate which passes to their special needs child at the time of their death is not considered an “available asset,” as defined by public benefit agencies. Parents must be mindful of both income and principal, as too much monthly income, as well as too much “cash,” can negatively impact their child’s future eligibility for benefits.

Purpose: Special needs planning works to preserve public benefits for the disabled child while supplementing and enhancing the quality of the child’s life. This type of planning is useful for many different purposes, including

lifetime money management for the benefit of the disabled child;
protecting the child’s eligibility for public benefits; and

ensuring a pool of funds available for future use in the event public funding should cease or be restricted.

Planning Options: The options available to families in making an estate plan for a special needs child who is receiving needs-based public benefits include the following:

Disinherit the child. This is the simplest option, but it does nothing to accomplish the essential purpose of enriching the life of the special needs child.
Give the estate to the brothers and sisters. At the parents’ death the entirety of the estate is distributed to the child’s siblings, with the understanding that they will “take care of” their disabled brother or sister. There are inherent risks with such an approach, including claims by the siblings’ creditors, bankruptcy, divorce, mismanagement of funds, etc. This may be appropriate when the child’s potential inheritance is modest.
Leave an inheritance to the disabled child. The outcome of this planning option will be the almost certain negative impact on the child’s continued eligibility for publicly funded benefits. At the least, benefits may be reduced. In the worst case scenario, the child may be rendered ineligible for SSI and Medicaid, and with this ineligibility for assisted housing, supported employment, vocational rehabilitation, group housing, job coaching, attendant personal care aides, and transportation assistance. The key benefit is Medicaid, as this program represents the child’s ability to access not only essential health care but many other public assistance programs.
Leave any inheritance in a Special Needs Trust. This last option will be preferred by most families in their efforts to provide and ensure a positive outcome for a special needs child. By using a properly drafted – and properly administered – Special Needs Trust, the child will continue to qualify for public assistance programs that would otherwise be unavailable to the child, especially the “means tested” programs that require the child to meet strict financial eligibility criteria. A Special Needs Trust works because the assets held in the trust are not “available” to the child. These types of trusts must be discretionary spendthrift trusts, with strict limits on the trustee’s ability to give money to the child. Under no circumstances can the special needs child force the trustee to make trust money available to the child. An additional benefit of the Special Needs Trust is that because the child is often unable to manage his or her own finances, the parents, in creating the trust, will appoint a trustee to act as the child’s money manager, and in so doing, ensure proper financial management after their death.

During Life or at Death? Families have the option of creating a Special Needs Trust at their death by incorporating a trust within a Last Will and Testament – this is called a “testamentary trust.”

The other option is for the parents to create a Special Needs Trust while alive -- not surprisingly, this is often referred to as a “living trust” (or inter vivos trust). The advantages of the living trust include:

the avoidance of a probate;

the creation of a trust to which other family members can make contributions, most usually the grandparents; and
an opportunity for a co-trustee to gain “hands on” experience in administrating the trust.

Revocable or Irrevocable? Tax considerations come into play in the decision to make the Special Needs Trust either revocable or irrevocable. Generally speaking, the family will make the trust revocable whenever:

the goals include maintaining maximum control over the trust; and
the family is not concerned with income tax considerations.
Correspondingly, the use of an irrevocable trust may be appropriate when the family is concerned with:

income tax considerations; and
if more than a million dollars will be going into the trust, possible federal estate and gift taxes.
Tax planning is beyond the scope of this article, so be sure to consult with your attorney, CPA or financial advisor if there are any special tax considerations in the creation of your Special Needs Trust.

Selecting Your Trustee: The Trustee will be responsible for administering your Special Needs Trust. So selecting your Trustee is one of the most important decisions your family will make in ensuring the long-term success of your Special Needs Trust. Given the natural pressures inherent in all families, someone in your family may consider the funds in the Special Needs Trust as “their” money, rather than the money of your special needs child. This can be a dangerous situation, especially as to your child’s continued eligibility for public benefits. In most families, it is best to consider selecting an independent, non-family member to serve as your Special Needs Trustee. The range of options includes:

a parent, sibling or another “distant” relative;
your attorney;
a Trust company or a financial institution;
a non-profit organization -- especially one with experience in special needs; or
co-Trustees, usually a family member acting with a trust company.

