Gov. Brown signs bill that limits seizure of assets of many Medi-Cal recipients

Jerry Brown on Monday signed into law a bill that limits the state’s seizure of assets from the estates of low-income residents ages 55 to 64.

Beginning Jan. 1, 2017, California will join many other states in the country that only recover the costs of enrollees’ long-term care and related costs after they die.

“They can still come after me if I end up in a nursing home or need home care,” said the 64-year-old Richmond resident. “But other than that, the standard stuff I was so up in arms about will no longer exist. My home will go to my kids.”

The new law, signed as part of the 2016-17 state budget, also would prohibit recovery from the estate of a deceased Medi-Cal member who is survived by a spouse or registered domestic partner. And it prohibits estate recovery if a home is of “modest value” — with a fair market value of 50 percent or less of the average price of homes in the county where it’s is located.

Darling once labeled Brown “the Tin Man of California” with “no heart” after the governor vetoed a previous version of the bill in September 2014 over its costs. Yet Brown’s signing message at the time did not completely close the door on an issue that has riled many Medi-Cal recipients between 55 and 64 years.

Since 2014, millions of people joined Medicaid, called Medi-Cal in California, under a special provision in the nation’s new health care law that expanded the program to low-income adults ages 18 to 64 without children if they earn up to 138 percent of the federal poverty level.

In 2016, that amounts to $16,394 a year for an individual or $22,107 for a couple.

Many of the 735,000 California homeowners ages 55 to 64 who have been laid off and are now getting by on dwindling savings said they did not realize that signing up for the expanded health care program for the poor came with a catch: The state could recover a broad array of costs and assets — including homes — from Medi-Cal recipients 55 and older after they die.

The logic behind the rule is simple: It may be fair for low-income Americans to take advantage of the program, now expanded to 32 states under Obamacare, without having to sacrifice their home or other investments. But when they die, so the thinking goes, the government ought to get reimbursed for its contribution to their medical care.

The provision to dock the estates of older recipients didn’t start with Obamacare; it kicked in when Medicaid was signed into law by President Lyndon Johnson in 1965.

Then, the rule was originally optional and applied only to people 65 or older. But in 1993, the law was changed to require all states to recoup the expenses of long-term care for Medicaid recipients 55 or older. States also were given the option to recover all other Medicaid costs, and California jumped in.

Yet the fear of losing their homes to the state led many low-income Americans to shy away from the health plan of last resort.

Legislation introduced in early 2014 by state Sen. Ed Hernandez , D-West Covina, sought to limit Medi-Cal recovery only to what’s required under federal law: the cost of long-term care in nursing homes.

California Gov. Jerry Brown gestures to a chart showing the unpredictable capital gains revenues as he discusses his revised 2016-17 state budget plan

California Gov. Jerry Brown gestures to a chart showing the unpredictable capital gains revenues as he discusses his revised 2016-17 state budget plan released Friday, May 13, 2016, in Sacramento, Calif.(AP Photo/Rich Pedroncelli) (Rich Pedroncelli)

But in 2014, Brown’s budget advisers balked, warning him that California would lose $15 million annually in general fund revenues as a result.

The federal government is paying 100 percent of the cost for these newly eligible Medicaid recipients until 2017, and 90 percent starting in 2020. But Brown’s advisers feared the state couldn’t afford to cover the rest of the bill in 2020 without getting reimbursed by estates.

Brown’s advisers say that today’s $171 billion spending plan can now accommodate both the costs of Medi-Cal expansion to 3.5 million Californians, and the costs associated with the new law on estate recovery, estimated to cost the general fund $5.7 million in 2016-17 fiscal year, and $28.9 million annually thereafter.

“It is a huge victory that this year’s budget limits estate recovery so that people with modest family homes can pass it on to their children,” Hernandez said in a statement.

Still, Department of Finance spokesman H.D. Palmer cautioned that if budget circumstances change going forward the state would have to “revisit a whole host of issues.”

Contact Tracy Seipel at 408-920-5343. Follow her at Twitter.com/taseipel.

WHAT THE NEW LAW WILL DO

Starting Jan. 1, 2017, Medi-Cal will limit estate recovery to only what the federal government requires. It will:

Prohibit estate recovery for costs of Medi-Cal services other than long-term care services

Prohibit estate recovery for a deceased Medi-Cal member who is survived by a spouse or registered domestic partner.

Allow a hardship exemption from estate recovery for a home of modest value (fair market value is 50 percent or less of the average price of homes in the same county).

Source: California Department of Finance

8000 per month rent

Digital Footprint and my domain names

mydomains

I use godaddy.com to create new domain names to prepare a global site for senior care.  Motherhealth.net and seniorconciergepro.com are now directed to http://www.clubalthea.com

Seniorconciergepro.com and Motherhealth.net

Seniorconciergepro.com shall match seniors and caregivers online and in mobile phones while motherhealth.net is an information hub for health resources for seniors and more.

Creating a digital footprint is important in today’s economy where each of us can define the digital space we want to be called for or be in service for.

We serve others using our site as most people use their cells and internet to find any service at any time.

