You Can Give Away More Tax Free in 2018

After staying the same for five years, the amount you can give away to any one individual in a particular year without reporting the gift will increase in 2018. 

The annual gift tax exclusion for 2018 is rising from $14,000 to $15,000. This means that any person who gives away $15,000 or less to any one individual (anyone other than their spouse) does not have to report the gift or gifts to the IRS.

If you give away more than $15,000, you do not necessary have to pay taxes, but you will have to file a gift tax return (Form 709). The IRS allows individuals to give away a total of $5.6 million and couples $11.2 million (in 2018) during their lifetimes before a gift tax is owed. This $5.6 million exclusion means that even if you have to file a gift tax return (Form 709) because you gave away more than $15,000 to any one person in a particular year, you will owe taxes only if you have given away more than a total of $5.6 million (or $11.2 million) in the past. As a result, the filing of a gift tax return is merely a formality for nearly everyone.

The gift tax also applies to property other than money, such as stock. If you give away property that is worth more than $15,000 you have to report that on your gift return.

Note that gifts to a spouse are usually not subject to any federal gift taxes as long as the spouse is a U.S. citizen. If your spouse is not a U.S. citizen, you can give only $152,000 without reporting the gift (in 2018). Anything over that amount has to be reported on the gift tax return. Also, you do not need to report tax deductible gifts made to charities on a gift tax return unless you retain some interest in the gifted property.

With the increase in the gift tax, the amount you can give to an ABLE account is also increasing to $15,000. ABLE accounts allow people with disabilities and their families to save up to $100,000 in accounts for disability related expenses without jeopardizing their eligibility for Medicaid, Supplemental Security Income (SSI), and other government benefits.

Three Reasons Why Giving Your House to Your Children Isn't the Best Way to Protect It From Medicaid

You may be afraid of losing your home if you have to enter a nursing home and apply for Medicaid. While this fear is well-founded, transferring the home to your children is usually not the best way to protect it.

Although you generally do not have to sell your home in order to qualify for Medicaid coverage of nursing home care, the state could file a claim against the house after you die. If you get help from Medicaid to pay for the nursing home, the state must attempt to recoup from your estate whatever benefits it paid for your care. This is called "estate recovery." If you want to protect your home from this recovery, you may be tempted to give it to your children. Here are three reasons not to:

1. Medicaid ineligibility. Transferring your house to your children (or someone else) may make you ineligible for Medicaid for a period of time. The state Medicaid agency looks at any transfers made within five years of the Medicaid application. If you made a transfer for less than market value within that time period, the state will impose a penalty period during which you will not be eligible for benefits. Depending on the house’s value, the period of Medicaid ineligibility could stretch on for years, and it would not start until the Medicaid applicant is almost completely out of money.

There are circumstances under which you can transfer a home without penalty, however, so consult a qualified elder law attorney before making any transfers. You may freely transfer your home to the following individuals without incurring a transfer penalty:

• Your spouse
• A child who is under age 21 or who is blind or disabled
• Into a trust for the sole benefit of a disabled individual under age 65 (even if the trust is for the benefit of the Medicaid applicant, under certain circumstances)
• A sibling who has lived in the home during the year preceding the applicant's institutionalization and who already holds an equity interest in the home
• A "caretaker child," who is defined as a child of the applicant who lived in the house for at least two years prior to the applicant's institutionalization and who during that period provided care that allowed the applicant to avoid a nursing home stay.

2. Loss of control. By transferring your house to your children, you will no longer own the house, which means you will not have control of it. Your children can do what they want with it. In addition, if your children are sued or get divorced, the house will be vulnerable to their creditors.

3. Adverse tax consequences. Inherited property receives a "step up" in basis when you die, which means the basis is the current value of the property. However, when you give property to a child, the tax basis for the property is the same price that you purchased the property for. If your child sells the house after you die, he or she would have to pay capital gains taxes on the difference between the tax basis and the selling price. The only way to avoid some or all of the tax is for the child to live in the house for at least two years before selling it. In that case, the child can exclude up to $250,000 ($500,000 for a couple) of capital gains from taxes.

Medicare Launches Hospice Compare Website

Patients looking for hospice care can now get help from Medicare’s website. The agency’s new Hospice Compare site allows patients to evaluate hospice providers according to several criteria. The site is a good start, but there is room for improvement, experts say.

Medicare's comprehensive hospice benefit covers any care that is reasonable and necessary for easing the course of a terminal illness. Medicare launched the hospice compare website to improve transparency and help families find the right hospice provider.

The website provides information on how hospices deal with treatment preferences, address a patient's beliefs and values, screen and assess for pain and shortness of breath, treat shortness of breath, and give a bowel regimen for patients treated with opioids. Patients can compare up to three hospices at a time.

Next year, the site plans to add more information, including allowing families to rate hospices as well as adding data on the number of staff visits a patient received in the final week before death.

