Elder Law of Louisville's Blog

Saturday, March 5, 2011

Tax Act Brings Changes to SSI / Medicaid Treatment of Refunds, Tax Credits

Many people heard about the last minute deal struck at the end of 2010 to extend tax cuts created by former President George W. Bush.  In my world, the big news was that the $3.5 million estate tax exemption would not only be continued, but actually increased to $5 million.  That law also contained several little-noticed provisions that fundamentally alter how the Supplemental Security Income (SSI) and Medicaid programs treat tax refunds and other tax credits, making it easier for elders and people with special needs to maintain their benefits.

Pursuant to the new law, tax refunds are not considered countable income for SSI or Medicaid purposes. Furthermore, any money received through a tax refund will not be a countable resource for 12 months following receipt of the funds, and SSI and Medicaid recipients will be under no obligation to segregate the funds from their other resources. The same rule applies to tax refunds received prior to an application for SSI or Medicaid, which means that so long as an applicant can point to funds in his account that are traceable to a tax refund during the previous year, those funds will not be a countable resource until the year has passed.
The new law also changes the treatment of several other important tax credits. Under previous rules, Making Work Pay, Earned Income, Advanced Earned Income, and Child Tax Credits were all excluded as countable income for SSI and Medicaid purposes, but if the income was retained, it had to be spent within nine months of receipt. Now, the 12-month rule applies to all of these tax credits and, furthermore, First-Time Homebuyer Tax Credits that were previously countable as income and as a resource are now exempt and subject to the same countability rules as the other tax credits.
CMS' Informational Bulletin also addresses what happens when an applicant seeking Medicaid long-term care benefits places her tax refund into a trust. According to the bulletin, the law "effectively precludes applying penalties under section 1917(c) of the Social Security Act to individuals who, in applying for long term care benefits under the Medicaid program during the period in which tax refunds or advance payments are not countable either as income or resources . . . dispose of part or all of the refunds or advance payments in a manner that normally would be considered a transfer of assets for less than fair market value."
In one more piece of good news, the law applies to any refunds or credits received after December 31, 2009, which means that, in limited cases, applicants who were initially denied SSI or Medicaid benefits due to receipt of a tax refund or credit may actually be retroactively eligible for benefits.

Friday, March 4, 2011

Kentucky Senate Refuses to Drop Medicaid Funding Plan

As expected, the Kentucky Senate on Friday refused to drop its changes to a bill to shore up the finances of the state’s Medicaid program.  That sets the stage for appointment of a conference committee to resolve the differences between the House and Senate.

The House voted to transfer $166.5 million from the 2011-12 Medicaid budget to make up for a shortfall this year. It would then be up to Gov. Steve Beshear to produce savings to plug that hole in 2011-12.  The Senate disagreed with this plan and proposed to transfer the money, but make cuts in other areas of state government to shore up the 2011-12 Medicaid budget.

In other action, a bill to streamline state guardianship procedures to conform with those in other states won approval from the Senate Friday.  House Bill 164, sponsored by Rep. Mary Lou Marzian, D-Louisville, will allow Kentucky to recognize legal guardians from other states.  It now goes to Gov. Steve Beshear.

The Senate also approved a House bill that would bar people who abuse or financially exploit vulnerable adults from inheriting from their victims.  HB 52 also would prevent such individuals from serving as guardians, power of attorney or executor for their victims.  Because of Senate changes, that bill goes back to the House for final approval.


Courtesy Courier-Journal

Thursday, March 3, 2011

Kentucky Legislature Deadlocked Over Fixing Medicaid Budget

Kentucky's House Speaker Greg Stumbo said Thursday that the House would refuse to cut education funding as proposed by the Senate in its plan to balance the state's Medicaid budget.  “We're not going to cut education when there's a viable alternative, I'll tell you that,” said Stumbo, D-Prestonsburg. “And there is a viable alternative.

In addition, Chief Justice John Minton said the Senate cuts to the judicial budget would prevent the implementation of the penal reform measures contained in a major bill passed this session and signed into law by Gov. Steve Beshear.

The House voted Thursday to refuse to go along with the Senate Medicaid plan. And the Senate was expected to make the deadlock official by refusing to back off from the cuts it proposed.  So a conference committee of House and Senate leaders is expected to begin meeting Friday to resolve the gaping differences in their approaches to balancing the Medicaid budget.

At issue is House Bill 305 which, as passed by the Democrat-controlled House last month, would enact Gov. Steve Beshear's plan to plug a funding hole in the current Medicaid budget with $166.5 million budgeted for the program in the 2011-12 fiscal year, which begins July 1.  Beshear promised in turn to find savings of $166.5 million in next year's Medicaid budget by contracting out certain aspects and services of the program.

