<![CDATA[Law Offices of Jeffrey C. Nickerson - Blog]]>Thu, 16 Aug 2018 14:30:37 -0700Weebly<![CDATA[V.A.'s Telehealth System now Operational Nationwide]]>Wed, 15 Aug 2018 21:47:38 GMThttp://jeffreycnickersonlaw.com/blog/vas-telehealth-system-now-operational-nationwide
On June 11, the Department of Veterans Affairs passed a major milestone with the introduction of a telehealth system known as “anywhere-to-anywhere.” This system allows qualified practitioners to access the VA’s telehealth system and provide care to patients across the nation.      This issue of The ElderCounselorwill take a closer look at this telehealth system, which is part of the VA Mission Act.

One facet of the recently passed VA Mission Act is to provide protections for VA telehealth services. The law extends regulatory protections to VA telehealth providers and blocks states from interfering with providers who are part of the VA telehealth network, even if they do notcomply with state regulations. 
A major advantage of this system is that it gives physicians the ability to determine if the patient needs to receive care at one of the already crowded VA facilities, or if care would be better receivedat home or a community care center. Inside the VA clinics, the telehealth system allows patients and local caregivers to connect digitally with physicians and specialists across the VA system. There is another option that launched June 2017, known as the VA Video Connect application. VA Video Connect is a desktop and mobile application that allows patients to connect with physicians and specialists without ever leaving their home. So far, this application has connected over 22,700 veterans with 4,500 unique VA providers—this is especially effective for rural patients who have to travel long distances to their nearest VA health center. 
Another area where the VA is making strides in telehealth is for Veterans in need of mental health care. Generally, patients will connect with physicians through video conferencing technology which allows the patient to seeand hear the physician but eliminates the need for travel that could be disruptive or costly. Thisis especially important for patients with severe cases of post-traumatic stress disorder because it allows them to receive the care they need in a controlled environment in which they feel comfortable. 
While the VA currently treats dozens of conditions via telehealth services and has plans to add more in the future, (you can view a complete listhere) the VA specializes in four main telehealth services:
Polytrauma:The polytrauma telehealth services allow the VA to link their four Polytrauma Rehabilitation Centers along with the 17 Polytrauma Network Sites together to congregate all of the expertise across the VA network into one place. Patients receive multiple opinions from care providers and the physicians can consult each other in real-time to determine the best path of care for their patients. 
TeleMental Health: As mentioned previously, another area the VA is specializing in is caring for mental health patients through the telehealth system. One in three Veterans suffer from mental health disorders, and this service has been effective in providing a safe and comfortable environment for Veterans to receive care.
TeleRehabilitation:This service allows patientswho are recovering from a stroke to be linked to a speech pathologist to begin the rehabilitation process. The VA also uses TeleRehabilitation to connect with Veterans and monitor their functional status and equipment needs.
TeleSurgery:The main use for this service is for surgeons to receive specialist consultation in remote sites, before operating on a patient. The VA also uses this service to provide patient and staff education and pre/post-operative assessment. 
With over nine million patients served each year, it is integral that the VA does everything possible to ensure Veteransreceive quality care in a reasonable amount of time. One of the ways they are accomplishing this is through the telehealth system.
 If youhave any questions, please do not hesitate to contact our office. 
<![CDATA[Underestimating the Risk of Disability - The Importance of Being Prepared]]>Wed, 25 Jul 2018 18:37:16 GMThttp://jeffreycnickersonlaw.com/blog/underestimating-the-risk-of-disability-the-importance-of-being-prepared
No one likes to think about the possibility of their own disability or the disability of a loved one. However, as the statistics below demonstrate, we should all plan for at least a temporary disability. This issue of The ElderCounselorTM examines the eye-opening statistics surrounding disability and some of the common disability planning options. Disability planning is one area where we can give each and every person and family we work with great comfort in knowing that, if they or a loved one becomes disabled, they will be prepared.

Most Individuals Will Face At Least a Temporary Disability
Study after study confirms that nearly everyone will face at least a temporary disability sometime during their lifetime. More specifically, one in three Americans will face at least a 90-day disability before reaching age 65 and, according to the definitive study in this area, depending upon their ages, up to 44% of Americans will face a disability of up to 4.7 years. On the whole, Americans are up to 3.5 times more likely to become disabled than die in any given year. 
In raw numbers, over 37 million Americans, or roughly 12% of the total population, are classified as disabled according to the 2010 census. Perhaps surprisingly, more than 50% of those disabled Americans are in their working years, from 18-64. For example, in December 2012, according to the Social Security Administration more than 2.5 million disabled workers in their 20s, 30s, and 40s received SSDI (i.e., disability) benefits.

Many Persons Will Face a Long Term Disability
Unfortunately, for many Americans the disability will not be short-lived. According to the 2007 National Home and Hospice Care Survey, conducted by the Centers for Disease Control's National Center for Health Statistics, over 1.46 million Americans received long term home health care services at any given time in 2007 (the most recent year this information is available). Three-fourths of these patients received skilled care, the highest level of in-home care, and 51% needed help with at least one "activity of daily living" (such as eating, bathing, getting dressed, or the kind of care needed for a severe cognitive impairment like Alzheimer's disease). The average length of service was more than 300 days, and 69% of in-home patients were 65 years of age or older. Patient age is particularly important as more Americans live past age 65. The U.S. Department of Health and Human Services Administration on Aging tells us that Americans over 65 are increasing at an impressive rate.
The Department of Health and Human Services also estimates that 9 million Americans over age 65 will need long term care this year. That number is expected to increase to 12 million by 2020. The Department also estimates that 70% of all persons age 65 or older will need some type of long term care services during their lifetime.
The Council for Disability Awareness provides startling examples of how disability is likely to impact “typical” Americans.
“A typical female, age 35, 5’4", 125 pounds, non-smoker, who works mostly an office job, with some outdoor physical responsibilities, and who leads a healthy lifestyle has the following risks:
  • A 24% chance of becoming disabled for 3 months or longer during her working career; with a 38% chance that the disability would last 5 years or longer, and with the average disability for someone like her lasting 82 months.
  • If this same person used tobacco and weighed 160 pounds, the risk would increase to a 41% chance of becoming disabled for 3 months or longer.
“A typical male, age 35, 5’10", 170 pounds, non-smoker, who works an office job, with some outdoor physical responsibilities, and who leads a healthy lifestyle has the following risks:
  • A 21% chance of becoming disabled for 3 months or longer during his working career; with a 38% chance that the disability would last 5 years or longer, and with the average disability for someone like him lasting 82 months.
  • If this same person used tobacco and weighed 210 pounds, the risk would increase to a 45% chance of becoming disabled for 3 months or longer.
Visit the Council for Disability Awareness website at http://www.whatsmypdq.org/ to calculate your own Personal Disability Quotient (PDQ), or risk for disability.

The Alzheimer's Factor

Alzheimer's is growing at an alarming rate. Alzheimer's increased by 46.1% as a cause of death between 2000 and 2006, while causes of death from prostate cancer, breast cancer, heart disease and HIV all declined during that same time period. 

