Strategies for Bridging SSDI’s Medicare Waiting Period

Getting benefits through the Social Security Disability Insurance (SSDI) program is a great relief to a person under age 65 who is unable to earn a living because of a disability. Its monthly payments guarantee some degree of financial security.

An added benefit to SSDI is health insurance coverage through Medicare. But there is a precarious two-year gap between receiving approval for disability benefits and becoming eligible for Medicare’s insurance coverage. The practical impact of this waiting period is that numerous SSDI beneficiaries are temporarily both unemployed because of their disabilities and without health insurance. 

Lower-income SSDI applicants may qualify for Medi-Cal, especially if they live in one of the 39 states that have expanded Medi-Cal to include anyone whose income is below 138 percent of the Federal Poverty Level, no disability required.  But this still leaves a large number with higher incomes who can face the life-threatening consequences of going without health insurance during the two-year waiting period. If this is the case for you, what are your options?

First of all, it might be possible to at least narrow the two-year gap by harnessing any delays in getting your case heard by the Social Security Administration (SSA). If, for example, you were on a waiting list for six months before a hearing with an ALJ (administrative law judge, the SSA official who adjudicates SSDI cases), that period might be counted toward the two-year delay in receiving Medicare coverage. In this instance, that would leave an 18-month period to cover.

Another possibility is individual insurance purchased on the exchanges made possible by the Affordable Care Act.  Although coverage can be expensive depending on where you live, be sure to research your options. You may be eligible for government subsidies to help you pay the premiums for an individual health plan if your modified adjusted gross income (MAGI) ranges from 100 to 400 percent of the previous year’s federal poverty guidelines.

The subsidies are tax credits that are available to help middle-income and low-income people afford health insurance when they don’t have access to affordable employer-sponsored coverage or government-sponsored coverage (Medi-Cal or Medicare). Most eligible enrollees take those tax credits in advance, paid directly to their health insurance carrier each month to offset the amount that has to be paid in premiums.

It goes without saying that no one, least of all someone with disabilities, should be without health insurance coverage. With careful planning and research, you may manage to navigate this insurance gap at little or no cost. Be sure to consult with a special needs planner, who can advise you on your qualifications and the laws in your home state.

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Elise Lampert, Esq.

Law Office of Elise Lampert

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https://www.eliselampert.com

 

Annuities and Medi-Cal Planning

In some circumstances, immediate annuities can be ideal Medi-Cal planning tools for spouses of nursing home residents. Careful planning is needed to make sure an annuity will work for you or your spouse. 

An immediate annuity, in its simplest form, is a contract with an insurance company under which the consumer pays a certain amount of money to the company and the company sends the consumer a monthly check for the rest of his or her life.

In most states the purchase of an annuity is not considered to be a transfer for purposes of eligibility for Medi-Cal, but is instead the purchase of an investment. It transforms otherwise countable assets into a non-countable income stream. As long as the income is in the name of the community spouse, it's not a problem.

In order for the annuity purchase not to be considered a transfer, it must meet the following basic requirements:

1. It must be irrevocable--you cannot have the right to take the funds out of the annuity except through the monthly payments.

2. You must receive back at least what you paid into the annuity during your actuarial life expectancy. For instance, if you have an actuarial life expectancy of 10 years, and you pay $60,000 for an annuity, you must receive annuity payments of at least $500 a month ($500 x 12 x 10 = $60,000).

3. If you purchase an annuity with a term certain (see below), it must be shorter than your actuarial life expectancy.

4. The state must be named the remainder beneficiary up to the amount of Medi-Cal paid on the annuitant's behalf.

Example: Mrs. Jones, the community spouse, lives in a state where the most money she can keep for herself and still have Mr. Jones, who is in a nursing home, qualify for Medi-Cal (her maximum resource allowance) is $128,640 (in 2020). However, Mrs. Jones has $238,640 in countable assets. She can take the difference of $110,000 and purchase an annuity, making her husband in the nursing home immediately eligible for Medi-Cal. She would continue to receive the annuity check each month for the rest of her life.

In most instances, the purchase of an annuity should wait until the unhealthy spouse moves to a nursing home. In addition, if the annuity has a term certain -- a guaranteed number of payments no matter the lifespan of the annuitant -- the term must be shorter than the life expectancy of the healthy spouse. Further, if the community spouse does die with guaranteed payments remaining on the annuity, they must be payable to the state for reimbursement up to the amount of the Medi-Cal paid for either spouse.

