Category : News

Social Security Shutters ‘Petri Dish’ Offices in Response to Coronavirus Outbreak

To protect its workers and the public during the coronavirus pandemic, the Social Security Administration (SSA) has suspended face-to-face service to at its field offices and hearings offices nationwide until further notice. Payments to the nearly 70 million Social Security beneficiaries will not be affected.

While in-person appointments will still be made for certain critical services (see below), the SSA is encouraging beneficiaries to transact as much business as possible online using the agency’s website. (If you don’t have an online account yet, click here.)

Certain services also will continue to be available via the agency’s toll-free line, (800) 772-1213 or from local offices’ General Inquiry lines. (For the local office locator, click here.)

Why the Closure?

Budget cuts to Social Security over the years have led to crowded offices and long wait times.  With the advent of the coronavirus outbreak, this went from being an inconvenience to a public health threat.  The union representing the SSA’s 61,000 workers was deeply concerned about the health of the agency’s workforce as well as the danger to the public.

“The offices are petri dishes,” Richard Couture, a spokesman for the union, told The New York Times.  “People are sitting there for a long time, magnifying and multiplying the risk of infection for everyone there, and to people on the outside.”

How to Get in Touch During the Shutdown

Examples of tasks or inquiries that can be accomplished online include:

  • Applying for retirement, disability, and Medicare benefits;
  • Checking the status of an application or appeal;
  • Requesting a replacement Social Security card (in most areas); or
  • Requesting a replacement Medicare card.

(For a complete list, click here.)

Phone services will also be available, although the SSA says it is “focusing on providing specific critical services to people in dire need.” Examples of how the SSA can help by phone include:

  • If you did not receive your monthly payment;
  • If you are currently homeless or at risk of becoming homeless; or
  • If your benefits were suspended and can now be reinstated.

Expect long wait times if calling, however.

In-Person Appointments

In-person help will still be available for a limited list of critical services, including:

  • Reinstatement of benefits in dire circumstances;
  • Assistance to people with severe disabilities, blindness or terminal illnesses; or
  • Help for those in urgent need of eligibility decisions for Supplemental Security Income or Medicaid eligibility related to work status.

If you require such services, you must call in advance; there are no walk-ins at the field offices.

What if you already had a standing appointment or disability hearing scheduled?  If this is the case, the SSA will call you to reschedule or to take care of the issue by phone. Unfortunately, this call may come from a private phone number rather than from a government phone because employees are working remotely and do not necessarily have government-issued phones. Identity theft phone scams where callers impersonate SSA workers were already on the rise, and this will likely only add to beneficiaries’ confusion. Be aware that agency employees will never inform you that your Social Security number has been suspended, demand payment, or seek credit card information.  (Scams taking advantage of the situation have already started.)

For full details on changes to SSA services brought on by the response to the coronavirus, go to the SSA’s Social Security & Coronavirus page, https://www.ssa.gov/coronavirus/

If you are enrolling in Medicare, you can get free counseling from your State Health Insurance Assistance Program (SHIP).  To find your state program, click here.

To learn more, contact Amy Stratton or Kristen Prull Moonan.

 

 

 

How Does Medicaid Treat Income?

The basic Medicaid rule for nursing home residents is that they must pay all of their income, minus certain deductions, to the nursing home. The deductions include a $60-a-month personal needs allowance (this amount may be somewhat higher or lower in your state), a deduction for any uncovered medical costs (including medical insurance premiums), and, in the case of a married applicant, an allowance for the spouse who continues to live at home if he or she needs income support. A deduction may also be allowed for a dependent child living at home.

In determining how a Medicaid applicant’s income affects his or her eligibility for nursing home coverage, most states use what is known as the “medically needy” or “spend-down” approach.  These states allow the applicant to spend down their income on their care until they reach the state’s income standard for eligibility, at which point Medicaid will begin covering their care.  In this way, those with incomes that exceed Medicaid’s thresholds can still qualify if they have high medical expenses, assuming they meet Medicaid’s other requirements.

But some states set a hard limit on the income permissible to qualify for Medicaid — no spend-down is allowed.  In these states, known as “income cap” states, eligibility for Medicaid benefits is barred if the nursing home resident’s income exceeds $2,349 a month (for 2020), unless the excess income above this amount is paid into a “(d)(4)(B)” or “Miller” trust. If you live in an income cap state, contact your attorney to set up a trust. The income cap states as of this writing are: Alabama, Alaska, Arizona, Arkansas, Colorado, Delaware, Florida, Georgia, Idaho, Indiana, Iowa, Kentucky, Louisiana, Mississippi, Nevada, New Mexico, New Jersey, Oklahoma, Oregon, South Carolina, South Dakota, Tennessee, Texas, and Wyoming.

