Retirement Account Changes for 2016 #retirementaccount
As the population continues to age and we see the next generation of seniors coming through our office there are differences in the profile of an aging senior today vs. what we saw 15 or 20 years ago. One change is in the amount of retirement assets that we see as part of the average client’s overall asset base. It is much higher than 20 years ago. Likewise, we are seeing fewer and fewer clients with substantial pensions. We are also seeing clients in their 60’s working full time to try to put away more for retirement knowing that they do not have pensions to rely on for income and Social Security by itself is not enough. In light of these changes, this week I’d like to take a look at some important changes to retirement account rules. The amount that may be contributed to an employee’s or self employed retirement account did not increase much because the cost of living index did not increase much. For 401(k), 403(b) and 457 plans the annual contribution limit is still $18,000 with those over 50 years of age able to contribute another $6000 annually as a catch up contribution. The total
Nursing Home Resident with Personal Injury Claim (Part 2) #Medicaid
Last week I was telling you about Mary who received a personal injury settlement while on Medicaid. Because she is over age 65 she can’t protect the money by placing it in a special needs trust #SpecialNeedsTrust for her own benefit. What other option does she have? What we examine first is whether any other Medicaid exception might apply. Medicaid regulations provide that a transfer to a disabled individual is exempt from the transfer penalty rules. The person must either be deemed disabled by the State of New Jersey or by federal guidelines under the Social Security disability program. I asked Melissa if Mary has a disabled child or grandchild. She does not. That left us with two alternatives. Mary can come off of Medicaid, spend down the proceeds and when her assets fall below $2000 she can reapply. Her other choice is to give all the money to the State and remain on Medicaid uninterrupted. Mary and her family were not happy with my answer. “You mean give it all to the State or the nursing home? Why did I pursue the case at all if I can’t keep the money”, she asked. I couldn’t answer the second question
Nursing Home Resident with Personal Injury Claim #Medicaid
A personal injury attorney called me recently for assistance. Melissa had settled a claim for damages resulting from the negligence of a nursing facility in which her client, Mary had been living. Mary’s net settlement after paying her legal fees and the costs of the lawsuit is approximately $100,000. Melissa told me it was a good result given the difficulties with the case. So why was she calling me? Because Mary was a Medicaid recipient. Her care at the nursing home is being covered by Medicaid and the receipt of the settlement money will cause her to exceed Medicaid’s $2000 asset limit and she will lose her benefits. Melissa knew this when she took the case. She just figured that Mary would be able to place the settlement monies in a special needs trust #SpecialNeedsTrust and keep her Medicaid benefits. Otherwise, most of the money would have to be spent on Mary’s nursing home care at the private pay rate of approximately $11,000 per month. After she settled the case, however, Melissa learned that she miscalculated in her plan. That’s because she missed one important limitation in the law that allows for the establishment of a special needs trust. Federal law says
529 Plans and Medicaid (Part 2) #Medicaid
Last week I was telling you about the problem 529 plans pose for Medicaid. Maria called me to handle her dad, George’s Medicaid application. George had set up 529 plans for Maria’s daughters. Are those accounts countable assets subject to Medicaid’s spend down rules? Last week I explained that the contributions and growth in these accounts are considered removed from George’s estate. That does not, however, answer the question for Medicaid. We have to look a bit deeper. While the value of a 529 plan is removed from the contributor’s estate for estate and gift tax purposes, the owner and custodian of the account still has the ability to revoke it and pull the assets back and therein lies the problem for Medicaid. If George is the owner and custodian then he has not made a transfer of assets out of his name for Medicaid purposes. The money in those 529 plans is countable and must be spent down. That means the money must be spent for George’s needs and not his granddaughters’ education. On the other hand, if George set up the accounts but named someone else – Maria for example – as the owner and custodian then
529 Plans and Medicaid #Medicaid
Maria asked me to handle the Medicaid application that needed to be filed on behalf of her father, George. We went over the assets he has left to spend down. That’s when Maria told me that George had set up 529 plans for his granddaughters. “Do we have to spend the money in these accounts on Dad’s care before qualifying for Medicaid”, she asked. 529 plans are college savings plans named after the section of the federal law that established them. These plans allow a parent, grandparent - or really anyone - to transfer money into an investment account which is established for the benefit of a child, to be used for that child’s college expenses. There are gift and estate tax advantages to these plans. I may make contributions of up to $14,000 per person per year to a 529 plan. The gift and tax laws will even allow me to accelerate my contributions so that I can contribute as much as $70,000 in one year for each beneficiary. This contribution will then be considered as having been made over a 5 year period so that no gift tax will be triggered. The advantage is that these contributions
What is Palliative Care? #palliativecare
Human life expectancy in the past 100 years has been substantially lengthened as a result of advances in medical science. However, as we know the quality of an extended life span isn’t always great. Many people live with serious illnesses such as COPD, heart disease, cancer, Parkinson’s Disease etc. for many years, often spending those years suffering extreme physical and emotional pain. While the medical community continues to focus on finding cures for these illnesses and conditions, an important part of administering medical care is easing a patient’s pain. This is what is known as palliative care and only recently – within the last 10 years or so – has palliative care become a new discipline of medicine. What is palliative care? It is specialized medical care for people with serious illnesses. It focuses on providing patients with relief from the symptoms and stress of a serious illness. The goal of palliative care is to improve the quality of life for both the patient and the patient’s family. Palliative care is provided by a specially trained team of doctors, nurses and other specialists such as social workers and chaplains, who work together with a patient’s other doctors to provide