The 2015 Alzheimer's Association annual report titled, “Alzheimer's Disease Facts and Figures” explores different types of dementia, causes and risk factors, and the cost involved in providing health care, among other areas. This report contains some eye-opening statistics:
  • An estimated 5.3 million Americans of all ages have Alzheimer's disease. This figure includes 5.1 million people aged 65 and older and 200,000 individuals under age 65 who have younger-onset Alzheimer's. 
  • One in nine people age 65 and older (11 percent) has Alzheimer’s disease.
  • About one-third of people age 85 and older (32 percent) have Alzheimer’s disease.
  • Eighty-one percent of people who have Alzheimer’s disease are age 75 or older. The number of people aged 65 and older with Alzheimer's disease is estimated to reach 7.7 million in 2030 - more than a 50% increase from the 5.1 million aged 65 and older currently affected. 
  • Every 67 seconds, someone in the United States develops Alzheimer’s. Thus, approximately 473,000 people age 65 or older developed Alzheimer’s disease in the United States in 2015.
  • By 2050, the number of individuals aged 65 and older with Alzheimer's is projected to number between 11 million and 16 million - unless medical breakthroughs identify ways to prevent or more effectively treat the disease. 

​Caregivers are at risk of developing health problems.
  There were approximately 10.9 million unpaid caregivers (family members and friends) providing care to persons with Alzheimer's or dementia in 2009. According to the Alzheimer's Association, those persons are at high risk of developing health problems, or worsening existing health issues. For example, family and other unpaid caregivers of people with Alzheimer's or another dementia are more likely than non-caregivers to have high levels of stress hormones, reduced immune function, slow wound healing, new hypertension and new coronary heart disease.

Spouses who are caregivers for the other spouse with Alzheimer's or other dementia are at greater risk for emergency room visits due to their health deteriorating as the result of providing care. A study mentioned in the 2010 Alzheimer's Association report found that caregivers of spouses who were hospitalized for dementia were more likely than caregivers of spouses who were hospitalized for other diseases to die in the following year.

Receiving care.  According to the National Nursing Home Survey 2004 Study, the most recent of its kind, the national average length of stay for nursing home residents is 835 days, with over 56% of nursing home residents staying at least one year. Significantly, only 19% are discharged in less than three months. Those residents who were married or living with a partner at the time of admission had a significantly shorter average stay than those who were widowed, divorced or never married. Likewise, those who lived with a family member prior to admission also had a shorter average stay than those who lived alone prior to admission.

While a relatively small number (1.56 million) and percentage (4.5%) of the 65+ population lived in nursing homes in 2000, the percentage increased dramatically with age, ranging from 1.1% for persons 65-74 years to 4.7% for persons 75-84 years and 18.2% for persons 85+. According to the U.S. Census Bureau, 68% of nursing home residents were women, and only 16% of all residents were under the age of 65. The median age of residents was 83 years.
See Vol. 4 Issue 5 of the Elder Counselor, The Affordable Care Act:  How It Impacts Our Senior Population, for a discussion of the Affordable Care Act’s Impact on information regarding nursing homes.

Long Term Care Costs Can Be Staggering
Not only will many individuals and families face prolonged long term care, in-home care and nursing home costs continue to rise. According to the Genworth 2015 Cost of Care Survey, Assisted Living, Adult Day Services, and Home Care Costs national averages for long term care costs are as follows:
  • Monthly base rate (room and board, two meals per day, housekeeping and personal care assistance) for assisted living care is $43,200 annually, expected to increase .2% annually. 
  • Daily rate for a private room in a nursing home is $250, or $91,250 annually, expected to increase 4% annually. 
  • Daily rate for a semi-private room in a nursing home is $220, or $80,300 annually, expected to increase 4% annually. 
  • Hourly rate for home health aides is $21.50, expected to increase 4% annually. 
These costs vary significantly by region, and thus it is critical to know the costs where the individual will receive care. For example, the median annual cost for a private room in the state of California during 2015 was $104,025, whereas the median cost for a year in a semi private room was nearly $90,000.

Most Americans Underestimate the Risk 
Perhaps most importantly, despite overwhelming and compelling statistics; most Americans grossly underestimate the risk of disability to themselves and to their loved ones. According to the Council on Disability Awareness 2010 survey:
  • 64% of wage earners believe they have a 2% or less chance of being disabled for 3 months or more during their working career; the actual odds for a worker entering the workforce today are closer to 25%.
  • Most working Americans estimate that their own chances of experiencing a long term disability are substantially lower than the average worker’s.  
Given the high costs of care, this underestimation often leaves Americans ill prepared to pay for the costs of long term care.

Long Term Care Insurance May Cover These Costs
If a parent, their spouse, or family member needs long term care, the cost could easily deplete and/or extinguish the family's hard-earned assets. Alternatively, seniors (or their families) can pay for long term care completely or in part through long term care insurance. 

Most long term care insurance plans let the individual choose the amount of the coverage she wants, as well as how and where she can use her benefits. A comprehensive plan includes benefits for all levels of care, custodial to skilled. Clients can receive care in a variety of settings, including the person's home, assisted living facilities, adult day care centers or hospice facilities. 

Planning in the Event Long Term Care Insurance is Unavailable or Insufficient
Unfortunately, many older Americans will either be medically ineligible for long term care insurance or unable to afford the premiums. In that event, more aggressive planning should be considered as early as possible to make sure life savings are not depleted as a result of having to pay out-of-pocket for care. With the help of an elder law attorney, a plan can be created that will protect much of the assets of an individual or couple that would otherwise be at risk of being depleted. 

All Planning Should Thoroughly Address Disability 
When a person becomes disabled; he or she is often unable to make personal and/or financial decisions. If the disabled person cannot make these decisions, someone must have the legal authority to do so. Otherwise, the family must apply to the court for appointment of a guardian over the person or property, or both. Those who are old enough to remember the public guardianship proceedings for Groucho Marx recognize the need to avoid a guardianship proceeding if at all possible.

At a minimum, seniors need broad powers of attorney that will allow agents to handle all of their property upon disability, as well as the appointment of a decision-maker for health care decisions (the name of the legal document varies by state, but all accomplish the same thing). Alternatively, a fully funded revocable trust can ensure that the senior's person and property will be cared for as desired, pursuant to the highest duty under the law - that of a trustee. 

The above discussion outlines the minimum planning everyone, including seniors and their loved ones, should consider in preparation for a possible disability. It is imperative that families work with a team of professional advisors (legal, medical and financial) to ensure that, in light of their unique goals and objectives, their planning addresses all aspects of a potential disability. Our firm is dedicated to helping seniors and their loved ones work through these issues and implement sound legal planning to address them. If we can help in any way, please don’t hesitate to contact our office.

