The following is a listing of the 2007 Medicaid regional rates which must be used to determine a transfer of assets penalty period when applying for Medicaid. You must refer to the rate for the region in which the facility is located. These rates are based on average nursing home costs in each of the seven regions in the State.
Central New York: $6506
Long Island: $10,123
New York City: $9,375
Northeastern New York: $7,189
Northern Metropolitan Area: $9,074
Rochester: $8,002
Western New York: $6,820
In addition, due to an increase in the consumer price index, the federal maximum community spouse resource allowance (CSRA) increases to $101,640 effective January 1, 2007. The State’s minimum CSRA will remain unchanged at $74,820. Therefore, in determining the community spouse resource allowance on and after January 1, 2007, the community spouse is permitted to retain resources in an amount equal to the greater of the following amounts:
1. $74,820 (the State minimum community spouse resource allowance); or
2. The amount of the spousal share up to $101,640 (the new federal maximum).
“Spousal Share” is the amount equal to one-half of the total value of the countable resources of the couple as of the beginning of the most recent continuous period of institutionalization of the institutionalized spouse on or after September 30, 1989.
Also effective January 1, 2007, the community spouse minimum monthly maintenance needs allowance (MMMNA) increases to $2,541. The increased MMMNA, family member allowance, federal maximum CSRA, and State minimum CSRA must be used when completing an assessment of a couple’s resources and income.
Friday, January 5, 2007
Wednesday, December 20, 2006
FDIC Misconceptions: A Top 10 List (Part I)
FDIC Insurance
To help depositors avoid repeating the mistakes of others, FDIC Consumer News has compiled this “Top 10" list of misconceptions that some people have about FDIC Insurance. This list is based on discussions with FDIC deposit insurance specialists, including representatives at our toll-free Call Center, which handles hundreds of calls a month from consumers asking about their deposit insurance.
1. The most a consumer can have insured is $100,000.
Too many people assume - often incorrectly - that if their bank fails their share all their accounts would be added together and insured up to a combined total of $100,000. Others have notions even further from the truth, such as the idea that the FDIC knows how much each customer has in every bank in the United States (rest assured, we don’t) and that the grand total of all those accounts is insured to no more than $100,000. The reality is that your accounts at different FDIC insured institutions are separately insured, not added together, and you may qualify for more than $1000,000 in coverage at each insured bank if you own deposit accounts in different “ownership categories.”
Suppose you have a variety of accounts at one bank. The funds you have in various checking and savings accounts (other than retirement accounts) in your name alone are insured up to $100,000. Your portion of joint accounts - those with other people - is also separately insured to $100,000. If you also have “revocable trust accounts” at the bank, the total can be separately insured up to $100,0000 for each beneficiary if certain conditions are met. And, under new rules, certain retirement accounts are insured up to $250,000, up from $100,000 previously.
“Depending on the circumstances, a family of four could have well over $1 million in deposit insurance coverage at the same bank,” said James Williams, an FDIC Consumer Affairs Specialist. “And that coverage is separate from what is protected at any other FDIC-insured institution.”
2. Changing the order of names or Social Security Numbers can increase the coverage for joint accounts.
Many depositors mistakenly believe that by changing the order of Social Security Numbers, rearranging the names listed on joint accounts, or substituting “and” for “or” in account titles, they can increase their insurance coverage.
“Consumers are always telling us that they thought they could get more coverage if they did something like title one account for ‘Mary and John Smith’ and another account for “Mary or John Smith,” said Kathleen Nagle, chief of the Deposit Insurance Section in the FDIC’s Division of Supervision and Consumer Protection. “These moves will have no impact on joint account coverage. The FDIC will simply add each person’s share of all the joint accounts at the same institution and insure the total up to $100,000.” (Note: Each person’s share is presumed to be equal unless stated otherwise in the deposit account records.)
3. If a bank fails, the FDIC could take up to 99 years to pay depositors for their insured accounts.
This is a completely false notion that many bank customers have told us they heard from someone attempting to sell them another kind of financial product.
The truth is that federal law requires the FDIC to pay the insured deposits “as soon as possible: after an insured bank fails.” Historically, the FDIC pays insured deposits within a few days after a bank closes, usually the next business day. In most cases, the FDIC will provide each depositor with a new account at another insured bank. Or, if arrangements cannot be made with another institution, the FDIC will issue a check to each depositor.
