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Millions of seniors who signed up for popular private health plans through Medicare are facing sharp premium increases this year -- another sign that spiraling costs are a problem even for those with solid insurance. A study released Friday by a major consulting firm found that premiums for Medicare Advantage plans offering medical and prescription drug coverage jumped 14.2 percent on average in 2010, after an increase of only 5.2 percent the previous year. Some 8.5 million elderly and disabled Americans are in the plans, which provide more comprehensive coverage than traditional Medicare, often at lower cost. Lee Durrwachter, a retired chemical engineer from Grand Marais, Mich., said his premiums more than doubled this year -- even though he switched plans to try to save money. "It doesn't bode well," Durrwachter said. "It's unaffordable." The Medicare findings are bad news for President Barack Obama and his health care overhaul that is bogged down in Congress. That's because the higher Medicare Advantage premiums for 2010 followed a cut in government payments to the private plans last year. And the Democratic bills pending in Congress call for even more cuts, which are expected to force many seniors to drop out of what has been a rapidly growing alternative to traditional Medicare. Republicans have seized on the Medicare Advantage cuts in their campaign to derail the health care bills, and seniors are listening. Polls show seniors are more skeptical of the legislation than the public as a whole, even though Democrats would also reinforce original Medicare by improving preventive benefits and narrowing the prescription coverage gap.
Source: Boston Globe (February 19, 2010)
Full story: http://www.boston.com/business/healthcare/articles/2010/02
Social Security's annual surplus nearly evaporated in 2009 for the first time in 25 years as the recession led hundreds of thousands of workers to retire or claim disability. The impact of the recession is likely to hit the giant retirement system even harder this year and next. The Congressional Budget Office had projected it would operate in the red in 2010 and 2011, but a deeper economic slump could make those losses larger than anticipated.cc"Things are a little bit worse than had been expected," says Stephen Goss, chief actuary for the Social Security Administration. "Clearly, we're going to be negative for a year or two." Since 1984, Social Security has raked in more in payroll taxes than it has paid in benefits, accumulating a $2.5 trillion trust fund. But because the government uses the trust fund to pay for other programs, tax increases, spending cuts or new borrowing will be required to make up the difference between taxes collected and benefits owed. Experts say the trend points to a more basic problem for Social Security: looming retirements by Baby Boomers will create annual losses beginning in 2016 or 2017. "The moment of truth has arrived," says Rep. Paul Ryan, R-Wis., top Republican on the House Budget Committee. "This is a wake-up call." Social Security took in only $3 billion more in taxes last year than it paid out in benefits — a $60 billion decline from 2008, according to federal data.
Source: USA Today
Full story: http://www.usatoday.com/NEWS/usaedition/2010-02-08-1Asocialsecurity08_ST_U.htm?csp=34
by Robert W. Haley
The federal estate tax expired on January 1, 2010. It remains to be seen whether Congress will reinstate it before it returns in 2011, but the fact that there is currently no estate tax can have unintended consequences for spouses. Standard language found in many current estate plans could leave spouses with nothing. It is important to check with an elder law or estate planning attorney to make sure your estate plan does what you want it to do.
In previous years, estates could pass a certain amount of assets tax free (up to $3.5 million in 2009). In addition, spouses can receive an unlimited amount tax free. To take advantage of these rules, estate plans often contain a "bypass trust" (or "credit shelter trust") and a will with language in it that is designed to allow estates to pass without any estate tax. For example, the will may state: "I leave to my trustees the maximum amount that can pass free of estate tax and leave the residual to my spouse." Because there is currently no estate tax, individuals who die in 2010 with this language in their estate plan would wind up leaving nothing to their spouses.
While Virginia allows spouses the opportunity to claim a portion of the estate (usually one-third), even if they don't receive anything under a will, this can be a time-consuming and expensive process. Some states are considering legislation to fix this problem created by congressional inaction, but to ensure your spouse is covered, you should talk to an attorney.
