Category : News

Deducting Long-Term Care Insurance Premiums in 2023

Mature couple sit in planning session with advisor.Are you a taxpayer who has purchased long-term care insurance (LTCI)? Take note of your policy details and your premium amount, as you may be able to deduct the cost – or at least part of it – from your 2023 income.

If your total eligible medical expenses (including your LTCI policy premium) for the year exceed 7.5 percent of your adjusted gross income, you may be able to take the amount of your LTCI policy premium as a deduction on your federal income tax return.

However, note that only certain LTCI policies qualify.

What Is Long-Term Care Insurance, and Do I Need It?

Long-term care insurance helps you cover costs for services you will likely need as you grow older, such as nursing home care or home health care.

According to LongTermCare.gov, U.S. seniors aged 65 today face a nearly 70 percent chance of requiring some form of long-term care later in life. In fact, almost a fifth of them will need it for more than five years.

Policies for this type of insurance can vary dramatically. Most will provide you with between $2,000 and $10,000 in funds each month, with premiums costing up to $5,000 a year. The younger you are when you purchase LTCI, the less pricey your annual premiums will generally be.

Keep in mind, too, that the average prices for long-term care have skyrocketed over time. For example, a private room in a nursing home will currently cost you more than $9,000 a month on average.

Unless you have very significant wealth, paying for LTCI may be well worth the cost, given how quickly long-term care can drain your retirement savings.

Can I Deduct My Long-Term Care Insurance Premium?

As mentioned above, only certain LTCI policies are tax-deductible. If your LTCI policy is considered “qualified” for tax deductibility, your total eligible medical expenses (including your LTCI policy premium) for the year also need to exceed 7.5 percent of your adjusted gross income in order you to be able to deduct your premium.

In addition, you are limited in how large a premium you can deduct. Read more about these caveats below:

1. Tax-Qualified Policies – To qualify for tax deductibility, your LTCI policy is required to meet specific rules, as outlined by the National Association of Insurance Commissioners (NAIC).

If you purchased your policy before January 1, 1997, it is likely qualified. (Double-check with your insurance broker or their state’s insurance commission.)

Policies purchased on or after January 1, 1997, have to meet a number of federal standards. Learn more about these standards on Page 9 of the NAIC’s Shopper’s Guide to Long-Term Care Insurance, available in PDF format.

2. Deduction Limits – The limit on your deduction depends on your age at year’s end. The IRS annually issues adjustments to these limits; it increased the 2023 tax-deductible limits by about 6 percent since 2022.

Note that if your annual premium amount for 2023 exceeds the limit provided in the table that follows, it will not be considered a medical expense:

Attained age before the close of the taxable year Maximum deduction
Age 40 or under $480 (up from $450)
Age 41 to 50 $890 (up from $850)
Age 51 to 60 $1,790 (up from $1,690)
Age 61 to 70 $4,770 (up from $4,510)
Age 71 and over $5,960 (up from $5,640)

 

3. Other Caveats

  • If you are self-employed, you can take the amount of the policy premium as a deduction if you made a net profit. Your medical expenses do not necessarily need to have exceeded 7.5 percent of your income.
  • Most hybrid life insurance policies are typically ineligible for tax deductions.
  • Note as well that benefits from per diem or indemnity policies, which pay a predetermined amount each day, are not included in income except amounts that exceed the beneficiary’s total qualified long-term care expenses or $420 per day (for 2023), whichever is greater.

For further details on these and other inflation adjustments, access the complete PDF from the IRS website.

Additional Resources

To get an idea of how much long-term care may cost you, visit Genworth’s Cost of Care online tool to calculate the cost of care where you live.

Be sure to seek out information from your attorney when it comes to evaluating your long-term care insurance needs as well as protecting your loved ones’ assets in the event that you do require long-term care. 

To learn more, reach out here to the MSW team: Amy Stratton or Kristen Prull Moonan

What Is IRMAA and How Does It Affect My Medicare Premiums?

Senior couple hiking in the forest together.As we near retirement, we may assume that once Medicare kicks in, our medical insurance premiums will be fixed. However, many people may not realize that there are special rules regarding how much they pay for Medicare Parts B and D if they are in a higher income range.

