It is that time of year again -- time to reassess whether your Medicare plan is working for you. Medicare's open enrollment period began November 15 and continues until midnight December 31. During this period, you may enroll in a Medicare Part D (prescription drug) plan or, if you currently have a plan, you may change plans. In addition, during this period you can return to traditional Medicare from a Medicare Advantage (managed care) plan, enroll in a Medicare Advantage plan, or change Medicare Advantage plans. Beneficiaries can go to www.medicare.gov or call 1-800-MEDICARE (1-800-633-4227) to make changes in their Medicare prescription drug and health plan coverage.
If you take no action, you will remain in your current plan unless your Medicare Advantage or drug plan is terminating its Medicare contract. Also, if you receive the Low-Income Subsidy (LIS) to help pay for some or most of your Part D drug costs, you may be randomly reassigned to a different plan. (For more on the LIS program, also known as "Extra Help," click here.)
But even beneficiaries who were satisfied with their plan in 2009 need to review their options for 2010. Prescription drug plans can change their premiums, deductibles, the list of drugs they cover, and their plan rules for covered drugs, exceptions and appeals. Medicare Advantage plans can change their entire benefit package and as well as their provider network.
Average premiums for prescription drug plans will rise 11 percent from $35 in 2009 to nearly $39 per month in 2010, which is a 50 percent increase from $25.93 in 2006, the first year of the Medicare Part D drug benefit. Also, more drug plans will charge a deductible in 2010. Sixty percent of plans will charge a deductible, up 15 percent from 2009. The number of plans that offer enrollees some coverage in the doughnut hole -- the coverage gap when consumers pay the full price for their prescriptions -- continues to shrink as well.
At www.medicare.gov/MPDPF you can evaluate drug plans. The Web site allows you to enter the list of medications you currently take to determine the amount that each prescription drug plan available in your area charges for premiums, copayments, and deductibles. It also allows you to compare Medicare prescription drug plans based on customer service and other criteria. You can compare Medicare Advantage and Original Medicare plans at www.medicare.gov/MPPF/. If you are enrolled in a Medicare Advantage plan, chances are it offers its own prescription drug coverage.
Some factors to look at when evaluating your drug plan include:
Some factors to look at when comparing Medicare Advantage plans include:
The Center for Medicare Advocacy offers a detailed list of things to consider when evaluating Part D and Medicare Advantage plans. For the list, click here.
For ElderLawAnswers' checklist, "10 Factors to Consider When Choosing a Medicare Drug Plan," which includes a link to a Drug Plan Comparison Worksheet to help you compare drug plans side by side, click here.
For the Medicare Rights Center's "What questions should I ask before joining a Medicare private health plan?" click here.
For the Center's "Enrolling in Part D and Changing Drug Plans," click here.
Medicare's Medicare and You handbook was mailed to all Medicare beneficiaries in October. The handbook is also available online. To download an copy, click here.
The Kaiser Family Foundation has published three "Data Spotlights" on "Medicare Advantage Availability and Premiums," "Part D Plan Availability in 2010 and Key Changes Since 2006," and "Medicare Part D 2010: The Coverage Gap."
For more information on Medicare, click here.
- What is the monthly premium?
- What is the cost sharing for doctor visits?
- Which doctors and hospitals are covered?
- Are any extra benefits included and will they be useful to you?
- What is the monthly premium?
- Does the plan continue to cover necessary drugs?
- Does the plan provide coverage for drugs in the "doughnut hole" or coverage gap?
- What pharmacies are covered under the plan?
As the New Year approaches, taxpayers around the nation are thinking about making gifts or other financial moves before January 1 that will benefit them come April 15, 2010. Here are some year-end considerations of particular interest to seniors.
A Reprieve on RMDs
Last year, as the stock market plunged and the economy teetered on the brink, Congress suspended the penalty for seniors who fail to take the required minimum distribution (RMD) from their IRA and employer retirement accounts in 2009.
There is normally a penalty for failure to withdraw once the account owner reaches retirement age -- after age 70 1/2. Taxpayers generally must begin taking annual distributions from their retirement accounts by the April 1 occurring after they reach age 70 1/2 or pay a whopping 50 percent excise tax on the amount that should have been distributed but was not. To prevent seniors from being forced to sell stocks in a down market, Congress suspended the required minimum distribution rule for 2009.
If you turned age 70 1/2 before 2009, you would normally be required to take your 2009 distribution by December 31, 2009. If you turned or will turn age 70 1/2 in 2009, you would normally be required to take your required distribution no later than April 1, 2010. In either case, you will not need to take this distribution. The new law also waives 2009 distributions for beneficiaries of inherited IRAs and employer retirement accounts. However, taxpayers still must take their 2010 distributions no later than December 31, 2010.
