White House Announces Measures to Improve Nursing Home Care Quality

The Biden administration on February 28th announced a round of new measures for nursing homes aimed at ensuring adequate care for seniors. 

Citing how the pandemic "highlighted the tragic impact of substandard conditions at nursing homes," the White House announced it would be issuing new requirements through the Department of Health and Human Services (HHS) to improve the "quality and safety" of nursing homes.  Through the Centers for Medicare and Medicaid Services (CMS), the administration will be proposing new minimum standards of care to be unveiled within the next year following a study to determine the level of care and staffing needed.  That means, practically, that it is intended that the new minimum standards would be in place before January 1st, 2024.

While the Administration's highlighting quality of care issues in nursing homes is welcome and commendable, it is hard to see the move as anything but a political device giving President Biden subject matter for his upcoming and first State of the Union address.  President Biden is "set to talk further on these proposed plans," among other topics, on Tuesday evening during the address.

The American Health Care Association/National Center for Assisted Living (AHCA/NCAL) and LeadingAge, while grateful the Biden administration seems to be prioritizing long-term care, questioned how these policies would be implemented and enforced without adequate funding and investments.

Mark Parkinson, president and CEO of The American Health Care Association and National Center for Assisted Living (AHCA/NCAL), said in a statement to Skilled Nursing News that additional oversight without necessary assistance will not improve resident care.  In a longer written statement, he wrote: 

“Those who continue to criticize the nursing home sector are the same people who refuse to prioritize our residents and staff for resources that will help save and improve lives. Additional oversight without corresponding assistance will not improve resident care. To make real improvements, we need policymakers to prioritize investing in this chronically underfunded health care sector and support providers’ improvement on the metrics that matter for residents.  

“Long term care was already dealing with a workforce shortage prior to COVID, and the pandemic exacerbated the crisis. We would love to hire more nurses and nurse aides to support the increasing needs of our residents. However, we cannot meet additional staffing requirements when we can’t find people to fill the open positions nor when we don’t have the resources to compete against other employers.  

“It’s time to stop blaming nursing homes for a once-in-a-century pandemic that uniquely targeted our residents and vilifying the heroic caregivers who did everything they could to protect the residents they have come to know as family. Together, we should focus on meaningful solutions that can attract and retain the frontline heroes we need and strengthen delivering the quality of care and services that our nation’s seniors deserve. Providers are dedicated to learning from this pandemic, renewing our commitment to our seniors, and offering solutions that will improve the quality of care in our nation’s nursing homes. With the proper resources and support, we can transform our nation’s nursing homes.”

On February 22nd,  Mr. Parkinson sent a letter on behalf of AHCA/NCAL to Congressional leadership thanking them for their continued support of long term care residents and staff but urging them to take additional steps to ensure the safety and protection of America’s most vulnerable.  In the letter,  he outlined the association’s specific requests of Congress that would provide nursing homes and assisted living communities with the resources necessary to combat COVID-19 and address critical challenges brought on by the ongoing pandemic. Specifically, in the upcoming appropriations bills, AHCA/NCAL is calling for replenishment of the Provider Relief Fund with $20 billion allocated to long-term care, as well as an extension to the current delay of Medicare sequestration cuts and the recoupment of Medicare Accelerated and Advance payments. 

He wrote that

“[n]ursing homes and assisted living communities are facing the worst job losses among all health care professions, and the shortage is impacting seniors’ access to care. More than half of nursing homes were limiting new admissions in recent months—at a time when overwhelmed hospitals needed our assistance to free up precious beds due to the Omicron surge.

 .           .          . 

Long term care residents and staff have been among the hardest hit by the pandemic, as the virus uniquely targeted older adults with chronic conditions and exposed long-standing issues within the industry. Chronic government underfunding coupled with workforce recruitment challenges were exacerbated by the global crisis. The number of long term care facilities forced to limit admissions or close altogether because of staffing shortages and financial concerns continues to grow." 

Katie Smith Sloan, LeadingAge president and CEO, called on officials to keep in mind Medicaid’s insufficiencies when it comes to covering the cost of service:

“We know that transparency, quality improvement, and workforce investments are critical to building better nursing homes for America’s older adults and families,” Smith Sloan said in the statement. “Yet Medicaid, the dominant payer of long-term care services, doesn’t fully cover nursing homes’ cost of quality care. Regulations and enforcement, even with the best intentions, just can’t change that math.” 

