Under current law, the estate tax is slated for one year of repeal in 2010 (approximately two months from now), with a return in 2011 at the rates and exemption level that were in effect in 2001 ($1 million exemption). Recently introduced H.R. 3905 would eliminate 2010's one-year repeal, and would gradually increase - over a 10-year period - the Federal estate and generation-skipping transfer tax exemptions to $5 million. The bill also would reduce - again over a 10-year period - the maximum rate of tax (now 45%) to 35%. The deduction for state death taxes would be phased out over the same period. In a bipartisan effort, H.R. 3905 was introduced by Rep. Berkley (D-NV) who was joined by co-sponsors Brady (R-TX), Davis (D-AL) and Nunes (R-CA).
The increase in the amount of the Federal estate tax exemption would be phased in at the rate of $150,000 per year as follows:
2009 $3,500,000
2010 $3,650,000
2011 $3,800,000
2012 $3,950,000
2013 $4,100,000
2014 $4,250,000
2015 $4,400,000
2016 $4,550,000
2017 $4,700,000
2018 $4,850,000
2019 and thereafter $5,000,000
In the case of any decedent dying after 2019, the $5,000,000 exemption amount would be indexed for inflation. The amendment would apply to estates of decedents dying and gifts made after December 31, 2008.
The maximum estate and gift tax rates would be reduced at the rate of 1 percent per year over 10 years as follows:
2009 45%
2010 44%
2011 43%
2012 42%
2013 41%
2014 40%
2015 39%
2016 38%
2017 37%
2018 36%
2019 and thereafter 35%
The deduction for state death taxes would be phased out over 10 years by reducing the allowable percentage of the current deduction over that period as follows:
2009 100%
2010 90%
2011 80%
2012 70%
2013 60%
2014 50%
2015 40%
2016 30%
2017 20%
2018 10%
2019 and thereafter 0%
It remains to be seen if this will pass. We’ll keep you posted!
Monday, November 9, 2009
Friday, October 16, 2009
ESTATE TAX UPDATE
There has been much discussion about the temporary repeal and reinstatement of the federal estate tax. Here is a brief summary of some of the current proposals.
Right now, there are three major bills in Congress:
Senate Bill 722
• Makes permanent the 2009 $3.5 million exemption and top 45% tax rate
• Reunifies the estate and gift tax exemption (the gift tax exemption is $1 million in 2009)
• Indexes the exemption for inflation
• Allows for exemption portability (i.e., allows the transfer of a decedent’s unused exemption to his or her surviving spouse)
House Bill 2031
• Makes permanent the exemption level at $2 million
• Establishes top tax rates of 45% for estates valued between $2 million and $5 million to $10 million, and 55% for estates valued over $10 million
• Reunifies the estate and gift tax exemption
• Indexes the exemption for inflation
• Allows for exemption portability
• Restores the state death tax credit
House Bill 436
• Makes permanent the 2009 $3.5 million exemption and top 45% tax rate
• Reunifies the estate and gift tax exemption
• Limits the valuation discount for family limited partnerships (FLPs)
• Provides strict valuation rules for the transfer of non-business assets
And, the Congressional Budget Office has modeled these four options for Congress:
Option 1
• Makes permanent the exemption level at $5 million
• Establishes the tax rate to equal the top rate on capital gains (currently 15% in 2010 and 20% thereafter)
• Indexes the exemption for inflation
• Disallows the deduction for state death taxes
Option 2
• Makes the same changes as Option 1, but a two-tiered rate would be used – the first $25 million of taxable assets would be subject to the top capital gains rate, then taxable transfers above $25 million would be taxed at 30% (and the $25 million threshold would be indexed for inflation)
Option 3
• Makes permanent the 2009 $3.5 million exemption and top 45% tax rate
Option 4
• Repeals the estate tax in 2010
• Retain the $1 million gift tax exemption
• Institutes a carryover basis regime state
We’ll continue to pass along timely, relevant information as it materializes.
Source: Forefield, 10/15/09.
Right now, there are three major bills in Congress:
Senate Bill 722
• Makes permanent the 2009 $3.5 million exemption and top 45% tax rate
• Reunifies the estate and gift tax exemption (the gift tax exemption is $1 million in 2009)
• Indexes the exemption for inflation
• Allows for exemption portability (i.e., allows the transfer of a decedent’s unused exemption to his or her surviving spouse)
House Bill 2031
• Makes permanent the exemption level at $2 million
• Establishes top tax rates of 45% for estates valued between $2 million and $5 million to $10 million, and 55% for estates valued over $10 million
• Reunifies the estate and gift tax exemption
• Indexes the exemption for inflation
• Allows for exemption portability
• Restores the state death tax credit
House Bill 436
• Makes permanent the 2009 $3.5 million exemption and top 45% tax rate
• Reunifies the estate and gift tax exemption
• Limits the valuation discount for family limited partnerships (FLPs)
• Provides strict valuation rules for the transfer of non-business assets
And, the Congressional Budget Office has modeled these four options for Congress:
Option 1
• Makes permanent the exemption level at $5 million
• Establishes the tax rate to equal the top rate on capital gains (currently 15% in 2010 and 20% thereafter)
• Indexes the exemption for inflation
• Disallows the deduction for state death taxes
Option 2
• Makes the same changes as Option 1, but a two-tiered rate would be used – the first $25 million of taxable assets would be subject to the top capital gains rate, then taxable transfers above $25 million would be taxed at 30% (and the $25 million threshold would be indexed for inflation)
Option 3
• Makes permanent the 2009 $3.5 million exemption and top 45% tax rate
Option 4
• Repeals the estate tax in 2010
• Retain the $1 million gift tax exemption
• Institutes a carryover basis regime state
We’ll continue to pass along timely, relevant information as it materializes.
