Thursday, October 30, 2014

Social Security Retirement and SSI Payments to Increase 1.7%

The Social Security Administration has announced that payments to retired and disabled beneficiaries will increase by 1.7% in 2015. This inflation adjustment is intended to offset the higher costs-of-living encountered by beneficiaries. The increase is effective in January 2015.
Social Security is the major source of income for most of the elderly. The Social Security Administration reports that:
  •    Nine out of ten individuals age 65 and older receive Social Security benefits.
  •    Social Security benefits represent about 38% of the income of the elderly.
  •    Among elderly Social Security beneficiaries, 52% of married couples and 74% of unmarried persons receive 50% or more of their income from Social Security.
  •    Among elderly Social Security beneficiaries, 22% of married couples and about 47% of unmarried persons rely on Social Security for 90% or more of their income. 

Social Security Benefits Increase
The estimated average Social Security benefit payable in 2015 to all retired workers will be $1,328 (up $22 from 2014). The estimated average for an aged couple where both are receiving benefits will be $2,176 (up $36). 
The maximum Social Security benefit for a worker retiring at full retirement age will be $2,663. (Individual benefits vary with factors such as the worker’s lifetime earnings record and age at time of claiming).   
SSI Benefits
With this year's cost of living adjustment the maximum federal SSI benefit for an individual will rise from $721 per month to $733. The maximum benefit for a couple on SSI will increase from $1,082 per month to $1,100.
Pennsylvania and many other states add to SSI benefits for their residents so that actual payments can exceed the federal maximums. The monthly payment amount is reduced by subtracting the recipient’s monthly countable income.
People who receive SSI usually qualify automatically for Medicaid benefits.
Related Reading
Social Security Changes (Social Security Administration Press Release)

Wednesday, October 29, 2014

Pooled Trust Law Updated

Individuals with disabilities often rely on public benefits from programs like Supplemental Security Income (SSI) and Medicaid to meet their basic needs. These programs require beneficiaries to have limited financial resources. The receipt of a small inheritance or the settlement of a law suit can cost the individual his or her benefits.
What is a Pooled Trust?
A pooled trust is a way for individuals with disabilities to maintain their public benefits while setting aside some funds with which to pay for their special needs. The trust is managed by a nonprofit organization that receives assets from multiple beneficiaries, maintaining a separate account for each, but pooling the accounts for purposes of investment and management.
Funds such as an otherwise disqualifying inheritance or settlement can be transferred to a pooled trust account for the disabled person. Accounts in a pooled trust may be established by the parent, grandparent or legal guardian of the individual with a disability, by the individual with a disability or by a court.
Congress has favored the use of pooled trusts since 1993 when it exempted them from the normal Medicaid long-term care resource and transfer restrictions. (Note that funds placed in a pooled trust account established for someone age 65 or older may be subject to a transfer penalty). The federal law governing pooled trusts is set out in 42 U.S.C. §1396p(d)(4)(C)
Federal law provides that to the extent that amounts are remaining in a pooled trust beneficiary’s account at death the balance of the account may be retained by the trust and used to benefit its other beneficiaries. Any amounts that are not retained by the trust must be paid to reimburse the State up to the total amount of medical assistance it paid on behalf of the beneficiary.
Act 42: Pennsylvania Attempts to Limit Pooled Trusts
In Act 42 of 2005, Pennsylvania enacted a number of questionable restrictions on the operation of pooled trusts. Included in Section 1414 of Act 42 (62 Pa. Stat. Ann. §1414) was a provision that a pooled trust could retain no more than 50% of the amount remaining in the account of a deceased beneficiary. This was contrary to the federal law which allows the trust to retain 100%.
This and several of the other limitations in Act 42 were later struck down in Federal Court.  See, Lewis v. Alexander, (685 F. 3d 325, 3rd Cir., June 20, 2012).  See my earlier posting “Federal Court voids Restrictions on Pooled Trusts” for more on the Lewis case.
Act 186 of 2014
Senate Bill 428 was initially introduced to make a slight change in the wording of the Pennsylvania statute governing pooled trusts. (See the Senate Co-sponsorship Memorandum). As initially introduced the bill would have re-codified the mandatory 50% state reimbursement requirement that had been already been thrown out by the Federal court. 
Aghast elder law attorneys noticed the bill and informed its sponsors that their legislative proposal would re-enact a provision that was in violation of federal Medicaid law. Eventually, after much discussion (which included legislative consultation with federal Medicaid authorities) the sponsors agreed and modified the bill to delete the illegal state reimbursement provision.  
SB 428 as amended was passed by the legislature and has now been signed into law by Governor Corbett as Act 186 of 2014. Act 186 does not actually change the enforceable law. It just cleans up Pennsylvania law on pooled trusts by deleting the 50% state reimbursement requirement that has been thrown out by the Federal Court.
Regarding state reimbursement, Pennsylvania law will now provide that “any money remaining in a beneficiary’s account upon the death of the beneficiary that is not retained by the trust will be paid to the Commonwealth, up to the total amount of Medical Assistance paid on behalf of the beneficiaries.”  
The Bottom Line
Pooled Trusts represent an important planning option for disabled individuals and those who want to help provide for them. For more information on whether a pooled trust is right for your situation Pennsylvania residents should talk with a knowledgeable elder law attorney like those at Marshall, Parker and Weber (1-800-401-4552) or contact one of Pennsylvania’s pooled trusts such as Achieva Family Trust (1-888-272-7229).