On the other hand, the Long Term Care Community Coalition (LTCCC) likened the proposed changes to “the biggest and most positive news for nursing home residents in the 35 years since Ronald Reagan signed the Nursing Home Reform Act.”

CMA Senior Policy Attorney Toby S. Edelman said the federal government’s agenda tackles issues that have “plagued” the nursing home industry for decades.

“For years, we have watched as an increasingly sophisticated and corporatized industry has, too often, cut back on staffing and essential services to maximize profits,” Richard Mollot, executive director of the Long Term Care Community Coalition (LTCCC) said in a statement. “We are profoundly grateful to the [p]resident for taking this bold stand for vulnerable residents, their families, and American taxpayers, who foot the bill for most nursing home care.”

Mollott’s comments about a “corporatized industry” echo the White House’s criticism of private equity ownership of nursing homes and practices that make it difficult for consumers and watchdogs to track corporate ownership of facilities. The Biden administration is seeking to address these issues with provisions related to greater transparency, heightened penalties and standards related to “corporate competency.”

President Biden's remarks in the SOTU address:

 And as Wall Street firms take over more nursing homes, quality in those homes has gone down and costs have gone up.  

That ends on my watch. 

Medicare is going to set higher standards for nursing homes and make sure your loved ones get the care they deserve and expect. 

We’ll also cut costs and keep the economy going strong by giving workers a fair shot, provide more training and apprenticeships, hire them based on their skills not degrees. 

 

Rethinking Guardianship- Carol Kelly

Carol Kelly shares the story of her mother, Mary Jane Mann, who was the victim of an inappropriate, predatory guardianship (conservatorship) in California. The video below features scenes from "A Hijacked Life," courtesy of KOVR CBS13 Sacramento.

Rethinking Guardianship's mission is to promote less restrictive alternatives to guardianship and effect long-term changes in North Carolina's guardianship system. To learn more, visit:

https://rethinkingguardianshipnc.org/

Watch the video below:

More is not Always Better - CMS Adds Staffing Information to Care Compare

The Centers for Medicare and Medicaid Services (CMS) recently announced that it will add data on staff turnover rates and weekend staffing levels to its Care Compare website, giving consumers another tool when choosing a nursing home.  The official Medicare website, previously called Nursing Home Compare,  offers up to five-star ratings of nursing homes based on health inspections, staffing, and quality measures. Users can search for nursing homes by location and directly compare one institution to another.  

CMS will post the following additional information for each nursing home on its website:

• Weekend Staffing: The level of total nurse and registered nurse staffing on weekends provided by each nursing home over a quarter. 
• Staff Turnover: The percent of nursing staff and number of administrators that stopped working at the nursing home over a 12-month period. 

CMS will begin adding the information to the Care Compare website in January, but the information will not be incorporated into the rating system until July 2022. 

The staffing information could not come at a more meaningful time.  Nursing homes are plagued by chronic understaffing and high turnover rates.  The problem has existed for years, but is exacerbated by the COVID-19 pandemic. A study reported in Health Affairs found that the turnover among nursing staff was 94 percent in 2017 and 2018 and mean turnover rates were as high as 140.7 percent among registered nurses, 129.1percent among certified nursing aides and 114.1 percent among licensed practical nurses. 

CMS previously noted a relationship between turnover and ratings. CMS noted in a memo that:

"facilities with lower nurse turnover may have more staff that are familiar with each resident’s condition and may therefore be more able to identify a resident’s change in condition sooner. In doing so, the facility may be able to implement an intervention to avoid an adverse event, such as a fall, acute infection, or hospitalization, which are indicators of quality. Similarly, facilities with lower nurse turnover may be more familiar with the facility’s policies and procedures and can potentially operate more efficiently and swiftly to deliver a higher quality of care to residents. Lastly, facilities with lower administrator turnover may have greater leadership stability, direction, and operations, which may help staff provide care more consistently or effectively to residents."

Regardless of the reasons for the association between turnover and quality, CMS acknowledging the relationship is encouraging.  

CMS has also acknowledged that  the additional information is important and is thus valuable to consumers.  For example, regarding weekend staffing, CMS acknowledged that consumers may not realize that nursing home staffing levels can vary on weekends. CMS hopes to encourage facilities to hire more weekend staff by adding weekend staff numbers to the nursing home rating system.

