How Medicare B Can Help Defray Medical Costs

Estate Planning Advice
for Every Stage of Life.

How Medicare B Can Help Defray Medical Costs

If you’re 65 years of age or older, and are a U.S. citizen or a legal permanent resident who has been here for five consecutive years, you are eligible to enroll in Medicare Part B insurance. This is true even if you are not eligible for Part A hospital insurance.

Part B medical insurance covers doctor bills for treatment in or out of the hospital, as well as the costs of medical equipment, tests and services provided by clinics and laboratories.

You have to pay for other medical expenses, such as routine physical examinations, medications, glasses, hearing aids and dentures.

Some of the items Medicare Part B insurance pays for include:

      • Doctor services, including surgery, provided at a hospital, a doctor’s office or your home.
      • Mammograms, pelvic exams, bone density tests and PAP smears for women.
      • Prostate Specific Antigen (PSA) tests for men.
      • Flu shots.
      • Colorectal cancer screenings such as colonoscopies and flexible sigmoidoscopies.
      • Medical services provided by nurses, surgical assistants or laboratory or X-ray technicians.
      • Outpatient hospital treatment, such as emergency room or clinic charges, X-rays injections and lab work.
      • Home health care, including part-time skilled nursing care, physical therapy, occupational therapy, home health aide services and durable medical equipment needed at home during an illness.
      • An ambulance, if required for a trip to or from a hospital or skilled nursing facility.
      • Medical equipment and supplies.
      • Diabetes service and supplies.
      • Glaucoma screening for high risk individuals.
      • Emergency care.
      • Prosthetic devices (including prosthetic breast after a mastectomy).

MEDICARE APPEALS

You may be able to successfully appeal cases when Medicare denies coverage for procedures that your doctor deems “medically necessary.

Your chances of winning may be good. According to the Medicare Rights Center, 80% of Medicare Part A appeals and 92% of Part B appeals turn out in favor of the person appealing.

What it Costs

While Part A Medicare coverage is free for many people, Part B coverage costs $134.00 ma month in 2018 (and 2017) when an individual has an annual income of $85,000 or less ($170,000 or less for married couples filing joint tax returns).

People with higher incomes pay higher premiums. When Medicare B does cover an item, it generally pays 80% of the amount it approves (after a $183 deductible in 2018 (and 2017) and you pay the remaining 20%. Part B insurance pays 100% of approved charges for home health care, clinical laboratory services and flu and pneumonia vaccines.

For a complete list of services covered by Medicare Part B, or more information on what you pay and what Medicare pays, click here to review the publications on the Medicare website. 

PERKINS & ZAYED, P.C.
1745 South Naperville Road, Suite 100
Wheaton, IL 60189
Phone: 630-665-2300 | Toll Free: 877-TRUST-50
Fax: 630-665-4343
Email: admin@trust-lawgroup.com
The information contained on this website is for informational and educational purposes only and is not legal, tax or financial advice. Always consult a qualified licensed attorney and/or appropriate professional to provide advice for your individual needs and circumstances. Use of this website does not create or constitute an attorney-client relationship. This website may include advertising material for Perkins & Zayed, P.C., The Estate and Trust Law Group. 

Appeal Questionable Social Security Administration Decisions

Estate Planning Advice
for Every Stage of Life.

Appeal Questionable Social Security Administration Decisions

Are you interested in appealing a decision made by the Social Security Administration (SSA)? You have the right, but certain steps must be followed.

Is it worth filing an appeal? Definitely, because approximately half of appeals of Social Security disability benefit denials are successful.

You must make an appeal request in writing within 60 days from the date you receive a letter from the agency. (The SSA assumes you receive the letter five days after the date listed on it, unless you can prove you received it later.)

There are four levels of appeal:

Level 1: Reconsideration

A reconsideration is a complete review of your claim by someone who didn’t take part in the first decision. The SSA looks at all the evidence submitted when the original decision was made, plus any new evidence you may have.

Most reconsiderations involve a review of your files without the need for you to be present. But when you appeal a decision that you are no longer eligible for disability benefits because your condition has improved, you have a choice of a file review or meeting with a Social Security representative to discuss your case. You can meet with a disability hearing officer and explain why you believe you still have a disability.

