Skip to main content
Tag

Benefits

Jan 10
Love0

Healthcare Costs Consuming SSI Benefits

By Uncategorized

Health Costs May Gobble Up Social Security Benefits

Healthcare for the average woman means they could spend an estimated 70 percent of her retirement check on health care costs, according to a recent study by the Nationwide Retirement Institute. The average man fares better, but still uses nearly half of his benefits to cover medical expenses.

Here’s how the Nationwide analysis reached its disturbing healthcare estimates: It assumed a woman with a life expectancy of 88 married a man who would live to 85 and they both claimed Social Security at 62, which is the earliest and most popular age to file for retirement benefits, regardless of gender. More than half of elderly married couples and nearly 75 percent single retirees depend on Social Security for the majority of their income in retirement. “Women disproportionately rely on Social Security in retirement,” said Nancy Altman, co-director of Social Security Works, which advocates for the expansion of the program. In fact, roughly two-thirds of Social Security beneficiaries age 85 and older are women. In the Nationwide’s bleak scenario, the man collects a monthly benefit of $1,543 and the woman collects $1,171 per month. (The average monthly benefit for a retired worker is $1,350, according to the Social Security Administration.)healthcare-costs

Nationwide projects hefty health costs for the hypothetical couple. The man would pay $214,278 in medical costs in retirement and the woman would pay more than $289,682, because of her longer lifespan. The forecast includes what the couple would have to spend on long-term care at a nursing home or in an assisted living center.

Source/more: CNBC.com

Want to protect your life savings from possible long term care costs?

We have advised hundreds of people on the steps they must take today to protect their assets from the possible catastrophic costs associated with long term care and nursing home care. Contact our office today for a no-cost consultation to discuss your estate planning options.

Matt Leonard

Jun 21
Love0

Home Placed In Massachusetts Trust Protected

By News

Ability to Use House Placed In Massachusetts Trust Does Not Render Trust Available

Reversing a lower court, Massachusetts’ highest court rules that two Medicaid applicants’ trusts were not available assets even though the applicants retained the right to use the houses that were put into the trusts. Daley v. Secretary of the Executive Office of Health and Human Services (Mass., No. SJC-12200, May 30, 2017) and Nadeau v. Director of the Office of Medicaid (Mass., No. SJC-12205, May 30, 2017).
James and Mary Daley created an irrevocable trust. They conveyed their interest in their condominium to the trust, but retained a life estate in the property. Seven years later, Mr. Daley was admitted to a nursing home and applied for Medicaid benefits. The state denied him benefits after determining that the trust was an available asset. Lionel Nadeau and his wife created an irrevocable trust and transferred their house into the trust. The trust provided that the Nadeaus had the right to use and occupy the house, which they did until Mr. Nadeau entered a nursing home and applied for Medicaid benefits. As with the Daleys, the state considered the trust a countable asset and denied benefits.

The Daleys and the Nadeaus appealed but following hearings, the state ruled that the trusts were available assets because the Daleys and Nadeaus had the right to occupy and use the properties that were in the trusts. In separate rulings, Massachusetts trial courts held that both trusts were available assets. [Daley v. Sudders, Mass. Super. Ct., No. 15–CV–0188–D; Dec. 23, 2015; and Nadeau v.Thorn, Mass. Super. Ct., No. 14-DV-02278C, Dec. 30,2015]; see The ElderLaw Report, March 2016, p. 5.) The Daleys and Nadeaus appealed and the Massachusetts Supreme Judicial decided both cases together.

The Massachusetts Supreme Judicial court reverses, holding that the trusts are not available assets. According to the court, “where a trust grants the use or occupancy of a home to the grantors [as in the Nadeau’s case], it is effectively making a payment to the grantors in the amount of the fair rental value of that property.” The court adds that these payments “do not affect an applicant’s eligibility for Medicaid long-term care benefits, but they may affect how much the applicant is required to contribute to the payment for that care.” In the Daleys’ case, the court rules that because the Daleys hold a life estate, their use of the home is not considered income and “the continued use of the home by the applicant pursuant to his or her life estate interest does not make the remainder interest in the property owned by the trust available to the applicant.”