But Republicans who control the Senate say that they can't accept Beshear's promise of future savings and that the state must cut spending now to be certain budget problems don't grow worse.  “You need to take precautionary steps now because we don't believe it is possible to have the savings” that Beshear's plan promises, said Senate Republican Leader Robert Stivers of Manchester.

The Senate plan calls for cutting state funding to all agencies by about one-half of 1 percent in the final quarter of this fiscal year, and by about 2 ¼ percent in 2011-12.  Schools and universities would be exempt in the final quarter of this year, and the cut to basic school funding in 2011-12 would be about 1.3 percent.

But Stumbo ruled out cuts to school funding. His office released data showing district-by-district cuts — with the Jefferson County schools losing nearly $4.2 million in 2011-12.  Asked if could accept cuts to any agencies, Stumbo noted that Beshear has already overseen eight rounds of spending cuts in three years totaling $1 billion.  And he said the House would be willing to consider a list of contingent cuts as a “back-up plan” if it appears Beshear's savings may fall short.
“The obvious question is why would we go to the nuclear option, if you will, of cutting education, before we give the governor the opportunity of doing what we know he's been good at doing over the past three years?” Stumbo said.

Education groups, advocates for the needy and others dependent on state funding say more cuts will affect services and force layoffs.  Brad Hughes, spokesman for the Kentucky School Boards Association, said the $38.6 million cut in base funding would deal a serious blow to schools as they prepare to implement the new assessment program known as Senate Bill 1.

The Senate approach gives schools ways to be flexible and stretch their dollars, including permission to exceed maximum class sizes allowed by law.  “But the major concern you would hear from superintendents and school board members is raising class sizes,” Hughes said. “Nobody wants to say to a teacher who's got to start a new teaching approach (under Senate Bill 1) that the class size will be larger.”

Mark Hebert, spokesman for the University of Louisville, said U of L “has suffered 11 budget cuts in 11 years and the state Senate's proposal would add another $4 million in cuts on top of the cuts we're already expecting in 2011-12.  Obviously, we'll be disappointed if state lawmakers approve more cuts.”

Minton said in his letter to legislative leaders that the proposed cuts, on top of reductions in recent years, would total 28.5 percent for the judicial branch.  “The court system cannot absorb further cuts without severely curtailing our daily operations and preventing our ability to implement penal code reform as mandated by House Bill 463,” Minton wrote.
Jefferson County Commonwealth’s Attorney Dave Stengel said, “We've already cut and cut and cut and there's nothing left. This will mean some layoffs and will definitely affect the quality of prosecution and public safety.”

Sheila Schuster, executive director of the Advocacy Action Network, an umbrella organization for groups that advocate for behavioral health and health care reform, said, “Across-the-board cuts will really hurt our already chronically underfunded programs that serve people with a wide range of disabilities who need those services.”

Ellen Kershaw, a spokeswoman for the Alzheimer's Association in Kentucky, said her organization is concerned about the prospect of deeper cuts to state agencies — particularly the state Department of Aging and Independent Living. The agency, which funds services such as senior centers, Meals on Wheels, adult day programs and services at home for the elderly and disabled, has lengthy waiting lists.  “At a time when the aging population is growing and the need is growing, it makes to no sense to impose more cuts,” Kershaw said.
But Stivers said that if cuts aren't made now much more painful ones will be required late in the two-year budget cycle when it will be apparent Beshear's approach did not work.  “We'll be in tremendously much worse shape. ... We're talking about 4 and 5 (percent) even maybe higher cuts,” he said.
Courtesy, Courier-Journal

Tuesday, February 22, 2011

Lexington, KY and Louisville, are among Forbes Top 25 Cities For An Active Retirement

Louisville, KY and Lexington, KY made Forbes' list of Top 25 cities for an active retirement.  Lexington, KY is ranked #10 very high rates of volunteerism and doctors per capita.  Louisville, KY is ranked #23, with good rankings across all four categories, with its strongest category being the strength of the biking community.  Forbes ranked the top cities based on four critieria: volunteerism rate, number of doctors per capita, violent crime rate, and strength of the biking community.


For a complete list of the Top 25 cities:

Monday, February 14, 2011

Basic VA Pension Eligibiilty Requirements

  1. Be a veteran who served at least 90 days of active duty or the surviving spouse of a wartime veteran (married at the time of veteran’s death)
  2. At least one day of active duty had to be during wartime:
  3. WWII – 12/7/41 to 7/25/47
  4. Korea– 6/27/50 to 12/31/55
  5. Vietnam– 8/5/64 to 5/7/75
  6. Does not need to have been in combat
  7. Discharged other than dishonorably
  8. Honorable discharge
  9. Discharge under honorable conditions
  10. General Discharge
  11. Bad conduct discharge, Discharge under other than honorable conditions, or Undesirable discharge may still be eligible after a "character of service determination" hearing
  12. Income less than $1,800 per month, once out-of-pocket medical expenses are considered (less than $951 per month for a surviving spouse)
  13. Net worth less than approximately $50,000 for singles or $80,000 for couples

Friday, February 11, 2011

Ways to Help Parents With Finances

A frequent challenge for children of seniors who are beginning to fail is how to help them with their finances without taking away their autonomy or getting into a tug-of-war over the issue.  Concerns often arise when visiting children find that bills have not been paid, papers are in disorder, or even that utilities have been cut off.  It’s not unusual to find parents defrauded by predators or going on a spree on the Home Shopping Network.