To comply with the U.S. Treasury regulations, we must inform you that (i) any U.S. federal tax advice contained in this newsletter was not intended or written to be used, and cannot be used, by any person for the purpose of avoiding U.S. federal tax penalties that may be imposed on such person and (ii) each taxpayer should seek advice from their tax advisor based on the taxpayer's particular circumstances.
<![CDATA[Why We Fail to Plan for Long Term Care]]>Thu, 19 Jul 2018 17:35:08 GMThttp://jeffreycnickersonlaw.com/blog/why-we-fail-to-plan-for-long-term-care
Most Americans do not know, or refuse to accept, the facts surrounding their potential need for long-term care and the costs associated with it.  This was reconfirmed recently in a telephone survey of 1,735 Americans over the age of 40, funded by the SCAN Foundation and conducted by the Associated Press (AP) – NORC Center for Public Affairs Research (“survey”).[1]  This survey highlights many of the misconceptions Americans have about long-term care, including: the potential that a loved one may need some sort of long-term care within the next five (5) years; lack of knowledge of the positive impact of “person-centered care” practices; lack of understanding of coverage of long-term care services by Medicare, Medicaid and private insurance; and an increase in lack of concern over failure to plan for the costs associated with long-term care.
Who Will Need Long-Term Care
According to the Genworth Cost of Care Survey of 2015 (“Genworth Survey”)[2], seventy percent (70%) of Americans over the age of sixty-five (65) will eventually need some type of long-term care.  In addition, by the year 2040, twenty-two percent (22%) of the population will be over the age of sixty-five (65), which is a ten percent (10%) increase from the year 2000.  Yet, this survey showed an increasing number of people over the age of forty (40) refusing to believe they will ever need long-term care.
Quality of Long-Term Care
The survey defined person-centered care as “an approach to health care and supportive services that allows individuals to take control of their own care by specifying preferences and outlining goals that will improve their quality of life.” This approach points to the consideration of coordinated care.  Coordinated care involves communication among various medical providers to reduce overlap, misdiagnosis or other medical oversights. Because many people are avoiding thinking about their golden years, they are missing out on the benefits provided by this approach and the survey shows a lack of appreciation for the improved quality of life it can provide.
According to the survey, over sixty-five percent (65%) of adults over the age of forty (40) have two or more doctors that they see on a regular basis.  Twenty-nine percent (29%) of those report that their providers do not communicate well or at all.  Further, the lack of understanding of the person-centered care approach is evident in that twenty-three percent (23%) of those individuals who don’t participate in it reported that it would not improve their quality of care.
Cost of Long-Term Care
The study showed a lack of understanding by many of coverage for long-term care by Medicare, Medicaid and private health insurance.  The truth is that Medicare does not pay for ongoing long-term care (although it will pay for intermittent stays at nursing facilities).  Yet, thirty-four percent (34%) surveyed thought Medicare would pay for long-term care while twenty-seven percent (27%) were unsure.  Furthermore, Medicare doesn’t typically pay for care in the home.  However, thirty-six percent (36%) of those surveyed thought it would and twenty-seven percent (27%) reported that they were unsure.
As for private insurance, most health insurance plans will not cover long-term services like a nursing home or ongoing care provided at home by a licensed home health care aide. Yet, eighteen percent (18%) of Americans age 40 and older believe that their insurance will cover the costs of ongoing nursing home care.  While, twenty-five percent (25%) believe their plan will pay for ongoing care at home. About 1 in 5 people surveyed were unsure of the coverage provided for these types of long-term care services.
Medicaid is the largest payer of long-term care services.[3]  Medicaid is a federally and state funded needs-based benefit that will provide for various types of long-term care depending on the state’s regulations.  In 2013, Medicaid paid for fifty-one percent (51%) of the national long-term care bill totaling $310 billion.  However, fifty-one percent (51%) of Americans age 40 and older reported that they don’t expect to have to rely on Medicaid to help pay for their ongoing living assistance expenses as they age.
The actual costs for long-term care are staggering.  The Genworth Survey reported that, nationwide, the average bill for a nursing home is approximately $80,300 and for home health care, approximately $44,616 with a variety of options among and in between these levels of care.
Planning for Long-Term Care
Despite the availability of this information, most Americans are unprepared for the costs associated with long-term care.  For example, the results of the survey showed that only one-third of adults were “very or extremely confident” in their ability to pay for long-term care. Fascinatingly, while many individuals reported being concerned over leaving family with debt or becoming a burden on loved ones, many do little to alleviate their concern in the way of planning. In fact, just over thirty percent (30%) of those over the age of sixty-five (65) reported being concerned with this.  And, finally, two-thirds of Americans over the age of forty (40) reported doing no planning for long-term care.
The survey results lead to the conclusion that many Americans are reluctant to face the possible loss of independence related to aging.  Apparently, this plays a role in the unwillingness to plan for the possibility of needing assistance later in life. As an example, there was an interesting difference in the number of people surveyed who had planned, or talked to loved ones about, their funeral arrangements (nearly sixty-five percent (65%)), in those who had discussed care preferences with family (about forty-two percent (42%)) and in those who had saved money for long-term care (approximately thirty-three percent (33%)).  Some things, including how we want to be memorialized are just easier to think about than how we may end up dependent on others.
Although not a popular topic among Americans over the age of forty, long-term care is an increasingly important one.  We are in the business of providing options for people in planning for their potential long-term care needs.  If you, a loved one or a client needs help figuring out their options, please think of us. We can help and we are always happy to hear from you.
<![CDATA[Estate Planning in the Age of Cryptocurrency]]>Thu, 28 Jun 2018 18:45:59 GMThttp://jeffreycnickersonlaw.com/blog/estate-planning-in-the-age-of-cryptocurrency
By Jonathan Bick

​Cryptocurrency, such as Bitcoin, has value and therefore is increasingly likely to become an estate asset. Due to the nature of cryptocurrency, typical wills and revocable living trusts may not be well suited to efficiently transfer this new type of asset. Consequently, new estate planning questions and clauses are needed.

While cryptocurrency is not sufficiently mature to allow existing legal structures to promulgate a complete set of rules and regulations, its technological character allows estate planning to protect the intent of clients holding it. However, the lack of statutory structure necessitates proactive steps.

Crypto SecurityCryptocurrency estate planning presents a novel security issue. Cryptocurrency is transferred as a result of following a set of technological protocol rather than presenting legal documents. Secrecy is the primary protection for cryptocurrency, since the identity of the cryptocurrency holder is not required. Thus, probate, a public process which makes all assets in a will and related will documents part of the public record, may compromise the secrecy associated with such secrecy. Probate information may also result in other difficulties related to making the cryptocurrency holder’s heirs a target for hackers or other bad actors.
Cryptocurrency holders may be sufficiently savvy to manage the ever-changing value of their virtual assets, but are unlikely to have that savvy reflected in their estate documents without assistance from their estate professionals. By the same token, due to the enigmatic nature of cryptocurrency, as well as its virtual embodiment, estate professionals may lack sufficient technical know-how to prepare proper estate documents without assistance from their cryptocurrency savvy clients.

Consequently, without timely interaction between cryptocurrency holder and estate professional, said holder risks losing everything for their heirs due to a number of circumstances. Hence, the estate professional must make specific inquiries as to cryptocurrency holdings and prepare cryptocurrency-specific clauses.

Crypto PropertyThe specific inquiries as to cryptocurrency holdings must address the fact that cryptocurrency is treated as property rather than currency for tax purposes. Just like traditional financial assets, the Internal Revenue Service has found that crypto-currency is subject to tax.

Specifically, Notice 2014-21 describes how existing general tax principles apply to transactions using virtual currency. Therefore, capital gain and loss on property transactions involving cryptocurrency must be reported. Such treatment, while well known, is not normally reflected in estate documents.

Next, said inquires and clauses must address the fact that there is no central cryptocurrency authority and, hence, no entity to authorize access to another’s cryptocurrency. Due to this lack of authority to give access to cryptocurrency to an executor or agent under a power of attorney, estate documents must be supplemented by business or technological options to preserve a cryptocurrency holder’s estate.

One supplemental action might be a business service that allows a third party to transfer cryptocurrency to an entity other than the cryptocurrency holder upon the demise of the cryptocurrency holder. Such a transfer service could avoid an unwanted legal duty for an executor or trustee to diversify out of cryptocurrency, and it will relieve them of the need to be cryptocurrency savvy, along with the attending liabilities.