Source: Forefield, 10/15/09.
Monday, October 5, 2009
INSURANCE INDUSTRY FIGHTING TO REMOVE KENNEDY'S LONG TERM CARE PLAN FROM HEALTH REFORM
A proposal to establish a new national long-term care insurance program that would offer basic help to the elderly and disabled is under attack by the insurance industry. Although the proposed program is still included in major health reform bills in both the House and Senate, it is unclear whether it will make it to the final legislation.
“It’s got a long way to go to survive,” says Brian W. Lindberg, Policy Advisor to the National Academy of Elder Law Attorneys; an organization that Lawrence Davidow has been involved with since its inception and recently held its highest position of President.
Proposed by the late Sen. Edward M. Kennedy, the Community Living Assistance Services and Supports (CLASS) Act would set up a voluntary, federal long-term care insurance program. Those who wish to participate would pay a premium of roughly $65 per month, far less than the typical cost of private long-term care insurance. After they had contributed for at least five years, participants would be eligible for benefits of either $50 or $100 per day, depending on degree of impairment. While the benefit would be modest compared to the average cost of nursing home care, it could be used instead to pay for a range of services that would help people stay in their homes. The CLASS Act was first introduced in 2007 by Sen. Kennedy, then-Sen. Barack Obama and current Senate Finance Committee Chairman Max Baucus (D-MT).
The CLASS Act is part of the Senate Health, Education, Labor and Pensions (HELP) Committee’s health care reform bill. This measure will eventually be merged with legislation coming out of Baucus’s Finance Committee that is being finalized and does not contain the CLASS Act. On the House side, the House Energy and Commerce Committee approved an amendment by Rep. Frank Pallone (D-JN) to add a bare-bones version of the CLASS Act to the House health reform legislation, HR 3200, which has not yet been passed by the full House.
As reported earlier, the Obama administration has thrown its support behind the CLASS Act, but that support may not be enough. As The Disability Policy Collaboration reports in its latest Action Alert, the insurance industry has recently launched what the Collaboration calls “a full-scale attack” on the CLASS plan. The American Council of Life Insurers (ACLI), the major trade group representing life insurers (including the leading providers of long-term care insurance), has gone on the offensive against the CLASS Act, which could cut into the sales of its members’ private long-term care products. ACLI argues that the CLASS Act’s; modest benefit will not adequately protect Americans who need nursing home care or 24-hour home health care services.
ACLI is missing the point, counters The Disability Policy Collaboration, which is a partnership of The Arc and United Cerebral Palsy. “By focusing on these extreme ends of long-term care, the industry is mischaracterizing the typical needs of most people with disabilities and older Americans,” the Collaboration states in its Alert. “What they most need is some assistance with things like getting up the stairs or getting dressed so that they can stay at home and not enter nursing homes or obtain full-time care before they truly need it. The CLASS plan’s cash benefit of about $27,000 per year can go a long way to meeting this need by paying for things like ramps and railings or a few hours a day of a home health worker.”
ACLI is also concerned that the CLASS Act will give consumers a false sense of security and further discourage sales of long-term care insurance. (Many consumers already mistakenly believe that Medicare will cover their long-term care needs.) “Simply put, the federal government should not get into the business of providing long-term care insurance. It sets the stage for doing more harm than good to consumers,” said ACLI President and CEO Frank Keating.
The Disability Policy Collaboration, is urging individuals to “take on the insurance industry” by calling or faxing their Senators and Representatives.
Source: www.elderlawanswers.com,9/28/09.
“It’s got a long way to go to survive,” says Brian W. Lindberg, Policy Advisor to the National Academy of Elder Law Attorneys; an organization that Lawrence Davidow has been involved with since its inception and recently held its highest position of President.
Proposed by the late Sen. Edward M. Kennedy, the Community Living Assistance Services and Supports (CLASS) Act would set up a voluntary, federal long-term care insurance program. Those who wish to participate would pay a premium of roughly $65 per month, far less than the typical cost of private long-term care insurance. After they had contributed for at least five years, participants would be eligible for benefits of either $50 or $100 per day, depending on degree of impairment. While the benefit would be modest compared to the average cost of nursing home care, it could be used instead to pay for a range of services that would help people stay in their homes. The CLASS Act was first introduced in 2007 by Sen. Kennedy, then-Sen. Barack Obama and current Senate Finance Committee Chairman Max Baucus (D-MT).
