Monday, June 23, 2008

Did the Seniors You Know Get Their Tax Stimulus?

Category: Elder Law, Tax Law and Planning

As many of us who work with seniors blogged about when the tax stimulus package came to pass , while great in theory, the need to file a tax return to get the stimulus payment had a big hole from an action plan standpoint. Many seniors don't need to file tax returns, and haven't done so in years. This small fact is easy to forget about because for working folks the tax stimulus payment came as a matter of course from filing the return.

The result? reports that: "About 156,800 New Jersey retirees and disabled veterans, including about 1,300 in Atlantic City alone, have not yet submitted paperwork to claim their stimulus payments, according to the IRS. The IRS is asking the public for help in reaching this population with information on how to file. While 74 percent of eligible members of the group have filed, a substantial minority have yet to be contacted. The IRS this week announced a new summer campaign to reach them."

So, for those who have seniors as neighbors, clients, congregation members, or otherwise, see if they got their tax stimulus payment. It is up t0 $600 for singles and $1200 for couples. For details see prior posting: Economic Stimulus Package Now Law.

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Sunday, June 22, 2008

Hybrid Long Term Care Insurance

Category: Elder Law, Financial Planning

The appeal of a hybrid car is more than greater bang for your buck - it is about making an investment you feel good about. When it comes to Long Term Care insurance, the only people who seem to feel good about the investment are those who have been caregivers, and have seen the devastating costs of spending every single penny of a person's savings (or at least down to the few last pennies) and it still not being enough to cover the costs of care. However, with teh US's aging population, many more families are going to find themselves in the position of caring for loved ones, and asking the question of: Where does the money come from?

Long Term Care Insurance may be a solution, but in many ways it has a bad reputation. The premiums seem very expensive, especially as the people looking at it tend to have just retired and are on a fixed income. Unscrupulous people have taken advantage of seniors with the product, tarring all long term care insurance professionals with the same suspicious brush. Another common thought is that if you never get sick, you just threw a lot of money down the drain.

A possible solution I was recently introduced to? Hybrid Long Term Care Insurance. The basic idea is that you take a lump sum of dollars and purchase Long Term Care Insurance. The dollars buy several things:

  1. A total pot of greater dollars available to pay for long term care (a $100k investment might buy you $250k of long term care, depending on your age)
  2. A death benefit greater then what you paid in that is "returned" to you heirs if you die and don't use the policy (A $100k investment might buy $200k in death benefity, depending on your age)
  3. The ability to withdraw the lump sum you paid in at some point in the future if you need it (you get your $100k back)
  4. A lump sum payment is a fixed investment - no need to pay ongoing premiums from your fixed income (you pay and "forget" it)

The cost? The loss of use of the lump sum and the growth on the lump sum unless you use the long term care benefits or the life insurance benefits.

The examined these hybrid polices in Hybrid Long-Term Care Might Be Right for You and highlighted some points to consider:

  • You have significant liquid assets available. With a single premium payment ranging from $50,000 to $100,000, a hybrid policy is only for those with significant cash available that can be reallocated.
  • You understand the risk to your portfolio. Once you have accepted that you may need care someday and that this care may be very expensive, the next step is to take a good look at what that will mean to your retirement portfolio.
  • A stand-alone, long-term care policy is not an option. If you are not interested in paying premiums indefinitely on a policy you may never use, then the hybrid product -- with a death benefit built in -- may be an option.
  • You have been planning to self-insure. If you haven't already recognized the financial risk of the cost of long-term care, you are not ready for this product.
  • The ability to get something back for your premiums and retaining control of your money is important to you. You will, at minimum, get the use of your full premium either through long-term care benefits, a death benefit or by requesting a return of premium.
  • Simplicity is important. While the long-term care portion of the policy contains the same framework of coverage as a stand-alone policy, there are fewer bells and whistles to add -- or to complicate the deal.

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Thursday, June 19, 2008

What's the Tax Plan Mr. President-in-Waiting

Category: Estate and Inheritance Tax, Tax Law and Planning

Now that the candidates are known, what is that next question? What they propose to do with your taxes of course. A quick summary rundown courtesy of National Center for Policy Analysis - YOUR TAX BILL: HOW MCCAIN, OBAMA DIFFER:

Income taxes:

  • McCain wants to make permanent the current federal income-tax rates.

  • McCain opposes Sen. Obama's plan to lift the earnings cap on the Social Security payroll tax, saying such a move would be bad news for the economy.