The fundamental underlying question, though, is whether adding additional information will help transform a questionable and unreliable system into a more meaningful system for consumers.  There is good reason to remain skeptical; there are numerous reports and examples suggesting that the federal ratings are inaccurate or misleading.  Consider the following:   

• NYT: "Maggots, Rape and Yet Five Stars: How U.S. Ratings of Nursing Homes Mislead the Public;
• Nursing Homes Create Phony Diagnoses to Sedate Patients with Dangerous Drugs, Doubling Risk of Death;
• Nursing Home Compare Does Not Accurately Reflect Patient Safety In Nursing Homes;
• Half of Most Dangerous Nursing Homes Remain Treacherous for Residents After Homes Are Cleared By Regulators.

Worse, even if information regarding nursing homes is more accurate, it does little to help the most vulnerable seniors, those being transferred from acute care in a hospital to a nursing home for rehabilitation; patients are simply given little guidance or information to help them direct accurately their own care decisions: 

• Patients Are Not Given Quality-Of Care Information When Discharged From Hospitals to Nursing Homes.

Providing additional information through Care Compare will only be comforting for consumers and planners when the reporting deficits underlying the system are fixed, and seniors are provided quality of care information prior to transfer. 

Industry reaction to the change has been "mixed," according to Amy Novtney, writing for Mcknight's Longterm Care News.  David Grabowski, professor of healthcare policy at Harvard Medical School, told  industry stakeholders during a LeadingAge conference call, that the timing of the change “feels like a gut punch to nursing homes who are really struggling right now.”

Grabowski called on providers, however, to view the move as a positive development for the industry in the long run. Grabowski said the data could provide benefits such as shedding light on the fact that there aren’t staff available to work on the weekends, that turnover is high and that there’s a high use of contract nurses. That, in turn, could lead to policy changes.

According to Novtney, Grabowski continued: 

“I do think longer term this data will add value and can serve as a signal to all of us that we need to invest more in direct care staff. We get the turnover we pay for and since we aren’t paying enough, we’re seeing high turnover. That’s not something nursing homes can fix on their own. I really believe we need more reimbursement from Medicaid and Medicare to make that happen.”

Other industry associations agree that the decision’s timing is unfortunate given the ongoing challenges related to the pandemic. 

Others criticized the addition information as impotent to improves staffing issues. “While we support transparency and agree that staffing hours and turnover metrics are important, more reporting will not solve this issue,” the American Health Care Association/National Center for Assisted Living said in a statement to McKnight’s this week. “The addition of this reporting requirement when we are in the middle of the worst labor shortage the nursing home sector has ever faced is tone deaf. We need public health officials to do more than acknowledge these challenges, but stand up to address them. By offering funding and policy solutions that will help us attract and retain the caregivers we so desperately need, policymakers can ensure nursing home residents are well supported.”

To read CMS’s announcement about this new policy, click here.

Annual Gift Tax Exclusion for 2022 Increases to $16,000.00

Due to surging inflation, the  Internal Revenue Service (IRS) announced that the annual exclusion for 2022 will be $16,000, up from the current $15,000. 

The rate of inflation hit a 31-year high in October.  Shortly thereafter, the IRS announced adjustments to certain inflation-indexed tax provisions for returns filed in 2023.

The inflation adjustments for tax years 2021 and 2022 inform taxpayers what they might expect going forward. In the event that inflation isn’t temporary, the adjustment determinations now will be all the more important come tax time in 2023. The other changes follow:

New standard deduction, tax brackets, gift tax and EITC

• The standard deduction rises to $25,100 for married couples filing jointly in their 2022 returns. That’s a $300 increase. It rises to $25,900 for 2023 returns, an $800 rise.

• For single filers and married individuals filing separately, the standard deduction in 2021 returns climbs to $12,550, a $150 increase. The following year, the deduction increases to $12,950, a $400 increase.

• The income levels applying to each tax bracket are increasing up and down the income scale. For example, in 2021 returns, the top 37% rate applies to individuals making $523,600, or $628,300 for married couples filing jointly. In 2022 returns, the richest households face the top rate for incomes above $539,900 or $647,850 for married couples filing jointly.

• The annual exclusion on the gift tax rises for the first time in several years. From 2018 to 2021, $15,000 was the threshold before taxes applied on gifts, according to the IRS. It rises to $16,000 in 2022, with returns filed in 2023.