Level 2: Hearing

If you disagree with the reconsideration decision, you can ask for a hearing.These hearings are conducted by an administrative law judge who had no part in the first decision or the reconsideration of your case. The hearing is usually held within 75 miles of your home. The administrative law judge will notify you of the time and place of the hearing.

You and your representative, if you have one, may come to the hearing and explain your case in person. You may look at the information in your file and give new information.The administrative law judge will question you and any witnesses brought to the hearing. You or your representative also may question the witnesses.

It is usually to your advantage to attend the hearing. If you don’t wish to do so, you must tell the SSA in writing that you don’t want to attend. Unless the administrative law judge believes your presence is needed to decide the case, he or she will make a decision based on all the information in your case, including any new information given.

After the hearing, the SSA sends a letter and a copy of the administrative law judge’s decision.

Level 3: Social Security’s Appeals Council Review

If you disagree with the hearing decision, you can ask for a review by Social Security’s Appeals Council.This Council looks at all requests for review, but it can deny a request if it believes the hearing decision was correct. If the Appeals Council decides to review your case, it can either decide your case itself or return it to an administrative law judge for further review. You will receive a copy of the Appeals Council’s decision or order sending it back to an administrative law judge.

Level 4: Lawsuit

Finally, you may file a lawsuit in a federal district court if you disagree with the Appeals Council’s decision or if the Appeals Council decides not to review your case.

You can appoint your attorney, elder care adviser, or other professional to represent you in Social Security appeals.

Request Continued Benefits

In some cases, you can ask the SSA to continue paying benefits while the agency decides on the appeal, including when:

      • You are appealing a decision that you are no longer eligible for Social Security disability benefits because your condition has improved.
      • You are appealing our decision that you are no longer eligible for SSI payments or that your SSI payment should be reduced.

If you want benefits to continue, you must inform the Social Security Administration within 10 days of the date you receive the decision letter. If your appeal is turned down, you may have to pay back any money you weren’t eligible to receive.

PERKINS & ZAYED, P.C.
1745 South Naperville Road, Suite 100
Wheaton, IL 60189
Phone: 630-665-2300 | Toll Free: 877-TRUST-50
Fax: 630-665-4343
Email: admin@trust-lawgroup.com
The information contained on this website is for informational and educational purposes only and is not legal, tax or financial advice. Always consult a qualified licensed attorney and/or appropriate professional to provide advice for your individual needs and circumstances. Use of this website does not create or constitute an attorney-client relationship. This website may include advertising material for Perkins & Zayed, P.C., The Estate and Trust Law Group. 

How to Protect Assets When Your Spouse Receives Medicaid

Estate Planning Advice
for Every Stage of Life.

How to Protect Assets When Your Spouse Receives Medicaid

Many couples, in their golden years, find themselves wondering: What if one or both of them is admitted into a nursing home and needs Medicaid? After saving throughout their lives, they are fearful that if one of them enters a nursing home, they will have to dissipate their life savings to pay for the cost of care before they can become eligible for Medicaid.

Moreover, some couples with wills drafted in the past may not realize that their wills could harm them if they did not consider Medicaid issues when they executed them.

Sometimes, couples attempt to make an estate plan leaving all assets to each other upon the death of the other spouse. These are sometimes called “sweetheart” wills. This may seem appropriate and easy to do at the time, but if the surviving spouse is on the verge of entering a nursing home and then inherits a large amount of money from the deceased spouse, the surviving spouse may not be eligible for Medicaid. Such an estate plan could result in a difficult situation for the surviving spouse.

One estate planning technique that a couple could consider is having terms set forth in their wills that set forth a supplemental or special needs trust. With this strategy, instead of leaving all the assets outright to the surviving spouse, the assets are distributed to the testamentary special needs trust. This way, at the death of one spouse, all assets would pass to the special needs trust, helping to ensure that the surviving spouse would be eligible for, or could keep, Medicaid benefits, and the inherited assets would be available to supplement his or her care.

