Many confuse Medicare with Medicaid and vice versa but they are two vastly different programs.
Here are some of the main differences between Medicare and Medicaid.
Generally, Medicare is a health insurance for senior citizens. It is a health plan offered by the Federal government when a person turns age 65 and has paid Medicare taxes. Medicare is not offered based on income level, like Medicaid. If you are turning 65, you can start applying for Medicare three months before your 65th birthday. Medicare provides free hospitalization coverage through Part A and outpatient services (e.g. doctor’s office visits, physical therapy etc.) through Part B by paying the standard premium of $135 per month. Medicare, unlike Medicaid, does not cover cost of prescription medications however you can purchase prescription coverage by signing up for Medicare Part D. Medicare Part D is provided through private insurance companies and you can select a program that fits your needs via Medicare.gov.
A sure way to distinguish whether you have Medicare or Medicaid is to look at your card. The Original Medicare card has the Red and Blue stripes on top of the card with Part A and Part B written on the front of the card and the Medicaid card has the word “Benefit” written on the front.
Unlike Medicare, Medicaid is a health plan offered by the government generally to those with low to moderate income. Medicaid is funded partly by the Federal government and partly by each State and its local government. Each state has different Medicaid rules. Generally, in New York, your monthly income must be less than $842 as a single individual to be eligible for Medicaid. Unlike Medicare, once you are determined eligible for Medicaid, Medicaid provides free hospitalizations, outpatient services, and prescription medications and even long-term care services.
Medicaid eligibility rules are complex and the guidelines differ depending on your age, income level and the type of Medicaid you need. For instance, if you need Medicaid for long-term care, such as nursing home care, you need to show not only that you have less than $842 in income but also that you do not have more than $15,150 in assets. Medicaid will look back over a five year period to make sure you did not transfer any large assets in order to become eligible for Medicaid. If large asset transfers were made within the last five years, you will not be eligible for Nursing Home Medicaid.
One of the areas of practice at Grimaldi and Yeung, LLP is helping our clients maneuver this complex Medicaid system and make appropriate plans. Contact us at 718-238-6960 to set up an initial consultation with one of our attorneys.
Lucky enough to find love the second time around? Wonderful. Want to protect your children’s inheritance? Here’s one estate planning option to address this concern.
Estate planning for couples in second marriages, when each spouse has children from a prior marriage, requires a few extra planning steps.
When each spouse dies, they may want his or her children to receive an inheritance with the remainder going to the surviving spouse.
In many states, a surviving spouse can choose to receive a portion of the other spouses’ estate by filing a petition in Probate Court, if they have not received an equitable share needed for their support. New York calls these shares a spousal elective share. It is $50,000 and a statutory portion of the estate, whichever is greater. The share ranges from 1/3 to 1/2.
Another strategy is using a QTIP or "Qualified Terminable Interest Property" in one’s testamentary plan found in their will or living trust. This is a type of trust designed to preserve the marital deduction for estates that may be subject to estate tax. The federal estate tax exemption is $11.2 million per person in 2018. In addition to federal estate tax laws subject to change down the road, some states also have their own state estate tax.
People in second marriages very frequently want to provide for their spouses when they die. However, they also want to be certain that their own children are able to inherit the remaining assets after the death of the second spouse. This can be done by creating a marital trust for the benefit of the surviving spouse with the remaining assets in the trust going to their children after the second spouse dies. A QTIP may not accomplish the objective of an immediate inheritance for children. Our firm, Grimaldi & Yeung, can explore your specific family situation and determine if a QTIP or other trust would be favorable for you.
Another option to discuss is a postnuptial agreement, where the surviving spouse waives his rights to an elective share or executes wills or trusts that designate assets to children at their death. We can also craft your estate planning documents, so an amount equal to one-third of the augmented estate will go outright to the surviving spouse and have the balance distributed to the children. Finally, spouses may choose to designate their children as beneficiaries on IRAs and insurance policies, instead of the surviving spouse.
There are more than a few ways to make estate planning work in an equitable fashion for everyone in the new blended family. Grimaldi & Yeung LCP is ready to help you create the plan that will work best for your unique situation.
It’s all in the details. Life insurance proceeds are income tax free. If you are the beneficiary of an insurance policy, you will not have to pay income taxes when you receive the life insurance proceeds.