The selection of any of these potential Trustees has both advantages and disadvantages. You should closely counsel with your attorney or financial advisor before making your Trustee selection.

Conclusion: This brief summary is just the start of your enquiry as you begin your special needs estate plan. By working closely with your attorney, your CPA, and your financial planner, you will develop a much greater understanding of the options available to you and your family in making an appropriate estate plan for your special needs child. After making your wishes known and getting the appropriate documents in place, you will have taken crucial steps in assuring that this child will receive proper care when you are no longer able to provide that care yourself.

Source: www.specialneedsalliance.com

Friday, March 7, 2008

Durable Power of Attorney

A durable power of attorney is one of the most important estate planning documents you can have. It allows you to appoint someone to act for you (your "agent" or "attorney-in-fact") if you become incapacitated. Without a power of attorney, your loved ones would not be able to make decisions for you or manage your finances without asking the court to appoint a guardian, which is an expensive and time-consuming process.

There are many do-it-yourself power of attorney forms available; however, it is a good idea to have our attorneys draft the form for you. There are many issues to consider and one size does not fit all.

The agent's powers
The power of attorney document sets out the agent's powers. Powers given to an agent typically include buying or selling property, managing a business, paying debts, investing money, engaging in legal proceedings, borrowing money, cashing checks, and collecting debts. Some powers will not be included unless they are specifically mentioned. This includes, but is not limited to, the power to make gifts and the power to designate beneficiaries of your insurance policies.

The power to make gifts of your money and property is a particularly important power. If you want to ensure your agent has the authority to do Medicaid or estate planning on your behalf then the power of attorney must give the agent the power to modify trusts and make gifts. The wording in a power of attorney can be significant, so it is necessary to consult with our attorneys.

Springing or immediate
The power of attorney can take affect immediately or it can become effective only once your are disabled, called a "springing" power of attorney. While a springing power seems like a good idea, it can cause delays and extra expense because incapacity will need to be determined. If the power of attorney is springing, it is very important that the method for determining incapacity is clearly spelled out in the document.

Joint agents
While it is possible to name more than one person as your agent, this can lead to confusion. If you do have more than one person named, you need to be clear whether both parties need to act together or whether they can act independently. It might make more sense and be less confusing to name an alternative agent to act in case the first agent is unable to.

Executing the power of attorney
To be valid, a power of attorney must be notarized.

Accepting a power of attorney
Even if you do everything exactly right, some banks and other institutions are reluctant to accept a power of attorney. These institutions are afraid of a lawsuit if the power of attorney is no longer valid. Many banks or other financial institutions have their own standard power of attorney forms. To avoid problems, you many want to execute the forms offered by the institutions with which you have accounts. According to a MarketWatch.com article, you need to be careful that you don't sign a bank's document that inadvertently restricts a power of attorney's ability to deal with other assets, and you should check that any document you sign with a bank match the original power of attorney. We would be pleased to review with you all your powers of attorney to make sure that there are no conflicts.

Friday, February 15, 2008

What is an UTMA account?

Paul’s son Mark has cerebral palsy. When Mark turned 18 he was approved for Supplemental Security Income (SSI) payments and Medicaid, with Paul as the representative payee for his son’s benefits. When Paul applied for Mark’s SSI he disclosed to the Social Security Administration that Mark had a Uniform Transfers to Minors Act account (UTMA) with a $30,000 balance. Social Security assured Paul that the UTMA account would not affect Mark’s eligibility for benefits.

Mark is now 25 years old. Last week Paul got a notice from the Social Security Administration that Mark’s SSI is being cut off because of his UTMA account and that Mark would have to repay two years of benefits totaling over $14,000. Paul was stunned. He had disclosed the UTMA account when Mark first applied for SSI and he had been diligent about complying with all of SSI’s rules.