What Is IRMAA?

If the Social Security Administration (SSA) determines you have a higher income, you will have to pay more for your Medicare Part B or Medicare Part D coverage. This surcharge  is referred to as the income-related monthly adjustment amount (IRMAA). It is paid in addition to your monthly premium amount.

Note that Medicare Part B pays for doctor visits, outpatient care, and related services. Medicare Part D is related to your prescription drug coverage.

How Is IRMAA Calculated?

To determine whether you must pay higher Medicare Part B or D premiums, the SSA bases the decision on your most recently filed tax return. Because of timing issues, this can often be your tax return from two years prior, as your most recent one may not yet be filed or in the IRS system.

If the SSA finds that you must pay a higher premium, they use a sliding scale based on your modified adjusted gross income (MAGI) to determine by how much. MAGI equals your total adjusted gross income and any tax-exempt interest income you have received in a tax year.

2023 IRMAA Brackets

The IRMAA 2023 threshold for married couples is $194,000. For any other filing status, the threshold is $97,000.

Once you cross these thresholds, you will pay more for coverage. How much more depends on how much you exceed these numbers. The SSA provides a chart to show you what you can expect in 2023.

The SSA calculates your IRMAA every year. So, while you may be subject to IRMAA for one year, you may not be subject to it the following year. If the SSA determines you will be subject to IRMAA, they inform you of this and its effect on your premium in writing.

How Will IRMAA Affect My Premiums?

Let’s start by understanding how IRMAA may affect your Medicare Part B and D premium. Usually, the split between SSA and you is 75 percent/25 percent. In other words, Medicare pays 75 percent of the premium, and you pay 25 percent. If you exceed the income thresholds, the split changes, and you may pay anywhere from 35 percent to the total cost, depending on your income level.

Again, refer to the SSA’s 2023 chart for your situation. So, for example, if you are filing taxes as a married couple and make between $194,000 and $228,000 in 2023, you will see on the 2023 chart that your Part B premium will increase by $65.90. Your Part D premium will go up by $12.20.

What If I Don’t Think I Should Be Subject to IRMAA?

What happens if your income listed on your most recently available tax return was much higher than what you are currently making or receiving? There is a way for you to inform SSA of the change in your finances.

For example, if you divorced, were laid off, or are making less money and you can document this, you can complete the Medicare Income-Related Monthly Adjustment Amount – Life-Changing Event form. This will inform SSA and ask them to reassess any imposition of IRMAA in your case.

You can also appeal the SSA’s decision where there was a change in your income but not necessarily in the form of a life event. For example, if you filed and IRS accepted an amended tax return for the year that is being used to calculate your IRMAA, you may be able to get the SSA to change its decision. Sometimes the SSA gets erroneous information about you from the IRS, and this may also be a basis to appeal.

There are a few different ways to appeal the SSA’s IRMAA determination. The appeal can be submitted in any of the following ways:

Speak With a Professional

If you have questions about IRMAA and your particular circumstances, it is best to speak with a professional. Timing matters, so seeking professional guidance as soon as possible after you receive notice of the IRMAA surcharge is essential.

To learn more, reach out here to the MSW team: Amy Stratton or Kristen Prull Moonan

Estate Planning: An At-a-Glance Overview

Grandmother and granddaughter smile, with their hands making a heart shape toward the camera.Estate planning, or legacy planning, entails preparing your affairs for the future, including death and other life events. While older adults might give more thought to estate planning, it is an essential tool at any age.

Why It’s Important

With estate planning, individuals and families can protect their interests after death or incapacity.

  • You can provide for their spouses, children, and dependent family members when you pass away.
  • You can arrange your care and financial affairs should you suffer a severe accident or illness that renders you incapacitated.
  • If you are a parent, you can nominate a guardian to care for and manage the inheritance of your minor children.
  • If you own a business, you can prepare to transfer it to family members, colleagues, or other trusted individuals.
  • You can make arrangements for your long-term care when you can no longer live on your own.
  • You can also make funeral preparations, determine what happens to your body when you pass, and prepay for your funeral, all of which can help lessen the burden on your family members.

What Is an Estate?

