John Lane Law

Changes in Medicare Surcharges Next Year - John M. Lane Law, PLLC

“More beneficiaries who are considered high earners will be hit with steeper fees.”

Bad news for high-income retirees who were hit with premium surcharges for Medicare Part B and Part D: they may need to pay a bit more in 2018. The income thresholds for the highest surcharge tiers are going to drop next year, affecting more beneficiaries with higher premiums, says Kiplinger in its recent article, “Medicare Surcharge Thresholds to Drop.”

This recalibration of the trigger points was a part of the Medicare Access and CHIP Reauthorization Act of 2015, also called the "Doc Fix" law, which ended the annual battles over fee schedules for doctors' Medicare payments. To help pay for the permanent fix, lawmakers have asked high-income beneficiaries to foot the bill.

There’ll still be four surcharge tiers for 2018, and there’s no surcharge for beneficiaries whose modified adjusted gross income (MAGI: AGI plus tax-exempt interest) is less than $85,000 for single filers or $170,000 for married taxpayers filing jointly.

However, the tops of the other tiers are going to be compressed. As a result, some income levels that were in tier two will move to tier three, and some beneficiaries previously in tier three will jump up to the most expensive tier four. The highest surcharges were previously triggered when MAGI passed $214,000 for singles and $428,000 for married couples. Now the trigger points will drop 25% in 2018, to $160,000 and $320,000 respectively.

Your 2016 tax returns are used to determine your 2018 Medicare premiums. Those returns have already been filed. Therefore, you could be stuck with higher premiums, unless you qualify for a waiver because of a life-changing event like retirement or the death of a spouse.

But if you think your income will be at similar levels in 2017, you still have some time to try to lower your MAGI for this tax year to reduce your 2019 Medicare premiums.

If you might be on the border of a tier threshold, consider tapping into sources of income that are exempt from MAGI, such as Roth account distributions, health savings account distributions, loans from cash-value life insurance, a portion of nonqualified immediate annuity payouts and reverse mortgage proceeds.

If you are subject to required minimum distributions (RMDs) from retirement accounts, consider making a direct charitable contribution from your IRA,  since this qualified charitable distribution won't count toward your MAGI.

Contact John M. Lane Law, PLLC to discover the Simplified Solution to your estate planning needs. Everyone has an estate, no matter how large or small, complex or simple. For more information about how we can help you, visit our website at www.JohnLaneLaw.com.

Reference: Kiplinger (June 2017) “Medicare Surcharge Thresholds to Drop”

Make a Plan to Make a Plan for Retirement - John M. Lane Law, PLLC

“You thought you’d planned for everything, but these things might still sneak up on you in retirement.”

Everyone’s busy with families, careers, home-buying, and then one day, college for the kids. It shouldn’t be too surprising that retirement planning takes a back seat, says The Washington Post in a recent article, “It takes a lot of work to be ready to retire. Don’t forget these things.”

While there are some who don’t begin considering retirement until they reach their 50s, it’s not too late to get started on your retirement planning. But a late start may mean you may have to face some unfortunate realities.

Retirement can be overwhelming. Let’s look at those things some forget to plan or didn’t even realize they needed to plan. First, some people aren’t prepared emotionally to retire. You need to determine how you will spend your time and what it might cost.

Medicare. You must enroll in Medicare at 65, but if you delay until 66, you’ll have to take the initiative because it’s not automatic. If you’re late, there’s a 10% penalty for every 12 months you snooze. If you wait 24 months, there’s a 20% permanent penalty because you forgot to re-enroll. Enrollment is three months before to three months after your 65^th birthday. If you delay taking Social Security, you’ll have to enroll in Medicare on your own.

Health-Care Costs. Studies show that health care will cost about $250,000 for a couple in retirement, or about $5,000 per year per person. People frequently underestimate health-care costs in retirement—they forget prescription drug and long-term care costs—which can use up a lot of money. The same is true of dental expenses, and Medicare doesn’t cover dental.

Major Purchases and Repairs. Some fail to account for major purchases, such as home repair and upkeep. Many retirees are caught short on the occasional large purchase, so examine your budget annually to be sure you consider things that come up quarterly or semiannually. Remember that life events like weddings, graduations, and spoiling the grandkids can be major unanticipated costs.