Kaiser Health News reports that while the website is helpful to families looking for information about hospice care, experts believe it is of limited use right now. According to Dr. Joanne Lynn of the Altarum Institute, a nonprofit health systems research and consulting organization, patients looking for hospice care need different information, including the hospice staff's average caseload, the percentage of patients discharged alive, and the share of the hospice's resources devoted to at-home care versus nursing home care.

In addition to the uncertainty of the ratings, the website also has been experiencing a problem with its search function. When patients search for a provider by location, they may get agencies that do not serve their zip code. While the problem is being fixed, patients should call to confirm that hospice providers service their area.   

A robust hospice rating system is badly needed, according to a Kaiser Health Newsinvestigation. A review of 20,000 government inspection records found that hospice providers often missed visits and neglected patients who were dying at home. Families or caregivers have filed more than 3,200 complaints with state officials in the past five years.

Three Reasons Why Giving Your House to Your Child Isn't the Best Way to Protect It From Medi-Cal

Three Reasons Why Giving Your House to Your Children Isn't the Best Way to Protect It From Medi-Cal

You may be afraid of losing your home if you have to enter a nursing home and apply for Medi-Cal. While this fear is well-founded, transferring the home to your children is usually not the best way to protect it.

Although you generally do not have to sell your home in order to qualify for Medi-Cal coverage of nursing home care, the state could file a claim against the house after you die. If you get help from Medi-Cal to pay for the nursing home, the state must attempt to recoup from your estate whatever benefits it paid for your care. This is called "estate recovery." If you want to protect your home from this recovery, you may be tempted to give it to your children.

1. Medi-Cal ineligibility. Transferring your house to your children (or someone else) may make you ineligible for Medi-Cal for a period of time. The state Medi-Cal agency looks at any transfers made within five years of the Medi-Cal application. If you made a transfer for less than market value within that time period, the state will impose a penalty period during which you will not be eligible for benefits. Depending on the house’s value, the period of Medi-Cal ineligibility could stretch on for years, and it would not start until the Medi-Cal applicant is almost completely out of money.

There are circumstances under which you can transfer a home without penalty, however, so consult a qualified elder law attorney before making any transfers. You may freely transfer your home to the following individuals without incurring a transfer penalty:

Your spouse

A child who is under age 21 or who is blind or disabled

Into a trust for the sole benefit of a disabled individual under age 65 (even if the trust is for the benefit of the Medicaid applicant, under certain circumstances)

A sibling who has lived in the home during the year preceding the applicant's institutionalization and who already holds an equity interest in the home

A "caretaker child," who is defined as a child of the applicant who lived in the house for at least two years prior to the applicant's institutionalization and who during that period provided care that allowed the applicant to avoid a nursing home stay.

2. Loss of control. By transferring your house to your children, you will no longer own the house, which means you will not have control of it. Your children can do what they want with it. In addition, if your children are sued or get divorced, the house will be vulnerable to their creditors.

3. Adverse tax consequences. Inherited property receives a "step up" in basis when you die, which means the basis is the current value of the property. However, when you give property to a child, the tax basis for the property is the same price that you purchased the property for. If your child sells the house after you die, he or she would have to pay capital gains taxes on the difference between the tax basis and the selling price. The only way to avoid some or all of the tax is for the child to live in the house for at least two years before selling it. In that case, the child can exclude up to $250,000 ($500,000 for a couple) of capital gains from taxes.

There are other ways to protect a house from Medi-Cal estate recovery, including putting the home in a trust. To find out the best option in your circumstances, consult with your elder law attorney.

What To Do When a Loved One Passes Away

Whether your spouse has just passed away or you have lost your mom or dad, the emotional trauma of losing a loved one often comes with a bewildering array of financial and legal issues demanding attention. It can be difficult enough for family members to handle the emotional trauma of a death, let alone taking the steps necessary to get these matters in order.

If you are the executor or representative of the will, you first should secure the tangible personal property, meaning anything you can touch such as silverware, dishes, furniture or artwork. Then, take your time while bills need to be paid. They can wait a week or two without any real repercussions. It is more important that you and your family have time to grieve. 

When you are ready, you should meet with an attorney to review the steps necessary to administer the will. While the exact rules of estate planning differ from state to state, the key actions include:

• File the will and petition in probate court in order to be appointed executor.
• Collect the assets. This means that you need to find out about everything the deceased owned and file a list of inventory with the court.
• Pay the bills and taxes. If an estate tax return is due, it must be filed within nine months of the date of death.
• Distribute property to the heirs. Generally, executors do not pay out all of the estate assets until the period for creditors to make claims runs out which can be as long as a year.
• Finally, you must file an account with the court listing any income to the estate since the date of death and all expenses and estate distributions.

While some of these steps can be avoided through trusts or joint ownership arrangements, whoever is left in charge still has to pay all debts, file tax returns and distribute the property to the rightful heirs. 