Legacy planning entails passing on your estate. Your estate is everything you own, including:

  • Savings and checking accounts
  • Retirement accounts
  • Investments
  • Life insurance
  • Annuities
  • House and other real estate
  • Car
  • Personal possessions, such as jewelry, furniture, and sentimental items

When you die, your estate encompasses all your property upon death. If you sold or gave away property before death, it is no longer part of your estate, and you cannot transfer it upon death.

Items you own with another person are also part of your estate. Depending on the type of asset, it might automatically pass to the other owner. For instance, if you own a home with your spouse as tenants by the entirety, it will pass to your spouse upon your death.

What Is an Estate Plan?

An estate plan consists of legal documents and arrangements that determine the distribution of your assets when you die or outline your care if you become incapacitated.

While a will can be a central component of an estate plan, a solid plan encompasses more than a will. It can also include legal tools that allow assets to pass outside of a will and probate, the process by which a court oversees the distribution of assets in a will.

Estate Planning Tools

In addition to your will, your estate plan could include the following:

  • Purchasing jointly owned property or adding a joint owner to your property
  • Designating a beneficiary on a pay-on-death bank account, retirement account, or annuity
  • Buying life insurance to benefit your family should you pass away
  • Creating a trust for a child
  • Obtaining long-term care insurance to cover future nursing home or assisted living fees
  • Executing power of attorney documents, naming health care and financial agents
  • Making a living will, providing instructions for care should you become incapacitated
  • Preparing a transfer on death instrument to pass ownership of your property to a beneficiary upon death

What Is an Estate Planner?

As professionals helping people make future arrangements, estate planners are attorneys who focus on end-of-life preparations. Estate planning attorneys assist people with drafting legal documents and understanding laws and taxes that could affect them and the loved ones they will leave behind.

When creating estate plans, individuals may need to consult attorneys as well as other experts, including financial planners, accountants, life insurance advisors, bankers, and real estate brokers.

What Does the Final Distribution of Assets Involve?

The final distribution of assets is a conclusory step in the probate process before the court closes probate. When an estate goes through probate, the personal representative must satisfy all debts, and the court must resolve all disputes before allowing the beneficiaries to receive the assets. The court transfers ownership of the assets to the beneficiaries during the final distribution of assets.

Do I Need a Lawyer for Estate Planning?

Although the law does not require that individuals secure legal representation to make estate plans, many find the support and guidance of estate planning attorneys invaluable. An estate planning attorney can help you identify the legal tools and strategies that suit your needs, as well as draft the necessary documents, such as wills, trusts, and powers of attorney. A legacy planning lawyer can help you preserve your estate’s wealth and may work with tax professionals.

In addition to addressing tax concerns and drafting documents, these attorneys can help you avoid probate. Probate, the process by which the court oversees the distribution of assets in a will, can be expensive and time-consuming for surviving family members. It also opens the door for disgruntled people to challenge the validity of the testamentary document, further complicating asset distribution. An estate planning attorney could help you organize your assets to transfer outside of probate to make the transfers simpler, easier, and less vulnerable to challenges.

Consult with your estate planning attorney for assistance in creating a legacy plan. To learn more, reach out here to the MSW team: Amy Stratton or Kristen Prull Moonan

What Is a Qualified Personal Residence Trust (QPRT)?

Extended family walks together as a group outside of their cabin in the woods.A qualified personal residence trust (QPRT) is an irrevocable trust used to achieve estate and gift tax savings. The basic idea behind a QPRT is to transfer the equity in a qualified residence out of a person’s estate and to their heirs while reaping lower transfer tax consequences.

A QPRT can also be used to prevent creditors from accessing equity in the residence and allow for the gradual transition of assets to other family members, should these be among a person’s concerns. Assuming specific rules are met, a QPRT can be used for a primary residence or secondary residence, such as a vacation home.

How Do Qualified Personal Residence Trusts Work?