All annuities must be disclosed by an applicant for Medi-Cal regardless of whether the annuity is irrevocable or treated as a countable asset. If an individual, spouse, or representative refuses to disclose sufficient information related to any annuity, the state must either deny or terminate coverage for long-term care services or else deny or terminate Medi-Cal eligibility.

Annuities are of less benefit for a single individual in a nursing home because he or she would have to pay the monthly income from the annuity to the nursing home. However, in some states immediate annuities may have a place for single individuals who are considering transferring assets. Income from an annuity can be used to help pay for long-term care during the Medi-Cal penalty period that results from the transfer. In such cases, the annuity is usually short-term, just long enough to cover the penalty period.

In short, immediate annuities are a very powerful tool in the right circumstances. They must also be distinguished from deferred annuities, which have no Medi-Cal planning purpose. The use of immediate annuities as a Medi-Cal planning tool is under attack in some states, so be sure to consult with your attorney before pursuing the strategy described above.

 

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Elise Lampert, Esq.

Law Office of Elise Lampert

9595 Wilshire Blvd. | Suite 900 | Beverly Hills , CA 90212

Phone: (818) 905-0601 / Email: elise@elampertlaw.com

https://www.eliselampert.com

Ability to Withdraw Money Early from Retirement Plan Expires at the End of the Year

 

Ability to Withdraw Money Early from Retirement Plan Without Penalty Expires at the End of the Year

If you are experiencing financial hardship due to the coronavirus pandemic, you may want to consider withdrawing money from your retirement account while you still can. The special exemption allowing early withdrawals without a penalty ends soon. 

Passed in March 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act allows individuals adversely affected by the pandemic to make hardship withdrawals of up to $100,000 from retirement plans this year without paying the 10 percent penalty that individuals under age 59 ½ are usually required to pay. This exemption is only for withdrawals made by December 30, 2020.

If you decide to withdraw money from your retirement account, you will still have to pay income taxes on the withdrawals, although the tax burden can be spread out over three years. If you repay some or all of the funds within three years, you can file amended tax returns to get back the taxes that you paid. 

To qualify for the exemption, you must meet one of the following criteria:

• You or a spouse or dependent have been diagnosed with COVID-19

• You or your spouse have suffered financial hardship due to the pandemic, such as a lost job, a job offer rescinded, reduced pay, business closed, or inability to work due to lack of childcare. 

This step should not be taken lightly. Withdrawing money now means your retirement funds will be reduced and limits the retirement plan’s ability to grow. But for some people, it may be the best option to pay bills and avoid running up high-interest credit card debt. 

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Elise Lampert, Esq.

Law Office of Elise Lampert

9595 Wilshire Blvd. | Suite 900 | Beverly Hills , CA 90212

Phone: (818) 905-0601 / Email: elise@elampertlaw.com

https://www.eliselampert.com

 

Will People with Disabilities Have Priority for a COVID-19 Vaccine?

The COVID-19 pandemic has been particularly devasting to people with disabilities. Recent studies indicate that they are three times as likely to die from the virus as the general population.

But as the pharmaceutical industry moves closer to obtaining approval for one or more COVID-19 vaccines, questions continue about whether the vaccines will be allocated in a way that does not discriminate against people with disabilities, and how affordable they will be.

Vaccines developed by Pfizer and Moderna were both more than 90 percent effective in large clinical trials.  Both companies are now gathering safety data necessary for emergency approval by the Food and Drug Administration. Numerous other vaccines are in various stages of development.

Even if a vaccine is approved, however, there will not be sufficient doses immediately to provide to every American. As a result, government agencies and health care providers will have to make difficult decisions about whom to prioritize when administering the vaccine.  

At the request of the Centers for Disease Control and Prevention, in September 2020 the National Academies of Science, Engineering and Medicine issued a preliminary framework for the distribution of a COVID-19 vaccine. The framework prioritizes essential and front-line health care workers, as well as people living in group homes and other congregate settings.

Echoing concerns earlier in the COVID-19 pandemic about ventilator rationing, disability advocates have pointed out the absence of any express mention of people with developmental disabilities, who they fear will receive lower priority based on outdated assumptions and stereotypes about their ability to survive COVID-19.

In a September 9 letter to the Office of Civil Rights in the Department of Health and Human Services, the Consortium for Citizens with Disabilities (CCD) implored the Department to ensure that the distribution of any COVID-19 vaccine complies with federal anti-discrimination laws.

“Disability status and age should not be used to deny or deprioritize people for a vaccine, such as categorically excluding people with certain disabilities or functional impairments or prioritizing people based on projections of long-term survivability,” the CCD wrote.

