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March 2017

Medicaid for Medicare Enrollees

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Seniors & Medicare and Medicaid Enrollees

Medicaid provides health coverage to more than 4.6 million low-income seniors, nearly all of whom are also enrolled in Medicare. Medicaid also provides coverage to 3.7 million people with disabilities who are enrolled in Medicare. In total, 8.3 million people are “dually eligible” and enrolled in both Medicaid and Medicare, composing more than 17% of all Medicaid enrollees. Individuals who are enrolled in both Medicaid and Medicare, by federal statute, can be covered for both optional and mandatory categories.

What Medicaid Covers for Medicare Enrollees

Medicare has four basic forms of coverage:

  • Part A: Pays for hospitalization costs
  • Part B: Pays for physician services, lab and x-ray services, durable medical equipment, and outpatient and other services
  • Part C: Medicare Advantage Plan (like an HMO or PPO) offered by private companies approved by Medicare
  • Part D: Assists with the cost of prescription drugs

Medicare enrollees who have limited income and resources may get help paying for their premiums and out-of-pocket medical expenses from Medicaid (e.g. MSPs, QMBs, SLBs, and QIs). Medicaid also covers additional services beyond those provided under Medicare, including nursing facility care beyond the 100-day limit or skilled nursing facility care that Medicare covers, prescription drugs, eyeglasses, and hearing aids. Services covered by both programs are first paid by Medicare with Medicaid filling in the difference up to the state’s payment limit.

Qualifying For Medicaid

Qualifying for Medicaid is a two part test: Asset Rules and Income Rules. Generally speaking, a person can only have $4,000 of countable resources under the asset rules component. As for Income, a recipient generally can keep the first $50 of monthly income and the balance is remitted to the skilled nursing facility with Medicaid picking up the balance due to the facility. The rules are different for spouses and the overall qualification is subject to a 5 year look-back at all of your finances.

Want to learn more about Medicare and Medicaid and how you should plan your estate around these programs? Contact us for a no-cost consultation.

Estimate: $595 million over five years to keep Medicaid coverage for Rhode Islanders

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Impact of Proposed Changes To Medicaid Program

PROVIDENCE, R.I. — Rhode Island officials estimate it would cost the state $595 million more over five years to prevent 75,000 low-income adults from losing their Medicaid coverage under the House Republicans’ plan to overhaul healthcare. And that’s just for the adults without children who became newly eligible for coverage in 2014 under the Affordable Care Act. Medicaid insures close to 300,000 Rhode Islanders, or nearly one-third of the population. “It’s hard to Fathom that Rhode Island could make up for the funding losses that we’d have here,” Anya Rader Wallack, acting secretary of Health and Human Services, said during a media briefing Wednesday morning. “And that’s just roll back of the expansion.”

The total cost to Rhode Island of the GOP plan’s proposal to cap federal spending on Medicaid has not been calculated by the state. But the Urban Institute, a Washington-based think tank, reports that Rhode Island is among 10 states that would experience the steepest declines in Medicaid spending under the plan.

Rhode Island is among 31 states, along with the District of Columbia, that adopted the federal law’s expanded eligibility criteria for Medicaid. In Rhode Island, that meant low-income adults who are not disabled and have no dependent children. Their coverage currently costs $450 million — or one-fifth of the state’s $2.3-billion Medicaid program.

Under the GOP plan, state officials estimate it would an additional $9 million more than 70,000 adults in the Medicaid expansion population from losing insurance during the first year of program — and another $220 million for their coverage during the program’s fifth year.

(The Medicaid expansion population, currently at about 70,000, is expected to rise by year five to about 75,000.)

Rhode Island’s expansion of Medicaid, coupled with another 30,000 people who don’t have coverage through their employers and instead purchase insurance through the state exchange, have helped cut Rhode Island’s uninsured rate by nearly a third, to about 4 percent from close to 12 percent prior to Obamacare.

If the state is forced to scale back its Medicaid coverage and if people are no longer penalized for not having coverage, as they are under Obamacare, and go without insurance, hospitals — which accepted lower state reimbursement rates in anticipation of fewer uninsured patients — would be hit with higher costs for uncompensated care.

“There’s a good bet hospitals will be destabilized,” Radar Walleck said.

The 30,000 Rhode Islanders who buy coverage through HealthSource RI, state officials said, also are expected to pay more under the GOP plan.

