New Medicare Advantage Benefits Starting in 2020

Medicare Advantage plans offer benefits you cannot get with original Medicare. However, Advantage plans usually do not provide the level of coverage you were used to getting through an employer-sponsored health insurance plan. The benefits Medicare does not offer are the ones that aging adults tend to need more than younger people.

Americans have wondered for a long time, when Medicare plans would include coverage that aligns better with the health insurance, they were used to having in employer group policies. There is good news. You will soon have more options available, if you have Medicare Advantage. There will be new Medicare Advantage benefits starting in 2020.

What is Changing

Beginning in 2020, the private insurance companies that sell Medicare Advantage plans will be allowed to offer a range of benefits that fall outside of traditional healthcare coverage. The administrator of the Centers for Medicare and Medicaid Services (CMS) justified the additional options, because the new items can improve or maintain an aging person’s health or function. The expanded coverage you can get, will depend on the specific Medicare Advantage plan you buy. However, Congress has approved the expansion of plans to include transportation, home meal deliveries and some housekeeping services.

Differences Between Original Medicare and Medicare Advantage Plans

When Medicare started, there was only one plan. We now call that coverage “original Medicare.” As time went by, the government gave private insurance companies permission to offer coverage to people who are eligible for original Medicare. The policies are not identical, so you should educate yourself on all your available options to get the best coverage you can at the right price. Some of the differences between original Medicare and Medicare Advantage include:

  • Public versus private plans. The government administers original Medicare plans. Medicare Advantage policies, on the other hand, are private insurance.
  • Which doctors and hospitals you can use. With original Medicare, you can go to any doctor or hospital that accepts Medicare. Medicare Advantage is more like a PPO, in that you have to use the doctors and hospitals in the plan’s network.
  • Prescription drug coverage. Most Medicare Advantage plans include prescription drug benefits. People who choose original Medicare do not have drug coverage, unless they buy it as an add-on, called Medicare Part D.
  • Dental, vision, and hearing. Original Medicare does not offer benefits for dental, vision, or hearing care. Most Medicare Advantage plans include coverage for these services.
  • Deductibles and co-pays. People with original Medicare have to buy supplemental policies, if they want help with co-pays and deductibles. Medicare Advantage plans usually pay most or all of these costs.
  • Transportation, home meal deliveries and some housekeeping services. As of 2020, Medicare Advantage plans can offer these benefits, but original Medicare will not.

Why Original Medicare Does Not Offer More Options

Congress has to give permission for original Medicare to expand its coverage. So far, Congress has not authorized additional coverage options for original Medicare, but there might be some pilot programs in the future to increase those benefits. As society becomes aware that a holistic approach will improve one’s overall well-being better than merely popping pills, additional non-medical benefits might become available.

References:

AARP. “Medicare Advantage Benefits Expanding (accessed May 2, 2019) https://www.aarp.org/health/medicare-insurance/info-2019/medicare-advantage-expanded-benefits.html

Suggested Key Terms: new Medicare Advantage benefits, 2020 new Medicare Advantage options, more Medicare Advantage benefits

Is It a Robocall?

Robocalls are a daily annoyance at best and, at worst, a way for criminals to wipe out your hard-earned savings. Law enforcement officials work hard on catching these crooks but face daunting challenges. This is because telephone scammers are highly organized and operate out of many different countries. Fortunately, experts know some of the key phrases and tactics these con artists use. This information can help you answer the question: Is it a robocall?

Experts advise people not to answer any phone call, if you do not recognize the number of the caller. This advice used to be more useful before the scammers found ways to hijack Caller ID and mask their calls, as coming from people or organizations you know or trust.

The scams tend to follow certain patterns, depending on the type of fraud the crooks are trying to perpetrate. Here are some examples:

Social Security Scam

You might get a phone call in which the caller tells you that someone has stolen your Social Security number and is using your number to commit crimes. This is a scam. The Social Security Administration notifies people of essential information by regular mail, not by calling people on the phone.