4. The FDIC only pays failed-bank depositors a percentage of their insured funds.
All too often we receive questions similar to this one: “Is it true that if my FDIC-insured bank fails, I would only get $1.31 for every $100 in my checking account?” As with “misconception number 3, “ this misinformation appears to be spread by some financial advisors and sales people.
Federal law requires the FDIC to pay 100 percent of the insured deposits up to the federal limit - including principal and interest. If your bank fails and you have deposits over the limit, you may be able to recover some or , in rare cases, all of your uninsured funds. However, the overwhelming majority of depositors at failed institutions are within the insurance limit, and insured funds are always paid in full.
5. Deposits in different branches of the same bank are separately insured.
FDIC insurance is based on how much money is in various ownership categories (single, joint, retirement, and so on) at the same insured institution. It doesn’t matter if the accounts were opened at different branches - they are considered the same bank for insurance purposes.
Distinguishing one bank from another isn’t easy these days. Some banks have similar names but they’re not the same institution. And then there are banks that use different “trade” names in different parts of the country or use a different name for their online banking activities or Internet divisions, but they’re all the same bank for FDIC insurance purposes. The FDIC and other federal regulators have advised banks to clearly identify their legal names in advertisements and on Web sites.
When in doubt, you may contact the FDIC. “One way to be extra sure you are depositing money in different banks is to ask the FDIC for each bank’s insurance ‘certificate number’,” noted Williams. “If the FDIC certificate numbers are different, the banks are different.”
Source: www.emaxhealth.com
To help depositors avoid repeating the mistakes of others, FDIC Consumer News has compiled this “Top 10" list of misconceptions that some people have about FDIC Insurance. This list is based on discussions with FDIC deposit insurance specialists, including representatives at our toll-free Call Center, which handles hundreds of calls a month from consumers asking about their deposit insurance.
1. The most a consumer can have insured is $100,000.
Too many people assume - often incorrectly - that if their bank fails their share all their accounts would be added together and insured up to a combined total of $100,000. Others have notions even further from the truth, such as the idea that the FDIC knows how much each customer has in every bank in the United States (rest assured, we don’t) and that the grand total of all those accounts is insured to no more than $100,000. The reality is that your accounts at different FDIC insured institutions are separately insured, not added together, and you may qualify for more than $1000,000 in coverage at each insured bank if you own deposit accounts in different “ownership categories.”
Suppose you have a variety of accounts at one bank. The funds you have in various checking and savings accounts (other than retirement accounts) in your name alone are insured up to $100,000. Your portion of joint accounts - those with other people - is also separately insured to $100,000. If you also have “revocable trust accounts” at the bank, the total can be separately insured up to $100,0000 for each beneficiary if certain conditions are met. And, under new rules, certain retirement accounts are insured up to $250,000, up from $100,000 previously.
“Depending on the circumstances, a family of four could have well over $1 million in deposit insurance coverage at the same bank,” said James Williams, an FDIC Consumer Affairs Specialist. “And that coverage is separate from what is protected at any other FDIC-insured institution.”
2. Changing the order of names or Social Security Numbers can increase the coverage for joint accounts.
Many depositors mistakenly believe that by changing the order of Social Security Numbers, rearranging the names listed on joint accounts, or substituting “and” for “or” in account titles, they can increase their insurance coverage.
“Consumers are always telling us that they thought they could get more coverage if they did something like title one account for ‘Mary and John Smith’ and another account for “Mary or John Smith,” said Kathleen Nagle, chief of the Deposit Insurance Section in the FDIC’s Division of Supervision and Consumer Protection. “These moves will have no impact on joint account coverage. The FDIC will simply add each person’s share of all the joint accounts at the same institution and insure the total up to $100,000.” (Note: Each person’s share is presumed to be equal unless stated otherwise in the deposit account records.)
3. If a bank fails, the FDIC could take up to 99 years to pay depositors for their insured accounts.
This is a completely false notion that many bank customers have told us they heard from someone attempting to sell them another kind of financial product.
The truth is that federal law requires the FDIC to pay the insured deposits “as soon as possible: after an insured bank fails.” Historically, the FDIC pays insured deposits within a few days after a bank closes, usually the next business day. In most cases, the FDIC will provide each depositor with a new account at another insured bank. Or, if arrangements cannot be made with another institution, the FDIC will issue a check to each depositor.
