Affordable Health Care Act Tackles Tooth Decay in 2014

The following is an abstract from Kaiser Heath News: 

Tooth decay is the most common chronic health problem in children. By the time they enter kindergarten, more than a quarter of kids have decay in their baby teeth. The problem worsens with age, and nearly 68 percent of people age 16 to 19 have decay in their permanent teeth, according to the Centers for Disease Control and Prevention. 

Starting in 2014, the Affordable Care Act requires that individual and small-group health plans sold both on the state-based health insurance exchanges and outside them on the private market cover pediatric dental services. However, plans that have grandfathered status under the law are not required to offer this coverage.

The requirement also doesn't apply to health plans offered by large companies, although they are much more likely to offer dental benefits than small firms. Eighty-nine percent of firms with 200 or more workers offered dental benefits in 2012, compared with 53 percent of smaller firms, according to the Kaiser Family Foundation's annual survey of employer health plans. (Kaiser Health News is an independent project of KFF.).

The changes in the health law apply specifically to children who get coverage through private plans. Dental services are already part of the benefit package for children covered by Medicaid, the state-federal health program for low-income people. But many eligible kids aren't enrolled, and even if they are, their parents often run into hurdles finding dentists who speak their language and are willing to accept Medicaid payments.

The health law encourages states to expand Medicaid coverage for adults, which advocates say will have the added benefit of probably bringing more children into the system. Despite the challenges, advocates say they anticipate that many low-income children will gain dental coverage.

Dental health advocates say they're pleased that pediatric dental services (along with other pediatric care) were included among the 10 "essential health benefits" that new health plans must cover in the exchanges and the small-group and individual markets under the law.

Go here to read the entire article.  

American Taxpayer Relief Act Brings Estate Tax Relief

After some last minute political posturing, in the wee hours of January 1, 2013 the U.S. Senate passed the American Taxpayer Relief Act ("ATRA") by a margin of 89 to 8. The U.S. House of Representatives, after initially balking at the provisions of ATRA, which does not include any significant spending cuts, ended up passing the bill around 11 p.m. on January 1 by a margin of 257 to 167. Shortly after the House passed ATRA, President Obama made a public statement in support of it and then within 30 minutes was whisked away to his Hawaiian vacation home, where he signed the bill into law using an autopen on January 2, 2013.

Now that we have been delivered from the precipice of the so-called fiscal cliff, below is a summary of what ATRA means for American taxpayers in 2013 as well as some retroactive changes for 2012.

Initially, though, you will probably hear more about what ATRA did NOT change. The temporary reduction of the Social Security payroll tax that went into effect in 2011 and was extended for 2012 was not addressed by ATRA, so in 2013 the share of the Social Security payroll tax paid by workers will increase from 4.2% to 6.2% for employees and 10.4% to 12.4% for those who are self-employed.  This increase will likely result in actual take-home pay remaining the same for many taxpayers, despite wage increases for 2013. Since this is the most effect of ATRA that most taxpayers will realize, many taxpayers won't see ATRA as real "relief.'    

Estate Tax, Gift Tax and Generation Skipping Transfer Tax

ATRA makes the rules governing estate taxes, gift taxes and generation skipping transfer taxes that went into effect under the Tax Relief Unemployment Insurance Reauthorization and Job Creation Act of 2010 ("TRUIRJCA") permanent for 2013 and beyond, with one exception - the maximum tax rate for each of these taxes is increased from 35% to 40%. Since TRUIRJCA unified the estate tax, gift tax and generation skipping transfer tax exemptions and provided for inflation indexing of these exemptions beginning in 2012, the 2013 exemption for each of these taxes is $5,250,000.

"Portability" of the Federal Estate Tax Exemption Becomes Permanent

 In addition, TRUIRJCA introduced the concept of portability of the estate tax exemption between married couples, and so ATRA has made portability permanent.In 2009 and prior years, married couples could pass on up to two times the federal estate tax exemption by including "AB Trusts" in their estate plan. TRA 2010 eliminated the need for "AB" Trust planning for federal estate taxes in 2011 and 2012 by allowing married couples to add any unused portion of the estate tax exemption of the first spouse to die to the surviving spouse's estate tax exemption, which is commonly referred to as "portability of the estate tax exemption."

