2020 CMS Updates from Van Dyck Law-What You Need to Know
Every year, the Centers for Medicare and Medicaid Services (CMS) releases the updated Medicare premiums, deductibles, and co-payments for the upcoming year. Here are the updates for 2020:
2020 Medicare Updates:
- Basic Part B premium: $144.60/month (was $135.50 in 2019)
- Part B deductible: $198 ($185.00 in 2019)
- Part A deductible: $1,408 (was $1,364 in 2019)
- Co-payment for hospital stay days 61-90: $352/day (was $341 in 2019); Co-payment for hospital stay days 91-150: $704/day (was $682 in 2019)
- All costs for each day beyond 150 days
- Skilled nursing facility co-payment, days 21-100: $176/day (was $170.50 in 2019)
- Maximum Community Spouse Resource Allowance: $128,640 (was $126,420 in 2019)
- Minimum Community Spouse Resource Allowance: $25,728 (was $25,284 in 2019)
- Maximum Monthly Maintenance Needs Allowance: $3,216 (was $3,160.50 in 2019)
- Minimum Monthly Maintenance Needs Allowance: $2,114 (thru June 30, 2020)
- Medicaid Waiver Benefits Income Cap: $2,349.00 per month (was $2,313 in 2019)
- Pennsylvania Medicaid penalty divisor: $10,732.83 ($352.86/day), as of 1/1/20
- New Jersey Medicaid penalty divisor: $351.84/day, since 4/1/19
The Van Dyck Law Elder Advocacy and Law Boot Camp Was a Success!
On October 1st, 2019 we facilitated the First Annual Van Dyck Law Elder Advocacy and Law Boot Camp at the Crowne Plaza Princeton Conference Center. We had over 120 attendees and 20 Circle of Care Vendor Partners. This was a Continuing Education event offering our attendees 5 credits for Social Workers and Administrators of Assisted Livings and Long Term Care Communities. Our Premier Sponsors were Integra Healthcare Management which is comprised of The Gardens at Monroe in Monroe Township, Imperial Healthcare in Neptune and Foothill Acres in Hillsborough. Our Breakfast Sponsor was Brandywine Living, Lunch Sponsor was Senior Bridge and our snack sponsors were Stonebridge at Montgomery and Akin Care. We would like to express how grateful to our care partners for helping us to make this day an absolute success.
The event began with registration at 8am and the education sessions began at 9am with our founding attorney, Fiona Van Dyck, educating our attendees about Elder Law Issues that every healthcare provider needs to know. She discussed the ins and outs of Medicaid planning as well as the need for estate planning documents including financial power of attorney, advanced directives, wills and trusts, to be in place in order to best plan for ours and our loved ones' futures. We then welcomed Nina Weiss of Weiss Law to educate our guests on what happens if those documents are not in place. She talked about guardianships, conservatorships as well as what and who determines competency when someone has a cognitive impairment, mental illness or is not able to speak or make decisions for themselves. Annette Murphy from Springpoint at Home was gracious enough to talk to us about Aging Life Care Advisors and how one can help in some of these situations.
Our Keynote speaker was Dr. Olga Tchikindas from Princeton Medical Institute. Dr. Tchikindas was charming and informative as she educated our guests on the types of dementia and why it's important to get the proper diagnosis.
We finished out the day with a Hot Topic elder advocacy panel consisting of Linda Mundie from The Gardens at Monroe who spoke on Avoiding Hospital Re-Admissions, Kim Saul-Bowne from Saul Funeral Home who spoke on Funeral Trusts, Christina Canitano from Senior Bridge who spoke on Senior Loneliness, our own Sheli Monacchio who spoke on Senior Bullying and finally Linda Mundie and Ann Akin from Akin Care spoke about the risks for families of hiring private home care aides, the risks to the caregivers who take private cases and Grey Market Risks to all involved.
We at Van Dyck Law are humbled by the support of our care partners and are so happy that we have these resources for our clients as care needs arise. As Fiona reiterated throughout the day, "we are all in the trenches together". This goes for our care partners, our clients and their families.
