Top 10 Most Important Cuts to MassHealth for Seniors, the Disabled, and their Families

 

continued from March 14th….

 

 

6. Elder Home Care

Approximately 2,500 frail elders each month are able to receive community based care services allowing them to stay in their homes and out of hospitals or other care facilities. There are now more than 2,700 elderly each month on waiting lists for these services. This program has experienced a $21.7 Million cut.

7. Elder Protective Services Cut

It’s no secret that the elderly are frequently preyed upon by the unscrupulous, and often loose whatever nest eggs they have managed to save and protect. The program that focuses on protecting the elderly has experienced a $1.5 Million (or 9% when adjusted for inflation) cut. More cases of elder abuse are likely to go uninvestigated. Fewer Guardians may be granted to Massachusetts most vulnerable elders.

8. Council on the Aging

The Council on the Aging sponsors locally focused programs that provide a variety of recreational and support service to elders. Adjusted for inflation this has been cut 11% since 2009. This year, it experience an almost Million Dollar cut in funding.

9. Geriatric Mental Heal & family Caregivers programs eliminated

This is a quarter of a million dollar program that has been entirely eliminated in the 2011 budget.

10. Home Care of the multi-Disabled

28% of the budget since 2009 for this program has been cut (adjusted for inflation). This program provides funding for home care of the multi-disabled, enabling a higher quality of life for those with multiple disabilities, who would otherwise be forced into institutional care.

 

If you have any concerns about how these cuts will affect you, contact our Elderlaw Attorneys at http://www.cohenoalican.com

Top 10 Most Important Cuts to MassHealth for Seniors, the Disabled, and their Families

Continued from March 7th 2011

Here are the major cuts that impact our clients. The following is a link that has a more inclusive list of budget cuts..

http://www.massbudget.org/documentsearch/findDocument?doc_id=614&dse_id=1293

1. Restorative Dental Care

700,000 adults relied on MassHealth for restorative dental care in 2010. Just over 18% were seniors.

2. Reduction in Hours for Day Services to Disabled Adults

Coverage for day services has been cut from six to five hours a day.

3. Personal Care Attendant Services Limited

Many disabled adults require only limited assistance. For instance they might need help getting in and out of bed, dressing and bathing, but are otherwise self sufficient. The 2011 plan establishes a floor. If your need is less than 14 hours a week, you will no longer be eligible.

4. Prescription Advantage Cuts

$26 Million has been cur tom the Prescription Advantage program, Some low income elderly will no longer have subsidies for the portion of their prescription drug costs not covered by Medicare Part D.

5. Respite Services Cut

$12.7 Million in funding will be cut for respite and intensive family support services. These services support the family care givers. Giving parents of disabled children, or children of parents with disabilities support and a safety net.

Stay tuned for the last 5 next week…

Top 10 Most Important Cuts to MassHealth for Seniors, the Disabled, and their Families

 

Introduction

We at Cohen & Oalican feel it is incumbent on us to keep our Elder, and disadvantaged client base abreast of the changes to our state’s Medicaid program, MassHealth in these economically challenging times.

As a result of the recession, politics, changing demographics, and many other factors, there have been some significant cuts to MassHealth, and other Health Reform programs.

Our job is not to comment on politics or right and wrong, but to help our clients who require services to get those services, without compromising their economic status. A large part of this is navigating MassHealth. Appropriate elder law attorney representation is a tremendous safeguard, our advice is to always PREPARE while you or your loved ones are healthy, not REACT. When you are in need of either, please feel free to contact us.

Briefly, Fiscal Year 2011 has seen an increase of less than 3% in funding, at a time when more demands are being placed on the Medicaid system, with healthcare cost inflation (depending on who is doing the estimates) is running anywhere between 5% and 8%. This means that funding, while it has increased, is not keeping up with healthcare inflation, at a time when overall demand on the fund is increasing due to the pure economics of more and more baby boomers retiring, and more and more younger people entering the Medicaid/MassHealth system due to unemployment from the recession.

to continue…

Cohen & Oalican : New Health Care Law and Medicare

Cohen & Oalican answer:

Will the new health care law have any influence on my current benefits and coverage from Medicare?


You may rest assured that there will be no adverse impact on your current Medicare coverage due to the new health care law. On the contrary, this new law signed by the President ensures increased access to health insurance and provides considerable improvements to current policy, thereby providing enhanced protection for you and your family through Medicare coverage plans.