Vaughn E. James. The Alzheimer's Advisor: A Caregiver's Guide to Dealing with the Tough Legal and Practical Issues. AMACOM. New York, NY. 2009. 300 pages. $14.96 from Amazon
Caring for a family member with Alzheimer's disease is complicated enough, but often overlooked are the legal implications of the disease. The Alzheimer's Advisor provides a guide to the legal and ethical aspects of caring for a family member with Alzheimer's.
The Alzheimer's Advisor is written by Vaughn James, an elder law professor at Texas Tech University School of Law who has personal experience with family members with Alzheimer's disease. While James touches on possible causes and symptoms of the disease, the bulk of the book addresses the legal challenges that arise when caring for an Alzheimer's patient. James stresses that legal assistance is needed as soon as possible because once a patient is in the final stages of the disease, he or she may not have the capacity to execute essential estate planning documents.
James discusses the various planning documents that are important for anyone to have, especially someone suffering from Alzheimer's disease, including powers of attorney, wills and trusts, living wills, and "do not resuscitate" orders. The presence of the disease complicates issues regarding many of these documents. For example, because Alzheimer's disease is technically not a terminal illness, it may not trigger a living will. James also explains the guardianship process, moving someone who is under guardianship, legal liability for patients who do something wrong, and paying for care. In addition, James provides tips for caregivers on how to cope with the stresses of caring for an Alzheimer's patient.
James's experience with family members with Alzheimer's disease lends the book a personal dimension. Using real-life examples, James provides a thorough and easy-to-read explanation of the complicated legal implications of having a family member with Alzheimer's disease.
On Monday, January 25, the Obama Administration’s Task Force on the Middle Class announced a recommendation for increased support for family caregivers. A proposed $102.5 million increase in funding for the Department of Health and Human Services would include $52.5 million for caregiver support programs that provide temporary respite care, counseling, training, and referrals to critical services and $50 million to programs that provide transportation help, adult day care, and in-home services, such as aides to help seniors bathe and cook, help which eases the burden for family members and helps seniors stay in their homes.
Find more information about the initiative here: http://www.whitehouse.gov/sites/default/files/Fact_Sheet-Middle_Class_Task_Force.pdf.
Most doctors don't talk about end-of-life issues with their cancer patients when those patients are feeling well, a new survey has found. Nor do they talk about them until treatments have been exhausted. Those delays mean patients might not be able to make truly informed choices early in their treatment. The study, published online Jan. 11 in the journal Cancer, surveyed 4,188 physicians about how they would talk to a hypothetical cancer patient with four to six months to live. A majority of respondents (65%) said they would discuss prognosis, but only a minority said they would discuss do-not-resuscitate status (44%), hospice (26%) or preferred site of death (21%) at that time. Rather, they would wait until symptoms were present or until there were no more treatments to offer. Current guidelines, from the National Comprehensive Cancer Network, a not-for-profit alliance of 21 of the world's leading cancer centers, say that such conversations should be initiated whenever a patient has been given less than a year to live, if not at diagnosis. Doctors gave various reasons for not following the guidelines. Some didn't want to dash patients' hopes; some wanted to continue treating patients. In addition, said lead author Dr. Nancy Keating of Harvard Medical School: "There's at least some evidence to suggest that patients don't want to hear about these things."
Source: Los Angeles Times (January 25, 2010)
Full story: http://www.latimes.com/features/health/la-he-closer25-2010jan25,0,5766082.story
The stress of caring for a disabled spouse increases the risk of stroke substantially, and the increased risk is greater for husbands than for wives. "We followed 767 people out of a large study who were caring for a spouse with any disabling condition," said William E. Haley, a clinical psychologist who is a professor in the School of Aging Studies at the University of South Florida in Tampa. "The spouses who had the highest scores for strain had the highest risk scores for stroke." Strain was measured on a standard score by asking the participants how many days during the past week they had felt depressed, lonely, sad or had crying spells. The answers were matched to the Framingham Stroke Risk Score, which measures risk factors such as age, blood pressure, blood cholesterol levels, smoking and diabetes. The study is published in the Jan. 14 online edition of Stroke. A high score on the measure of strain was associated with an overall 23 percent higher risk of stroke.