Investors needed for Senior Care

Motherhealth LLC is looking for investors to reach its goal of serving the needs of seniors. Email motherhealth@gmail.com for details to be one of founding investors.

C corporation for the practice, structure for max savings and min taxes

C corporation can be the right choice for many small entities because of the deductions it allows.

A C corporation enjoys a full deduction for the cost of employees (including owner employees) health insurance, group term life insurance up to $50k per employee and even long-term care premiums without regard to age-based limitations.

A C corporation can also deduct the costs of a medical reimbursement plan.

Lower Tax Rates for C Corporations

potential income taxes loss

C corporations enjoy their own graduated rates.

Best of both worlds

Many medical practices can take advantage of both the C corp and S corp by setting up two distinct entities to operate different aspects of their practice. The S corp can be used for the operating side of the practice while the C corp can be used for the management functions. In this way, the medical practice as a whole can take advantage of both the tax deductions afforded a C corp and the flow-through advantages of an S corp.

protect your practice

income tax analysis

professional corp

section 79

————–

Contact Connie Dello Buono 408-854-1883, financial planner working with your CPA, motherhealth@gmail.com for a finance and business structure and strategy to save your business significant income taxes

———————————

Free 30min phone chat with a sr financial advisor at Harding Financial to help you reduce income taxes using a business structure and financial strategies, connie.dellobuono@hardingfinancial.com or conniedbuono@gmail.com 408-854-1883

Make 2014 and 2015 be the year to protect your wealth and secure your retirement.

 Connie Dello Buono
Jr Financial Advisor
hardingfinancial.com

4 Ways Men and Women Approach Finance Differently by Maria Cornelius

Anyone familiar with John Gray’s Men Are from Mars, Women Are from Venus knows the premise that men and women communicate very differently. Perhaps this explains why most female investors prefer to work with a female adviser and most married women leave a male adviser after the husband dies. Starting with the first conversation, women want, need and deserve distinct treatment in financial advice.

Old-fashioned gender roles designate the man of the house as responsible for personal finances. That changed over the past few decades but, if you’re a woman, your adviser must understand the role money played in your early life. Another concern: Women constitute more than half of financial planning or investment clients, yet less than a quarter of certified financial planners are women.

As a wealth manager with a large female client base, I notice four differences in how men and women approach financial decisions:

Communication and learning styles. Eleanor Blayney’s Women’s Worth: Finding Your Financial Confidence points out that women and men absorb and process information differently. Fundamentally, women learn through interaction with others, neurologically wired to be social and seek out relationships.

Especially if you’re a woman, find an adviser you connect with on a personal level. Talking openly about what matters most to you helps your adviser create a plan to prioritize and achieve your financial goals.

I also find that even highly accomplished and intelligent women (with expertise outside finance) can feel uneasy amid complex projections and financial jargon. Most prefer an adviser who can find a way to communicate in plain English.

While male clients may be more interested in charts and graphs that illustrate a point, women may take to an adviser who can connect financial advice with real-life examples. Competitive terms possibly motivating to men, such as “beating the market,” may not persuade women as deeply.

Confidence. Although this is shifting slowly, women’s greatest financial challenge remains lack of confidence in decision-making. The 2013-14 Financial Experience and Behaviors Among Women Prudential Financial survey, for instance, finds that “while women are taking control of household finances, they are no more prepared to meet long-term financial goals than they were a decade ago.”

The previous year’s survey also found only 23% of female breadwinners describing themselves as “very well prepared” to make financial decisions (compared with 45% of male counterparts) and that women are twice as likely to describe themselves as financial beginners (15% of women, 7% of men).

Due to this lack of confidence or experience in financial matters, many women want education from an adviser — and asking professional advice from a man may actually intimidate them.

Risk. Women’s generally lower tolerance to financial risk often reflects this lack of confidence. Many women lean toward more-conservative investing since greater risk might lead to failure. Women are also more likely to view money in terms of security.

I see this in female clients holding large amounts of cash in money markets or bank accounts. Although intuitively they know that in the long run investing is far more beneficial, fear of making a bad decision and losing the money influences them more. Find an adviser to explain the effects of not keeping up with inflation and that you can invest conservatively for long-term goals in many ways.

Life expectancy. Conservative investing isn’t bad, but if you take too little risk early you may barely keep up with inflation and won’t accumulate as much over your lifetime — which will likely be longer than a man’s. Research shows that in the U.S. women live, on average, almost five years longer than men; more than 975,000 American women are widowed annually, according to the latest U.S. Census data. Widows are also more likely than widowers to suffer a drop in income after the death of a spouse; almost half (more than 48%) of poor elderly in the U.S. are widows. (Women are also more likely than men to take career breaks or work part time for a variety of reasons.)

Median age for new widowhood is 59, which, combined with a high divorce rate, means that most women bear sole responsibility for finances at some point.

Identifying an adviser who wants to do more than just manage your investment, one who listens to and understands your goals and priorities, educates you on important concepts and encourages you to ask questions can lead you to a greater security and focus on your own long-term goals.

