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The Scoop on Medicaid Block Grants

Clients frequently ask me what effect repealing the Affordable Care Act (ACA) will have on Medicaid. The answer depends on which version you read (the two leading contenders: House Speaker Paul Ryan’s plan or Health and Human Secretary Tom Price’s).

Most of the proposals have one element in common: a conversion to Medicaid block grants.

What does this mean?

Will it “cut out fraud, waste and abuse,” as President Trump’s adviser Kellyanne Conway suggests?

Or would 43,000 people die annually as a result of the ACA repeal, as a New England Journal of Medicine study recently revealed?

We all hope it is not the latter, but this all remains to be seen.

Medicaid explained

First, let’s back up and review Medicaid. Medicaid is a medical welfare program, also referred to as Title XIX, which provides health care for 75 million people. There is federal enacting legislation, and the states implement the program. The program funding comes in part from the federal government and the balance from states.

One exception is Medicaid expansion under the ACA (which Connecticut adopted): the feds pay 100%. There is much confusion these days about “entitlement programs,” but Medicaid is exactly that: anyone who qualifies financially is eligible. There is no cap on the number of beneficiaries or federal funding.

Medicaid block grants

Medicaid block grants would completely alter the existing methodology by capping federal expenditures to the states. Consequently, it is, as you’d expect, all about the fiscal savings.

Based on what I have read, there is no indication that this conversion will cut fraud, waste and abuse because it is an across-the-board reduction of federal dollars. The result is that states would have greater flexibility in administering the program, potentially deciding who is entitled to receive benefits.

I can’t opine on whether people will die as a result, but there is no question that the Medicaid population (currently 25% of the population) will plummet.

The good news is that the core tenet of Medicaid—providing medical care to the disabled and elderly—should not change significantly. The federal safeguards that are in place now for these sectors of the population should remain, meaning that states will be preempted by federal law if they try to reduce benefits. Nursing home residents on Medicaid (more than 70% in Connecticut) should not be affected as a result. Those individuals receiving health care through the Affordable Care Act and Medicaid expansion, however, would likely account for the bulk of the purported savings with Medicaid block grants, since most plans provide for either an elimination or a significant reduction.

The details of exactly how Medicaid block grants will play out is uncertain. Until more is known, I am offering my own educated speculation. When the muddied waters clear, you will hear it from us first!

#ACA #affordablecareact #blockgrants #medicaid

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Estate Planning News

Take a look at our Winter 2017 Smart Planner Newsletter.

How does the Trump presidency effect taxes?

Does paying family members for care affect Medicaid eligibility?

And nail polish life hacks!

All this and more! Read all about it here:

#estateplanning #lifehacks #connecticut #medicaid 

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Possible Estate Tax Cut in Connecticut!

By Paul T. Czepiga

I just read a lot of detail on the Governor’s proposed budget that he released this week. In the midst of the drastic news about expenditure cut, there was actually some good news.

The Governor is proposing to increase Connecticut’s gift tax and estate tax exemption to be at the same level as the federal government’s.

Currently the Connecticut exemption amount is $2.0 million and the federal exemption is $5.49 million. The increase in Connecticut’s exemption, if it occurs, will be phased in, beginning with gifts made and people dying after January 1, 2018.

-For 2018, the exemption is increased to $2.6 million
-For 2019 the exemption is increased further to $3.6 million
-For 2020 and beyond the exemption will be equal to the federal exemption
-The Connecticut tax rates will begin, for those years, at 7.2%, 7.8%, and 10% and will be capped, in all years at 12%.

The federal exemption is now $5.49 million, but is increased annually for the costs of inflation. The increases in the federal exemption have been relatively modest thus far. For example, from 2016 to 2017, the federal exemption went from $5.45 million to $5.49 million, an increase of 7/10ths of 1%.

Well, well, well. Who would’ve thunk? Is this a recognition that many of Connecticut’s citizens are migrating out to tax free havens like Florida and other estate tax-free states? And remember, too, that Connecticut is the only state in the country with a gift tax—not necessarily anything to brag about!

So, will the Governor’s proposal last long enough to become law in tough budget times?

The estimated revenue loss is $-0- for 2018, but $20.1 million for 2019. Will the legislature go along with a $20.1 million tax loss when many constituencies will be screaming about cuts to causes near and dear to them?

