Don’t Go Broke in a Nursing Home

Mr. Losavio is giving a workshop at Amber Terrace Assisted Living Tuesday January 12, 2016 at 4:00pm and 6:30pm and Thursday January 14,2016 at 4:00pm an 6:30pm.  Amber Terrace Assisted Living is located at 8585 Summa Ave., Baton Rouge, LA 70809.  Seating is limited so call ahead and reserve your seat 1-800-426-6104.

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Medicaid Estate Recovery: Barrier to Medicaid Enrollment

With more people becoming eligible for Medicaid, one question repeatedly comes up: “will receiving Medicaid coverage jeopardize my family home?” Depending on the circumstances, the answer can be complicated. But states can do much to make it less complex.

The fact is that states can recover against the estates of some Medicaid beneficiaries, but only after the beneficiary passes away, and only in certain circumstances. Federal law actually requires that states try to recover from the estates of Medicaid beneficiaries who received nursing facility services and/or home and community-based services when they were age 55 or older. In other words, federal law sets the floor for Medicaid estate recovery by states.

Complicating matters is that states have the option to recover for more than what is federally required. States may recover from individuals age 55 and older for any items or services covered under the state’s Medicaid plan. California is one of just a few states that has taken the option to recover for all covered services provided to individuals age 55 and older. Currently, a bill is moving through the state legislature to limit recovery to only what is federally required. Last year, a similar bill received unanimous support from the California legislature, but was vetoed by the governor due to budgetary concerns.

It is important to keep in mind that there are exceptions to when a state can recover and from whom it can do so. For example, Medicaid estate recovery cannot occur during the lifetime of a surviving spouse or when there is a surviving child under age 21 or a blind or disabled child of any age. Also, states must establish procedures for waiving estate recovery when it would cause an undue hardship. Yet many states do not have clear undue hardship policies, leading to increased denials and making it difficult for family members to figure out who qualifies for a hardship waiver and in which circumstances.

State policy makers should also realize that, for the next couple of years, states will not keep recovered claims for the Medicaid expansion population and after 2016 will still keep only a small amount. When states recover from the estates of former Medicaid beneficiaries, they return to the federal government the portion that represents the federal share of expenditures on an individual’s Medicaid covered services. Since services provided to the Medicaid adult expansion population are 100 percent federally funded for the first three years (2014-16), and almost fully federally funded thereafter, states will have to return to the federal government the full amount collected (and in future years close to the full amount). States are essentially serving as a collection agency for the federal government.

Many have identified estate recovery rules as a potential barrier to enrollment in Medicaid. Individuals may be hesitant to enroll in Medicaid because they own a home that they want to leave to their adult children when they pass away. Advocates must urge states to limit estate recovery to what is federally required, and advocate for clear exceptions policies to ensure that individuals and families feel comfortable enrolling in Medicaid and getting the care that they need.