Planning for a Long Life. This is very important because if you will live to age 90, will your money last? There are many things to consider when you think about 25 years in retirement, like long-term care.

Estate Planning. Estate plans aren’t just for the wealthy, and if you’re not pro-active, all those decisions will be made for you by the state. Create a will, be certain that your beneficiaries are correct and up to date, and make sure you have a power of attorney and health-care directive.

Contact John M. Lane Law, PLLC to discover the Simplified Solution to your estate planning needs. Everyone has an estate, no matter how large or small, complex or simple.  For more information about how we can help you, visit our website at www.JohnLaneLaw.com.

Reference: The Washington Post (October 15, 2016) “It takes a lot of work to be ready to retire. Don’t forget these things.”

Elder Abuse Grows with Senior Population - John M. Lane Law, PLLC

“As the population of those older than 60 increases, so do instances of elder abuse.”

The Administration for Community Living says that hundreds of thousands of older persons are abused, neglected and exploited every year, reported The Hillsdale (MI) Daily News in “Understanding Elder Abuse.” They found that one out of every 10 people age 60 and older who live at home experiences elder abuse, including neglect and exploitation. Unfortunately, this statistic is probably underestimated as many victims are unable or afraid to report the abuse.

When it comes to scams, IRS phone scam are popular. A scammer calls a senior and threatens prison time because the senior owes the IRS money. In reality, the IRS doesn’t call people.

Unfortunately, many senior citizens are the target of scammers through phone calls, email and postal mail. Scammers can use charm, intimidation or scare tactics to convince their victims to hand over cash or credit card information.

Also, many seniors don’t look at their Medicare Summary Notices (MSNs), which are received quarterly. This provides details for all of the services received and what Medicare will pay. It’s not a bill. It’s a summary of services and Medicare payments. Keep a log of when you go to the doctor or have a test or treatment so you can compare what you actually received to what Medicare paid.

There also can be problems with seniors who become attached to a caregiver, whether paid or not. This can lead to poor choices, especially when a caregiver has financial or family issues and shares these problems with a sympathetic senior. Frequently the senior can’t afford to help financially but will still do so because of his or her attachment to the caregiver.

The stealing of prescription medications from seniors is also a big problem. Sadly, statistics show that family members or friends of family members are the most likely perpetrators.

Contact John M. Lane Law, PLLC to discover the Simplified Solution to your estate planning needs. Everyone has an estate, no matter how large or small, complex or simple.  For more information about how we can help you, visit our website at www.JohnLaneLaw.com.

Reference: Hillsdale (MI) Daily News (July 13, 2016) “Understanding Elder Abuse”

Dispelling Misconceptions and Misinformation About Medicare - John M. Lane Law, PLLC

“Making the most of Medicare's home health care policy is easier than you think.”

Medicare home health coverage can be vital for seniors who are recently sent home from the hospital or who are suffering from a chronic condition and have trouble leaving home. Even so, taking advantage of this benefit can be a real challenge.

Kiplinger’s recent article, “Medicare Rules for Home Health Care,” explains that Medicare covers in-home services, including skilled nursing and physical therapy. If a patient is eligible, there's typically no charge and no limit on the length of time they can receive the benefit.

Patient advocates contend that the problem is that the eligibility requirements are often misunderstood by patients and providers. For example, Medicare's requirement that patients be homebound is often incorrectly interpreted as meaning that a person who occasionally leaves home isn’t eligible. This confusion over the rules results in some patients never seeking care because they think they won't qualify. Others are wrongfully denied care or see their services terminated prematurely, some critics say. There looks to be a great deal of subjectivity in some of the rules governing home health benefits, advocates claim.

To qualify for Medicare, you must require part-time skilled nursing, physical or occupational therapy, or speech-language pathology. These services have to be provided by a Medicare-certified home health agency and under a care plan established by your doctor. Finally, a doctor must certify that you're homebound, but this isn't as restrictive as many people think. Under Medicare's rules, your illness or injury must cause you to have trouble leaving your home without help—like using a walker or special transportation—or must make leaving home difficult and medically unadvisable because of your condition. Things like occasional religious services or health care visits don’t disqualify a person from being “homebound.” It doesn’t mean bedbound, and some Medicare Advantage plans waive the homebound requirement entirely.