Close to 90 percent of enrollees on the state exchange receive tax credits, which pay for about 70 percent of the monthly premiums. The Obamacare tax credits are based on income as well as age.

The average premium on the state exchange is about $458 per month — of which $247 per month is paid for through tax credits — so that the cost to the enrollee is $111 per month, according to HealthSource RI’s spokeswoman, Kyrie Perry.

The GOP plan provides age-based tax credits, which range from $2,000 for anyone under age 30 to $4,000 for people over age 60.

Under that plan, the individual premium costs on the exchange are projected to increase, on average, by 15 to 20 percent in 2018 and 2019, according to HealthSourceRI. They are expected to level out after 2019.

For the benchmark “Silver” plan, that amounts to about $1,700 less, on average, in tax credits and another $2,000 more in premiums, Zach Sherman, director of HealthSourceRI said.

“There are definitely winners and losers” under the age-based tax credits, Sherman said. “It will results in older folks having trouble affording coverage.”


On Twitter: @LynnArditi

Source: Estimate: $595 million over five years to keep Medicaid coverage for Rhode Islanders

The Rhode Island Model Can Save Medicaid

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The Ocean State cut spending on the program while delivering better outcomes for patients: A Model to Save Medicaid.

by GARY D. ALEXANDER March 14, 2017 4:00 AM

Read the Original Article at:

As Congress attempts to reform our health-care system yet again, discussions about how to manage and pay for Medicaid are on the front burner. With one in four Americans enrolled in what’s now the largest “unearned” public-welfare program in history, curbing the program’s growth is a fiscal imperative.

But that doesn’t mean cutting back Medicaid has to hurt the poor as liberals claim; Medicaid spending can go down while patient care improves and the number of patients covered goes up. I know this is true because I helped my state achieve it.

In 2009, as secretary of health and human services for Governor Donald Carcieri of Rhode Island, I was charged with running a novel experiment. With exploding Medicaid costs in our state crowding out education, infrastructure, and other vital needs, we plainly saw what most current governors see today: an out-of-control entitlement growing 7 percent each year and eating 30 percent of our budget, yet frustrating patients with its complexities and subpar outcomes.

We set about revolutionizing the system with great success: Just two years later, an audit by the Lewin Group, a respected health-care-research firm, concluded that our bold reforms had been “highly effective in controlling costs and improving patients’ access to appropriate physician services.” The audit notes that our reforms led to “lower emergency room utilization,” as prevention of chronic conditions like asthma, heart disease, and diabetes became the norm. Home-health utilization, critical to avoiding needless expensive hospitalizations, actually increased by over 20 percent. The report praised Rhode Island for becoming a “smart purchaser” whose citizens received “the right services at the right time and in the right setting.”

So how did we do it? And could President Trump and Republicans replicate our success nationwide?

The answers are found in an incredibly misunderstood concept: “block grants,” which sadly have replaced “death panels” as the new political football standing in the way of a once-in-a-generation opportunity to completely overhaul Medicaid’s archaic, inefficient, and unaffordable design. Some hear the term block grants and think “kicking people off” and “limits to care.” They couldn’t be more mistaken.

First, like Medicare, Medicaid is headed for imposed limits anyway if we do nothing to reform it, because its rapidly rising costs are totally unsustainable. That’s a fact. And second, block grants are indeed a capped budget for states to spend, but in exchange, the federal government removes miles of onerous red tape, allowing governors huge freedom to innovate and apply modern solutions that have proven to deliver the results we all want: better health outcomes at lower prices.

In Rhode Island, we needed budgetary certainty about our Medicaid costs, but we didn’t want to compromise the health of our most vulnerable. So we asked the federal government for a one-of-a-kind “Global Medicaid Waiver,” which works like a block grant. We agreed to a fixed amount of funding from HHS for five years; in return, the Feds agreed to waive the burdensome restrictions that prevented us from instituting imaginative reforms such as shared living for seniors, delivery of specialty care to only the small patient cohort that needed and benefitted from it, and improved reimbursement incentives for home care and prevention. These reforms in turn gave patients greater independence and better outcomes, and their satisfaction soared.

Our single, spending-capped Medicaid system replaced dozens of independent programs that had operated with no spending limits and no coordination. The culture change within our state government was seismic: We were forced to embrace cost containment and disciplined management, and to eliminate the silos between programs. Many feared harm to our Medicaid population, but exactly the opposite happened: The imaginative remedies we implemented were so responsive and customized to our patients’ needs that their experiences and health improved even as we spent less.