Thank you to all the professionals who were a part of our day and we look forward to our next Boot Camp in 2020!
Should Elder Care Benefits Be Part of Employees’ Compensation?
“Our aging population has led to a rise in demand for elder care benefits. There are a variety of options that businesses can offer.”
As employees’ parents and family members grow older, many are asked to be caregivers. More than one in six Americans working full-time or part-time report assisting with the care of an elderly or disabled family member, relative or friend. Of this group, nearly 50% say they have no choice about taking on these responsibilities. That’s why many struggle in silence, deciding not to share their situation with employers out of fear for the impact on their career or a desire for privacy.
Benefits Pro reports in the article “Elder care benefits: A growing need for the U.S. workforce” that under the federal Family and Medical Leave Act (FMLA), “family leave for seriously ill family members” is required by law. However, the law offers unpaid job protection and the definition of family member is restricted to spouse, child or parent. This has resulted in an increase in demand for elder care benefits. There are a variety of options that businesses can offer.
Many employers now offer an employee assistance program (EAP), which provides employees and household members with educational and referral services for elder care. These services often include free and confidential assessments, short-term counseling, referrals and follow-up services. These EAPs also address a broad body of mental and emotional well-being issues, like alcohol and substance abuse, stress, grief, family problems and psychological disorders.
In addition, some employers also have Dependent Care Assistance Plans (DCAP), commonly referred to as the “day care benefit,” allowing employees to set aside tax-free dollars for qualified elder care. While DCAPs don’t cover the entire cost of elder care, they can provide up to $5,000 per calendar year in assistance and lessen employees’ federal tax burden.
Respite care provides short-term relief for primary caregivers and can be arranged for just an afternoon or for several days.
Caregiving has shown to reduce employee work productivity by 18.5% and increase the likelihood of employees leaving the workplace. Offering elder care benefits to employees can help with retention and efficiency, as well as with businesses’ bottom line. A study by the Center for American Progress found that turnover costs are often estimated to be 100 to 300% of the base salary of the replaced employee.
As the demand for these benefits continues to increase, employers are recognizing the diverse needs of their workforce and are creating programs that have benefits to help at all stages of life.
Reference: Benefits Pro (April 30, 2019) “Elder care benefits: A growing need for the U.S. workforce”
How Do I Avoid Life Insurance Mistakes?
“Life insurance may play a vital role in an estate plan, because insurance proceeds can be counted on to provide liquidity when it’s needed. With proper planning, insurance money can pay expenses, such as the estate tax and keep other assets intact.”
Let’s say that Howie passes away and leaves a big estate to his daughter Eva, and there’s an equally large estate tax due. However, most of Howie’s assets are tied up in real estate and in his IRA.
With that scenario, Eva might not want to immediately force a sale of the real estate. However, if she accesses the inherited IRA to raise money, she’ll have to pay income tax on the withdrawal and lose a terrific opportunity for extended tax deferral.
FedWeek’s recent article, “Common Mistakes in Life Insurance Designations,” explains that considering this type of scenario, Howie could purchase insurance on himself.
The proceeds from Howie’s life insurance policy would then be used to pay the estate tax bill. With that taken care of, Eva could keep the real estate, while taking only minimum required distributions from the inherited IRA.
If the insurance policy is owned by Eva or by a trust, the proceeds probably will not be included in Howie’s estate and will not increase the estate tax obligation.
That’s a smart way to plan it out. However, some life insurance errors can wreak havoc with an estate plan. Let’s look at some common mistakes:
Naming your estate as beneficiary. This puts the proceeds in your estate—and the money will be exposed to estate tax and your creditors. Your executor will also have more paperwork, if your estate is the beneficiary. Instead, designate the appropriate people or charities.
Designating a single beneficiary. Always name at least two contingent or “backup” beneficiaries, which will decrease or eliminate any confusion, if the primary beneficiary predeceases you.