Home health care should keep going as long as you are eligible. Some patients’ services have been terminated because their condition isn’t improving, but the rules don’t require this. Medicare beneficiaries filed a nationwide class action lawsuit in 2011 arguing that providers were inappropriately applying an improvement standard. That case settled in 2013 with the understanding that patients should be able to get care to maintain their condition or even slow their decline. However, the misperception persists.

If a person believes his or her home health care is being wrongfully denied or ended prematurely, this individual can file an appeal. When a home health agency suspends care, it must provide written notice that includes the rationale for ending care and contact information for a Quality Improvement Organization, a group of health-quality experts who will review your appeal.

Contact John M. Lane Law, PLLC to discover the Simplified Solution to your estate planning needs. Everyone has an estate, no matter how large or small, complex or simple.  For more information about how we can help you, visit our website at www.JohnLaneLaw.com.

Reference: Kiplinger’s (June 2016) “Medicare Rules for Home Health Care”

Help with Complex Medicaid Planning

Estate planning frequently addresses property transfers in contemplation of death while elder law considers retirement income issues. While it is easy to consider the two issues in isolation, this is frequently a mistake. This comment briefly provides an incomplete educational overview of some common legal issues that are relevant in both the estate planning and elder law context. Consult experienced professionals in specific situations. For the ordinary person, government benefit programs are an important retirement income consideration. In broad overview, governmental programs may be divided into "means-tested" and "non-means-tested." Supplemental Security Income (SSI) and Medicaid are examples of federal means-tested programs that consider an individual's resources and income. In contrast, a number of Social Security administered programs and Medicare benefits are non-means-tested.

Recently, the Huffington Post published an article titled “Some Legal Issues at the Intersection of Elder Law and Estate Planning.” The article discusses some ethical and legal issues that are very important.

One is whether to dispose of assets through pre-need planning to qualify for means-tested government programs such as Medicaid that might pay, for example, the cost of long term nursing home care. This is very complicated, and you should work with a qualified elder law attorney.

If you want to maximize eligibility for means-tested governmental benefits, a common income reduction technique is to create a Qualified Income Trust (QIT), often called a “Miller Trust.” There are also other types of "special needs trusts" that can be created without reducing government benefits. Again, this is a highly complex area that requires help from an elder law attorney.

Remember the five-year look-back on transfers. Medicaid eligibility usually examines the transfer of assets (like gifts) to third parties that happen in the 60 months prior to the Medicaid application. To avoid this issue, you may be able to create irrevocable college saving plans and also make transfers to your spouse without penalty. A child who lived in the parent's home and cared for the parent—and delaying institutional care in a physician's opinion—may be able to get assets as a gift without a Medicaid penalty under the "two-year caretaker rule." This is also extremely complex and requires consultation with an experienced elder law attorney.

For your family and yourself, do as much elder law and estate planning as far in advance as possible.  Contact John M. Lane Law, PLLC to discover the Simplified Solution to your estate planning needs. For more information about how we can help you, visit our website at www.JohnLaneLaw.com.

Reference: Huffington Post (September 22, 2015) “Some Legal Issues at the Intersection of Elder Law and Estate Planning”

The Medicare Mess and How to Tackle it Next Year

If the government doesn't act soon, nearly one-third of Medicare beneficiaries will face a 50 percent increase in their Part B premiums for 2016, while more than two-thirds will pay no premium hike at all. Most beneficiaries will pay the same monthly premium next year as they paid this year–$104.90. But others making the same income will pay $159.30. And some high-income retirees will pay as much as $509.80. Even worse, the big premium increases could encourage many seniors to take Social Security benefits earlier than they otherwise would—a policy that would only increase the burden on the federal retirement system. The premium hikes would also stick state Medicaid programs with an enormous unanticipated bill. What's going on here?

Forbes' recent article, "Untangling the Medicare Premium Mess -- And What It Means For You," says that the issue facing Medicare beneficiaries is largely the result of complex links between Social Security and Medicare. The Medicare laws require that program to bump up its premiums to cover increases in per-capita costs. Ok, sure. And if next year were a normal year, premiums for most beneficiaries would go up about 16 bucks—from $104.90 to $120.70. That's a manageable increase. Not that anyone wants to pay more, but most can handle this.