The CLASS Act is part of the Senate Health, Education, Labor and Pensions (HELP) Committee’s health care reform bill. This measure will eventually be merged with legislation coming out of Baucus’s Finance Committee that is being finalized and does not contain the CLASS Act. On the House side, the House Energy and Commerce Committee approved an amendment by Rep. Frank Pallone (D-JN) to add a bare-bones version of the CLASS Act to the House health reform legislation, HR 3200, which has not yet been passed by the full House.
As reported earlier, the Obama administration has thrown its support behind the CLASS Act, but that support may not be enough. As The Disability Policy Collaboration reports in its latest Action Alert, the insurance industry has recently launched what the Collaboration calls “a full-scale attack” on the CLASS plan. The American Council of Life Insurers (ACLI), the major trade group representing life insurers (including the leading providers of long-term care insurance), has gone on the offensive against the CLASS Act, which could cut into the sales of its members’ private long-term care products. ACLI argues that the CLASS Act’s; modest benefit will not adequately protect Americans who need nursing home care or 24-hour home health care services.
ACLI is missing the point, counters The Disability Policy Collaboration, which is a partnership of The Arc and United Cerebral Palsy. “By focusing on these extreme ends of long-term care, the industry is mischaracterizing the typical needs of most people with disabilities and older Americans,” the Collaboration states in its Alert. “What they most need is some assistance with things like getting up the stairs or getting dressed so that they can stay at home and not enter nursing homes or obtain full-time care before they truly need it. The CLASS plan’s cash benefit of about $27,000 per year can go a long way to meeting this need by paying for things like ramps and railings or a few hours a day of a home health worker.”
ACLI is also concerned that the CLASS Act will give consumers a false sense of security and further discourage sales of long-term care insurance. (Many consumers already mistakenly believe that Medicare will cover their long-term care needs.) “Simply put, the federal government should not get into the business of providing long-term care insurance. It sets the stage for doing more harm than good to consumers,” said ACLI President and CEO Frank Keating.
The Disability Policy Collaboration, is urging individuals to “take on the insurance industry” by calling or faxing their Senators and Representatives.
Source: www.elderlawanswers.com,9/28/09.
Friday, September 25, 2009
Pre-Need (Pre-Paid) Funeral and Burial Plans
1. Advantages and Disadvantages of Prepaid Plans
One way to plan in advance for the end of one's life is to sign a formal contract called a "preneed funeral plan." With this plan, money to pay for a funeral and/or burial is held in a trust, in an escrow account or paid through an insurance policy on the life of the person desiring the plan. Parts of or all of the funeral service and burial are designed in advance and pre-funded in advance and the family has little to do but show up.
This type of planning has become very popular in recent years. A survey conducted by the AARP in 1999, found that two out of five people over age 50 had been approached to pre-purchase funerals and burial goods and services. An AARP survey in 1998 indicates that 32% of all Americans over age 50, roughly 21 million people, have prepaid some or all of their funeral and or burial expenses (but not necessarily through a formal preneed plan). Breaking that down; about 25% of the over age 50 population have prepaid for their burials (cemetery plot, mausoleum or niche), 18% have prepaid for headstones, urns, caskets , grave liners or vaults, opening and closing of graves and so on and 13% have prepaid for goods or services from a funeral home or funeral director. The same survey indicates that over $25 billion is being held in preneed trust funds. Roughly another $25 billion is waiting to be paid out in life insurance benefits. Prepaid or preneed funerals and burials are big business.
Funerals and burials funded privately by the family, or paid from an individual life insurance policy and arranged informally through a funeral home or funeral director are generally not subject to state regulation. Any formal arrangement through a second party or involving a contract is subject to regulation in all states. Each state has adopted different rules as to who can sell these plans, what the plans can provide, what contract provisions must be, how the plan is to be funded and what recourse purchasers might have in the event of fraud or default. All states call these regulated plans "preneed" funeral and burial arrangements.
Here are some advantages as to why one would want to buy a preneed plan for funeral and burial services and goods.
It provides peace of mind knowing these arrangements have been made in advance.
It avoids the burden on family members to make decisions when they are most vulnerable to manipulation.
It allows one to virtually control from the grave by determining in advance the funeral products, funeral services, burial products and burial services that one would prefer having for final arrangements.
It helps the family to avoid taking loans, arranging finance plans, raiding savings or selling assets to pay for a funeral and burial.
It guarantees (for many contracts) that if products and services currently purchased are not available in the future, equivalent substitutes will be provided at no additional cost.
It locks in guaranteed prices (available with some contracts) forever.
It allows for inflation in future costs (for those contracts that do not guarantee prices) by investing money in an interest-bearing account or buying life insurance that increases in value over time.
Depending on the contract, it may allow for transfer to another funeral home or for partial or full refund.
Unfortunately, there are also problems with prepaid, preplanned final arrangements.
With some trust fund and insurance funding options there may be no refund if someone wants to cancel the plan in the future.
If a purchaser moves to another state there may be no transfer options or there may be different rules governing the funding option.
In some contracts, interest earnings on investments resulting in excess money not needed for the plan may be retained by the funeral home or funeral director.
On installment plans interest may be charged but not credited to the account.
