SECURE Act 2.0
At the end of 2019 Congress passed the SECURE Act which contained a number of changes to retirement accounts that I detailed in several blog posts in 2020 and then again in 2021 and 2022 as follow up regulations addressed some unanswered questions. Congress continued to tinker with IRAs and retirement plan rules with SECURE Act 2.0 which was passed by Congress as part of a $1.7 trillion spending package last week. While the new law contains incentives designed to encourage more employers to offer 401ks and other tax deferred plans to its employees and to encourage more employees to participate in such plans, it also contains changes that impact the rules with regard to withdrawing funds from retirement accounts. SECURE Act 1.0 raised the required minimum distribution age (RMD) from 70.5 to 72. That is the age by which an account owner must start withdrawing funds from his/her retirement account. SECURE Act 2.0 increases the age further. Starting in 2023 account owners must start taking RMDs when they turn 73. In 2033 the age goes up again to 75. The new law also allows, beginning in 2024, the withdrawal of up to $1000 from certain retirement plans for emergency expenses while waiving
Unexpected Medicaid Estate Recovery Hiccup (Part 3)
In this third post of three I finish telling you about the estate recovery problem we encountered with one of our clients. As I explained last week, when the client died and we asked the State what it was seeking to recover, what we got back was an amount triple what we expected. When I examined the State's printout it was immediately clear why. Medicaid was reimbursing the facility at the ventilator patient rate which is approximately triple the private pay rate for nursing residents who are not on a ventilator. My client, however, had never been on a ventilator. Clearly there had been a mistake in communication between the State and the facility. Getting the answers and more importantly getting it straightened out would take time. We had to get it corrected because as I related to you last week, the proceeds from the sale of my client's house had been placed in a special needs trust (SNT). Now that my client died, the State needed to be paid back all the benefits it paid out, or at least what was left in the SNT, if not enough to cover the full amount. If
Unexpected Medicaid Estate Recovery Hiccup (Part 2)
Last week I started to tell you about the Medicaid estate recovery process in which the State attempts to recover from the estates of deceased Medicaid recipients, benefits it paid out. The process is usually pretty routine. The State runs a printout, which shows the dates and amounts it paid. When a Medicaid recipient is in a facility, the cost charged by the facility is at a reduced Medicaid rate. Additionally, the Medicaid beneficiary must apply most of his or her income to the cost, so the State rarely pays the full amount of that rate. In order to be Medicaid eligible, an applicant must have less than $2000 in assets to his or her name so you would think that the State's effort to recover money is a fruitless effort. There are, however, many ins and outs to the Medicaid regulations. In our particular case, because our client was under age 65, we were able to place his home into a special needs trust without spending it down towards care at the much higher private pay rate. This strategy allowed him to qualify for Medicaid's reduced rate. After death some of the proceeds from
Unexpected Medicaid Estate Recovery Hiccup – Part 1
Medicaid's estate recovery law requires state Medicaid offices to attempt to recover paid benefits from the estates of Medicaid recipients after they die. New Jersey takes an expanded definition of estate, which includes probate assets (those passing by way of a will or otherwise thru the estate administration process) and non-probate assets such as those held in certain trusts. A Medicaid applicant must have less than $2000 in assets to his/her name to qualify for and maintain Medicaid eligibility, so you might think that there shouldn't be much to attempt to recover. You'd be wrong. The Medicaid laws, rules and regulations are complicated and there are many exceptions under which assets that are subject to estate recovery do not prevent a person, while alive, from qualifying for Medicaid. At the same time, once the estate recovery process is reached there are no real disputes as to what the State should be looking to recover. For the first time in our office, however, we discovered that a mistake did happen when we got to the estate recovery process. Next week I'll share more.
2023 VA Aid and Attendance Numbers
In this week’s post I will review the updated numbers for 2023 for the VA program that provides a benefit to wartime veterans and their spouses. Known as the VA Aid and Attendance program, this benefit provides a special pension to eligible applicants who need long term care. The maximum pension amount is tied to the same cost of living adjustment as Social Security, which for 2023 is 8.7%. For a single veteran with no dependents the maximum pension one can receive goes up to $2229 per month. For a married veteran the maximum for 2022 will be $2642. For a widowed spouse who needs care the 2022 max will be $1432 per month. The Aid and Attendance program is a needs based benefit. This means that to be eligible one must meet a financial test. Different than Medicaid, the VA uses a net worth test. It calculates the applicant’s (in the case of a married couple both spouse’s) annual income and adds that to the countable assets. This is known as the net worth. For 2022 the net worth must be no more than $150,538 to qualify for this benefit. Existing VA A&A recipients should have received a letter from the
2023 Medicaid Numbers
Last month in this blog I updated you on some of the new Social Security and Medicare numbers for 2023. The recently announced cost of living adjustment (COLA) of 8.7% has resulted in another big jump in benefits for the second year. Many other federal programs are tied to the Social Security COLA. These include Medicaid and the VA Aid and Attendance programs. This week we will review the 2023 Medicaid numbers. Medicaid's programs that cover long term care have a strict income cap or limit. For 2023 that number is $2742 per month. Anyone with more than $2742 per month of gross income (before taxes, Medicare and health premiums are deducted) must use a Qualified Income Trust in order to qualify for Medicaid. Medicaid recipients must also have less than $2000 of countable assets. A home is an exempt asset up to a certain limit as long as the applicant is living in it. In 2023 the limit is $1,033,000 of equity. Anything above that amount is countable. For a married couple where at least one of the spouses is living in the home there remains no limit. In other words,