Filing and forgetting the policy. Review your policies every three years. If the beneficiary is an ex-spouse or someone who’s died, make the appropriate change and get a confirmation, in writing, from the insurance company.
Not having adequate coverage. If you have young children, it will take a small fortune to pay for their expenses, including college, in case of your untimely death. Be wise with enough coverage for your children and for whoever will take care of them. It may not or may not be a spouse, but children don’t raise themselves and you don’t want a bargain basement mom for your kids.
Reference: FedWeek (February 14, 2019) “Common Mistakes in Life Insurance Designations”
How Do I Know When It’s Time to Retire?
“After years of hard work, you are certainly entitled to a happy retirement. You may have already started daydreaming about it, at least a little. Will you travel the world, volunteer for your favorite charity, go fishing every day, or just spend more time with the grandkids? The post-retirement possibilities are practically endless.”
Many senior workers are actually a little afraid of retirement, because they’ve heard too many horror stories about people who retire too soon and wind up outliving their nest eggs. This is reflected in a 2016 survey from the Transamerica Center for Retirement Studies, which found that 51% of American workers say their top retirement worry is outliving their investments and savings.
Here are the key indicators that you’re probably ready to retire, according to this recent article from Investopedia’s, “6 Signs That You Are OK to Retire.”
- Hit Your Full Retirement Age. If you were born between 1943 and 1954, your full retirement age is 66. If you were born after 1959, it’s 67. You can start claiming Social Security benefits as early as 62, but your benefits will be much higher, if you wait until your full retirement age.
- Retire Debt-Free. If you have a ton of credit card debt or still owe a lot on your home or car, you may want to wait to retire because when you’re on a fixed income, a big mortgage or car payment can put a major dent in your finances. Before you retire, pay off all your debts, if possible, and get on a budget.
- Not Financially Supporting Your Kids (or Parents). If your kids still live with you–or you’re paying for their college education–you probably should wait with your retirement plans. Likewise, it might be smart to delay retirement, if you’re financially responsible for your elderly parents. If that’s you, retirement probably isn’t an option until your situation changes.
- Make a Retirement Budget. Prior to retiring, calculate whether you can live comfortably on your post-retirement income. Add up your mandatory monthly costs, like a mortgage or rent, groceries and utilities. Next, add in your 'wants,' like travel, entertainment shopping and eating out. You can then determine whether you’ll have enough retirement savings to cover all of this. Add your Social Security payments, pension, retirement account distributions and any other sources of income. Your retirement budget (if you retire in your mid-60s) shouldn’t be more than 4% of your investments, plus Social Security and pension payments.
- Review Your Portfolio. You’re going to depend a lot on your investment portfolio in retirement. If you haven’t had a portfolio review in a while, do it soon. Reassess your portfolio and determine if you need to make any modifications. As you get close to retirement, you may want to move to lower-risk investment strategies to protect your wealth.
- Plan with Your Spouse. Unless you live alone, retirement will have a major effect on your spouse or partner. Retirement should be reviewed together. Look at how the reduction in income will affect your lifestyle and future care needs. Consider what changes may need to occur to make it enjoyable for you both.
These are just the basic elements to determine when you’re ready for retirement. You should also think about how you’ll spend your days, where you want to live and whether most of your friends will still be working. All of these things could have a big effect on your general enjoyment of retirement.
Reference: Investopedia (June 1, 2018) “6 Signs That You Are OK to Retire”
Can I Draft My Own Will?
A common question among people is “Can I write my own will?” or “Do I really need a lawyer to do my estate planning?”
The Frisky‘s recent article, “Why You Should Hire A Lawyer to Write Your Estate Plan,” says that writing your own estate plan can be a complicated thing—and one that a non-attorney may find very difficult.
It’s More Than a Will. Many people believe that a will and an estate plan are the same. This is not true. An estate plan is a legal strategy that prepares you for potential incapacity and eventual death. A will is a legal document that’s part of the estate plan.