  • Obama wants to raise the top ordinary income-tax rate from 35 percent to 39.6 percent on families making more than $250,000 a year.

  • Obama's plan includes increased taxes not only on ordinary income such as salary but also on capital gains and most corporate dividends.

  • Obama also plans to impose higher Social Security taxes on workers making over $250,000.

Investment income:

  • McCain wants to keep the current structure of tax rates on capital gains and

  • Obama wants to raise the long-term capital-gains rate for families making more than $250,000 from its current rate of 15 percent to around 20 percent, or even higher.

Estate taxes:

  • Neither candidate wants to kill the estate tax permanently, as President
    Bush has proposed.

  • Under current law, the federal estate-tax exemption this year is $2 million, and the top rate is 45 percent; in 2009 that exclusion is set to rise to $3.5 million, with the rate remaining at 45 percent.

  • McCain proposes raising the exclusion to $5 million and cutting the tax rate to 15 percent.

  • Obama proposes a $3.5 million exclusion while keeping the top rate at 45 percent.


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Friday, June 06, 2008

Gas Costs Bringing Your Business Down

Category: Business Law and Planning

The skyrocketing costs of gas are hitting all of us. Business owners are especially concerned as to how this will hit their bottom line, both directly in the costs of materials and shipping, and indirectly, as employees look to balance the cost of getting to work against their paycheck.

It appears that the New Jersey Assembly is trying to help. NJ Biz reports that Bill Would Allow Gas to be Sold at Cost or Below:

"A bill designed to lower gas prices by removing the state''s gasoline "price floor" was approved by an Assembly panel yesterday. "

"Service stations with convenience stores or auto-repair shops make the most of their revenue from those more profitable services, not the sale of gasoline, [Assembly Person] Burzichelli said. Allowing gasoline to be priced below cost would allow stations to lower prices to attract more customers for those services while simultaneously providing a much-needed price break at the pump, he said.

New Jersey has required gas station owners to price their fuel above cost since 1938, when many states enacted laws to protect consumers from gas companies that would undercut competitors in sparse marketplaces to gain a monopoly on fuel sales, Burzichelli said."

Other employers are looking to take their own action to control the indirect costs of gas prices. Some ideas and concerns:

  • Provide gas allowance - note however this must be included in the employees income each year
  • Foster telecommuting - make sure that you have an appropriate security policy in place in your employment agreement, employee handbook, or other policy regarding remote access of computers. You may also want to invest in a program to be able to track an employee's productivity while out of the office
    • Adopt a flex workweek of 4 day / 10 hours, or 9 days/9 hours every 2 weeks - while you need to make sure your critical daily activities are covered, this may allow you to get all the work done for the week in a shorter period, and be a cost free "bonus" to the employees who not only have to commute less days, but get an extra day to address their out of office obligations (perhaps making for more productive employees)


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    Monday, June 02, 2008

    Assisted Living Company Sued for Forcing Out Elderly Residents

    Category: Elder Law,

    From NJ, a report that the New Jersey Public Advocate has filed papers against Assisted Living Concepts Inc., operating eight assisted-living facilities in southern New Jersey, for "allegedly forcing out elderly residents once they have run out of savings and qualify for Medicaid."

    In the Article Assisted-Living Co. Charged with Forcing Out Residents, Scott Goldstein reports that "The Public Advocate is investigating allegations that ALC is involuntarily discharging elderly residents, or threatening to discharge them once they have exhausted all of their own funds, or "spent down" their life savings, and therefore qualifies for Medicaid payments to cover the cost of their assisted-living apartment. "

    The company under investigation "owns and operates eight assisted living facilities in New Jersey: Baker House in Vineland, Goldfinch House in Bridgeton and Maurice House in Millville, all in Cumberland County; Lindsay House in Pennsville, Salem County; Mey House in Egg Harbor Township, Atlantic County; Chapin House in Rio Grande, Cape May County; Granville House in Burlington, Burlington County; and Post House in Glassboro, Gloucester County."

    Many nursing homes and assisted living facilities have a "key-money" requirement that essentially says that a person must spend $X of their own money before the facility will accept Medicaid for the costs of their care. So if a facility has a 12 month "key-money" requirement, and costs $5000 a month, then they will only accept a person who has at least $60,000 to pay for their care. After it is spent, if the person then qualifies for Medicaid, New Jersey will pay the cost of care, usually at a rate below the private pay rate. Here, the New Jersey Public Advocate appears to be alleging that ALC took the "key-money" and then maneuvered to have residents discharged when Medicaid took over payments.


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