Stay tuned. It is likely to be a rough ride!

#connecticut #estatetax #tax #gift #budget #estateplanning 

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With all the snow and temperature fluctuations, icy patches are popping up everywhere. Be careful out there! Here are some great tips on safely walking on slippery surfaces. Our favorite? Walk like a penguin! It makes sense...

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Signing a Nursing Home Agreement

Can you be sued by a nursing home for signing an agreement as a responsible party? The answer is yes. In this video, Carmine goes over three scenarios to help you prepare or protect yourself in this situation.

#connecticut #nursinghome #responsibleparty #elderlaw 

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How to Leave Money to an Irresponsible Child: Inheritance and Financial Responsibility

As parents, we all want what’s best for our children, but we also realize that they don’t always know what’s best for them.

When considering how your financial assets will be distributed upon your death, assessing your children’s level of financial responsibility is a critical component of making effective choices and creating a solution for a lasting legacy.

The truth is, developing good money management skills can take an entire lifetime.

There’s so much to learn about not only the intricacies of complex financial affairs, but also about personal strengths and weaknesses when it comes to investing, spending, and saving.

Financial maturity is something that must be earned. This is why 77% of people who win a lottery or come into some other kind of cash windfall end up broke within a few years. They just don’t know how to handle their newfound wealth.

For parents trying to figure out the best way to provide for their children, this question of financial responsibility is a big one. While a Will ostensibly ensures that your assets are distributed according to your wishes, a trust is a better option in many scenarios.

How does a trust work?

A trust allows you more control over how and when an inheritance is distributed to a child by putting a trustee, sometimes a trusted friend or relative, in charge of managing the assets. The trustee could also be the attorney who drafted the trust or a financial institution like a bank.

There are a variety of ways to structure a trust depending on your specific situation:

1. Annuities: This is a trust that distributes the inheritance over time based on a payment schedule that you deem appropriate. Typically, payments are made in equal amounts each year.

2. Incentive Trust: This term (sometimes called “Pay for Performance”) applies to any trust in which there are conditions the child must meet in order to “earn” distributions. Many parents tie distributions to the attainment of educational goals, but you can be as creative as you like. Some parents choose to connect distributions to more personal life goals or philanthropic service.

3. Age-based Trust: A more traditional route to take is to set distributions based on the child reaching certain ages. (Just remember, age does not automatically equal wisdom!)

4. Income-matching Trust: In this case, annual distributions are made in an amount matching the child’s earned income or a percentage of that income.

What about assets that are not monetary?

Alternatively, you can provide for your children via non-monetary assets. For instance, you might leave a home in a trust, ensuring that your child always has the comfort and stability of having a place to live. (To ensure your child can’t sell the house for cash, put the house in a trust that requires the money from any sale to be reinvested in another house.)

You can also earmark your child’s inheritance to be used for the purpose of paying off either student loans or a mortgage. (Just be sure to double check for any early payment penalties.)

There is no one-size-fits-all solution when it comes to leaving money to your kids. At the end of the day, you need to carefully consider their needs in the context of their personality and level of maturity. Sometimes, you might have to apply a little tough love, but they will thank you for it in the long run.

#adultchildren #inerhitance #planning #irresponsible #will #trust 

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Elder Abuse in Connecticut

Connecticut’s protections against elder abuse have recently become stronger than ever. As an elder advocate, this makes me proud.

In our profession, we hear stories all the time like this one, told to me recently by a client of our firm:

My mother’s caregiver was only too happy to make trips to the local supermarket to pick up groceries anytime Mom was out of something. No milk? No problem. Running low on fruit? I’ll run right out and get some.

But even at 95, my mother was still sharp enough to ask for receipts, and when she kept getting just the part with the total, she mentioned it to me. I checked her bank account online, and sure enough, she had hundreds of dollars worth of charges at the supermarket over a very short period of time.

I called the store and asked them to run the card number through their computer. They asked me if my mother bought a lot of gift cards and I said no. But the caregiver had been buying them, using Mom’s credit card like an ATM card.

Our client notified the police and protective services, and the caregiver was arrested. This incident, as unpleasant as it was, is minor compared to some of the far more egregious things that can befall elders – persons 60 years of age or older – at the hands of unscrupulous individuals who prey on them.