All parents, children and the relationships between them come in different flavors. Some parents freely share financial information with their children and readily let them participate in bill paying and investment decisions.  Others hold onto control as if their lives depended upon it — and well it might, to the extent that they would lose their identity along with their checkbook.  They may even suspect their children of wanting to take their money.

So there’s no single answer for every situation.  Following, however, are approaches that we have worked for many of our clients in the past:

  • Offer to help with bill paying.  Permit the senior to continue to control the checkbook, but schedule a monthly sit-down to go through all of the bills that have accumulated.  The child can write out the checks, but permit the parent to sign them.


  • Use the Internet.  With on-line access to accounts, children can monitor them without stepping to take control.  If unusual payments or transfers occur, children can step in quickly, rather than waiting to review monthly statements.


  • Segregate accounts.  Leave the senior in charge of the family checking account, but take control of investment accounts.  This will leave only smaller amounts at risk, rather than the parent’s entire estate.


  • Make sure the parent does estate planning while competent.  Through properly-executed durable powers of attorney and revocable living trusts, children can step in when needed.


  • Play on parental responsibility.  While it is contrary to the traditional parent-child relationship for the child to take over the parent’s finances, it is consistent with such roles for the parent to take care of the child.  Pitch the need to help with finances as a way to put the child’s mind at ease, rather than as a response to the parent’s increasing incapacity.  This is something the parent can do for the child, rather than the other way around.


  • If all else fails, it may be necessary for the child or children to seek court appointment as guardian or conservator over the parent’s finances.  While this gives them complete control, it removes the parent’s right to make any financial or legal decisions.  In addition, it involves legal costs, periodic reporting to the court and, in some instances, the necessity of seeking court approval for expenditures or estate and long-term care planning steps that could be carried out freely under a durable power of attorney or revocable living trust.

Just as there is no single answer for every family situation, it may be necessary to try various interventions to determine which works best.  Or, one may work for a while, and then it may become necessary to take a more drastic step if the situation deteriorates.

Courtesy Elder Law Answers.

Friday, February 11, 2011

State Lawmakers Trying to Protect Elderly and Disabled

A House bill to create a registry of people who abuse adults cleared a committee Thursday, one day after a Senate committee approved a similar bill.  House Bill 101 would create a database similar to the child abuse registry.  Kentucky currently maintains a registry of those found by state social service officials to have neglected or abused children — and those individuals are barred from jobs caring for children, such as in day care facilities or schools.  HB 101 passed the House Health and Welfare Committee unanimously with little discussion. The Senate Health and Welfare Committee approved a similar measure, Senate Bill 38, on Wednesday.  The bill now goes to the House.

The committee also approved and sent to the full House several other measures Thursday involving health care and the protection of people with disabilities.  This includes approval of a measure meant to protect disabled adults in institutions. HB 132 would allow for immediate dismissal of any worker in a licensed facility for adults with mental disabilities who negligently fails to provide supervision of residents, placing them at risk of death or injury.  This bill will also go to the House.
Courtesy Courier-Journal.

Thursday, February 10, 2011

2011 Long Term Care Insurance Price Index

A 55-year-old individual can expect to pay $1,480 annually for $169,000 in current benefits, which would grow to $354,000 of coverage by age 80, according to the 2011 Long-Term Care Insurance Price Index, an annual report from the American Association for Long-Term Care Insurance, an industry group.

A 55-year-old couple purchasing long-term care insurance protection can expect to pay $2,350 a per year (combined) for about $338,000 of current benefits, which would grow to about $800,000 of combined coverage for the couple when they turn age 80. If the 55-year-old couple did not qualify for preferred health discounts, but rather for standard rates as a result of having one or more health issues, their cost would increase by $325 annually.

The study found that rates for comparable coverage from leading insurers could vary by between 41 and 48 percent.

According to Association research, three-fourths (78 percent) of long-term care insurance policies are bought by couples where either both or just one spouse purchases coverage. The average age for individual purchasers is 57, with some 76.3 percent of purchases made between ages 45 and 64 according to the Association's research.