A technological solution, which results in the sale of cryptocurrency due to predetermined conditions, such as the cryptocurrency holder’s failure to renew a cryptocurrency covered option, will have the same results. Like the business option, it will eliminate or ameliorate the need for cryptocurrency clauses in the related estate documents.

Another technological option is to use an Internet application that will transfer cryptocurrency to a revocable living trust upon the execution of a will. Once this application is fully executed, the cryptocurrency will then be subject to a trust and the responsibility of the trustee named in the application.

However, simply using an Internet application to transfer cryptocurrency is insufficient to protect the cryptocurrency; the holder will still need to leave instructions with an executor, with a recitation as to how to transfer these assets into a trust. Ideally, the transfer keys should remain in the control of, and transferred to, the heirs of the cryptocurrency holder in a letter that is stored with the estate documents.

If neither business nor technological estate document supplements are employed, then estate professionals must actively encourage cryptocurrency holders to document that they own cryptocurrency, document where they bought the cryptocurrency, and how a third party can get access to it.

Such information is required because unlike traditional assets, cryptocurrency holders can buy cryptocurrency without communicating their identity. It should be noted that not all cryptocurrency transactions are anonymous. For example, cryptocurrency associated with South Korea is regulated, and such regulations require cryptocurrency holders to be identified.

At a minimum, estate professionals should encourage cryptocurrency holders to keep a dynamic written record of what cryptocurrency they own, where it is located, what they paid for it, from whom they acquired it, and, if they sold their cryptocurrency, the amount for which it was sold. Most importantly, estate professionals should encourage cryptocurrency holders to record the private digital key needed to access it.

Normally, crypto-currency exchanges do not ask for the identity of the cryptocurrency holder, much less request that a cryptocurrency holder record the name of a beneficiary. As a result, failure to secure sufficient information concerning cryptocurrency for a particular holder may result in the need for unnecessary asset accounting, and possibly expensive and time-consuming litigation.

In addition to updating wills and revocable living trusts, power of attorney authorization should be updated to reflect the need for a specific person to act on behalf of cryptocurrency holders. The wills and revocable living trusts should include information related to how to distribute cryptocurrency. The power of attorney authorization should allow entities acting on behalf of the cryptocurrency holder to access the holder’s computers, storage devices, accounts and data, so as to facilitate the transfer or disposition of the cryptocurrency.

Ideally, such updating of wills, revocable living trusts and power of attorney authorization should be accompanied by administrative and technological actions by the cryptocurrency holder. Estate professionals should advise their cryptocurrency holder clients to place cryptocurrency information (such as the information noted above) on a USB drive, or paper, and place it in a bank safe deposit box or home safe. Such precautions will make losing cryptocurrency less likely.
Jonathan Bick is of counsel at Brach Eichler in Roseland, NJ. He is also an adjunct professor at Pace and Rutgers law schools, and the author of 101 Things You Need to Know About Internet Law (Random House 2000). He can be reached at bickj@bicklaw.com.
<![CDATA[Maximizing Social Security Retirement Benefits for Married Baby Boomers]]>Tue, 12 Jun 2018 18:47:47 GMThttp://jeffreycnickersonlaw.com/blog/maximizing-social-security-retirement-benefits-for-married-baby-boomers
On the final day of the 2012 NAELA Annual Conference in Seattle in April, Attorney David A. Cechanowicz, JD, MSFS from Albuquerque, New Mexico, delivered an eye-opening presentation entitled "Maximizing Social Security Income for Dual Income Boomers." His message was so novel and surprising to many of the boomers and other members of the National Academy of Elder Law Attorneys in the audience that this issue of the ElderCounselornewsletter addresses the topic, with permission of Attorney Cechanowicz.
As we all know and statistics confirm, the American population is aging, people in general are living longer than past generations did, and in many cases women outlive men. For these reasons, it is important for people in their sixties to make the best choices in how they elect to claim their Social Security retirement benefits. For some people – particularly for those with diseases that make a relatively early death likely – election to start receiving their Social Security retirement benefits as early as possible may be the best choice. However, for many, starting to receive their Social Security retirements later can result in a large increase in the total amount of benefits received over the rest of their lives. What most of us are unaware of is that married people have the option to receive Social Security benefits under their own work record, their spouse’s work record, or in some circumstances, both their own and their spouse’s work record. If the choices made are not optimal, the result can be less than maximum monthly benefits for two, three or even four decades – a very long time.

​Planning Note: Married people have the option to receive Social Security benefits under their own work record, their spouse's work record, or both, in some circumstances.

The members of the baby boom population (defined as those born between 1946-1964) born in 1946 are now 65 years old or have recently turned 66 years old. For the next 17 years, an average of more than 10,000 boomers per month will turn 65. This huge population of people needs to make decisions about when to start receiving their Social Security retirement benefits. Some have already elected to start receiving benefits as early as age 62.

The annual statement entitled "Your Social Security Statement" was mailed to taxpayers automatically for the past several years. The Social Security Administration stopped sending this statement automatically in 2011 due to budget constraints, but announced in February 2012 that it would begin sending the statements again to workers age 60 or older who are not yet receiving benefits.

The 2011 annual statement listed data for the worker's benefits upon retirement or disability, and projected benefit data for the worker's survivors. The 2011 statement also contained the following one-line comment in a list of potential benefits: "*Family - If you get retirement or disability benefits, your spouse or children may also qualify for benefits." This line did not provide any data. The last page of the 2011 statement amplified this point as follows: "Family - If you're eligible for disability or retirement benefits, your current or divorced spouse, minor children or adult children disabled before age 22 also may receive benefits. Each may qualify for up to about 50 percent of your benefit amount." Despite this information, most people are completely unaware that this benefit exists, that they need to elect it in order to get it, and that it can make a huge difference in their benefits received over the rest of their lives.

Attorney Cechanowicz compares the choices people in their 60s face to a three-legged stool. The legs are mortality, election, and taxation, and ignoring any leg will make the stool fall over. Each "leg" is discussed below.

As mentioned above, the population as a whole is aging and individuals are living longer than ever before. Many factors affect how long individuals will live, but key factors are lifestyle, including diet, exercise, stress, sleep, exposure to dangerous conditions at work and at home, exposure to environmental health risks and unpredictable risks such as a car accident caused by someone else, and genetics. Some people now facing decisions about Social Security are already in terminal conditions or have substantial likelihood of not living many years. For these people, getting benefits earlier may be a better decision than waiting to receive more benefits later. But individuals whose health is good and exposure to predictable risks is low, and whose parents and ancestors have tended to live long lives, may choose to plan on a long lifetime.

Despite the fact that people are living longer, according to the SSA's Annual Statistical Supplement for 2011, 74% of Social Security recipients have elected to start receiving benefits early. This can be a huge mistake for a very long time.

Planning Tip: Electing to receive benefits early can be a huge mistake.

Social Security election is often viewed as having to make one of three choices: to take early at a decreased benefit rate, take at the "full retirement age," or take late at a larger benefit level - sort of each man or woman for himself or herself. Although that is true on one level, it ignores the fact that more often than not, women live longer than men, and with a married couple, the surviving spouse is most likely going to be the wife who may live for many years after the husband dies. Dual income and formerly dual income families have more election choices than each spouse for himself or herself.

There are a few defined terms with which the reader needs to be familiar. Primary Insurance Amount (PIA) is the benefit (before rounding down to the next lower whole dollar) a person would receive if electing to begin receiving retirement benefits at Full Retirement Age (FRA, defined below), as calculated when the worker reaches age 62. The benefit a worker would receive if electing to begin receiving benefits at FRA is the PIA plus any cost-of-living increases between age 62 and the FRA.