In certain insurance funded contracts, the ownership or death benefit may be irrevocably assigned to the contract holder (funeral home), preventing the purchaser from enjoying ownership rights in the policy.
In certain insurance funded contracts, a growth in the death benefit over time that exceeds the cost of the preneed plan services and goods may be pocketed by the contract holder (funeral home) instead of being refunded.
If the contract provider goes out of business or fails to secure 100% of the funds for future payment, there may be no recourse to get all of the money back that was put in.
If certain services or goods that were purchased initially are not available in the future, but more expensive versions might be, the family may be forced to pay extra for those items.
In certain insurance funded plans, if the insured dies too soon, there may have been a waiting period in which few or no benefits are paid at death, thus forcing the family to pay out of pocket for the funeral.
Certain unscrupulous providers may have failed to provide an itemized list of services and goods or failed to identify properly, specific services and goods, thus allowing the provider in the future to substitute less expensive items or to leave out services and goods that were originally anticipated in the agreement.
What Services and Goods Can Be Prepaid?
All states allow for prepaid plans for funeral services and merchandise. This would include such things as picking up the body, embalming and restoration, rooms or chapel for viewing and funeral services, casket, vault or grave liner, transportation, permits, death certificates, obituaries and so forth. Almost all states allow for prepaid burial services and merchandise as well. Only about six states do not allow it. Burial services and merchandise might include opening and closing the grave, grave markers, vaults or grave liners, mausoleums or niches. Cemetery plots are excluded from prepaid plans in all states.
The AARP has excellent information for consumers on planning for funerals. Quoting from the AARP:
"Most states have a licensing board that regulates the funeral industry. You may contact the board in your state for information or help. If you want additional information about making funeral arrangements and the options available, you may want to contact interested business, professional and consumer groups."
Source: www.planforcare.org
One way to plan in advance for the end of one's life is to sign a formal contract called a "preneed funeral plan." With this plan, money to pay for a funeral and/or burial is held in a trust, in an escrow account or paid through an insurance policy on the life of the person desiring the plan. Parts of or all of the funeral service and burial are designed in advance and pre-funded in advance and the family has little to do but show up.
This type of planning has become very popular in recent years. A survey conducted by the AARP in 1999, found that two out of five people over age 50 had been approached to pre-purchase funerals and burial goods and services. An AARP survey in 1998 indicates that 32% of all Americans over age 50, roughly 21 million people, have prepaid some or all of their funeral and or burial expenses (but not necessarily through a formal preneed plan). Breaking that down; about 25% of the over age 50 population have prepaid for their burials (cemetery plot, mausoleum or niche), 18% have prepaid for headstones, urns, caskets , grave liners or vaults, opening and closing of graves and so on and 13% have prepaid for goods or services from a funeral home or funeral director. The same survey indicates that over $25 billion is being held in preneed trust funds. Roughly another $25 billion is waiting to be paid out in life insurance benefits. Prepaid or preneed funerals and burials are big business.
Funerals and burials funded privately by the family, or paid from an individual life insurance policy and arranged informally through a funeral home or funeral director are generally not subject to state regulation. Any formal arrangement through a second party or involving a contract is subject to regulation in all states. Each state has adopted different rules as to who can sell these plans, what the plans can provide, what contract provisions must be, how the plan is to be funded and what recourse purchasers might have in the event of fraud or default. All states call these regulated plans "preneed" funeral and burial arrangements.
Here are some advantages as to why one would want to buy a preneed plan for funeral and burial services and goods.
It provides peace of mind knowing these arrangements have been made in advance.
It avoids the burden on family members to make decisions when they are most vulnerable to manipulation.
It allows one to virtually control from the grave by determining in advance the funeral products, funeral services, burial products and burial services that one would prefer having for final arrangements.
It helps the family to avoid taking loans, arranging finance plans, raiding savings or selling assets to pay for a funeral and burial.
It guarantees (for many contracts) that if products and services currently purchased are not available in the future, equivalent substitutes will be provided at no additional cost.
It locks in guaranteed prices (available with some contracts) forever.
It allows for inflation in future costs (for those contracts that do not guarantee prices) by investing money in an interest-bearing account or buying life insurance that increases in value over time.
Depending on the contract, it may allow for transfer to another funeral home or for partial or full refund.
Unfortunately, there are also problems with prepaid, preplanned final arrangements.
With some trust fund and insurance funding options there may be no refund if someone wants to cancel the plan in the future.
If a purchaser moves to another state there may be no transfer options or there may be different rules governing the funding option.
In some contracts, interest earnings on investments resulting in excess money not needed for the plan may be retained by the funeral home or funeral director.
On installment plans interest may be charged but not credited to the account.
In certain insurance funded contracts, the ownership or death benefit may be irrevocably assigned to the contract holder (funeral home), preventing the purchaser from enjoying ownership rights in the policy.
In certain insurance funded contracts, a growth in the death benefit over time that exceeds the cost of the preneed plan services and goods may be pocketed by the contract holder (funeral home) instead of being refunded.
If the contract provider goes out of business or fails to secure 100% of the funds for future payment, there may be no recourse to get all of the money back that was put in.