Money, Time and Energy Savings. Creating your own estate plan will be more time-consuming than you may have thought. Hiring a lawyer to do this will cost you—but it will cost you more, if you decide to do it on your own. Hiring a lawyer for your estate plan will save you time, because he or she is trained in the law to do it the right way.
If you do finish your own estate plan and you realize that it really is a mess, you can hire a lawyer to do it over for you. However, calculate how much time, energy, and resources you’ve spent on making on your quick DIY estate plan. Work with an experienced estate planning attorney and create a sound estate plan.
It’s Complicated. If you don’t fully understand what you’re doing, estate planning can drive you nuts. That’s because every word you write is crucial. Everything you write counts and may be interpreted differently. The law in this area also changes all the time. Agencies in the federal government, the IRS and the courts are always creating new regulations and decisions. Your estate planning attorney monitors all of this, makes sure your estate plan is in compliance and takes the best advantage of the current law.
Objectivity. Another thing your attorney adds to the mix—in addition to legal expertise—is objectivity. Your estate planning attorney will give you a clean, unbiased view of your current situation, along with a fair and honest assessment of your options.
Reference: The Frisky (February 6, 2019) “Why You Should Hire A Lawyer to Write Your Estate Plan”
Why Is Everyone Retiring to Florida?
A recent report by WalletHub ranks Florida as the best place to retire in terms of affordability, health-related factors and overall quality of life. According to the U.S. Census’ 2017 Population Estimates Program, roughly a half-million Miami-Dade County residents are over the age of 65, and by 2040, 1 in 5 Americans will be over the age of 65, according to the annual report produced by the Administration for Community Living.
Advances in medicine are helping with longevity, but various improvements in diet and lifestyle have also helped, says The Miami Herald in the article “Plan now on ways to take care of yourself through a long retirement.”
It’s important to keep your lifestyle through retirement, and it’s an essential part of any financial plan. You’ll need to budget for plans or services that help you in your later years, such as everyday tasks, medical care, or even where you live.
Take some time to consider how you want your later years to look, like where you would want to live—whether that’s at home (possibly with live-in help) or in an assisted-living facility. With our longer life spans, we encounter more significant health risks, like cognitive issues. According to research, 37% of people over the age of 85 have some mild impairment and about one-third have dementia. The Alzheimer’s Association says that 540,000 people aged 65 and older reported living with Alzheimer’s in Florida in 2018. Roughly 15% of those in Florida hospice care had a diagnosis of dementia in 2015. Therefore, you can see why it is critical to think about this now and communicate your long-term needs to your family.
As we get older, the ability to maintain a lifestyle we like, can become a financial challenge. This is especially true, if we also face an unexpected health condition. Making wise decisions now, can have a dramatic impact on what those later years will look like. Saving for a lengthy retirement can help you prepare to face any potential issues that may arise.
Making provisions for your family and leaving a legacy, isn’t always an easy task. However, the financial security of your family may depend not only on how you manage your wealth today, but also on how you protect and preserve it for the future. Your estate plan can help you prepare now to provide for your loved ones in the future.
Talk to your family and your estate planning attorney about these issues and ensure that your legacy planning is up to date, by regularly updating your will, trust, or advanced medical directives.
Reference: Miami Herald (February 1, 2019) “Plan now on ways to take care of yourself through a long retirement”
What Doesn’t Medicare Cover?
Medicare Part A and Part B are also known as Original Medicare or Traditional Medicare. These two parts cover a large portion of your medical expenses, after you turn age 65. Part A is hospital insurance that helps pay for inpatient hospital stays, stays in skilled nursing facilities, surgery, hospice care and even some home health care.
Part B is your medical insurance that helps pay for doctors' visits, outpatient care, some preventive services and some medical equipment and supplies. Most seniors can enroll in Medicare three months before the month they turn 65.
Kiplinger’s article, “7 Things Medicare Doesn't Cover,” takes a closer look at what isn't covered by Medicare, plus information about supplemental insurance policies and strategies that can help cover the additional costs, so you don't wind up with unanticipated medical bills in retirement.
