Congress has passed and President Obama has signed into law the deal extending the Bush tax cuts that he struck with Congressional Republicans. The legislation restores the estate tax for two years at a 35 percent rate, with estates up to $5 million exempt from paying any tax ($10 million for couples). If Congress does not change the law in the interim, in 2013 the estate tax will revert to what it was scheduled to be in 2011 – a 55 percent rate and a $1 million exemption
The new $5 million estate tax exemption and 35 percent rate are retroactive to January 1, 2010. The heirs of those dying in 2010 will have a choice between applying the new rules or electing to be covered under the rules that have applied in 2010 – no estate tax but only a limited step-up in the cost basis of inherited assets. This will benefit the heirs of tens of thousands who dies in 2010 with relatively modest estates and who would have been subject to capital gains tax on inherited assets above a certain threshold.

The law makes the estate tax exemption “portable” between spouses. This means that if the first spouse to die does not use all of his or her $5 million exemption, the estate of the surviving spouse could use it.
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The basic premium for Medicare Part B will be $115.40 a month in 2011, up from $110.50 in 2010 (a 4.4 % increase). But because there will be no cost of living benefit increase for Social Security recipients for 2011, most beneficiaries will be exempted from paying this increase and will instead pay the same $96.40 premium amount they have paid since 2008.

A “hold-harmless” provision in the Medicare law prohibits Part B premiums from rising more than that year’s cost of living increase in Social Security benefits. Since there is no Social Security increase, most beneficiaries – about 73 percent – will not have to pay any increased Part B premiums because of the hold-harmless provision. Those covered by the provision will continue to pay Part B premiums of $96.40 per month in 2011.

But this hold-harmless protection does not apply to the other 27 percent of beneficiaries – about 12 million in all – who either: do not have their Part B premiums withheld from their Social Security checks; or pay a higher Part B premium surcharge based on high income; or are newly enrolled in Part B.

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 2009 tax return is used to determine whether the beneficiary must pay a higher monthly Part B premium in 2011. 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 decreases significantly in the past two years, he may request that information from more recent years be used to calculate the premium.
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Two federal courts in the past two months have ruled that Medicare’s coverage of skilled care does not require a beneficiary to show improvement. Instead, both courts said that Medicare can pay for skilled care if it is needed simply to preserve a patient’s current functioning or prevent further decline.

Home health agencies and nursing homes that contract with Medicare routinely terminate the Medicare coverage of a beneficiary who has stopped improving, adhering to what Medicare advocates have referred to as an “urban legend” that such beneficiaries are receiving “custodial care”, which Medicare does not cover. These beneficiaries could include those with chronic conditions and disabilities like multiple sclerosis, Alzheimers disease, ALS and broken hips.

In terminating the coverage, the Medicare contractors are not following the Medicare statute or its regulations, neither of which states that improvement is required for continued skilled care.
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During the annual open enrollment period for Medicare which runs from November 15 to December 31, you may switch Medicare drug or health care plans. This year it is particularly important because of changes brought on by the new health care law.

As the health care reform law goes into effect, there are a number of changes affecting seniors. Even if the new health law will not affect your plan, you should still review your options for 2011. Prescription drug plans can change their premiums, deductibles and the list of drugs they cover. Medicare Advantage plans – private managed care plans that compete with traditional Medicare – can change their entire benefits package as well as their provider network. Many plans are also consolidating options and closing some policies. If you take no action, you will remain in your current plan.

Under the new health law, Medicare will now pay 100 percent of preventive care. That means beneficiaries will not have to pay deductibles or co-pays for certain preventive services, such as annual wellness exams. While many Medicare Advantage plans already offered this benefit, it is not mandatory for all types of Medicare plans. If you had a Medicare Advantage plan primarily because of its preventive care coverage, you may want to reassess whether that or any other Medicare Advantage plan is still the best option for you.

In addition, under the new health reform law, subsidies to Medicare Advantage plans are being phased out. In response, Medicare Advantage plans may stop covering extra benefits like dental and vision. Check your Medicare Advantage plan to make sure you will still receive the benefits you want.

The biggest change for Medicare prescription drug plan beneficiaries is the lowering of prescription drug costs for those who reach the “doughnut hole”. In 2010, after meeting a $310 deductible, beneficiaries pay only 25 percent of drug costs until the costs total $2830. Coverage then stops completely until total out-of-pocket spending for covered drugs reaches $4550. This lack of coverage is called the “doughnut hole”. In 2011, beneficiaries in the doughnut hole will receive a 50 percent discount on brand-name drugs and a 7 percent discount on generic drugs. Medicare will continue to count the full retail price of medications in computing the coverage gap, so seniors will pay a lot less to get through the doughnut hole. The health reform law also eliminates the doughnut hole by the year 2020.

You will also want to make sure that your Part D plan still covers the drugs that you need because the list of drugs that each plan covers changes from year to year.

In the past, if you regretted your Medicare Advantage or regular Medicare decision, you could change things from January 1 through the end of March of the following year. But in 2011, this period will last only from January 1 to February 15, and the only change that will be allowed is if you want to shift from a Medicare Advantage plan to traditional Medicare.