Key Tax Tips on the Tax Effects of Divorce or Separation

Income tax may be the last thing on your mind after a divorce or separation. However, these events can have a big impact on your taxes. Alimony and a name change are just a few items you may need to consider. Here are some key tax tips to keep in mind if you get divorced or separated.
• Child Support. If you pay child support, you can’t deduct it on your tax return. If you receive child support, the amount you receive is not taxable.
• Alimony Paid. If you make payments under a divorce or separate maintenance decree or written separation agreement you may be able to deduct them as alimony. This applies only if the payments qualify as alimony for federal tax purposes. If the decree or agreement does not require the payments, they do not qualify as alimony.
• Alimony Received. If you get alimony from your spouse or former spouse, it is taxable in the year you get it. Alimony is not subject to tax withholding so you may need to increase the tax you pay during the year to avoid a penalty. To do this, you can make estimated tax payments or increase the amount of tax withheld from your wages.
• Spousal IRA. If you get a final decree of divorce or separate maintenance by the end of your tax year, you can’t deduct contributions you make to your former spouse’s traditional IRA. You may be able to deduct contributions you make to your own traditional IRA.
• Name Changes. If you change your name after your divorce, notify the Social Security Administration of the change. File Form SS-5, Application for a Social Security Card. You can get the form on SSA.gov or call 800-772-1213 to order it. The name on your tax return must match SSA records. A name mismatch can delay your refund.
Health Care Law Considerations
• Special Marketplace Enrollment Period. If you lose your health insurance coverage due to divorce, you are still required to have coverage for every month of the year for yourself and the dependents you can claim on your tax return. Losing coverage through a divorce is considered a qualifying life event that allows you to enroll in health coverage through the Health Insurance Marketplace during a Special Enrollment Period.
• Changes in Circumstances. If you purchase health insurance coverage through the Health Insurance Marketplace you may get advance payments of the premium tax credit in 2015. If you do, you should report changes in circumstances to your Marketplace throughout the year. Changes to report include a change in marital status, a name change and a change in your income or family size. By reporting changes, you will help make sure that you get the proper type and amount of financial assistance. This will also help you avoid getting too much or too little credit in advance.
• Shared Policy Allocation. If you divorced or are legally separated during the tax year and are enrolled in the same qualified health plan, you and your former spouse must allocate policy amounts on your separate tax returns to figure your premium tax credit and reconcile any advance payments made on your behalf. Publication 974, Premium Tax Credit, has more information about the Shared Policy Allocation.
For more on this topic, see Publication 504, Divorced or Separated Individuals. You can get it on IRS.gov/forms at any time.
Each and every taxpayer has a set of fundamental rights they should be aware of when dealing with the IRS. These are your Taxpayer Bill of Rights. Explore your rights and our obligations to protect them on IRS.gov.
Additional IRS Resources:
• Publications 590-A, Contributions to Individual Retirement Arrangements (IRAs)
• Publication 555, Community Property
• Publication 974, Premium Tax Credit
• Publication 5152: Report changes to the Marketplace as they happen English | Spanish

. Medicare Premiums Expected to Rise Steeply for Some, Stay Unchanged for Most

Most Medicare enrollees can expect to pay the same amount for their Medicare Part B coverage (the portion of Medicare that pays for doctors’ services and outpatient care) in 2016 as they do this year ($104.90), according to estimates from the latest Medicare trustees report. But about 1 in 7 enrollees will face a dramatic increase. In 2016, about 70 percent of Medicare enrollees will be protected from an increase because of a “hold harmless” provision in federal law that says their Medicare premium cannot go up from one year to the next by more than the increase in their Social Security benefit. Government officials currently estimate there will be no cost-of-living increase in Social Security benefits next year because inflation has been so low. For about 30 percent of Medicare enrollees, premiums are expected to rise steeply. About 14 percent of enrollees will pay these premiums themselves. The rest will not be directly affected because they are enrolled in Medicaid or a Medicare Savings Program and their premiums are paid by their state. Three groups will see increases:
• People who newly enroll in Part B in 2016 (about 5 percent of Medicare enrollees);
• Medicare enrollees who do not receive a Social Security check — for example, enrollees who delay claiming Social Security benefits because they continue to work (about 3 percent of Medicare enrollees); and
• Higher-income enrollees (people with income above $85,000 or couples with income above $170,000) who pay higher premiums (about 6 percent of Medicare enrollees)

For these enrollees not protected by the hold harmless provision, the Part B standard monthly premium will be $159.30 in 2016, a 52 percent increase. Higher-income enrollees who pay higher premiums will also see a 52 percent increase; their 2016 monthly premiums will be between $223 and $509.80, depending on income. The rise is especially steep because the total increase in premium revenue required in 2016 will be spread among only the 30 percent of enrollees who are not protected by the hold harmless provision, rather than among all enrollees.