Tip: Your advisor should love gardening. Invest like a girl. Talk your financial emotion with your financial advisor. Learn from the mistakes of your parents. Do not use your house as your retirement plan. Contact Connie Dello Buono for a team of financial advisors, and other experts. 408-854-1883 motherhealth@gmail.com CA Life Lic 0G60621 in 50 US states.

Is your house your retirement plan?

Your house is not your retirement plan. Many seniors in care homes have sold more than 2 houses to pay for their caregiving services.

Contact Connie 408-854-1883 motherhealth@gmail.com for a financial advisor and an LBS expert to help you optimize your retirement savings to last forever with efficient tax strategies and protection for the future.

————–The following video “Dangers of Needs Based Planning” shows the common financial, “My financial plan will meet all of my needs.” The message of this videos is, how traditional planning, “Needs Analysis” forgets to focus on how the world is not a static place and individuals don’t have a “number”. Depicts that a financial plan is out of date as soon as it is printed and how The Living Balance Sheet philosophy does not set parameters and is ever changing, and helping individuals prepare for those unforeseen life events. Throughout this video it highlights how living by a set of parameters set out in a financial plan (e.g., rate of return, expected income in retirement, etc…) is not possible due to unexpected life events, changes in tax rates, or a higher tax bracket in retirement, etc…

The Living Balance Sheet® and the Living Balance Sheet® Logo are registered service marks of The Guardian Life Insurance Company of America (Guardian), New York, NY. The graphics and text used herein are the exclusive property of Guardian and protected under U.S. and International copyright laws. Guardian, its subsidiaries, agents or employees do not give tax or legal advice. © Copyright 2005-2011, The Guardian Life Insurance Company of America

44 Social Security ‘Secrets’ All Baby Boomers and Millions of Current Recipients by Laurence Kotlikoff

full retirement social security

Social Security’s Handbook has 2,728 separate rules governing its benefits. And it has thousands upon thousands of explanations of those rules in its Program Operating Manual System, called the POMS, which provides guidance on implementing the 2,728 rules. Talk about a user’s nightmare!

As a young economist, I did a fair amount of academic research on saving and insurance adequacy. At the time, I thought I had a very good handle on the rules. Then I started a financial planning software company, which makes suggestions about what benefits to take from Social Security and when to take them to get the best overall deal. (see, in this regard, http://www.maximizemysocialsecurity.com and http://www.esplanner.com).

At that point, I realized I needed to quadruple check my understanding of Social Security’s provisions. To do this, I established contacts with experts at Social Security’s Office of the Actuary. I also hired a specialist whose only job is to audit my company’s social security, Medicare premium, and federal and state income tax code.

The problem with this strategy is you can only check on things you know about. Over the years, I discovered things I had never heard of. I would then check with the Social Security actuaries who would say, “Oh yes, that’s covered in the POMS section GN 03101.073!”

Mind you, a large share of the rules in Social Security’s Handbook rules are indecipherable to mortal men and the POMS is often worse. But thanks to patience on the part of the actuaries, I’ve learned things which almost no current or prospective Social Security recipient knows, but which almost all should know.

The reason is that taking the right Social Security benefits at the right time can make a huge difference to a retiree’s living standard.
Unfortunately, Social Security has some very nasty “gottcha” provisions, so if you take the wrong benefits at the wrong time, you can end up getting the wrong, as in smaller, benefits forever.

Also, the folks at the local Social Security offices routinely tell people things that aren’t correct about what benefits they can and can’t receive and when they can receive them. Taking Social Security benefits – the right ones at the right time – is one of the biggest financial decisions you’ll ever make, so you need to get it right.

Getting it right on your own, however, is neigh impossible. One of my engineers and I calculated that for an age-62 couple there are over 100 million combinations of months for each of the two spouses to take retirement benefits, spousal benefits, and decided whether or not to file and suspend one’s retirement benefits. There are also start-stop-start strategies to consider. Each combination needs to be considered to figure out what choices will produce the highest benefits when valued in the present (measured in present value). For some couples who are very different in age, survivor benefits also come into play. In that case, the number of combinations can exceed 10 billion!

Fortunately, http://www.maximizemysocialsecurity.com can help you find the right answer generally within a matter of seconds. It does exhaustive searches of all combinations of months in which you can take actions, but thanks to modern computing power and careful programming, our Maximize My Social Security program can run through millions upon millions of combinations of decisions incredibly fast.

Whether or not you use our software, it’s important to have as full a handle on Social Security’s provisions as possible. Listed below are Social Security “secrets” I’ve learned over the years that you may not know or fully understand.
1. If you are already collecting your retirement benefit and are at or over full retirement age, you can tell Social Security you want to suspend further benefits and then ask them to restart your benefits at a later date, say age 70. Social Security will then apply its Delayed Retirement Credit to your existing benefit once you start collecting again. Hence, this is a means by which current Social Security recipients who aren’t yet 70 can collect higher benefits, albeit at the cost of giving up their check for a while. But this trade off will, on net, often be very advantageous. For example, if you started collecting at 62 and are now at your full retirement age, i.e., 66, you can suspend benefits until 70 and then start collecting 32 percent higher benefits for the rest of your life. This benefit collection strategy can be called Start Stop Start. We are in the process of rolling out a new update of http://www.maximizemysocialsecurity.com, which incorporates Start Stop Start.