New Year's Resolution: Planning for Incapacity

The Ohio statutory living will declaration has affixed to the first page
 the seals of the various legal and medical organizations that
approve the content of the document greatly
adding to its practicality  

If you have not done so, you should discuss incapacity planning with an estate planning lawyer as soon as possible.

Incapacity planning is important for people of all ages.  Although the risk of disability might increase with age, the possibility of , short or long-term,disability, incompetency, and/or incapacity is ever present. 

Incompetency planning necessarily concerns both health care and financial issues, and therefore requires several legal documents to implement.  The document most people are familiar with, however, is a living will. 

One need look no further than the case of Terri Schiavo to appreciate the importance of a living will. This young woman fell into a vegetative state after suffering full cardiac arrest while she was in her 20s.  She had not executed a living will expressing her own wishes with regard to being kept alive by way of the use of artificial life support measures. As a result, a highly publicized court battle ensued between her husband and her parents.

You should also consider and execute "practical," and "legally enforceable" durable powers of attorney. These documents are "practical" if they are in a form and format that health care institutions and professionals are accustomed to seeing and accepting.  They are "legally enforceable" if they meet state law requirements, including prior notifications that may be required, and requirements for execution, such as signature, attestation or acknowledgement, and witnessing or notarization.  Many states have statutory forms, and it is wise to first consider use of a statutory form rather than a form prepared without regard to the practicality of the most commonly used and accepted forms.  With these instruments you select proxies to act on your behalf in the event of your incompetency or incapacity. 

You must also consider the Health Insurance Portability and Accountability Act (HIPAA) when you are planning for the possibility of incapacity. This act makes it necessary for you to sign releases to allow people to access your health care information.  HIPAA covers medical records, but it also covers a whole host of medically related financial records,  Consequently, relying upon only a durable medical power of attorney is short-sighted.  Your incapacity planning should include a HIPAA authorization so your health care proxy and your financial attorney-in-fact is able to access needed health care information.

You may also wish to include a financial power of attorney or trust to permit a person you choose to make financial decisions on your behalf if you are incapacitated.  Your financial attorney-in-fact or trustee need not be the same person as your health care proxy.

The new year is a good time to turn your attention to these important planning documents.

Estate Planning for Your Online Assets

There is no question that our real lives have more virtual reality than ever before, and executors and successor trustees are increasingly tasked with unraveling the legal disposition of online assets, accounts, and resources.   Dispensing with tedious recitation of examples from recent articles regarding the legal and practical impediments to identifying and recovering these assets, for example or retrieve email, facebook accounts, online assets such as blogs, and the like, which are appearing more frequently each day, I posit a simple question: Is there any doubt that identifying, cataloging  and planning for the disposition of your online accounts and virtual assets is preferable to simply leaving them to whichever family member steps forward to handle your estate to figure out?

To those who appreciate the importance of this type of planning, I commend the excellent infographic, Step By Step Expert Guide To Protect Yourself Online Before You Die. With advice from Evan Carroll, author of one of my favorite websites, The Digital Beyond,  and Nate Lustig,  of  SecureSafe, the infographic defines digital assets, presents the various digital estate planning services, and discusses how to leave a digital legacy. Check it out here.

Ohio Spends Less than Budgeted for Medicaid

Ohio has spent fewer dollars on Medicaid than expected under its current two-year budget.

The following is from an article published in the Alliance Review: 

State officials have been working to rein in the cost of the $19.8 billion health program for low-income people. The slowdown in spending comes as Gov. John Kasich prepares to unveil his next two-year spending blueprint in February. 

In the budget year that ended in June, state figures show that Ohio spent $590 million less in state and federal dollars than it had anticipated. 

Medicaid spending for the current fiscal year is also tracking below projections. The state has spent about $6.2 billion on Medicaid since July. That's about $219 million -- or 3 percent less -- than it is expected to spend through November, according to the latest data available. 

