Annual Exclusion Gifts Are Counted When Determining Medicaid Eligibility

Many people believe that if they give away an amount equal to the annual gift tax exclusion – currently $14,000 to any one individual – this gift will be exempted from Medicaid’s five-year look-back at transfers that could trigger a waiting period for benefits.  Nothing could be further from the truth.

The gift tax exclusion is an IRS rule.  Any person who gives away $14,000 (in 2014) or less to any one individual does not have to report the gift or gifts to the IRS.  If you give away more than $14,000 to any one person (other than your spouse), you will have to file a gift tax return.  However, this does not necessarily mean you’ll pay a gift tax.  You’ll only have to pay a tax if your reportable gifts total more than $5.34 million (2014 figure) during your lifetime. 

This IRS rule has nothing to do with Medicaid’s asset transfer rules. While the $14,000 that you gave to your grandchild this year will be exempt from any gift tax, Medicaid will still count it as a transfer that could make you ineligible for nursing home benefits for a certain amount of time should you apply for them within the next five years.  You may be able to argue that the gift was not made to qualify you for Medicaid, but proving that is an uphill battle.   

If there is a chance you will need Medicaid coverage of long-term care in the foreseeable future, see your elder law attorney before starting a gifting plan. 

Marriage of Couple in Their Mid-90s Is Challenged by Wife's Co-Guardian

Many people are aware that, in many states, a guardian can file for dissolution of a marriage of a ward from the spouse's ward.  See, e.g., Illinois Permits Guardian Authority to Petition for Termination of a Ward's Marriage.  It seems that the guardian's authority includes contesting a marriage each persona voluntarily entered into.  Edith Hill and Eddie Harrison married after being companions for 10 years, but the marriage is being questioned because Hill had been declared incompetent several years ago. 

Hill, who is 96, and Harrison, who is 95, met in line for lottery tickets more than 10 years ago and married earlier this year, according to the Associated Press. The marriage has been challenged, however, because Hill is under guardianship. Hill's daughter, Rebecca Wright, serves as Hill's co-guardian along with another daughter, Patricia Barber. Wright supports the marriage and supposedly allowed it to take place without Barber's knowledge.

After ruling that the marriage may not be legally binding, a Virginia judge ordered an investigation. The judge removed Wright and Barber as guardians and appointed an independent lawyer to determine whether the marriage is in Hill's best interest. Barber is concerned that the marriage may affect the distribution of Hill's estate, which totals $475,000. One possible solution being discussed is a postnuptial agreement preventing Harrison from inheriting Hill's estate.

For more information about the couple’s possibly invalid marriage, click here. 

Achieving a Better Life Experience (ABLE) Act Would Create Tax-free Accounts for the Disabled

Sara Wolff (center) is calling on Congress to allow disabled
 Americans to save and still receive benefits like
 Social Security Disability Insurance payments and Medicaid.

Many families struggle with planning for the future of a child with severe disabilities. While they are able to save for the educational needs of their other children through “529” college tuition plans, these plans do not fit well the needs of a child with severe disabilities.  The disabled child may, now, or in adulthood, need the long term services and supports of the Medicaid program and/or the income assistance of the Supplemental Security Income (SSI) program.  Since the child may live for many decades beyond the ability of the parents to supplement the services they receive through Medicaid, most parents recognize the need for saving and securing funds for the child.  Others want to ensure the financial security of a disabled child who has a level of disability required for Medicaid eligibility, but for now, is managing to function without the use of those benefits. Still others want to ensure that their family member can exercise control over the funds in the account without endangering the Medicaid and SSI benefits on which they may rely.

Although Supplemental Needs Trusts and/or Wholly Discretionary Trusts for Special Needs offer a savings solution, many families have found it too expensive to establish a trust which meets the requirements of the Medicaid and SSI programs.  While many attorneys will prepare these for reduced fees for those in need, it is not uncommon to pay five to ten thousand dollars for these solutions.  The ABLE Act (S.313 / H.R.647) would give individuals with disabilities and their families access to accounts that would allow individual choice and control while protecting eligibility for Medicaid, SSI, and other important federal benefits for people with disabilities.

The Senate Finance subcommittee on taxation and IRS oversight may have never heard testimony from someone quite like Sara Wolff.  Ms. Wolff, 31, was born with Down syndrome, but that hasn’t stopped her from becoming involved in politics. She testified before the subcommittee on the Achieving a Better Life Experience (ABLE) Act, which would create tax-free savings accounts for those with disabilities. Earlier this year, she wrote a change.org petition calling on Congress to pass the ABLE Act. The petition garnered more than 250,000 online signatures.