Other Considerations When Contemplating Medicaid

Even when executing wills with trust provisions, there are other factors that a couple must consider in their estate plan. For example:

1. The Medicaid Transfer Penalty

If a couple finds that they are in a situation where they have assets greater than what is allowed under Medicaid, they may contemplate transferring assets to be eligible for Medicaid. However, with the transfer of assets to third parties, such as children, a Medicaid applicant might be subject to a penalty period during which the person would be ineligible for coverage if he or she transferred assets for “less than fair market value” within the five years prior to applying for aid.

The state divides the value of all gifts made within the five years leading up to the Medicaid application by the average monthly cost of nursing home care in order to determine the penalty period. For example, let’s say the average monthly cost of nursing home care is $5,000. Thus, an individual who transferred $60,000 within the five-year period would be subject to 12 months of ineligibility running from the date of the Medicaid application.

2. Estate Recovery

Federal law requires states to seek recovery of Medicaid benefits from the estate of a deceased Medicaid recipient. An applicant’s home, vehicle, and several other items are treated as exempt assets and not counted under the asset test when qualifying for Medicaid. However, while these assets are exempt for qualification purposes, they are subject to Medicaid’s right to reimburse itself for benefits paid out to the Medicaid recipient after the recipient has died.

There are several exceptions to this rule, very few of which are common knowledge. For example, assets transferred to a disabled child either outright or in a special needs trust avoid treatment as a transfer for Medicaid purposes, and also avoid estate recovery.

3. Transferring Assets to Joint Ownership

Adding a non-spouse as a joint owner on a bank account or other property will likely be considered a gratuitous transfer for Medicaid purposes. If the transaction occurred within the five years leading up to the filing of a Medicaid application, a transfer penalty will likely be imposed. There may be arguments against the imposition of the penalty, but other estate planning techniques may be more appropriate. If there is just the need to have a joint bank account for convenience only, it may be better to have a durable power of attorney. Alternatively, an option is to add the loved one’s name to the account as an authorized signature provider only, with no ownership rights.

4. Protecting Your Assets with the Use of Trusts

In addition to the testamentary trusts previously discussed, other trusts are typically used to help applicants qualify for Medicaid or to prevent estate recovery of certain assets. Trusts can also prove useful in preventing individuals who are already receiving public benefits from losing them. For example, an applicant may have very few assets but, because of his or her income, still fail to qualify for Medicaid benefits depending on the state. An applicant who exceeds the income cap may still qualify for benefits provided all income in excess of the income cap is placed into a certain type of trust (sometimes called a Miller trust) each month.

5. A First-Party Special Needs Trust

What happens if an individual receives assets that effectively disqualifies him or her from Medicaid? Or, a Medicaid recipient inherits money or gets a payout from a litigation claim? In either situation, the funds received will most likely disqualify the individual from receiving additional benefits unless one of several federally permitted options is used.

Execution of a first-party special needs trust is one option. These trusts are funded with assets owned by the individual receiving Medicaid. First-party trusts must include a payback provision allowing the state to reimburse itself for benefits paid to or for the benefit of the special needs individual. First-party special needs trusts also have additional limitations.

The law related to Medicaid eligibility is complex and there may be other estate planning techniques you can use. This article only covers the basics. Speak with your attorney about the potential steps you must take and the documents you must execute to protect your assets when contemplating future Medicaid coverage.

PERKINS & ZAYED, P.C.
1745 South Naperville Road, Suite 100
Wheaton, IL 60189
Phone: 630-665-2300 | Toll Free: 877-TRUST-50
Fax: 630-665-4343
Email: admin@trust-lawgroup.com
The information contained on this website is for informational and educational purposes only and is not legal, tax or financial advice. Always consult a qualified licensed attorney and/or appropriate professional to provide advice for your individual needs and circumstances. Use of this website does not create or constitute an attorney-client relationship. This website may include advertising material for Perkins & Zayed, P.C., The Estate and Trust Law Group. 

Advantages of Qualified Long Term Care Insurance

Estate Planning Advice
for Every Stage of Life.

Advantages of Qualified Long Term Care Insurance

Owners of qualified long-term care policies are eligible for some important federal income tax breaks. Here are the details of two benefits policy holders get from Uncle Sam.

1. Benefit Payments Are Usually Federal Income Tax-Free

In general, benefit payments received under a qualified long-term care policy are free from federal income tax because they’re considered reimbursements for medical expenses under health insurance coverage. This tax-free treatment automatically applies to benefits of up to $360 per day  (for 2018 and 2017) or the equivalent for benefits paid on some other periodic basis (such as weekly or monthly). The $360 cap is adjusted annually for inflation.