Ohio Medicaid Director John McCarthy credited the slowdown to changes in provider reimbursements, more conservative budgeting and better contract negotiations. He also said a new system for processing claims has meant that the state is better at rejecting claims that should have been paid by Medicare or those that don't fit Medicaid rules.

Still, he noted that while the savings seem significant, they're still just a fraction of the federal-state program's cost.

Medicaid spending accounts for roughly a third of all funds Ohio gets from state and federal dollars, fees and other sources.

Homeless Heir to $300 Million Clark Copper Fortune Found Dead

Huguette Clark (right) c. 1917 (age approximately 11)
 with her sister Andrée (left)
 and her father William A. Clark (center)

According to Bill Dedman, an Investigative Reporter for NBC News, a relative of the reclusive heiress Huguette Clark, who stood to inherit $19 million of her $300 million fortune had he stepped forward to make a claim, has been found dead under a Union Pacific Railroad overpass in Wyoming.

"Children sledding found the body of Timothy Henry Gray, 60, Thursday afternoon in Evanston, a small mining town in southwestern Wyoming near the Utah border. The coroner said it appeared he died of hypothermia. The low temperature that day was 10 degrees, and had hit zero in the previous week. [T]here was no evidence of foul play, and Gray was wearing a light jacket. Gray's siblings said they hadn't heard from him since their mother's funeral in 1990, when he disappeared without a word.  It wasn't clear whether Gray was living under the overpass, where transients have been known to camp.

Tim Gray was an adopted great-grandson of former U.S. Sen. William Andrews Clark, known as one of the copper kings of Montana, a banker, a builder of railroads and the founder of Las Vegas. The senator's youngest daughter, Huguette Clark, was a recluse who died in 2011 in New York City at age 104, after living in hospitals for 20 years while her palatial homes sat unused. Gray was her half great-nephew."

Huquette Clark left no part of her conservatively estimated three hundred million dollar estate to her family, leaving it instead to her nurse, goddaughter, attorney, accountant, hospital, doctor, favorite museum and various employees, as well as  to an art foundation to be set up at her oceanfront estate in Santa Barbara, Calif.  None of her relatives had seen Clark in at least 40 years, though some had been in touch with her through holiday cards and occasional phone calls.  Nineteen of Clark's relatives contested her will in a New York court.  The case could go before a jury in 2013, though settlement talks have begun.

To read the whole article, click here.  To read more about Huguette Clark, click here.

Immortality Aided By Good Viral Email

Viral Photograph of Mr. Allen Swift alongside his 1928 Rolls-Royce

Picadilly Phantom-1 Roadster?  

Mr. Allen Swift of Springfield Massachusetts has attained a measure of immortality. He received a beautiful brand new two-tone green 1928 Rolls-Royce Picadilly Phantom-1  Roadster from his father as a graduation gift in 1928. He would go on to drive it for nearly eight decades until shortly before his death in October, 2005.  He was 102 years old.  

According to the Hartford Courant,  Mr. Swift "drove arguably the most distinctive car in town" for eight decades- a  world record for the longest period of  ownership of a new automobile.  In fact, he may be a Guinness recognized record holder. 

Upon his death, Mr. Swift donated the vehicle as part of a one million dollar donation to the Connecticut Valley Historical Museum in Springfield, Connecticut for the purpose of a establishing a new industrial heritage museum. The donation permitted the museum to establish a separate museum dedicated to industrial heritage.  According to the Hartford Courant: 

[t]he car [went] on display in Springfield in a new industrial heritage museum made possible in part by a $1 million bequest from Swift.

Mr. Swift's car will be one of the centerpieces of the collection. It still works and runs very, very quiet," said Guy McLain, director of the Connecticut Valley Historical Museum in Springfield. "His initial gift gave us the seed money to make this new museum a reality. Having that $1 million enabled us to raise the $8 million for this project."

Swift, general manager of his family's precious metals business in Hartford, drove the car carefully around town and sometimes piloted it in the town's holiday parades. Some of the town's older residents remember seeing the elegant car on the road, said Ned Skinnon, program director with the West Hartford Senior Center.