The caller will try to get you to give private information. Again, this is a scam. The Social Security Administration does not call people and ask for personal information.

These callers often threaten people that there is a warrant for their arrest and the only way to keep from getting arrested and thrown into jail, is to give them the personal information they want. Only con artists make these threats. The Social Security Administration does not call people and threaten to arrest them and throw them into jail.

For your peace of mind: if you get a call like this, hang up right away, then go to your local Social Security office to make sure that there are no issues with your Social Security number.

Jury Duty Scam

You get a phone call from someone pretending to work at the police department or sheriff’s office. The caller accuses you of missing jury duty and says that there is a warrant for your arrest. You must pay a fine to people who pretend to be the police.

This is a scam. Courts send notifications of jury duty by mail. Courts also do not telephone people to demand payments. Courts send notices of fines by mail. The police and sheriff’s department do not call people to collect fine payments.

For your peace of mind: hang up right away. if someone calls you with this scheme. Contact the jury administrator of your local country courthouse to see if you missed jury duty.

These crooks prey on your fear of getting arrested, even when you know you did nothing wrong. The fraudsters will bully, harass, and threaten you to try to steal your money. You cannot talk them out of what they are doing or get them to admit that they are committing a crime. Your best option is to hang up immediately, then contact the relevant legitimate government agency to verify that what the caller said was false.

References:

AARP. “How to Recognize a Robocall.” (accessed May 2, 2019) https://www.aarp.org/money/scams-fraud/info-2019/recognize-a-robocall.html

Suggested Key Terms: identifying a robocall, how to tell if it is a robocall, recognizing robocalls, phone fraud

How Do I Lessen the Chance of My Children Fighting at My Death?

There are several actions that a parent can take to decrease the chance of a fight after her death, says nj.com in its recent article, “My brothers might start a fight over mom’s will. What can she do about it?”

Trying to decide how to divide property is a common estate planning challenge. Some people decide inheritances should be split among heirs equally, with the same amount left to each heir. Others decided to divide their estate “equitably,” in some other way that is considered fair.

It may not be clear if the parent is looking to leave her only daughter the house and other assets to her sons, or if she plans to distribute her assets unevenly. If the home is valued similarly to whatever other assets the parent is leaving her sons, there may not be a fight.

However, if the house represents most of the parent’s net worth and the sons’ inheritances will be much smaller, it could create hard feelings.

The brothers can’t contest the will simply because they think the inheritance is unfair. In New Jersey, the primary reasons to contest a valid will are either because the decedent lacked testamentary capacity or was subject to undue influence.

An attorney can help draft a will that will prepare in advance for either of these grounds for a will contest. As far as testamentary capacity is concerned, an attorney should test the parent before allowing her to sign the will.

Another option would be for the parent to tape a video that shows her signing the will. This would make it more difficult for her sons to claim she didn’t have mental capacity.

The parent can also include language in the will explaining why the inheritance isn’t equal. If they see the reasoning behind her decision—and it’s rational—they may be less likely to allege undue influence.

She may want to prepare a letter of intent to explain her reasoning. This is not a legal document but may be helpful, if the will is contested.

Another option is a no-contest clause. However, these are frowned upon in New Jersey. A no-contest clause states that if an heir challenges the will and loses, then he or she will get nothing.

Another option would be for the parent to change the deed to her house to a life estate deed.

An estate planning attorney needs to be consulted to prepare the estate plan with the mother, so that she can be sure that her wishes are followed. The attorney will also be able to provide some helpful insight on the family dynamic.

Reference: nj.com (May 3, 2019) “My brothers might start a fight over mom’s will. What can she do about it?”

Key Terms: Inheritance, Estate Planning Lawyer, Will Contest, Undue Influence

What is Congress Doing for Seniors?

House Majority Leader Steny Hoyer, a Democrat from Maryland, informed the House Democratic Caucus in an April 25th “Dear Colleague” letter that he intends to bring H.R. 1994, the Setting Every Community Up for Retirement Enhancement (SECURE) Act of 2019, to the House floor in May.

