Tuesday, February 25, 2020

Mail-in Voting Now Authorized in Pennsylvania

Pennsylvania’s new election reform law takes effect with the primary election on April 28, 2020. The law creates a new option to vote by mail that can make voting much easier and more convenient for older adults. Registered voters can now choose to vote by mail-in ballot rather than appearing at a polling place on election day.
According to the Governor’s press release  the new law (Act 77 of 2019) creates an option to vote by mail up to 50 days before an election and be placed on a list to permanently receive a ballot application by mail. Unlike an absentee ballot, no reason or excuse is required.  The reform law also provides more time to register to vote and makes other changes to Pennsylvania election laws.
Among the provisions of the new law as noted in the press release:
 No excuse mail-in voting
The law creates a new option to vote by mail without providing an excuse, which is currently required for voters using absentee ballots. Pennsylvania joins 31 other states and Washington, D.C. with mail-in voting that removes barriers to elections.
50-day mail-in voting period
All voters can request and submit their mail-in or absentee ballot up to 50 days before the election, which is the longest vote-by-mail period in the country.
Permanent mail-in and absentee ballot list
Voters can request to receive applications for mail-in or absentee ballots for all primary, general and special elections held in a given year. Counties will mail applications to voters on the list by the first Monday of each February. Voters who return an application will receive ballots for each election scheduled through the next February. Pennsylvania is the 12th state to provide voters with the automatic option.
15 more days to register to vote
The deadline to register to vote is extended to 15 days from 30 days before an election. Cutting the current deadline by half enables more people to participate in elections. The new more flexible and voter friendly deadlines provide more time to register to vote than 24 other states.
Extends mail-in and absentee submission deadlines
Voters can submit mail-in and absentee ballots until 8:00 p.m. on election day.
Act 77 provides PA voters with two options for voting by mail. You may either choose a mail-in ballot or an absentee ballot to request, complete, and return to your county election office. The votePA.com website describes these options as follows:
  • Absentee ballot – If you plan to be out of the municipality on election day or if you have a disability or illness, you should request this ballot type, which still requires you to list a reason for your ballot.
  • Mail-in ballot – If you aren’t an absentee voter, you may apply for a mail-in ballot. You may simply request this ballot without a reason.
This means that any Pennsylvania voter should now be able to vote by mail. The absentee ballot has been around in the past but requires an excuse. The no-excuse mail-in ballot option is newly authorized by Act 77. 
How do you Obtain a Mail-in Ballot? You can request a mail-in ballot online or at your county election office:
Online: You can check your registration status, register to vote if needed , and request an absentee or mail in ballot online at VotesPA.com.  If your online application is accepted, you will get a mail-in ballot with instructions from your county election office. VotesPA.com is an official Pennsylvania government website.
Directly from County Election Office: You can also apply for a receive a mail-in ballot directly from your county election office. Contact your county election office for more information.
Note, if you plan to vote using an absentee or mail-in ballot in the 2020 GENERAL PRIMARY held on 04/28/2020, your completed application must be received in the county office by 5:00 PM on 04/21/2020. The deadline to return your voted absentee or mail-in ballot is 8:00 PM on 04/28/2020.

You must apply for an absentee or mail-in ballot for each election, unless you qualify for and request permanent status to vote by mail-in ballot. If you are added to the annual mail-in ballot request list you will receive an application to renew your mail-in ballot request each year. Once your application is approved, you will automatically receive ballots for the remainder of the year, and you do not need to submit an application for each election.