• The Earned Income Tax Credit, a credit for low- and moderate-income households, also increases. For example, the maximum credit for 2021 returns of qualifying households with three or more eligible children is $6,728. The following year, households with three or more kids will receive $6,935, the IRS said. The American Rescue Plan passed in March expanded the EITC’s rules, qualifications and potential payouts, particularly for workers without children.

Promissory Note Executed by Nursing Home Resident’s Daughter Is Not Illegal Third-Party Guarantee

The efforts of nursing homes to create and enforce filial responsibility, i.e., hold children financially responsible for a parent's long term care, even where state legislators have not enacted such legislation, is a frequent topic of articles on this blog:

• Filial Responsibility- Resident’s Son Not Liable for Breach of Contract Because He Did Not Cause His Mother to Be Ineligible for Medicaid;

• Judge Can Not Impose an ‘Unusual’ Condition on a Reversal of a Default Judgment in a Nursing Home Breach of Contract Lawsuit;

• Tortious Interference With Contractual Relationship Claim Most Recent Possible Remedy Nursing Homes can Employ Against Children of Nursing Home Residents;

• Conservator Owes Duty to Nursing Home to Timely Apply for Medicaid;

• Agent Under Power of Attorney Liable for Damages to Nursing Home for Breach of Contract;

• Conveyance to Son Was Fraudulent, But His Siblings May Also Be Liable Under Filial Support Law;

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

Another recent example comes courtesy of a Kentucky appeals court which held that a promissory note executed by a nursing home resident’s daughter, agreeing to pay the nursing home for the resident’s outstanding expenses, is not illegal because there was no evidence her mother’s stay in the nursing home was conditioned on her signing the note. Roberts v. Mt. Washington Health Care, LLC (Ky. Ct. App., No. 2020-CA-1190-MR, Oct. 29, 2021).  Federal law provides that “a nursing facility must . . . not require a third party guarantee of payment to the facility as a condition of admission (or expedited admission) to, or continued stay in, the facility...” 42 U.S.C. § 1396r(c)(5)(A)(ii). 

Erma Basham entered a nursing home in 2018. She applied for Medicaid in 2019 and was approved, but she owed $34,742.26 in expenses for her care before her Medicaid application was approved. Ms. Basham’s daughter, Christy Roberts, executed a promissory note, agreeing to pay the nursing home monthly to pay down Ms. Basham’s bill. Ms. Roberts made one payment and defaulted on the note.

The nursing home sued Ms. Roberts. The trial court found Ms. Roberts had executed a valid promissory note and entered judgment in favor of the nursing home. Ms. Roberts appealed, arguing that the promissory note was illegal because under federal law, the nursing home cannot require a third-party guarantee of payment as a condition of admission or continued stay in the facility.

The Kentucky Court of Appeals affirmed in part, holding that the promissory note is not illegal. According to the court, there was “no testimony or other evidence of record apart from [Ms.] Roberts’ unsupported assertions indicating that her mother’s admission or continued stay at the appellee’s facility was conditioned upon [Ms.] Roberts executing the February 12, 2019 promissory note.” 

The court did find that the interest charged Ms. Roberts was too high and remanded the case to the trial court to enter a lower interest rate.

SSI and other Social Security Benefits Set to Increase 5.9% in 2022

People with disabilities receiving Supplemental Security Income (SSI) and other Social Security benefits will receive the biggest rise in their monthly payments since 1982.  The Social Security Administration  says that benefits will grow 5.9% in 2022.

The change is the result of an automatic cost-of-living adjustment, or COLA, tied to inflation, and is another indication of a post-pandemic surge in inflation.  The annual adjustment is based on the Consumer Price Index (CPI) from the U.S. Department of Labor’s Bureau of Labor Statistics which rose 5.4% in September from a year earlier, the largest annual gain since 2008.

With COLA, the maximum federal SSI benefit for individuals will be $841 per month in 2022, up from $794 this year. For couples, the maximum will be $1,261 next year, up from $1,191.

Beneficiaries may see payments that are greater than the federal maximum since some states chip in extra.

The new amounts will take effect in January for the nation’s 64 million Social Security beneficiaries and will start Dec. 30 for 8 million SSI beneficiaries.

The Social Security Administration said beneficiaries are usually notified by mail beginning in early December about their updated payment amount for the coming year and most people will also be able to view the information online through their Social Security account at that time.

In the last 10 years, COLA has increased by an average of 1.65% annually.