To evaluate plans, go to https://www.medicare.gov/find-a-plan/questions/home.aspx?AspxAutoDetectCookieSupport=1.
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A report by the Government Accountability Office (GAO) warns that given the weak economy Continuing Care Retirement Communities (CCRCs) are facing challenging times.

CCRCs offer the entire residential continuum of care – from independent housing to assisted living to round-the-clock nursing services – under one “roof”.

In its new report, “Continuing Care Retirement Communities Can Provides Benefits, but Not Without Some Risk”, the GAO notes that although few CCRCs have failed, “challenging economic and real estate market conditions have negatively affected some CCRC’s occupancy and financial condition”. The GAO’s report notes that CCRC residents “are at a disadvantage because any claim they have on a CCRC that is forced into bankruptcy is subordinate to the claims of secured creditors, such as tax-exempt bondholders and mortgage lenders”.

CCRCs generally depend on high occupancy rates to remain financially viable. Slow real estate markets like the current one can make it difficult for older Americans to sell their homes to pay CCRC entrance fees. As a result, occupancy levels at many CCRCs have fallen. In addition, some older Americans may be staying in their homes longer and thus moving into CCRCs when they need more care, which can worsen CCRCs’ long-term financial picture.
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Many people like the idea of leaving bequests to favorite charities in their wills. But instead of leaving money to a charity in your will, you can put that money into a charitable remainder trust and collect income while you are still alive. Charitable remainder trusts have many other advantages, including reducing your income and estate taxes and diversifying your assets.

A charitable remainder trust is an irrevocable trust that provides you (and possibly your spouse) with income for life. You place assets into the trust and during your lifetime you receive a set percentage from the trust. When you die, the remainder in the trust goes to the charity (or charities) of your choice.

A charitable remainder trust has many benefits. At the time you create the trust, you will receive an income tax deduction for charitable giving. Also, any profit from the sale of the investments within the trust are not subject to capital gains, which means the trustee may have more freedom in managing the assets. In addition, when you die, the assets in the trust will pass outside your estate and be eligible for the estate tax charitable deduction.

The downside of a charitable remainder trust is that it is irrevocable, meaning once you create the trust, you cannot cancel it. While you cannot revoke the trust, you may have the ability to change the beneficiary if you decide to give to a different charity. You may also serve as trustee, giving you control over how the trust assets are invested. In addition, note that any income you receive from the trust will be subject to income taxes.
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Continuing-Care Retirement Communities (CCRC) offer comfortable living for older individuals and include the availability of fine dining, health clubs and on-site long-term health care.

Risks to consider are whether the CCRC might fail due to loss of membership. In the case of failure, residents can lose all or part of their entrance fee. The average entrance fee is about $250,000.

Two web sites which offer information about retirement communities and their financial stability are CARF International and The American Association of Homes and Services for the Aging.
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Elder Law Attorney An Elder Law Attorney is uniquely qualified to guide you through the complex maze of public entitlements, estate and trust planning, tax law, probate, incapacity planning and nursing home rights.

Home Care Home Care encompasses a wide range of health and social services delivered at home. These services include skilled nursing care, rehabilitative care, custodial care, hospice and housekeeping services. In the appropriate case, services in the home can be supplemented by community services such as adult day care, where a person can be picked up and brought to an adult center for supervision, recreation, meals and community. Certified health care agencies, hospice, home care aide agencies, private agencies and individuals can provide home health care services.

Life Care Communities Residents in Life Care Communities are offered a full range of housing options from independent living to assisted living to a full-service nursing home, in order to accommodate changing medical and custodial needs. This option is excellent for those who “sign up” before there is ever a diagnosis of illness and who can afford the private pay expense.
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Hospice Care/Medicare Hospice care is designed for terminally ill persons and is covered by Medicare Part A. Hospice programs will care for patients in a hospice facility or whenever possible in their homes and emphasize relieving pain and managing symptoms rather than undertaking curative procedures. An individual may elect to receive hospice care rather than regular Medicare benefits for the management of his/her illness.

Power of Attorney for Property This is a document in which you select someone, and at least one back-up person, to handle your business and legal affairs for you if you are unable to manage on your own. A property drafted Power of Attorney should include the authority to do long-term care planning.

Power of Attorney for Health Care A document in which you select someone, and a least one back-up person, to handle your health care decision-making if you are unable to make those decisions for yourself.
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Continuing Care Retirement Community This type of housing alternative, sometimes called a life care community, generally requires that an individual be able to live independently upon becoming a resident in the community. As a resident begins to need more assistance, specific additional services are made available. Most CCRCs offer three basic levels of housing on an as-needed basis: fully independent living, assisted living (personal care services) and skilled nursing care.

Living Will This is a document in which you state your wishes about end-of-life care. Many living wills specify that artificial medical intervention be avoided or discontinued where there is no hope of meaningful recovery from a vegetative state or terminal illness.

Nursing Homes There are two types of Nursing Homes: Skilled Nursing Homes and Custodial Nursing Homes. A skilled nursing home provides skilled nursing and rehabilitative care. A custodial nursing home provides assistance with activities of daily living (i.e., bathing, dressing, eating), but do not provide specific or ongoing skilled nursing services or rehabilitative care.
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