While you may keep your current plan intact, the President’s new law improves Medicare coverage exponentially. For example, the new law ensures the gap in prescription drug coverage (otherwise known as the “donut hole”) will close gradually by 2020. Each year, Medicare recipients will be offered new savings under the law. In 2010, a one-time rebate of $250 will be offer to Medicare recipients This amount will be given to those Medicare recipients who are not already receiving extra help to pay for prescribed medicines. You do not have to submit any personal information to obtain this check like bank account numbers, Social Security details or even Medicare coverage details. If anybody calls you regarding this $250 check and asks for any information, we advise you not divulge any personal facts.

The new health care law would also help reduce the costs of preventive services from the year 2011 moving forward.

If you have further questions please contact Cohen & Oalican LLP, elder law attorneys in Boston, Andover and Raynham.

PROTECTING YOUR HOUSE FROM THE COST OF NURSING HOME CARE Part 7 Conclusion

Cohen & Oalican, LLP : PROTECTING YOUR HOUSE FROM THE COST OF NURSING HOME CARE Part 7 of 7




Conclusion

Our clients worked extremely hard their entire lives saving for their retirement and to pass along a little something for their children. Often, their home is their “nest egg” representing a life time of hard work and savings. The best way to protect your home is to plan ahead. Given the State’s tightening budget, it has become even more difficult to obtain Medicaid eligibility and protect your home. For your own peace of mind, it’s more important than ever to hire an experienced Elder Law Attorney to create a comprehensive Asset Protection Plan to preserve all that you have worked for.

Consult with one of the attorneys at the offices of Cohen & Oalican, LLP for more information on Medicaid and Estate Planning.

This series has been brought to you by Cohen & Oalican LLP, Elder Law Attorneys Boston, Raynham, Andover

PROTECTING YOUR HOUSE FROM THE COST OF NURSING HOME CARE Part 6 Bring on The Medicaid Lien

Cohen & Oalican, LLP discuss: PROTECTING YOUR HOUSE FROM THE COST OF NURSING HOME CARE Part 6 of 7



Bring on the Medicaid Lien


In certain situations, it may make more sense to apply for Medicaid and let the Medicaid lien accrue against the house. Let’s consider a client who has $100,000 and a house worth $400,000. They spend down their funds in a year or so after entering a nursing home. At that point they have two choices. First, they could sell the house and pay privately for their care until the funds are spent down. If the nursing home costs $10,000 a month this will take about three years or so. Another option would be to apply for Medicaid once the funds are spent down. Remember, Medicaid will not count your house as an asset in determining eligibility if you indicate on your application that you intend to return home. Once the application is accepted, Medicaid will place a lien against the house and when the individual dies, the family will have to pay back Medicaid for benefits provided during that person’s life. You may be wondering where is the benefit in this strategy? The benefit lies in the fact that when you repay Medicaid you are paying them based on what Medicaid pays the nursing home which is typically between 60 and 60 percent of the private pay rate. In other words, if you let the lien accrue you would pay back Medicaid at a rate of $7,000 a month compared with the $10,000 a month that you would have paid privately if you sold the house. Of course, if you receive Medicaid benefits over many years, the lien may exceed the value of the house and there would be no benefit to the family. (It’s important to note that regardless of the size of the lien, Medicaid is only entitled to the value of the house.) One other drawback to this strategy is that the Medicaid applicant cannot use their own income to pay for the house expenses (taxes and insurance). The only way to cover this cost is either to rent the house or for other family members to pay the bills.

Consult with one of the attorneys at the offices of Cohen & Oalican, LLP for more information on Medicaid.

This has been Part 6 in a series of 7, brought to you by Cohen & Oalican LLP, Elder Law Attorneys Boston, Raynham, Andover

PROTECTING YOUR HOUSE FROM THE COST OF NURSING HOME CARE Part 4

Cohen & Oalican, LLP discuss: PROTECTING YOUR HOUSE FROM THE COST OF NURSING HOME CARE Part 4 of 7

PROTECTING YOUR HOUSE FROM THE COST OF NURSING HOME CARE


Irrevocable Trusts

One strategy our office uses to protect homes from the Medicaid lien is an irrevocable trust. In order for a trust to be protected from Medicaid it must meet three requirements. First, it has to be irrevocable. This means that neither the Medicaid applicant, nor their spouse, can be able to revoke or change the trust in any way. Second, neither the Medicaid applicant nor their spouse can serve as trustee. Keep in mind that when Medicaid reviews trusts they are looking to see whether the applicant or their spouse, retained too much control over the trust assets. If you have too much power over a trust, your home will not be protected. Lastly, the trust principal cannot be paid out to the Medicaid applicant or their spouse. The asset that is held in the trust is called the trust principal. The interest, dividends or rent earned on the trust is called the trust income. As an example, let’s assume you have your home deeded in an irrevocable trust and the house was then sold for $250,000. The trust could pay the interest earned on the funds to you but it cannot under any circumstances pay the $250,000 to you.