Senior Care Staffing Shortage Crisis- Nightmare Scenario Warns One-Half of Facilities Could Close

The shortage of staff in long-term facilities and home care agencies has gone from a problem to a crisis, according to Howard Gleckman,  a fellow at the Urban Institute.  Consider the following:

• Three rural nursing homes in Maine close because they cannot hire enough staff to maintain care for patients and residents.
• One of the oldest nursing facilities in Summit County, Ohio closed, citing an array of post pandemic financial difficulties, including cost of maintaining adequate staff. 
• A senior living facility in Camden County, Georgia was forced to close due to staffing shortage.  
• A nursing home in Oklahoma shuts its doors due to staff shortages.
• A nursing home in Kansas closes due to staff shortages.
• A new industry survey reports that only 1 percent of nursing homes and 4 percent of assisted living facilities (ALFs) say they are fully staffed, while 89 percent of nursing homes and 82 percent of ALFs report moderate or severe shortages.
• Fifty-eight percent of nursing homes and 28 percent of ALFs say they are limiting admissions because they do not have enough staff to care for residents.
• As many as one-half of all nursing homes and assisted living facilities in the nation could close within the next year, if the current staffing crisis is not alleviated, according to Washington Health Care Association CEO Robin Dale.

Gleckman notes that staffing shortages don't impact just nursing homes and assisted living facilities, but impact the entire spectrum of senior care.  For example, the operator of a Maryland home health agency claims it is turning away families looking for assistance because it does not have sufficient aides; “We cannot provide the care our clients deserve with the staff we have,” she told Gleckman.  

Fundamentally, though, as resources are spread thin across the entire health care industry, opportunities for cover and redundancy are disappearing.  Whether those opportunities are within or outside of a formal system, seniors are forced to rely upon less in the hopes that care quality will remain high. The reality is that a system can provide generally high quality care only when it's component parts work to support each other; hospitals support care institutions, care institutions rely upon a full complement of staff within a facility, and upon other outside institutions, to supplement and support care and accept patients best placed in the care of others.  

Many long-term care workers are leaving the health care profession entirely. Widespread shortages of low-wage workers in the hospitality industry give aides the opportunity to work for as much money—or even more—at jobs that are far less physically and emotionally demanding.

Gleckman also warns that these labor shortages appear to be growing at the same time the long-term care industry is confronting another equally important trend: consolidation. Not only are facilities closing, but operators are selling out. Small facilities being acquired by mid-sized chains and large chains are selling out to bigger ones, often owned by private equity firms.

How will these owners, often obsessively focused on the short-term bottom line, confront these labor shortages? It is hard to know, but the answer will be critically important to workers as well as to residents and their families.

Three Assisted Living Workers Charged in Death of Resident

Three assisted living facility workers are being prosecuted in the death of 86-year-old, Hazel Place, a resident who suffered from Alzheimer’s disease.  Authorities alleged the three left Ms. Place outside in sweltering weather for six hours.

Jamie Johnston, 30, Jenny Logan, 50, and Letticia Martinez, 27, employees of  Cappella Assisted Living and Memory in Grand Junction, Colorado, were charged with negligent death of an at risk person and criminally negligent homicide, both felonies.  

Johnston and Martinez were also charged with a misdemeanor for allegedly forging patient records, according to court documents describing the charges.

National Weather Service data shows that the high temperature in Grand Junction that day was 102 degrees Fahrenheit (38.9 Celsius).

The court documents detailing the evidence gathered against the workers have been sealed.

Place could walk and did so frequently in a routine that was familiar to caregivers, but was supposed to be checked on every hour because she was at risk of falling, her daughter, Donna Golden, told The Daily Sentinel in Grand Junction.

“What it boils down to, as the caregivers that day and probably on other days, none of them were doing their job. Not a one of them checked her,” she said.

Cappella Assisted Living and Memory said in a statement that it reported the circumstances surrounding Place’s death to regulators and conducted an internal investigation which led to the dismissal of two of the workers. The third worker was placed on “investigatory leave,” the statement said.

“We are very saddened by the passing of this beloved resident, and we continue to send our sincerest sympathy to this resident’s family and friends,” the statement said.

Scrivener’s Error and Limited Power of Appointment Do Not Make Property Available to State to Recoup Medicaid Benefits

A recent Massachusetts land court ruling is instructive regarding the extent to which states will go in attempting to collect resources for Medicaid. 