Gift Threshold Now $13,000
The amount that may be gifted each year to any one person without the need to file a gift tax return rose from $12,000 to $13,000 on January 1, 2009. The increase to $13,000 means that more can be given away for estate tax planning purposes. For example, a married couple with four children will be able to give away up to $104,000 in 2009 with no gift tax implications.
Charitable Donations From an IRA Not Taxable
As part of the large financial rescue package, Congress retroactively extended the IRA charitable rollover provision from January 1, 2008, through December 31, 2009. This reinstates the rollover exemption that was part of the Pension Protection Act of 2006.
Previously, those wishing to make charitable donations using money in their IRA accounts were required to withdraw funds from their IRA and pay income tax on the withdrawal before they could take a charitable donation deduction on their annual tax returns. But under the new law, so long as the donation is transferred directly from a traditional or Roth IRA or rollover IRA account to an eligible public charity, the donor doesn't have to pay any income tax on the withdrawal at all. As far as the federal government is concerned, money donated to the charity simply is not income. (But note that the transfer is no longer eligible for the charitable tax deduction, either.) For details and restrictions, click here. For more from the IRS on this and other charitable donation rules, click here.
Rollover Retirement Distributions
Those 70 1/2 or older who took a distribution from a retirement plan or IRA earlier in the year may be able to avoid tax on the payout by rolling it over into an eligible retirement plan (including an IRA) before December 1, 2009.
A great way to reduce taxable income is to contribute funds to an IRA or to your 401(k) through work. In addition, the income on assets in the IRA or qualified plan are deferred until the withdrawal is made. The contribution limits for traditional and Roth IRAs remain the same for 2009 as in 2008: $5,000 for a single person and $10,000 for a couple, or $6,000 for a single person if over 50 and $12,000 if both spouses are over 50 and married. If you are self-employed, the contribution limite for a SEP-IRA or a simple IRA is $49,000 per year. Keep in mind that there are limitations on the contributions that may be made based on income and other specific data.
Take Advantage of Losses
Even though the market has posted gains since the dark days of last March, many investors still have long-term capital losses on investments held longer than one year. You can deduct up to $3,000 of these losses a year against ordinary income, with the excess carried forward for use in future years.
New Roth Rollover Rules Take Effect Jan. 1
Before January 1, 2010, you can convert a traditional IRA to a Roth IRA only if your adjusted gross income is less than $100,000. The income limit is lifted on January 1, at which point anyone will be able to rollover a traditional IRA to a Roth. Roth IRAs grow tax-free, but you'll have to pay taxes when you convert a regular IRA to a Roth. However, the tax bill can be spread over two years. For details on Roth rollover rules from Kiplinger.com, click here. For an article on the benefits of Roths for heirs, click here.
If you have questions about how to take advantage of tax-saving opportunities before year's end, be sure to consult your attorney or financial advisor.
The worst U.S. economic recession in 70 years is forcing senior citizens out of retirement, leaving them fighting for jobs in a weak labor market or risk homelessness, according to a private study. The study by Experience Works, released on Tuesday, showed 46 percent of the 2,000 low income people over 55 years who participated needed to find work to keep their homes. Nearly half of them had been searching for work for more than a year. Experience Works is the nation's largest nonprofit provider of community service, training and employment opportunities for older workers. The study was conducted in the past two months and covered 30 states and Puerto Rico. "These people are at the age where they understandably thought their job-searching years were behind them," said Cynthia Metzler, president and CEO of Experience Works. "But here they are, many in their 60s, 70s and beyond, desperate to find work so they can keep a roof over their heads and food on the table." According to the study, many of the participants had no intention of working past their 60th birthday, but had to change plans after being laid off or following the death of a spouse. Over a third of the participants had retired. Ninety percent of respondents 76 years and older planned to continue working for the next five years.