Protecting Elders from Exploitation
Fortunately, we live in a state that takes elder abuse of any kind very seriously. In October 2015, a new bill was passed, strengthening protections for vulnerable elders.

Anyone who witnesses or suspects elder abuse can report it, but the bill expands the universe of “mandatory reporters.” It specifies reporting requirements as well as consequences for not reporting incidents or suspicion of abuse, neglect, exploitation or abandonment to the Department of Social Services.

The State of Connecticut defines each of these terms as follows:

Abuse – willful infliction of physical pain, injury or mental anguish, or willful deprivation of caregiver services which are necessary to maintain physical and mental health
Neglect – failure or inability of an elderly person to provide for himself or herself the services which are necessary to maintain physicial and mental health, or the failure to provide or arrange for provision of such necessary services by a caregiver.
Exploitation – the act or process of taking advantage of an elderly person by another person or caregiver, whether for monetary, personal or other benefit, gain or profit.
Abandonment – the desertion of willful forsaking of an elderly person by a caregiver, or the foregoing of duties or the withdrawal or neglect of duties and obligations owed an elderly person by a caregiver or other person.
Caregiver – a person who has the responsibility for the care of an elderly person as a result of family relationship, or who has assumed the responsibility for the care of the elderly person voluntarily, by contract, or by order of a court of competent jurisdiction.
Who is required to report?

Mandatory reporters are any of the following professionals or community workers who may have contact with an elderly person (newly added categories in italics):

Physician, surgeon, resident physician, intern or registered nurse
Nursing home administrator, nurse’s aide, or orderly in a nursing home or residential care home
Person paid for caring for a person in a nursing home or residential care home
Staff person employed by a nursing home or residential care home
Patients’ advocate
Licensed practical nurse, medical examiner, dentist, optometrist, chiropractor, podiatrist, social worker, clergyman, police officer, pharmacist, psychologist, physical therapist
Person paid for caring for an elderly person by any institution, organization, agency or facility, including without limitation, any employee of a:
Community-based services provider
Senior center
Home care agency
Homemaker and companion agency
Adult day care center
Village-model community
Congregate housing facility
Person licensed or certified as an emergency medical services provider including members of a municipal fire department
Financial agents – officers or employees of financial institutions who:
o Have direct contact with an elderly person
o Review or approve an elderly person’s documents, records or transactions
Consequences of failing to report

Mandatory reporters are required to report incidents they recognize or suspect to the Commissioner of Social Services within 72 hours. The penalty for failing to report is a fine of up to $1,500.

If the failure to report is intentional, the person is guilty of a class C misdemeanor for the first offense, and a class A misdemeanor for a subsequent offense.

What happens to the abuser?
The new bill specifies severe consequences for the perpetrators of elder abuse, especially those named as beneficiaries in a victim’s Will. For example, a person found guilty of elder abuse is treated as if he or she died before the deceased victim and cannot receive any part of the victim’s estate. Joint ownership of property is severed and property owned in “joint tenancy” may be converted to property owned solely by the deceased victim.

For those of us engaged in helping older adults enjoy the highest possible quality of life for as long as possible, it’s hard to imagine the dark side of humanity that preys on the most vulnerable among us. We applaud the State of Connecticut for recognizing the need to strengthen the laws protecting elder adults.

#elder #abuse #connecticut #report

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Some great travel tips here if you are planning on getting out in 2017...

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Why do I Need Life Insurance?

We spend our lives doing everything we can to provide for our loved ones. We work hard to make sure they have the material, emotional, and financial resources they need to feel secure and cared for.

We do whatever we can to help them achieve their goals.

But, life can be unpredictable; and you can’t plan for every potential eventuality. Life insurance provides a means by which you can preserve your family members’ well-being and ensure their ability to pursue their dreams.

And yet, many people choose not to purchase life insurance. Go figure!

The most common reasons people give to support their decision to forego the protection of a life insurance policy are that

It’s too expensive
It’s not their most pressing priority
They already have coverage through their employer
But each of these reasons is rife with common misconceptions.

Too expensive?

Though cost is a legitimate concern, many people find that the actual monthly fees are much lower than they had expected, especially if they consider “term” rather than “whole” life insurance.