What is a UTMA account? UTMA accounts are controlled by state law. South Carolina and Vermont still call this type of account by an earlier name: Uniform Gifts to Minors Act (UGMA) accounts. Both types of accounts are designed to hold money that is given to a minor child. In Mark’s case the UTMA account was opened up when he was a baby to hold periodic cash gifts made by his grandparents. Though parents and grandparents knew at the time that Mark would have a disability throughout his life, they were hopeful that the money would help make him more independent and comfortable, and that his functional abilities might improve as he grew up.

A UTMA account is legally owned by the child and even lists the child’s Social Security number. The funds are controlled by a “custodian,” but the custodian is required to hold and use the money for the benefit of the child. The account resembles a simplified trust arrangement, with its terms set by state statutes. State law determines when the UTMA account will terminate. Depending on the state and the circumstances, the account terminates when the child reaches the age specified in the state law, usually either 18 or 21. The balance in the UTMA account is then legally available to the (now adult) child.

How does SSI treat UTMA accounts? Social Security’s Program Operation Manual System (POMS) provides that Social Security will not count a UTMA account as an available resource for SSI purposes until the account is considered available under state law (POMS 01120.205). Interest or dividend income generated from a UTMA account is also not counted as income of the SSI recipient. Of course, if the custodian makes a distribution of cash to the child from the account the payment would be counted as income to the child for that month. SSI does count the UTMA account as an available asset in the month in which the child reaches the age at which state law requires that the account be terminated.

Unfortunately the Social Security Administration does not remind parents of a child approaching majority that a UTMA account may soon be counted as an available asset. In Mark’s case his UTMA account of $30,000 made him ineligible for SSI and Medicaid as of his twenty-first birthday, when the law in his state mandated that the account became available. Because the Social Security Administration determined that Paul as the representative payee was not “at fault” in creating the overpayment, the recovery was limited to two years instead of four. It took Social Security four years to make the connection, but once the determination was made the ineligibility was retroactive to Mark’s twenty-first birthday.

Missed opportunity: Before Mark turned 21 the UTMA account could have been transferred into a special needs trust for Mark’s benefit. This would most likely be a “Medicaid payback” special needs trust since the trust would be funded with Mark’s own money—even though the funds originally came from Mark’s grandparents. In some circumstances (and states), it may even be possible to avoid the necessity of establishing a payback trust at all, but the key is to decide how to proceed before the child reaches the age set by state law.

In Mark’s case, after Paul repays the Social Security Administration for the overpayment he can still transfer the remaining funds into a payback trust so that Mark can re-qualify for SSI as of the first of the next month. Paul can also consider the possibility of transferring the UTMA balance to a pooled trust; given the amount of money and Mark’s young age, it may be more cost-efficient to take this approach. It may even be possible to make purchases for Mark’s benefit (like adaptive equipment, or the dental work that Mark needs) that could eliminate the need for a trust at all. Unfortunately, in Mark's case it is too late to save the $14,000 that the Social Security Administration will claim for its overpayment.

Lesson learned: Parents, financial advisors and legal counsel should do a check of any UTMA accounts for a child approaching the age of majority in cases of disability. It is easy to avoid a serious eligibility issue with important government benefits by transferring the UTMA account into a special needs trust before the account is available to the child. As always, competent legal advice can help navigate the tricky (and not always obvious) eligibility rules and procedures.
Source: Barbara A. Isenhour, Special Needs Alliance Newsletter, 2/08

Lawrence Eric Davidow is a founding member and the Treasurer of the Special Needs Alliance which is a National Alliance of Disability Lawyers. This premier alliance of leading law firms throughout the country are dedicated to the area of planning for those with Special Needs. These hand picked law firms have the resources to devise solutions and insure financial security for special needs clients nationwide. Long aware of the need for attention to this area, Mr. Davidow, along with his colleagues, formed an alliance solely dedicated to the unique challenges this area of the law presents.

