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Posts Tagged ‘Elder Law’

Fiscal Cliff Legislation: It’s Impact on Seniors & Boomers

Friday, February 1st, 2013

Guest Blog by Elder Law Attorney Anthony Ferraro

Elder Law Attorney Anthony FerraroShortly after the ball dropped in Times Square to mark the start of 2013, the U.S. Senate passed the American Taxpayer Relief Act of 2012 (ATRA) by an overwhelming 89 to 8 vote. The compromise legislation, which was adopted at about 2 a.m. on Jan. 1, was designed to avert the fiscal cliff.

ATRA is generally classified as tax legislation, but has built into it numerous provisions affecting public benefits, elder care, Elder Law and our seniors and boomers in general.

What does this mean for seniors and boomers? Consider the following:

Fiscal Cliff1. Tax rate changes – The bill permanently extended current tax rates for individuals earning less than $400,000 and couples earning less than $450,000. Wealthy taxpayers (those making more than $400,000) will revert back to a 39.6% (up from 35%) tax rate. Taxpayers in this wealthy category will also see an increase in their capital gains tax rate and dividend tax rate from 15% to 20%. Also, married couples that earn more than $300,000 and individuals that earn more than $250,000 will face a phaseout of the personal tax exemption.

2. Estate Tax Changes – The estate tax is alive and well. The federal estate tax exemption for 2013 will be $5.25 million per person and be indexed for inflation in future years. Effective January 1, 2013, the top federal estate tax rate will increase from 35% to 40%. Portability of the unused exemption will remain in place for spouses. And the gift tax exemption will remain at $5 million. The Illinois estate tax exemption will increase to $4 million per person for 2013.

3. Payroll tax – Since 2011, the payroll tax rate, which funds Social Security, was kept at 4.2%. Starting January 1, 2013, the payroll tax rate will now revert back to 6.2% for those earning wages.

4. Good news for doctors (and all of us) – For another year, doctors will not suffer the previously scheduled 27% reimbursement cuts to Medicare patients’ fees.

5. Older Americans Act funding – There is additional increased funding for important aging programs. For fiscal year 2013, Area Agencies on Aging will receive an additional $7.5 million in additional funds. The Aging and Disability Resource Centers received an additional $5 million. The National Center for Benefits and Outreach Enrollment will also see an increase of $5 million in funding. Also, Medicare State Health Insurance Programs (SHIP) will receive an additional $7.5 million in additional funding for 2013.

6. Sequestration – The scheduled automatic spending cuts are delayed by a few months. Half of the cuts would come from defense spending and the other half would come from non-defense spending.

7. Class Act is repealed – This was to be an attempt at a national long-term care insurance program. It was scrapped in exchange for the establishment of the Commission on Long-Term Care.

8. Commission on Long-Term Care – This commission will develop a plan for the establishment, implementation and financing of a comprehensive system that ensures availability of long-term care services and support. The commission will look into the coordination of Medicare, Medicaid and private long-term care insurance. The commission will have 15 members, including the President. The various members will represent the interests of consumers, older adults, family caregivers, healthcare workers, private long-term care insurance, state insurance departments, and state Medicaid agencies.

Let’s hope they come up with an affordable long-term care model for our boomers and seniors. The (NAELA)Illinois Supportive Living program provides a wonderful example.

Remember, the most painful financial crisis affecting seniors and boomers today is the devastating cost of long-term care ($6,000 to $10,000 per month, per person in the Chicagoland area!).

9. Other items – The bill extended Medicare programs for older Americans including the payment for outpatient therapy services and specialized Medicare advantage plans for special needs individuals. The bill also extended the Qualifying Individual program (QI program).

10. Note – This is complicated stuff. But don’t let it stop you. Keep reading in the months ahead to understand more about the changes and how they might impact you. Also note that this bill still doesn’t solve the problems regarding sequester and the debt limit debate. That heavy lifting is still coming. Things will certainly heat up between now and May in trying to resolve those issues.

Takeaways – Stay tuned in. Start your “senior” estate planning now.

