Monthly Archives: December 2019

Medicare Part D: A First Look at Prescription Drug Plans in 2020

December 24, 2019

courtesy of NAELA eBulletin:

During the Medicare open enrollment period  from October 15 to December 7 each year, beneficiaries can enroll in a plan that provides Part D drug coverage, either a stand-alone prescription drug plan (PDP) as a supplement to traditional Medicare, or a Medicare Advantage prescription drug plan (MA-PD), which covers all Medicare benefits, including drugs.

Click here for the entire article and the issue brief

Medicaid’s Treatment of the Home

December 24, 2019

Nursing home residents do not automatically  have to sell their homes in order to qualify for Medicaid, but that doesn’t mean the house is completely protected. The state will likely put a lien on the house while the resident is living and attempt to recover the property after the resident has passed away.

Medicaid will not count a nursing home resident’s home as an asset when determining eligibility for Medicaid as long as the resident intends to return home (in some states, the nursing home resident must prove a likelihood of returning home). In addition, the resident’s equity interest in the home must be less than $585,000, with the states having the option of raising this limit to $878,000 (figures are adjusted annually for inflation; these are for 2019).

The equity value of the home is the fair market value minus any debts secured by the home, such as a mortgage or a home equity loan. For example, if your home has a fair market value of $400,000 and an outstanding mortgage of $100,000, the equity value is $300,000. Your equity interest depends on whether you own the home by yourself or with someone else.  If you own the home by yourself, your equity interest is the entire equity value.  If you own your home jointly with your spouse or someone else, your equity interest is only half of the home’s equity value.

The home equity rule does not apply if the Medicaid applicant’s spouse or a child who is under 21 or is blind or disabled lives in the home.

While the house may not need to be sold in order to qualify for Medicaid, state Medicaid agencies will likely place a lien on any real estate owned by a Medicaid beneficiary during his or her life. The state cannot impose a lien if a spouse, a disabled or blind child, a child under age 21, or a sibling with an equity interest in the house is living in the house.

Once a lien is placed on the property, if the property is sold while the Medicaid beneficiary is living, not only will the beneficiary cease to be eligible for Medicaid due to the cash from the sale, but the beneficiary would have to satisfy the lien by paying back the state for its coverage of care to date. In some states, the lien may be removed upon the beneficiary’s death. In other states, the state can collect on the lien after the Medicaid recipient dies. Check with your attorney to see how your local agency handles this.

Even if the state did not place a lien on the home during the Medicaid beneficiary’s life, the home may still be subject to estate recovery after the Medicaid recipient’s death, again depending on the state.

There are steps you can take to protect your home. Contact your attorney to learn more.

Medicare Premiums to Increase By Almost $10 a Month in 2020

December 24, 2019

After small or no increases the past couple in of years, Medicare’s Part B premium will rise sharply 2020. The basic monthly premium will increase $9.10, from $135.50 a month to $144.60.

The Centers for Medicare and Medicaid Services (CMS) announced the premium increase on November 8, 2019. Not everyone will pay the whole increase, however. Due to a “hold harmless” rule around 70 percent of Medicare recipients’ premiums will not increase more than Social Security benefits, and Social Security benefits are increasing only 1.6 percent in 2020. This “hold harmless” provision does not apply to about 30 percent of Medicare beneficiaries: those enrolled in Medicare but who are not yet receiving Social Security, new Medicare beneficiaries, seniors earning more than $87,000 a year, and “dual eligibles” who get both Medicare and Medicaid benefits.

Meanwhile, the Part B deductible will go from $185 to $198 in 2020, while the Part A deductible will go up by $44, to $1,408. For beneficiaries receiving skilled care in a nursing home, Medicare’s coinsurance for days 21-100 will increase from $170.50 to $176. Medicare coverage ends after day 100. CMS attributed the sudden steep rise in Part B premiums and deductibles on the increased costs of physician-administered drugs.

Here are all the new Medicare payment figures:

  • Part B premium: $144.60 (was $135.50)
  • Part B deductible: $198 (was $185)
  • Part A deductible: $1,408 (was $1,364)
  • Co-payment for hospital stay days 61-90: $352/day (was $341)
  • Co-payment for hospital stay days 91 and beyond: $704/day (was $682)
  • Skilled nursing facility co-payment, days 21-100: $176/day (was $170.50)

So-called “Medigap” policies can cover some of these costs.

Premiums for higher-income beneficiaries ($87,000 and above) are as follows:

  • Individuals with annual incomes between $87,000 and $109,000 and married couples with annual incomes between $174,000 and $218,000 will pay a monthly premium of $202.40.
  • Individuals with annual incomes between $109,000 and $136,000 and married couples with annual incomes between $218,000 and $272,000 will pay a monthly premium of $289.20.
  • Individuals with annual incomes between $136,000 and $163,000 and married couples with annual incomes between $272,000 and $326,000 will pay a monthly premium of $376.00.
  • Individuals with annual incomes above $163,000 and less than $500,000 and married couples with annual incomes above $326,000 and less than $750,000 will pay a monthly premium of $462.70.
  • Individuals with annual incomes above $500,000 and married couples with annual incomes above $750,000 will pay a monthly premium of $491.60.