Think Advisor’s recent article, “SECURE Act to Get House Vote in May,” explains that the SECURE Act passed the House Ways and Means Committee on April 2. There’s been action on the companion bill—the Retirement Enhancement and Savings Act (RESA) of 2019. That legislation has yet to be scheduled by the Senate Finance Committee.

In discussing the actions taken during the first 100 days of the 116th Congress, Representative Hoyer said that the House will soon take up H.R. 9, the Climate Action Now Act, “to affirm the principles of the Paris Climate Agreement, in spite of President Trump’s pledge to withdraw the United States.”

Hoyer signaled that a vote on the SECURE Act would follow “over the coming work period,” and noted that with the flood insurance program set to expire at the end of May, “I expect the House to take action to address that as well.”

Hoyer said in the next few weeks, “as committees continue to markup legislation, the House will also take up legislation to strengthen the Affordable Care Act and to address rising prescription drug costs.”

Another possibility for consideration in May by the full House is Financial Services Committee Chairwoman Maxine Waters’ Consumers First Act, H.R. 1500. That bill passed out of that committee on March 28. Waters’ bill is aimed at reversing the damage done to the Consumer Financial Protection Bureau, under former acting director Mick Mulvaney.

The Senior Security Act of 2019 would require the SEC to create a Senior Investor Taskforce. That bill could be up for a House vote very soon. The House docket also has a resolution on Supporting the Protection of Elders Through Financial Literacy.

The bill includes a provision requiring law enforcement and regulatory agencies to work together to understand and detect elder frauds and scams.

Reference: Think Advisor (April 29, 2019) “SECURE Act to Get House Vote in May”

Suggested Key Terms: Legislation, Elder Law Attorney, Elder Abuse, Financial Abuse

Estate Planning Hacks Create More Problems

The estate planning attorney in this gentleman’s neighborhood isn’t worried about this rancher’s plan to avoid the “courtroom mumbo jumbo.” It’s not the first time someone thought they could make a short-cut work, and it won’t be the last. However, as described in the article “Estate planning workaround idea needs work” from My San Antonio, the problems this rancher will create for himself, his wife, and his children, will easily eclipse any savings in time or fees he thinks he may have avoided.

Let’s start with the idea of putting all the man’s assets in his wife’s name. For starters, that means she has complete control and access to all the accounts. Even if the accounts began as community property, once they are in her name only, she is the sole manager of these accounts.

If the husband dies first, she will not have to go into probate court. That is true. However, if she dies first, the husband will need to go to probate court to access and claim the accounts. If the marriage goes sour, it’s not likely that she’ll be in a big hurry to return access to everything.

Another solution: set the accounts up as joint accounts with right of survivorship. The bank would have to specify that when spouse dies, the other owns the accounts. However, that’s just one facet of this estate planning hack.

The next proposal is to put the ranch into the adult children’s names. Gifting the ranch to children has a number of irreversible consequences.

First, the children will all be co-owners. Each one of them will have full legal control. What if they don’t agree on something? How will they break an impasse? Will they run the ranch by majority rule? What if they don’t want to honor any of the parent’s requests or ideas for running the ranch?  In addition, if one of them dies, their spouse or their child will inherit their share of the farm. If they divorce, will their future ex-spouse retain ownership of their shares of the ranch?

Second, you can’t gift the ranch and still be an owner. The husband and wife will no longer own the ranch. If they don’t agree with the kid’s plans for the ranch, they can be evicted. After all, the parents gave them the ranch.

Third, the transfer of the ranch to the children is a gift. There will be a federal gift tax return form to be filed. Depending on the value of the ranch, the parents may have to pay gift tax to the IRS.  Because the children have become owners of the ranch by virtue of a gift, they receive the tax-saving “free step-up in basis.” If they sell the ranch (and they have that right), they will get hit with capital gains taxes that will cost a lot more than the cost of an estate plan with an estate planning attorney and the “courtroom mumbo jumbo.”