Anthony Ferraro is a member of the
National Academy of Elder Law Attorneys, Inc. (NAELA)

All affordable assisted living communities managed by BMA Management, Ltd. are certified and surveyed by the Illinois Department of Healthcare and Family Services. All assisted living communities are licensed and surveyed by the Illinois Department of Public Health.

“BMA Management, Ltd. is the leading provider of assisted living in Illinois
and one of the 20 largest providers of assisted living in the United States.”

What are your thoughts? Leave a comment and let us know.

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Are You Thinking of Buying Into a Continuing Care Retirement Community?

Thursday, March 8th, 2012

A Guest Blog by Elder Law Attorney Anthony B. Ferraro

Are you thinking of buying into a continuing care retirement community?
That is often a good idea but, think again carefully.
A new Illinois Medicaid law dramatically changes the treatment of
entrance fees at Continuing Care Retirement Communities

Anthony B. Ferraro - Elder Law Attorney

Continuing Care Retirement Communities (CCRCs) are communities that provide a full continuum of care for its residents. They have flexible accommodations designed to meet their resident’s health and housing needs as their needs change over time. They offer independent living, assisted living and nursing home care, usually all in one location. 

As a requirement for admission to most CCRCs, residents are required to pay an entrance fee or a lump sum “buy-in” which, in addition to other things, guarantees the resident’s right to live in the facility for the remainder of their lifetime. In addition to the entrance fee, residents also pay a monthly service fee.

The entrance fee is often, but not always, reimbursable (at least partially) if the individual moves from the facility, if they pass away while a resident at the facility, or if they otherwise terminate the contract. Many contracts also contain a provision wherein an individual is able to use a portion of their entrance fee toward their monthly resident charges if the resident exhausts his resources and becomes otherwise unable to pay.

Prior Law

Prior to the new Medicaid law (the Deficit Reduction Act of 2005, hereinafter “DRA”), the entrance fee was generally not considered an available asset for Medicaid eligibility purposes.

New Law

Under the new DRA, that took effect on January 1, 2012, a CCRC entrance fee is considered an available or “countable” asset if: ➊ the contract provides the entrance fee may be used to pay for care should the resident run out of money and become unable to pay their monthly charge; or ➋ the individual is eligible for a refund of any remaining entrance fee when the individual dies, leaves the community or otherwise terminates the life care contract; and ➌ the entrance fee does not confer an ownership interest in the CCRC.

Also, under the new law, CCRC’s are given the authority to include in their contacts a provision which requires residents to spend all of their resources on their care prior to applying for Medicaid benefits (essentially disallowing any Medicaid planning or asset protection once the contract is signed). Thus, when an individual applies for admission to a CCRC, the application may request full disclosure of an individual’s resources.

Prior to the new law, regardless of the amount of resources an individual declared, the CCRC could not prohibit the individual from doing any long-term care planning or asset protection planning and then applying for Medicaid.

Problem Created by New Law

Now CCRC’s can contractually require a resident to spend down all of the assets they declared at the time of admission before applying for medical assistance.

This new provision will greatly limit the ability of CCRC residents to protect their assets once admitted to the community.

Some residents may not care about the ability to protect their assets once they are admitted to the community. But for those of you that do care about protecting assets from being lost to the devastating cost of long-term care, the inability to plan with your remaining dwindling resources is a big deal!


It is a good idea to consult with an experienced elder law attorney prior to entering into a contract at a Continuing Care Retirement Community. This ensures that you understand how your entrance fee/”buy-in” agreement may financially and legally impact your long term care plan and any asset protection planning that you may have in mind. CCRC’s can do a nice job of providing care, but there is no substitute for getting the appropriate legal advice before you enter into a binding contract with anyone.

All affordable assisted living communities managed by BMA Management, Ltd. are certified and surveyed by the Illinois Department of Healthcare and Family Services. All assisted living communities are licensed and surveyed by the Illinois Department of Public Health.

“BMA Management, Ltd. is the leading provider of assisted living in Illinois
and one of the 20 largest providers of assisted living in the United States.”

What are your thoughts? Leave a comment and let us know.

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