The National Council on Disability and the Autistic Self Advocacy Network also submitted comments to the National Academies, expressing similar fears about its framework.  

In addition to distribution concerns, there are questions about whether health insurers will provide vaccine coverage, and if it will be affordable.

As part of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) , Congress mandated in March 2020 that Medicare cover the full cost of any COVID-19 vaccine for Medicare beneficiaries. However, Medicare regulations currently only permit the federal government to cover the costs of vaccines approved through the standard approval process, as opposed to through an emergency use authorization (EUA), which appears to be how the Trump Administration anticipates approving vaccines in the next two months.

On October 28, the Centers for Medicare and Medicaid Services (CMS) released interim final regulations requiring Medicare to cover the full cost to patients of any COVID-19 vaccine, regardless of whether it is approved through an EUA. Coverage will also be free for Medicaid recipients, under the announced policy.

CMS also announced a partnership on October 16 with retail pharmacies CVS and Walgreens to provide vaccines at no cost to seniors and staff in long-term facilities

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Elise Lampert, Esq,

Law Office of Elise Lampert

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Phone: (818) 905-0601 / Email: elise@elampertlaw.com

https://www.eliselampert.com

 

What to Look for When Choosing a Medicare Advantage Plan

As Medicare premiums rise, a Medicare Advantage plan can seem like an attractive option. But if you are considering switching from Original Medicare to a Medicare Advantage plan, you need to know what to look for. 

Medicare Advantage plans are run by private insurers, unlike Original Medicare, which the federal government operates, although the medical providers are private. The government pays Medicare Advantage plans a fixed monthly fee to provide services to each Medicare beneficiary under their care. The plans often look attractive because they offer the same basic coverage as original Medicare plus some additional benefits and services that Original Medicare doesn't offer. 

To compare Advantage plans, go to the Medicare Plan Finder at Medicare.gov. When deciding whether a Medicare Advantage plan is right for you, the following are the main factors to consider: 

• Cost. Since Medicare Advantage plans are offered by private insurers, the cost of the plan varies depending on where you live. While Medicare Advantage plans usually have lower premiums than paying for Original Medicare plus a Medigap plan, they can have higher deductibles and co-pays in certain circumstances, so you need to take those into account when calculating the cost of each plan. Medicare Advantage plans do have a cap on out-of-pocket costs, while Original Medicare does not. Check the annual maximum out-of-pocket costs for the plan. If you have a high level of health costs, a low out-of-pocket maximum may be the best option. 

• Coverage. What coverage does the plan offer? Medicare Advantage plans must cover everything that Original Medicare covers, but some plans offer additional benefits, such as dental, hearing, and vision. Plans may require your doctor to get approval for certain procedures. If the plan administrators disagree with your physician that a procedure is medically necessary, the plan may refuse to pay for it.You will want to find out how the plan is about approving treatments, referring patients to specialists or allowing patients to remain in the hospital if they are not ready to leave. You may want to check with your doctor to find out their experience with the plan and whether the plan frequently overrules the doctor.

• Doctors. Original Medicare does not have any restrictions on which doctor you use, but Medicare Advantage plans are HMOs and PPOs, meaning that not every doctor accepts the insurance. With an HMO, if you visit a doctor outside of the network, you will likely have to pay out of pocket (except in an emergency). With a PPO, you can usually see any doctor you want, but you will pay less for an in-network doctor. You will want to check if your doctor and hospital are part of the plan’s network. The best way to do this is to call your doctor’s office to confirm. 

• Prescription drugs. Most Medicare Advantage plans include prescription drug coverage, so you should check to make sure the plan covers all the medications you take. You should also check if you need any special authorizations for any of your medications or if there any limits on the amount you can get. Other questions include whether your pharmacy is a preferred provider and whether you can get prescriptions by mail. 

• Quality of care. The Medicare Plan Finder includes a rating system that measures how well the plan manages health screenings and chronic conditions as well as how many customer complaints it receives, among other things. The ratings aren’t perfect, but they can give you an idea of plan’s quality. 

 

 

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Elise Lampert, Esq.

Law Office of Elise Lampert

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https://www.eliselampert.com

 

A Trust Protector Can Look Out for a Beneficiary's Interests

One of the most important decisions a special needs trust's donor (the person who supplies the funds for the trust) makes is the choice of a trustee for the trust. A trustee typically manages the day-to-day operations of the trust, often making distributions to the trust's beneficiary, investing the trust's assets, and paying the trust's bills. But how can the donor make sure that the trustee will properly manage the trust when the donor is no longer around to keep an eye on the trustee, especially if the trust's beneficiary is not capable of supervising his own trustee? In many cases, a trust protector can ensure that a beneficiary is protected from trustee mismanagement.

