Sunday, March 29, 2015

Elimination of Net Worth Makes More Veterans Eligible for Reduced Cost Health Care

VA Eliminates Net Worth as Health Care Eligibility Factor
The Department of Veterans Affairs has announced that it is updating the way it determines eligibility for VA health care benefits, a change that will result in more Veterans having access to the health care benefits.
According to a VA news release dated March 17, 2015, VA has now eliminated the use of net worth as a determining factor for both health care programs and co-payment responsibilities. 
Until now, some low income but higher net worth veterans were allowed to receive care at VA hospitals and clinics but only with burden of co-payments that ranged from $15 per visit for primary care to $50 per visit for specialty care. Co-payments also have been applied to in-patient care. 
As a result of the change, instead of combining the sum of Veterans’ income with their assets to determine eligibility for medical care and co-payment obligations, VA will now only consider a Veteran’s gross household income and deductible expenses from the previous year. Elimination of the consideration of net worth for VA health care enrollment means that certain lower-income, non-service-connected Veterans will have less out-of- pocket costs. Over a 5-year period, it is estimated that 190,000 Veterans will become eligible for reduced costs of their health care services.
Last year VA eliminated the annual requirement for updated financial information. VA now uses information from the Internal Revenue Service and Social Security Administration to automatically match individual Veterans’ income information which reduces the burden on Veterans to keep their healthcare eligibility up to date.
The net worth change is part of an ongoing effort to streamline the administrative burden on veterans applying for services and benefits. 
VA will continue to use the combined net-worth/income threshold in the determination of eligibility for other benefits, such as in considering applications for pensions.
Veterans with low incomes who were prioritized into the lowest tiers of eligibility for care as a result of their net worth/income calculation — Priority Groups 7 and 8 — should receive notifications that they may now be eligible for enrollment in a higher priority group based on their gross income. 
Veterans with questions about the change can contact their local Veterans Affairs office. 

Friday, March 27, 2015

Bills Would Authorize ABLE Accounts in Pennsylvania

Two separate bills have been introduced in the Pennsylvania Legislature to authorize the use of ABLE Accounts by Pennsylvania residents. House Bill 444 is sponsored by Republican Representative Todd Stephens. House Bill 583 is sponsored by Democrat Dan Miller.  
ABLE accounts are a new form of tax free savings account for individuals who became severely disabled before they reached age 26. The idea is to allow those qualified to have more savings than previously allowed without jeopardizing their public benefits eligibility. 
The extra savings in the account can be used as needed to pay for a broad range of expenses like education and housing costs. For more information on ABLE accounts see my earlier postings:
Individuals who think ABLE accounts should be available to Pennsylvania residents should contact their representatives and express support for the above legislation. You can find out how to contact your representatives in the state House and Senate here.  
Representative Stephens prepared the following Memorandum explaining his bill and seeking co-sponsors
February 4, 2015 03:34 PM
All House members
Tax Free Savings Accounts to Help People with Disabilities

I will be introducing legislation to ease the financial stresses faced by individuals with disabilities by creating a tax-free savings account in the Commonwealth that may be utilized to cover qualified expenses such as education, housing and transportation. Congress recently passed, and the President signed, a law providing for federal tax benefits for these accounts and allowing states to provide for similar tax benefits.

These funds will supplement benefits provided to individuals with disabilities and provide a mechanism for their families to prepare for their long term care.  The legislation allows for an account to be established that is similar to a PA 529 account.  The funds that are contributed to this new account may only be utilized for qualified disability expenses.

Qualified disability expenses means any expense related to the eligible individual’s disability which are made for the benefit of the individual and include the following expenses:

• Education;
• Housing;
• Transportation;
• Employment training and support;
• Health, prevention and wellness;
• Financial Management and administrative services;
• Legal fees;
• Expenses for oversight and monitoring;
• Funeral and Burial expenses; and
• Other expenses approved through regulations.

This legislation will provide an additional tool to those who are planning for the future of an individual with a disability.

Please join me in co-sponsoring this bill.

And here is Representative Miller’s Co-sponsorship Memorandum
December 12, 2014 03:24 PM
All House members
Creating disability tax advantaged savings accounts per the federal ABLE Act

In the near future, we plan to introduce legislation that would enact tax advantaged savings accounts for individuals with a disability per the soon-to-be-finalized federal Achieving a Better Life Experience (ABLE) Act. These ABLE Accounts would be similar in design and regulation to our existing 529 college savings accounts, but will be a game changer to those families who are looking to support their loved ones with a disability as they would supplement and not supplant existing assistance.

The ABLE Act recently passed the House by a 404-17 vote, with all of our Pennsylvanian Congressional delegation either voting for it or co-sponsoring it. It has 75 bipartisan Senate cosponsors- including Senator Toomey and the bill’s author Senator Casey. All signs indicate that it will be on its way to the President’s desk soon and signed into law. Given its significance and need we must move forward as soon as possible to allow our citizens to take advantage of this program.

Too many Pennsylvanian families face severe and arbitrary hurdles when it comes to supporting their loved ones with disabilities. An overwhelming bipartisan majority in DC has realized that we need to provide them with more tools to do so, and in a manner that does not endanger Medicaid and SSI benefits. These supports are often insufficient to ensure dignity, safety, and opportunity.

At the end of last session, a resolution I sponsored urging Congress to pass the ABLE Act unanimously passed our Human Services Committee. I hope you will join us in this new session in bringing this important piece of legislation to reality.