Athena and Sotirios Koutoukis hired an attorney to transfer ownership of their real estate to their daughters, creating and retaining a life estate for their benefit.  They also  retained a power of appointment to convey the property to their children. Mr. Koutoukis received MassHealth (Medicaid) benefits before he died. After Mr. Koutoukis’s death, the attorney for the estate discovered that the deed included the words “tenants in common for life and further,” which was an error.

The estate filed an action in probate to correct the scrivener’s error, and the state filed a claim against the estate in order to recoup the Medicaid benefits paid on Mr. Koutoukis’s behalf. The state filed for summary judgment, arguing that because Mr. Koutoukis left property in his will to his wife, he did not intend to create a life estate and that the power of appointment in the deed made the property a countable asset. The estate also filed for summary judgment. The Massachusetts Land Court, Department of the Trial Court, granted summary judgment for the estate benefitting the Koutoukis family, holding that the deed can be reformed to correct the mistake, and the state cannot recoup benefits from the property.  Estate of Koutoukis v. Secretary of the Executive Office of Health and Human Services (Mass. Land Ct., Dept. of the Trial Ct., No. 20 MISC 000004 (RBF), Sept. 17, 2021). 

The court held that the power of appointment in the deed is a limited power that did not permit the Koutoukises to grant the property to themselves, so the property was not a countable asset for Medicaid purposes.  More importantly, the court wrote that the evidence clearly established that the Koutoukises intended to create a life estate, and the state did not provide any evidence to the contrary:

On a motion for summary judgment, the nonmoving party cannot create a dispute of material fact simply by declaring that it disputes the material fact. The nonmoving party is supposed to provide some evidence that disputes the fact; that is, some evidence that, if credited, would support the opposite of the claimed undisputed fact. On these cross-motions for summary judgment, the defendant Secretary of the Executive Office of Health and Human Services (EOHHS) has attempted to forestall summary judgment on the plaintiffs’ claim for reformation of a deed due to a scrivener’s error by the simple expedient of saying the affidavits provided by the plaintiffs do not support the claim, without providing any evidence of its own to the contrary.

As the affidavits do support the claim for reformation, there is no dispute of material fact. Based on the undisputed material facts and the applicable law, summary judgment shall enter reforming the subject deed to clarify that the parties’ intent was to create a life estate, and declaring that the life estate and the limited power of appointment in the deed do not make the subject property a 

The court noted that state "has denied many of the asserted facts relating to the claim of scrivener’s error in the subject deed without providing any affidavits or other evidence whatsoever."  

Estate of Koutoukis, at p. 4.  

The court concluded that the state cannot recoup Medicaid benefits from a Medicaid recipient’s property, left in a life estate notwithstanding a scrivener’s error,  and a limited power of appointment. Estate of Koutoukis v. Secretary of the Executive Office of Health and Human Services (Mass. Land Ct., Dept. of the Trial Ct., No. 20 MISC 000004 (RBF), Sept. 17, 2021). 

Liberal Magazine Fires Shot Across the Bow of Cruise Ship Roth IRA

A Roth IRA is an individual retirement account (IRA) that allows qualified withdrawals on a tax-free basis provided certain conditions are satisfied. Established in 1997, it was named after William Roth, a former Delaware Senator.  Roth IRA's are popular investment choices for Americans.

Roth IRAs are similar to traditional IRAs, the biggest distinction between the two being how they are taxed. Roth IRAs are funded with after-tax dollars; the contributions are not tax-deductible. Once you start withdrawing funds, the money is tax-free. Conversely, traditional IRA deposits are generally made with pretax dollars; you usually get a tax deduction on your contribution and pay income tax when you withdraw the money from the account during retirement.

Many people use Roths because account holders don't have to start taking distributions at age 70½ as they do with traditional IRAs. The money can sit untouched and grow tax-free throughout the owner's lifetime—a big plus for those who don't need the assets to live on. And while those who inherit any type of IRA must start taking distributions immediately, they are permitted to stretch out those payments, allowing the bulk of a Roth account to continue growing tax-free.

This and other key differences make Roth IRAs a better choice than traditional IRAs for some retirement savers. They are, at the same time, increasingly unpopular among those who champion government intervention to alleviate wealth disparity.  I have warned investors to consider seriously possible future changes to the laws governing Roth IRA's before investing, and particularly before implementing IRA conversions, i.e., liquidating a traditional IRA, and paying the taxes on the investment, in order to convert the investment to a Roth IRA that permits future tax-free withdrawals of both principal and income. See, "Roth IRAs Dim as Inheritance Vehicles- Beware the Rush to Covert."