New Yorker Article Highlights Abuses in the Guardianship System

Serious problems with the public guardianship system in the United States can lead to elder abuse, according to an in-depth article in The New Yorker titled “How the Elderly Lose their Rights.” Court-appointed guardians can take control of an elderly person’s finances and life and become wealthy while doing so. One expert interviewed describes the guardianship system as “a morass, a total mess.”

If an adult becomes incapable of making responsible decisions due to a mental disability, the court will appoint a substitute decision maker, often called a "guardian," but in some states called a "conservator" or other term. Guardianship is a legal relationship between a competent adult (the "guardian") and a person who because of incapacity is no longer able to take care of his or her own affairs (the "ward"). A public guardian is appointed by the court to serve wards when no family member or private guardian is available.

The New Yorker article, written by staff writer Rachel Aviv, focuses on a Nevada couple who came under the control of public guardian April Parks. As guardian for hundreds of wards, Ms. Parks, took over their lives, sold their belongings, and charged their estates hundreds of dollars an hour while doing so. Over her 12 years as a public guardian, Ms. Parks built relationships with hospitals and medical providers to refer patients to her and found doctors who were willing to declare patients incompetent. Families often found out too late that their loved one was under guardianship and beyond their legal control.

Ms. Parks was just one part of a system that fails to protect vulnerable elderly individuals the way it is meant to, Aviv suggests. The couple in the article lost their home and freedom and were moved around to various assisted living facilities and medicated. After the couple’s daughter notified the media, Ms. Parks was finally removed from the case. She was eventually investigated and indicted for perjury and theft related to her business dealings. Unfortunately, according to the article, other public guardians who are abusing the system are still working.

There are a growing number of stories of seniors who become confused and overwhelmed after losing control of their lives to a guardian they don't know. In response to such abuses, some states have begun making reforms. In March 2016, Florida’s governor signed a law creating an Office of Public and Professional Guardians that is required to create standard practices and rules for public guardians. Nevada has also enacted a number of reforms, including requiring that individuals subject to guardianship be represented by an attorney, that are set to go into effect in 2018. And in a rare display of bipartisanship, Congress recently passed and sent to the President a bill that empowers federal officials to investigate and prosecute unscrupulous guardians and conservators appointed by state courts.

While there isn't a foolproof way to prevent someone from preying on you or a loved one, there may be steps you can take to reduce the chances. A power of attorney allows a person you appoint (and trust) to act in place of you for financial purposes when and if you ever become incapacitated. Having a power of attorney in place may lessen the need for a guardian.

To find out what you can do to protect yourself and your loved ones, consult with your attorney. 

Use Your Will to Dictate How to Pay Your Debts

The main purpose of a will is to direct where your assets will go after you die, but it can also be used to instruct your heirs how to pay your debts. While generally heirs cannot inherit debt, debt can reduce what they receive. Spelling out how debt should be paid can help your heirs.

If someone dies with outstanding debt, the executor is responsible for making sure those debts are paid. This may require selling assets that you would like to leave to specific heirs. There are two types of debts you might leave behind:

• Secured debt is debt that is attached to a piece of property or an asset, such as a car loan or a mortgage.
• Unsecured debt is any debt that isn't backed by an underlying asset, such as credit card debt or medical bills.

When you leave an asset that has debt attached to it to your heirs, the debt stays on the property. Your heirs can either continue to pay on the debt or sell the property to pay off the debt. If you believe this would cause a burden for your heirs, you can leave them assets in your will specifically designated to pay off the debt.

With unsecured debt, although your heirs will not have to pay off the debt personally, the executor will have to pay the debt using estate assets. You can specify in your will which assets to use to pay these debts. For example, suppose you have a valuable collectible that you want one of your heirs to have. You can specify that the executor use assets in your bank account to pay any debts before selling the collectible. And if you want to leave liquid assets, like a bank account, CD, or stocks to an heir, you should designate in your will what you would like your executor to use instead to satisfy debts.

Not everyone needs to spell out how to pay debt in a will. If your debt is negligible or your entire estate is going to just one or two people, it may not be necessary.

Social Security Beneficiaries Will Receive a 2 Percent Increase in 2018

In 2018, Social Security recipients will get their largest cost of living increase in benefits since 2012, but the additional income will likely be largely eaten up by higher Medicare Part B premiums.

Cost of living increases are tied to the consumer price index, and an upturn in inflation rates and gas prices means recipients get a small boost in 2018, amounting to $27 a month for the typical retiree. The 2 percent increase is higher than last year’s .3 percent rise and the lack of any increase at all in 2016. The cost of living change also affects the maximum amount of earnings subject to the Social Security tax, which will grow from $127,200 to $128,700.