Source: Reuters (22 September 2009)
The number of retired workers who began collecting Social Security benefits jumped by a record 19% in the 2009 fiscal year that ended Wednesday as aging Baby Boomers and the unemployed chose to retire early. More than 2.6 million retired workers entered the Social Security system, up from 2.2 million in fiscal 2008. That's a much bigger increase than during past recessions. "There are just not enough jobs for older people," says Richard Johnson, senior fellow at the non-partisan Urban Institute. "They have no choice but to go on Social Security." The number of disabled workers receiving first-time benefits also soared to nearly 1 million, an increase of 100,000 over the previous year, according to Social Security Administration records. Those two factors are putting new pressure on Social Security's finances. The program paid out $6 billion more in August than it took in. It's projected to run in the red for the next two years before returning to a surplus in 2012. "We have the combination of more people filing for early retirement and disability benefits at the same time that we have a reduction in the size of the workforce," said Stephen Goss, Social Security's chief actuary. The figures are affected both by the lengthy recession, which has sent unemployment to 9.7%, and by Baby Boomers who began reaching the early retirement age of 62 in 2008.
Source: USA Today (2 October 2009)
Full story: http://www.usatoday.com/news/nation/2009-10-01-social-security_N.htm
There is no ‘miracle cure’ just around the corner for dementia. And yet while the number of people suffering from dementia is increasing rapidly, there is a widespread lack of understanding about what people with dementia are capable of doing. This report concludes that we need to do more as a society to enable people to live well with dementia. Currently, they are not getting the support and respect that they need. This report presents an ethical framework to help those who face dilemmas in connection with the everyday care of someone with dementia. The framework forms the basis for a number of recommendations to policy makers in the following areas: promoting autonomy and well-being through an ethical approach to dementia care; including people with dementia in society; aking decisions about the care and treatment of people with dementia; dealing with day-to-day ethical dilemmas in care; recognising the needs of carers; and research funding and participation.
Source: Nuffield Council on Bioethics (1 October 2009)
ESTATE TAXES: What's a Taxpayer to Do?
After almost a decade of changes in the federal estate tax code, and many states changing their tax structure in response to the federal changes, clarity appears to be on the horizon. Congress's recently passed budget resolution would make the current estate tax rules permanent, taxing only estates over $3.5 million in value with the tax rate set at 45 percent. Although no actual legislation has yet been voted on, the nonbinding budget resolution sets guidelines for Congress to follow when writing tax and spending legislation later this year.
In light of this and other changes, taxpayers need to review their estate plans with the following issues in mind:
- Simplify if possible. The increase in the tax threshold from $600,000 at the beginning of the decade to $3.5 million today, coupled with the drop in most taxpayers' net worth over the past year, means that many people who had taxable estates no longer do. They may be able to significantly simplify more complicated estate plans that were necessary in the past to eliminate or decrease taxes due at death.
- But beware state tax laws. In the past, most states had very similar estate tax laws that were tied to the federal laws. As a result of changes in the federal estate tax, though, many states that were tied to the federal system found that their estate tax revenue was dropping to zero. To increase their revenue, these states "decoupled" and established their own estate tax plans. Taxpayers need to learn what the law is in their state and whether their existing plan is up to date. This is especially true for taxpayers who have moved from one state to another since signing estate planning documents.
- Review life insurance. All consumers should have their life insurance policies reviewed if they have had them for more than a few years. Some universal life policies that were based on projections made when the economy was stronger may be "underwater" and may need more robust premium payments to sustain them over the long term. With other policies where the premiums were based on old tables measuring life expectancy, the consumer may be able to lower her premium payments or increase the death benefit. Finally, consumers should never simply drop policies they no longer need or can afford. They may be giving up a large benefit for their heirs and they may be able to sell the policy for a larger return than the policy's cash surrender value.
- Refocus estate planning. The threat of the estate tax had the beneficial effect of prompting many consumers to do estate planning. But it also sometimes diverted them and their advisors from the real purpose of estate planning: to leave the legacy they want. The estate plan people leave can benefit children and grandchildren for decades to come, or it can cause familial strife that tears the family apart. The choice of executor and trustee and the terms under which heirs will receive property are vital issues that deserve your full consideration, regardless of whether taxes are an issue.
With the stigma of tattoos diminishing, more baby boomers are heading to tattoo salons to add colorful designs to their bodies. "One of my best clients got his first tattoo after he retired," says Dan Conner, co-owner of Mid Air & Ink, a Des Moines tattoo studio. "He worked for the government and felt he couldn't do it then. He was 60 when he retired, and he really went nuts. But he had a great plan (for getting tattooed)." Conner says he does a lot of tattoos for clients who are in their late 40s to mid-50s. "With some, they felt it wasn't socially acceptable 15 or 20 years ago to get a tattoo," Conner says. "And some are getting close to retirement, and they don't give a dang." A 2008 Harris poll showed that about 20 percent of adults between the age of 40 and 64 reported having one or more tattoos. People are becoming more comfortable and curious about body art, tattoo artists say. Dr. Ava Feldman, a Clive dermatologist, says she has seen a slight increase in the number of baby boomers with tattoos at her office. One woman had a blue rose tattoo on her in remembrance of her late mother. Another had a little angel tattoo near where she had melanoma, Feldman says. Improving laser techniques are helping with tattoo removal, but it is still a long process, she says. People on certain medications, such as blood thinners, are not good candidates for tattoos, Feldman says. Others are allergic to certain types of tattoo dyes, she says.