An individual worker's PIA is calculated from the average of the worker's 35 highest income years, with each past year adjusted for inflation. The PIA formula for 2012 is in three parts:
  1. 90% of first $767 of average indexed monthly earnings, plus
  2. 32% of average indexed monthly earnings over $767 and through $4,624, plus
  3. 15% of average indexed monthly earnings over $4,624
In order to be eligible for Social Security benefits based on a worker's own earning record, the worker must have at least 40 credits, meaning 40 quarter years for which Social Security withholding was withheld.

Optimizing the Social Security retirement benefits that a dual-income family or former dual-income family (due to being divorced or widowed) can obtain depends on the:
  1. Worker #1's work record;
  2. Spouse of Worker #1's work record;
  3. Worker #2's work record;
  4. Spouse of Worker #2's work record;
  5. Survivor's benefit may be based on the Worker #1's record, Worker #2's work record, or both.
Full Retirement Age (FRA) depends on when the worker was born.
  • 1937 or earlier - Age 65
  • 1938-1942 - Add 2 months per year to 65
  • 1943-1954 - Age 66
  • 1955-1959 - Add 2 months per year to 66
  • 1960 or later - Age 67
Avram L. Sacks, Social Security Law Analyst with Wolters Kluwer Law & Business, commented about the determination of FRA as follows: "[A]n individual is deemed to have attained a given age on the day BEFORE the anniversary of one's date of birth. And, technically, the rule is based on when an individual attains age 62. Thus, for individuals born on January 1, the applicable rule used to determine FRA is the rule for the preceding December 31. Thus, for example, an individual born January 1, 1960, attains age 62 on December 31, 2021. Since age 62 was attained in 2021, that person has FRA at age 66 and 10 months."

A worker with FRA of 66 may elect to receive benefits based on their own work record as early as age 62. However, the benefit is reduced to 75% of their PIA if taken at age 62 (a 25% reduction), 80% if taken at age 63, 86.6% if taken at age 64, or 93.3% of PIA at age 65. (The percentages in these examples apply to individuals who elect to start receiving benefits exactly in the month that their age changes. The numbers actually change each month of worker age, not just each year.) Adding insult to injury, if the worker continues earning wages while receiving Social Security benefits based on their own work record, the Social Security benefits are decreased based on the ongoing earnings.

A worker's benefit based on their own work record can increase above their PIA if receipt of benefits is delayed to as late as age 70. They receive 108% of their PIA if they start receiving benefits at age 67, 116% of PIA if starting at age 68, 124% if starting at age 69, and 132% if starting at age 70. This is an 8% increase for each year the starting date is delayed, up to age 70. (Again, these percentages actually change monthly, although the examples are yearly.) For a worker who is likely to live a long time and has other assets and income to live on while waiting, delaying the start of receiving benefits may be very profitable. If the worker continues earning wages after their FRA, there is NO decrease in the benefit; the worker gets the full benefit.

Important Rules
1) Early receipt of Social Security benefit reduces the worker benefit AND the spousal benefit.

2) The spouse of worker benefit reaches its maximum at the worker's FRA. Delayed retirement credits do not increase the spousal benefit.

3) Early receipt of benefits based on the worker's own work record before their FRA causes "deeming". The worker is deemed to have made all allowable elections as of that date.

4) Deeming does not occur if the worker elects to receive benefits based on their own work record at or after their FRA.

5) Prior to FRA, the worker has an earnings test that may cause repayment of Social Security benefits.

6) The Senior Citizen's Right to Work Act of 2001 eliminates the earnings test at or after the FRA.

Planning Note: There are several ways to maximize benefits for a couple.

When a two-worker couple elects to start receiving Social Security benefits based on their own work records, optional monthly choices over nine years for each worker result in 11,664 possible age combinations. There are four more ways to maximize the benefits for a couple:

When a two-worker couple elects to start receiving Social Security benefits based on their own work records, optional monthly choices over nine years for each worker result in 11,664 possible age combinations. There are four more ways to maximize the benefits for a couple:

Claim and Suspend. A worker who has attained FRA can claim benefit but then suspend the benefit and collect Delayed Retirement Credits (DRCs). This allows the worker's spouse to claim and receive the "spousal benefit," which is one-half of the worker's benefit, based on the suspended worker's record. 

Claim Now, Claim More Later. The spouse of a worker who claims, or claims and suspends as described in the preceding paragraph, claims the spousal benefit (one-half of the other worker spouse's benefit), then later claims higher personal benefit at their FRA or later increased by DRCs. 

Do Over. A claimant can change their claim election within 12 months after claiming, but claimant must repay the benefits received. Taxes paid may be reclaimed from the IRS and state.

Stop-N-Go. An individual who has started receiving benefits can stop temporarily, and later resume receiving benefits enhanced by DRCs based on a smaller amount.

Articles from the Center for Retirement Research at Boston College go into great detail about this and suggest which scenarios will work best based on relative incomes of the spouses. Seehttp://crr.bc.edu/; and http://fsp.bc.edu/social-security-claiming-guide/.

Another tool for planning is available at https://www.socialsecuritytiming.com/. 

As should be evident, the maximum family benefit is not an individual calculation, nor even two individual calculations. It is a lifetime choice, and electing early Social Security benefits based on your own work record is betting against you living a long life.

The way Social Security recipients blend their Social Security benefits with other income can make as much difference in net benefit as the election choice because Social Security is a tax-preferred form of income. That said, for those recipients whose only source of retirement income will be Social Security, very likely all of their retirement income will be income-tax-free. On the other end of the income spectrum, people who make several hundred thousand dollars per year of earned or investment income tend to be less concerned about optimizing the tax treatment of their Social Security. It is the middle income category of seniors who can make the most significant improvement in how their Social Security benefits are taxed by how they make their elections.

Social Security benefits are tax-free below the lower numerical thresholds in the following table:
Taxpayer who is:
50% Taxable
85% Taxable

Single or Head of Household
Over $25,000
Over $34,000

Married Filing Jointly
Over $32,000
Over $44,000

To examine the income tax effect of delayed receipt, compare the following two scenarios. 

In scenario #1, a couple receives a blend of 42% Social Security benefits and 58% income from other income including IRA and 401(k) income. Their total income of $72,000 is made up of $30,000 Social Security and $42,000 other income. Adjusted gross income from this scenario (the taxed portion of Social Security plus other income) comes out at $40,050.

In scenario #2, the couple increases to 72% Social Security benefits ($52,000), and decreases other income to 28% ($20,000). Adjusted gross income (the taxed portion of Social Security plus other income) in this scenario is $8,700 due to the greater share of Social Security benefits, which are only partially taxed.

To further illustrate this concept, consider the combined state plus federal income taxes in the following states:
Scenario #1 
($42k other income/$30k SS)

Scenario #2 
($20k other income/$52k SS)








The average adjusted gross income for scenario #1 is $5,560. The average adjusted gross income for scenario #2 is $780. Thus, scenario #2 provides a tax savings of $4,780 per year. Over 20 years, such tax savings multiplies to $95,600.*

*Source of calculations for this discussion: David A. Cechanowicz, "Maximizing Social Security Income for Dual Income Boomers", presentation at NAELA Annual Conference, Seattle, Washington, April 28, 2012.