In its first three years, our Global Waiver saved Rhode Island approximately $100 million. Our Medicaid spending remained an amazing $3 billion below the $12 billion cap we had agreed to. Even after a Democratic governor took over in 2011, the eye-popping savings continued, and physicians and hospitals continued to support our changes, offering proof that ingenuity knows no party label. The head of our state’s AARP chapter was ecstatic that the elderly could move out of nursing homes and back into their communities, saying that our blueprint offered “the right direction for seniors.” Most astonishingly, in 2013, the Providence Journal reported that Rhode Island’s program had delivered a $28 million surplus.

How many governors would love to have such a Medicaid surplus? How many states would jump at the chance to save more money that could be spent on helping more of their most vulnerable citizens? Our reforms could give them that chance if instituted nationwide. Congress and the Trump administration would be wise to give the Rhode Island model a look.

— Gary D. Alexander is a health-care and human-services adviser to governors, members of Congress, health systems, and private businesses. He served as Pennsylvania secretary of human services from 2011 to 2013 and as Rhode Island secretary of health and human services from 2006 to 2011. He can be reached at

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Recent changes to the complex Social Security rules provide important planning opportunities for seniors.


SIDNEY KESS, JD, LLM, CPA, is of counsel to Kostelanetz & Fink and a senior consultant at Citrin Cooperman & Company, New York, N.Y. He is a member of the NYSSCPA Hall of Fame and was awarded the Society’s Outstanding CPA in Education Award in May 2015. He is also a member of The CPA Journal Editorial Board. JAMES R. GRIMALDI, JD, CPA, and JAMES A. J. REVELS, CPA, MST, are partners at Citrin Cooperman & Company.

After working for decades—while paying into the Social Security system—many people look forward to collecting benefits in retirement. Moreover, preretirement benefits may be available in case of disability. Social Security retirement payouts can be especially valuable because they are federally guaranteed for a lifetime, indexed to inflation, partially or fully tax-exempt, and may effectively include death benefits. Currently, a $25,000-per-year Social Security benefit provides more retirement cash flow than $1 million of ten-year Treasury bonds.

However, the Social Security system has complex rules for paying benefits. Disabled and retired clients naturally want to maximize their benefits, which can provide an opportunity for advisers to deliver tangible results. Considering recent changes in the rules, and the widespread press coverage, knowledgeable planning for Social Security may be especially welcomed by seniors.

Truncated tactics

The recent changes in the rules apply mainly to married couples, involving when each spouse should start Social Security and continue to receive retirement benefits. Some tactics have been terminated while others have effectively been grandfathered for certain seniors. For those strategies, and for those that still exist, planning begins around the date when an individual reaches “full retirement age” (FRA). For years, FRA has been 66, but that is now starting to change (see Exhibit 1).

As one can see, people who will be 62 to 73 in 2016 have an FRA of 66, but that age increases by two months for people who are 61 in 2016. Gradual increases in FRA will continue until it reaches age 67, for people 56 and younger in 2016.

FRA is important for three reasons. One, someone who waits until FRA to start Social Security retirement benefits will not incur an “earnings penalty.” Before FRA, certain amounts of earned income will cause a delay in receiving some benefits. By starting at FRA or later, a senior can have any amount of earned income and collect full retirement benefits. (There is no penalty at any age for any amount of unearned income, such as dividends and interest.)

The second reason to focus on FRA is that “full retirement age” means receiving full retirement benefits, according to the Social Security calculation, which is based on how much a worker has paid into the Social Security system. Starting earlier—retirement benefits generally can be collected as early as 62—means receiving a smaller monthly check. Ann Benson, born in 1954, with an FRA of 66, would get only $1,500 a month (75% of her FRA amount) if she started at 62, four years before she could collect $2,000 a month at her FRA. Craig Duncan, born in 1960, would get only $1,400 a month (70% of his FRA amount), if he started at 62, rather than starting at 67 with a $2,000 monthly benefit.

Finally, the FRA milepost marks the point at which waiting for benefits offers an 8% annual (but not compounded) increase in retirement benefits, all the way to age 70, the last starting date for Social Security. By waiting for benefits until age 70, Ann would get $2,640 a month (32% more than her FRA benefit of $2,000) while Craig would receive $2,480 a month (a 24% increase) by waiting for three years beyond his FRA for benefits. (All of these monthly amounts are before cost-of-living-adjustments.)