Consult with one of the attorneys at the offices of Cohen & Oalican, LLP to create your personalized Medicaid plan.

This has been Part 4 in a series of 7, brought to you by Cohen & Oalican LLP, Elder Law Attorneys Boston, Raynham, Andover

PROTECTING YOUR HOUSE FROM THE COST OF NURSING HOME CARE Part 3

Cohen & Oalican, LLP discuss: PROTECTING YOUR HOUSE FROM THE COST OF NURSING HOME CARE Part 3 of 7

The Transfer Penalty and the Look-Back

If you give away your assets it will make you and your spouse ineligible for Medicaid benefits for up to five years. When you apply for benefits, Medicaid reviews five years of bank statements in order to identify any disqualifying transfers. This is known as the “look-back period.” Any transfers that happened before the five year period are protected and do not have to be reported to Medicaid. However, if you apply for benefits during the look-back period, Medicaid imposes one month of ineligibility for approximately every $8,000 you give away. In addition, the clock does not start “ticking” on the ineligibility period until you are in a nursing and have spent down your assets.

The easiest way to explain the transfer rules is by way of an example. Let’s assume Mrs. Smith transfers her condo worth $320,000 to her grandson on March 15, 2010. On April 15, 2011, Mrs. Smith suffers a stroke and is admitted to a nursing home. Assume she spends down her assets below $2,000 as of August 2011. Because she would be applying during the look-back period, Medicaid would impose thirty two (32) months of ineligibility ($320,000 ÷ $8,000 = 32 months). The transfer penalty would not start until August 1, 2011 and would end in April 2014.

Keep in mind, that the rules are different for married couples. If a husband is in a nursing home with a wife living in the community, Medicaid allows the husband to transfer their home to the healthy spouse, without imposing any ineligibility period. The house is then completely protected from the husband’s nursing home costs (even after the wife’s death.) Although, planning can be more complicated for a single person there are several options available to protect the house regardless of whether you are married or single.

Consult with one of the attorneys at the offices of Cohen & Oalican, LLP to create your personalized Medicaid plan.

This has been Part 3 in a series of 7, brought to you by Cohen & Oalican LLP, Elder Law Attorneys Boston, Raynham, Andover

Cohen & Oalican Answer: Can a Life Estate Still Protect Your House from Medicaid Part 2

Part 2

The three year look back period was the most important reason to choose a Life Estate deed instead of an irrevocable trust to protect a client’s house. That benefit has been eliminated. Now clients and attorneys must consider the limitations of Life Estates in relation to irrevocable trusts. Most importantly, the Life Estate only works if the house is not sold until after the Medicaid recipient’s death. If the house is sold during the person’s life a portion (this value is based on Medicaid’s actuarial tables) of the proceeds will pass to the Medicaid recipient and the funds will be taken by Medicaid. If a house is held in an irrevocable trust, all of the proceeds from sale stay in the trust and remain protected regardless of when its sold. Although families understand the issue when they create the Life Estate, this becomes a pressing issue when the client moves into a nursing home and the house is empty. At that point, families must either rent the house (taking on the aggravation of being a landlord) or leave the house empty and use their own funds to pay for the property taxes and insurance. Both options are not ideal.

There are also capital gains tax issues to consider when choosing between a Life Estate deed and an irrevocable trust. The tax questions are somewhat up in the air right now and many attorneys believe that unless Congress changes the tax laws, Life Estate deeds will no longer give clients a step-up in the tax basis resulting in children paying capital gains taxes on all of the gain accrued during the parents’ lives.

That all being said, a Life Estate deed does have one important benefit. Its simple. A Life Estate
deed is easy to put in place. Its just a deed. Also, if everyone on the deed is agreeable, its also
easy to unwind; everyone just deeds the house back to the original owners. Reversing an irrevocable trust is much more complicated (and sometimes not possible) with an irrevocable trust.

Everyone wants to protect their home. The question remains what is the best strategy to do the job. In weighing your options, consider, how much control you want to keep, when the house will be sold, your need to use the house equity and tax issues. Life Estate deeds do still work. However, irrevocable trusts are often a better option to protect your home.

Contact Cohen & Oalican to discuss a medicaid plan that works for you.

Cohen & Oalican Answer: Can a Life Estate Still Protect Your House from Medicaid Part 1

Part 1

Can a Life Estate Still Protect Your House from Medicaid?