For Medicaid applicants who are married, the income of the healthy spouse living in the community (the “community spouse”) is not counted in determining the Medicaid applicant’s eligibility. Only income in the applicant’s name is counted in determining his or her eligibility. Thus, even if the community spouse is still working and earning, say, $5,000 a month, he or she will not have to contribute to the cost of caring for his or her spouse in a nursing home if the spouse is covered by Medicaid.

To learn more, contact Amy Stratton or Kristen Prull Moonan.

Estate Planning Is Essential for Unmarried Couples

While estate planning is important for married couples, it is arguably even more necessary for couples that live together without getting married. Without an estate plan unmarried couples won’t be able to make end-of-life decisions or inherit from each other.

Estate planning serves two main functions: determining who can make decisions for you if you become incapacitated and who gets your assets when you die.  There are laws in place to protect spouses in couples that have failed to plan by governing the distribution of property in the event of death. If you do not have a will, property will pass to your spouse and children, or to parents if you die without a spouse or children.

But there are no laws in place to protect unmarried partners. Without a solid estate plan, your partner may be shut out of the decision making and the inheritance. The following are the essential estate planning steps that can help unmarried couples:

  • Joint Ownership. One way to make sure property passes to an unmarried partner is to own the property jointly, with right of survivorship. If one joint tenant dies, his or her interest immediately ceases to exist and the remaining joint tenants own the entire property. This is also a good way to avoid probate.
  • Beneficiary Designations. Make sure to review the beneficiary designations on bank accounts, retirement funds, and life insurance to make sure your partner is named as the beneficiary (if that is what you want). Your partner will not have access to any of those accounts without a specific beneficiary designation.
  • Durable Power of Attorney. This appoints one or more people to act for you on financial and legal matters in the event of your incapacity. Without it, if you become disabled or even unable to manage your affairs for a period of time, your finances could become disordered and your bills not paid, and this would place a greater burden on your partner. Your partner might have to go to court to seek the appointment of a conservator, which takes time and money, all of which can be avoided through a simple document.
  • Health Care Proxy. Similar to a durable power of attorney, a health care proxy appoints an agent to make health care decisions for you when you can’t do so for yourself, whether permanently or temporarily. Again, without this document in place, your partner might be shut out by other family members or forced to go to court to be appointed guardian. If it is important for all of your family members to be able to communicate with health care providers, a broad HIPAA release — named for the Health Insurance Portability and Accountability Act (HIPAA) of 1996 — will permit medical personnel to share information with anyone and everyone you name, not limiting this function to your health care agent.
  • Will. Your will says who will get your property after your death. However, it’s increasingly irrelevant for this purpose as most property passes outside of probate through joint ownership, beneficiary designations, and trusts. Yet your will is still important for two other reasons. First, if you have minor children, it permits you to name their guardians in the event you are not there to continue your parental role. Second, it allows you to pick your personal representative (also called an executor or executrix) to take care of everything having to do with your estate, including distributing your possessions, paying your final bills, filing your final tax return, and closing out your accounts. It’s best that you choose who serves in this role.
  • Revocable Trust. A revocable trust can be especially important for unmarried couples. It permits the person or people you name to manage your financial affairs for you as well as to avoid probate. You can name one or more people to serve as co-trustee with you so that you can work together on your finances. This allows them to seamlessly take over in the event of your incapacity.

Your attorney can help you determine the estate plan that is right for you and your partner. To learn more, contact Amy Stratton or Kristen Prull Moonan.

How to Include Cryptocurrency in an Estate Plan

The growing popularity of cryptocurrency means it is increasingly something that must be considered when planning an estate. If you own cryptocurrency, providing instructions in your will is a must.

Cryptocurrency is virtual money that exists only in digital form. The most popular cryptocurrency is Bitcoin, but there are many different types. Usually the only way to access the funds is through a computer, using a personal passcode.

Unlike a bank account, there is no physical record of the currency, so if you own cryptocurrency it is essential that you declare it in your will and also let the person who will be handling your estate (your fiduciary) know about it. Also, unlike with a bank account, the fiduciary does not have to provide a death certificate or power of attorney in order to access the currency. As long as the fiduciary has your passcode, he or she can take control of the currency. This means you need to be sure that your fiduciary is someone you can trust with this information.

You do not want to put the passcode directly into your estate planning documents, which if they go through probate could become public documents. Instead, simply list the cryptocurrency as an asset in your will and put the instructions on how to access it in a separate document that is also referenced in the will. The instructions should be as specific as possible, and it can be updated as needed. If you lose the passcode to the currency, it may not be possible to recover it, so it is important to store it in a safe place, like a safe deposit box.

Your attorney can help you make a plan for your digital assets. To learn more, contact Amy Stratton or Kristen Prull Moonan.

How Secure Is Social Security?