Patience can be prudent

Therefore, seniors have a choice when it comes to starting Social Security. Begin early, and start collecting, or wait and collect a higher benefit that will provide a plumper lifelong pension. The 8% annual delayed retirement credit, paid after FRA, as well as comparable increases before FRA, far exceed the return currently offered by federally guaranteed bonds and bank accounts.

The tradeoff, of course, is that waiting means forgoing substantial amounts of cash. Assume that Ann, in the above example, could start collecting benefits at age 62 without owing an earnings penalty. If she starts at $1,500 a month, that is $18,000 a year. She would forgo $72,000 in benefits by waiting until 66, and as much as $144,000 by waiting until 70.

The payoff is that Ann would get much larger payments at age 66, and especially at age 70, by waiting beyond age 62 to start Social Security. Depending on the assumptions used, the breakeven point for Ann—the time when she would gain more by waiting than she would lose upfront—is somewhere in her early to mid-80s.

Thus, if Ann can live comfortably without the early Social Security payments and has a reasonable expectancy of living for many years, deferring the start of benefits can pay off by addressing longevity risk. (Considering the rapidly increasing cost of health care at advanced age, longevity risk may become a key concern for many seniors.) After waiting to start benefits, Ann will collect ample payouts in her late 80s, 90s, and even longer.

Conversely, if Ann needs the money or if she has a relatively short life expectancy, she may do well to start Social Security benefits early. An early start also may be preferred by people who have doubts about the future solvency of the Social Security system.

Number crunching

As mentioned, the delayed retirement credit, for waiting to start Social Security until after FRA, is 8% a year: 16% for two years, 24% for three years, 32% for four years. Also, starting at FRA (now 66) rather than at age 62, the earliest possible date, raises Ann’s monthly benefit from $1,500 to $2,000: a 33.3% increase. This might appear to be a similar 8% increase, but the compound return, from $1,500 to $2,640 a month over eight years, is closer to 7%: still a good return today, for a government-guaranteed stream of income.

Upon closer inspection, the path from an age-62 benefit to an age-70 benefit is not a straight line. Above, Ann would get $1,500 a month from Social Security, starting at age 62, with an FRA of 66. If Ann starts instead at age 63, she would get 80% of her $2,000 FRA amount: $1,600 a month. That is an increase of 6.7% a month.

Now suppose that Ann waits to age 64, when she would get 86 2/3% of her FRA payout, about $1,733 a month. This one-year increase, from $1,600 to $1,733 a month, is over 8.3%. And so on, through Ann’s 60s, the true benefit of waiting will rise and fall. By waiting to start from 69 to 70, for example, Ann’s monthly Social Security check would increase from $2,480 to $2,640 a month, an increase of not quite 6.5%, rather than the posted 8%.

For some people, the difference between a 6.5% benefit increase and an 8.3% increase will not matter that much. The long-term advantage of a higher payout will still be appealing. In other cases, though, this pattern might lead seniors to start at, say, 68 or 69, rather than wait until 70, if immediate cash flow becomes important. Similarly, starting at age 64 rather than age 63 might be desirable, due to the 8.3% increase in benefits then.

Breaking even

People deciding when to start Social Security may want to see how long the makeup period would be. Not counting the time value of money, how long will it take to break even? If Ann waits from 62 to 70, she will not collect eight years of benefits at $1,500 a month, or $144,000. Starting at 70, she would collect $2,640 a month, an extra $1,140, so she would catch up in 127 months: more than ten years. By the time Ann reaches age 81, she would be ahead in total dollars collected, and the gap would grow throughout Ann’s lifetime.

Alternatively, suppose that Ann still has ample earned income, so starting before her FRA (66) does not make sense. As mentioned, Ann could get a Social Security benefit of $2,640 a month by waiting until age 70.

However, Ann could start Social Security at 69 and receive $2,480 a month. In the first year, she would collect $29,760 in benefits. By waiting until 70, she would get an extra $160 a month, so it would take her 186 months ($29,760 divided by $160) to recoup those forgone paychecks. Ann would not be ahead in total Social Security payments until she is 85 1/2 years old.

The actuarial formula used by Social Security has been designed so that people receive the same aggregate amount of money, regardless of when they begin claiming, assuming they all live to their life expectancy. In terms of total dollars, waiting is advantageous if recipients ultimately live longer than expected.