Tuesday, March 24, 2015

The Big 4 Legal Documents for Older Adults

Listed below are four important legal documents that older adults should have. #1, #2 and #3 are needed by all; #4 is optional depending on your specific circumstances.
1. A Power of Attorney for Financial Matters, where you name a trusted person to manage financial affairs for you in the event of your incapacity and in accordance with your directions.
2. A Durable Power of Attorney for Health Care, where you name a trusted person to make medical treatment decisions for you if you become incapacitated. This document should be combined with communicating with and educating the person named and your family about your medical treatment desires, and your values and views.
3. A Will, where you name your heirs (those who will receive your assets when you die) and your executor (the person who will manage and distribute your assets when you die).
4. A Trust, where you name a trustee to manage your trust assets while you are living and manage and distribute the assets when you die. Special kinds of trusts may also be used to protect your assets in the event that you (or your spouse) should ever require long term care either at home or in a nursing facility.
Here are links to more information on each of these important legal documents.

Tuesday, March 17, 2015

IRS Issues ABLE Act Clarifications

States Don’t have to Wait for IRS Regulations to Create ABLE Programs
Last December saw the enactment of the Achieving a Better Life Experience Act of 2014 (ABLE Act). The Act creates Section 529A of the Internal Revenue Code (26 U.S. Code §529A) which authorizes a new form of tax free savings account for individuals who became severely disabled before they reached age 26.
Earnings on an ABLE account will not be subject to federal income tax, and more importantly, the funds in the account will not disqualify the owner from continued benefits under the Supplemental Security Income (SSI) and Medicaid programs. Money can be saved for future expenses and needs without jeopardizing the owner’s SSI and Medicaid eligibility.
ABLE accounts are only available to residents of a state which has either established its own qualified ABLE program or entered into a contract with another state to provide its residents with access to a qualified ABLE program.
It will take a while for the IRS to develop regulations implementing the ABLE Act. However, several states are already moving forward on legislation that would authorize their residents to establish ABLE accounts this year (2015). ABLE accounts in those states may be in operation before the IRS regulations have been issued.
The IRS does not want to discourage states from moving forward on legislation creating their ABLE programs. If states wait for the IRS to issue regulations it could delay the ability of the families of disabled individuals or others to begin to fund ABLE accounts for those disabled individuals. Therefore, the IRS has issued a notice to let states know that once regulations are issued, it will allow states that have already established programs sufficient time to change their programs to conform to the federal rules.
In addition, the IRS has provided states with two clarifications regarding how it intends to implement ABLE. These are two important ways that ABLE accounts will differ from the rules governing Section 529 education accounts: 
  • The owner of an ABLE account is the designated beneficiary of the account;
  • Where the designated beneficiary is not the person with signature authority over that account, the person with signature authority over the account of the designated beneficiary may neither have nor acquire any beneficial interest in the account and must administer that account for the benefit of the designated beneficiary of that account.
The IRS Notice is available here:
Here is a link to my December 2014 blog post which provides a lot of additional information on ABLE accounts:

Friday, March 13, 2015

Use a “No-contest” Clause to Avoid Fights over your Estate

One of the fundamental goals of estate planning is to limit the potential for disputes and hard feelings among your heirs after your death. But so-called “will contests” (and “trust contests”) seem to be getting more frequent these days.

Disputes over the post-mortem disposition of your property can arise for many reasons. Perhaps your children just don’t get along. Or you left more to one child than another. Or there is conflict between your spouse and your children from a prior marriage. Or a family member feels that they were denied “their rightful inheritance” because you gave part of your estate to a friend or a charity.

I recall representing an estate where the decedent was gay, and his siblings were very upset that he left a large bequest to his life partner. The siblings lost, but not until after a court battle.

Our increasing longevity may feed into the growing prevalence of will contests. Age related losses in mental acuity (“lack of capacity”) and the potential outsized influence of a child who serves as primary caregiver (“undue influence”) are factors in many will contests.

How Does a No-contest Clause Work?

One way to limit the potential for a will (or trust) contest is to include a clause in your estate planning documents that says that an heir who challenges your Will or Trust and loses gets nothing. This clause is commonly called a “no-contest” or “forfeiture” provision, although lawyers sometimes refer to it as an in terrorem clause.

Most (but not all) states permit you to include a no-contest provision in your Will. Pennsylvania has a statute allowing it: See 20 Pa.C.S. §2521.

Pennsylvania law, like that of many states, specifies that forfeiture will not take place if there was “probable cause” for the will contest. While there is no settled definition of what constitutes probable cause, the term basically means that there was a good reason for the contest. Probable cause justification for a contest may be found even in situations where the Will is ultimately upheld.

Don’t Totally Disinherit.

A no-contest clause can protect your estate from vexatious lawsuits from a disappointed heir. But it only works if the heir has something to lose.  If an heir is completely disinherited, there is nothing to be forfeited. So, if you use a no contest provision you will want to leave your disfavored heirs enough money or property to make them hesitate before seeking to invalidate your Will. 

Other Strategies to Avoid a Will Contest.

A no-contest clause is just one of the strategies that can be used to avoid litigation over your estate. Your lawyer may recommend steps to limit the potential for lack of capacity and undue influence claims – e.g. doctor’s exams, videotaped wills and excluding children from estate planning meetings. 

Be sure to tell your lawyer if you think that there is a chance that someone may dispute the dispositions you intend to make in your Will or Trust. Together you can come up with the best ways to ensure that your estate plan does not include a legacy of anger and litigation.