What Employers Need to Know about the Affordable Care Act

The health care law contains tax provisions that affect employers. The size and structure of a workforce – small or large – helps determine which parts of the law apply to which employers. Calculating the number of employees is especially important for employers that have close to 50 employees or whose work force fluctuates during the year

The number of employees an employer has during the current year determines whether it is an applicable large employer for the following year. Applicable large employers are generally those with 50 or more full-time employees or full-time equivalent employees. Under the employer shared responsibility provision, ALEs are required to offer their full-time employees and dependents affordable coverage that provides minimum value. Employers with fewer than 50 full-time or full-time equivalent employees are not applicable large employers.

For more information on these and other ACA tax provisions, visit IRS.gov/aca.

7 Questions to Ask Yourself Before Deciding to Retire

Few Americans save enough for retirement. Whether due to financial issues or a lack of foresight, a lot of people either don’t give much thought to retirement or are unable to save up enough to help them fund their elder years.

In fact, only 13 percent of people who haven’t retired yet say they’ve given a lot of thought to financial planning for retirement, according to a survey conducted by the Federal Reserve Board. Nearly 40 percent say they have given little to no thought to retirement planning.

Mapping out your retirement takes more than asking yourself, “When should I retire?” Consider these seven questions to help you better plan for financial and personal obstacles in retirement.

Read: What Retirement Without Savings Looks Like

1. What kind of lifestyle do I want?

Before figuring out how much money you need to retire, you need to consider what sort of lifestyle you want to have in retirement, said John Sweeney, Executive Vice President of Retirement and Investing Strategies at Fidelity.

Do you want to stay in your current home or downsize? Will you want to move to a bigger city or someplace warmer? Maybe you want to travel the world.

No matter how you envision your retirement, you’ll need to plan ahead to fund it. Depending on your goals, you might need to save more than you originally planned. If you’re married, you’ll need to speak with your spouse to make sure your retirement plans are aligned.

2. What will my expenses in retirement be?

Sweeney said most people can expect to spend about 85 cents in retirement for every dollar spent before retirement. Depending on your health, however, you might need to save more to cover medical expenses. If you have a chronic condition or mobility issues, over time you might end up needing to spend more money to maintain your quality of living.

To help you project rough estimates of your retirement costs, you can use an online retirement income calculator. With a financial planner, you can get a detailed cash-flow analysis and help managing taxes.

3. Will I have enough savings to cover my expenses?

Less than half of all workers say they’ve ever tried to calculate how much money they will need to save to live comfortably in retirement, according to The 2015 Retirement Confidence Survey conducted by the Employee Benefit Research Institute. Scott Bishop, Director of Financial Planning at STA Wealth Advisors in Houston, recommends comparing your current monthly expenses with how much income you’ll have in retirement.

If your retirement savings can’t sustain your mortgage, insurance and other typical costs, you might want to reconsider your current savings plan. You will also want to calculate your Social Security benefit to determine how it will affect your monthly budget. When considering whether you’ll have enough income in retirement, assume you’ll be in retirement for 25 years and have access to four percent of your savings annually.

In retirement, you’ll want to revisit your withdrawal percentage, adjusting for your actual spending, said Bishop. Your retirement portfolio, which should include numerous asset types, should also be structured to outpace inflation. Sweeney recommends you have a mix of stocks — about 55 percent — in your early years of retirement to maintain growth, and fixed income, such as bonds, to guard against market volatility.

4. What impact will taxes have on my retirement income?

Taxes don’t disappear when you stop working. In fact, your tax bill can take a big bite out of your retirement income.

Up to 85% of your Social Security benefits might be taxable if you have income in addition to your benefits. Withdrawals from tax-deferred retirement accounts, such as traditional IRAs and 401(k)s, are also taxed. So, if you need $5,000 a month to cover expenses in retirement, you might need to withdraw up to $6,000, said Bishop.

Higher-income taxpayers will have to pay taxes on profits from the sale of stocks, bonds, mutual funds and other investments not held in tax-deferred retirement accounts. States have their own rules for taxing retirement income, so depending on where you live, you could be hit with an above-average tax bill.