Monday, October 27, 2014

Tax Rebate Income Guidelines Increased for Social Security Recipients

The Pennsylvania Property Tax/Rent Rebate program provides rebates for lower income homeowners and renters. An annual rebate of up to $650 is available to Pennsylvania residents who are age 65 and older; widows and widowers age 50 and older; and people with disabilities age 18 and older.

Applicants must meet strict income guidelines to qualify for a rebate. The income eligibility limits are $35,000 for homeowners and $15,000 for renters. One half of the Social Security income is included in calculating income. 

Because one-half of Social Security income is included in calculating eligibility, a Social Security cost of living adjustment (COLA) can put people over the limit. (Social Security has recently announced a 1.7% increase for 2015).

A new law (House Bill 1067 - Act 156) provides some temporary relief from ineligibility due to COLA increases. The Act provides that persons who, as of December 31, 2012, are eligible for the property tax or rent rebate shall remain eligible if the household income limit is exceeded due solely to a Social Security cost-of-living adjustment.

Any homeowner who receives Social Security, was paid a property tax rebate in 2013 for claim year 2012 and had annual income up to $35,298 last year is encouraged to apply for a rebate for claim year 2013.
The deadline to apply for a rebate on property taxes or rent paid in 2013 is Dec. 31, 2014.

Renters who receive Social Security, were paid a rent rebate in 2013 for claim year 2012 and had annual incomes last year up to $15,128 are also encouraged to apply.

The Department of Revenue is automatically reviewing previously denied claim year 2013 applications where the rebate was denied for income in excess of $35,000 for homeowners and $15,000 for renters. In cases where the overage is due solely to Social Security COLAs, the department will reopen, process and pay these claims.

This COLA increase disregard expires on December 31, 2016.

More information is available through the PA Department of Revenue website: or by calling 1-888-222-9190. The Department’s press release regarding the new law is available here.

Sunday, October 26, 2014

Medicaid Spousal Impoverishment Standards for 2015

The Federal Government has published the consumer price index for all urban consumers, all items, U.S. city average (the CPI-U) for the month of September 2014. Using these figures it is possible to project Medicaid's 2015 Community Spouse minimum and maximum resource allowance and maximum income allowance for 2015.

What are Community Spouse Resource and Income Allowances?

In general, when your spouse is in a nursing home or needs assistance with home care under a Medicaid Waiver program (like Pennsylvania’s Aging Waiver program) he or she will not qualify for Medicaid benefits until your combined financial resources are reduced to a certain level. That permitted level of so-called “available resources” varies depending on your financial circumstances.

For nursing facility residents, the general rule is that the community spouse can keep ½ of the amount of available resources that were owned by the couple on the date of admission to the nursing facility. However, this standard protected “Community Spouse Resource Allowance” is subject to a ceiling and a floor. The ceiling and floor amounts for 2015 are set out below.

In addition to being allowed to keep the resource allowance, the community spouse is also entitled to have a certain level of income called the Monthly Maintenance Needs Allowance. This income allowance is also subject to a ceiling and a floor. If the community spouse does not have the required level of income, that spouse may be allowed to keep some of the institutional spouse’s income. If the income diverted from the institutionalized spouse is still insufficient, the community spouse may be able to keep additional resources.

What are the Resource and Income Allowances for 2015?

These community spouse resource and income allowances are adjusted annually. Although the new figures have not yet been announced by the Centers for Medicare and Medicaid Services (CMS), by law they are based on the consumer price index for all urban consumers published by the Bureau of Labor Statistics (the CPI-U) for September of the prior year which has now been released.

The Medicaid law established the initial community spouse resource allowance at levels of $12,000 minimum and $60,000 maximum for 1989 based on the CPI-U for September 1988. The initial maximum income allowance was set at $1,500. The law provides that these levels be increased by the same percentage as the percentage increase in the CPI-U between September 1988 and the September before the calendar year involved.

The CPI-U for September 1988 was 119.8. The CPI-U for September 2014 was 238.031. This means that the CPI-U has increased 98.6903% over the period. For calculation purposes, I’ve rounded this percentage to 98.7%.

Because the September CPI-U has now been released, I can now project that effective January 1, 2015, the new standard community spouse allowances should be as follows:

  • · Minimum Community Spouse Resource Allowance = $23,844.
  • · Maximum Community Spouse Resource Allowance = $119,220.*
  • · Maximum Community Spouse Monthly Income Allowance = $2,980.50.

Note: The current Minimum Monthly Income Allowance remains at $1,966.25 – it will be adjusted on July 1, 2015. The income allowances are higher for residents of Hawaii and Alaska.

Readers should understand that the Community Spouse Resource Allowance is a starting point for planning. A community spouse can often protect resources in excess of his or her resource allowance through Medicaid planning techniques such as the purchase of a Medicaid qualified annuity. (Be sure to consult an experienced elder law attorney before purchasing an annuity for purposes of qualification for Medicaid benefits.)

The allowances discussed in this post can be calculated from the September CPI-U. But they have not yet been formally announced by the Centers for Medicare and Medicaid Services (CMS). It is possible that CMS could ultimately announce figures that are slightly different than those above. But my projections have been correct in the past and I have a high degree of confidence in them.

Thanks to my friend and fellow elder law attorney Robert Clofine of York, Pennsylvania, for being first to calculate these 2015 inflation adjusted figures.

Further Information:

Spousal Impoverishment (from Medicaid.Gov website).

The law governing these protected amounts is found at 42 U.S.C. §1396 – 5.

* To illustrate, here is how I did the calculation for the Maximum CSRA:

238.031/119.8= 1.9869031

Round 1.9869 to 3 decimal places = 1.987

1.987 X $60,000 = $119,220 (the new maximum CSRA for 2015)