Mother Jones Magazine (MJ) recently published an article critical of the government continuing to "support" wealthy individuals in an effort to avoid taxation using Roth IRA's. The article may be the first in a coming onslaught of attacks against the investment option, and may be a bell weather indicating reform. 

Although the article often reads more like a partisan platform or political screed (the article is openly published under the MJ "Politics" section), language choice, narrative, and hyperbole aside, the article explores the uses and misuses of the Roth IRA, particularly as a tool of the ultra-wealthy: 

"For many working Americans, a Roth IRA is a useful, if not particularly interesting, way to save money for retirement. For tech billionaire Peter Thiel, it was a way to accumulate more than $5 billion. The nonprofit journalism shop ProPublica ran an exposé in June revealing how a small number of extremely wealthy folks had ended up with Roths—federally subsidized retirement accounts meant for middle-class savers—worth tens to hundreds of millions of dollars and up. Thiel did so, the article noted, by “stuffing” his Roth IRA with wildly undervalued “founders shares” of pre-IPO startups—potentially an illegal tactic—and then watching as their values rose exponentially, and completely tax-free.

The story prompted congressional leaders to request data from the nonpartisan Joint Committee on Taxation, which reported that, as of 2019, more than 28,000 Americans held combined (Roth and traditional) IRA balances of $5 million or more, and 497 taxpayers had balances of at least $25 million. The latter group had socked away a combined $77 billion in their IRAs—on average, more than $150 million each. 'IRAs were designed to provide retirement security to middle-class families, not allow the super wealthy to avoid paying taxes,' Sen. Ron Wyden (D-Ore.) lamented in a press release.  

But it turns out IRAs are only the tip of the iceberg. The bigger problem, according to Steve Rosenthal, a tax attorney and senior fellow at Urban-Brookings Tax Policy Center, is that, thanks to a series of bipartisan bills Congress has passed over the past quarter-century, the government spends a fortune subsidizing a whole range of retirement plans whose benefits flow overwhelmingly to America’s most affluent. 'It’s unbelievable the amounts of dollars at stake, and how tilted they are to the high end,' Rosenthal told me. 'It’s just staggering.'"

The author acknowledges that reform of the Roth IRA is not likely or particularly popular, right now:

“'The wealth defense industry—the lawyers, accountants, and wealth managers to the super-rich—are paid millions to sequester trillions, stretching the limits of the law and sometimes writing the law themselves,' says Chuck Collins, director of the Program on Inequality and the Common Good at the Institute for Policy Studies and author, most recently, of a book titled The Wealth Hoarders. 'They have fracked every corner of the tax code, especially tax-advantaged retirement programs, to extract benefits for their wealthy clients.'"

The article concludes with a contributing source explaining possible reforms and illustrating the lack of receptiveness there is for reform in Congress: 

"'To prevent stuffing and other kinds of self-dealing, [Steve Rosenthal, a tax attorney and senior fellow at Urban-Brookings Tax Policy Center] continues, Congress should just forbid people from holding non–publicly traded assets—like shares of a pre-IPO startup—in an IRA. Lawmakers also could enact a combined asset limit that covers all types of tax-advantaged retirement plans—as first proposed by the Obama administration. They also could strengthen nondiscrimination rules or consider shoring up Social Security—which appears to be in trouble—instead of further enriching the families who need the least help in their old age. “Congress will struggle to solve the problem they created,' Rosenthal told me in an email. 'But the longer they wait, the harder it will be.'

He’s not holding his breath. In July, when the Senate Finance Committee held a hearing titled 'Building on Bipartisan Retirement Legislation: How Can Congress Help?,' Rosenthal and University of Chicago professor Daniel Hemel submitted a statement for the record, but most of the professionals present at the hearing were part of what he calls the retirement-industrial complex: 'The benefits community, the practitioners, the retirement service industry—they testified. Nobody was invited to testify who says the emperor has no clothes.'"

MJ, despite is controversies, and mis-fires, has often been at or near the forefront of a once controversial position moving mainstream.  MJ was, for example, among the first to overtly connect Former President Trump to the alt-Right, although it's effort was roundly criticized, from the Left because its article portrayed a neo-nazi in a "positive" light.   

More importantly, the past few years have demonstrated just how quickly change is possible.  Roth IRA's, like all investment options, should be considered carefully.