2. If you aren’t now collecting and wait until 70 to collect your retirement benefit, your retirement benefit starting at 70 can be as much as 76 percent higher than your age-62 retirement benefit, adjusted for inflation. The reason is that your benefit is not reduced due to Social Security’s Early Retirement Reduction; moreover, it’s increased due to Social Security’s Delayed Retirement Credit. For many people, the increase in the retirement benefit can be even higher if they continue to earn money after age 62 thanks to Social Security’s Re-computation of Benefits.

3. But if you are married or divorced, waiting to collect your retirement benefit may be the wrong move. If you are the low-earning spouse, it may be better to take your retirement benefit starting at age 62 and then switch to the spousal benefit you can collect on your current or ex-spouse’s account starting at your full retirement age. But beware of the Gottcha in item 5.

4. If you’re married, you or your spouse, but not both, can receive spousal benefits after reaching full retirement age while deferring taking your retirement benefits and, thereby, letting them grow.  This is called the File and Suspend strategy.
5. Be careful! If you take your own retirement benefit early and are below full retirement age, you will be forced to take your spousal benefit early and at a permanently reduced level if your spouse collects his/her his/her retirement benefit before or in the month in which you apply to collect your retirement benefit. If your spouse is not collecting a retirement benefit when you apply for an early retirement benefit, you will not be deemed to be applying for your spousal benefit. Hence, you can start collecting your spousal benefit later with less or no reduction. But there is a gotcha, namely once you have filed for a retirement benefit (regardless of whether you have suspended it) your spousal benefit will be calculated as the excess spousal benefit rather than the full spousal benefit. The full spousal equals half of your husband’s or wife’s full retirement benefit (not the actual retirement benefit he or she may receive, which can be lower or higher than the full retirement benefit depending on when it’s collected). The excess spousal benefit equals half of your spouse’s full retirement benefit less 100 percent of your full retirement benefit. If this excess is negative, the excess spousal benefit is set to zero. (Also see item 33)

6. Start Stop Start may also make sense for married workers who aren’t already collecting and whose age differences are such they they can’t take advantage of File and Suspend. Take, for example, a 62 year-old high earner, named Sally, with a 66-year old low earner spouse, named Joe. By starting retirement benefits early, Sally permits Joe to start collecting a spousal benefit immediately. The reason is that spouses aren’t eligible to collect spousal benefits unless the worker is either collecting a retirement benefit or has filed for a retirement benefit, but suspended its collection. If Sally starts her retirement benefit at 62, Joe can apply just for his spousal benefit at 66 and then wait until 70 to collect his own retirement benefit, which will be at its highest possible value thanks to Social Security’s Delayed Retirement Credit. As for Sally, she can suspend her retirement benefit at 66, when she reaches full retirement, and then restart it at 70, at which point her benefits will be 32 percent higher than what she was collecting. Even singles workers may opt for Start Stop Start to help with their cash flow problems.

7. If your primary insurance amount (your retirement benefit available if you wait until full retirement) is less than half that of your spouse and you take your own retirement benefit early, but are able to wait until full retirement age to collect your spousal benefit, your total check, for the rest of your life, will be less than one half of your spouse’s primary insurance amount. Nonetheless, this may still be the best strategy. This reflects another Gotcha explained in 8.
8. On its website, Social Security states, “your spouse can receive a benefit equal to one-half of your full retirement benefit amount if they start receiving benefits at their full retirement age.” This is true only if your spouse isn’t collecting his/her own retirement benefit. If your spouse is collecting her own retirement benefit, his/her spousal benefit is calculated differently. Rather than equaling one half of your full retirement benefit, it’s calculated as half of your full retirement benefit less your spouse’s full retirement benefit. This difference is called the excess spousal benefit. The total benefit your spouse will receive is her retirement benefit, inclusive of any reduction, due to taking benefits early, or increment, due to taking benefits late, plus the excess spousal benefit. The excess spousal benefit can’t be negative; i.e., its smallest value is zero.

Take Sue and Sam. Suppose they are both 62 and a) Sue opts to take her retirement benefit early and b) Sam opts to file and suspend at full retirement and take his retirement benefit at 70. Between ages 62 and 66 (their full retirement age), Sue collects a reduced retirement benefit, but is not forced to take her spousal benefit (which would be reduced) because Sam isn’t collecting a retirement benefit during the years that Sue is 62 to 66. Now when Sue reaches age 66, she starts to collect an unreduced spousal benefit because Sam has qualified her to do so by filing and suspending for his retirement benefit. Ok, but her unreduced spousal benefit is calculated as 1/2 x Sam’s full retirement benefit less Sue’s full retirement benefit. Sue ends up getting a total benefit equal to her own reduced retirement benefit plus her unreduced excess spousal benefit. This total is less than half of Sam’s full retirement benefit. To see this note that the total equals half of Sam’s full retirement benefit plus Sue’s reduced retirement benefit minus Sue’s full retirement benefit. The last two terms add to something negative.