If, after consultation with an attorney, it appears a QPRT could benefit you, it works as follows:

  • You transfer the title of a residence to an irrevocable trust and retain the right to use the residence and receive any income from it for a fixed period (known as the trust term).
  • If you, as the trust grantor, pass away prior to the expiration of the trust term, it is common for the residence to revert back to you (in compliance with 26 U.S. Code § 2036). The residence will then be included in your estate and will be dealt with according to the terms of your estate plan. In addition, the value of the gift will be reduced due to the reversion.
  • If you, as the trust grantor, are living when the trust term comes to an end, your interest in the trust will expire, and the residence passes to those that have been designated your beneficiaries. If the trust is constructed correctly, there should be no additional transfer tax on the appreciation of the value of the residence. In addition, the property in the QPRT will avoid any complications that may come with going through the probate process.

Special QPRT Rules

A QPRT must follow specific rules to comply with limitations imposed by the IRS:

  • A grantor cannot have term interests in more than two QPRTs.
  • Property transferred to the QPRT must be either:
    • The grantor’s principal residence,
    • A residence that is used for personal purposes for at least 14 days of the year, or, if more than 14 days, then for 10 percent of the number of days per year that it is rented, or
    • An undivided fractional interest in one of these types of residences.
  • If a grantor pays any expenses of the property that arguably should be paid for by the beneficiaries, this payment may constitute an additional taxable gift. Language can be crafted to address this issue, but it must be done with care and attention to how it is written.
  • If the property in the QPRT is no longer used as a qualifying residence, the QPRT must terminate, subject to certain exceptions.
  • If a QPRT ceases to qualify as a QPRT, the trust assets must go to the trust grantor, or the QPRT must be converted into a Grantor Retained Annuity Trust (GRAT) within a fairly short timeframe, often as soon as 30 days.

It should be noted that the above rules are not exhaustive. There are many other rules and technicalities that are beyond the scope of this article.

Gift Tax Benefits of QPRTs

A QPRT has unique gift tax benefits. Once set up, the trust grantor is treated as having made an immediate gift to their beneficiaries. This means that the gift tax value is calculated as of the time of the transfer of the property into the QPRT.

However, this gift is discounted by the amount of the trust grantor’s retained interest in the residence. This is usually the value of the right to use or collect income from the property. The values and discounts are determined using actuarial tables published by the IRS.

Once the trust term ends, and assuming the grantor survives the term, the residence will pass on to the beneficiaries. They will not pay any further transfer tax above any tax that may become due on the discounted gift amount. If the residence has appreciated in value during the trust term, this appreciation will not be subject to transfer tax.

If the trust grantor passes away before the expiration of the trust term and there is a reversion clause, QPRT property will be brought back into the grantor’s estate. In this scenario, the grantor will not be in any worse position than they would have been had they not created the QPRT.

You May Be Able to Stay in Your Home Longer Than You Think

Many become nervous when they learn that they may only retain an interest in a personal residence subject to a QPRT for a certain amount of time.

However, one way to continue to have access to the property even after the term ends is to provide that the residence will stay in the trust and give the person’s spouse the right to live there rent-free until they pass. As long as the grantor remains married to their spouse, there is no reason why they cannot live there as well during this time.

Some Drawbacks

QPRTs are not a perfect solution for everyone. For example, it will not be possible to mortgage the property after it is put into the trust. In addition, it may be necessary to pay off any mortgage against the property prior to the transfer to avoid complications, such as a possible mortgage acceleration or other difficulties.

Setting up a QPRT can also be an expensive endeavor, as a good amount of time and effort by qualified professionals will be required to set it up correctly. This can include attorney’s fees, several appraisals, and title expenses.

Finally, a QPRT is irrevocable and may not allow someone to engage in other gift and estate tax planning. An analysis will have to be made to determine if a QPRT makes the best use of a person’s available gift and estate tax exclusions.

Consult With Your Attorney

This article only covers some of the rules that must be followed or technical considerations that should be considered when setting up a QPRT or determining if it is the right option for your situation. It is essential to consult with your estate planning attorney before creating a QPRT.

To learn more, reach out here to the MSW team: Amy Stratton or Kristen Prull Moonan

Assisted Living vs. Nursing Homes: What’s the Difference?

Three senior men sit at table in retirement community, interacting while two of them play chess.Assisted living facilities and nursing homes are long-term housing and care options for older adults. Although people sometimes use the terms assisted living and nursing home synonymously, they are distinct.