4. The FDIC only pays failed-bank depositors a percentage of their insured funds.
All too often we receive questions similar to this one: “Is it true that if my FDIC-insured bank fails, I would only get $1.31 for every $100 in my checking account?” As with “misconception number 3, “ this misinformation appears to be spread by some financial advisors and sales people.
Federal law requires the FDIC to pay 100 percent of the insured deposits up to the federal limit - including principal and interest. If your bank fails and you have deposits over the limit, you may be able to recover some or , in rare cases, all of your uninsured funds. However, the overwhelming majority of depositors at failed institutions are within the insurance limit, and insured funds are always paid in full.
5. Deposits in different branches of the same bank are separately insured.
FDIC insurance is based on how much money is in various ownership categories (single, joint, retirement, and so on) at the same insured institution. It doesn’t matter if the accounts were opened at different branches - they are considered the same bank for insurance purposes.
Distinguishing one bank from another isn’t easy these days. Some banks have similar names but they’re not the same institution. And then there are banks that use different “trade” names in different parts of the country or use a different name for their online banking activities or Internet divisions, but they’re all the same bank for FDIC insurance purposes. The FDIC and other federal regulators have advised banks to clearly identify their legal names in advertisements and on Web sites.
When in doubt, you may contact the FDIC. “One way to be extra sure you are depositing money in different banks is to ask the FDIC for each bank’s insurance ‘certificate number’,” noted Williams. “If the FDIC certificate numbers are different, the banks are different.”
Source: www.emaxhealth.com
Friday, December 8, 2006
8 Steps for Mangaing Parents' Finances
So, the event you’ve worried about much of your adult life has finally happened: You need to take over Mom’s or Dad’s financial affairs.
In addition to the stress and sadness over what’s happened, you immediately have to deal with practical matters: Will Mom be able to live in her home again? Can she afford a nursing home? Will insurance cover all of Dad’s medical bills?
And, speaking of bills, you’ve got to start paying them–everything from utilities to credit cards.
Even if you’re not at this point with your parents yet, this list can help you decide what to do now–before anything happens.
8-Step Plan
The need to take over your parents’ financial life, especially if it happens suddenly, can be extremely stressful. However, if you approach it one step at a time, you’ll get a handle on what needs to be done.
1. Find all financial accounts and documents.
2. Collect and start paying bills.
3. Locate power of attorney or living trust.
4. Open your parents’ safe-deposit box - with a witness.
5. Become your parents’ guardian.
6. Document everything you do.
7. Consider hiring a financial planning team.
8. Consider updating investments.
Advance planning tip: There are three important documents you can help your parents prepare before they become ill.
1. A power of attorney form, which allows you to take care of their finances.
2. A health care proxy, which allows you to make life-and-death medical decisions.
3. A will, which determines how their assets will be divided when they're gone.
Source: Written by Teri Cettina, Bankrate.com.
In addition to the stress and sadness over what’s happened, you immediately have to deal with practical matters: Will Mom be able to live in her home again? Can she afford a nursing home? Will insurance cover all of Dad’s medical bills?
And, speaking of bills, you’ve got to start paying them–everything from utilities to credit cards.
Even if you’re not at this point with your parents yet, this list can help you decide what to do now–before anything happens.
8-Step Plan
The need to take over your parents’ financial life, especially if it happens suddenly, can be extremely stressful. However, if you approach it one step at a time, you’ll get a handle on what needs to be done.
1. Find all financial accounts and documents.
2. Collect and start paying bills.
3. Locate power of attorney or living trust.
4. Open your parents’ safe-deposit box - with a witness.
5. Become your parents’ guardian.
6. Document everything you do.
7. Consider hiring a financial planning team.
8. Consider updating investments.
Advance planning tip: There are three important documents you can help your parents prepare before they become ill.
1. A power of attorney form, which allows you to take care of their finances.
2. A health care proxy, which allows you to make life-and-death medical decisions.
3. A will, which determines how their assets will be divided when they're gone.
Source: Written by Teri Cettina, Bankrate.com.
Wednesday, November 22, 2006
Seniors Can Change Medicare Prescription Drug Plans Beginning November 15th
Medicare recipients with changes in their drug needs, who want to explore less costly drug plans, or for other reasons desire to change their last year’s plan, now have the chance to choose a new drug plan that better fits their needs.