Spousal strategies

Deciding when to start Social Security may not be an easy decision, as explained. Moreover, the decision will be more complicated for married couples because one or both spouses typically have two choices: taking benefits on one’s own work record or on the other spouse’s work record. Previously, there were more opportunities to expand income by switching between one’s own record and a spouse’s record (often involving starting and stopping one spouse’s benefits, thus executing a “file-and-suspend” plan) but those methods generally expired in 2016.

The exception: “restricted applications for spousal benefits” are still allowed, but only for people who reached age 62 on or before 1/1/16. A restricted application can be approved at full retirement age of 66. With this tactic, someone applies for Social Security but restricts the

claim to a spousal benefit, on the other spouse’s work record.

To see how this might work, suppose Ed Franklin worked steadily for decades and his wife Gloria’s working career was interrupted while she stayed home with their young children. Thus, Ed contributed more to the Social Security system than Gloria, and he will receive a larger benefit.

If Gloria is now 63, she can file a restricted application to get a spousal benefit at her FRA. Her spousal benefit could equal 50% of Ed’s benefit. This approach would allow Gloria’s benefit to grow larger until she starts to take it, perhaps as late as age 70. Alternatively, if Ed meets the age requirement, he could use a restricted application to start his spousal benefit at FRA, allowing his regular benefit to grow larger, at 8% a year until age 70. (A restricted application by one spouse requires the other spouse to be receiving benefits.)

Some strategies are still viable

As explained, restricted applications are available to only some people 62 and older in 2016. Nevertheless, there are opportunities for all married couples to use in their planning. For example, one spouse might claim benefits early, to start cash flowing, while the other spouse waits to start Social Security, in order to receive a higher payout.

Take a hypothetical married couple, Heidi and Ivan King. They are both 60, so they cannot use a restricted application or the now banned file-and-suspend plan. Suppose both spouses have made substantial contributions to the Social Security system over the years, so they will both receive ample benefits, but Ivan would get a higher payout. One approach would be for Heidi to begin her own benefits at age 62, the earliest date possible, while Ivan waits until age 70.

Assuming no earnings penalty, Heidi’s checks would provide eight years of cash flow in their 60s, making it easier for the Kings to wait for Ivan’s large payout. If Ivan is the first spouse to die, Heidi would receive the amount Ivan had been getting, as a surviving spouse; if Heidi dies first, Ivan would continue to receive his high benefit.

What if Ivan had contributed much more to Social Security than Heidi, so that Ivan is entitled to a $2,500 monthly benefit at FRA but Heidi’s FRA benefit is only $750 a month? One approach would be for Ivan (born in 1956) to claim benefits at 66 and four months, his FRA, and start getting $2,500 a month. Heidi, about the same age, would also claim at her FRA. Then Heidi would get a spousal benefit, so she would receive 50% of Ivan’s benefit—$1,250 a month—which is larger than her own. Again, Heidi would get a large bump in benefits if she is the surviving spouse.

Things could be different if Heidi (with a low benefit on her own work record) is now 55 years old, instead of 60. Then, Ivan could wait until he is age 70, to get the maximum monthly benefit. Heidi could start at age 62, the earliest date, claiming her own benefit. Heidi would get a reduced benefit, because she started early, but she would still get monthly checks. At age 65, when Ed is 70 and claims his maximum benefit, Heidi could get a spousal benefit, increasing her Social Security checks. (If Ed is older than Heidi, that increases the likelihood he will be the first spouse to die, so waiting for his benefit also increases the widow’s benefit Heidi could receive.)

In real life, the decision to start Social Security will go beyond spreadsheets to health and the need for cash flow. Still, it will pay to know the rules, so seniors can figure out how much they will collect and how much they will forgo, at various points in time.

Fine points

Despite the changes in Social Security rules, some people are still able to use the banned strategies. Anyone who initiated a file-and-suspend strategy before 4/30/16, is grandfathered, and thus remains eligible to maintain that method of claiming benefits.

As mentioned, restricted applications for spousal benefits are still allowed for people who were 62 or older at the start of 2016. Moreover, the same opportunity applies to divorced spouses who were 62 or older by that deadline. If they were married at least ten years, have been divorced at least two years, and are unmarried, divorced spouses can file a restricted application at FRA to get a 50% spousal benefit, then switch to their own higher retirement benefit as late as age 70.