Understanding the differences between assisted living and nursing homes is critical for those considering where to live as they age. This is because assisted living communities and nursing homes provide different types of care. While assisted living is appropriate for active older adults who need support with everyday tasks, nursing homes provide medical care to adults with significant health issues.

What Is Assisted Living?

Older adults who can no longer live on their own but do not require round-the-clock medical care can benefit from assisted living. While assisted living facilities can have nurses on staff, the primary focus is not on health care, but rather on supporting residents with daily life.

Activities of daily living (ADLs) are six basic activities that healthy individuals can carry out on their own on a daily basis. Depending on an individual resident’s needs, an assisted living facility can provide aid with showering, dressing, preparing meals, completing household chores, and taking medication on time at the correct dose.

While giving necessary support, assisted living communities maximize adults’ independence and autonomy. Residents typically live in private units similar to traditional apartments with kitchens that are part of larger communities offering opportunities to socialize with fellow residents. Units can have safety features tailored to older adults with mobility challenges, such as shower bars, widened doorways, safety rails, and enhanced lighting.

Difference Between Assisted Living and Nursing Home

Compared to assisted living, nursing homes may be the right fit for those with significant medical conditions requiring round-the-clock care. Nursing homes can offer more extensive health care services that are unavailable in many assisted living facilities. Therefore, nursing homes can be more appropriate for those with severe health needs.

As they provide critical medical support, nursing homes can help people with mobility complications or cognitive challenges that limit their autonomy. For instance, a person diagnosed with severe dementia might do better in a nursing home than in an assisted living facility. Some nursing homes have specialized memory care units for those with dementia. Nursing home staff can also provide medical care and supervision as well as help with the six activities of daily living.

Like assisted living facilities, nursing homes also offer help with daily living, such as bathing or help with medication management, and can adapt to individuals’ needs. For instance, showers and bathtubs may have safety bars, and doors may be wide enough to accommodate wheelchairs.

Yet nursing homes offer residents less freedom and independence than assisted living communities. Those receiving care typically do not have their own kitchens and may share a room with another patient.

What Are the Costs of Assisted Living Facilities and Nursing Homes?

Assisted living facilities and nursing homes can constitute a significant expense for residents and their families.

According to SeniorLiving.org, the median cost of assisted living in 2021 was $4,500 per month. Because of the higher level of medical care, nursing homes tend to be more expensive than assisted living. A private room in a nursing home averages $9,034 per month, and a shared room $7,908 per month.

Individuals can pay for assisted living or nursing home fees out of pocket or through long-term care insurance. Medicare does not cover assisted living or nursing home fees.

Medicaid coverage, however, does extend to nursing home fees. Though Medicaid does not pay for room and board at assisted living facilities, it includes the skilled nursing care and emergency response services that residents of assisted living facilities receive.

Additional Resources

Before selecting an assisted living facility or nursing home, research the community and ensure it is a good fit.

To learn more, reach out here to the MSW team: Amy Stratton or Kristen Prull Moonan

Appointing an Executor? Here’s What an Executor Cannot Do

Shady executor steeples his fingers and smirks.The person you name as your executor will be accountable for a number of important tasks, even in managing the administration of a small estate. This may include filing tax returns, keeping meticulous records, and distributing assets to your beneficiaries.

At the same time, there are rules about what the person in this role is not permitted to do.

What Is an Executor?

An executor is a person you choose to administer your estate upon your death. When you have passed away, the executor, assuming they agree to take on this role and can do so, presents your will to the court. The executor then asks the court to confirm their appointment.

Each state has rules regarding who may or may not serve in this role. Basic rules usually include that the executor must be of the age of majority (in most states, age 18) and of sound mind. In some states, the executor must not have a felony conviction. There can also be other state-specific rules to qualify as an executor.

Assuming these rules are met, the executor may then begin to manage the estate affairs. The goal is to wrap up the estate in an orderly manner. Their responsibilities may include:

  • identifying what assets and property comprise an estate
  • determining what debts may need to be addressed
  • honoring the wishes expressed by the decedent in their will (to the extent possible)
  • filing any estate tax returns that may be needed
  • and much more.