Baby boomers face important choices to make the best elections in their choice of Social Security retirement benefit start dates. Dual income couples have very substantial opportunities to increase their total benefits above the sum of what two single individuals can receive. Dual income couples can plan carefully for the most likely survivor, and take optimum advantage of the spousal benefit available from Social Security in addition to the benefit available to each individual based on their own work record. Former spouses and widows and widowers in their 60s may have similar opportunities to receive additional spousal benefits based on the work record of their former or deceased spouse in addition to the benefits they are entitled to, based on their own work records. 

<![CDATA[Medicare Advantage Plans to Offer Greater Plans in 2019]]>Wed, 30 May 2018 21:52:46 GMThttp://jeffreycnickersonlaw.com/blog/medicare-advantage-plans-to-offer-greater-plans-in-2019

On April 2, the Centers for Medicare & Medicaid Services (CMS) expanded how it defines the “primarily health-related” benefits that insurers are allowed to include in their Medicare Advantage policies. As a result, when these plans roll out their coverage for 2019, new benefits may include air conditioners for people with asthma, healthy groceries, rides to medical appointments, home-delivered meals, and non-skilled home-care services.
In this issue of The ElderCounselor, we will look at how Medicare Advantage Plans work, the benefits they provide, what the expansion means, and how it may impact both seniors and the plan providers.
Medicare is government-sponsored health care for those age 65 years and older. Part A covers inpatient hospital stays, care in a skilled nursing facility, hospice care, and some home health care. Part B covers doctors’ services, outpatient care, medical supplies, and preventative services.
However, there are deductibles and copayments for Medicare that can add up quickly. Also, there is no limit on annual out-of-pocket expenses. Most people buy a supplemental insurance policy, called Medigap insurance. It “fills in the gaps” of Medicare and pays deductibles and copayments. These policies are sold through private insurance companies approved by Medicare. Prescription drug coverage is also sold separately as Part D through private insurance companies.
Many seniors like the flexibility this combination provides because they can go to any health care provider or facility that accepts Medicare. Medicare pays its share of the approved amount for covered health care costs first, and then Medigap pays its share. However, Medicare can and does deny coverage for a procedure or treatment that it rules is medically unnecessary, and Medigap will only pay its share if Medicare pays first. 
Also, there are some expenses that Medicare does not cover that are important to seniors, including hearing aids, vision care and dental care.
What Are Medicare Advantage Plans and How Do They Work?
Medicare Advantage Plans, sometimes called Part C, are sold by private insurance companies as an alternative to Original Medicare. If you join a Medicare Advantage Plan, you still have Medicare, but you receive Part A (hospital insurance) and Part B (medical insurance) coverage from the Medicare Advantage Plan, not from Original Medicare. However, Original Medicare will still cover the costs for hospice care, some new Medicare benefits, and some costs for clinical research studies.
Medicare pays a fixed amount for care each month to the companies offering Medicare Advantage Plans. These companies must follow rules set by Medicare and they must cover all of the services that Original Medicare covers. However, if one chooses a Medicare Advantage Plan, they cannot use a Medigap policy. In fact, it is against the law for someone to sell a senior on a Medicare Advantage Plan a Medigap policy unless that person is switching back to Original Medicare. (Changing plans is allowed once each year, during open enrollment in the fall.)
Medicare Advantage Plans work like HMOs and PPOs. Generally, a Medicare recipient must use facilities, physicians, and pharmacies that participate in the plan’s network. Some allow for non-network coverage. Emergency and urgently needed care are covered both in- and out-of-network.
One of the draws for seniors is that Medicare Advantage Plans offer benefits that Medicare does not, including vision, hearing, dental, gym memberships, and health/wellness programs. There are also cost savings. The monthly premium usually includes Medicare prescription drug coverage (Part D). And, while there may be a copayment for covered services, there is an annual limit on out-of-pocket costs. So, once a senior reaches a certain limit, they will pay nothing for covered services for the rest of the year.
Some Shortcomings of Medicare Advantage Plans
There is a multitude of Medicare Advantage Plans, even within one service area. This can be confusing to consumers who must re-evaluate them each year. Each plan can charge different out-of-pocket costs. They can also have different rules for how services are received, such as whether a referral is needed to see a specialist. And they usually have different networks of facilities and providers.
Each year, plans set the amounts they charge for premiums, copays, deductibles, and services. The plan (rather than Medicare) decides how much someone pays for the covered services, and it is allowed to change how much the insured would pay only once a year, on January 1. (This is the effective date of coverage for each fall’s open enrollment.) However, they can change their network providers and facilities at any time during the year.
When considering a Medicare Advantage Plan, consumers must be diligent about understanding which facilities and physicians are included in its network, where they are located, and how to use the plan for routine and emergency care.
A plan can also choose not to cover the costs of services that are not medically necessary under Medicare, so it is advisable for a patient to check before they have the service or procedure done. If someone needs a service that the plan says is not medically necessary, they may have to pay all the costs of the service. But that patient would have a right to appeal the decision. They can also ask for a written advance coverage decision to make sure a service is medically necessary and will be covered.
Still, of the 61 million people enrolled in Medicare last year, 20 million have opted for a Medicare Advantage Plan. One reason may be that, in recent years, many families have become accustomed to HMOs and PPOs for their health insurance as lower-cost alternatives to traditional health care.
What the CMS Ruling Means
According to the CMS, the new rules will expand benefits to items and services that may not be directly considered medical treatment but will provide care and devices that prevent or treat illness or injuries, compensate for physical impairments, address the psychological effects of illness or injuries, or reduce emergency medical care. The goal is to keep people healthy and well, making it easier for them to live longer and more independently. A physician’s order or prescription will not be required, but the new benefits must be “medically appropriate” and recommended by a licensed health care provider.
Details of the Medicare Advantage Plan benefit packages for 2019 must first be approved by CMS and will be released in the fall when the annual open enrollment begins. But plan providers already have ideas of what they could include.
In addition to transportation to doctors’ offices or better food options, some health insurance experts said additional benefits could include simple modifications in beneficiaries’ homes, such as installing grab bars in the bathroom, or aides to help with daily activities, including dressing, eating, and other personal care needs. The goal is to focus on avoiding injuries or exacerbating existing health conditions.
Non-skilled in-home care services will also be allowed for the first time as a supplemental benefit, providing they compensate for physical impairments, diminish the impact of injuries or health conditions, and/or reduce avoidable emergency room use.
Home health care providers have already partnered with Medicare Advantage Plans, and many believe the plans will be willing to pay for non-skilled in-home care with an eye on saving money over the long-term. Medicare Advantage Plans have greater flexibility than the fee-for-service providers have, and in many cases do not have a homebound requirement. Because they receive a set amount per patient from Medicare, they would be more inclined to provide any services, including private duty nursing, to ensure the patient doesn’t cost them more money than necessary.
What to Watch
Seniors on Medicare have said that when considering Medicare Advantage Plans, access to certain hospitals and doctors is a top priority for them. Original Medicare includes the vast majority of providers and the broadest possible provider network.
But Medicare Advantage Plans are gaining in popularity. According to CMS, in 2015, 35% of Medicare beneficiaries were participants in Medicare Advantage Plans. That number is expected to grow quickly over the next several years. New, attractive benefits coming in 2019 (especially non-skilled in-home care) will likely persuade even more seniors to join Medicare Advantage Plans.
That’s certainly good news for the Medicare Advantage Plan industry. And it will be good for seniors if it lets them stay in their homes longer and lead healthier, more independent lives.
<![CDATA[Three Essential Documents for Parents of Children with Special Needs]]>Wed, 09 May 2018 18:21:10 GMThttp://jeffreycnickersonlaw.com/blog/three-essential-documents-for-parents-of-children-with-special-needs
If your child has special needs, a standard estate plan -- will, trust, power of attorney, and health care proxy -- may not be adequate for your family. If your child will not be able to support herself or live independently as an adult, you need to make special provision for her in your estate plan. Here are three must-have documents:

Special Needs Trust. Instead of leaving your estate directly to a disabled child, the funds should be left in a specially-drafted trust for the child's benefit. This will ensure that the funds are properly managed for the child's lifetime. And provided that the trust is properly administered, the trust funds will not be countable, which helps to preserve your child's eligibility for public benefits such as SSI and Medicaid.