The increase in benefits will likely be consumed by higher Medicare premiums, however. Most elderly and disabled people have their Medicare Part B premiums deducted from their monthly Social Security checks. For these individuals, if Social Security benefits don't rise, Medicare premiums can't either. This “hold harmless” provision does not apply to about 30 percent of Medicare beneficiaries: those enrolled in Medicare but who are not yet receiving Social Security, new Medicare beneficiaries, seniors earning more than $85,000 a year, and "dual eligibles" who get both Medicare and Medicaid benefits. In the past few years, Medicare beneficiaries not subject to the hold harmless provision have been paying higher Medicare premiums while Medicare premiums for those in the hold harmless group remained more or less the same. Now that seniors will be getting an increase in Social Security payments, Medicare will likely hike premiums for the seniors in the hold harmless group. And that increase may eat up the entire raise, at least for some beneficiaries.

For 2018, the monthly federal Supplemental Security Income (SSI) payment standard will be $750 for an individual and $1,125 for a couple.

Nursing Home Costs Rise Sharply in 2017

The median cost of a private nursing home room in the United States has increased to $97,455 a year, up 5.5 percent from 2016, according to Genworth's 2017 Cost of Care survey, which the insurer conducts annually. Genworth reports that the median cost of a semi-private room in a nursing home is $85,775, up 4.44 percent from 2016. The rise in prices is much larger than the 1.24 percent and 2.27 percent gains, respectively, in 2016.

The price rise was slightly less for assisted living facilities, where the median rate rose 3.36 percent, to $3,750 a month. The national median rate for the services of a home health aide was $22 an hour, up from $20 in 2016, and the cost of adult day care, which provides support services in a protective setting during part of the day, rose from $68 to $70 a day.

Alaska continues to be the costliest state for nursing home care, with the median annual cost of a private nursing home room totaling $292,000. Oklahoma again was found to be the most affordable state, with a median annual cost of a private room of $63,510.

The 2017 survey was based on responses from more than 15,000 nursing homes, assisted living facilities, adult day health facilities and home care providers. The survey was conducted by phone during May and June of 2017.

As the survey indicates, nursing home care is growing ever more expensive. Contact your elder law attorney to learn how you can protect some or all of your family's assets.

How to Reverse Medicare Surcharges When Your Income Changes

What happens if you are a high-income Medicare beneficiary who is paying a surcharge on your premiums and then your income changes? If your circumstances change, you can reverse those surcharges.

Higher-income Medicare beneficiaries (individuals who earn more than $85,000) pay higher Part B and prescription drug benefit premiums than lower-income Medicare beneficiaries. The extra amount the beneficiary owes increases as the beneficiary's income increases. The Social Security Administration uses income reported two years ago to determine a beneficiary's premiums. So the income reported on a beneficiary's 2015 tax return is used to determine whether the beneficiary must pay a higher monthly premium in 2017.

A lot can happen in two years. If your income decreases significantly due to certain circumstances, you can request that the Social Security Administration recalculate your benefits. For example, if you earned $90,000 in 2015 but your income dropped to $50,000 in 2016, you can request an income review and your premium surcharges for 2017 could be eliminated. Income is calculated by taking a beneficiary's adjusted gross income and adding back in some normally excluded income, such as tax-exempt interest, U.S. savings bond interest used to pay tuition, and certain income from foreign sources.

You can request a review of your income if any of the following circumstances occurred:

• You married, divorced, or became widowed
• You or your spouse stopped working or reduced your work hours
• You or your spouse lost income-producing property because of a disaster or other event beyond your control
• You or your spouse experienced a scheduled cessation, termination, or reorganization of an employer's pension plan
• You or your spouse received a settlement from an employer or former employer because of the employer's closure, bankruptcy, or reorganization

If your income changes due to any of the above reasons, you can submit documentation verifying the change in income -- including tax documents, letter from employer, or death certificate -- to the Social Security Administration. If the change is approved, it will be retroactive to January of the year you made the request.

Florida Nursing Home Tragedy Causes Rethinking of Disaster Preparedness

The recent tragedy in which 12 Florida nursing home residents died when the facility lost power during Hurricane Irma is causing government officials to rethink disaster planning.

In response to the deaths, Florida Governor Rick Scott announced a new emergency rule, requiring nursing homes and assisted living facilities in the state to have generators capable of maintaining comfortable temperatures for four days after a loss of power. Fire marshals must inspect the generators within 15 days after installation. The rule goes into effect immediately and lasts 90 days, after which it needs to be renewed. Florida already required nursing homes to ensure power, food, water, staffing, and 72 hours of supplies. The governor hopes to make the emergency rule a permanent part of Florida law.

The incident is also shining light on a new federal rule that is scheduled to take effect in November. The rule, enacted in response to 215 people dying in hospitals and nursing homes in Louisiana following Hurricane Katrina, requires that nursing homes have an alternative source of energy to maintain temperatures. However, the rule does not specify that the nursing home must have a generator or the ability to power air conditioning. It also provides no funding to nursing homes to assist in purchasing the type of generator required to power an air conditioning unit.