Appoint a Capable and Responsible Person

Serving as an executor is a serious undertaking. If you are preparing a will, it is important to choose someone you know you can trust, who is reliable, and who will take their role seriously. It is also essential they are capable, so their financial sophistication and ability to understand complex issues matter.

As part of this decision-making process, you may consider the things they would be prohibited from doing as well.

What an Executor Cannot (And Should Not) Do

In general, an executor may not engage in bad acts or abuse their role. So, for example, they cannot refuse to probate a will if they agree to take on this responsibility. They also cannot steal from the estate or mishandle estate property.

An executor cannot take money from bank accounts and use them for personal needs, transfer property for less than market value, pocket money they are collecting from rental properties that are part of an estate, and much more. Absent unusual circumstances, this is considered stealing.

If they steal from an estate, a court can remove them from their position and deem them liable for the return of stolen funds. Those who abuse their role in such ways may find themselves being sued by beneficiaries and dealing with other legal worries.

However, in most states, executors are allowed to receive a “commission” or fee for their services. In New York, for example, an executor collects commissions based on the estate’s value. If the estate is worth $100,000 or less, they are entitled to 5 percent.

They may also be reimbursed for any reasonable and necessary expenses they need to take on in carrying out their role. They have to go about collecting these amounts appropriately, which usually requires some court oversight and approval.

In addition, there are some exceptions for use of estate property by an executor. In many situations, such as where a parent leaves a home to their child, that child is also serving as executor. A will typically provides that living in the house is permissible in such a situation. A will may also have additional language that permits certain “self-dealing” by an executor.

Executors are also expected to honor what is set forth in a will unless it is not feasible. So, they cannot arbitrarily refuse to carry out the wishes of the individual who had appointed them to the role, refuse to acknowledge beneficiaries, or refuse to wrap up an estate.

However, as with most things, there are exceptions. For example, suppose a will provides for something that is illegal, against public policy, or simply not possible (i.e., gifting of funds that do not exist). In that case, an executor understandably cannot carry out such provisions.

An executor cannot fail to maintain good records. In managing an estate for the benefit of others, they are supposed to keep records of all expenditures and transactions. They will also be expected to make this information reasonably available to beneficiaries, the court, and other parties with a vested interest in the estate.

Further Resources

There are many other examples of things an executor cannot do. Because every estate and will are unique, it is best to speak with your attorney. They can help alleviate any concerns you may have about what an executor may or may not be able to do.

To learn more, reach out here to the MSW team: Amy Stratton or Kristen Prull Moonan

Highlights of How the Omnibus Bill Will Benefit Older Adults

Happy mature couple signing documents in kitchen at home.The Senate and House have cleared the passage of a year-end $1.7 trillion appropriations bill that will benefit older adults on a number of fronts.

The bill, which runs more than 4,000 pages and includes a wide variety of legislation, heads to President Biden next for his signoff.

Here is a breakdown of some of the highlights that relate to supporting older Americans:

Health and Housing

  • Opt to age at home – The Money Follows the Person (MFP) Program has been helping older adults age in their own home or a community setting, rather than in nursing homes, since 1972. The newly passed bill extends MFP through September 2027.
  • Age in place safely – The omnibus bill has also doubled funding for the federal government’s Older Adult Home Modification Program from $15 million to $30 million.For seniors with limited income, this program covers the cost of simple, low-cost home modifications – such as railings and temporary wheelchair ramps – that help them age in place safely.
  • Provide for your healthy spouse if you are on Medicaid in a nursing home – Medicaid beneficiaries who must reside in a long-term care facility but have a spouse still living at home will continue to see their healthy spouse protected from poverty.Known as spousal impoverishment rules, these protections ensure that the healthy spouse receives income while their institutionalized spouse keeps their Medicaid eligibility. These protections, which are adjusted each year, will continue to be in place until September 2027.
  • Continue to see doctors online – Lawmakers have extended access to telehealth services for Medicare enrollees for another two years.
  • Find affordable housing with support services – The Housing for the Elderly Program has received a billion-dollar bump in funding as well.This program seeks to aid seniors with very limited income in securing housing that is within their means while also offering supportive services such as assistance with cooking and cleaning.