Guardianship Nomination.
 Your will should include a guardianship nomination for all of your minor children. But when your child turns 18, she is considered to be an adult by law, even if her disabilities are very severe. Taking the time to select a guardian for your disabled child reduces stress and uncertainty for other family members after your death: the person you nominate as guardian will typically be given preference by the court.

​Letter of Intent.
 This is a non-binding document that captures vital information about your child for future caregivers and trustees. It can include information about your child's routines, preferences, medical history, allergies, and so on. As parents, you have gathered a lifetime's worth of information about your child, information that will be invaluable to your child's future caregivers. You can ask your attorney to keep a copy of the Letter of Intent with your other estate planning documents.
<![CDATA[The Forgotten Family Member - Advocating for Pet Trusts]]>Wed, 02 May 2018 18:23:11 GMThttp://jeffreycnickersonlaw.com/blog/the-forgotten-family-member-advocating-for-pet-trusts
Whether as a friendly companion or a fully-fledged family member, pets have become an intrinsic component to many households. According to the American Pet Products Association, 67% of American families own a pet today. Not only is pet ownership up from 56% in 1988, but Americans are also spending significantly more on their pets. In 2016, the pet industry raked in roughly $66 billion in pet-loving profits, a 74% increase from 2006. An explanation for this spending increase could be because most pet owners﹘about 95%﹘consider their pets to be part of the family. 
It’s a wonder then, why the estate planning field often overlooks pets. While pet trusts can claim a small fraction of the pet industry profits, only about 12% of cat and dog owners make financial stipulations for their pets in their estate plans.  This underutilized market has significant business potential for estate planning attorneys and provides an opportunity to serve clients better.

Pet Trusts: What are they and how to introduce them to your clients​
Planning for animal care is similar to planning for dependent children. As such, trusts are seen to be superior to wills as they can bypass the lengthy probate process, which can significantly delay financial support for the animal. In addition, a will cannot protect and care for a pet in the event of their owner’s incapacity. 

Breaking it down: how a pet trust worksAt its most basic, a pet trust lays out instructions on how a pet should be cared for after its owner passes away. A caretaker is usually chosen to be responsible for the pet’s day-to-day care. Funds are allocated to the trust to pay for various expenses such as food, veterinary care, and recreation. 

A trustee is chosen to manage the trust’s funds and oversees the caretaker’s compensation for caring for the animal. As another level of protection, a client can also choose to appoint an enforcer, who oversees the trustee. Once the animal passes away, the remaining funds can then redistribute to the living beneficiaries or a charity of the client’s choosing.
Educating clients on pet trusts

As many people are unaware of the benefits of a pet trust, an attorney’s primary goal is first awareness and then education.  Attorneys can utilize email campaigns to educate current clients on the importance of pet trusts, providing awareness and a call to action to add animal care provisions to their existing trusts. 

For prospective clients, attorneys may want to consider adding pet ownership questions to their new client intake forms. Statistically, more than half of your clients will indicate “yes,” which will give you the opportunity to educate them about this service.

Important factors to consider when drafting a client’s pet trust

Pet trusts may be suitable for couples who don’t share the same affinity or level of care for the petFor clients who have brought previously owned pets into their marriage, or if one spouse simply doesn’t share the same affinity for a pet, a pet trust might be in order. In the event that one spouse passes away and is concerned their surviving spouse may be unable or unwilling to care for the animal adequately, a pet trust can ensure the deceased owner’s wishes. This option also provides financial and logistical relief for the living spouse, as they will not have to worry about their spouse’s pet after they are gone.

Animals with special medical needs, longer lifespans or defined as “exotic” may need more money allocated for their care.

There are a few different factors to consider when determining the number of funds to allocate for a pet’s care. Species, length of lifespan and whether or not the animal has, or may need, special medical care, are usually the biggest defining factors. For example, animals such as macaws, parrots, and snakes may require more significant funds due to longer lifespans, than say dogs or cats. Also, certain types of dog breeds like American bulldogs and German shepherds may need more funding due to their predisposition to health issues like hip dysplasia and respiratory problems.

Caretaker suitability should depend on lifestyle and personal regard for the animal.

It’s essential that a pet owner choose a caretaker for their animal wisely, to minimize disruption of care. Make sure to help your client by clarifying that their choice for caretaker has adequate housing, time and experience to look after the animal. To avoid trouble down the road, ask the client if they think the caretaker would want the job, or better yet if they have already discussed this responsibility with them.
<![CDATA[Stan Lee Suing his Ex-Business Manager,  Alleging Elder Abuse]]>Thu, 19 Apr 2018 20:05:45 GMThttp://jeffreycnickersonlaw.com/blog/stan-lee-suing-his-ex-business-manager-alleging-elder-abuse
Elder abuse is real and needs to be taken seriously. An estate and trust can help from preventing that. In this article that was published in the Los Angeles Times, there have been recent reports that Marvel Comics founder and creator Stan Lee has been a victim and is placing suit against those responsible.

​Article by Tracy Brown

Marvel comics icon Stan Lee has filed a lawsuit against former manager Jerardo Olivarez, alleging fraud, financial abuse of an elder, conversion and misappropriation of his name and likeness.

In a complaint filed in Los Angeles County Superior Court on Friday, Olivarez is accused of being one of many “unscrupulous businessmen, sycophants and opportunists” who sought to take advantage of Lee following the July death of his wife, Joan.

The lawsuit alleges that Olivarez — a former business associate of Lee’s daughter Joan “J.C.” Lee — manipulated Lee into ousting his “banker of 26 years” and his longtime lawyer, signing power of attorney over to Olivarez, loaning $300,000 to a fake nonprofit and buying an $850,000 West Hollywood condo. Olivarez is also accused in the lawsuit of taking nearly $1.4 million from Lee’s accounts “through a series of complicated wire-transfers all initiated” by him and orchestrating a scheme to steal Lee’s blood for use as a “merchandising item.”