Officials at the Hollywood, Florida, nursing home where the recent deaths occurred – which is across the street from a hospital that was fully functioning at the time -- is facing serious consequences. To start, the facility has lost its Medicaid funding and its license to operate has been suspended. In addition, the Hollywood police department has opened a criminal investigation into the deaths that could lead to manslaughter charges. Lawsuits by patients' families have already begun. The nursing home had a two-star rating (out of five) from the Centers for Medicare & Medicaid Services, based on the fact that the state had cited it for 11 health deficiencies in its most recent inspection.

If you have a loved one in a nursing home or assisted living facility, or you are trying to choose a facility, you may want to ask to see the institution's emergency management plan, especially if the area is a vulnerable one like Florida, according to The New York Times. You may also want to ask whether the plan includes a backup generator to power the air conditioning system. Many facilities do not even have air conditioning anywhere except common areas, however. No doubt, given recent events, you will not be alone in inquiring about emergency preparedness.

It remains to be seen what lessons can be learned from the Florida tragedy.  According to a Kaiser Health News investigation, nursing homes have been caught unprepared for far more mundane emergencies than hurricanes and rarely face serious consequences for their lapses.

Using a Prepaid Funeral Contract to Spend Down Assets for Medicaid

No one wants to think about his or her death, but a little preparation in the form of a prepaid funeral contract can be useful. In addition to helping your family after your death, a prepaid funeral contract can be a good way to spend down assets in order to qualify for Medicaid.

A prepaid or pre-need funeral contract allows you to purchase funeral goods and services before you die. The contract can be entered into with a funeral home or cemetery. Prepaid funeral contracts can include payments for: embalming and restoration, room for the funeral service, casket, vault or grave liner, cremation, transportation, permits, headstones, death certificates, and obituaries, among other things.

One benefit of a prepaid funeral contract is that you are paying now for a service that may increase in price—possibly saving your family money. You are also saving your family from having to make arrangements after you die, which can be difficult and time-consuming. And, if you are planning on applying for Medicaid, a prepaid funeral contract can be a way to spend down your assets.

Medicaid applicants must spend down their available assets until they reach the qualifying level (usually around $2,000, depending on the state). By purchasing a prepaid funeral contract, you can turn available assets into an exempt asset that won't affect your eligibility. In order for a prepaid funeral contract to be exempt from Medicaid asset rules, the contract must be irrevocable. That means you can't change it or cancel it once it is signed.

Before purchasing a contract, you should shop around and compare prices to make sure it is the right contract for you. Buyers need to be careful that they are buying from a reputable company and need to ask for a price list to make sure they are not overpaying. 

Take These Three Steps When Your Child Turns 18

If your child has reached the teenage years, you may already feel as though you are losing control of her life. This is legally true once your child reaches the age of 18 because then the state considers your child to be an adult with the legal right to govern his or her own life.

Up until your child reaches 18, you are absolutely entitled to access your child’s medical records and to make decisions regarding the course of his treatment. And, your child’s financial affairs are your financial affairs. This changes once your child reaches the age of 18 because your now-adult child is legally entitled to his privacy and you no longer have the same level of access to or authority over his financial, educational and medical information. As long as all is well, this can be fine. However, it’s important to plan for the unexpected and for your child to set up an estate plan that at least includes the following three crucial components:

1. Health Care Proxy with HIPAA Release

Under the Health Insurance Portability and Accountability Act, or HIPAA, once your child turns 18, the child's health records are now between the child and his or her health care provider. The HIPAA laws prevent you from even getting medical updates in the event your child is unable to communicate his or her wishes to have you involved. Without a HIPAA release, you may have many obstacles before receiving critically needed information, including whether your adult child has even been admitted to a particular medical facility.

Should your child suffer a medical crisis resulting in the child's inability to communicate for him or herself, doctors and other medical professionals may refuse to speak with you and allow you to make medical decisions for your child. You may be forced to hire an attorney to petition to have you appointed as your child’s legal guardian by a court. At this time of crisis, your primary concern is to ensure your child is taken care of and you do not need the additional burden of court proceedings and associated legal costs. A health care proxy with a HIPAA release would enable your child to designate you or another trusted person to make medical decisions in the event your child is unable to convey his or her wishes.

2. Durable Power of Attorney

Like medical information, your 18-year-old child’s finances are also private.  If your child becomes incapacitated, without a durable power of attorney you cannot access the child's bank accounts or credit cards to make sure bills are being paid. If you needed to access financial accounts in order to manage or resolve any problem, you may be forced to seek the court’s appointment as conservator of your child.

Absent a crisis, a power of attorney can also be helpful in issues that may arise when your child is away at college or traveling. For example, if your son is traveling and an issue comes up where he cannot access his accounts, a durable power of attorney would give you or another trusted person the authority to manage the issue. An alternative may be to encourage your child to consider a joint account with you.  However, this is rarely recommended because of the unintended consequences for taxes, financial aid applications, creditor issues, etc.