Retirement Savings

  • Contribute more to retirement – For older workers, the omnibus bill raises what are known as “catch-up” contribution limits for retirement savings. Taxpayers ages 60 to 63 will be allowed to contribute an extra $10,000 to their 401(k) starting in 2025.
  • Access 401(k) funds for emergencies – If you need to take money out of your 401(k) before reaching age 59½, under certain circumstances you will no longer have to pay the 10 percent penalty fee for withdrawing money early. As of the end of 2023, you will be allowed to withdraw up to $1,000 a year for unforeseen emergencies without incurring a penalty.
  • Wait longer to withdraw money from your retirement accounts – Previously, you were required to begin withdrawing money from your retirement plan account starting at age 72. This mandatory withdrawal is known as a required minimum distribution (RMD).As of January 1, 2023, the new bill allows you to hold off until age 73 to take funds from these types of private retirement accounts.

    To learn more, reach out here to the MSW team: Amy Stratton or Kristen Prull Moonan

Does Power of Attorney End at Death?

Bouquet of flowers at grave in cemetery.A power of attorney is a powerful planning document that enables you (the principal) to give another person (the agent or attorney-in-fact) the power to act for you while you are alive.

Because it is often prepared in the context of estate planning, many believe it gives their agents the power to continue acting after their death.

Although every state’s laws and forms vary, most power of attorney forms specify that the agency relationship created by a power of attorney ends upon a person’s death.

What Does a Power of Attorney Do?

A power of attorney (POA) can convey a significant range of power to the person you appoint. This includes the ability to do the following on your behalf:

  • Enter into real estate transactions;
  • Enter into leases and purchase personal property;
  • Buy bonds or other securities;
  • Engage in banking transactions;
  • Engage in business operating transactions;
  • Handle insurance transactions;
  • Engage in estate transactions;
  • Make decisions concerning any claims you have or in which you may be involved;
  • Make gifts or charitable donations;
  • Manage any benefits you receive or are entitled to;
  • Manage the financial aspects of your health care;
  • Manage your retirement accounts;
  • Handle your tax matters;
  • Delegate any of the above responsibilities to a third party

Power of Attorney Forms

Most POA forms allow you to choose how specific or broad you would like the powers you give to be so that you can tailor a power of attorney to suit your needs. An agent can also update a power of attorney over time as a principal’s needs change.

In many states, these powers, once delegated, remain in place even in the event of your incapacity. People frequently execute a power of attorney for this reason. They do not want to worry about what may happen should they become incapacitated or whether a loved one will have the ability to handle their affairs if they are no longer able to do so.

Power of Attorney After Death

That being said, a power of attorney expires upon your death. So, if you have entrusted a particular person with carrying out certain functions on your behalf while you were alive, those abilities cease when you pass away.

If you wish for the same person to continue handling your affairs after you die, you would need to specify they serve as the executor or personal representative of your will or trustee of your trust.

If you are concerned about maintaining continuity or making sure a particular person oversees your affairs upon your passing, be sure speak with an estate planning attorney. Every person’s situation and needs are different, and state laws also vary. Connect with your estate planner to help you understand your local laws and tailor an estate plan that meets your needs.

To learn more, reach out here to the MSW team: Amy Stratton or Kristen Prull Moonan

Does Medicare Pay for Assisted Living?

Physical therapist working with senior woman using a walker.Assisted living facilities support older adults with daily living while fostering their independence. Individuals who do not require round-the-clock nursing but need help with everyday activities like bathing, housekeeping, medications, and meal preparation can benefit from assisted living.

Some seniors choose to move into assisted living following a frightening event, such as a fall. They want to live autonomously but may feel unsafe in their homes.

Averaging $4,500 per month, assisted living can be expensive. Those considering assisted living might wonder whether Medicare, a federal health insurance program for qualifying adults aged 65 or over, will cover the cost.

Traditional Medicare covers only certain health services to those residing in an assisted living facility. Meanwhile, some Medicare Advantage programs may only pay for services that help people remain in their homes.

Does Traditional Medicare Cover Assisted Living?

In short, no. While traditional Medicare supports older adults’ medical needs, it does not apply to most assisted living expenses. Assisted living facilities help residents with everyday, nonmedical tasks, which Medicare typically does not include.