9. Are there are two different formulas for spousal benefits depending on whether the spouse is collecting his/her own retirement benefit? It sure seems that way because when the spouse is collecting a retirement benefit, the excess spousal benefit (potentially reduced for taking spousal benefits early) comes into play. And when the spouse isn’t collecting a retirement benefit, the spousal benefit equals half of the worker’s full retirement benefit. (Note, the spouse has to collect a retirement benefit before full retirement age if she applies for her spousal benefit.) The answer, in fact, is no. There is only one formula. The formula for the spousal benefit is always the excess benefit formula. But here’s what happens to the application of that formula if the spouse is not collecting a retirement benefit. In that case, the spouse’s full retirement benefit (also called the Primary Insurance Amount) is set to zero in calculating the excess spousal benefit. The reason, according to Social Security, is that a worker’s Primary Insurance does not exist (i.e., equals zero) if the worker has not applied for a retirement benefit (and either suspended its collection or started to receive it). In other words, your Primary Insurance Amount is viewed as non-existant until you apply for a retirement benefit. This construct – the primary insurance amount doesn’t exist until it’s triggered by a retirement benefit application — lets Social Security claim to have one formula for spousal benefits. But there are, in effect, two spousal benefit formulas and which one you — the person who will collect a spousal benefit — faces will depend on whether or not you take your retirement benefit early.
10. If you are divorced and were married for at least 10 years, both you and your ex can collect spousal benefits (on each other’s work histories) after full retirement age, assuming your ex is over 62 and your were divorced for two or more years (or your ex has already filed for retirement benefits), while still postponing taking your own retirement benefits until, say, age 70, when they are as high as can be. This is an advantage for divorcees. But there’s also a disadvantage. A divorcee who applies for spousal benefits before full retirement age will automatically be forced to apply for retirement benefits even if her/his ex isn’t collecting retirement benefits. (But see 36. for an exemption to this rule if you are older than your ex or have been divorced for less than two years and your ex has not filed for his/her retirement benefit).

11. There is no advantage to waiting to start collecting spousal benefits after you reach your full retirement age.

12. There is no advantage to waiting to start collecting survivor benefits after you reach your full retirement age.

13. If you started collecting Social Security retirement benefits within the last year and decide it wasn’t the right move, you can repay all the benefits received, including spousal and child benefits, and reapply for potentially higher benefits at a future date.

14. If you wait to collect your retirement benefit after you reach your full retirement age, but before you hit age 70, you have to wait until the next January to see your full delayed retirement credit show up in your monthly check.

15. Millions of Baby Boomers can significantly raise their retirement benefits by continuing to work in their sixties. This may also significantly raise the spousal, child, and mother and father benefits their relatives collect.

16. If you take retirement, spousal, or widow/widower benefits early and lose some or all of them because of Social Security’s earnings test, Social Security will actuarially increase your benefits (under the Adjustment of Reduction Factor) starting at your full retirement age based on the number of months of benefits you forfeited. This is true whether the loss in benefits due to the earnings test reflects benefits based on your own work record or based on your spouse’s work record. Consequently, you should not be too concerned about working too much and losing your own retirement benefits if you elected to take them early. On the other hand, if you lose spousal or child benefits due to the earnings test, they will just be lost. The Adjustment of the Reduction Factor does not apply to those benefits.

17. When it comes to possibly paying federal income taxes on your Social Security benefits, withdrawals from Roth IRAs aren’t counted, but withdrawals from 401(k), 403(b), regular IRAs, and other tax-deferred accounts are. So there may be a significant advantage in a) withdrawing from your tax-deferred accounts after you retire, but before you start collecting Social Security, b) using up your tax-deferred accounts before you withdraw from your Roth accounts, and c) converting your tax-deferred accounts to Roth IRA holdings after or even before you retire, but before you start collecting Social Security.
18. Social Security’s online benefit calculators either don’t handle or don’t adequately handle spousal, divorcee, child, mother, father, widow or widower benefits, or file and suspend options.

19. The default assumptions used in Social Security’s online retirement benefit calculators is that the economy will experience no economy-wide real wage growth and no inflation going forward. This produces benefit estimates that can, for younger people, be significantly less than what they are most likely to receive.

20. Some widows/widowers may do better taking their survivor benefits starting at 60 and their retirement benefits at or after full retirement. Others may do better taking their retirement benefits starting at 62 and taking their widow/widowers benefits starting at full retirement age.

21. If you’re below full retirement age and are collecting a spousal benefit and your spouse is below full retirement age and is collecting a retirement benefit, your spousal benefit can be reduced if your spouse earns beyond the Earnings Test’s exempt amount. And it can also be reduced if you earn beyond the Earnings Test’s exempt amount.

22. The Windfall Elimination Provision affects how the amount of your retirement or disability benefit is calculated if you receive a pension from work where Social Security taxes were not taken out of your pay, such as a government agency or an employer in another country, and you also worked in other jobs long enough to qualify for a Social Security retirement or disability benefit. A modified formula is used to calculate your benefit amount, resulting in a lower Social Security benefit than you otherwise would receive.