Finally, the ranch is not the children’s homestead. If it has been gifted it to them, it’s not the parent’s homestead either. Therefore, they can expect an increase in the local property taxes. Those taxes will also be due every year for the rest of the parent’s life and again, will cost more over time than the cost of creating a proper estate plan. Since the ranch is not a homestead, it is subject to a creditor’s claim, if any of the new owners—those children —have a financial problem.

We haven’t even mentioned the family business succession plan, which takes a while to create and complements the estate plan. Both plans exist to protect the current owners and their heirs. If the goal is to keep the ranch in the family and have the next generation take the reins, everyone concerned be better served by sitting down with an estate planning attorney and discussing the many different ways to make this happen.

Reference: My San Antonio (April 29, 2019) “Estate planning workaround idea needs work”

Suggested Key Phrase: Estate Planning, Family Business, Joint Ownership, Heirs, Federal Gift Tax Return, Step Up In Basis, Capital Gains Taxes

Why Have Charitable Gifts From IRAs Increased Dramatically?

Qualified Charitable Distributions (QCDs) from IRAs, also known as IRA charitable rollover gifts, increased by 73.8% from 2017 to 2018, and 92% of nonprofit organizations surveyed by FreeWill reported increases in QCD giving.

ThinkAdvisor’s recent article, “Charitable Gifts From IRAs Shot Up by 74% in 2018,” says the 7% of nonprofits that reported a decrease were primarily small charities that received few QCD donations in both years.

FreeWill noted that QCDs are open to anyone 70½ and older with a traditional IRA. However, 401(k)s aren’t eligible for QCDs. Distributions from IRAs can satisfy the IRS’s minimum distribution requirement (RMD). These gifts can be made annually, up to a maximum of $100,000 per year. There is also no minimum.

FreeWill’s research looked at about 120 nonprofits with total revenue ranging from $1 million to $1 billion. The research showed that QCD gifts are getting larger: 52% of charities that responded said the average gift had increased since 2017. Only 12% said the average had decreased, and 30% reported no change.

About 50% of respondents said demographics were responsible for the sharp growth in giving via QCDs, while 27% said it was changes in the tax law. The tax law changes mean that for many donors older than 70, QCDs may be their only way to get a meaningful tax benefit from charitable contributions, since they can no longer itemize deductions and don’t have the charitable deduction.

In addition to the tax incentives, demographic shifts are dramatically altering charitable giving in our country. Americans between 70 and 80 are the fastest growing age bracket. Their numbers will continue to grow over the next 10 years.

The nonprofits in the study said there were several obstacles that keep donors from making QCD contributions. About 80% of respondents said their biggest challenge when processing these gifts, was a lack of information shared by IRA custodians.

The survey’s respondents reported a second challenge to QCDs reaching them: many donors are not aware that the option exists or are confused by the process of making contributions. Planned giving officers reported that up to 75% of all questions in estate planning sessions with donors were about QCDs. The third big challenge comes from confusion within nonprofits, about which department is responsible for QCDs from IRA rollovers. Nearly a quarter of respondents said the responsibility devolved on a combination of departments.

Reference: ThinkAdvisor (May 6, 2019) “Charitable Gifts From IRAs Shot Up by 74% in 2018”

Suggested Key Terms: Tax Planning, Financial Planning, Required Minimum Distribution (RMD), IRA Charitable Rollover Gift, Qualified Charitable Donation (QCD)

What’s the Latest on Hollywood Director John Singleton’s Estate?

It looks like Director John Singleton didn’t update his will, which was written in 1993. The will states that his entire estate goes to his eldest daughter Justice. According to Radar Online, Justice was his only child at the time. However, since he wrote his will, he’d fathered six more children who aren’t mentioned in the document.

The Hollywood News Daily’s recent article, “John Singleton’s Eldest Daughter To Inherit Entire $3.8 Million Estate,” says that the critically acclaimed director died suddenly at the age of 51, after suffering a stroke.