Rates differ for beneficiaries who are married but file a separate tax return from their spouse. Those with incomes greater than $87,000 and less than $413,000 will pay a monthly premium of $462.70. Those with incomes greater than $413,000 will pay a monthly premium of $491.60.

The Social Security Administration uses the income reported two years ago to determine a Part B beneficiary’s premiums. So the income reported on a beneficiary’s 2018 tax return is used to determine whether the beneficiary must pay a higher monthly Part B premium in 2020. Income is calculated by taking a beneficiary’s adjusted gross income and adding back in some normally excluded income, such as tax-exempt interest, U.S. savings bond interest used to pay tuition, and certain income from foreign sources. This is called modified adjusted gross income (MAGI). If a beneficiary’s MAGI decreased significantly in the past two years, she may request that information from more recent years be used to calculate the premium. You can also request to reverse a surcharge if your income changes.

Those who enroll in Medicare Advantage plans may have different cost-sharing arrangements. CMS estimates that the Medicare Advantage average monthly premium will decrease by 14 percent in 2020, from an average of $26.87 in 2019 to $23 in 2020.

For Medicare’s press release announcing the new premium and deductible amounts, click here.

Home Care Costs Rise Sharply in Annual Long-Term Care Cost Survey

December 24, 2019

When it comes to long-term care costs, the charges for home care are now rising faster than those for nursing home care, according to Genworth’s 2019 Cost of Care survey. In the past year, the median annual cost for home health aides rose 4.55 percent to $52,624, while the median cost of a private nursing home room rose only 1.82 percent to $102,200.

Genworth reports that the median cost of a semi-private room in a nursing home is $90,155, up 0.96 percent from 2018, and the median cost of assisted living facilities rose 1.28 percent, to $4,051 a month. But home care services had sharper increases. The national median annual rate for the services of a home health aide rose from $22 to $23 an hour, and the cost of adult day care, which provides support services in a protective setting during part of the day, rose from $72 to $75 a day, up 4.17 percent annually.

Alaska continues to be the costliest state for nursing home care by far, with the median annual cost of a private nursing home room totaling $362,628. Oklahoma again was found to be the most affordable state, with a median annual cost of a private room of $67,525.

The 2019 survey, conducted by CareScout for the sixteenth straight year, was based on responses from more than 15,178 nursing homes, assisted living facilities, adult day health facilities and home care providers. Survey respondents were contacted by phone during May and June 2019.

As the survey indicates, long-term care is growing ever more expensive. Contact your elder law attorney to learn how you can protect some or all of your family’s assets from being swallowed up by these rising costs.

For more on Genworth’s 2019 Cost of Care Survey, including costs for your state, click here.

IRS Issues Long-Term Care Premium Deductibility Limits for 2020

December 24, 2019

The Internal Revenue Service (IRS) has announced the amount taxpayers can deduct from their 2020 income as a result of buying long-term care insurance.

Premiums for “qualified” long-term care insurance policies (see explanation below) are tax deductible to the extent that they, along with other unreimbursed medical expenses (including Medicare premiums), exceed 10 percent of the insured’s adjusted gross income.

These premiums — what the policyholder pays the insurance company to keep the policy in force — are deductible for the taxpayer, his or her spouse and other dependents. (If you are self-employed, the tax-deductibility rules are a little different: You can take the amount of the premium as a deduction as long as you made a net profit; your medical expenses do not have to exceed a certain percentage of your income.) Additionally, these tax deductions allowed by the IRS for long-term care insurance premiums are generally not available with so-called hybrid policies, such as life insurance and annuity policies with a long-term care benefit.

However, there is a limit on how large a premium can be deducted, depending on the age of the taxpayer at the end of the year. Following are the deductibility limits for tax year 2020. Any premium amounts for the year above these limits are not considered to be a medical expense.

Attained age before the close of the taxable year       Maximum deduction for year

40 or less                                                                                       $430

More than 40 but not more than 50                                         $810

More than 50 but not more than 60                                         $1,630

More than 60 but not more than 70                                         $4,350

More than 70                                                                                 $5,430

Another change announced by the IRS involves benefits from per diem or indemnity policies, which pay a predetermined amount each day. These benefits are not included in income except amounts that exceed the beneficiary’s total qualified long-term care expenses or $380 per day, whichever is greater.

For these and other inflation adjustments from the IRS, click here

What Is a “Qualified” Policy?

To be “qualified,” policies issued on or after January 1, 1997, must adhere to certain requirements, among them that the policy must offer the consumer the options of “inflation” and “nonforfeiture” protection, although the consumer can choose not to purchase these features. Policies purchased before January 1, 1997, will be grandfathered and treated as “qualified” as long as they have been approved by the insurance commissioner of the state in which they are sold.