Friday, February 1, 2008

2008 Medicaid Only Income Exemption and Resource Levels

Released by the Office of Health Insurance Programs,
Division of Coverage and Enrollment

Due to a 2.3% cost of living adjustment for SSA payments effective January 1, 2008, several figures used in determining Medicaid eligibility must be updated. Effective January 1, 2008, Medicaid eligibility must be determined using the following updated figures:

1. Medicaid income level for 1 is $725/month or $8,700/year.
2. Medicaid income level for 2 is $1,067/month or $12,800/year.
3. Medicaid income levels for households of 3 or more remain the same as in 2007.
4. Medicaid resource levels are $4350 and $6400, for households of 1 and 2, respectively. The resource levels for households of 3 or more remain the same as in 2007.
5. Family Health Plus resource levels are $13,050 and $19,200, for households of 1 and 2, respectively. The Family Health Plus resource levels for households of 3 or more remain the same as in 2007.
6. The Supplemental Security Income federal benefit rate (FBR) for an individual living alone is $637/single and $956/couple.
7. The allocation amount is $342, the difference between the Medicaid level for a household of two ($1,067) and one ($725).
8. The 249e factors are .893 and .188.
9. The SSI resource levels remain $2,000 for individuals and $3,000 for couples.
10. The state supplement is $87 for an individual and $104 for a couple living alone.
11. The Medicare Part A premium is $423 per month.
12. The Medicare Part B standard monthly premium increases to $96.40 per month. Beginning in 2007, some enrollees, based on their incomes, will pay a higher Part B premium amount. The standard Medicare monthly Part B premium for 2008 will be $96.40. Local districts may see higher premium amounts, up to a maximum of $238.40, especially in some spousal impoverishment cases when applicants/recipients may have more monthly income than is ordinarily seen in most Medicaid cases.
13. Maximum federal Community Spouse Resource Allowance is $104,400.
14. Minimum State Community Spouse Resource Allowance is $74,820.
15. The community spouse Minimum Monthly Maintenance Needs Allowance is $2,610.
16. Maximum Family Member Allowance is $584 (estimated).
17. Family Member Allowance formula number used is $1,750 (estimated).
18. Substantial Gainful Activity (SGA): Non-Blind $940/month, Blind $1570/month, Trial Work Period (TWP) $670/month.
19. SSI-related student earned income disregard limit of $1550 monthly up to a maximum of $6240 annually.

Medicaid is a joint federal and state program designed to provide medical assistance benefits, including Nursing Home care and community based home care, to certain needy individuals who qualify and those who have properly planned. However, the process of application and eligibility is confusing and intimidating. At Davidow, Davidow, Siegel & Stern we can successfully guide you through the entire Medicaid process from establishing eligibility, the preparation of the application, gathering the necessary documents, submission of the application, follow-up to submission, to the acceptance and ongoing Medicaid eligibility.

Tuesday, January 8, 2008

Panel Rules Same-Sex Partner Ineligible for Death Benefit

The same-sex partner of a man who died following an on-the-job accident is not entitled to the Workers’ Compensation death benefit a surviving spouse in a traditional marriage would receive, a divided upstate appeals panel ruled yesterday.

The civil union that John R. Langan and the late Neal Conrad Spicehandler entered into in Vermont in 2000 does not make Mr. Langan eligible for the death benefit as a surviving spouse under New York’s Workers’ Compensation Law §16, the court determined in Matter of Langan v. State Farm Fire & Casualty. In a 4-1 ruling, the court decided that Mr. Langan has no better claim to the death benefit than the male registered domestic partner in Matter of Valentine v. American Airlines, (2005), who sought the death benefit after his partner was killed in a 2001 plan crash in New York City.

Neither civil unions nor registered domestic partnerships are recognized as marriages under the Workers’ Compensation Law, Justice Anthony T. Kane wrote for the Third Department panel. A “legal spouse” is the “husband or wife of lawful marriage” for purposes of the statute, Justice Kane wrote, citing Valentine.

