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Partner Howard S. Krooks, Esq., CELA, presented "Medicaid Planning under the DRA" to the Elder Law Certification Review Course in Orlando on January 9, 2009. The course was presented by The Florida Bar Continuing Legal Education Committee and the Elder Law Section.
Partner Ellen S. Morris, Esq. presented "Medicaid & Legislative Update" at the Palm Beach County Bar Association's 11th Annual Elder Law Update in West Palm Beach on December 12, 2008. She also conducted an in-service session for the staff of a local home health and care management company in their Delray Beach offices. Ms. Morris explained the nuances of advance directives and professional liability as it relates to advance directives.
If you are interested in scheduling an in-service for your employees with either Ms. Morris or Mr. Krooks, please send an email to Info@ElderLawAssociates.com. We provide The Elder Law Update to our clients and our colleagues who make up a wide range of service providers for seniors and people with disabilities to facilitate the dissemination of helpful and accurate information. We thank you for letting us share our knowledge with you. We continue to welcome your comments and questions. You may send them to Info@ElderLawAssociates.com. |
Congress Waives Retirement Account Distribution Requirements for 2009
 Congress has passed and President Bush has signed legislation that will temporarily suspend the penalty for seniors who fail to take the required minimum distribution from IRA and employer retirement accounts in 2009.
But the penalty freeze, which is part of the Worker, Retiree, and Employer Recovery Act of 2008, does not affect required distributions for 2008, which are hitting seniors the hardest, and some contend that the suspension for 2009 will only benefit more affluent seniors.
Since the idea of retirement accounts is to encourage taxpayers to save for retirement, there is normally a penalty for failure to withdraw once the account owner reaches retirement age -- after age 70 1/2. Taxpayers generally must begin taking annual distributions from their retirement accounts by the April 1 occurring after they reach age 70 1/2 or pay a whopping 50 percent excise tax on the amount that should have been distributed but was not. The percentage that must be withdrawn is based on life expectancy and increases each year. For someone who is 70 1/2 years old, the required withdrawal would be 3.65 percent of the total retirement account balance.
But with the stock market plunge, about $2 trillion evaporated from workplace retirement plans between October 2007 and October 2008, according to the Center for Retirement Research at Boston College. To prevent seniors from being forced to sell stocks in a down market, Congress suspended the required minimum distribution rule for 2009.
If you turned age 70 1/2 before 2009, you would normally be required to take your 2009 distribution by December 31, 2009. If you will turn age 70 1/2 in 2009, you would normally be required to take your required distribution no later than April 1, 2010. In either case, under the Act you will not need to take this distribution. The new law also waives 2009 distributions for beneficiaries of inherited IRAs and employer retirement accounts. However, taxpayers still must take their 2010 distributions no later than December 31, 2010.
Importantly, Congress did not change the requirements for 2008 distributions, meaning that taxpayers must still take their 2008 distributions by December 31 if they haven't done so already. According to the Washington Post, the bill's sponsors didn't include a provision for this year because they expected the Treasury Department and the Internal Revenue Service to come up with a solution. But the agencies have decided not to change the rule requiring seniors to withdraw money from their retirement accounts by the end of the year.
These taxpayers will be hit with a double whammy because the required withdrawals are based on a percentage of what the IRA and 401(k) portfolios were worth at the end of 2007, when the Dow Jones Industrial Average was still well into five digits. If the account is heavily invested in stocks, it could have lost 30 percent to 40 percent in the past year.
"Seniors are getting hit both ways," said Angela Foreshaw, a spokeswoman for AARP Pennsylvania. "If their retirement accounts have fallen and they have to [make mandatory withdrawals] and pay taxes on a higher amount, it's putting them in a difficult financial bind."
Some have also pointed out that the people who will benefit most from a temporary freeze in the required minimum distribution rule are the more affluent taxpayers who don't need the money in their retirement accounts for daily living expenses. Those who are less well off and need the money to live on will make withdrawals whether or not they are required to do so -- and may take a big loss in the process.
For more on the bill, including its full text, click here.
For a background article in the Pittsburgh Post-Gazette click here.
For the Washington Post article on the Treasury and IRS decision not to waive the rule for 2008, click here. |
Updating Your Estate Plan When Your Finances Change
 In the recent economic downturn, many homes have lost considerable value and stock portfolios have plummeted. If this is the case for you, do you need to change your will? What if your income and assets have increased significantly? If your finances have changed markedly since you wrote your will, you should check your estate plan to see if you need to make any changes.
If your will or estate plan divides your estate into percentages for beneficiaries, then changes in value won't affect how your estate is distributed. However, if you include specific bequests in your will, a fall or rise in your estate could have consequences. For example, if your estate plan gives $50,000 to your favorite charity and the rest of your estate to your children, a reduction in the value of your estate could mean your children won't get as much as you intended.
A change in value of assets could also affect your estate plan if you intended to treat your children equally by giving them assets of equal value. For example, suppose your will gives your house worth $500,000 to your daughter and your stock worth $500,000 to your son. If the value of either the house or the stock portfolio increases or decreases significantly in value, your children will no longer receive equal gifts. It is also important to update your estate plan if the overall nature of your assets has changed. For example, if you sold the stock and bought real estate instead, this will affect the distributions to your children.
In addition, if your estate has significantly increased in value, it is important to reassess whether your estate will be subject to estate taxes. In 2008, estates worth more than $2 million are subject to federal estate taxes. In 2009, estates subject to federal taxes must be worth more than $3.5 million. After that, it isn't clear what the estate tax will be, so it is important to be prepared for any eventuality. |
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Book Review: Caring for Your Parents: The Complete Family Guide
 Hugh Delehanty and Elinor Ginzler. Caring for Your Parents: The Complete Family Guide. AARP and Sterling Publishing, New York, NY. 2008. 238 pages.