However, Kiplinger’s recent article, “Myth: Life Insurance is NOT Taxable,” explains that life insurance payments at death are included in the calculation of a deceased person’s estate value. If the policy is large enough, the decedent’s estate— any life insurance proceeds—could be subject to federal and/or state estate taxes.
For instance, if you have a $1 million life insurance policy, the IRS will deem that policy to be an asset. At your death, the IRS sees it as a million-dollar asset you just transferred to your beneficiaries. Since that estate tax is usually due upon death, this asset can increase the value of your estate. You can avoid having your life insurance proceeds included in your estate and subject to the estate tax, by creating an irrevocable life insurance trust (ILIT), which will own your life insurance and this asset will be removed from your estate (if you have had no control over the policy for at least three years). When you die, the proceeds from your life insurance will pass on to your heirs’ income tax and estate tax-free.
You may be able to create a ILIT if your estate is in excess of the federal “application exclusion amount” ($11.18 million for single individuals and $22.36 million for couples under the Tax Cuts and Jobs Act of 2017.) At that point, note that the current law that governs this estate tax exemption sunsets on December 31st, 2025 and the credit amount will return to $5 million indexed for inflation, unless the law is made permanent.
An ILIT could save your family up to 40% in federal estate taxes by removing the proceeds from your estate calculation. That’s a benefit worth the expense and complexity in setting it up. However, it is important to note that 12 states and DC have their own estate taxes, and their exclusion amounts may be lower than the federal limits.
In addition, an ILIT can help you can avoid tax on both spouses’ estates. Life insurance proceeds can be held in a trust for the benefit of the surviving spouse during her lifetime. When she dies, the proceeds will not be included as part of her estate either. They will pass tax-free to her children and then to her grandchildren, as an ILIT is a multigenerational trust.
You should use caution because the IRS scrutinizes ILIT's carefully. In order to be certain that your ILIT conforms to IRS rules, some requirements are:
To transfer polices you already own to the ILIT, complete an “absolute assignment” or “change of ownership” form;
You need to relinquish all ownership rights to the trust and you may not pay the premiums directly.
All ownership rights to the policy, such as the right to change beneficiaries, borrowing from cash values, and making premium payments, may not be performed by the original owner.
An annual cash partition agreement to create and separate funds from which premiums are paid; and
Maintain a change of ownership in an existing policy for at least three years before the insured's death. (You must survive for at least three years after transferring your policy to the trust, or the proceeds will be taxed in your estate like you retained ownership of the policy).
An estate planning attorney is necessary to set this trust up for you.
Bear in mind that while your family may not pay income tax on life insurance proceeds that they receive, they may have to pay estate taxes on the policy, if the estate exceeds the estate tax exemption amount threshold level. You’ll need to set up the ILIT at least three years before you die.
Call our firm, Grimaldi & Yeung, if you want to explore this option and assure your ILIT is created more than 3 years in advance.
Over the years we gather paper clippings, documents and bank statements. We try to discard some of this ever increasing pile. It is difficult knowing which financial and personal paperwork you need to keep or what to discard. To help you with this difficult task, here is a suggested list and timeline for keeping and/or shredding your important documents. Scan copies to be produced when needed for individuals who have limited storage space.
Documents which should be kept indefinitely—in a secure location:
Birth/death certificates and Social Security cards
Marriage Licenses and Divorce Decrees
Pension plan documents
Originals and/or copies of Wills, Trusts, Health Care Proxies/Living Wills and Powers of Attorney (attorney/executor should have copies) – Do NOT keep these documents in a Safe-deposit box as it may be sealed by the bank just when you need it.
Military discharge papers
Copies of burial deeds and plots
Safe-deposit box inventory
Copies of all tax returns
Suggested timeline for retaining documents:
Supporting documents for tax return (7 years) - This is the recommended minimum period of time to retain, but it is advised that tax return copies should remain on file indefinitely. You can scan them to save storage space.
Investment records and statements (7 years) - These are needed for tax filing. Keep for a minimum of 3 years, but you may want to keep for the same amount of time as your tax return to support claims.
Credit card statements (45 days-7 years) - Keep up to seven years as it may be used for taxes, as proof of purchase or for insurance.
Financial statements (1-5+ years) - Keep bank and financial statements for 5 years or longer. This is especially important if you apply for Medicaid which requires 5 years of financial information. Keep information on business expenses, home improvements, mortgage payments or major purchases. This information is useful for tax returns as well.