Medicare Part A insures people for hospital stays and up to 100 days in a skilled nursing facility. Skilled nursing facilities provide 24-7, short-term nursing care. Because they deliver medical care, they are distinct from assisted living facilities, which offer custodial or daily life care.

Medicare Part B pays for medical fees for outpatient care, and Part D covers prescription drug costs. Most assisted living expenses do not fall under Medicare Part A, B, or D.

However, traditional Medicare may cover specific medical costs for people in assisted living. Expenses Medicare may cover include:

  • Physical therapy
  • Specific health services like changing sterile dressings
  • Preventative health services like vaccinations
  • Health care transportation

Does Medicare Advantage Pay for Assisted Living?

Private insurance companies that contract with traditional Medicare sell Medicare Advantage plans. Like original Medicare, these plans typically do not cover monthly assisted living bills.

Certain Medicare Advantage plans may offer supplemental home care benefits that help people continue living independently, albeit in their own homes rather than a designated facility.

The services available through select Medicare Advantage programs may include home modifications like wheelchair ramps and bathroom safety grab bars; in-home assistance with daily tasks; and transportation to the hospital and the pharmacy. Adult daycare is also available through some Medicare Advantage plans.

Seniors looking to live on their own might consider enrolling in a plan that includes services that support autonomy. Many programs are available, and the coverage that is open to you depends on where you live. The terms of Medicare Advantage plans vary. Review your plan options and speak with an attorney before deciding whether to enroll in a Medicare Advantage program.

Does Medicaid Pay for Assisted Living?

Unlike Medicare, Medicaid generally will pay for some of the costs of assisted living. Medicaid is a joint federal-state health insurance program for low-income people, including older adults. Although it does not cover room and board for assisted living, it may help pay for personal care services, on-site therapy services, and medication management.

Before deciding whether to move into an assisted living facility, reach out here to the MSW team: Amy Stratton or Kristen Prull Moonan

Protecting Spouses of Medicaid Applicants: 2023 Guidelines

Closeup view of senior couple clasping each other's hands.The Centers for Medicare & Medicaid Services (CMS) has released the 2023 federal guidelines for how much money the spouses of institutionalized Medicaid recipients may keep, as well as related Medicaid figures.

What Are Spousal Impoverishment Rules?

Spousal impoverishment is a concern for older couples when there is one spouse who requires long-term care and applies for Medicaid.

Before the federal government enacted spousal impoverishment protections, many healthy spouses faced poverty when their partners needed long-term care. The spousal impoverishment rules are based on the idea that spouses will provide for each other.

Community Spouse Resource Allowance

In 2023, the spouse of a Medicaid recipient living in a nursing home (called the “community spouse”) may keep as much as $148,620 without jeopardizing the Medicaid eligibility of the spouse who is receiving long-term care.

Known as the community spouse resource allowance (CSRA), this is the most that a state may allow a community spouse to retain without a hearing or a court order. While some states set a lower maximum, the least that a state may allow a community spouse to retain in 2023 will be $29,724.

Monthly Maintenance Needs Allowance

Meanwhile, the maximum monthly maintenance needs allowance (MMMNA) for 2023 will be $3,715.50. This is the most in monthly income that a community spouse is allowed to have if their own income is not enough to live on and they must take some or all of the institutionalized spouse’s income.

The minimum monthly maintenance needs allowance for the lower 48 states will be $2,288.75 ($2,861.25 for Alaska and $2,632.50 for Hawaii) until July 1, 2023.

In determining how much income a particular community spouse is allowed to retain, states must abide by this upper and lower range. Bear in mind that these figures apply only if the community spouse needs to take income from the institutionalized spouse.

According to Medicaid law, the community spouse may keep all their own income, even if it exceeds the maximum monthly maintenance needs allowance.

The new spousal impoverishment numbers (except for the minimum monthly maintenance needs allowance) take effect on January 1, 2023.

Home Equity Limits

In 2023, a Medicaid applicant’s principal residence will not be counted as an asset by Medicaid if the applicant’s equity interest in the home is less than $688,000. States have the option of raising this limit to $1,033,000.

Reach out here to the MSW team: Amy Stratton or Kristen Prull Moonan