Beginning November 15th, the Medicaid Part D enrollment window will re-open for seniors and other Medicare recipients. The window will close December 31st. However, the Centers for Medicare and Medicaid Services state that seniors need to enroll in a new plan by December 8, to ensure their new prescription drug card in early January 2007.
New plans will go into effect January 1, 2007, and remain in place for another year. Alternatively, a recipient satisfied with their current Part D plan does not have to re-enroll. For more information contact 1-800-MEDICARE. Or visit the website: www.medicare.gov for the available Medicare D plans.
Beginning November 15th, the Medicaid Part D enrollment window will re-open for seniors and other Medicare recipients. The window will close December 31st. However, the Centers for Medicare and Medicaid Services state that seniors need to enroll in a new plan by December 8, to ensure their new prescription drug card in early January 2007.
New plans will go into effect January 1, 2007, and remain in place for another year. Alternatively, a recipient satisfied with their current Part D plan does not have to re-enroll. For more information contact 1-800-MEDICARE. Or visit the website: www.medicare.gov for the available Medicare D plans.
Friday, November 3, 2006
Friends of Karen
From time to time we are lucky enough to come in contact with a very special organization filled with very special people and a very worthwhile cause. The attached message is from such an organization and we're proud to share it with you.
DID YOU KNOW?
For over twenty-eight years, Friends of Karen has provided financial, emotional and advocacy support to families with children from birth to 21 years of age with cancer and other life-threatening illnesses and living in the tri-state area. Friends of Karen’s goal is to help maintain the highest quality of life and prevent the financial and emotional collapse of the family, as they go through this most difficult time.
Last year, Friends of Karen helped 577 families with children with life-threatening illnesses. Additionally, we helped 805 of their siblings.
HOW DOES FRIENDS OF KAREN HELP?
They Pay -
• Basic living expenses, such as rent and mortgage, utilities, car payments, etc. that
become unmanageable due to lost wages and the high cost of medical care.
• Medical co-payments, hospital bills including television and telephone
• Transportation to/from medical treatment
• Childcare for siblings
• Health insurance payments
• Special home care needs and food
• Funerals
• Counseling
Friends of Karen’s Back to School program provides much needed school supplies to our Friends of Karen children and their brothers and sisters. Holiday Adopt-A-Family program, which begins in the Fall, assures festive holidays for those unable to provide for themselves because of the cost of their child’s illness, and Children Helping Children programs collaborating with schools and service clubs gives children the opportunity to help other children in their community.
Please visit their website at: www.friendsofkaren.org or call them at 631-473-1768 for more information about their services and their up-coming Open House scheduled for late November.
Friends of Karen, 21 Perry Street, Port Jefferson, NY 11777
“When the parents of a terminally or catastrophically ill child receive financial and emotional help, they then have more time to love.”—Sheila Petersen, Founder, 1978.
DID YOU KNOW?
For over twenty-eight years, Friends of Karen has provided financial, emotional and advocacy support to families with children from birth to 21 years of age with cancer and other life-threatening illnesses and living in the tri-state area. Friends of Karen’s goal is to help maintain the highest quality of life and prevent the financial and emotional collapse of the family, as they go through this most difficult time.
Last year, Friends of Karen helped 577 families with children with life-threatening illnesses. Additionally, we helped 805 of their siblings.
HOW DOES FRIENDS OF KAREN HELP?
They Pay -
• Basic living expenses, such as rent and mortgage, utilities, car payments, etc. that
become unmanageable due to lost wages and the high cost of medical care.
• Medical co-payments, hospital bills including television and telephone
• Transportation to/from medical treatment
• Childcare for siblings
• Health insurance payments
• Special home care needs and food
• Funerals
• Counseling
Friends of Karen’s Back to School program provides much needed school supplies to our Friends of Karen children and their brothers and sisters. Holiday Adopt-A-Family program, which begins in the Fall, assures festive holidays for those unable to provide for themselves because of the cost of their child’s illness, and Children Helping Children programs collaborating with schools and service clubs gives children the opportunity to help other children in their community.
Please visit their website at: www.friendsofkaren.org or call them at 631-473-1768 for more information about their services and their up-coming Open House scheduled for late November.
Friends of Karen, 21 Perry Street, Port Jefferson, NY 11777
“When the parents of a terminally or catastrophically ill child receive financial and emotional help, they then have more time to love.”—Sheila Petersen, Founder, 1978.
