Binding Arbitration and Admissions Agreements – Part 2
In last week’s post I wrote about a New Jersey Appellate Division case that was handed down a couple of weeks ago concerning an arbitration clause in an assisted living facility contract. I explained that there is a federal law that favors and encourages arbitration but there is also a New Jersey state law that finds arbitration clauses in nursing home and assisted living facility admissions agreements to be void and unenforceable. The federal arbitration law preempts - or overrides - state law in cases where the federal law is applicable. It would seem, in cases involving a prospective resident and a long term care facility, that the federal law would not apply and the state law would take precedence. That is not, however, what the court decided. Instead, it delved into the circumstances of the signing of the admission agreement. This part of the decision is instructive. The decision to place a loved one in a long term care facility is typically followed by much paperwork. These contracts are necessary so as to give certainty to the rights and obligations of each party. In every day situations, however, where decisions often must be made quickly, the procedures and formalities of these agreements are sometimes overlooked or not
Binding Arbitration and Admissions Agreements
We frequently review long term care facility agreements for our clients. We want to be sure they understand what is contained in these agreements which can be 30 pages or more with multiple attachments and exhibits. It is a legally binding contract that contains rights and responsibilities for each party but the language can sometimes be a bit confusing. A decision handed down last week by a New Jersey Appellate Division court is an interesting case focused on the admission agreement and more specifically the circumstances of it’s signing by the resident, the resident’s daughter and the assisted living facility. The issues were raised after the resident filed a lawsuit in state court alleging negligent care by the facility caused him certain personal injuries. The facility in turn said that there was an enforceable arbitration agreement contained as part of the admissions agreement which was signed by the resident and his daughter preventing the lawsuit. Instead this agreement directed that all claims of negligence be submitted to binding arbitration. Binding arbitration means that the matter is not handled through the states court legal system. There is no judge. Instead, an arbitrator is chosen or provided, sometimes from an arbitration association which is in the business of providing arbitration services
Some Important Numbers for 2022
Much of the economic news recently has focused on inflation rates. The current rate of inflation is at the highest its been in the last 30 years, 6.2% on an annual basis. Against that backdrop, the Social Security Administration has announced it’s cost of living adjustment for the coming year 2022. The announced 5.9% increase is the highest since 2008 although if inflation continues to increase it may not be enough to keep pace. Nevertheless recipients will see the added amount beginning in January. Medicare costs will also increase but at a much higher rate, 14.5% for 2022. This is in part because the increase last year was lower than the actual increase in costs. Medicare’s standard Part B premiums will rise from $148.50 to $170.10. The Part B deductible will also rise by $30 to $233. This will cut into some of the increased Social Security benefits people will receive. For higher income Social Security recipients who pay a greater Part B premium, the increase will also be greater. Other Medicare numbers will change as well. The Part A hospitalization deductible will rise from $1484 to $1556 for the coming year. The Social Security cost of living adjustment also affects other government programs which apply the same increased rate. The Supplemental Security
New Tax Law Changes Coming? Part 2
In my post last week I talked about recent draft legislation which would make changes to federal income, gift and estate tax laws. Many of our clients have called asking what they should do and I must remind callers that nothing has changed yet. We are at the beginning of what is usually a lengthy legislative process as we just saw with the passage last week of the $1 trillion infrastructure package. Nevertheless, what is contained in the current draft will affect certain taxpayers and not others. It is targeted more towards wealthy - high income and net worth - Americans. It is not likely to affect a majority of our clients, again, as far as what is currently on the table. For example, the federal estate and gift tax exemption - the amount that each person can pass free of estate and gift tax during and/or at death - would be cut in half. It is currently $10 million per person indexed for inflation ($11.7 million for 2021) and it would drop to $5 million. With the inflation index the exemption would be a shade over $6 million in 2022. For a married couple that would be up to $12 million they could pass on to heirs tax
New Tax Law Changes Coming ? – Part 1
We have received many calls about upcoming changes to the federal income, estate and gift tax laws. To be clear, nothing has changed yet. Draft legislation has been proposed by the House of Representative’s Ways and Means Committee but right now it is nothing but a proposal. Things can and often do change dramatically from where they start but we are just at the beginning of the legislative process. Final drafts must be voted on by both houses of Congress and any differences between the two bills must be reconciled. Understanding that, however, let’s take a look at what is currently being proposed since it is generating a lot of public discussion in the media and by our clients. Everyone wants to know how they will be affected. One noteworthy omission in the current draft is the step up in basis. Since President Biden took office there has been much talk about his effort to eliminate the step up in basis. I wrote about that here last October. No change, however, has been included in the current proposal. Of course, it still could end up in the final version but so far nothing. What is in the current draft affects estate, gift and generation skipping tax, retirement accounts and grantor trusts. Next week
On Credit Cards and Medicaid – Part 2
In last week’s post I told you about two calls I received regarding Medicaid. In each case the caller was concerned about how credit card charges on a Medicaid applicant’s card affects eligibility. A common misconception about Medicaid is that debts affect eligibility. Not true, at least in the sense that the State doesn’t care if you have debt. You can’t simply offset your debt against your assets to get under the $2000 asset limit. What the State does care about is how you spend down your assets and that includes paying down debt. For example, each time you make a payment to VISA, MasterCard or American Express to pay down or pay off your credit card bill you are spending down assets. The question, however, is whose debt are you spending down on? As I stated last week, New Jersey Medicaid is increasingly focusing on credit card statements if they see that an applicant is spending funds to pay those bills. The State is scrutinizing the charges to determine if those charges are for products or services used by the applicant or by someone other than the applicant. One of the callers told me that her mother’s credit card was used by other family members to make purchases. She said