Wednesday, January 15, 2020

New Law Changes Rules for IRAs and 401(k)s

A new law, which became effective on January 1, 2020, makes major changes to the rules governing retirement plans. The new law is designed to increase the availability of retirement plans to workers and thus the amount of money that workers are saving in retirement accounts. But it also includes negative tax consequences that will be felt by most non-spouse beneficiaries who inherit an IRA or other retirement plan on the death of the account owner.
The Setting Every Community Up for Retirement Enhancement (SECURE) Act of 2019 changes the law governing retirement plans such as 401(k)s, traditional IRAs, and Roth IRAs. Notable changes made by the SECURE Act include:
Stretch IRAs. This change affects beneficiaries who inherit a retirement plan from an account owner who dies after 2019. Under the old pre-SECURE Act law, designated beneficiaries* who inherited an IRA, 401(k) or similar retirement plan were permitted to spread-out their withdrawals from the account over their own life expectancies. For younger beneficiaries, withdrawals (and income taxes) could thus be deferred for 30 or 40 years or more.  During this time the accounts could continue earning income on a tax-deferred basis with only yearly required minimum distributions (RMDs) being taxed. This was referred to as “stretching” the IRA.
Under the SECURE Act most non-spouse beneficiaries will be required to withdraw (and pay tax on) all of the money in the inherited account within 10 years of the death of the account owner.  This can create a major income tax problem for beneficiaries of larger retirement plan accounts. (Note that this new 10-year limit only applies to retirement accounts where the account owner dies after December 31, 2019. If you have inherited an IRA from an account owner who died in 2019 or earlier the old pre-SECURE Act rules continue to apply).
Exceptions to the 10-year rule apply if the designated beneficiary is an “eligible designated beneficiary.” This class includes:
  • the surviving spouse of the deceased account owner;
  • a surviving child of the deceased account owner if the child has not reached the age of majority (but only until the child reaches the age of majority – 18 in Pennsylvania);
  • disabled individuals within the meaning of IRC Section 72(m)(7);
  • chronically ill individuals within the meaning of IRC Section 7702B(c)(2), with some exceptions;
  • individuals who are not more than 10 years younger than the deceased account owner.
The change in the RMD rules can have significant estate planning implications.  Of particular concern are plans that use trusts as beneficiaries of retirement accounts. Those trust-based plans need to be reviewed and perhaps revised due to the new law.
Starting Age for RMD Requirement. Under the old law, account owners were required to begin taking minimum distributions from their IRAs beginning the year they reached age 70 ½. Under the new SECURE Act law, individuals who were younger than 70 ½ at the end of 2019 can now wait until age 72 to begin taking minimum distributions. Note: if you turned 70 ½ in 2019 the old law still applies and you still need to withdraw your RMD for 2019. Failure to do so will result in a 50% penalty of your RMD. On the other hand, if you were born on July 1, 1949, or later, you can delay taking RMD withdrawals until age 72.
Withdrawals for Birth and Adoption. The new law allows a withdrawal of up to $5,000 from a retirement account without an early withdrawal penalty in the event of the qualified birth of a child or an adoption of a child under age 18. The withdrawal must be made within one year after the qualifying event. If there are two parents and both have retirement plans, they may each be able to withdraw $5,000. These withdrawals will avoid the penalty for early withdrawal. Generally, the amounts an individual withdraws before reaching age 59½ are subject to an additional 10% early withdrawal tax unless an exception applies.
Employer Incentives. The new law includes increased credits and incentives to encourage small businesses to start a retirement plan and auto-enroll employees. It also makes it easier for small businesses to join multiple-employer plans.
Annuities. The new law removes roadblocks that made employers wary of including annuities in 401(k) plans by eliminating some of the fiduciary requirements used to vet companies and products before they can be included in a plan.
In light of the changes made by the SECURE Act, owners of IRAs and other retirement plan accounts may need to re-evaluate their estate plans. This is especially important if the retirement account is large or if it is payable to a trust. Such trusts may need to be revised to conform to the new rules. If IRAs are part of your estate plan consult with your elder law attorney to determine if you need to make changes.
The SECURE Act makes a number of other changes to the law governing IRAs and other retirement plans. Click here for the House Committee on Ways and Means section by section summary of the new law. The SECURE Act was included as Division O of the massive spending bill H.R. 1865.
* The term “designated beneficiary” means an individual designated as a beneficiary by the account holder (and certain trusts).

Friday, December 20, 2019

What is the Medicaid Transfer Penalty?

When you need long-term care at home or in a facility the costs can be staggering. That is why qualifying for government benefits through Medicaid is crucial to the financial, physical and emotional health of so many seniors and their families.
Unfortunately, qualifying for Medicaid long-term care benefits can be very difficult. One of the obstacles is the so-called “transfer penalty.” A period of ineligibility for benefits (transfer penalty) is imposed if an applicant has disposed of assets for less than fair market value during a five-year look-back period.
Imposition of a transfer penalty denies benefits for individuals who otherwise need and would qualify for Medicaid long term-care coverage. A denial can also effectively make an individual’s children liable for the costs of the needed care. See: Law Can Require Children to Pay Support for Aging Parents.
The transfer penalty applies when a transfer was made by the individual applying for Medicaid long-term care benefits, or their spouse, or someone else acting on their behalf. Unless the transfer is for some reason exempt, if an asset was transferred for less than fair consideration within the look-back period, then a period of ineligibility is imposed based on the uncompensated value of that transfer.
New Penalty Divisor for 2020
The length of the penalty period is calculated by taking the uncompensated value of the asset transfer and dividing it by the average private patient cost of nursing facility care in Pennsylvania at the time of application for benefits. The average cost to a private patient of nursing facility care is often referred to as the “private pay rate” or the “penalty divisor.”
The penalty divisor is revised each year as nursing facility care costs increase. As of January 1, 2020, the penalty divisor is set at $352.86 per day. This means that the PA Department of Human Services has calculated that the average monthly nursing facility private pay rate in Pennsylvania is $10,732.83 a month. [Please note that the penalty divisor is different in states other than Pennsylvania].
Uncompensated transfers made during the look-back period will be calculated at one day of ineligibility for every $352.86 transferred away. In Pennsylvania, a transfer penalty will be imposed when the value of transfers made in a month exceeds $500.
The rules are complicated. Seniors considering making gifts or other transfers of assets are well advised to consult with an experienced elder law attorney before completing the transaction.  If you live in Pennsylvania you can contact the elder law attorneys at Marshall, Parker and Weber for more information.