Singleton had reportedly been battling hypertension and suddenly became ill, when he returned from Costa Rica.

He was hospitalized and suffered a stroke while under medical care, where his condition quickly deteriorated. He was placed on life support.

After being on life support at L.A.’s Cedar Sinai for two weeks, his family made the decision to take him off of all life-sustaining machines. Singleton quietly passed away hours later.

Singleton’s surprising death following a stroke at such an early age is much like that of another Hollywood celebrity, former Beverly Hills 90210 and Riverdale star Luke Perry, who died in March at the age of 52.

John Singleton is survived by his mother Sheila Ward; his father Danny Singleton and his children Justice, Maasai, Hadar, Cleopatra, Selenesol, Isis and Seven.

While Singleton failed to update his will to address his other children born after 1993, they may not wind up with nothing, according to California law. Experts say that the six other kids have a solid argument to be included in the division of his estate, if litigation is pursued.

Singleton’s children hopefully will be able to come to an agreement on the division of the estate, and matters will not need to go to those extremes.

A private funeral was set to take place to honor Singleton.

Reference: Hollywood News Daily (May 4, 2019) “John Singleton’s Eldest Daughter To Inherit Entire $3.8 Million Estate”

Suggested Key Terms: Estate Planning Lawyer, Will Contest

What Can I Do When My Aging Parent Refuses to Give Up Control?

It’s a common problem for families, when a parent in charge of finances develops cognitive impairment and needs help managing the family trust and his own spending. It can be financially dangerous with a stubborn parent.

Forbes’ recent article asks, “What Can You Do When A Stubborn Aging Parent Refuses To Give Up Control?” The article explains what it took one family to get an aging parent out of the position as trustee and to permit the successor, the adult daughter, to take over.

The family saw signs of dementia and a family member’s financial abuse.

The trust provided that the parent could be removed as trustee, if two physicians declared him to be incapacitated for handling his own finances. In that case, a judge’s decision wasn’t required. The doctors verified that the elderly parent was incapacitated to safely handle his money. However, all this takes time.

A parent’s failure to listen to reason and their stubborn refusal to resign as trustee when asked, can cost his children dearly. In that situation, a family may have to engage an attorney to resolve the problem.

Remember that even if your aging parents are fine, there’s no time like the present to ask them to review their estate planning documents with you. Look at the terms that define what happens in the event of “incapacity.” Be sure that all of you understand what would happen, if impaired parents are unwilling to give up financial control and you have to institute the proscribed process to remove control from them.

Those who are named in a trust as the “successor trustee,” must know what that means and how much responsibility is involved. The family needs to recognize that financial elder abuse is a huge problem in our country, and family members are frequently the abusers. If you see abuse, and your elderly parent can’t resist the pressure to give money to any dishonest person, an elder law attorney will be able to give you worthwhile advice on the best approach, as well as the law.

Lastly, in the event your aging parent never created an estate plan, work with an experienced estate planning attorney and ask your parent to get going for the family’s sake. You don’t want to live through the situation described above, with no legal means to stop an impaired parent from financial ruin.

Reference: Forbes (May 7, 2019) “What Can You Do When A Stubborn Aging Parent Refuses To Give Up Control?”

Suggested Key Terms: Estate Planning Attorney, Capacity, Trusts, Trustee, Asset Protection, Probate Court, Inheritance, Elder Abuse, Financial Abuse, Elder Care

Estate Planning When a Family Member Is Disabled

This kind of mistake can wreak havoc on many lives, which is why it is so important to work with an experienced estate planning attorney who is knowledgeable about special needs planning. The article, “Crafting an estate plan to include disabled family members” from The Ledger explains what is involved in special needs planning.

Supplemental Security Income (SSI) is a federal program that pays monthly benefits to disabled or blind adults and children. To qualify, an individual must have fewer than $2,000 of countable assets and very limited income. Medicaid is a Federal and State health insurance program that helps people with limited assets and income pay for their medical costs.