Friday, October 27, 2006
The Pension Protection Act of 2006
The Pension Protection Act of 2006 was signed into law by President Bush on August 17, 2006. It is the most significant pension legislation since the Employee Retirement Income Security Act of 1974 (ERISA). Among other things, the new law makes a number of retirement savings incentives permanent, toughens the funding rules that govern traditional pension plans, and authorizes 401(k) plans to provide investment advice and automatic enrollment of participants. These changes should help promote retirement income security.
First, the Pension Protection Act permanently extends a variety of pension and savings incentives that were scheduled to sunset in 2011. The annual limit on Individual Retirement Account (IRA) contributions will increase from $4,000 this year to $5,000 in 2008, and it will be indexed for inflation thereafter. The provision that allows individuals who are at least 50 years old to make an additional "catch-up" contribution of $1,000 a year is also made permanent. Also, starting in 2007, taxpayers will be able to have a portion of their income tax refunds directly deposited into their IRAs.
Similarly, the annual limit on 401(k) plan contributions has increased to $15,000 in 2006 (plus another $5,000 for those over age 50), and these amounts are indexed for future inflation.
The Act also expands the saver's tax credit for low- and moderate-income workers. The credit is equal to a percentage-50, 20, or 10 percent, depending on income level-of up to $2,000 of qualified retirement savings contributions ($1,000 maximum credit in 2006). The credit was scheduled to expire at the end of 2006, but the Act makes it permanent and indexes the income and rate levels for inflation.
Second, the Pension Protection Act toughens the funding rules that govern traditional "defined benefit" pension plans. One provision generally requires employers to fix any funding shortfall within seven years, and new disclosure rules give workers more information about the financial status of their pension plans. Moreover, poorly funded plans will be subject to limitations on benefit increases, lump sum payments, and shutdown benefits. Employers will, however, be able to deduct more in the years in which they can afford to make larger contributions.
The Act also makes it easier for employers to utilize cash balance and other innovative pension plan designs, and it allows employers to set up Roth 401(k) plans, under which employees will be able to designate their salary deferral contributions as after-tax Roth contributions.
Third, the Pension Protection Act encourages employers to automatically enroll employees in their 401(k) plans. Starting in 2008, employers will be able to satisfy the IRS's so-called "nondiscrimination" test if they automatically enroll each employee in the 401(k) plan, withhold and contribute a few percent of compensation on behalf of those employees, and make small matching contributions. These 401(k) plans will qualify for favorable tax treatment, even if many employees instead elect to contribute at less than the target levels, or not at all.
Also, starting in 2007, employers will have an easier time providing investment advice to help their employees manage their 401(k) accounts. Employers will be able to provide investment advice through computer models that take into account the employee's age, expected retirement age, income, risk tolerance, and other variables. Alternatively, investment advice could be provided by certain third-party experts on an individual basis, but only if that advice is based on a flat fee charged to each employee, regardless of the investments selected or amounts involved. Another provision protects plans that use a diversified stock and bond fund as the default investment, rather than an ultra-safe but low-yield, money market fund. The Act also requires plans that invest in publicly traded employer stock to allow employees to diversify their individual account holdings. In general, employees must have the right to diversify their own contributions immediately and must be allowed to diversify most employer contributions after three years of service. Together, these investment provisions should help employees get better rates of return on their retirement savings.
The Pension Protection Act also accelerates the vesting of employer contributions to 401(k) and similar plans. Starting next year, employer contributions need to be either 100 percent vested after three years of service (down from five years) or 20 percent vested after two years with an additional 20 percent vesting each year thereafter until 100 percent is vested after six years of service (down from three-to-seven-year graduated vesting).
Another provision facilitates phased retirement by allowing workers over the age of 62 to take in-service distributions from their traditional pensions. Eligible workers will be able to go from full-time to part-time work and receive pension benefits to maintain their current income levels. Also, 401(k) plans will be allowed to let participants make hardship withdrawals to help parents or other beneficiaries, even if those beneficiaries are not dependents or spouses.
The Act also includes a number of provisions that make it easier to fund health care and long-term care costs. For example, one provision makes it easier for pension plans to use excess assets to fund retiree health care, and another provision allows long-term care insurance to be offered as part of an annuity or life insurance contract.