Maryland elder law attorney Ron M. Landsman joined the briefing and argument. In reaching its conclusion in the Daley case, the court cites the Elder Law section of West’s Massachusetts Practice series, written by Harry S. Margolis and Jeffrey A. Bloom of the Boston firm of Margolis & Bloom, LLP. For the full text of this decision, go to: http://tinyurl.com/elr-Daley3

Oct 19
Love0

2017 Social Security Benefits Increase

By Uncategorized

Social Security Cost of Living Adjustment Announced

retirement benefits

retirement benefits

The annual cost-of-living adjustment (COLA) usually means an increase in the benefit amount people receive each month. By law, the monthly Social Security and Supplemental Security Income (SSI) federal benefit rate increases when there is a rise in the cost of living.

 

The government measures changes in the cost of living through the Department of Labor’s Consumer Price Index (CPI-W). The CPI-W rose this year. When inflation increases, your cost of living also goes up. Prices for goods and services, on average, are a little more expensive. Since the CPI-W did rise, the law increases benefits to help offset inflation.

As a result, monthly Social Security and SSI benefits for over 65 million Americans will increase 0.3 percent in 2017.

Social Security Wage Base Increases to $127,200 for 2017

Other changes that would normally take effect based on changes in the national average wage index will begin in January 2017. For example, the maximum amount of earnings subject to the Social Security payroll tax will increase to $127,200.

The Federal Insurance Contributions Act (FICA) imposes two taxes on employers, employees, and self-employed workers-one for Old Age, Survivors and Disability Insurance (OASDI; commonly known as the Social Security tax), and the other for Hospital Insurance (HI; commonly known as the Medicare tax).

For 2017, the FICA tax rate for employers is 7.65%-6.2% for OASDI and 1.45% for HI.

For 2017, an employee will pay:

  • (a)  2% Social Security tax on the first $127,200 of wages (maximum tax is $7,886.40 [6.2% of $127,200]), plus
  • (b)  45% Medicare tax on the first $200,000 of wages ($250,000 for joint returns; $125,000 for married taxpayers filing a separate return), plus
  • (c)  35% Medicare tax (regular 1.45% Medicare tax + 0.9% additional Medicare tax) on all wages in excess of $200,000 ($250,000 for joint returns; $125,000 for married taxpayers filing a separate return).

For 2017, the self-employment tax imposed on self-employed people is:

  • 4% OASDI on the first $127,200 of self-employment income, for a maximum tax of $15,772.80 (12.40% of $127,200); plus
  • 90% Medicare tax on the first $200,000 of self-employment income ($250,000 of combined self-employment income on a joint return, $125,000 on a separate return), plus
  • 8% (2.90% regular Medicare tax + 0.9% additional Medicare tax) on all self-employment income in excess of $200,000 ($250,000 of combined self-employment income on a joint return, $125,000 for married taxpayers filing a separate return).

There is a maximum amount of compensation subject to the OASDI tax, but no maximum for HI.

Note: On a salary of $127,200 (or more), an employee and his employer each will pay $7,886.40 in Social Security tax in 2017.

Note: A self-employed person with at least $127,200 in net self-employment earnings will pay $15,772.80 for the Social Security part of the self-employment tax in 2016.

Note: Self-employed workers deduct half of their self-employment tax above-the-line in arriving at adjusted gross income.

Information about Medicare changes for 2017, when announced, will be available at www.Medicare.gov. For some beneficiaries, their Social Security increase may be partially or completely offset by increases in Medicare premiums.

Want to discuss how this impacts you and your retirement planning? Contact us for a free consultation.

Matt Leonard

Close Menu