No matter where it went, the car stood out, like an emerald parrot in a flock of starlings. His model was a Piccadilly Roadster, chassis number S273FP, built in the plant that Rolls-Royce had in Springfield from 1921 through 1931 for its American market.

R.D. Shaffner, director of the Rolls-Royce Foundation in Mechanicsburg, Pa., knew Swift for 30 years, had the chance to drive his car and was pleased that Swift loaned his car to the foundation in 2003 for display when the foundation opened a new building.

He actually received this car as a graduation gift from his father in 1928 and, of course, kept it all his life - and as such earned the respect and admiration of many people - and holds the record [in Guinness] as the longest standing original owner, and I believe last surviving original owner of a Springfield car," Shaffner wrote in an e-mail response to a query about the vehicle.

Henry Hensley, chairman of the Phantom I Society, said that the Piccadilly is one of the most sought-after bodies on the early Rolls-Royce automobiles. Swift's car is one of about 2,500 Phantoms made in Springfield. About 60 percent of those made still exist, most of them in private collections.

I did not find any mention of Mr. Swift, or his bequest on the museum's website.  I also did not see the Rolls-Royce listed as an exhibit of the museum. Whether some have forgotten Mr. Swift, he has managed to attain some level of immortality.   Mr. Swift is made even more famous as a result of a viral email, often forwarded with the subject, “Oldest running car and driver in history...”  There are various versions of the email, some of which make additional wild claims, such as that the mileage on the vehicle exceeded one million miles.  The vehicle apparently had only “170,000 miles on it and an engine that still purrs like a sewing machine.”  But Snopes.com does have a thread for the email under its topic "Fauxtography," which may suggest the picture is not accurate.  Regardless, Mr. Swift is immortalized in the virtual world as the email travels from inbox to inbox. 

A good friend and client recently forwarded the email to me, but I had seen it previously several times over the past few years.  So I researched the real story, which I hope you have enjoyed. 

Nursing Home May Sue Resident's Daughter for Breach of Contract

A Connecticut trial court has ruled that a nursing home may sue a resident's daughter for breach of contract because she agreed to use her mother's assets or Medicaid to pay for the nursing home, even though she did not sign as a personal guarantor. Cook Willow Health Center v. Andrien (Conn. Super. Ct., No. CV116008672, Sept. 28, 2012).

Judy Andrien admitted her mother to a nursing home and signed an admissions agreement as her mother's responsible party. She agreed to take steps to ensure the nursing home was paid out of her mother's assets or by Medicaid.

The nursing home sued Ms. Andrien for breach of contract, alleging that she did not use her mother's assets to pay the nursing home or apply for Medicaid when the assets were near depletion. Ms. Andrien filed two special defenses. She argued that the admissions agreement was void and unenforceable because it made Ms. Andrien personally liable for the cost of her mother's care. She also argued the agreement was a surety contract, so the nursing home was required to meet certain preconditions before enforcing the contract. The nursing home moved to strike Ms. Andrien's two defenses.

The Connecticut Superior Court granted the nursing home's motion to strike the special defenses. The court rules that the contract does not contain a personal guarantee, so it did not violate federal law prohibiting nursing homes from requiring a third-party guarantee as a condition of admission. The court also ruled that the contract is not a surety contract, i.e., a guarantee of one party for the obligation of another to a third party.  According to the court, the nursing home's "complaint is not based upon a breach of a promise to answer for the debt of another, but rather a breach of contract."  The contract, according to the court, "does set forth a scenario in which the responsible party would be liable for any costs of care and services for the resident incurred should the resident make a transfer rendering him/her ineligible for Medicaid payment or assistance."  The Court wrote that the Complaint alleged no facts that would indicate such a scenario, but nonetheless, set aside all of Ms. Andrien's affirmative defenses, and permitted the action to proceed.   

For the full text of this decision, click here.