3. Will

Your child owns any funds given to him or her as a minor or that he or she may have earned. In the catastrophic event that your child predeceases you, these assets may have to be probated and will pass to your child’s heirs at law, which in most states would be the parents. If you have created an estate plan that reduces your estate for estate tax or asset protections purposes, the receipt of those assets could frustrate your estate planning goals. In addition, your child may wish to leave some tangible property and financial assets to other family members or to charity.

While a will may be less important then the health care proxy, HIPAA release or durable power of attorney, ensuring that your child has all three components of an estate plan can prevent you, as a parent, from having to go to court to obtain legal authority to make time-sensitive medical or financial decisions for your child.

If you have a child (or grandchild) who is approaching adulthood, talk to your elder law attorney about having the child execute these three crucial documents.

Don't Let Health Care Providers Use the Improvement Standard to Deny Medicare Coverage

Have you or a loved one been denied Medicare-covered services because you’re "not improving"? Many health care providers are still not aware that Medicare is required to cover skilled nursing and home care even if a patient is not showing improvement. If you are denied coverage based on this outdated standard, you have the right to appeal.

For decades Medicare, skilled nursing facilities, and visiting nurse associations applied the so-called "improvement" standard to determine whether residents were entitled to Medicare coverage of the care. The standard, which is not in Medicare law, only permitted coverage if the skilled treatment was deemed to contribute to improving the patient's condition, which can be difficult to achieve for many ill seniors.

Three years ago in the case of Jimmo v. Sebelius the Centers for Medicare & Medicaid Services (CMS) agreed to a settlement in which it acknowledged that there's no legal basis to the "improvement" standard and that both inpatient skilled nursing care and outpatient home care and therapy may be covered under Medicare as long as the treatment helps the patient maintain her current status or simply delays or slows her decline. In other words, as long as the patient benefits from the skilled care, which can include nursing care or physical, occupational, or speech therapy, then the patient is entitled to Medicare coverage.

Medicare will cover up to 100 days of care in a skilled nursing facility following an inpatient hospital stay of at least three days and will cover home-based care indefinitely if the patient is homebound.

Unfortunately, despite the Jimmo settlement, the word hasn't gotten out entirely to the hospitals, visiting nursing associations, skilled nursing facilities, and insurance intermediaries that actually apply the rules. As a result, the Jimmo plaintiffs and CMS have now agreed to a court-ordered corrective action plan, which includes the following statement:

The Centers for Medicare & Medicaid Services (CMS) reminds the Medicare community of the JimmoSettlement Agreement (January 2014), which clarified that the Medicare program covers skilled nursing care and skilled therapy services under Medicare’s skilled nursing facility, home health, and outpatient therapy benefits when a beneficiary needs skilled care in order to maintain function or to prevent or slow decline or deterioration (provided all other coverage criteria are met). Specifically, the Jimmo Settlement required manual revisions to restate a “maintenance coverage standard” for both skilled nursing and therapy services under these benefits: Skilled nursing services would be covered where such skilled nursing services are necessary to maintain the patient's current condition or prevent or slow further deterioration so long as the beneficiary requires skilled care for the services to be safely and effectively provided. Skilled therapy services are covered when an individualized assessment of the patient's clinical condition demonstrates that the specialized judgment, knowledge, and skills of a qualified therapist (“skilled care”) are necessary for the performance of a safe and effective maintenance program. Such a maintenance program to maintain the patient's current condition or to prevent or slow further deterioration is covered so long as the beneficiary requires skilled care for the safe and effective performance of the program. The Jimmo Settlement may reflect a change in practice for those providers, adjudicators, and contractors who may have erroneously believed that the Medicare program covers nursing and therapy services under these benefits only when a beneficiary is expected to improve. The Settlement is consistent with the Medicare program's regulations governing maintenance nursing and therapy in skilled nursing facilities, home health services, and outpatient therapy (physical, occupational, and speech) and nursing and therapy in inpatient rehabilitation hospitals for beneficiaries who need the level of care that such hospitals provide

“The CMS Corrective Statement is intended to make it absolutely clear that Medicare coverage can be available for skilled therapy and nursing that is needed to maintain an individual’s condition or slow deterioration,” says Judith Stein, Executive Director of the Center for Medicare Advocacy and a counsel for the plaintiffs. “We are hopeful this will truly advance access to Medicare and necessary care for people with long-term and debilitating conditions.”

While this doesn't change the rights Medicare patients have always had, it should make it somewhat easier to enforce them. If you or a loved one gets denied coverage because the patient is not "improving," then appeal.

Long-Term Care Scorecard Finds States Have Room for Improvement

A new report finds that states have made incremental improvements in providing long-term care, but need to make more improvements in order to meet the needs of the growing number of people who require long-term care services. According to the 2017 Long-Term Services and Supports State Scorecard, while long-term care remains unaffordable for middle class families, there has been some progress in other areas.

The scorecard, a collaboration between the AARP, The Commonwealth Fund, and The SCAN Foundation, measures states' long-term care system performance in five areas: affordability and access, choice of setting and provider, quality of life and quality of care, support for family caregivers, and effective transitions between care settings.