While insurance providers tend to promote the lifetime benefits of whole policies, policies that provide coverage either for a limited number of years or up to a certain age are more cost effective and often a more sensible fit.

Not a priority?

And, while there are certainly many financial priorities vying for our attention at different stages in our lives, life insurance should be considered important even though it may not seem urgent.

Just imagine the potential financial hardships your family might face without the support of a life insurance policy. From final expenses to mortgage payments and debt relief, life insurance can make a huge difference in how easily your loved ones are able to manage certain aspects of their lives in the wake of a loss.

Is your employer policy sufficient?

Finally, though many people do have some form of group life insurance through their employers, such benefits are typically not sufficient and are terminated when the insured leaves his or her job.

In most cases, employer-based life insurance provides coverage that is equal to only one or two times the individual’s annual salary. This amount is woefully below the amount usually recommended by financial planners of at least ten times your annual salary. Even though employees typically have the option to purchase supplemental insurance to augment the modest policy offered by their employer, it’s usually wiser to purchase a separate policy that is not tied to employment status.

Determining which policy type and benefit amount are best for you depends on many variables including age, health, and financial responsibilities. For instance, a young couple just starting a family has financial considerations that are very different from an empty nester whose children are already independent and have established their own households.

Likewise, a person without any dependents will have different insurance needs than someone whose children are preparing for college.

Professionals can help you navigate the various life insurance policy types and features to sort out which option is most appropriate for your situation. Then you can rest easier knowing that your family will be well cared for no matter what happens.

#lifeinsurance #estateplanning

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Tips for Making Charitable Bequests

It may be true what they say about not being able to “take it with you.”

It’s also true that – with the right planning – your assets can continue to support the organizations and causes you care about.

Charitable bequests help you extend the reach of your legacy through planned giving that defines specific gifts in your Will. But, you need to be diligent about how you structure a bequest if you want to ensure that your money and other gifts are used according to your wishes.

Types of bequests

• A bequest can be general (providing funds to help an organization with its general purposes) or specific (providing funds that are earmarked for a clearly defined use).

• They can be simple – the donation of a designated amount

• Residuary – meaning that the donation is equal to whatever remains of your assets once all other terms of your Will have been satisfied

• Contingency-based – meaning that they only go into effect if your named beneficiary does not survive you

Whichever type of bequest you choose, there are a few simple steps to follow to make sure that your wishes are carried out in a way that is true to your intentions:

1. Determine which causes and organizations you want to support. Give some thought to what kind of legacy you want to leave behind. Do you want to consolidate your giving with a single donation, or disperse it across a variety of recipients.

2. Do an asset inventory. Bequests are not limited to monetary assets. In place of liquid assets, they may include real estate, art, vehicles, or any other asset you choose to donate. Consider all your options.

3. Consult with your attorney and/or financial advisor. While a bequest may seem like a fairly simple thing to arrange, there are some details that are best handled by a professional. Both your attorney and your financial advisor will be able to provide valuable guidance on how to set everything up in the most beneficial way for all parties involved.

4. Discuss logistics with the receiving organizations. It’s also wise, especially in relation to substantial bequests, to meet with a representative from the receiving organization so that they confirm that they are able to receive such a gift, are prepared for it, and have a full understanding of your intentions. This meeting will also give you a chance to ask questions about what percentage of your gift will be used for non-administrative/overhead purposes as well as how (if it’s important to you) your bequest will be acknowledged and memorialized.

5. Talk with your family. Finally, you can help mitigate any potential misunderstandings about your wishes by having an open conversation with your family members about what you’ve included in your estate plan.

Throughout the process, be sure to be as specific as you can about your intentions and expectations. In a recent case that garnered some media attention, a frugal librarian named Robert Morin made a $4 million bequest to the University of New Hampshire where he had worked for much of his life. In a move that angered some students and faculty, the school chose to spend $1 million of that gift on a video scoreboard for their newly renovated football stadium. However, because only $100,000 of Morin’s generous bequest was specifically designated for the library, the university was completely within its rights to use the remaining “unrestricted” amount however they chose.

If it is within your means, a charitable bequest is a fitting way to continue providing tangible support to the charities closest to your heart. It’s also an effective way to pass on your values to the next generation by demonstrating your commitment to a particular cause.

#charity #bequest #donation #share #legacy #will
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