If certain services or goods that were purchased initially are not available in the future, but more expensive versions might be, the family may be forced to pay extra for those items.
In certain insurance funded plans, if the insured dies too soon, there may have been a waiting period in which few or no benefits are paid at death, thus forcing the family to pay out of pocket for the funeral.
Certain unscrupulous providers may have failed to provide an itemized list of services and goods or failed to identify properly, specific services and goods, thus allowing the provider in the future to substitute less expensive items or to leave out services and goods that were originally anticipated in the agreement.
What Services and Goods Can Be Prepaid?
All states allow for prepaid plans for funeral services and merchandise. This would include such things as picking up the body, embalming and restoration, rooms or chapel for viewing and funeral services, casket, vault or grave liner, transportation, permits, death certificates, obituaries and so forth. Almost all states allow for prepaid burial services and merchandise as well. Only about six states do not allow it. Burial services and merchandise might include opening and closing the grave, grave markers, vaults or grave liners, mausoleums or niches. Cemetery plots are excluded from prepaid plans in all states.
The AARP has excellent information for consumers on planning for funerals. Quoting from the AARP:
"Most states have a licensing board that regulates the funeral industry. You may contact the board in your state for information or help. If you want additional information about making funeral arrangements and the options available, you may want to contact interested business, professional and consumer groups."
Source: www.planforcare.org
Wednesday, August 19, 2009
Governor Paterson Signs Legislation to Make Health Insurance More Affordable and Improve Access to Health Care
Governor David A. Paterson signed into law three Governor’s Program bills that will make health insurance more affordable and improve access to health care for New Yorkers. The first extends the period of time for COBRA (Consolidation Omnibus Budget Reconciliation Act of 1985) coverage from 18 to 36 months; the second permits families to cover their young adult dependents through age 29 under their job-based insurance; and the third enacts a series of managed care reforms to make health insurance work better for consumers and permit timely access to necessary health services. The Governor signed the legislation at the University of Rochester Medical Center and was joined by members of the Senate, Assembly and community.
“By enhancing access to group health insurance, these reforms will make health insurance more affordable for everyday New Yorkers. More than 2.5 million of our residents do not have health insurance, partly because of the high cost of coverage,” said Governor Paterson. “We must take the necessary steps to improve our broken health care system. By making insurance coverage more accessible, we bring people into the system before they need emergency treatment, reducing the overall cost of health care to the State.”
The bills signed into law will:
• Expand COBRA for Employees to 36 months: this law will increase the period for employees who lose their jobs to continue their health insurance under COBRA from 18 to 36 months. Workers who lose their jobs can continue purchasing group health insurance provided by their former employers’ group health plans for limited periods of time under certain circumstances for themselves and their families. Federal COBRA generally applies to employers with 20 or more employees, while the State’s “mini-COBRA” law requires that smaller employers - those who have fewer than 20 employees - offer the same continuation coverage. This allows employees to maintain health insurance at a lower cost than if they had to buy it independently on the open market. The Governor’s new law will allow New Yorkers who lose their jobs to extend their health insurance coverage for a longer period of time, which is particularly important in the current economy with its record high level of unemployment.
• Insure Dependents through Age 29: This law, outlined by the Governor in his State of the State address, requires insurers to allow unmarried children through age 29 - regardless of financial dependence - to be covered under a parent’s group health insurance policy. Young adults ages 19 to 29 represent 31 percent of uninsured New Yorkers. They often become ineligible for coverage under their parents’ policies at age 19 or upon high school or college graduation, find themselves in entry-level jobs that do not provide employer-based health insurance, and cannot afford to pay premiums for individual insurance policies - which are much more expensive than group policies. Under the new law, premiums will be paid for by families, not employers, and would cost less because coverage is under group policies rather than individual policies. The law also requires insurers to offer employers an option to purchase coverage that includes young adults as dependents in family policies through age 29.
• Managed Care Reform: This bill will implement reforms that help consumers receive the care they need and cut some of the red tape that results in inappropriately delayed or denied claims. There are many protections that will now benefit consumers, some of which include: prohibiting insurers from treating in-network providers as out-of-network providers because the referring provider was out-of-network; reducing prompt-pay time frame from 45 days to 30 days; requiring HMOs and providers to give providers notice of adverse reimbursement changes to provider contracts so that they may have the opportunity to cancel and much more. For the complete list, go to http://www.ny.gov/governor/press/press_0729095.html .
The bills signed into law on July 29, 2009 build upon other initiatives aimed at increasing the availability and affordability of health insurance. In March, Governor Paterson signed into law his Program Bill to help New Yorkers who lost their jobs at small businesses take advantage of a COBRA subsidy made available under the Federal American Recovery and Reinvestment Act (ARRA). In addition, the 2009-10 budget eliminated certain barriers to enrolling in public health insurance coverage such as face-to-face interviews, finger imaging, and asset tests and authorized the Department of Health to seek federal support for expanded coverage for low-income adults. Moreover, as of September 1, 2008, all of New York’s uninsured children became eligible for moderate or no-cost health care coverage under Child Health Plus.