23. Based on the Government Pension Offset provision, if you receive a pension from a federal, state or local government based on work where you did not pay Social Security taxes, your Social Security spouse’s or widow’s or widower’s benefits may be reduced. But the Government Pension Offset doesn’t kick in until you start collecting your non-covered pension. So, … it may behove you to wait to take your non-covered pension especially if the pension you can collect at a later date is actuarially increased.

24. If you have children, because you started having children late or adopted young children later in life, they can collect child benefits through and including age 17 (or age 19 if they are still in secondary school) if you or your spouse or you ex spouse are collecting retirement benefits.
25. If you have children who are eligible to collect benefits because your spouse or ex spouse is collecting retirement benefits, you can collect mother or father benefits until your child reaches age 16.

26. Your children can receive survivor benefits if your spouse or ex-spouse died and they are under age 18 (or age 19 if they are still in secondary school) or, independent of age, if they were disabled prior to attaining adulthood.

27. You can collect mother or father benefits if you spouse or ex-spouse died and you have children of your spouse or your ex-spouse who are under age 16.

28. There is a maximum family benefit that applies to the total benefits to you, your spouse, and your children that can be received on your earnings record.

29. If you choose to file and suspend in order to enable your spouse to collect a spousal benefit on your earnings record while you delay taking your benefit in order to collect a higher one later, make sure you pay your Medicare Part B premiums out of your own pocket (i.e., you need to send Social Security a check each month). If you don’t, Social Security will pay it for you and treat you as waving (i.e., not suspending) your benefit apart from the premium and, get this, you won’t get the Delayed Retirement Credit applied to your benefit. In other words, if you don’t pay the Part B premiums directly, your benefit when you ask for it in the future will be NO LARGER than when you suspended its receipt. This is a really nasty Gotcha, which I just learned, by accident, from one of Social Security’s top actuaries.

30. If you are collecting a disability benefit and your spouse tries to collect just his/her Social Security benefit early, she will be deemed to be filing for her spousal benefits as well. I.e., if your spouse takes his/her retirement benefit early, he/she won’t be able to delay taking a spousal benefit early, which means both her retirement and spousal benefits will be permanently reduced thanks to the early retirement benefit and early spousal benefit reduction factors.

31. When inflation is low, like it is now, there is a disadvantage to delaying until, say 70, collecting one’s retirement benefit. The disadvantage arises with respect to Medicare Part B premiums. If you collecting benefits (actually were collecting them last year), the increase in the Medicare premium this year will be limited to the increase in your Social Security check. This is referred to as being “held harmless.” Hence, when inflation is low, the increase in your check due to the cost of living adjustment will be small, meaning the increase in your Medicare Part B premium will be limited. But, if you aren’t collecting a benefit because you are waiting to collect a higher benefit later, tough noogies. You’re Medicare Part B premium increase won’t be limited. And that increase will be locked into every future year’s Medicare Part B premium that you have to pay. You can wait to join Medicare until, say, age 70, but if you aren’t working for a large employer, the premiums you’ll pay starting at 70 will be higher and stay higher forever. So much for helping the government limit its Medicare spending!
32. Hold harmless — the provision that your increase in Medicare Part B premium cannot exceed the increase in your Social Security check due to Social Security’s Cost of Living Adjustment — does not apply if you have high income and are paying income-related Medicare Part B premiums.

33. The thresholds beyond which first 50 percent and then 85 percent of your Social Security benefits are subject to federal income taxation are explicitly NOT indexed for inflation. Hence, eventually all Social Security recipients will be tax on 85 percent of their Social Security benefits.

34. If you take your retirement benefit early and your spouse takes his/her retirement benefit any time that is a month or more after you take your retirement benefit, you will NOT be deemed, at that point (when your spouse starts collecting his/her retirement benefit) to be applying for a spousal benefit. In other words, you can, in this situation, wait until your full retirement age to start collecting your unreduced excess spousal benefit. The retirement benefit collection status of your spouse in the month you file for early retirement benefits determines whether you are deemed to be also be applying for spousal benefits. This means that you should think twice about applying for retirement benefits in the same month as your spouse if one or both of you are applying early.

35. If you take your spousal benefit early, you will be deemed to be taking your retirement benefit as well with one exception — if you have a dependent child in your care. In this case, you can just take your spousal benefits with no reduction. If you are under full retirement age when your children all reach their 16th birthday or leave your care, your unreduced spousal benefit will stop unless you file a “certificate of election for reduced spousal benefits.” This will permit you to continue to receive spousal benefits which and if you are still below full retirement age, you will automatically be deemed to be applying for early retirement benefits. In addition, your spousal benefit will be reduced based on the number of months left before you reach your age of full retirement.

36. If you’re divorced, but were married for 10 years, you can collect spousal benefits based on the earnings record of your ex-spouse, but you a) have to wait until your ex has reached age 62 and b) be divorced for two or more years if your ex hasn’t yet filed for his/her retirement benefit. This means that if you are older than your ex and your ex was the higher earner, you’ll be able to collect your reduced retirement benefit early without being forced to take your spousal benefit early, which would mean that it would be permanently reduced. Also, you won’t be automatically deemed to be applying for spousal benefits when your ex reaches age 62. What’s relevant for the deeming is the age he/she was at the time you first apply for your retirement benefit.