Except that 2016 will not be a normal year. Most retirees have their Medicare premiums deducted from their Social Security benefits, but because inflation was so low this year, there won't be a cost-of-living increase in 2016 for Social Security. And the law says that if Social Security benefits don't rise—you guessed it—neither can the Medicare premiums. That's at least not for most people who get Social Security benefits.

That means about 70% of Medicare beneficiaries won't see the premium hike. However, that leaves the entire burden of this year's Medicare cost increases on the remaining 30%. Those guys are going to be hit with 50% premium hikes.

This list of those who are unprotected is a bit curious. It includes high income seniors, new enrollees, those enrolled in Medicare but not getting a Social Security check, and the so-called "dual eligibles" (who receive Medicare and Medicaid benefits; their premiums are paid by state Medicaid programs).

For high-income people, those premium hikes are hefty: for a single making more than $214,000, Part B premiums are will increase from $335.70 to $509.80. For some of these folks, it'd be cheaper to buy insurance through Affordable Care Act exchanges than to buy Part B plus Part D drug coverage and a Medigap policy. But they also might be better off with Medicare long term. It's complicated.

Seniors with more typical incomes also have some tough choices to make. For years, we've heard how the government and many financial experts encouraged seniors to wait to take their Social Security benefits for as long as they could. However, the special circumstances in 2016 may give some the exact opposite message, like those age 67, single, making less than $85,000, and enrolled in Medicare but not yet taking Social Security. The rule is that you must pay a large increase if your premiums are not being deducted from your Social Security check. If you claim Social Security now and start having premiums deducted, you can save more than $500 in Medicare premiums in 2016, and you start getting Social Security benefits.

But it's a trade-off, because you may also receive less in lifetime Social Security benefits. You'll need to do some math and the answer will depend on how much money you make, your best guess about how long you will live, and whether you're married.

Contact John M. Lane Law, PLLC to discover the Simplified Solution to your estate planning needs. Everyone has an estate, no matter how large or small, complex or simple.  For more information about how we can help you, visit our website at www.JohnLaneLaw.com.

Reference: Forbes (October 9, 2015) "Untangling the Medicare Premium Mess -- And What It Means For You"

Advice for Long-Term Healthcare and Dementia Care

With its views of the Rincon Mountains and nine large, adobe-style homes, the Villas at Houghton looks more like an upscale gated neighborhood than a community of frail and cognitively impaired seniors. Each 6,100-square-foot home houses 10 people and two caregivers, all in private rooms with private bathrooms, a chef preparing daily meals and a menu of daily activities. The cost for staying in what owners from for-profit Tucson-based Innovative Senior Living call a “memory care neighborhood” starts at $52,750 per year. The Villas at Houghton is not the most expensive facility of its kind. In Tucson, high-level, long-term care for people with Alzheimer’s disease and other forms of dementia can run more than $100,000 per year. The costs are a surprise to many families who incorrectly assume that Medicare will cover the expense of out-of-home care. And while some low-income, disabled seniors will qualify to have their expenses covered by the Arizona Long Term Care System (ALTCS), many facilities, including the Villas at Houghton, don’t accept it.

The Arizona Daily Star’s article “Costs pile up fast for dementia care” points out several important items when it comes to long-term care.

Don’t count on Medicare. The median annual cost for a private room in a skilled nursing facility in Tucson last year was more than $90,896. Assisted living costs about $45,000. In a 2015 annual Cost of Care survey, results showed that Americans paid approximately $16,060 more per year in 2015 for a nursing home than they paid in 2010.

Remember that Medicare doesn’t pay for long-term care, including home care, aside from 100 days of skilled services or rehabilitative care. After that, it’s up to the family to figure out how to pay. The options include long-term care insurance, public assistance through Medicaid programs for people over 65, Veterans Aid, or private pay. On average, an American turning 65 today will incur $138,000 in future long-term services. This cost could be financed by setting aside $70,000 today.

