Eliminating the Medical Expense Deduction Would Seriously Harm People Who Are Chronically Ill

Another important announcement from NAELA.  This would have devastated us in caring for my mother-in-law!

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Older man kissing sick wifeThe House Republicans tax proposal introduced today ends the medical expense deduction. This change will cause major harm to individuals and families trying to pay for the catastrophic costs of long-term services and supports (LTSS).

Read the bill text.

Here’s how you can help:

Call your representative – Look up the direct office number in the House of Representatives Directory.

Post this or your own thoughts on social media.

Warn others in your local community organizations.

Read NAELA’s “Overview of the Medical Expense Deduction for the Chronically Ill” and NAELA’s “The Medical Expense Deduction for the Chronically Ill, Key Points.”

LTSS provides assistance with Activities of Daily Living — eating, transferring, bathing, dressing, and continence. In many instances, individuals who need LTSS must be placed in a nursing facility to receive 24-hour care. Conditions that may require LTSS include Alzheimer’s disease, Multiple Sclerosis, or spinal cord injury.

The tax code allows individuals to deduct qualified long-term care expenses if they are chronically ill, meaning those unable to perform two or more Activities of Daily Living without assistance, or who need constant supervision because of a severe cognitive impairment, such as Alzheimer’s disease.

These expenses are usually catastrophic, requiring many Americans to spend all of their income and to liquidate resources to pay for care. For instance, paying for nursing home care can quickly impoverish middle- and working-class Americans, costing a median of $97,000 a year for a private room.

According to NAELA President Hy Darling, CELA, CAP, “The problem is as much a practical issue as it is a policy one. Fundamentally, many individuals paying for these costs will not be able to pay for their care and federal income tax at the same time. Raising the standard deduction and lowering tax rates will not address the issue.”

Why wouldn’t increasing the standard deduction and lowering tax rates help? “Because many chronically ill Americans must pay all of their income towards care, and without the Medical Expense Deduction they could still have a tax liability that they cannot afford to pay,” explains Darling.

Put simply, eliminating the Medical Expense Deduction puts chronically ill Americans between a rock and a hard place. If these individuals cannot pay for the cost of LTSS, this could lead to eviction from their care facility. Yet paying for their care and not the increased tax creates an uncollectible tax liability. And, it likely would lead to an increased reliance on government programs. Many middle- and working-class individuals must “spend down” their resources to qualify for Medicaid. Without a tax subsidy, there is an increased incentive for people in need of care to participate in an already stressed federal/state program rather than assuming personal responsibility for their care or the care of their loved ones.

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Medicaid – Please Lend Your Voice

helping handToday there is no personal story, no witty reference to any modern media.  I am asking for your help in determining the future of Medicaid. If you, or someone you know or love, is not currently affected by Medicaid it is almost certain that you will be at some point in your life.  Please see the below message, taken from an alert from NAELA (National Academy of Elder Law Attorneys, Inc.):
Continue reading

Planning for Old Age

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Wow. I cannot believe it has been almost two months since my last blog post. I wrote last time that I had herniated a disk in my back; however, that has not been the end of my woes. The first week in April I tore the Achilles tendon from my heel. Ultimately, both my back and my Achilles tendon required surgery. Currently, I am recovering from both procedures, and my right leg is in a non-weight bearing cast. Fortunately, the numbness from my herniated disk is mostly gone, and I am regaining strength in my left leg.  I am grateful to have good health care coverage, but even so the last months have been extremely stressful. I cannot emphasize enough how important it is to be prepared for the curves we all have thrown at us. I never expected to undergo what I have recently, but it happened nonetheless.

With this in mind now is the time to prepare for our later years. When most of us think of Medicaid we think of a program for poor people. The reality is that many of us will need it in the future because long-term care costs are so high. The problem with waiting until a need arises is that doing so places one’s assets at risk.

But before we get into a deeper discussion understand that Medicaid is a federal program administered by the states. Each state has enacted legislation governing its implementation of Medicaid, and the rules are changing all the time.  The reason for the constant state of flux is that as health care costs rise the states are seeking ways to cut their costs. The result is that strategies for protecting assets that used to work may not today.

Accordingly, the key when thinking about Medicaid is to plan early. As most are aware, there is a five year, or 60 month lookback period. What this means is that Medicaid will look back five years from the date of eligibility to determine if any assets owned by the applicant were transferred without receiving adequate compensation for the asset sold or disposed of. If it is determined that an uncompensated transfer did occur then Medicaid can impose a penalty period during which the applicant will have to fund his or her own care. Consequently, as noted, the key is to plan early so that any transfers necessary can be made early enough so they fall outside the look-back period so that no penalty is incurred. This generally means beginning Medicaid planning as one approaches retirement age.

Next time: What are countable assets and what constitutes an uncompensated transfer? Take care until then, and if we can help please contact us.

Family law attorney experiences first-hand significance of elder law

THIS IS AN ARTICLE THAT RAN IN THE GAZETTE YESTERDAY:

Bill Gazetter Main PhotoFor attorney William “Bill” Moller, elder law hits close to home. “When I meet with clients who are trying to make long-term care decisions for themselves or their elderly relatives, I know exactly what they are going through, because I have been there,” he said. Continue reading

Medicaid – Planning Ahead Can Save Assets

ElderCounsel_Logo_MemberI ask many of my clients what will happen if they are diagnosed with a sickness such as dementia or Alzheimer’s, or need twenty-four care some day. Very few of my clients can afford the cost of twenty-four hour care in their home or elsewhere. This type of care ranges from $40,000 to $100,000 per year. None of my clients can afford to lose this much in either income or assets.  Continue reading

A Tale of Two Mothers

Bill Moller

Bill Moller

In the past we have run articles about different legal issues, but right now I want to share some personal stories.

Two years ago, my mother-in-law starting exhibiting some worrisome behaviors. After spending several months in Florida for assessment and tests, my wife finally moved her mother here to Colorado.  Within a month of moving here we had to place her in a memory care unit at only age 72.  My wife’s mother was not cooperative throughout this process, and we were fortunate to get the documents that we needed to be able to take care of her business for her. My wife is her legal representative and takes care of all of her needs. It has been a very difficult journey, and the journey continues.  Continue reading