Medical and dental records (1-5 years) - Keep for at least one year, but up to five years to be safe. Retain information about prescriptions, specific medical histories, health insurance information and contact information for your physician.
Utility and phone bills (1 month-1 year) - Shred them after you have paid them, unless they contain tax-deductible expenses—keep them for a year if they can be used for business deductions.
Insurance policies (until closed) - Keep as long as the policies remain in force.
Mortgages and other home documents (for the full ownership period + 6 years) - Mortgages, deeds and home improvement documents should be kept on file for the length of ownership, plus six years after selling the home.
Appliance manuals and warranties (as long as owned) - Keep on file for the length of ownership.
Vehicle titles and loan documents (if owned) - Keep on file for the length of ownership.
Pay stubs (until end of year) - There is no requirement for keeping pay stubs. Keep stubs for three months especially if you are applying for a loan. You may want to keep them for a year so you can compare against your W-2.
Be sure to carefully shred any information that has your personal details on it.
If our firm can help you get your legal house in order in the New Year, we are available to review your estate plan, your Will, Power of Attorney or medical directives.
If you receive a call from the Social Security Administration ("SSA") asking for your personal information in order to increase your benefits payments or threatening to cut off your benefits if you don't give them your information, be cautious. Scammers are now spoofing SSA's customer service number to try and get your personal information. These scammers can call from anywhere but make the number that appears on your caller ID show up as a different and legitimate number.
If you receive a call like this, remember:
First and most importantly, SSA will never threaten you for your personal information. They also won't promise to increase your social security benefits in exchange for your information.
Never give the caller your personal and financial information.
Sign up for the National Do Not Call Registry. Most legitimate sales people tend to honor the Do Not Call list; scammers ignore it.
If you are unsure if you are speaking to SSA, hang up and call SSA directly at 1-800-772-1213.
If you get one of these calls, report it to SSA's Office of Inspector General at 1-800-269-0271 or online here. You can also report the calls to the FTC here.
Please visit our website for information on Elder Law and Estate Planning.
Effective January 2019, the Center for Medicare & Medicaid Services (CMS) made changes to Medicare rules, particularly related to Part C and Part D. Medicare Part C, also known as Medicare Advantage Plan (MA), is a Medicare coverage offered through private companies. When you join a MA plan, you receive hospital insurance (part A), Medical insurance (part B), and sometimes drug coverage (part D) from a private MA plan company not from Original Medicare. Medicare Part D is a prescription drug coverage plan offered by private companies. The following are some of the notable changes being implemented in January of 2019.
Until now, CMS mandated MA plans to provide same benefit packages to the enrollees in a service area at a same premium. However as of January 1, 2019, CMS has eliminated that requirement and will allow more flexibility for MA companies to provide assortment of supplemental services not normally covered by Original Medicare. This means that as of January 2019 the MA plans will offer benefits that are not necessarily a “medical treatment”, so long as they are medically related to specific health conditions of the enrollees at varied levels of premiums and the deductibles. Some of the supplemental benefits that will now be offered to eligible Medicare beneficiaries may include palliative care, meal delivery services, transportation, adult day services, medical equipment and home care services. Thus, the Medicare beneficiaries will now have an option to choose from a pool of MA plans that will offer myriad of different benefits tailored to meet their financial and specific health care needs.
Although this change was made with a worthy initiative to provide more services to Medicare beneficiaries, Medicare advocacy group representatives anticipate that the increased variance of benefit packages offered by multiple MA companies may make it more difficult to navigate Plan Finders on Medicare web-portal. It may be more challenging to compare and choose from so many different plans offering multitude of services. The advocacy group cautions the enrollees to carefully read the details of the supplemental services offered by the plans and how their health conditions would affect the premiums before joining a plan.
In addition to eliminating the restrictive rules for MA plans, CMS also made changes to enable the beneficiaries to join and switch plans more easily. Until now, CMS only allowed Medicare beneficiaries to enroll and dis-enroll from MA plans during the Medicare Advantage Disenrollment Period which ran from January 1 through February 14 each year. The Medicare beneficiaries had this short window period to either enroll in a MA plan or dis-enroll from MA plan and go back to Original Medicare but were not allowed to switch to another MA plan.