A loved one with dementia will increase the costs for round-the-clock care and a secure place to live, with the disease lasting up to 20 years. Caregiver costs, including hospitalizations, skilled nursing facilities, home-health services, day-care services for adults and assisted living add up, and the cost is enormous. One way to ease the emotional cost is to create a plan and provide relief to your family.

When it comes to paying for care, many people incorrectly assume they have too much money to qualify for Medicaid. Talk with an elder law attorney and see whether you or your loved one qualifies because Medicaid can help pay for both in-home and out-of-home care. The individual must be medically eligible—cognitively impaired or unable to perform at least two activities of daily living on their own (like bathing and eating). Single applicants are not allowed to have resources of more than $2,000. Applicants who do have more than $2,000 should talk to an attorney about creating a burial fund, or buying a house or car, as these are all exempt.

Although the gross monthly income limit is $2,199 for an individual, sometime those with a higher income can set up a “Miller Trust” for the money above that limit. For married couples where only one partner is applying, the income limit is either $2,199 for the applicant, or an average of the two spouses, whichever is more favorable to the applicant.

It’s important to remember that Congress set a five-year look-back period on gifts. So someone who gives money and other assets to children and other family members in order to be eligible has to do this five years before they apply. An elder law attorney can help a single person with too many assets to qualify to spend down those resources on long-term care or on any legitimate expense that benefits either the applicant or the spouse, and then apply.

Long-Term Insurance. People whose incomes are too high to qualify can consider long-term insurance or self-pay. With long-term insurance, typically the buyer defines a monthly amount they’d like to get for a set number of years. For example, a couple could each choose a $2,000 benefit for five years, and they’d have access to a maximum $125,000. However, buyers may have to supplement with their own money.

The best time to buy long-term care insurance is when buyers are in their mid-50s to early 60s. If you wait, you might have a medical condition arise and fail the underwriting. For example, a policy might guarantee $5,000 per month for five years if the individual needs it. Expect the premiums to go up every five years, and note that they are not fixed like level term life. Some folks are surprised by big premium hikes and cancel the coverage. If you buy long-term care, read the policy carefully.

The good news is there are experts available to help you navigate these oftentimes difficult decisions. Contact John M. Lane Law, PLLC to discover the Simplified Solution to your estate planning needs. Everyone has an estate, no matter how large or small, complex or simple.  For more information about how we can help you, visit our website at www.JohnLaneLaw.com.

Reference: Arizona Daily Star (September 26, 2015) “Costs pile up fast for dementia care”

Common Senior Mistakes in Retirement Planning - Texas Estate Planning

While there is nothing that can guarantee that you will have sufficient money to cover all potential costs in retirement, there are certainly some common mistakes that you want to steer clear from to help protect your assets.

Physician’s Money Digest lists some of the most common mistakes that the authors have seen seniors make in a recent article titled “Top Mistakes Seniors Make”:

1.  Misinformation about Medicare.  Some seniors believe that once they qualify for Medicare, they are 100% covered without any gaps. Unfortunately, there may be issues, such as nursing homes and assisted living for long-term care. These are not covered under Medicare.

2.  Failing to consider mental incapacity. Many seniors don’t address how they want health care and property decisions handled in the event they are incapacitated. Remember, a will doesn’t take this scenario into account.

3.  Drawing from retirement accounts too soon. Withdrawing money from your retirement accounts too soon or too late can really affect your savings. Speak with an estate planning attorney about the retirement account rules to get the most from your assets.

4.  Mis-timing life insurance decisions. You should assess your life insurance needs and current premiums to determine what is appropriate in your circumstances.

5.  Relying on annuities. Whether an annuity is the right choice depends primarily on your specific financial situation. Conduct an in-depth assessment of the product and your overall financial plan with an estate planning attorney.

As you can see, there are many issues that need to be addressed when it comes to retirement planning. Do not go it alone. Get appropriate professional counsel.

Contact John M. Lane Law, PLLC to discover the Simplified Solution to your estate planning needs. Everyone has an estate, no matter how large or small, complex or simple.  For more information about how we can help you, visit our website at www.JohnLaneLaw.com.

Reference: Physician’s Money Digest (April 8, 2015) “Top Mistakes Seniors Make”