The states that impose the highest taxes on retirees include California, Connecticut, New York, Oregon, Rhode Island and Vermont, according to a 2014 analysis of state taxes conducted by Kiplinger, a publisher of business forecasts and personal finance advice. A financial planner can help you figure out how taxes will impact you in retirement and what strategies you can use to minimize your tax bill.

5. Where will I get my health care?

Chances are your employer won’t continue providing health care coverage for you in retirement. Only 28 percent of companies with 200 or more employees offer retiree health coverage, according to the 2013 Kaiser/HRET Survey of Employer-Sponsored Health Benefits.

You are eligible for Medicare when you turn 65. You likely won’t need to pay a premium for Medicare Part A, which covers inpatient hospital stays, care at nursing facilities, hospice care and some home health care. If you want extended health benefits, however, you’ll need to pay a monthly premium for Medicare Part B, which covers most doctor and outpatient services. Medicare Part B typically costs around $104.90 each month.

If you retire early, you’ll have to get an insurance policy on your own. Couples who retire at 62 can expect to pay $17,000 a year for health insurance premiums and out-of-pocket costs until they’re eligible for Medicare, according to Fidelity. A retiree can expect to pay an average of $220,000 in medical expenses over the course of their retirement.

You also need to factor in long-term medical care, which could wipe out your retirement savings if you’re not prepared. The median annual cost of care in an assisted living facility is $43,200, and the average cost of a private nursing home room is more than double that, according to the Genworth 2015 Cost of Care Survey. To curb these types of costs, you can look into long-term care insurance.

6. How much debt do I have?

The more debt you carry into retirement, the more retirement income you’ll need to pay off what you owe. When you’re deciding when to retire, you need to figure out how long it will take to pay off your existing debts. You should pay off any high-interest debts that aren’t tax-deductible first, such as credit card balances, said Bishop. If you have good credit, refinance any high-interest debt that’s tax-deductible, such as a mortgage, to get the lowest rate possible.

7. Am I emotionally ready to retire?

Ask yourself what you will do once you retire. If you don’t know — and most people don’t — you might have a problem, said Bishop. Around 22 percent of people surveyed by the Federal Reserve Board say they plan to stop working entirely in retirement.

You need to figure out before you retire whether you want to continue working in some capacity. If you initially choose not to work in retirement, you might have a harder time becoming employed after being out of the workforce for a while.

Deciding to retire, much less knowing how to map out a retirement plan, takes work and careful thought. Consider meeting with a financial planner to help you determine how to decide when to retire and to create an action plan for retirement. Knowing how and when you will retire will allow you to look forward to retirement.

Don’t Go Broke in a Nursing Home

Mr. Pete Losavio will be speaking at a  free workshop at Sunrise of Baton Rouge 8502 Jefferson Hwy. Baton Rouge, LA 70809  on Saturday June 27, 2015 at 9:30 am to discuss his new book he co-authored ” Don’t Go Broke in a Nursing Home”.  Please call 1-880-426-6104 to attend.

The Health Care Law and Employers: The ACA Basics for Applicable Large Employers

Some of the provisions of the Affordable Care Act only affect your organization if it’s an applicable large employer. An applicable large employer is generally one with 50 or more full-time employees, including full-time equivalent employees.
• Applicable large employers have annual reporting responsibilities; you will need to provide the IRS and employees information returns concerning whether and what health insurance you offer to your full-time employees.
• If you’re an applicable large employer that provides self-insured health coverage to your employees, you must file an annual return reporting certain information for each employee you cover.
• You may have to make an employer shared responsibility payment if you do not offer adequate, affordable coverage to your full-time employees, and one or more of those employees get a premium tax credit. Learn more about the employer shared responsibility provision.
• You may be required to report the value of the health insurance coverage you provided to each employee on their Form W-2.
• If you’re an applicable large employer with exactly 50 employees, you can purchase affordable insurance through the Small Business Health Options Program (SHOP).
For more information, see the Affordable Care Act Tax Provisions for Employers page on IRS.gov/aca.