While it is common for people to name their spouse or children as beneficiaries in their estate plan, if your spouse or child is disabled and receiving government benefits, an inheritance will result in their loss of benefits, unless special planning is done.

A Special Needs Trust (SNT) is designed for disabled beneficiaries so that cash, real property, or any other assets are available for the person’s benefit, while still allowing the disabled person to receive their means-based government benefits.

There are several different ways to accomplish this, depending on your family’s situation. One way is to have a testamentary Special Needs Trust created within a will or trust that goes into effect, when the creator of the trust or the will dies. A SNT can also be created while you are living and can be funded, instead of waiting for it to go into effect at your death.

A third-party SNT can be named as the beneficiary of life insurance policies and retirement accounts, investment accounts or real property. The third-party SNT assets that are not used for the disabled beneficiary during their lifetime, can pass to non-disabled beneficiaries upon the death of the disabled beneficiary.

These assets will be free from Medicaid recovery liens, since the property in a third party SNT does not belong to the disabled beneficiary.

A first party SNT is set up and funded with assets that do belong to a disabled person, and no other funds can be contributed to this type of trust by any other donors. These are often used when a large settlement following an injury is awarded. In Florida and in other states, first-party SNTs are subject to Medicaid recovery to reimburse the state.

Special needs trusts are complicated trusts and require the knowledge of an experienced attorney who devotes most, if not all, of their practice to SNTs and trust and estate planning.

Reference: The Ledger (May 2, 2019) “Crafting an estate plan to include disabled family members”

Suggested Key Terms: Special Needs Trusts, Special Supplemental Income, SSI, Disabled, Medicaid, SNT, Testamentary

The Conversation You Need to Have with Your Parents

Sometimes the way to ease into a conversation with aging parents about money and their plans for the future, is to start by discussing your own. You want to know about their will or retirement finances? Start by explaining your own plan, how you’ve decided to set up your estate and then ask what they’ve done for themselves.

The conversation may feel awkward the first time you start it, says the Daily Local News in the article “Ask your folks about their financial plans,” but you need to get to where everyone is comfortable having the conversation. Your parents’ plans might impact yours, and visa versa. So, it’s good to talk, “early and often” about how they are planning for retirement and the high costs of retirement, including health care.

If something happens to their parents, the children are the most likely ones to step in and take charge, whether it’s caring for a surviving spouse or stepparent or of the entire estate. The more you know in advance, the better equipped you’ll be.

Your first real job is a good opening to talk about saving for retirement. Ask them what they did, or do, about 401(k) contributions. This will give you insight into how well-prepared and knowledgeable they are about retirement savings. If you’re house hunting, that’s an excellent opportunity to get them talking about their retirement plan. Do you need to buy a home with a possible “in-law” suite in mind? It’s not a bad question to ask. It shows that you are thinking about their future needs.

Untangling an estate when there’s no will and no advance planning has been done, can tear a family apart. That’s the last thing you or your parents want. Talking openly with them about money, trusts, wills, life insurance and advance medical directives, will give you an idea of what they have or have not done to plan for the future. It may spur them on to move forward with plans that they’ve procrastinated on.

Even if you learn that they haven’t done any planning and don’t have a will, that is better than not knowing until it’s too late. If you learn that this is the case, you can start educating them about what will happen, if they don’t meet with an estate planning attorney. You can offer to take them to meet your estate planning attorney or offer to get them a few names so that they can decide who they are most comfortable with.

Starting a family and setting up your own estate plan is another opportunity to ask your parents what they did and what their thoughts are about your plans. Their family may have never done any estate planning, and they might have more than a few family horror stories to share. In that case, you can help them change the family’s dynamic, by helping them to take a different path.

Reference: Barchart (April 16, 2019) “Ask your folks about their financial plans”

Suggested Key Terms: Estate Planning Attorney, Advance Medical Directives, Wills, Life Insurance, 401(k)

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