Once she assumes office, a trustee almost always serves in a "fiduciary capacity," meaning that she is in a position of trust and confidence and has a legal duty to properly manage the trust's assets while keeping in mind the best interests of the trust's beneficiary. A fiduciary is held to a high standard of conduct, and she owes the trust's beneficiary a strict duty of loyalty. However, in many cases involving special needs trusts, the beneficiary of the trust is unable to properly enforce this fiduciary duty because of his special needs. This is where a trust protector comes in.

A trust protector is a person chosen by the donor who is responsible for monitoring the trustee's actions. The trust protector's duty is to serve as an additional pair of eyes for the trust's beneficiary, making sure that the trustee is properly performing her job. The trust protector typically has access to the trust's accounts, and can compel a trustee to produce a summary of what she has done for the beneficiary. If a trust protector believes that the trustee is not properly performing her duties, he can usually fire the trustee. Depending on how the trust is drafted, the donor can even give the trust protector the power to name a new trustee if the donor has not done so himself in the trust document. (Most of the time, however, the trust protector must name an independent trustee as the new trustee, avoiding the scenario where the trust protector fires a trustee only to name himself as the new trustee.)

Trust protectors may be useful in a variety of situations. Take the case of Jennifer and her son, Adam. Jennifer is elderly and would like to make sure that her son, who has special needs, is cared for at home for as long a possible after she is gone. So Jennifer decides to establish a special needs trust that will hold her home for Adam's benefit, and she funds this trust with enough money to make sure that the property is well kept and that the bills are paid. However, Jennifer's closest relative, her niece Margaret, does not want to serve as trustee of Adam's trust because she does not want the added responsibility of managing a home. Jennifer decides to name John, a friend of hers who knows Adam and who runs a property management company, as the trustee instead. Although Jennifer trusts John, she decides to name Margaret as a trust protector to review his yearly accounts and make sure that he charges the proper amount for his services and is keeping the property in good shape.

Every special needs trust is different, and in many cases, especially when a donor is serving as trustee, a trust may not initially need a trust protector. The best way to decide if your special needs trust should include one is to speak with your qualified special needs planner.

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Elise Lampert, Esq.

Law Office of Elise Lampert

9595 Wilshire Blvd. | Suite 900 | Beverly Hills , CA 90212

Phone: (818) 905-0601 / Email: elise@elampertlaw.com

https://www.eliselampert.com

 

Government Agency Calls for End to Program Allowing Subminimum Wages for People with Disabilities

 

A federal agency has called on the government to end a program that explicitly permits employers to pay hundreds of thousands of people with disabilities less than $1 an hour, calling the practice “rife with abuse and difficult to administer.”

The federal minimum wage has stood at $7.25 since 2009, although many states have enacted their own higher minimum wages. Certain employers, however, may request certificates from the Department of Labor authorizing them to pay employees with disabilities less than the minimum wage, called a “subminimum" wage. The certificate is known as a 14(c) waiver, referring to the provision of the Fair Labor Standards Act of 1938 that authorizes such waivers.

The program’s original purpose was to provide job opportunities for people considered unemployable because of their disabilities. However, the program is now widely viewed as exploitative. (Reports documenting extensive subminimum wage abuse can be read here and here.)

In a massive new report released September 17, 2020, and titled “Subminimum Wages: Impacts on the Civil Rights of People with Disabilities,” the federal U.S. Commission on Civil Rights blasts both the Department of Labor and the Department of Justice for failing to adequately monitor the 14(c) program.

The Commission’s top recommendation is that the federal government phase out the 14(c) certificates altogether — following the lead of a few states that have done so — in favor of “alternative service models prioritizing competitive integrated employment.”

The Commission also finds that people employed by 14(c) certificate holders, who number more than 420,000 nationwide, are “not categorically different” from other people with disabilities. It notes that the Americans with Disabilities Act requires states to integrate their workforces, and thus 14(c) certificates may now violate the Act.   

“The Commission’s research shows that Section 14(c) is antiquated as it was enacted prior to our nation’s civil rights laws, and its operation in practice remains discriminatory by permitting payment of subminimum wages based on disability without sufficient controls to ensure that the program operates as designed . . . ” the report states. “Although Congress enacted the program with good intentions, the Department of Labor’s enforcement data as well as several key civil rights cases and testimony from experts show that with regard to wage disparities, the program is rife with abuse and difficult to administer without harming employees with disabilities.”