Finally, the Act also includes a package of charitable giving incentives and loophole closers. For example, one provision allows tax-free distributions from IRAs for charities. Otherwise taxable distributions of up to $100,000 a year will be excluded from the IRA owner's taxable income as long as the distribution is made after the owner has reached age 70½ and is made payable to the charity.
Another provision makes it harder to take a current deduction for contributions of a future interest in paintings and other collectibles. A charity receiving a fractional interest in tangible personal property must take complete ownership of the property within 10 years or the death of the donor, whichever is first. In addition, the charity must take possession of the property and use it at least once during the 10-year period as long as the donor remains alive.
The Act also increases the penalties on taxpayers and charities that abuse the charitable contribution rules. Also, one provision denies the deduction for contributions of clothing and household items unless the items are in good condition, and another provision requires that donors have a receipt or cancelled check for all cash donations.
Source: NAELA E-Bulletin, October 3, 2006; written by Jon Forman.
First, the Pension Protection Act permanently extends a variety of pension and savings incentives that were scheduled to sunset in 2011. The annual limit on Individual Retirement Account (IRA) contributions will increase from $4,000 this year to $5,000 in 2008, and it will be indexed for inflation thereafter. The provision that allows individuals who are at least 50 years old to make an additional "catch-up" contribution of $1,000 a year is also made permanent. Also, starting in 2007, taxpayers will be able to have a portion of their income tax refunds directly deposited into their IRAs.
Similarly, the annual limit on 401(k) plan contributions has increased to $15,000 in 2006 (plus another $5,000 for those over age 50), and these amounts are indexed for future inflation.
The Act also expands the saver's tax credit for low- and moderate-income workers. The credit is equal to a percentage-50, 20, or 10 percent, depending on income level-of up to $2,000 of qualified retirement savings contributions ($1,000 maximum credit in 2006). The credit was scheduled to expire at the end of 2006, but the Act makes it permanent and indexes the income and rate levels for inflation.
Second, the Pension Protection Act toughens the funding rules that govern traditional "defined benefit" pension plans. One provision generally requires employers to fix any funding shortfall within seven years, and new disclosure rules give workers more information about the financial status of their pension plans. Moreover, poorly funded plans will be subject to limitations on benefit increases, lump sum payments, and shutdown benefits. Employers will, however, be able to deduct more in the years in which they can afford to make larger contributions.
The Act also makes it easier for employers to utilize cash balance and other innovative pension plan designs, and it allows employers to set up Roth 401(k) plans, under which employees will be able to designate their salary deferral contributions as after-tax Roth contributions.
Third, the Pension Protection Act encourages employers to automatically enroll employees in their 401(k) plans. Starting in 2008, employers will be able to satisfy the IRS's so-called "nondiscrimination" test if they automatically enroll each employee in the 401(k) plan, withhold and contribute a few percent of compensation on behalf of those employees, and make small matching contributions. These 401(k) plans will qualify for favorable tax treatment, even if many employees instead elect to contribute at less than the target levels, or not at all.
Also, starting in 2007, employers will have an easier time providing investment advice to help their employees manage their 401(k) accounts. Employers will be able to provide investment advice through computer models that take into account the employee's age, expected retirement age, income, risk tolerance, and other variables. Alternatively, investment advice could be provided by certain third-party experts on an individual basis, but only if that advice is based on a flat fee charged to each employee, regardless of the investments selected or amounts involved. Another provision protects plans that use a diversified stock and bond fund as the default investment, rather than an ultra-safe but low-yield, money market fund. The Act also requires plans that invest in publicly traded employer stock to allow employees to diversify their individual account holdings. In general, employees must have the right to diversify their own contributions immediately and must be allowed to diversify most employer contributions after three years of service. Together, these investment provisions should help employees get better rates of return on their retirement savings.
The Pension Protection Act also accelerates the vesting of employer contributions to 401(k) and similar plans. Starting next year, employer contributions need to be either 100 percent vested after three years of service (down from five years) or 20 percent vested after two years with an additional 20 percent vesting each year thereafter until 100 percent is vested after six years of service (down from three-to-seven-year graduated vesting).
Another provision facilitates phased retirement by allowing workers over the age of 62 to take in-service distributions from their traditional pensions. Eligible workers will be able to go from full-time to part-time work and receive pension benefits to maintain their current income levels. Also, 401(k) plans will be allowed to let participants make hardship withdrawals to help parents or other beneficiaries, even if those beneficiaries are not dependents or spouses.