The 2017 scorecard found that states showed progress since the previous scorecard in 2014 in reducing inappropriate antipsychotic drug use for nursing home residents, helping family caregivers, reducing long-term nursing home stays, increasing the number of Medicaid recipients receiving care at home or in the community rather than in an institution, and reducing potentially burdensome hospitalizations for people who die in a nursing home. However, the scorecard concludes that overall improvements are not keeping up with the demand. For example, there are not enough home care workers to meet the needs of individuals with disabilities living in the community. In addition, while states have made improvements in providing home health care, progress is moving too slowly to keep up with growing needs.

According to the scorecard, the top five states for long-term care are Washington, Minnesota, Vermont, Oregon, and Alaska. The bottom five states are Tennessee, Mississippi, Alabama, Kentucky, and Indiana. Tennessee and New York made the most progress since the previous scorecard in 2014.

Owe Back Taxes? The IRS May Grant You Uncollectible Status

Sometimes seniors find themselves owing past-due federal taxes they cannot afford to pay.  Although notices from the IRS can be especially frightening, there are solutions. 

If the sum owed is less than $50,000, the IRS will accept monthly payments over five years. For example, if $6,000 is owed to the IRS, monthly payments of around $100 can be made. There are also laws in place that provide that persons unable to pay their taxes can be placed on Currently Not Collectible (CNC) status with the IRS and not have to pay their past-due income taxes. The IRS is generally very understanding and helpful towards seniors with lower incomes applying for currently not collectible status.

Seniors with especially low incomes can often obtain CNC status by simply phoning the IRS at the number on an IRS collection notice. You can ask the collector to file “53” on your case, which means filing IRS form 53 (only a collector or IRS official can do this). You will not need to file detailed financial paperwork. For example, a senior with a monthly income of $1,200 and rent of $600 obviously will have no extra income to pay any past-due taxes. 

However, you may be asked to complete a financial form that shows you do not have any surplus income after paying necessary monthly living expenses. This form, IRS 433-A, can be found here. 

Although it is rarely done, the IRS can garnish 15 percent of a senior’s Social Security for past-due income taxes. However, this garnishment will never happen without the senior being first notified.  The IRS will almost never garnish pensions and other retirement income. 

Tips on Applying for Uncollectible Status

Here are some guidelines and requirements for applying for CNC status:

• The financial information supplied must prove to the IRS that the individual does not have any surplus income after paying their necessary monthly living expenses and that they have no significant additional assets.
• Individuals may need to submit their bank statements along with this IRS financial statement and any other relevant financial documentation for review.
• Look carefully at this web page http://www.taxdebthelp.com/hardship/requirements-uncollectible. At the bottom of the page are links to budget standards the IRS uses in determining whether a person qualifies for uncollectible status.
• If you are going to apply by phone, carefully prepare a budget ahead of time that shows expenses within those budget standards that consume all your money so it is clear there is no extra money with which to pay taxes.
• If applying by phone, the IRS collector might try to get you to say that you can pay something when you can’t.  Review on the IRS website the suggested budget numbers and national standards for where you live. Do not underestimate your expenses, which many people do.  If you fit within the criteria, you qualify for CNC status.

Once taxpayers are placed on CNC status, they will maintain this status for at least a year.  In the case of retirees, the status will likely be indefinite since retirement income and Social Security are constant and most retirees will not be working in the future. If an individual’s account keeps its CNC status until after the statute of limitations on the debt runs out, usually around ten years, the IRS will be permanently prevented from collecting the debt.

What About State Income Taxes?

 Not all states have procedures in place to put persons on uncollectible status for past-due state taxes owed. Federal law protects Social Security, pension, disability and VA benefits from garnishment by states for taxes owed. Unfortunately, not all state taxing agencies will tell seniors that their income is protected from garnishment; instead, they continue collection efforts.

If a senior’s bank account is garnished by a state tax collector, twice the amount of monthly Social Security deposited into the bank account is automatically protected from garnishment, no matter the source of funds in the account at that time. Federal banking regulations require a bank to determine an account into which Social Security is deposited and disregard any garnishment, including for past-due state taxes owed. If there are excess funds from exempt sources in the account, a claim of exemption would need to be filed with the state before the money could be released.

Relief From Medicare's Part B Late-Enrollment Penalty Offered to Some

Medicare is offering relief from penalties for certain Medicare beneficiaries who enrolled in Medicare Part A and had coverage through the individual marketplace. For a short time, these individuals will be able to enroll in Medicare Part B without paying a penalty for late enrollment.

Individuals who do not enroll in Medicare Part B when they first become eligible pay a stiff penalty. For each year that they put off enrolling, their monthly premium increases by 10 percent -- permanently. Some people with marketplace plans – that is, plans purchased by individuals or families, not through employers -- did not enroll in Medicare Part B when they were first eligible. Purchasing a marketplace plan with financial assistance from the Affordable Care Act (aka Obamacare) can be cheaper than enrolling in Medicare Part B. However, Medicare recipients are not eligible for marketplace financial assistance plans. And because marketplace plans are not considered equivalent coverage to Medicare Part B, signing up late for Part B will result in a late enrollment penalty.