Prescription Drugs. Medicare doesn’t provide coverage for outpatient prescription drugs. However, you can purchase a separate Part D prescription-drug policy for that or a Medicare Advantage plan that covers both medical and drug costs. You can sign up for Part D or Medicare Advantage coverage, when you enroll in Medicare or when you lose other drug coverage. You can switch policies during open enrollment each fall.
Long-Term Care. Medicare provides coverage for some skilled nursing services but not for custodial care. That includes things like help with bathing, dressing and other activities of daily living. However, you can purchase LTC insurance or a combination long-term-care and life insurance policy to cover these costs.
Deductibles and Co-Pays. Part A covers hospital stays and Part B covers doctors’ services and outpatient care. Nonetheless, you have to pay out-of-pocket for deductibles and co-payments. Note that over your lifetime, Medicare will only help pay for a total of 60 days beyond the 90-day limit (“lifetime reserve days”). After that, you’ll pay the full hospital cost. Part B typically covers 80% of doctors’ services, lab tests and x-rays. However, you must pay 20% of the costs, after a $183 deductible (in 2018). A Medigap (Medicare supplement) policy or Medicare Advantage plan can fill in the gaps, if you don’t have the supplemental coverage from a retiree health insurance policy. If you purchase a Medigap policy within six months of signing up for Medicare Part B, insurers can’t reject you or charge more because of preexisting conditions. Medicare Advantage plans have medical and drug coverage through a private insurer. They also may also provide additional coverage, like vision and dental care. You can switch Medicare Advantage plans annually in open enrollment.
Most Dental Care. Medicare will not provide coverage for routine dental visits, teeth cleanings, fillings, dentures or most tooth extractions. There are Medicare Advantage plans that cover basic cleanings and x-rays, but they usually have an annual coverage cap of about $1,500. You could also get coverage from a separate dental insurance policy or a dental discount plan.
Routine Vision Care. Medicare doesn’t cover routine eye exams or glasses (exceptions include an annual eye exam, if you have diabetes or eyeglasses after certain kinds of cataract surgery). However, some Medicare Advantage plans give you vision coverage, or you may be able to purchase a separate supplemental policy that provides vision care alone or includes both dental and vision care. If you saved money in a health savings account before you enroll in Medicare, you can use the money tax-free at any point for glasses, contact lenses, prescription sunglasses, and other vision care out-of-pocket expenses.
Hearing Aids. Medicare doesn’t cover routine hearing exams or hearing aids, but some Medicare Advantage plans cover hearing aids and fitting exams, and some discount programs provide lower-cost hearing aids.
Medical Care Overseas. Medicare usually doesn’t cover care you receive while traveling outside of the U.S., except for very limited situations (like on a cruise ship within six hours of a U.S. port). However, Medigap plans C through G, M, and N cover 80% of the cost of emergency care abroad with a lifetime limit of $50,000. There are some Medicare Advantage plans that cover emergency care abroad. Another option is to purchase a travel insurance policy that covers some medical expenses, while you’re outside of the U.S.
Reference: Kiplinger (May 23, 2019) “7 Things Medicare Doesn't Cover”
What’s the Latest with Aretha Franklin’s Estate?
Aretha Franklin, known as “The Queen of Soul,” died of pancreatic cancer in August of 2018 in her Detroit riverfront apartment at age 76.
Franklin did not have a will or trust. Therefore, processing the estate, which could be worth tens of millions of dollars, has been slow.
The Detroit Free Press reported in a recent article, “Aretha Franklin's ex-husband wants a cut of her music royalties,” that recently filed pleadings in Oakland County Probate Court detail some of the fighting.
"There is a dispute between the estate and Ms. Franklin's ex-husband, the father to one of the heirs, regarding music royalties," David Bennett, a lawyer for the estate, wrote in a pleading.