How benefits are taxed

The starting date for Social Security benefits might also affect how those benefits are taxed. The reasoning behind this opportunity is complex, to put it mildly.

The key is the formula that determines how benefits are taxed. That starts with a calculation of “combined income” (CI), also known as provisional income. To find someone’s CI, add one-half of annual Social Security benefits received to all other income, including tax-exempt income, and other exclusions from income. Once CI is found, it is compared to certain base amounts. If CI is under $25,000 (for single filers) or under $32,000 (for couples filing joint tax returns), no federal income tax will be imposed on Social Security benefits.

As CI climbs over those thresholds, a gradually increasing portion of Social Security benefits will be taxed, up to 50%. Eventually, CI may reach a second set of thresholds: $34,000 for singles and $44,000 for joint filers. With CI in excess of those amounts, the tax rate keeps climbing, and up to 85% of Social Security benefits can be taxed.

Note that Social Security benefits are never fully taxed under current law. If Jim and Lynn Martin, high income seniors, collect a total of $60,000 in benefits, it is likely that $51,000 (85% of $60,000) will be included in their income, subject to income tax. If the Martins are in the top 39.6% tax bracket, they would owe $20,196 in tax on their Social Security benefits—39.6% of $51,000, for an effective tax rate of 33.7% on their $60,000 from Social Security.

Tax planning possibilities

Thus, taxpayers with CI below $25,000 (single) or $32,000 (joint) will owe no tax on their Social Security benefits, without any planning. Taxpayers far above $34,000 or $44,000 in CI probably will owe tax on 85% of their Social Security benefits. In the middle ground, though, some steps may be effective.

Investing in municipal bonds will not help because tax-exempt interest is fully included in CI. Conversely, taking capital losses to offset taxable gains might pay off; so might investing in no-dividend stocks or growth funds. If it is possible to convert a traditional IRA to a Roth IRA at a low tax rate, in part or in full, this might cut future taxable withdrawals and thus reduce future CI—Roth IRA owners never have required minimum distributions (RMDs), so fewer RMDs can mean lower CI in the coming years.

Patience may be prudent

What does the starting date of Social Security benefits have to do with taxes on those benefits? As mentioned, the formula counts Social Security benefits at only 50 cents on the dollar, when computing CI. Other income, including withdrawals from traditional IRAs, is fully included in CI, dollar for dollar.

Thus, people who are in the middle ground for the taxation of Social Security benefits (CI not too low to be fully exempt and not too high to certainly face maximum taxation) might do well to delay Social Security until age 70, to get the maximum benefit, even if that means withdrawing money from a traditional IRA to provide needed cash flow. Those IRA withdrawals, which might be lightly taxed in retirement, will reduce future RMDs, while more post-age-70 cash flow will come from Social Security, only partially included in CI.

The advantages of delaying Social Security will vary, from one individual to another, and number crunching will be necessary to determine the probable best result. However, withdrawals from traditional IRAs will always be taxable, at any age, and the tax rate on those withdrawals may be higher if 85% of Social Security benefits are also included in income, moving taxpayers into a higher bracket. On the other hand, Social Security benefits may not be included in income for some taxpayers, or at least not included up to the 85% maximum. Taking taxable IRA withdrawals in lieu of early Social Security benefits may be a long-term tax savings strategy, in the right circumstances.


Savvy Social Security Strategies

Even after the recent changes to the rules for claiming Social Security benefits, there are still some moves that work. Examples:

  • It is never too late to increase Social Security benefits. Retirement benefits, as well as other individuals’ Social Security benefits tied to those retirement payouts, are based on a worker’s 35 highest-earning years. At any age, a top-35 earnings year can be replaced by a year with greater earnings, boosting the amount of the checks from Social Security.
  • Do not dally for spousal benefits. Waiting past FRA will not increase spousal benefits. FRA, now 66, is scheduled to gradually increase to 67 in the coming years.
  • Social Security planning can be family planning. People with a spouse and perhaps children who can collect on the breadwinner’s record might want to start Social Security retirement benefits at age 62, the earliest age possible. Then other qualified family members may be able to accelerate their benefits from Social Security.
  • Family benefits may be as high as 80% of the breadwinner’s Social Security retirement benefit. The maximum amount might be reached if the retiree has children under age 18, or slightly older and still in high school. Older children may get a disability benefit, also based on the breadwinner’s earnings record.
  • Widows and widowers can still double-dip. Someone who qualifies for a widow(er)’s benefit can claim their own retirement benefit first, then claim a widow(er)’s benefit; or file first as a widow(er), if that works better. However, filing for retirement benefits before a spouse or ex-spouse dies will limit the widow(er)’s benefit. The earnings penalty described previously also applies to widows and spouses, however.
  • Widowed divorcees can start early. The starting age for collecting Social Security on a deceased ex-spouse’s work record is as early as 60 for people who were divorced and then widowed by an ex-spouse’s death (age 50 for people who are disabled). That is the case if the marriage lasted at least ten years and the divorced individual does not have a work record that would provide a higher benefit.