“Just because I have Down syndrome, that shouldn’t hold me back from achieving my full potential in life,” Ms. Wolff of Moscow, Pa., said in a statement. “I can work a full-time job, be a productive member of society, and pay taxes – but because of outdated laws placed on individuals with disabilities, we hold people like me back in life.”

Ms Wolf is also a board member of the National Down Syndrome Society (NDSS), which is championing the bipartisan legislation. The Senate bill is sponsored by Sen. Robert Casey, Pennsylvania Democrat, and Sen. Richard Burr, North Carolina Republican.  Support for the House bill is being led by Rep. Ander Crenshaw, Florida Republican; Rep. Cathy McMorris Rodgers, Washington Republican; Rep. Pete Sessions, Texas Republican; and Rep. Chris Van Hollen, Maryland Democrat.

“The bill aims to ease financial strains faced by individuals with disabilities by making tax-free savings accounts available to cover qualified expenses such as education, housing and transportation,” said an NDSS statement.

Ms. McMorris Rodgers, whose seven-year-old son Cole has Down syndrome, called on Congress to “advance this crucial legislation.”  “As the mom of a son with Down syndrome, I see firsthand how federal policies limit—not expand— opportunities for those with disabilities.  And the ABLE Act will change that,” said Ms. McMorris Rodgers in a statement. “It will make sure that Cole — and the millions like him who have special needs — will be able to save for their futures and reach their full potential.”

The ABLE Act  has 74 Senate co-sponsors, including Senate Majority Leader Harry Reid and GOP Minority Leader Mitch McConnell.  “Passing this landmark legislation will go a long way to help people with Down syndrome and other disabilities realize and achieve their own hopes, dreams and aspirations,” NDSS Vice President of Advocacy and Affiliate Relations Sara Hart Weir said in a statement.

Members of the U.S. Senate said Friday, September 26th, that they have an agreement that will allow the Achieving a Better Life Experience, or ABLE, Act to proceed to the full Congress.  The bill’s chief sponsors and leaders of the Senate’s Committee on Finance said in a joint statement that they expect the legislation to be considered when Congress returns to Washington in November.

Under the measure, people with disabilities would be able to create special accounts at any financial institution where they could deposit up to $14,000 annually. The ABLE accounts could accrue up to $100,000 in savings without risking an individual’s eligibility for government benefits like Social Security. What’s more, Medicaid coverage could be retained no matter how much money is deposited in the proposed accounts.

Modeled after the popular 529 college savings plans, funds deposited in ABLE accounts could be used to pay for education, health care, transportation, housing and other expenses. Interest earned on savings within the accounts would be tax-free.

The ABLE Act has been under consideration in Congress since 2006.  It is time that this proposal was enacted into law.

If you want to follow this legislation, Autism Speaks will do that for you by clicking here.  

The National Disability Institute has useful information here.

You can sign Sara's petition here.

Read more: http://www.washingtontimes.com/news/2014/jul/22/act-would-create-tax-free-savings-accounts-disable/#ixzz38RqDdzBf

and http://www.disabilityscoop.com/2014/09/19/deal-savings-accounts/19689/

Preparing for Medicare Open Enrollment

Oct. 15 marks the start of Medicare's seven-week annual election period, when current beneficiaries can add, drop or switch prescription-drug plans and make other coverage changes.

In Medicare, individuals must choose one of two paths: original fee-for-service Medicare, or a federally subsidized Medicare Advantage plan, which typically operates like a health-maintenance or preferred-provider organization. Many who opt for traditional Medicare also purchase a private "Medigap" policy, as well as a separate prescription-drug policy, to patch holes in their coverage.

In recent years, Medicare Advantage plans have gained in popularity, in part because, when compared with a Medigap policy, they generally cover a wider array of benefits, often including prescription drugs and dental care. Many also charge lower premiums, but require members to use the plan's network of providers.

The Affordable Care Act has sparked fears that Medicare Advantage plans, which cover about 30% of Medicare beneficiaries, will raise premiums, reduce benefits and pare their networks of doctors and hospitals. The reason: Under the law, Medicare will reduce payments to Medicare Advantage plans by some $156 billion by 2022, to bring per-person payments in line with those of traditional Medicare.