The Act also includes a number of provisions that make it easier to fund health care and long-term care costs. For example, one provision makes it easier for pension plans to use excess assets to fund retiree health care, and another provision allows long-term care insurance to be offered as part of an annuity or life insurance contract.
Finally, the Act also includes a package of charitable giving incentives and loophole closers. For example, one provision allows tax-free distributions from IRAs for charities. Otherwise taxable distributions of up to $100,000 a year will be excluded from the IRA owner's taxable income as long as the distribution is made after the owner has reached age 70½ and is made payable to the charity.
Another provision makes it harder to take a current deduction for contributions of a future interest in paintings and other collectibles. A charity receiving a fractional interest in tangible personal property must take complete ownership of the property within 10 years or the death of the donor, whichever is first. In addition, the charity must take possession of the property and use it at least once during the 10-year period as long as the donor remains alive.
The Act also increases the penalties on taxpayers and charities that abuse the charitable contribution rules. Also, one provision denies the deduction for contributions of clothing and household items unless the items are in good condition, and another provision requires that donors have a receipt or cancelled check for all cash donations.
Source: NAELA E-Bulletin, October 3, 2006; written by Jon Forman.
Friday, October 6, 2006
What is Special Needs Law?
What is Special Needs Law?
Special Needs Law is the practice of law dedicated to helping persons with disabilities (“special needs”) and their families by navigating their government benefits and estate planning options.
What is a “special needs” trust?
“Special Needs” is just a term to describe any trust intended to provide benefits without causing the beneficiary to lose public benefits he or she is entitled to receive.
What kinds of public benefits do special needs trust beneficiaries receive?
Each special needs trust can be intended to protect different public benefits. Most commonly, special needs trusts are intended to permit Supplemental Security Income (SSI) and Medicaid recipients to receive some additional services or goods.
Does the existence of a special needs trust qualify the beneficiary for public benefits?
No. The existence of a special needs trust does not itself make public benefits available; the beneficiary must qualify for the benefits program already, or qualify after the trust is established. If properly established, the special needs trust will not cause of loss of benefits (although in some circumstances the level of benefits may be reduced), but the trust does not make it easier to qualify.
What is a “supplemental benefits” trust?
Some lawyers prefer to use the term “supplemental benefits” rather than “special needs.” Occasionally, the term “supplemental needs” is used. All are interchangeable, and describe the purpose of the trust rather than being a limited legal term.
Who can establish a special needs trust?
Anyone can establish a special needs trust, but there are two general categories of such trusts: self-settled and third-party trusts, which we will go into in detail in the next newsletter.
Lawrence Eric Davidow is a founding memeber and the Treasurer of the Special Needs Alliance (www.specialneedsalliance.com) which is a premier alliance of leading law firms throughout the country who 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.
Special Needs Law is the practice of law dedicated to helping persons with disabilities (“special needs”) and their families by navigating their government benefits and estate planning options.
What is a “special needs” trust?
“Special Needs” is just a term to describe any trust intended to provide benefits without causing the beneficiary to lose public benefits he or she is entitled to receive.
What kinds of public benefits do special needs trust beneficiaries receive?
Each special needs trust can be intended to protect different public benefits. Most commonly, special needs trusts are intended to permit Supplemental Security Income (SSI) and Medicaid recipients to receive some additional services or goods.
Does the existence of a special needs trust qualify the beneficiary for public benefits?
No. The existence of a special needs trust does not itself make public benefits available; the beneficiary must qualify for the benefits program already, or qualify after the trust is established. If properly established, the special needs trust will not cause of loss of benefits (although in some circumstances the level of benefits may be reduced), but the trust does not make it easier to qualify.
What is a “supplemental benefits” trust?
Some lawyers prefer to use the term “supplemental benefits” rather than “special needs.” Occasionally, the term “supplemental needs” is used. All are interchangeable, and describe the purpose of the trust rather than being a limited legal term.
Who can establish a special needs trust?
Anyone can establish a special needs trust, but there are two general categories of such trusts: self-settled and third-party trusts, which we will go into in detail in the next newsletter.
Lawrence Eric Davidow is a founding memeber and the Treasurer of the Special Needs Alliance (www.specialneedsalliance.com) which is a premier alliance of leading law firms throughout the country who 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.
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