Source: 7/29/09 Press Release, www.ny.gov
“By enhancing access to group health insurance, these reforms will make health insurance more affordable for everyday New Yorkers. More than 2.5 million of our residents do not have health insurance, partly because of the high cost of coverage,” said Governor Paterson. “We must take the necessary steps to improve our broken health care system. By making insurance coverage more accessible, we bring people into the system before they need emergency treatment, reducing the overall cost of health care to the State.”
The bills signed into law will:
• Expand COBRA for Employees to 36 months: this law will increase the period for employees who lose their jobs to continue their health insurance under COBRA from 18 to 36 months. Workers who lose their jobs can continue purchasing group health insurance provided by their former employers’ group health plans for limited periods of time under certain circumstances for themselves and their families. Federal COBRA generally applies to employers with 20 or more employees, while the State’s “mini-COBRA” law requires that smaller employers - those who have fewer than 20 employees - offer the same continuation coverage. This allows employees to maintain health insurance at a lower cost than if they had to buy it independently on the open market. The Governor’s new law will allow New Yorkers who lose their jobs to extend their health insurance coverage for a longer period of time, which is particularly important in the current economy with its record high level of unemployment.
• Insure Dependents through Age 29: This law, outlined by the Governor in his State of the State address, requires insurers to allow unmarried children through age 29 - regardless of financial dependence - to be covered under a parent’s group health insurance policy. Young adults ages 19 to 29 represent 31 percent of uninsured New Yorkers. They often become ineligible for coverage under their parents’ policies at age 19 or upon high school or college graduation, find themselves in entry-level jobs that do not provide employer-based health insurance, and cannot afford to pay premiums for individual insurance policies - which are much more expensive than group policies. Under the new law, premiums will be paid for by families, not employers, and would cost less because coverage is under group policies rather than individual policies. The law also requires insurers to offer employers an option to purchase coverage that includes young adults as dependents in family policies through age 29.
• Managed Care Reform: This bill will implement reforms that help consumers receive the care they need and cut some of the red tape that results in inappropriately delayed or denied claims. There are many protections that will now benefit consumers, some of which include: prohibiting insurers from treating in-network providers as out-of-network providers because the referring provider was out-of-network; reducing prompt-pay time frame from 45 days to 30 days; requiring HMOs and providers to give providers notice of adverse reimbursement changes to provider contracts so that they may have the opportunity to cancel and much more. For the complete list, go to http://www.ny.gov/governor/press/press_0729095.html .
The bills signed into law on July 29, 2009 build upon other initiatives aimed at increasing the availability and affordability of health insurance. In March, Governor Paterson signed into law his Program Bill to help New Yorkers who lost their jobs at small businesses take advantage of a COBRA subsidy made available under the Federal American Recovery and Reinvestment Act (ARRA). In addition, the 2009-10 budget eliminated certain barriers to enrolling in public health insurance coverage such as face-to-face interviews, finger imaging, and asset tests and authorized the Department of Health to seek federal support for expanded coverage for low-income adults. Moreover, as of September 1, 2008, all of New York’s uninsured children became eligible for moderate or no-cost health care coverage under Child Health Plus.
Source: 7/29/09 Press Release, www.ny.gov
Thursday, August 6, 2009
LETTER OF INTENT
You have signed your last will and testament or revocable trust, created a special needs trust for your child with disabilities and selected an appropriate trustee to manage assets and make necessary trust distributions for your child's care. Now you are done, correct? Not exactly, because ensuring your child's financial future is only one facet of a comprehensive plan designed to care for your child with special needs.
An important companion piece to a special needs trust is a "letter of intent" or "letter of instruction." This is a document that actually ensures your trustee knows your child's functional abilities, routines, interests, and particular likes and dislikes. In addition to describing your special child, the letter of intent identifies specific doctors, services and resources that will help your child enjoy the highest level of independence and self-reliance. The document is a valuable tool that communicates knowledge only parents may know, including specific hopes and desires for their child's future well being, to the very people who will be caring for the child after the parents no longer are able to do so. After all, who knows a child better than a parent?
The letter of intent serves as the foundation of any comprehensive life-plan for a child with special needs. By compiling as much information as possible, parents are equipping future care providers with the knowledge and insight needed to increase the likelihood of good choices in order to maximize the child's quality of life and avoid the need for caregivers to learn by trial and error. A child also may participate in creating the letter of intent so that his or her own wishes are acknowledged and recorded.
A well thought out letter of intent often includes a medical component and a practical piece and, at a minimum, should contain the following:
A family history, including where and when parents were born, raised, and married, as well as a description of siblings, grandparents, other relatives and special friends, with current contact information for all.
Resources that provide assistance to persons with disabilities in your child's local area, including public agencies, churches, individuals and private organizations.
Residential care needs for your child, including past and present accommodations and expected future needs.
Educational information, including past records, current enrollment, specialty teachers, future educational goals, special interests and talents, extra-curricular activities, as well as types of educational emphasis, for example, vocational, academic or communication.
Employment guidance, including the work your child may enjoy, sheltered workshops, activity centers and companies that provide employment in the community which may be of interest to your child.