37. As indicated, you need to be married for 10 years in order to collect spousal and survivor benefits from your ex-spouse if you get divorced. It’s amazing how many people get divorced just shy of 10 years. Yes, you’ve had it. Yes, your spouse is the worst of the worst. But stick it out for the extra time if possible. There’s potentially a lot of money, which you both can share, if you’re just patient. And, btw, no one at Social Security checks whether you are living together let alone sleeping together let alone …
38. If you get divorced and then remarry, you will not be able to receive spousal based on your ex’s work history. And you also won’t be able to receive survivor benefits if you remarry and your ex spouse dies unless you remarry after age 60. Also, to receive spousal benefits based on your new spouse’s work history, you need to stick it out with him/her (stay married to him/her) for 10 years. Hence, you need to think twice about getting remarried if you divorced someone who earned a lot more than you earned and are, say, over 50. And if you are close to 60 and are thinking of marrying a low earner and, again, your ex was a high earner relative to you, waiting until 60 to remarry will at least secure your survivor benefits. Another reason to think twice about remarrying applies if you have young children. If your ex dies while any of your children under your care are under age 16 (i.e., they haven’t yet hit their 16th birthday) and you havent’ remarried, you (in addition to your kids) can receive survivor benefits until you have no children under age 16 regardless of how old you are when your ex kicks. These benefits can, however, be lost due to Social Security’s earnings test if you earn too much money.

39. Father and Mother benefits, available to surviving spouses who have a child under age 16 of a retired worker or a deceased worker, are available at any age and are not reduced based on age. If you reach age 60 and are eligible to receive a father or mother benefit, do not apply for your survivor (widow or widower) benefit, because you will end up getting your survivor benefit, instead of your mother/father benefit, and the survivor benefit will be permanently reduced, whereas, the mother or father benefit will not. This is another nasty Gotcha if you make the wrong move.

40. Mother and father benefits, available to widows/widowers of deceased workers when they have a child of the worker under age 16 under their care are eligible, are, as indicated in 39., not reduced. But this also means that if they are lost due to the earnings test, i.e., due to the surviving spouse earning too much money , they won’t be increased in the future as in the case of retirement, spousal, and survivor benefits (benefits to widows/widowers who don’t have a child of the deceased worker under 16 in their care).

41. If you take your retirement benefit early (before full retirement age), it will be reduced and if you die, your spouse’s survivor benefit will equal the benefit you were receiving, so it too will be permanently reduced. Furthermore, if you widow/widower takes his/her survivor benefit early, this reduced survivor benefit will be reduced yet again due to the fact that the surviving spouse took her/his survivor benefit early. So this is a double whammy. If you don’t take retirement benefits early and die before full retirement age, your surviving spouse’s survivor benefit will equal your full retirement benefit. If you don’t take retirement benefits until after full retirement, your surviving spouse’s survivor benefit will equal the benefit you were receiving or would have received had you applied right before you died, namely your full retirement benefit augmented by the Delayed Retirement Credit.

42. The Government Pension Offset (see 23) provision will decline, in real terms, if your pension from non-covered employment is not fully indexed for inflation. Hence, you can lose all or some of your Social Security spousal or survivor benefits for some period of time, but ultimately start receiving either some benefits or larger benefits.
43. If you take your benefits early and then suspend them at or after full retirement age (you can’t suspend them before full retirement age), the spousal benefit you will collect based on your living spouse’s earnings record will not be half of his/her full retirement benefit. Instead, it will be what may be called an excess spousal benefit, which will equal A) half of his/her full retirement benefit less your full retirement benefit with any delayed retirement credits applied (notwithstanding your having suspended its collection multipled by a reduction factor if you took your spousal benefits early.

44. If you take your benefits early and then suspend them at or after full retirement age (you can’t suspend them before full retirement age), the survivor benefit you will collect based on your deceased spouse’s earnings record will not be half of his/her full retirement benefit. Instead, it will equal A) his/her actual retirement benefit if he/she died after beginning to collect retirement benefits or B) his/her full retirement benefit if he/she died before reaching full retirement age without having started to collect his/her retirement benefits or C) his/her retirement benefit, which would have been available had he/she started collecting at the time of his/her death, if he/she begins collecting after full retirement age less D) the retirement benefit you were collecting at the time you suspended your benefits. In other words, you will receive what may be called an excess widow/widower’s benefit rather than a full widow/widower’s benefit (which would be A, B, or C by itself).

———————————

Free 30min phone chat with a sr financial advisor at Harding Financial to help you reduce income taxes using a business structure and financial strategies, connie.dellobuono@hardingfinancial.com or conniedbuono@gmail.com 408-854-1883

Make 2014 and 2015 be the year to protect your wealth and secure your retirement.