Aretha Franklin was twice divorced, and the record doesn't name the man, beyond saying that he's the father of one of her four sons. It looks like it’s her first husband, Ted White, who served for a time as Franklin's manager. Franklin and White have a son, Ted White Jr. Her second marriage to actor Glynn Turman didn't occur until 1978—eight years after her youngest son was born.
The recent court pleading was filed in response to a request from Edward Franklin, Aretha’s son, for more financial disclosure from the estate, as it's being processed. Prior to Christmas, a lawyer for Edward Franklin requested that Probate Judge Jennifer Callaghan order the disclosure of monthly financial statements and other records.
Edward wants "copies of all invoices and supporting documents regarding payments to friends and relatives of the personal representative, if any, for services performed for the estate."
The lawyer for the estate, Bennett, asked Judge Callaghan to deny the request for monthly financial updates, because it "would be an exceptional expense to the estate, is time-consuming and would interfere with the administration of the estate."
The IRS filed a claim in December of last year alleging the Franklin estate owed about $6.3 million in back taxes and penalties. An attorney for the estate told the Associated Press that at least $3 million in back taxes had been paid back to the IRS, since Franklin's death.
Reference: Detroit Free Press (January 11, 2019) “Aretha Franklin's ex-husband wants a cut of her music royalties”
What Do I Need to Know About Estate Planning After a Divorce?
The recent changes in the tax laws created increased year-end activity for those trying to finalize their divorces by December 31—prior to the effective date of the new rules.
The new tax laws stipulate that alimony is no longer deductible by the payor, and it’s no longer taxable by the receiver—this creates a negative impact on both parties. The payor no longer receives a tax deduction, and the receiver will most likely wind up with less alimony because the payor has more taxes to pay.
Forbes’ recent article, “9 Things You Need To Know About Estate Planning After Divorce” suggests that if you were one of those whose divorce was finalized last year, it’s time to revise your estate plan. It’s also good idea for those people who divorced in prior years and never updated their estate plans. Let’s look at some of the issues about which you should be thinking.
See your estate planning attorney. Right off the bat, send your divorce agreement to your estate planning attorney, so he or she can see what obligations you have to your ex-spouse in the event of your death.
Health care proxy. This document lets you designate someone to make health care decisions for you, if you were incapacitated and not able to communicate.
Power of attorney. If you had an old POA that named your ex-spouse, it should be revoked, and you should execute a new POA naming a friend, relative, or trusted advisor to act as your agent regarding your finances and assets.
Your will and trust. Ask your attorney to remove the provisions for your ex-spouse and remove your ex-spouse as the executor and trustee.
Guardianship. If you have minor children, you can still name your ex-spouse as the guardian in your will. Even if you don’t, your ex-spouse will probably be appointed guardian if you pass away, unless he or she is determined by the judge to be unfit. While you can select another responsible person, be sure to leave enough cash in a joint bank account (with the trusted guardian you name) to fund the litigation that will be necessary to prove your ex-spouse is unfit.
A trust for your minor children. If you don’t have a trust set up for your minor children, and your ex-spouse is the children’s guardian, he or she will have control of the children’s finances until they turn 18. You may ask your estate planning attorney about a revocable trust that will name someone else you select as the trustee to access and control these funds for your children, if you pass away.
Life insurance. You may have an obligation to maintain life insurance under the divorce agreement. Review this with your estate planning attorney and with your divorce attorney.
Beneficiary designations. Be certain that your 401K and IRA beneficiary designations are consistent with the terms of your divorce agreement. Have the beneficiary designations updated. If you still want to name your ex-spouse as the beneficiary, execute a new beneficiary designation dated after the divorce. It’s also wise to leave a letter of intent with your attorney, so your intentions are clear.
Prenuptial agreement. If you’re thinking about getting remarried, be certain you have a prenuptial agreement.
It’s a great time to settle these outstanding issues from your divorce and get your estate plan in order.
Reference: Forbes (January 8, 2019) “9 Things You Need To Know About Estate Planning After Divorce”