Social, behavioral and personal relationships that are important to your family and child, including relatives, special friends, teachers and care providers.
Social and recreational activities your child enjoys, including sports, dance, music or movies. Parents also might want to mention whether their child should have his or her own spending money.
A typical day in the life of your child, including his or her favorite foods, music, books, television shows and routines.
Medical information, including current doctors, therapists, clinics, hospitals, current medications and therapies. The parents should explain how the medications are given and for what purpose and describe medications that have not worked in the past.
Parents' final expression of love, hope and desires for their child.
Parents should not be inhibited when writing a letter of intent, and a clear, conversational voice that avoids legalese is best. In addition, the document should be reviewed periodically to reflect any changes. Below is an excerpt from an actual letter of intent, published with a client's permission, to help other families with their own drafting:
"...Bill can dress himself, but needs some help picking an appropriate outfit for the weather. Once his clothes are laid out he can dress himself. May need some help with buttons or other fasteners. He prefers pullover shirts and t-shirts rather than shirts with buttons. He prefers athletic pants that he can pull up such as track pants rather than jeans or slacks. He can put on his own socks. He struggles with tying shoes and we have switched exclusively to zip up or pull-on shoes. He is able to zip his own coat, but may need help at times. Using zippers, snaps and buttons are a continuous goal for him to work on manipulating them independently.
He needs to be reminded to brush his teeth and wipe his face, but can do these tasks independently both in the morning and at night. He hates mint toothpaste and uses the kids' flavors. Right now he is using Kids Crest- Sparkle Fun flavor. He hates getting a lot of water on his face and needs a washcloth and wipes all over his face and then rinses with a damp cloth. He can do all this himself, but hates it and needs supervision and verbal prompts/encouragement. Bill is doing well with taking showers. It has been a long process. He can wash himself fairly well with the washcloth and can now wash his own hair. He continues to need someone checking in on him and providing verbal cues to wash and rinse his hair well. He gets upset if a lot of water goes on his face so rinsing his hair is an issue..."
Although writing a letter of intent may be an emotional experience, once the process is complete, parents may rest easier knowing they have left a detailed road map for later care providers and trustees to ensure the highest quality of life for their child and the fewest interruptions in his or her daily routine.
Source: www.specialneedsalliance.com, 6/09, Vol. 3 Issue 6
An important companion piece to a special needs trust is a "letter of intent" or "letter of instruction." This is a document that actually ensures your trustee knows your child's functional abilities, routines, interests, and particular likes and dislikes. In addition to describing your special child, the letter of intent identifies specific doctors, services and resources that will help your child enjoy the highest level of independence and self-reliance. The document is a valuable tool that communicates knowledge only parents may know, including specific hopes and desires for their child's future well being, to the very people who will be caring for the child after the parents no longer are able to do so. After all, who knows a child better than a parent?
The letter of intent serves as the foundation of any comprehensive life-plan for a child with special needs. By compiling as much information as possible, parents are equipping future care providers with the knowledge and insight needed to increase the likelihood of good choices in order to maximize the child's quality of life and avoid the need for caregivers to learn by trial and error. A child also may participate in creating the letter of intent so that his or her own wishes are acknowledged and recorded.
A well thought out letter of intent often includes a medical component and a practical piece and, at a minimum, should contain the following:
A family history, including where and when parents were born, raised, and married, as well as a description of siblings, grandparents, other relatives and special friends, with current contact information for all.
Resources that provide assistance to persons with disabilities in your child's local area, including public agencies, churches, individuals and private organizations.
Residential care needs for your child, including past and present accommodations and expected future needs.
Educational information, including past records, current enrollment, specialty teachers, future educational goals, special interests and talents, extra-curricular activities, as well as types of educational emphasis, for example, vocational, academic or communication.
Employment guidance, including the work your child may enjoy, sheltered workshops, activity centers and companies that provide employment in the community which may be of interest to your child.
Social, behavioral and personal relationships that are important to your family and child, including relatives, special friends, teachers and care providers.
Social and recreational activities your child enjoys, including sports, dance, music or movies. Parents also might want to mention whether their child should have his or her own spending money.
A typical day in the life of your child, including his or her favorite foods, music, books, television shows and routines.
Medical information, including current doctors, therapists, clinics, hospitals, current medications and therapies. The parents should explain how the medications are given and for what purpose and describe medications that have not worked in the past.
Parents' final expression of love, hope and desires for their child.
Parents should not be inhibited when writing a letter of intent, and a clear, conversational voice that avoids legalese is best. In addition, the document should be reviewed periodically to reflect any changes. Below is an excerpt from an actual letter of intent, published with a client's permission, to help other families with their own drafting:
"...Bill can dress himself, but needs some help picking an appropriate outfit for the weather. Once his clothes are laid out he can dress himself. May need some help with buttons or other fasteners. He prefers pullover shirts and t-shirts rather than shirts with buttons. He prefers athletic pants that he can pull up such as track pants rather than jeans or slacks. He can put on his own socks. He struggles with tying shoes and we have switched exclusively to zip up or pull-on shoes. He is able to zip his own coat, but may need help at times. Using zippers, snaps and buttons are a continuous goal for him to work on manipulating them independently.