 Connie Dello Buono
Jr Financial Advisor
hardingfinancial.com

Understanding Medicare Enrollment Periods by Katy Votava

Medicare Timeline

Medicare has many enrollment periods for the various parts of Medicare. These enrollment periods provide beneficiaries with the chance to get Medicare coverages, yet the different periods and their acronyms are confusing. A beneficiary who does not act carefully may miss a window of opportunity to have various parts of Medicare coverage and face a waiting period to get coverage, incurring high out-of-pocket costs in the interim as well as paying lifelong penalties. By understanding Medicare enrollment periods, advisers can help their clients avoid these problems.

Click HERE for Enrollment Period Timeline.

Initial Enrollment Period (IEP)

The Medicare Initial Enrollment Period (IEP) is a beneficiary’s first opportunity to enroll in Medicare Parts A and B. With the exception of those who are medically disabled under the age of 65, the IEP begins three months before the 65th birthday, and concludes at the end of the third month after the 65th birthday. Most people who are Medicare eligible should enroll for Medicare Part A during their IEP, unless they will be eligible for a Special Enrollment Period (SEP) later. If they do not enroll on time and are not eligible for a SEP, they will face lifelong penalties and a delay in being able apply to get Medicare coverage.

Caveat: If your birthday is on the first of the month, Medicare Parts A and B start the month prior to your birth month.

Caveat: If you have Health Savings Account-eligible employer coverage, you should not enroll in any parts of Medicare. First, you must verify that your coverage is Medicare “creditable” for Part D.

Special Enrollment Period (SEP)

After the Initial Enrollment Period ends, a beneficiary may have the chance to sign up for Medicare Parts A and B during a Special Enrollment Period (SEP). If the individual had been covered under a group health plan based on current employment, he or she has a SEP to sign up for Part A and/or Part B any time, as long as the individual or his or her spouse is working and is covered by a group health plan through the employer or union based on that work.

Caveat: The employer or union plan needs to cover a group with 20 or more members. If the group is smaller than 20 members, the individual must enroll in Medicare during their IEP. If they do not, they will only have secondary coverage through their employer plan, and if they wait beyond their IEP, they will not be eligible for a SEP.

There is an eight-month SEP to sign up for Part A and/or Part B that starts the month after the employment coverage ends. Usually, there is not a late enrollment penalty if an individual signs up during a SEP.

A number of other SEPs exist for Medicare Part C Advantage and Part D enrollment and disenrollment for:

  • someone who moves out of a Medicare Part C Advantage Plan or Part D service area has a SEP to enroll in a plan that serves the geographic area of their new home
  • beneficiaries who move permanently into, reside in, or move out of a nursing home may also have a SEP
  • individuals who are eligible for Medicare and Medicaid have a SEP that allows them to change Part D drug plans at any time

General Enrollment Period (GEP)

Medicare beneficiaries who did not enroll in Parts A and B when they first became eligible for Medicare may elect Part A and B coverage during the General Enrollment Period (GEP) from January 1 through March 31 each year. Coverage becomes effective on July 1 of the same year.

Beneficiaries who delay enrollment in Parts A and B and are not eligible for a SEP will be assessed a late enrollment penalty on their Part B premium. The penalty is 10 percent per year for each full year of delayed enrollment for as long as the beneficiary remains uncovered under Part B.

A person who enrolls in Part B during the GEP also has a SEP for Part D or Medicare Part C Advantage, including drug coverage beginning in April and ending in June of that year. If the person has not had Medicare “creditable” drug coverage in the interim, that person will pay a late enrollment penalty for Part D. The late enrollment penalty is 1 percent per month for every month without Part D coverage. That coverage begins July 1 of the same year.

Open Enrollment Period (OEP)

The Open Enrollment Period runs from October 15 through December 7 each year. Many people refer to this as Medicare’s “annual enrollment” period. During this time, beneficiaries may change Part D prescription drug plans, Medicare Advantage plans, or enroll in a Medicare Advantage plan for the first time. Enrollment changes take effect on January 1 of the following year.

Medicare Advantage Disenrollment Period (MADP)

The Medicare Advantage Disenrollment Period (MADP) provides Medicare beneficiaries an opportunity to disenroll from a Medicare Advantage plan. The MADP extends from January 1 through February 14 each year. The change will take effect the first of the following month. That same beneficiary can enroll in a standalone Prescription Drug Plan (PDP) for Part D coverage during the MADP. The person may want to enroll in a Medigap plan as well.

Medigap Open Enrollment Period

The Open Enrollment Period for Medigap is a six-month period that automatically starts the month a person turns age 65 and enrolls in Medicare Part B. During this six-month period, the beneficiary can buy any Medigap policy sold in their state without being subject to underwriting. If a person decides to enroll in a Medigap plan after this six-month period, they may be subject to underwriting.

Katy Votava, Ph.D., RN, is a nurse practitioner, health care economist, and president and founder of www.GoodCare.com, an online resource of free tools and provider of webinars and consulting services for financial advisers and small businesses to help them work through the maze of health care plans.

————-

Contact Connie Dello Buono for employee or public presentation on Medicare. 408-854-1883 motherhealth@gmail.com