Although the Centers for Medicare and Medicaid Services (CMS) sent notice to individuals who had both marketplace plans and Medicare, it may have been too late. Therefore, CMS is allowing individuals who enrolled in Medicare Part A and had coverage through a marketplace plan to enroll in Medicare Part B without a penalty. It is also allowing individuals who dropped marketplace coverage and are paying a late enrollment penalty for Medicare Part B to reduce their penalty. To be eligible for the relief, the individual must:

• Have an initial Medicare enrollment period that began April 1, 2013 or later; or
• Have been notified of a retroactive premium-free Medicare Part A award on October 1, 2013 or later.

This offer is available for only a short time. To be eligible for the relief, individuals must request it by September 30, 2017. Individuals who are eligible should contact Social Security at 1-800-772-1213 or visit their local Social Security office and request to take advantage of the "equitable relief."

Don't Let Health Care Providers Use the Improvement Standard to Deny Medicare Coverage

Have you or a loved one been denied Medicare-covered services because you’re "not improving"? Many health care providers are still not aware that Medicare is required to cover skilled nursing and home care even if a patient is not showing improvement. If you are denied coverage based on this outdated standard, you have the right to appeal.

For decades Medicare, skilled nursing facilities, and visiting nurse associations applied the so-called "improvement" standard to determine whether residents were entitled to Medicare coverage of the care. The standard, which is not in Medicare law, only permitted coverage if the skilled treatment was deemed to contribute to improving the patient's condition, which can be difficult to achieve for many ill seniors.

Three years ago in the case of Jimmo v. Sebelius the Centers for Medicare & Medicaid Services (CMS) agreed to a settlement in which it acknowledged that there's no legal basis to the "improvement" standard and that both inpatient skilled nursing care and outpatient home care and therapy may be covered under Medicare as long as the treatment helps the patient maintain her current status or simply delays or slows her decline. In other words, as long as the patient benefits from the skilled care, which can include nursing care or physical, occupational, or speech therapy, then the patient is entitled to Medicare coverage.

Medicare will cover up to 100 days of care in a skilled nursing facility following an inpatient hospital stay of at least three days and will cover home-based care indefinitely if the patient is homebound.

Unfortunately, despite the Jimmo settlement, the word hasn't gotten out entirely to the hospitals, visiting nursing associations, skilled nursing facilities, and insurance intermediaries that actually apply the rules. As a result, the Jimmo plaintiffs and CMS have now agreed to a court-ordered corrective action plan, which includes the following statement:

The Centers for Medicare & Medicaid Services (CMS) reminds the Medicare community of the Jimmo Settlement Agreement (January 2014), which clarified that the Medicare program covers skilled nursing care and skilled therapy services under Medicare’s skilled nursing facility, home health, and outpatient therapy benefits when a beneficiary needs skilled care in order to maintain function or to prevent or slow decline or deterioration (provided all other coverage criteria are met).

Specifically, the Jimmo Settlement required manual revisions to restate a “maintenance coverage standard” for both skilled nursing and therapy services under these benefits:

Skilled nursing services would be covered where such skilled nursing services are necessary to maintain the patient's current condition or prevent or slow further deterioration so long as the beneficiary requires skilled care for the services to be safely and effectively provided.

Skilled therapy services are covered when an individualized assessment of the patient's clinical condition demonstrates that the specialized judgment, knowledge, and skills of a qualified therapist (“skilled care”) are necessary for the performance of a safe and effective maintenance program. Such a maintenance program to maintain the patient's current condition or to prevent or slow further deterioration is covered so long as the beneficiary requires skilled care for the safe and effective performance of the program.

The Jimmo Settlement may reflect a change in practice for those providers, adjudicators, and contractors who may have erroneously believed that the Medicare program covers nursing and therapy services under these benefits only when a beneficiary is expected to improve. The Settlement is consistent with the Medicare program's regulations governing maintenance nursing and therapy in skilled nursing facilities, home health services, and outpatient therapy (physical, occupational, and speech) and nursing and therapy in inpatient rehabilitation hospitals for beneficiaries who need the level of care that such hospitals provide

“The CMS Corrective Statement is intended to make it absolutely clear that Medicare coverage can be available for skilled therapy and nursing that is needed to maintain an individual’s condition or slow deterioration,” says Judith Stein, Executive Director of the Center for Medicare Advocacy and a counsel for the plaintiffs. “We are hopeful this will truly advance access to Medicare and necessary care for people with long-term and debilitating conditions.”

While this doesn't change the rights Medicare patients have always had, it should make it somewhat easier to enforce them. If you or a loved one gets denied coverage because the patient is not "improving," then appeal.