Thursday, December 12, 2019

Medicare Part B Premium and Deductible to Rise in 2020

Medicare is the vital healthcare program that covers most older Americans. It’s a complicated program. This article will take a look at one of its components – Medicare Part B and Part B’s premiums.   
Medicare Overview
Medicare is the federal health insurance program that covers people 65 and older and some younger adults with permanent disabilities and certain medical conditions. When Medicare was established in 1965 about half of American seniors had no health insurance. Today, virtually all Americans over age 65 have at least some health coverage through Medicare.
Medicare does not cover all health care services. For example, Medicare generally does not pay for long-term care services, regular eye exams and eyeglasses, hearing aids, or routine dental care.
Medicare coverage is divided into four parts – Part A, Part B, Part C (Medicare Advantage), and Part D.
Part A (Hospital Insurance) covers inpatient hospital care, some limited skilled nursing facility stays, home health care, and hospice care.
Part B covers physician services, outpatient hospital care, and some home health visits. It also covers laboratory and diagnostic tests, such as X-rays and blood work; durable medical equipment, such as wheelchairs and walkers; certain preventive services and screening tests, such as mammograms and prostate cancer screenings; outpatient physical, speech and occupational therapy; outpatient mental health care; and ambulance services.
Part D is prescription drug coverage.  
Part C (Medicare Advantage) allows beneficiaries to choose to receive their Part A, B, and D services through a private managed care insurance plan rather than original Medicare.  
Medicare Part B Premiums and Deductible
Over 90% of eligible Medicare beneficiaries enroll in Part B and over 70% use Part B services during a year. Part B generally pays 80% of the approved amount for covered services in excess of the annual deductible ($185 in 2019 and $198 in 2020). The beneficiary is liable for the remaining 20%. Many beneficiaries purchase a Medicare Supplement (Medigap) policy to cover that exposed 20%.
Part B coverage is not free. You pay a premium each month for your Part B coverage. If you get Social Security, Railroad Retirement Board, or Office of Personnel Management benefits, your Part B premium is deducted from your benefit payment. If you don’t get these benefit payments, you’ll get a bill. 
The Centers for Medicare and Medicaid Services (CMS) has recently announced that the standard monthly Part B premium for 2020 will be $144.60. This is an increase of $9.10 over the 2019 amount. Some beneficiaries will pay substantially more while those with low incomes and limited resources can get help paying the premiums through several Medicare Savings Programs.
Your monthly Part B premium will be increased if you are subject to penalty for late enrollment or reenrollment. Premiums are also increased for individuals with higher incomes. This is referred to as your Income Related Monthly Adjustment Amount (IRMAA). The Government uses the taxpayer’s recent (2018) federal income tax return to determine if they are subject to an IRMAA premium adjustment. The calculation is based on your adjusted gross income plus tax-exempt interest income. This is referred to as your modified adjusted gross income (MAGI)Here are the IRMAA adjusted Part B monthly premium amounts for 2020:
If your MAGI income in 2018 was (you will pay in 2020)
You pay each month (in 2020)
File as Single on tax return
File joint tax return
File married separate tax return
$87,000 or less
$174,000 or less
$87,000 or less
above $87,000 up to $109,000
above $174,000 up to $218,000
Not applicable
above $109,000 up to $136,000
above $218,000 up to $272,000
Not applicable
above $136,000 up to $163,000
above $272,000 up to $326,000
Not applicable
above $163,000 up to
above $326,000 up to
above $87,000 up to
$499.999.99                $799,999.99                         $412,999.99

$500,000 and above              $750,000 and above             $413,000 and above                             $491.60                           
Filing Single rates also apply to Head of Household and Qualifying Widow filings.
Special rules may apply to lower your IRMAA premium is some situations where your income has come down due to changed circumstances.   Click here for more information.
Note: If you have joined a Medicare Advantage Part C Plan, you still have Medicare. You'll get your Medicare Part A (Hospital Insurance) and Medicare Part B (Medical Insurance), and perhaps Medicare Part D (Drug) coverage from the Medicare Advantage Plan and not Original Medicare. Medicare Advantage Plans have different rules and charge different out-of-pocket costs. Those rules and costs change each year.
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