Even if the policy pays benefits in excess of the cap, they are still federal-income-tax-free as long as they don’t exceed the insured person’s actual long-term care costs. However, benefits that exceed both the cap and the actual costs are generally taxable.

Note: If you receive long-term care insurance benefit payments during the year, you should expect to get a Form 1099-LTC from the IRS early in the following year. It reports the gross payments made to you. The taxable amount (if any) is calculated on IRS Form 8853, Archer MSAs and Long-Term Care Insurance Contracts. Ignore the part about MSAs unless you have one.

If you have company-paid qualified long-term care insurance coverage through a job, the cost of the coverage is generally a tax-free fringe benefit to you for federal income tax purposes. However, if you pay the premiums with salary dollars via payroll withholding, the premiums are considered part of your taxable salary.

2. Potential Itemized Deductions For Premiums

Because a qualified long-term care policy is considered health insurance for federal income tax purposes, the premiums are treated as medical expenses on Schedule A. However, there are limits. You can only treat the age-based amounts listed below as medical expenses. Don’t forget to count premiums paid for coverage on your spouse, as well as premiums paid for other dependent family members (meaning you pay over half the cost of supporting the person and he or she doesn’t file a joint federal income tax return).

Age on 12/31/17

Maximum Amount
Treated as a Medical Expense
for 2017
Age on  12/31/18Maximum Amount
Treated as a Medical Expense
for 2018

40 or under

$41040 or under

$420

41 to 50

77041 to 50

  780

51 to 60

1,53051 to 60

 1,560

61 to 704,09061 to 70

 4,160

Older than age 705,110Older
 than age 70

 5,200

Combine these age-based amounts with your other medical expenses, such as health and dental insurance premiums, insurance co-payments, out-of-pocket prescription costs, and any other unreimbursed medical outlays. If the resulting total exceeds 7.5% of your adjusted gross income (AGI) for 2017 and 2018, you can write off the excess as an itemized medical expense deduction on Schedule A. (This percentage rose to 10% for some taxpayers, but thanks to the passage of the Tax Cuts and Jobs Act, it reverts to 7.5% for 2017 and 2018.)

Note: If you pay premiums for a long-term care policy that is not qualified under tax law, the premiums are treated as a nondeductible personal expense.

Example: Let’s say you’re age 63 at the end of 2017 and pay $2,500 during  the year for a “bare bones” qualified long-term care policy. You can treat the entire $2,500 as a medical expense for itemized deduction purposes on your Schedule A, because that amount is less than the $4,160 maximum for 2018. But if you pay $4,200 for a more-generous policy, you can only treat $4,160 as a medical expense. Now let’s say you also pay $5,000 in premiums for a qualified long-term care policy that covers your dependent 82-year-old father. In this case, you can treat an additional $5,000 as a medical expense on your Schedule A. If your total medical expenses, including the age-based long-term care insurance premium amounts, exceed 7.5% of your AGI, you can deduct the difference on Schedule A.

The federal income tax breaks for qualified long-term care insurance are not a reason to buy the coverage. However, they may help lower the effective cost and make it more affordable to obtain adequate coverage.

PERKINS & ZAYED, P.C.
1745 South Naperville Road, Suite 100
Wheaton, IL 60189
Phone: 630-665-2300 | Toll Free: 877-TRUST-50
Fax: 630-665-4343
Email: admin@trust-lawgroup.com
The information contained on this website is for informational and educational purposes only and is not legal, tax or financial advice. Always consult a qualified licensed attorney and/or appropriate professional to provide advice for your individual needs and circumstances. Use of this website does not create or constitute an attorney-client relationship. This website may include advertising material for Perkins & Zayed, P.C., The Estate and Trust Law Group. 

ESTATE PLAN RESOURCE

Estate Planning Advice
for Every Stage of Life.

Advantages of Qualified Long Term Care Insurance

Owners of qualified long-term care policies are eligible for some important federal income tax breaks. Here are the details of two benefits policy holders get from Uncle Sam.