Citing the ACA, the nation's largest Medicare Advantage insurer, UnitedHealth Group, has cut an estimated 10% to 15% of the doctors and hospitals from its nationwide network. Consumer advocates say the insurer targeted providers with the sickest and most expensive patients, leaving patients in the middle of treatments in the lurch. The company says the changes enable it to better coordinate care and denies that patients in the middle of treatments are adversely affected, extending exceptions to members in active treatment.

Because some of the cuts occurred at times of the year when patients are unable to switch plans, Sen. Sherrod Brown (D., Ohio) and Rep. Rosa DeLauro (D., Conn.) recently introduced legislation that would bar insurers from dropping providers outside of Medicare's annual open-enrollment period.

Because Medicare Advantage can change annually, it's important to examine your options during open enrollment, from Oct. 15 to Dec. 7.  You should call your providers to make sure they still participate in your plan.  You can also use the "Plan Finder" tool at medicare.gov to compare premiums, copayments and deductibles for Part D prescription-drug plans in your area.

During open enrollment, you can switch to either a Medicare Advantage plan or to traditional Medicare, which allows you to see any doctor who takes Medicare. From Jan. 1 to Feb. 14, Medicare Advantage participants may switch to traditional Medicare.

Medicare beneficiaries whose claims are denied should also know that, despite rising backlogs in Medicare's appeals system, two recent lawsuits indicate that those who press their cases have a good chance of success. The procedure differs depending on whether you're in traditional Medicare, a Medicare Advantage plan or a Part D prescription-drug plan. Typically, each appeal can be heard five times, the last time in a federal court.

Since 2010, success rates in the first two rounds of appeals of denied claims for home health-care coverage have plunged to 5% or less, according to a class-action lawsuit the nonprofit Center for Medicare Advocacy in Willimantic, Conn., filed on June 4 in the U.S. District Court in Connecticut against the Department of Health and Human Services, which oversees the agency that administers Medicare.

The center's director of litigation, Gill Deford, told the Wall Street Journal that consumers who want a "meaningful review of their Medicare claims" should continue to the third round of appeal—before an administrative law judge—where odds of success jump to 40% or more.

The average wait for a decision from an administrative law judge is 398 days, up from 95 days in 2009, according to HHS. In a federal lawsuit filed Aug. 26, also in Connecticut, the Center for Medicare Advocacy seeks to force the government to take steps so that appeals can be decided within the 90 days the Medicare statute requires.

When appealing, ask your doctor for a letter explaining why you need the treatment in question. Those who go before an administrative law judge may benefit from retaining a medical or legal advocate. Most State Health Insurance Assistance Programs provide free counseling.

This post is based upon a Wall Street Journal article which can be read here.

What Happens When We All Live to 100?

Gregg Easterbrook, contributing editor of The Atlantic has penned an excellent and thought-provoking article in What Happens When We All Live to 100? (the pictures accompanying the article are equally excellent):  

For millennia, if not for eons—anthropology continuously pushes backward the time of human origin—life expectancy was short. The few people who grew old were assumed, because of their years, to have won the favor of the gods. The typical person was fortunate to reach 40.

Beginning in the 19th century, that slowly changed. Since 1840, life expectancy at birth has risen about three months with each passing year. In 1840, life expectancy at birth in Sweden, a much-studied nation owing to its record-keeping, was 45 years for women; today it’s 83 years. The United States displays roughly the same trend. When the 20th century began, life expectancy at birth in America was 47 years; now newborns are expected to live 79 years. If about three months continue to be added with each passing year, by the middle of this century, American life expectancy at birth will be 88 years. By the end of the century, it will be 100 years. 

Viewed globally, the lengthening of life spans seems independent of any single, specific event. It didn’t accelerate much as antibiotics and vaccines became common. Nor did it retreat much during wars or disease outbreaks. A graph of global life expectancy over time looks like an escalator rising smoothly. The trend holds, in most years, in individual nations rich and poor; the whole world is riding the escalator.

Projections of ever-longer life spans assume no incredible medical discoveries—rather, that the escalator ride simply continues. If anti-aging drugs or genetic therapies are found, the climb could accelerate. Centenarians may become the norm, rather than rarities who generate a headline in the local newspaper.

Pie in the sky? On a verdant hillside in Marin County, California—home to hipsters and towering redwoods, the place to which the Golden Gate Bridge leads—sits the Buck Institute, the first private, independent research facility dedicated to extending the human life span. Since 1999, scientists and postdocs there have studied ways to make organisms live much longer, and with better health, than they naturally would. Already, the institute’s researchers have quintupled the life span of laboratory worms. Most Americans have never heard of the Buck Institute, but someday this place may be very well known.

To read the rest of this fantastic article, go here.