This being an election year there is talk again about what the candidates propose to do about the Social Security program which most recent projections suggest will run out of money by 2035. The Medicare program projections are more dire, with that program now expected to be insolvent by 2026 which is 3 years earlier than was predicted in 2017. I have written about this problem a few times over the past 10 years but Washington D.C. has done nothing about it except to raise the full retirement age gradually for baby boomers – those born between 1946 and 1964 – who are now or will soon be reaching retirement age. There are a few reasons for this problem. One is that people are living longer in retirement and thus collecting benefits longer than was ever anticipated. The aging population is also a cause. Back when Social Security was instituted the ratio of workers contributing to Social Security versus retirees collecting benefits was much greater than it is now. It is not difficult to do the math and see that more people taking money out and less people putting money in is going to be a problem. What makes it worse is that as the percentage of Americans with traditional pensions has declined and with only about ½ of all American
Last week I started talking about Medicaid’s redetermination process. Pretty much every county Medicaid office is now sending out annual redetermination notices. As I said last week, married couple cases can be especially tricky. That’s because even after Medicaid is approved, the healthy spouse must keep certain rules in mind. Let’s first review some of the Medicaid rules. In order to qualify for benefits in the case of married couple where only one applies for benefits, the countable assets are totaled as of the first day of the first month of continuous institutionalization – known as the snapshot date. The assets are then divided in half and the non-Medicaid or community spouse can keep ½ but only up to a maximum of $128,240 (in 2020). That is known as the Community Spouse Resource Allowance (CSRA). The Medicaid spouse must have no more than $2000 in assets to his/her name. I explain this to clients and repeat it many times during the course of the spend down process leading to Medicaid and again during the Medicaid application process. What people tend to focus on is the first part but not the second. I mean that clients focus on the target number they need to get to for Medicaid eligibility but not the part about how much of that amount must
Last year I wrote about the challenge of keeping Medicaid after you’ve been approved. Whenever I give prospective clients an overview of the Medicaid rules and what is necessary to qualify, I also explain that the rules must be followed even after Medicaid eligibility is achieved. You can’t let your guard down and completely forget about the Medicaid rules. Medicaid does a redetermination once a year. For many years the redeterminations were sporadic. I had clients on Medicaid who never received a redetermination notice. I’ve noticed, however, in the last 5 years or so that just about every county in which I file Medicaid applications now sends annual redetermination notices like clockwork. While the” redets” as we call them are much easier to work thru (since the process doesn’t involve providing 5 years of records), most of our clients either handle it themselves or the facilities take care of it, especially in the case of single Medicaid recipients where all the income goes directly to the facility and they have most of the information needed to process it. There are several reasons redeterminations are necessary. Some of the numbers change from year to year. For example, Social Security and pensions typically have a cost of living adjustment. Health insurance premiums, which can be deducted from income before turning the
6 years ago I wrote about the fight over Casey Kasem. (Blog post 11-25-13). Some may not be old enough to remember Kasem who was an actor and radio personality. He is probably best known as the host of American Top 40, a nationally syndicated radio program in the 1970’s and 80’s which counted down the top pop songs every week. Kasem died in June 2014 but not before his children from his first marriage fought with his second wife over their right to see their father and to make decisions regarding his medical care. Kasem had advanced Parkinson’s Disease and was reported to be bedridden. A legal battle ensued in which the children filed for conservatorship in a California court. His wife then removed him from a California nursing home to one in Washington state and that is where he died. 6 months after his death she buried him in Norway. The children then filed a wrongful death lawsuit against his wife and she filed a countersuit against them. It is now nearly 6 years after his death and both sides finally agreed to an undisclosed settlement in which they both dismissed their claims. The case highlights several issues which I have previously written about. One is the challenges presented by second marriages. It appears that Kasem’s children
If you are a regular reader of my blog you know that getting a Medicaid application approved can be tricky to say the least. As the process becomes more and more involved and complex, we are receiving more calls than we ever have seeking our assistance. When I discuss our fee, people often tell me that they have spoken with a “Medicaid company” whose fee is less than ours. My response has always been that you get what you pay for. Medicaid is a combination federal and state program that consists of laws, regulations and court decisions interpreting those laws and regulations. I explain to prospects that when an interpretation of these laws and regulations is necessary or when the State misapply these laws and regulations, you need an attorney to advocate on your behalf. While to some, hiring an attorney seems costly or unnecessary, if it turns out you weren’t eligible when you thought you were, but that realization happens 3 or 4 or 6 months after you filed for Medicaid, you can only fix the problem moving forward. Even if you hire an attorney at that point, more likely than not you will lose months of Medicaid eligibility costing tens and in some cases hundreds of thousands of dollars in unpaid long term care costs.
In last week’s post I reviewed the changes to retirement accounts under a new law called the SECURE Act. I started with the positive changes but not all about the new law is a plus. The SECURE Act severely limits the ability of retirement account beneficiaries to stretch out the payouts. As I explained last week, under the old rules, beneficiaries could stretch out the withdrawals over their life expectancies. Now spousal beneficiaries can still take the distributions over their own life expectancies, however, other non-spouse beneficiaries can no longer do so (with some limited exceptions). The majority of non-spouse beneficiaries must now withdraw the entire account value within 10 years. Besides spousal beneficiaries, minor child beneficiaries, beneficiaries who are no more than 10 years younger than the deceased account owner and chronically ill individuals can still exercise the stretch provisions. This change has an obvious impact for Americans whose retirement accounts have grown to six and seven figures. Many have intended to withdraw only the minimum and leave as much as possible to children and grandchildren who could then stretch the withdrawals out over 30, 40 or 50 years or more. That is no longer possible. In fact, the tax hit could be greater for the children than for the senior account