We are often asked by clients and attorneys alike, whether Life Estates still “work”. In other words, can you protect your house from a Medicaid lien with a Life Estate deed. To cut to the chase, Life Estate deeds still work, but they may not be the best option. First, let’s clarify the question. If an individual applies for Medicaid (MassHealth in Massachusetts), their home is considered to be a noncountable asset. Although the regulations make it sound as if your home is a “protected” asset, that is far from true. As a noncountable asset, Medicaid cannot force you to sell your home to obtain eligibility (as long as the equity is less than $750,000). However, at the death of the Medicaid recipient, if the house is in that person’s sole name, the State will have a claim against the house for reimbursement for benefits provided during that person’s lifetime.

Frequently, our asset protection plans focus on a client’s home. Medicaid is only authorized to make a claim against an interest in a house that is in the sole name of the Medicaid recipient. These assets are referred to in legal jargon as “probate assets”. For example, a house that’s held as joint tenants passes to the survivor automatically by virtue of the deed and thus avoids probate and a Medicaid lien.

For many years a simple way to protect the house from Medicaid was by using a Life Estate deed. With a Life Estate deed a client is typically giving away their house to their children but they are retaining certain rights of ownership over the property. Most commonly, clients keep the right to live in the house and the rights to rental income. They also still have an obligation to pay the house expenses. However, the house cannot be sold or mortgaged without everyone’s consent. The parents retained interest in the house is called a Life Estate. The childrens’ rights to receive the property at death is called a remainder interest. Because a Life Estate deed passes automatically at death outside of probate, a Life Estate deed avoids Medicaid’s claim at death.

Prior to February, 2006 (when the federal Medicaid laws changed), Life Estates were quite common. At that time Medicaid imposed a three year “look-back” period for transfers to individuals and a five year “look-back for transfers to trusts. Consequently, clients and attorneys often preferred to use a Life Estate as part of their asset protection plan instead of an irrevocable trust because the house would be protected in only three years. That is no longer the case. Under current law, all transfers have a five year look-back period and in effect make the applicant and their spouse ineligible for five years.

Part 2 to follow

The experienced attorneys at Cohen & Oalican, LLP, can help you prepare for, and resolve, all of your medicaid planning and administration needs.

Durable Power of Attorney and Health Care Proxy - FAQ Part 1

Durable Power of Attorney and Health Care Proxy

1. Does everyone need a power of attorney and health care proxy?

Absolutely.

These documents allow you to designate who will make decisions for you should you become incapacitated. Without them, it may be necessary for your family to become your legal guardian to the probate court which can be time consuming and expensive.

2. Could I be held liable for my actions as attorney-in-fact?

Yes, but only if you act with willful misconduct or gross negligence such as stealing money from your principal. If you do your best and keep your principal’s interest in mind as the basis of all your actions, you will not incur any liability.

3. When does the power of attorney take effect?

Unless the power of attorney is “springing”, it takes effect as soon as it is signed by the principal. A “springing” power of attorney takes effect only when the event described in the instrument itself takes place. Typically, this is the incapacity of the principal as certified by one or more physicians. Section III of your power of attorney indicates whether it is effective immediately or is springing. In most cases, even when the power of attorney is immediately effective, the principal does not intend for it to be used until he or she becomes incapacitated. You should discuss this with the principal so that you know his or her wishes.

4. What if there is more than one attorney-in-fact?

Depending on the wording of the power of attorney, you may or may not have to act together on all transactions. In most cases, when there are multiple attorneys-in-fact they are appointed “severally”, meaning that they can each act independently of one another. Nevertheless, it is important for them to communicate with one another to make certain that their actions are consistent.

5. Can I be fired?

Certainly. The principal may revoke the power of attorney at any time. All he or she needs to do is send you a letter to this effect. The appointment of a conservator or guardian does not immediately revoke the power of attorney. But the conservator or guardian, like the principal, has the power to revoke the power of attorney.

Contact an attorney at Cohen & Oalican, LLP who is skilled and experienced in this area.

Supplemental Needs Trust - Questions Answered Part 2

Are there restrictions on how the funds in the supplemental needs trust may be spent?


Yes and no. Yes, each public benefits program has restrictions that must be complied with in order not to jeopardize the beneficiary’s continued eligibility for public benefits.
For instance, the beneficiary would lose a dollar of SSI benefits for every dollar paid to him or her directly. In addition, payments by the trust for food, or housing for the beneficiary are considered "in kind" income and, again, the SSI benefit will be cut one dollar for every dollar of value of such "in kind" income. Some attorneys draft the trusts to limit the trustee's discretion to make such payments. Others do not limit the trustee's discretion, but instead counsel the trustee on how the trust funds may be spent, permitting more flexibility for unforeseen events or changes in circumstances in the future. The difference has to do with philosophy, the situation of the client, and the amount of money in the trust.