For years people have been worried about Social Security’s future, but what is the actual outlook? According to the federal government, unless Congress acts to intervene, Social Security shortfalls are expected beginning in 2035.

Social Security retirement benefits are financed primarily through dedicated payroll taxes paid by workers and their employers, with employees and employers splitting the tax equally. Employers pay 6.2 percent of an employee’s income into the Social Security system, and the employee kicks in the same. Self-employed individuals pay the entire 12.4 percent Social Security payroll tax. This money is put into a trust fund that is used to pay retiree benefits.

The trustees of the Social Security trust fund have reported that if Congress doesn’t take action, the fund’s balance will reach zero in 2035. This is because more people are retiring than are working, so the program is paying out more in benefits than it is taking in. Additionally, seniors are living longer, so they receive benefits for a longer period of time.

Once the fund runs out of money, it does not mean that benefits stop altogether. Instead, retirees’ benefits would be cut. According to the trustees’ projections, the fund’s income would be sufficient to pay retirees 77 percent of their total benefit.

Congress can act to shore up Social Security before this happens. Some ideas include eliminating the cap on benefits. Right now, workers only pay Social Security tax on the first $137,700 of income (in 2020). That amount can be increased, so that higher-earning workers pay more in taxes. The Social Security tax or the retirement age could also be increased.

Social Security is immensely popular and lawmakers are unlikely to allow steep benefit cuts to take place. The last time the program was in financial trouble and received a major overhaul was in 1983, when President Ronald Reagan and congressional Democrats struck a deal to increase taxes and gradually raise the retirement age from 65 to 67.

For more information about a potential Social Security shortfall, click here and here. Or, contact Amy Stratton or Kristen Prull Moonan.

Accounting for Gifts and Loans to Children in Your Estate Plan

No parents want their children to fight among themselves after they are gone. Sadly, conflicts often arise, especially when a parent has gifted or loaned money to one child and not others. However, a few key words in your estate plan can minimize the potential for conflict.

If you give money to one child, the other siblings may claim that the child should receive a reduced share of your estate.  You can forestall such disputes by making your intent clear in your estate planning documents. For example, the document could state that you are not making any adjustments based on gifts. This would make it clear to everyone that no one should receive a reduced share. Alternatively, you could specify the gifts that have been made and explain why one child is receiving a reduced share.

Loans are another problem. These can be addressed in a number of ways, depending on your intent. Verbal loans are difficult to prove, so consider including a provision in your estate planning documents stating that all verbal loans are a gift. If you have any outstanding verbal loans that you don’t want to be a gift, then make sure you put these in writing. If you want the loan to be an advance against inheritance, this can also be specified in your estate planning documents. To avoid a child claiming the loan was forgiven, you can require that the forgiveness be in writing.

The important thing is to make sure your estate planning documents clearly convey your intent. Contact Amy Stratton and Kristen Prull Moonan for additional information and to ensure your documents provide the guidance you want regarding gifts and loans.

 

Understanding the Differences Between a Living Trust and an Irrevocable Trust

Trusts can be useful tools to protect your assets, save on estate taxes, or set aside money for a family member. But before you commit to adding a trust to your estate plan, make sure you understand the differences between revocable (also called “living”) and irrevocable trusts because each offers advantages and disadvantages, depending on their purpose.

While the two main types of trusts differ in how they are structured and taxed, both types of trusts are tools for setting aside assets and distributing them according to specific wishes and instructions. They can protect one’s property, safeguard a family’s financial future, and provide tax-saving strategies.

Structure
As the name suggests, an irrevocable trust, once established, can’t be canceled or revoked. The person creating the trust, sometimes called the “grantor,” transfers assets into the trust and permanently gives up all claim to them. A trustee is appointed to carry out the instructions spelled out in the trust. No changes to the terms of the trust can be made without the consent of the trust’s beneficiaries.

In contrast, a living trust offers more flexibility. The grantor of a living trust still owns and controls the assets and can make changes at any time. A living trust also has a trustee, someone who would take over management of the trust if the owner is no longer capable of doing so.

Taxes
Both types of trusts offer tax advantages, although these differ in key ways. An irrevocable trust is considered a separate entity and must have its own tax returns filed annually under its tax ID number. Irrevocable trusts can incur additional costs if a CPA is needed for tax preparation. Because it is a trust and not an individual, the irrevocable trust can’t qualify for the various deductions and exemptions that individuals can claim on their returns. Also, higher rates apply at lower income levels. For example, an irrevocable trust is subject to the highest federal tax rate of 37 percent if its income exceeds $12,500, a much lower ceiling than for individuals.