As of January 2019, the Medicare beneficiaries can either go back to Original Medicare plan or switch to another MA plan if they are unsatisfied with their plan during the new Spring Enrollment Period (SEP). The SEP will run for three (3) months from January 1 through March 31 each year. CMS will now allow the beneficiaries to evaluate their current plans and make changes freely during this extended three months period each year without limitations. Any changes made during this period will be effective the following month.
For Medicare Part D enrollees receiving Extra Help, beneficiaries used to be able to switch their Part D plans as many times as necessary throughout the year. Under the new 2019 Medicare rules, these beneficiaries will be able to make changes to another Part D plan only during the Low Income Subsidy Enrollment Period (LISEP) which will run once every calendar quarter: January through March, April through June and so forth. This means that if a beneficiary switched their plan in January, he/she is not allowed to make another switch until the next quarter (i.e. April -June).
Furthermore, there are additional welcoming changes for Medicare Part D beneficiaries in 2019. Under the new Bipartisan Budget Act, the Medicare Part D coverage gap, also known as the “donut hole”, will close for brand name drugs. This means that Medicare beneficiaries on Part D will no longer pay out of pocket for increased medication cost when they hit the “donut hole”. The beneficiaries will now pay no more than an average of 25% of the cost of their drugs after meeting the deductibles. In 2020, the same changes will be made for generic drugs.
Lastly, based on the Comprehensive Addiction and Recovery Act (CARA), a Federal law signed into law in 2016, the Medicare Part D plans will establish a drug management plan. This program will be used to restrict access to medications that are determined to be Frequently Abused Drugs (FADs) to those identified as “as risk” when dangerous patterns of use are detected. However, beneficiaries on the FADs for treatment of cancer related pain, palliative care, hospice care and those in a long term care facilities, will be exempt from this program. If a beneficiary has been labeled “at risk” under this program mistakenly, the beneficiary can appeal the decision and most likely will prevail if medications are medically necessary.
The Medicare changes of 2019 are complex and can be difficult to understand. If you are currently on Medicare or will be eligible for Medicare in the near future, please make note of these important changes that affect your coverage or contact our firm at 718-238-6960 for advice and direction.
 Medicare Rights Center is a national, nonprofit consumer service organization that works to ensure access to affordable health care for older adults and people with disabilities. The organization helps people with Medicare understand their rights and benefits. Anyone with questions about Medicare benefits can call the national Helpline at 1-800-333-4114.
Many people who have pets care for them and even consider their pets as close as children. They want to make sure their pets are taken care of, if they should become incapacitated or pass away. These owners feel that it is their responsibility to provide for their pet’s costs and care when they are no longer able to do so themselves.
Is there a way to take care of your pet’s well-being for the future?
A pet trust is the answer. This type of trust can designate a caretaker to provide for the continued care of your pet. This pet trust will appoint a designated person to follow your exact wishes in caring for your pet.
It is also possible to name a pet caretaker and a successor caretaker in your Will. However, using a Will for this purpose may not be the best option, as it is only effective upon your death, but not if you should become incapacitated in life. A Will needs to be probated after death, which may take some time, therefore leaving your pet “officially” uncared for until your estate is settled. A trust does not have to be probated and will expedite naming the new caretaker for your pet including obtaining the funds for its care.
Pet owners need to plan now for their pets including decisions on: how to care for their pets, and the type of veterinary care needed as well as the funds to provide for this care, including the management of these funds.
Our law firm can help you personalize a pet trust outlining detailed instructions on your pet’s care now and in the future.
The National Association of Elder Law Attorneys (“NAELA”) recently posted an article titled "Winning Against a Stacked Deck: Medicare Hospital Discharge Appeal", which discusses hospital discharge appeals for Medicare beneficiaries and how understanding the regulations that make it difficult to win an appeal is vital to successful advocacy.
Our partner, Judith Grimaldi, is a NAELA Board Member, a member of NAELA's Council of Advanced Practitioners ("CAP") and a past President of the NAELA's New York Chapter.
Did you know that November is National Alzheimer's Disease Awareness Month and National Family Caregiver's Month?
CaringKind, an organization dedicated to creating, delivering and promoting inclusive and compassionate care and support services for individuals and families affected by Alzheimer’s (and related dementias) and eradicating the disease through the advancement of research, is a combination of both awareness and caregiving. CaringKind provides a host of free information, tips, tools, support groups and community resources for caregivers. In addition, CaringKind has a free 24- hour Helpline, where you can speak to a trained professional.
In addition, CaringKind offers educational and training opportunities. For more information, click on the links below.