This series brought to you by Boston Attorneys Cohen & Oalican,LLP, specializing in Guardianship and Conservatorship.

Cohen & Oalican provide a full spectrum of services for the elderly, for disabled adults, and for the families.

Your Retirement - Part 3 - FAQ

The Roth IRA

As if the rules described above were not complicated enough, as part of the Taxpayer Relief Act of 1997 Congress created two new planning vehicles: the Roth IRA, named after Senator William V. Roth (R-Del.) And the Education IRA. The Roth IRA, in effect, turns a traditional IRA on its head. While traditional IRAs permit the taxpayer to shelter pre-tax earnings but taxes them upon withdrawal, the Roth IRA is for after-tax savings, but both the original deposits and the earnings on them are not taxed on withdrawal. In addition, unlike traditional IRAs, Roth IRAs are available to taxpayers already contributing to a plan at work and to taxpayers who continue to work after age 70 ½. Finally, there is no minimum distribution requirement upon reaching that age.

Eligibility for the Roth IRA is limited to taxpayers with an adjusted gross income of under $110,000 if single and $160,000 if married (to be adjusted for inflation after 1998). The contribution is limited to $2,000 a year, with smaller limits for taxpayers with income of between $95,000 and $110,000 if single and between $150,000 and $160,000 if married and filing a joint return.

Financial experts calculate that for many Americans a Roth IRA will save more money than a traditional IRA. This is because the future value of the interest earned, which will never be taxed, often far outweighs the value of deferring taxes on the investment itself. Remember, traditional IRAs may be converted to Roth IRAs this year only! Consult with your financial advisor to help decide if a Roth IRA makes sense for you.

The Education IRA

Similar to the Roth IRA, the new education IRA permits individuals to save up to $500 annually with the earnings accumulating tax free. This may be of special interest to parents and grandparents who can contribute this amount annually to accounts owned by their children and grandchildren. Although $500 a year isn't a lot of money given the size of college tuition, over time it can make a difference. It is only available to taxpayers whose adjusted gross income is under $110,000 for single taxpayers and $160,000 for married taxpayers filing a joint return, with limits on contributions for taxpayers with income between $95,000 and $110,000 and between $150,000 and $160,000, respectively (all numbers to be adjusted for inflation after 1998). If the parents' income exceeds these levels, grandparents and others with lower taxable incomes can contribute to the accounts. But only $500 can be added per child per year.


Funds can only be added to the accounts while the child is under age 18 and must be withdrawn by the time he or she reaches age 30 or turned over into an account for another family member. An advantage with these accounts over most accounts created for children is that the funds do not have to be turned over to the child at age 18. But a word of caution: if you expect that your child or grandchild will apply for financial assistance for college, it may be wiser to invest the money in your own name. The financial aid application process for college has become increasingly complex, but, in general, colleges treat assets held by the family -- especially a grandparent -- differently from assets held by the student.

Only a portion of family assets are expected to be used for a specific student's education, while all of the child's assets are expected to be used before the student draws on financial aid.


Conclusion


While the rules regarding retirement plans are complicated (and the summary above only brushes the surface) the most important lesson is to always name a designated beneficiary and to make sure that you name individuals only. (You can also name a trust that meets certain requirements beyond the scope of this article.) The second lesson is to consult with a qualified professional advisor when you reach 70 ½, if not before.

Cohen & Oalican, LLP provide a full spectrum of services for the elderly, for disabled adults, and for the families.

Your Retirement - Part 2 -FAQ

To Fix or Recalculate, That is the Question


The second consideration is not so straightforward. At your required beginning date, you may elect the "fixed" or "recalculation" method of determining your minimum distributions. As their names imply, under the first approach the portions of your retirement plan that you must withdraw is based on your life expectancy and that of your designated beneficiary on the required beginning date and it never changes. Under the second approach, you withdraw a bit less than under the fixed approach each year because your life expectancy and that of your designated beneficiary are recalculated each year. The choice makes little difference during the first few years, but the longer you live the better off you are with the recalculation method. Under the fixed approach, when you and your spouse reach age 90 you will have withdrawn everything. But if one of you reaches that age your life expectancy will still be five years, meaning that you would only have to withdraw one fifth of what remained in your plan that year if you had opted for the recalculation method.


On the other hand, if you choose the recalculation method after one of you dies, you will have to base future distributions on the survivor's life expectancy alone. If one spouse dies at a young age, this choice could accelerate minimum distributions. So, what's the best approach? Some experts recommend always using the fixed methods. Others recommend always using the recalculation method unless you or your spouse has a shortened life expectancy for one reason or another. In short, there's no answer that's right for everyone. What you choose may depend on predictions of your longevity and that of your spouse based on your health and the lifespan of other family members. If you designate someone other than your spouse as your beneficiary, you may not elect the recalculation method with respect to his life expectancy, only for your own.