He needs to be reminded to brush his teeth and wipe his face, but can do these tasks independently both in the morning and at night. He hates mint toothpaste and uses the kids' flavors. Right now he is using Kids Crest- Sparkle Fun flavor. He hates getting a lot of water on his face and needs a washcloth and wipes all over his face and then rinses with a damp cloth. He can do all this himself, but hates it and needs supervision and verbal prompts/encouragement. Bill is doing well with taking showers. It has been a long process. He can wash himself fairly well with the washcloth and can now wash his own hair. He continues to need someone checking in on him and providing verbal cues to wash and rinse his hair well. He gets upset if a lot of water goes on his face so rinsing his hair is an issue..."
Although writing a letter of intent may be an emotional experience, once the process is complete, parents may rest easier knowing they have left a detailed road map for later care providers and trustees to ensure the highest quality of life for their child and the fewest interruptions in his or her daily routine.
Source: www.specialneedsalliance.com, 6/09, Vol. 3 Issue 6
Thursday, July 23, 2009
Marketing of Reverse Mortgages Lacks Adequate Consumer Protections
As the economy has slowed and housing values have dropped, reverse mortgages have become even more attractive to seniors looking for ways to use the equity in their homes without moving. But a new study by the Government Accountability Office (GAO) raises concerns about the adequacy of consumer protections for reverse mortgage borrowers, who are sometimes subjected to misleading marketing and inappropriate cross-selling of other financial products that may be unsuitable for them.
A reverse mortgage allows homeowners 62 or older to convert the equity in their home to a flexible cash advance that does not have to be repaid until the homeowner moves, sells, or dies. Almost all reverse mortgages are made under the Home Equity Conversion Mortgage (HECM) program, which is administered by the Department of Housing and Urban Development (HUD). In the first quarter of 2009, HUD backed about $7.8 billion worth of reverse mortgages, the largest amount in any quarter since the agency launched the program in 1988, the Washington Post reports.
While reverse mortgages look like no-lose propositions at first glance, they are complex products that have significant downsides for some. For example, these loans carry large insurance and origination costs, they may affect eligibility for government benefits like Medicaid, and they are not ideal for parents whose major objective is to safeguard an inheritance for their children.
GAO reviewed marketing materials used by reverse mortgage lenders and found some claims that were "potentially misleading because they were inaccurate, incomplete, or employed questionable sales tactics."
GAO also found evidence that potentially unsuitable financial products like annuities are being sold in conjunction with reverse mortgages. The Housing and Economic Recovery Act of 2008 is intended to restrict this inappropriate cross-selling, but HUD is still in the early stages of developing regulations.
To help seniors make informed decisions about whether to obtain a reverse mortgage, Congress requires prospective borrowers to obtain adequate counseling by an independent third party. As part of its investigation, the GAO employees went undercover to receive such counseling. While the GAO found that the counselors generally conveyed accurate and useful information, none of the counselors covered all of the topics required by HUD and in nearly half the sessions the counselors did not discuss required information about alternatives to reverse mortgages.
The GAO concludes that these issues pose "emerging consumer protection risks" for reverse mortgage borrowers and the agency makes a number of recommendations to improve consumer protections.
Source: www.elderlawanswers.com; 7/3/09
A reverse mortgage allows homeowners 62 or older to convert the equity in their home to a flexible cash advance that does not have to be repaid until the homeowner moves, sells, or dies. Almost all reverse mortgages are made under the Home Equity Conversion Mortgage (HECM) program, which is administered by the Department of Housing and Urban Development (HUD). In the first quarter of 2009, HUD backed about $7.8 billion worth of reverse mortgages, the largest amount in any quarter since the agency launched the program in 1988, the Washington Post reports.
While reverse mortgages look like no-lose propositions at first glance, they are complex products that have significant downsides for some. For example, these loans carry large insurance and origination costs, they may affect eligibility for government benefits like Medicaid, and they are not ideal for parents whose major objective is to safeguard an inheritance for their children.
GAO reviewed marketing materials used by reverse mortgage lenders and found some claims that were "potentially misleading because they were inaccurate, incomplete, or employed questionable sales tactics."
GAO also found evidence that potentially unsuitable financial products like annuities are being sold in conjunction with reverse mortgages. The Housing and Economic Recovery Act of 2008 is intended to restrict this inappropriate cross-selling, but HUD is still in the early stages of developing regulations.
To help seniors make informed decisions about whether to obtain a reverse mortgage, Congress requires prospective borrowers to obtain adequate counseling by an independent third party. As part of its investigation, the GAO employees went undercover to receive such counseling. While the GAO found that the counselors generally conveyed accurate and useful information, none of the counselors covered all of the topics required by HUD and in nearly half the sessions the counselors did not discuss required information about alternatives to reverse mortgages.
The GAO concludes that these issues pose "emerging consumer protection risks" for reverse mortgage borrowers and the agency makes a number of recommendations to improve consumer protections.
Source: www.elderlawanswers.com; 7/3/09
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