The 2011 Price Index analyzed costs for couples at ages 55, 60 and 65. In addition, for the first time, the analysis included a 3 percent compound inflation growth factor versus the 5 percent formula that has been used in prior studies. "More purchasers are opting for this formula which significantly reduces the cost of coverage and can be quite adequate in terms of future benefits," said Jesse Slome, the association's executive director. The Price Index also looked at rates for policies including the newer Shared Care option whereby two policyholders can each access a combined pool of benefits.

The full Price Index will be available only in the Association's 2011 Long-Term Care Insurance guide.


Courtesy Elder Law Answers.

Monday, February 7, 2011

An Historical Perspective on the Estate Tax

In a compromise between the Republicans in Congress and President Obama, the federal estate tax has been set for the next two years to apply only on those estate larger than $5 million and beginning at a 35% rate.  This is the lowest rate since the estate tax was instituted.  In recent years, the limits and rates were as follows:

Year                       Tax Threshold                   Highest Rate

1975 $60,000                                 77%

1980 $400,000                              70%

1985 $600,000                              55%

1990 $600,000                              55%

1995 $600,000                              55%

2000 $675,000                              55%

2005 $1,500,000                           47%

2010 Choice of 2011 rates or no tax.  (2011 tax structure has capital gains tax advantages.)

2011 $5,000,000                           35%

Tuesday, February 1, 2011

Elder Financial Abuse Checklist of Warning Signs

1. Enrollee's personal belongings, papers, or credit cards are missing; or there are signs of a break-in or vandalism on the premises.

2. Signatures on checks or legal documents that do not resemble enrollee's signature.

3. Frequent checks made out to "cash".

4. Enrollee appears truly fearful when questioned about another person's handling of the enrollee's finances.

5. Notice of eviction or foreclosure.

6. Notice to cut-off utilities or property tax past due.

7. Large number of credit cards to manage.

8. Numerous unpaid bills.

9. Purchase of home improvements that are more costly than appropriate for the home's value or enrollee's budget.

10. Enrollee owns home but no longer gets tax notice and doesn't know why.

11. Enrollee has signed blank legal or financial document "to be filled in later".

12. Problems with income taxes.

13. Enrollee has a trustee, conservator or representative payee AND enrollee's basic needs are not being met.

14. Enrollee signs on loan for another person.

15. Withdrawals from bank accounts or transfers that the enrollee cannot explain.

16. Unusual activity in the enrollee's bank accounts; such as large withdrawals, frequent transfers between accounts.

17. Explanations given about the enrollee 's finances don't make sense.

18. Enrollee has no documentation about financial arrangements.

19. The enrollee does not understand or know about financial arrangements that have been made for him or her.

20. Bank statements and canceled checks no longer come to the home, and enrollee does not know why.

21. Banking activities at new accounts at banks with which the enrollee has no prior connection.

22. A new person's name is added to a bank account and enrollee does not know why.

23. Frequent phone calls from charities or telemarketers.

24. Enrollee is spending money on sweepstakes, gambling games, psychics and other scams.

25. Relatives or caregivers, who were never involved before, suddenly appear and want to be very involved.

26. Enrollee is repeatedly solicited for un-prescribed "health services".

27. Telephone bill is unusually high.

28. Someone else controls the money and refuses to spend it on the enrollee.

29. Frequent or expensive gifts to a caregiver, friend, family or provider.

30. Someone else expresses too much interest in how much money is spent on the enrollee's care.

31. Enrollee is unaware of monthly income or recurring bills.

32. Legal documents suddenly appear, which the enrollee doesn't understand.

33. Enrollee or caregiver state that a contract exists for enrollee to pay for caregiver's services, especially if payment is a gift of the home.

34. Multiple visits by door-to-door salesmen.

35. New "best friends," or suspicious "sweetheart, including an improperly chummy or flirtatious provider.

36. Enrollee unaware of reason for upcoming appointment with banker or attorney.

Courtesy of

Tuesday, February 1, 2011

Elder Abuser Registry Proposed

Advocates hope to strengthen laws against adult abuse and neglect and financial exploitation in the 2011 legislative session.  A key issue for many advocates this year is creation of a state registry of people found to have abused or neglected adults — similar to the one the state already maintains for child abusers. Bills have been filed in both the House and Senate to do so.

Advocates say they will work to advance Senate Bill 38, sponsored by Sen. Julie Denton, R-Louisville, and House Bill 101, filed by Rep. Ruth Ann Palumbo, D-Lexington, despite concerns from state officials about potential costs.
Among the supporters is the Council on Developmental Disabilities, which believes a registry would help protect disabled or elderly adults by giving potential employers a place to check the backgrounds of people they hire to provide personal care at home such as housekeeping or bathing and grooming.
Courtesy Courier-Journal.

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