Post-Death Treatment of Retirement Plans

What happens to retirement plans after the participant dies depends on whether the decedent had named a designated beneficiary, whether that designated beneficiary is the decedent's spouse, and whether the participant died before or after her required beginning date. If the participant dies before her required beginning date and has not named a designated beneficiary, all of the plan must be distributed before the end of the fifth calendar year after her death. This is often referred to as the five-year rule. On the other hand, if the decedent had named a designated beneficiary, the assets may be distributed over the beneficiary's life expectancy. If the beneficiary is not the decedent's spouse, the distributions must begin by the end of the calendar year after the participant died. If the beneficiary is the surviving spouse, distributions must begin by the end of the calendar year in which he reaches age 70 ½ or the calendar year after the participant's death, whichever is later.

Again, these rules show the importance of designated a beneficiary. Without a designated beneficiary, the heir must take distributions of the entire plan within five years and pay income taxes on such distributions. With a designated beneficiary, the heir can take distributions over his life expectancy, which for a 38-year-old child, for instance, would be 44.4 years. The ultimate difference to the heir may total hundreds of thousands of dollars over time, depending on the value of the retirement plan. You may designate more than one beneficiary, but the minimum distributions will be based on the life expectancy of your oldest beneficiary. Don't name a non-person, such as a charity, as a beneficiary of your plan or the five-year rule will apply to all of your beneficiaries.

If the plan participant dies after her required beginning date, again the outcome depends on whether she named a spouse as her designated beneficiary. If she did not designate a beneficiary, the heirs would be required to withdraw the entire plan within one year of the death of the participant.

The spouse has an option not available to other designated beneficiaries. He can roll the plan over into his own plan and it will be treated as if he had always been the owner. This means he can postpone withdrawals until his required beginning date and designate a new beneficiary.

A non-spouse designated beneficiary may withdraw from the plan based on her life expectancy and that of the decedent (unless the decedent elected the recalculation method, in which case the beneficiary must make withdrawals based on her life expectancy alone). Note, that in cases where the beneficiary is considerably younger than the decedent, this will allow smaller distributions than before the plan participant's death since the beneficiary will no longer be deemed to be only 10 years younger than the participant.

In part 3 we will discuss the different IRA's

Cohen & Oalican, LLP provide a full spectrum of services for the elderly, for disabled adults, and for the families.

Your Retirement - Part 1 - FAQ

This series will cover some Frequently Asked Questions:

Your Retirement
Following are the basic rules governing taking minimum distributions from retirement plans and a few pointers for getting the most out of them.

Calculating Your Minimum Distribution
Congress created the rules described below to encourage saving for retirement. They imposed a penalty for early withdrawal and a penalty for failure to withdraw once the owner reaches retirement age. Until last year, there was also a penalty for excess withdrawals, in other words for those who saved more than they need for retirement, but that has been repealed.


These penalties are in the form of excise taxes. Withdrawals (with limited exceptions) before age 59 ½ are subject to a 10 percent excise tax. The plan participant must begin taking distributions by the April 1 occurring after he or she reaches age 70 ½ (known as the required beginning date), or pay a whopping 50 percent excise tax on the amount that should have been distributed but was not.

In general, the advantage of retirement plans is that the participant may save income before taxes during his or her working career and continue to have such savings grow without paying taxes until the funds are withdrawn. This permits the retirement savings to grow at a much faster rate than other savings and investments. The participant must pay taxes on any amounts withdrawn. As a result, it usually makes sense to postpone withdrawals for as long as possible.

The amount the participant must withdraw after reaching age 70 ½ is based on her own life expectancy and that of the person she names to receive the plan after her death, known as the designated beneficiary. At the required beginning date, your life expectancy will be either 15.3 years or 16.0 years, depending on whether you have reached your 71st birthday before the applicable April 1. If you have not designated a beneficiary, you will have to withdraw this portion of your plan at that time that is 1/16th (assuming you're 70 years old on your required beginning date). In other words, if your plan holds $160,000, you'll have to withdraw $10,000 or pay a penalty.

On the other hand, if, for instance, you have named your spouse as your designated beneficiary and you are both 70 years old, your joint life expectancy will be 20.6 years, meaning that you can withdraw a smaller portion of your retirement plan each year -- only $7,767 from a plan holding $160,000. In the first year alone, this would permit you to continue to invest an additional $2,233 tax free and save more than $700 in income taxes (depending on your tax rate). The savings can be even greater if you name someone younger than yourself as a designated beneficiary, but if you choose someone who is not your spouse, he or she will always be deemed to be no more than 10 years younger than you.