1. Benefit Payments Are Usually Federal Income Tax-Free

In general, benefit payments received under a qualified long-term care policy are free from federal income tax because they’re considered reimbursements for medical expenses under health insurance coverage. This tax-free treatment automatically applies to benefits of up to $360 per day  (for 2018 and 2017) or the equivalent for benefits paid on some other periodic basis (such as weekly or monthly). The $360 cap is adjusted annually for inflation.

Even if the policy pays benefits in excess of the cap, they are still federal-income-tax-free as long as they don’t exceed the insured person’s actual long-term care costs. However, benefits that exceed both the cap and the actual costs are generally taxable.

Note: If you receive long-term care insurance benefit payments during the year, you should expect to get a Form 1099-LTC from the IRS early in the following year. It reports the gross payments made to you. The taxable amount (if any) is calculated on IRS Form 8853, Archer MSAs and Long-Term Care Insurance Contracts. Ignore the part about MSAs unless you have one.

If you have company-paid qualified long-term care insurance coverage through a job, the cost of the coverage is generally a tax-free fringe benefit to you for federal income tax purposes. However, if you pay the premiums with salary dollars via payroll withholding, the premiums are considered part of your taxable salary.

2. Potential Itemized Deductions For Premiums

Because a qualified long-term care policy is considered health insurance for federal income tax purposes, the premiums are treated as medical expenses on Schedule A. However, there are limits. You can only treat the age-based amounts listed below as medical expenses. Don’t forget to count premiums paid for coverage on your spouse, as well as premiums paid for other dependent family members (meaning you pay over half the cost of supporting the person and he or she doesn’t file a joint federal income tax return).

Age on 12/31/17

Maximum Amount
Treated as a Medical Expense
for 2017
Age on  12/31/18Maximum Amount
Treated as a Medical Expense
for 2018

40 or under

$41040 or under

$420

41 to 50

77041 to 50

  780

51 to 60

1,53051 to 60

 1,560

61 to 704,09061 to 70

 4,160

Older than age 705,110Older
 than age 70

 5,200

Combine these age-based amounts with your other medical expenses, such as health and dental insurance premiums, insurance co-payments, out-of-pocket prescription costs, and any other unreimbursed medical outlays. If the resulting total exceeds 7.5% of your adjusted gross income (AGI) for 2017 and 2018, you can write off the excess as an itemized medical expense deduction on Schedule A. (This percentage rose to 10% for some taxpayers, but thanks to the passage of the Tax Cuts and Jobs Act, it reverts to 7.5% for 2017 and 2018.)

Note: If you pay premiums for a long-term care policy that is not qualified under tax law, the premiums are treated as a nondeductible personal expense.

Example: Let’s say you’re age 63 at the end of 2017 and pay $2,500 during  the year for a “bare bones” qualified long-term care policy. You can treat the entire $2,500 as a medical expense for itemized deduction purposes on your Schedule A, because that amount is less than the $4,160 maximum for 2018. But if you pay $4,200 for a more-generous policy, you can only treat $4,160 as a medical expense. Now let’s say you also pay $5,000 in premiums for a qualified long-term care policy that covers your dependent 82-year-old father. In this case, you can treat an additional $5,000 as a medical expense on your Schedule A. If your total medical expenses, including the age-based long-term care insurance premium amounts, exceed 7.5% of your AGI, you can deduct the difference on Schedule A.

The federal income tax breaks for qualified long-term care insurance are not a reason to buy the coverage. However, they may help lower the effective cost and make it more affordable to obtain adequate coverage.

Have an estate planning question or concern? Please let us know! Call us at 630.665.2300 or click the button to schedule a free consultation.

PERKINS & ZAYED, P.C.
1745 South Naperville Road, Suite 100, Wheaton, IL 60189

Phone: 630-665-2300 | Toll Free: 877-TRUST-50
Fax: 630-665-4343
Email: admin@trust-lawgroup.com

The information contained on this website is for informational and educational purposes only and is not legal, tax or financial advice. Always consult a qualified licensed attorney and/or appropriate professional to provide advice for your individual needs and circumstances. Use of this website does not create or constitute an attorney-client relationship. This website may include advertising material for Perkins & Zayed, P.C., The Estate and Trust Law Group.