Gifting to Avoid Nursing Home Costs- Too Many Planning Intentional Impoverishment

Health care costs continue to be a top retirement concern, yet few Americans know about their options or the potential dangers of improper planning. More importantly, the most common "simple" plans compromise, unnecessarily, important goals and objectives due to misconceptions. 

Gifting Assets May Risk Home Health Care 

For example, according to a recent survey of financial advisers by Nationwide Financial, 42% of financial advisers say their clients are currently considering giving away their assets to their children so they can qualify for Medicaid to avoid paying for a nursing home.  There are obviously some circumstances making such gifting appropriate.  But, many Americans do not understand the adverse consequences of relying on Medicaid to pay for their long-term care costs.  

Perhaps the most important of these is that the senior abandons control over their long term care and short term health care planning.  Such a result flies in the face of one of the most important objectives most senior's claim to have, and that is to maintain control of their care.  In fact, according to the  Nationwide Financial survey, maintaining control is the most important aspect of retirement health care planning to most seniors.

Many seniors also underestimate the risks of gifting.  Knowing their children to be responsible and loving, they assume the assets will remain as a safety net for their later needs.  But, what if a child is unfortunate, and suffers economic catastrophe through no fault of their own?  Gifting subjects assets to numerous other risks, such as the claims of creditors of children, loss through divorce or disability, and additional long-term care risks.  Moreover, most seniors have no idea what happens if their children predecease them.  Simply, gifting means, for all intents and purposes, that the senior may never see those assets again, regardless of need. 

Asset Protection Planning- "Keep it Secret; Keep it Safe."

A stark warning to those engaged in asset protection planning comes from Jay Adkisson,  a Partner in the Newport Beach, California, law firm of Riser Adkisson LLP, who practices in the areas of creditor-debtor law, in an excellent article for Forbes Magazine, entitled, "Kilker - Asset Protection Intent In Making Transfers To Protect Against Future Creditors Means Disaster When Creditor Appears." Simply, as the wizard Gandalf instructed the Hobbit Frodo, in Lord of the Rings: "Keep it secret; keep it safe."  Identifying asset protection planning as a purpose of your estate plan is, perhaps, the first step to losing the protection.  

Attorney Adkisson writes:  

"Taking this opinion at face value, the lesson here is simple and commonsensical but is one that is often ignored by planners: Asset protection planning should rarely be undertaken in its own name or for that stated purpose.

If the Engineer here had not admitted that he put this structure in place for asset protection purposes, and to defeat the rights of future claimants who might sue him over soil studies gone bad, then the result might have been very different on this point.

There is rarely a need to announce to the world that something was done for asset protection purposes, to call something an “asset protection trust”, to send an “asset protection” engagement letter, or any of the like. Yet, bad planners and do-it-yourselfers do it every day.

To the contrary, asset protection planning should almost exclusively be undertaken for some other purpose than creditor planning.  Do it for estate or succession planning reasons, do it for general business or financial planning reasons, do it for health reasons, do it because you’re trying to look out for an heir, but don’t state that you’re doing it for creditor reasons. (emphasis added).

There is great risk in boldly and publicly identifying an estate, business or financial plan as an asset protection plan.  Yet the market is replete with estate plans employing documents entitled "Asset Protection Trusts," or which have other, often imposing, titles such as fortress Trusts," or "The Castle Plan."  Perhaps my personal favorite is the "Complete Asset Protection Plan," which I reviewed for a client that had transferred only the personal home and a single bank account to the dubious plan, thereby rendering the supposed benefits of the plan far less than "complete." 

Proper asset protection is not easily accomplished, and it is easily lost.  If you want to incorporate asset protection planning in your estate, business, or financial plan, you are best advised to seek, and maintain a relationship with an attorney.  From conception to development, and through implementation of the plan, care must taken to ensure that the plan is as carefully protected as are the assets.  Finally, proper use of the plan as a shield requires counsel regarding presentation of the plan.

"Keep it secret; keep it safe."  It sounds simple, but it isn't.  If your assets are important enough for you to want a plan to protect them from risk of loss, they are important enough to ensure that the plan is properly drafted and implemented.