Source: Des Moines Register (5 June 2009)
When terminally ill patients become mentally incapacitated, their surrogates often make treatment decisions in collaboration with health care providers. The authors examined how surrogates' errors in reporting their spouses' preferences are affected by their gender, status as durable power of attorney for health care (DPAHC), whether they and their spouses discussed end-of-life preferences, and their spouses' health status. Structural equation models were applied to data from married couples in their mid-60s from the 2004 wave of the Wisconsin Longitudinal Study. Surrogates reported their spouses' preferences incorrectly 13% and 26% of the time in end-of-life scenarios involving cognitive impairment and physical pain, respectively. Surrogates projected their own preferences onto their spouses'. Similar patterns emerged regardless of surrogate gender and status as DPAHC, marital discussions about end-of-life preferences, or spousal health status. Implications for the process of surrogate decision making and for future research are discussed.
Source: Research on Aging (July 2009)
"Parentgiving" website offers assistance to adult children caring for elderly parents
Caregivers provide better care for their aging parents by providing: in-depth information and helpful checklists about a variety of caregiving topics; on-call professional care managers who possess the expertise and experience necessary to help navigate through the maze of caregiving; and a more enlightened shopping experience at the Shop Parentgiving store, where family caregivers can learn about and shop for the products and supplies that best fit their aging parents needs. So whether you are a new caregiver or have been caring for your aging parent for years, Parentgiving.com is here to answer questions, streamline your time, reduce your stress and simplify your life.
Source: Current Awareness in Aging Research (CAAR) Report #490 (4 June 2009)
Visit the website: http://www.parentgiving.com
British scientists studied 1,320 people with dementia and looked at their past education, employment and retirement history. Although there was no link with education or employment, the people who retired later developed dementia later. It is thought the mental stimulation may help delay the effects of dementia or it may be that people who retire earlier do so for ill health which itself contributes to the development of dementia symptoms. The study published in the International Journal of Geriatric Psychiatry found on average with every extra year of employment the age of onset of Alzheimer's Disease became 0.13 years later. The Institute of Psychiatry at King's College London study, funded by the Alzheimer's Research Trust. Prof Simon Lovestone, Scientific Adviser to the Alzheimer's Research Trust and the paper's co-author, said: "The intellectual stimulation that older people gain from the workplace may prevent a decline in mental abilities, thus keeping people above the threshold for dementia for longer. Much more research is needed if we are to understand how to effectively delay, or even prevent, dementia." Rebecca Wood, Chief Executive of the Alzheimer's Research Trust, which funded the study, said: "More people than ever retire later in life to avert financial hardship, but there may be a silver lining: lower dementia risk. Much more research into lifestyle factors is needed if we are to whittle down the £17 billion a year that dementia costs our economy."
Source: Telegraph (18 May 2009)
Full story: http://www.telegraph.co.uk/health/healthnews/5338518/Later-retirement-may-stave-off-dementia-say-researchers.html
Elder financial abuse costs older Americans more than $2.6 billion per year and is most often perpetrated by family members and caregivers, according to a new report released by the MetLife Mature Market Institute. The report, Broken Trust: Elders, Family and Finances, was produced in conjunction with the National Committee for the Prevention of Elder Abuse and Virginia Polytechnic Institute and State University. It points out that up to one million older Americans may be targeted yearly and that related costs such as health care, social services, investigations, legal fees, prosecution, lost income, and assets reach tens of millions of dollars annually. The study indicates that for each case of abuse reported, there are an estimated four or more that go unreported. Family members and caregivers are the culprits in 55 percent of cases; financial losses are higher with investment fraud scams. The National Adult Protective Services Association suggests that the “typical” victim of elder financial abuse is between the ages of 70 and 89, white, female, frail, and cognitively impaired. She is trusting of others and may be lonely or isolated, although reports show that there is a very diverse population of victims.
Source: Financial Planning (8 May 2009)
Full story: http://www.financial-planning.com/news/elder-financial-abuse-costly-2661878-1.html
Get the MetLife report: http://www.metlife.com/assets/cao/mmi/publications/studies/mmi-study-broken-trust-elders-family-finances.pdf
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