$10.36 from Amazon (click on book to order)
As parents age, their adult children are often forced to take on an active caregiving role, which creates a new dynamic between parent and child. Caring for Your Parents provides practical advice to help adult children navigate this complex emotional and bureaucratic terrain.
Written by two experts on long-term care and caregiving from the AARP, Caring for Your Parents is full of useful tips as well as personal, touching stories of innovative strategies real people have found to manage the challenges of caregiving. Among the topics covered are talking to parents about aging, dealing with siblings, being an advocate for a parent, coping with Medicare, finding suitable living arrangements, preparing for death, and mourning. The chapters are peppered with facts and key questions that can help children keep their parents safe from consumer scams, evaluate long-term care options, and choose a financial planner, among other matters.
Caring for Your Parents is a well-written, easy-to-read book that would be helpful for anyone who is, or soon will be, among the estimated 30 million Americans caring for an elderly person. |
Five-Star Rating System for Nursing Homes Arrives, for Better or for Worse
 The Centers for Medicare & Medicaid Services (CMS) has unveiled a one- to five-star rating system for nursing homes to help consumers evaluate a nursing home's quality when selecting a facility. The ratings appear on the agency's Nursing Home Compare Web site.
A five-star designation means the facility ranks "much above average," four-star indicates "above average," three means "about average," two is a "below average" ranking, with a one indicating that a facility ranks "much below average." The rankings, which will be updated monthly, are based on a nursing home's performance in three areas: quality measures, nurse staffing levels and health inspection reports.
In this first round of quality ratings about 12 percent of the nation's nursing homes received a full five-star rating while 22 percent scored at the low end with one star. The remaining 66 percent of facilities were distributed fairly evenly among the two-, three- and four-star rankings. The ratings indicate that nonprofit nursing homes deliver a higher quality of care than for-profit facilities, according to an analysis by USA Today.
When the rating system was announced earlier this year, Toby Edelman, senior policy attorney with the Center for Medicare Advocacy, said that two of three criteria CMS uses for the ratings -- staffing data and quality measures -- are "self-reported by nursing facilities and are inaccurate." Edelman said, "Relying on nursing homes to describe accurately how well they are doing . . . just doesn't make sense."
The National Citizens' Coalition for Nursing Home Reform issued a statement saying it commends CMS for providing a new tool for long-term care consumers but urging consumers to "not oversimplify nursing home selection."
"In reviewing the Five-Star rating for a particular nursing home, consumers should compare the rating with their own experience during a personal visit to the home," the Coalition warned. "For example, staffing data that is used for the rating system is based on the two weeks prior to the nursing home's annual regulatory survey, an insufficient period of time to represent the usual staffing pattern of the home. Consumers should visit the home and review staffing data that is required to be posted for every shift, every day."
For its part, the nursing home industry is not pleased with the rating system. In an opinion piece in USA Today, Bruce Yarwood, president of the American Health Care Association, a long-term care industry trade group, called the new rating scheme "a complex and inaccurate system that fails to provide the consumer with an appropriate tool to measure quality of care in our nation's nursing homes."
For a CMS press release on the new rating system, click here.
For a Washington Post article on the rating system, click here.
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Long-Term Care Insurer Dumps 140,000 Policies on State's Doorstep
 Conseco Inc., a major long-term care insurer, has transferred more than 140,000 of its policies to an independent trust set up by Pennsylvania, putting the policyholders at risk.
Conseco moved its Senior Health Insurance Co. long-term-care policies, which were underpriced, to a new state-supervised nonprofit trust, Senior Health Insurance Co. of Pennsylvania. The trust will pay claims from a pool of funds, including $175 million in capital, transferred to it by Conseco, the Wall Street Journal reports.
But the trust has no access to additional capital and may need to raise rates and reduce benefits. If the trust were to become insolvent, the Pennsylvania state guaranty association would pay claims, but only up to its own limits.
Although Conseco is headquartered in Carmel, Indiana, its Senior Health unit was based in Pennsylvania, making it subject to that state's regulations. Senior Health stopped selling new policies in 2003, but holders of existing policies are spread out around the U.S.
To read the Wall Street Journal article, click here. |
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Elder Law Associates PA is a boutique elder law firm that practices exclusively in Medicaid and long term care planning including long term care insurance, Medicaid applications, home and community-based Medicaid waiver services, diversion program benefits, nursing home benefits, spousal refusal applications, and Medicaid fair hearings and appeals; nursing home and assisted living facility residents' rights litigation; asset preservation planning with a special focus on planning in light of the Deficit Reduction Act of 2005, including personal service agreements, the purchase of life estates, income producing real estate and spenddown planning; disability planning, including special needs trusts and guardianship; estate planning, including wills and trusts and advance directives; and probate, which encompasses estate and trust administration as well as litigation.
We assist clients in planning for the possibility of disability, incapacity, home health care, assisted living and/or nursing home placement. Our firm enables clients to avoid impoverishment caused by the escalating cost of long term care, to maintain their right to make health care decisions and to avoid unnecessary medical treatment.
We hope you have enjoyed The Elder Law Update. If you have questions about something you read, elder law matters or issues concerning persons with disabilities, we would be delighted to hear from you. We serve as an elder law resource to many professionals and organizations and want to become your elder law resource as well. You can reach us at Info@ElderLawAssociates.com.
Warm regards,
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Ellen S. Morris, Esq. & Howard S. Krooks, Esq., CELA
Elder Law Associates PA
phone: (561) 750-3850 / (800) 353-3752
fax: (561) 750-4069
This publication is intended for general information purposes only. It is not intended to constitute individual legal advice to any specific client. |
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