The association was stronger in husbands than in wives. It was highest in black men with high care giving strain, with a 26.9 percent increased risk of stroke in the next 10 years. "For the most part, when men are caregivers they use more paid services," Haley said. "It's likely that men who are not getting help, African-American men in particular, experience tremendous strain. Women are more prepared to be caregivers, and show less risk tied to strain." It's not clear whether the high-risk scores will result in an increased incidence of stroke, he noted. "We haven't followed enough people for long enough to do that analysis," Haley said. "Over the next several years, we will have the ability to see whether high degrees of strain lead to a higher incidence of stroke and mortality." Caregivers who feel the strain can and should seek help, he advised. "We do know already that caregivers can benefit from all sorts of counseling," Haley said. "We encourage those caregivers to get additional assistance."
Source: Business Week (January 14, 2010)
Full story: http://www.businessweek.com/lifestyle/content/healthday/634967.html)
Journal article: http://stroke.ahajournals.org/cgi/content/abstract/36/10/2181?maxtoshow=&HITS=10&hits=10&RESULTFORMAT=&fulltext=caregivers&searchid=1&
A durable power of attorney (POA) allows the person creating the document, called the "principal," to name a trusted agent who can act on his behalf in almost any situation. But because of the risk of abuse, many banks will scrutinize a POA carefully before allowing the agent to act on the principal's behalf, and often a bank will refuse to honor a POA. In a recent Florida case, Bank of America rebuffed an agent's request that funds be withdrawn from the principal's account. The agent fought back in court and just won a $64,000 judgment against the bank.
Clarence Smith, Sr., named his son, Clarence Smith, Jr., as his agent under a POA. When his father no longer wanted to manage his own finances, he asked Clarence Jr. to step in as his agent. Clarence Jr. reviewed his father's account activity and became suspicious about some withdrawals from a bank account that Clarence Sr. owned jointly with a friend from his retirement community.
Acting as his father's agent under the POA, Clarence Jr., asked Bank of America to transfer $65,000 from the account into a new account that listed only his father as the owner. Before doing so, Bank of America contacted the other person named on the account. When she told the bank that she did not want the funds withdrawn and also accused Clarence Jr. of stealing his father's money, Bank of America refused to honor Clarence Jr.'s request. The other account owner then withdrew all of the funds from the account and placed them into her own account, effectively preventing Clarence Sr. from accessing his own money. Clarence Sr. died several weeks later.
Clarence Jr. sued Bank of America under a Florida law that imposes penalties on financial institutions that refuse to honor reasonable requests from agents named in properly executed POAs. In November 2009, after a week-long trial, a Florida jury returned a verdict against the bank and awarded $64,142 to Clarence Sr.'s estate. The jury found that Bank of America had not acted reasonably when it rejected Clarence Jr.'s request, even though the joint owner of the bank account had not agreed to the release of the funds.
Bank of America plans to appeal. "We believe that neither the facts nor the law support the verdict," said spokeswoman Shirley Norton.
While this case clearly illustrates the conflicts that can arise through the use of a POA, it also raises the issue of the proper use of joint bank accounts in estate planning. Under most state laws, when two or more people own "joint" bank accounts, each of them has the right to the entire account, no matter whose money is actually in the account. While joint accounts can often be useful, sometimes, as in this case, joint owners or their agents can disagree about the use of funds in the accounts. When that happens, the party who makes it to the bank first often wins. A qualified elder law attorney can explain the pros and cons of joint ownership, can draft an effective POA, and can assist family members when disputes arise.
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)
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