Disability rights advocates hailed the report.  “We are thrilled to see the U.S. Commission on Civil Rights calling for an end to the 14(c) waiver program,” Rebecca Cokley, director of the Center for American Progress’ Disability Justice Initiative, told The Hill. “This program has existed for over 80 years to transition disabled people to competitive fair wage jobs, with less than a 5% success rate.”  

The U.S. Commission on Civil Rights is an independent, bipartisan federal agency created by Congress in 1957 and tasked with issuing recommendations on federal civil rights policy.

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Elise Lampert, Esq.

Law Office of Elise Lampert 

9595 Wilshire Blvd. | Suite 900 | Beverly Hills , CA 90212

Phone: (818) 905-0601 / Email: elise@elampertlaw.com

https://www.eliselampert.com

 

Husbands Usually Don’t Consider Their Wives’ Future When Deciding When to Take Social Security Benefits

The amount of Social Security benefits a surviving spouse receives depends, in part, on when their deceased spouse began claiming benefits. However, husbands usually don’t take survivor’s benefits into account when claiming benefits, according to a recent study, meaning that many widows will needlessly experience a significant drop in income. 

Because women typically live longer than men and men are often the higher earners, most married women will be widowed and will have their income drop below what they need to maintain their accustomed standard of living. Spouses of a worker who has died are entitled to the worker's full retirement benefits once they reach their full retirement age. If the worker delayed retirement, the survivor's benefit will be higher. Husbands have the option of increasing their surviving spouse’s income by delaying Social Security benefits, but according to a study by the Center for Retirement Research at Boston College, most husbands do not take their wives’ future needs into consideration. 

The study looked at whether greater awareness of Social Security Survivor’s benefits would affect claiming decisions. The study found that husbands tend to take more immediate concerns into consideration, such as their health and whether they have another pension, rather than their wives’ Survivor’s Benefits. Giving the husbands information about how they could improve their wives’ financial well-being by claiming benefits later did not change their claiming decisions. 

The study concludes that in order to protect widows, the government should consider providing Survivor’s Benefits in a way that doesn’t tie the surviving spouse’s benefits to the decision of when to claim benefits. As things stands now, however, if you are the higher earner and are nearing retirement, you may want to take into account how your decision on when to claim benefits will affect your spouse if he or she survives you. 

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Elise Lampert, Esq,

Law Office of Elise Lampert

9595 Wilshire Blvd. | Suite 900 | Beverly Hills , CA 90212

Phone: (818) 905-0601 / Email: elise@elampertlaw.com

https://www.eliselampert.com

 

Receiving an Inheritance While on Medi-Cal

For most people, receiving an inheritance is something good, but for a nursing home resident on Medi-Cal, an inheritance may not be such welcome news. Medi-Cal has strict income and resource limits, so an inheritance can make a Medi-Cal recipient ineligible for Medi-Cal. Careful planning is necessary to make sure the inheritance doesn't have a negative impact.

An inheritance will be counted as income in the month it is received.  You or whoever is representing you will have to inform the state Medi-Cal agency, and Medi-Cal coverage will then end until you have again spent down your assets to the countable limit, which is $2,000 in most states. If you receive an inheritance and the amount puts you over the income limits for your state, you will not be eligible for Medi-Cal for at least that month. If you can properly spend down the money in the same month it is received, however, you will be eligible for Medi-Cal again the following month. The first thing to do is pay the nursing home for the current month (at the Medi-Cal rate).

If you have money left after paying the nursing home, your elder law attorney can advise you on the proper way to spend down the money. You may be able to give it to a spouse, a child with special needs, or the child's special needs trust. You may also pre-pay an irrevocable funeral contract or buy burial items for a close relative.  It could also be spent on travel, dining out, clothes, television, DVD player, and paying off any debts you may have. In most cases, you cannot make gifts with the money, but there are some exceptions to this rule and in some states good planning techniques that may permit some gifting. To be sure, you will need to consult with your elder law attorney.

If the inheritance is too large to spend in one month, your attorney may be able to use other techniques to protect a portion of it.  

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  Elise Lampert, Esq,

Law Office of Elise Lampert

9595 Wilshire Blvd. | Suite 900 | Beverly Hills , CA 90212

Phone: (818) 905-0601 / Email: elise@elampertlaw.com

https://www.eliselampert.co