The lawsuit follows a report published last week by the Hollywood Reporter detailing the battle over the 95-year-old Lee’s estate. The story revealed Lee’s situation, which also involves Olivarez, as “increasingly toxic and combative … involving broken alliances, abrupt expulsions and allegations of elder abuse.”
<![CDATA[Medicaid & Work Requirements]]>Wed, 04 Apr 2018 18:23:09 GMThttp://jeffreycnickersonlaw.com/blog/medicaid-work-requirements
Medicaid and Work Requirements
On January 11, the Centers for Medicare and Medicaid Services (CMS) issued a State Medicaid Director Letter providing new guidance for Section 1115 waiver proposals that would impose work requirements in Medicaid as a condition of eligibility.
As of press time, CMS has approved work requirement waivers for Kentucky, Indiana and Arkansas. As many as 13 other states have pending waiver requests and/or have stated they plan to apply. These include Alabama, Alaska, Arizona, Kansas, Louisiana, Maine, Mississippi, New Hampshire, North Carolina, South Carolina, South Dakota, Utah and Wisconsin.
The CMS guidance describes the potential scope of requirements that could be approved and asserts that such provisions would promote program objectives by helping states “in their efforts to improve Medicaid enrollee health and well-being through incentivizing work and community engagement.” It invites proposals that are designed to promote better mental, physical and emotional health or help individuals and families rise out of poverty and attain independence.
Medicaid work requirement proposals generally would require beneficiaries to verify their participation in approved activities, such as employment, job search or job training programs, for a certain number of hours per week in order to receive health coverage. Certain populations, including children, the elderly, disabled, medically frail, pregnant women, caregivers and students would be exempt.
The Goal
CMS Administrator Seema Verma has stated that she hopes the work requirements will improve enrollees’ health while reducing Medicaid rolls, and that requiring people to work would encourage them to find jobs that offer health coverage or make enough money to afford private plans.
Two Examples
Kentucky was the first state to receive approval to impose work requirements as part of a broader overhaul of the state’s Medicaid program. It is set to go into effect in June. State officials have made it clear that the work requirements are aimed at the newly eligible Medicaid enrollees who gained coverage only after the state’s previous Democratic governor expanded Medicaid. The current Republican governor, Matt Bevin, has said that many of the newly eligible are able-bodied and that they have a moral responsibility to work for their benefits.
Under Kentucky’s plan, able-bodied adults will be required to complete 80 hours a month of community engagement to qualify for coverage. This would include work, education, volunteering/community service or job training. Drug treatment is considered a work activity, not an exemption.
Enrollees can seek “good cause” exemptions if they can verify one of the following in their month of noncompliance: disability, hospitalization or serious illness of the enrollee or immediate family member in the home; birth or death of family member living with the enrollee; severe inclement weather including natural disaster; family emergency or other life-changing event such as divorce or domestic violence. In addition, one primary caregiver of a dependent minor child or adult with disabilities per household is exempt, and caregiving for a non-dependent relative or another person with a disabling medical condition is considered a work activity.
State officials estimate that up to 95,000 people would no longer have Medicaid at the end of five years. While they do expect people to lose coverage, they predict that most would transition off Medicaid by entering the workforce and gaining access to employer-sponsored insurance or private insurance.
While other states may use Kentucky’s Medicaid program as a model, CMS officials said it was not meant to be a template.
Arkansas became the third state to receive permission to compel some residents on Medicaid to work or prepare for a job, but the federal government denied the state’s request to shrink its Medicaid expansion. Instead of including people with incomes up to 138% of the federal poverty line, as designed in the ACA, Arkansas wanted to set its expansion limit at 100% of poverty, a move that would immediately cast out up to 60,000 people from the program.
State legislators required that “shrinking the expansion” be included in the state’s application for the work requirements. Now, with the federal government’s rejection, the state Senate may not have enough votes to approve a budget for the agency that runs the program. (The proposed budget for the coming year does not include any extra money to help people train and look for a job.)
Arkansas’ plan compels people to have a job, be in school or volunteer at least 80 hours per month. The requirements will apply to able-bodied adults unless they qualify for an exemption, which include caring for a young child, being pregnant, being medically or mentally unable to work, or are being treated for addiction.
Requirements will begin in June for people ages 30 to 49, with estimates that nearly 40,000 of the 98,000 Medicaid expansion recipients will need to start complying. (The program will expand to include those starting at age 19 in 2019.) Individuals will need to document every month that they are fulfilling the rules. A person who fails to do so for three months will be removed from the program and locked out until the next year.
Those opposed to the work requirements are voicing some concerns that will need to be addressed and monitored. These include:
Potential loss of health coverage. Many people working full time are still eligible for Medicaid, especially in Medicaid expansion states, because they are working low-wage jobs. For example, an individual working full-time (40 hours/week) for the full year (52 weeks) at the federal minimum wage ($7.25/hour) would earn an annual salary of just over $15,000 a year, or about 125% of poverty. That is still below the 138% federal poverty level maximum targeted by Medicaid expansion.
In non-expansion states with low eligibility levels, meeting Medicaid work requirements through 20 hours of work per week at minimum wage could lead to loss of Medicaid eligibility. For example, in Alabama, adults without children are not eligible for the program, and parents can only qualify if they earn not more than 18% of the federal poverty level, or less than $3,800 a year for a family of three.
Also, low-wage jobs are unlikely to have health benefits. According to the Kaiser Family Foundation, in 2017 less than a third of workers who worked at or below their state’s minimum wage had an offer of health coverage through their employer.
Increased administrative costs. Those who are working will need to successfully document and verify their compliance. And those who qualify for an exemption must also successfully document and verify their exempt status, as often as monthly. States would need to pay for the staff and systems to track work verification and exemptions.
Some states have already decided to not implement waiver authority they have received due to administrative costs. For example, Kentucky amended its waiver application to move from a tiered-hour work requirement to a flat hourly requirement, citing administrative concerns.
Additionally, the CMS guidance states that federal Medicaid funds may not be used for supportive services. This means the states must address and pay for ways to overcome multiple barriers (childcare, transportation, education, training, etc.) that interfere with the ability to work.
Complicated processes can cause eligible individuals to lose coverage. Some eligible people may lose coverage due to their inability to navigate the processes, miscommunication or other breakdowns in the administrative process. This could be especially true of people with disabilities who may not obtain an exemption for which they qualify and end up losing coverage.
Additionally, some people may have trouble getting the documentation to prove they aren’t healthy enough to work. According to a Kaiser study, roughly one-third of non-elderly adults with Medicaid report having a disability, but nearly 60% of those do not receive Supplemental Security Income (SSI).
The impact of work requirements on people with disabilities will depend, in part, on whether states will correctly identify and exempt people who can’t work and what types of support services they provide to help them.
What to Watch
Expect lawsuits. Democrats are expected to argue the Trump administration is trying to undermine ObamaCare’s Medicaid expansion on its own after Congress failed to repeal the health care law. Lawyers for advocacy groups are likely to argue that work requirements don’t promote the objectives of the Medicaid program because they would be a barrier to coverage. The administration is hoping to show a correlation between work and improved health outcomes/independence.
Expect more states to come on board, especially Red states. Requiring work for benefits is a GOP policy staple and most of the states who have applied for work waivers have Republican governors.
Expect ongoing evaluations. CMS is requiring follow ups to determine if the work requirements lead to improved health, well-being and independence. Individuals who experience a lapse in eligibility or coverage because they failed to meet the program requirements or because they gained employer-sponsored insurance will also be surveyed.
Expect refinements. Participating states will be in the spotlight. We should see ongoing efforts to improve their programs as they strive to make them successful and fair.
Public Perception: A new poll from Kaiser shows the public is split on whether work requirements are more to cut spending or lift people up. If people do not see positive results, there will likely be a backlash.
To comply with the U.S. Treasury regulations, we must inform you that (i) any U.S. federal tax advice contained in this newsletter was not intended or written to be used, and cannot be used, by any person for the purpose of avoiding U.S. federal tax penalties that may be imposed on such person and (ii) each taxpayer should seek advice from their tax advisor based on the taxpayer's particular circumstances.