Determining disability

Social Security benefits also may be available to people who cannot work because of a medical condition. To qualify, the condition must be expected to last at least one year or result in death. Moreover, a disabled worker usually must meet: (1) a recent work test, based on age at the time of becoming disabled; and (2) a duration of work test to show how long payments were made to the Social Security program.

Certain blind workers must meet only the duration of work test. In addition, family members of disabled workers may also receive disability benefits from Social Security.

Under the recent work test, someone who became disabled in or before the quarter of turning age 24 must have worked 1.5 years under Social Security during the three-year period ending with the quarter the disability began.

If the disability occurred in the quarter after turning age 24 but before the quarter of turning age 31, the requirement is work for at least half the time of the period beginning with the quarter after turning 21 to the quarter of becoming disabled. For example, someone who becomes disabled in the quarter of turning 27 would need three years of work out of the six-year period ending with the quarter of becoming disabled.

If the disability occurred in the quarter after turning 31 or later, the requirement is work for at least five years out of the ten-year period ending with the quarter the disability began.

The test for duration of work generally requires a total of 1.5 years of work that was covered by Social Security for a disability before age 28. That requirement gradually increases, to a total of 9.5 years of covered work for a disability at 60 or older.

Even after passing both tests, applicants for Social Security disability benefits must undergo an extensive review process before collecting. In 2017, the average disability benefit for a disabled worker, spouse, and one or more children is about $2,000 a month.

Exhibit 1. Full retirement age

Full retirement age

Exhibit 2. Checklist for Social Security Planning

Checklist for Social Security Planning


Important Medicaid Trust Rules Update: R.I. Court Rules That Pre-1993 Trust Is Countable Resource

By Medicaid Planning and Gifting, News

Important Legal Update: Medicaid Trust Rules Machunis v. Rhode Island Dept. of Human Services (R.I., Super, No. PC 2016-0613, Jan. 9, 2017): 

A Rhode Island trial court affirms the denial of a nursing home resident’s application for Medicaid benefits based on excess resources, concluding that because a trust she established in 1991 allowed the trustee to make distributions of income and principal for her benefit, the entire trust was a countable resource.  

Nursing home resident Catherine T. Machunis applied to the Rhode Island Dept. of Human Services for Medicaid long-term care benefits. The agency denied the application because Ms. Machunis’ financial statement revealed that she was the beneficiary of a trust with a value of $78,149.57, exceeding Medicaid’s $4,000 asset limit.

Ms. Machunis requested a formal hearing, disputing the agency’s consideration of any money in the trust as a countable resource. Following an evidentiary hearing, a hearing officer determined that because Ms. Machunis had established the trust prior to August 1993, it was a Medicaid Qualifying Trust and the amount available to her was the maximum amount the trustee could distribute if the trustee used his or her full discretion under the trust’s terms. The hearing officer affirmed the denial of benefits, concluding that the trustee had the authority to disburse the entirety of the trust assets to Ms. Machunis and, therefore, the entire trust was a countable resource. Ms. Machunis appealed to the Superior Court of Rhode Island.

On appeal, Ms. Machunis argued that the trust assets were not countable resources for Medicaid purposes because the trustee’s discretion was limited to making distributions only from the income, and not from the principal, of the trust. The agency countered that the trustee had the discretion to make distributions from the principal for Ms. Machunis’ benefit and, therefore, the entire corpus of the trust was available to her.

The Superior Court of Rhode Island, Providence County, affirms the agency’s denial of Ms. Machunis’ application based on excess resources. The court finds that because the trust clearly
authorizes the trustee to make distributions from the income and principal for Ms. Machunis’ benefit, the entire trust is a countable resource and the agency properly denied her application.

For the full text of this decision, go to:

Overwhelmed with the Medicaid Application process? Contact us for help.