You can always change designated beneficiaries after you have reached the required beginning date, but they can never be used to reduce your minimum distributions. This means that if you have no designated beneficiary on your required beginning date, you will always be stuck making withdrawals based on your own life expectancy. So, the first rule of retirement plans is to always designate a beneficiary.

Part 2: To Fix or Recalculate, that is the question.

Cohen & Oalican, LLP provide a full spectrum of services for the elderly, for disabled adults, and for the families.

"Living Longer on Less in Massachusetts:"

These tough economic times have made it increasingly difficult for many Massachusetts seniors to make ends meet. The Institute on Assets and Social Policy recently released a report entitled: "Living Longer on Less in Massachusetts: The New Economic (in)Security of Seniors." This report highlights some of the financial difficulties faced by seniors today and discusses proposed changes to the law.
The study identified five factors critical in determining the economic stability of seniors. These factors are: Housing costs, healthcare expenses, household budget, home equity, and household assets. According to the study, 68 percent of all senior households in the state are financially at risk. Single and widowed seniors face the greatest financial hardships. The study recommended that seniors meet minimum financial criteria to be considered financially stable. To view the criteria and the proposed changes to state law, click on the following link to read the article in it's entirety:
Article
If you have any questions pertaining to Medicaid, guardianship, or other elderlaw issues, please feel free to contact us at scohen@cohenoalican.com or eoalican@cohenoalican.com or by phone at (617) 263-1035 Boston or (508) 821-5599 Raynham

National Healthcare Decisions Day

We want to make you aware that April 16, 2010 is National Healthcare Decisions Day. Despite increased public awareness over the last ten years millions of Americans still do not have health care proxies. We urge all of our friends and clients to join other national, state and community organizations in encouraging everyone to sign a health care proxy for themselves. Beyond signing the document it is just important to communicate with your appointed agent and your family regarding what your wishes are regarding health care decisions. To learn more about this effort, visit www.nationalhealthcaredecisionsday.org.


Health care proxies and living wills are simple estate planning tools that enable all of us to direct how are health care decisions are made in the event we become incapacitated. The absence of these documents can force families to seek guardianships in the probate court. Although this is not the end of the world, going to court means incurring unnecessary legal expense, stress and delays. In addition the health care proxy gives the patient and their family the peace of mind of knowing that their wishes will be honored regarding medical care. For all of us both personally and professionally (for those of us who work in related fields) it is important to keep in mind the important role these documents play. It is critical that we make sure that everyone has advanced directives.

Health care proxies are relatively straight forward documents. In Massachusetts, the proxy must be witnessed by two people. There is no requirement that the document be notarized but we think it is a good idea just in case you need to use it in another State which does have this requirement. In addition to naming your agent it is always a good idea to have an alternate just in case your first choice is not available. Finally, we recommend including a medical directive which describes in broad strokes what your wishes are regarding end of life decisions. Rather than having this in a separate living will which goes into lost of detail, we’ve found over the years that a medical directive in the health care proxy itself works better. A medical directive serves two functions. First, it can serve as a supportive guide to your health care agent helping them make the decision you would want. Second it allows health care providers a means of confirming that an agent is making decisions consistent with the written expressed wish of the patient.


In an effort towards encouraging everyone to have a health care proxy, we are making our firm’s health care proxy forms available. If you wish to download the forms, please go to our website at www.cohenoalican.com to receive a copy of our form. Remember that our form must be witnessed by two people (neither of whom can be the agent or alternate) and notarized.

Home Care as An Alternative to Nursing Home Care

Home Care as An Alternative to Nursing Home Care Part 1

By Denise Leydon Harvey

If you or an elder or disabled person you know are living at home but need more care than you or your loved ones can provide, you should consider the services of a (PCA). A PCA is someone who can assist you with daily living needs in your own home, or in your assisted living facility. PCA services are specifically intended to allow elders or disabled people to remain at home when the alterative is a nursing home or other in-patient facility. PCA services are available to anyone covered by MassHealth who meets certain eligibility requirements.

The types of services offered by the MassHealth PCA Program include assistance with personal care needs, such as bathing, grooming, eating, getting dressed, and helping with medicines as well as housekeeping needs that include laundry, meal preparation and the like. To benefit from PCA services because of a disability, you should do the following:

1. If you are applying for MassHealth, include the Senior Medical Benefit Request form with your application
2. If you are already a MassHealth member, submit the MassHealth Eligibility Review Form.

