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.