The majority ruled that its holding was also consistent with the state Court of Appeals’ landmark ruling in Hernandez v. Robles, (2006), in which the Court ruled 4-2 that New York’s Domestic Relations Law implicitly limits marriage to heterosexual couples.

The Court of Appeals has also long recognized that the Workers’ Compensation system is designed to protect the family–“husband, wife and children,” as the court put it yesterday–should spouses be injured or killed while on the job, the Third Department noted.

“The Court of Appeals has already determined that the Legislature’s decision to limit marriage to opposite-sex couples is rationally related to this legitimate interest and withstands rational basis scrutiny,” Justice Kane wrote. “The decision to extend workers’ compensation death benefits to a whole new class of beneficiaries, i.e., survivors of same-sex unions, is a decision to be made by the Legislature after appropriate inquiry into the societal obligation to provide such benefits and the financial impact of such a decision.”

The majority also ruled that comity does not bind New York state to extend Workers’ Compensation death benefits to partners in civil unions, as Vermont does for its same-sex-couple residents. “This doctrine is not a mandate to adhere to another state’s laws, but an expression of one state’s voluntary choice to defer to another state’s policy,” the court held.

The lone dissenter, Justice Robert S. Rose, found Mr. Langan’s comity argument more persuasive. Justice Rose wrote that the plaintiff is not asking for the death benefit because Vermont would confer them on him were he a resident of that state, but “only to recognize the legal status of spouse afforded to him by Vermont, as a matter of comity.”

“Once that status is recognized, New York law provides the legal incidents to which claimant would be entitled, including workers’ compensation death benefits,” the dissenter held.

Yesterday’s ruling affirmed the denial of death benefits to Mr. Langan by a Workers’ Compensation Law judge and the Workers’ Compensation Board. Mr. Langan’s appeal went directly to the Appellate Division.

Had Mr. Langan and Mr. Spicehandler been in a traditional marriage, Mr. Langan would have been eligible for a death benefit totaling two years’ worth of benefits is provided, according to the state Workers’ Compensation Board.

Mr. Spicehandler lived on Long Island with Mr. Langan and the two men had been in a relationship for 14 years before the entered into a civil union. Mr. Spicehandler was struck by a hit-and-run driver in midtown Manhattan and severely injured his leg in February 2002. He died of a blood clot two days later, following surgery.

The prospect of New York’s Legislature legalizing same-sex marriages or extending Workers’ Compensation benefis to domestic partners or couples in civil unions is considered dim as long as Republicans maintain their majority in the state Senate.

By an 85-61 vote, the Democrat-dominated state Assembly approved a bill sent by Governor Eliot Spitzer to authorize same-sex marriages on June 19. However, Senate Republican Majority Leader Joseph Burn, R-Brunswick, has said repeatedly his GOP members have no interest in taking up the bill or legalizing same-sex marriages.

The Third Department panel took 3 ½ months after hearing oral arguments to hand down its ruling in Langan. That is about twice as long as the court normally takes to decide cases and generally indicates disagreements among members of the panel over the ruling.

This was not the first time Mr. Langan has lost before the Appellate Division in a case concerning his late partner. In Langan v. St. Vincent’s Hospital (2005), a Second Department panel ruled 3-2 that same-sex partners cannot pursue a wrongful death action in New York. Mr. Langan had sought to sue St. Vincent’s Hospital for alleged maltreatment of the injuries of Mr. Spicehandler, a Massapequa attorney. The Court of Appeals dismissed an appeal of that ruling in 2006.

As this recent case proves, Gay and Lesbian couples and their families do not have the same legal rights as traditional married couples making it even more imperative to establish an estate plan. Without an estate plan, critical decisions may be left to a system that may exhibit legal prejudice and involve bloodline relatives that you may not want involved. The attorneys at Davidow, Davidow, Siegel & Stern are well versed in this area. If you require detailed information, please request a copy of our special report entitled, “Protecting the rights of non-traditional couples in the traditional world”.

Source: NY Law Journal