Assets within a living trust are still considered the property of the trust owner. Any income earned from this trust is filed along with the owner’s other income. Also, the assets of the trust belong to the owner’s estate and are taxed accordingly on the owner’s death. For this reason, wealthy families may choose to transfer a portion of their assets into an irrevocable trust to keep the value of their estate below federal and state exemptions.

Protecting Assets in the Future
One key advantage of irrevocable trusts is that their assets are protected from lawsuits and creditors. A living trust offers no such protection, because the trust assets are still part of the owner’s property.

A living trust is an option for someone who doesn’t need all the layers of protection but still wants to set up some provisions for the future.  A living trust works well to set aside assets in the event that the grantor becomes unable to manage his or her finances in the future, due to illness or old age. With a living trust, the grantor controls the property while he or she is competent, but a trustee can take over this function if the grantor loses this capacity.

If there are other considerations, such as estate tax planning, protection from creditors, or providing for a special needs family member, an irrevocable trust might be the better way to go. Your planner will have the best answers for your particular circumstances.

Keep in mind that this is general advice only and that specific situations may be treated differently. Contact your attorney for advice on how your specific situation will be handled using different types of trusts.

Or, contact Amy Stratton and Kristen Prull Moonan for additional information.

Bank Pays Price for Refusing to Honor Request Made Under a Power of Attorney

A durable power of attorney (POA) allows the person creating the POA, called the “principal,” to name a trusted agent who can act on his behalf in almost any situation. But because of the risk of abuse, many banks will scrutinize a POA carefully before allowing the agent to act on the principal’s behalf, and often a bank will refuse to honor a POA. Bank of America rebuffed a Florida agent’s request that funds be withdrawn from the principal’s account. The agent fought back in court and won a $64,000 judgment against the bank.

Clarence Smith, Sr., named his son, Clarence Smith, Jr., as his agent under a POA. When his father no longer wanted to manage his own finances, he asked Clarence Jr. to step in as his agent. Clarence Jr. reviewed his father’s account activity and became suspicious about some withdrawals from a bank account that Clarence Sr. owned jointly with a friend from his retirement community.

Acting as his father’s agent under the POA, Clarence Jr., asked Bank of America to transfer $65,000 from the account into a new account that listed only his father as the owner. Before doing so, Bank of America contacted the other person named on the account. When she told the bank that she did not want the funds withdrawn and also accused Clarence Jr. of stealing his father’s money, Bank of America refused to honor Clarence Jr.’s request. The other account owner then withdrew all of the funds from the account and placed them into her own account, effectively preventing Clarence Sr. from accessing his own money. Clarence Sr. died several weeks later.

Clarence Jr. sued Bank of America under a Florida law that imposes penalties on financial institutions that refuse to honor reasonable requests from agents named in properly executed POAs. A jury returned a verdict against the bank and awarded $64,142 to Clarence Sr.’s estate. The jury found that Bank of America had not acted reasonably when it rejected Clarence Jr.’s request, even though the joint owner of the bank account had not agreed to the release of the funds.

While this case clearly illustrates the conflicts that can arise through the use of a POA, it also raises the issue of the proper use of joint bank accounts in estate planning. Under most state laws, when two or more people own “joint” bank accounts, each of them has the right to the entire account, no matter whose money is actually in the account. While joint accounts can often be useful, sometimes, as in this case, joint owners or their agents can disagree about the use of funds in the accounts. When that happens, the party who makes it to the bank first often wins. Your attorney can explain the pros and cons of joint ownership, draft an effective POA, and assist family members when disputes arise.

Or, contact Amy Stratton and Kristen Prull Moonan for additional information.

 

Medicare Now Covers Outpatient Treatment for Opioid Addiction

Recognizing the huge problems caused by opioid addiction in the United States, Medicare is adding a new outpatient opioid treatment benefit, paying for methadone and related treatment in certain facilities.

Under a new rule taking effect in January 2020, Medicare will now provide payment to opioid treatment programs (OTPs), also known as methadone clinics, as part of Medicare Part B. OTPs are the only locations where people addicted to opioids can receive methadone as part of their treatment.

Under the new OTP benefit, Medicare covers:

  • U.S. Food and Drug Administration (FDA)-approved opioid treatment medications (such as methadone)
  • Dispensing and administration of the treatment medications (if applicable)
  • Substance use counseling
  • Individual and group therapy
  • Toxicology testing
  • Intake activities
  • Periodic assessments

For beneficiaries who are eligible for both Medicare and Medicaid, Medicaid paid for methadone treatment. Now, once the OTP is enrolled in Medicare, Medicare will become the primary payer for these beneficiaries. Medicaid should continue to cover the service during the transition. Medicare Advantage plans should also allow coverage of OTPs that are not in their network while they assist beneficiaries in transitioning to an in-network OTP.

For a fact sheet from Justice in Aging, click here.

Or, contact Amy Stratton and Kristen Prull Moonan for additional information.