If MassHealth determines that you are eligible for PCA services, you will be advised to contact a MassHealth PCA agency in your area to set up services. The Council has established a directory for consumers to use in searching for qualified PCAs. The directory can identify PCA candidates from its database based on several different criteria, including proximity to the consumer, language, skills, transportation, preferred hours and so forth. MassHealth does not screen PCAs, so the directory does not represent a screened or qualified list of potential providers. However, the consumer may call references and request a CORI background check for any potential PCA before hiring. The directory is accessible and free to anyone who is eligible for PCA services by registering online using your MassHealth number.

This series brought to you by Boston Attorneys Cohen & Oalican,LLP, specializing in Guardianship and Conservatorship.

Cohen & Oalican provide a full spectrum of services for the elderly, for disabled adults, and for the families.




Part 2 to follow

Superior Court Upholds MassHealth Applicant's Sale of Property to Daughter: A Summary of Clark v. Dehner

Overview

The implementation of the Deficit Reduction Act (DRA) has made it increasingly complicated for families to protect their assets from the high costs of long-term nursing home care. Many planning options were curtailed by the DRA, and state Medicaid agencies are implementing the revised rules at a disadvantage to families seeking government benefits. However, a 2009 Massachusetts Superior Court decision has validated a planning option involving the fair market value sale of assets to family members.



Background

In May of 2005, George and Susan Clark established the George E. & Susan Clark
Irrevocable Trust. They were named as grantors and trustees of the trust. George and Susan transferred title to their home located in Marshfield into the trust on the date the trust was executed. The home's value at that time was approximately $412,000. The trustees of the trust were to hold the property for the benefit of George and Susan's children, Michelle Dionne and Kerri Poole. This transfer disqualified George from MassHealth benefits for a period of fifty-two months beginning on the date of the transfer.



In August of 2006, George entered the Walden Nursing Home, a long-term care facility. He suffers from a degenerative condition called Pick's Disease. As George's date of admission was during the aforementioned fifty-two month ineligibility period, an alternative planning strategy was implemented. This strategy involved curing the original transfer through the sale of a partial interest in the home using a promissory note and mortgage executed between Susan and Michelle.



Promissory Note

The MassHealth regulations allow applicants for long-term care to sell assets through the use of a promissory note and mortgage if the following conditions are met: 1) the repayment of the note is actuarially sound, 2) the promissory note provides for equal payments during the life of the loan, 3) the promissory note prohibits cancellation of the balance on the death of the lender. See 130 C.M.R. 520.007(G)(3). The regulations do not specifically prohibit such transactions from occurring between family members, as long as the sales are for fair market value and meet the above requirements. However, in recent years, MassHealth has taken the position that such transactions between family members are not reasonably enforceable, and therefore should be treated as disqualifying transfers.


George submitted an application for Medicaid benefits on October 31, 2007. Although the promissory note executed between Susan and Michelle satisfied all of MassHealth's regulatory conditions, as described above, George's application for benefits was denied. The hearing officer determined that Michelle's purchase of the property interest was a disqualifying transfer of assets, due in large part to the fact that it occurred between family members.

Tomorrow we will share the supreme court decision.

Cohen & Oalican, LLP provide a full spectrum of services for the elderly, for disabled adults, and for the families.

Real Estate Tax Abatements

Real Estate Tax Abatements


Think your home is overvalued? If so, consider filing an application for a real estate tax abatement. A real estate tax abatement reduces the tax you pay on the value of your home. To obtain the abatement form, contact your town's tax assessor's office. This is an important first step because each of the 351 cities and towns in Massachusetts may have different forms. Most towns have their own website with instructions on how to complete the form.

Applications for abatements must be submitted by the due date of the first actual tax bill of the year. In communities that have quarterly tax bills, the application is due with the 3rd quarter tax bill, usually on February 1st. To meet the deadline, the application must be in the tax assessor's office by close of business day, or postmarked no later than the due date.

To determine if a bill is an actual tax bill or an estimated bill, the taxpayer should look on their bill for a property assessment value and a designated tax-rate. The application must be completed and filed by the current owner or their agent. Under certain circumstances other parties with an interest in the property may file the abatement. You should contact your assessor's office for any special rules that may apply.

Filing an abatement does not guarantee that your tax bill will be reduced. However, you won't know unless you ask. Remember the deadline is February 1, 2010. You can obtain additional information by clicking on the following link:

MA state website.

If you have any questions, please see our contact information below or visit our website: Cohen & Oalican.

Cohen & Oalican, LLP.
18 Tremont Street, Suite 903
Boston, MA 02108
Telephone 617-263-1035 x310
Fax 617-263-1038
scohen@cohenoalican.com