Senator Rick Santorum Introduces Long-Term Care Tax Incentive Plan

 

Written By: Attorney Jeffrey A. Marshall , CELA*

  Pennsylvania Senator Rick Santorum has introduced federal legislation to establish additional tax incentives for the purchase of long-term care insurance. The Senator's website states that:

"The Medicaid program cannot sustain the projected explosive growth in long-term care spending - it is essential that we have more private dollars, rather than taxpayer dollars, being spent on long-term care services. We must do more to encourage planning and personal responsibility for long-term care to address needs today and in the future."

The legislation (Senate Bill 2281) would encourage individuals to save for long term care expenses by:

-Allowing employers to establish programs similar to 401(k) plans under which employees could save pretax funds for long-term care insurance;

-Allowing the establishment of programs that combine annuities and long-term care insurance;

-Allowing individuals to establish tax-free "long-term care accounts" similar to health savings accounts. These accounts could be used by individuals who are unable to purchase long-term care insurance because of pre-existing medical conditions or cost issues. Individuals could place as much $5,000 in the accounts annually and use the funds without penalty for health care expenses such as nursing home care or home health care for themselves or family members.

-Allowing employers to establish programs similar to 401(k) plans under which employees could save pretax funds for long-term care insurance;

-Allowing individuals with flexible spending accounts to use them to cover the cost of home health care, adult day care or respite care for family members.

In addition to the Santorum legislation, the recently enacted Deficit Reduction Act (DRA) also seeks to encourage the purchase of long term care insurance by making it more difficult to qualify for Medicaid long-term care benefits and expanding long term care insurance Partnership Programs.

However, the Santorum legislation and Partnership Programs would appear to benefit mainly upper middle class workers with excess disposable income and do little to provide for individuals of modest means or seniors who already have long term-care needs.  As a result, they are unlikely to have much impact on long-term care financing.

A recent study by the Kaiser Commission on Medicaid and the Uninsured suggests that while long term care insurance is "growing and is likely to play a larger role in financing long term care in the future . . . Medicaid, in conjunction with direct out-of-pocket spending, is likely to remain the primary financing source for lengthy nursing home stays." 

For Further Information:

Senator Santorum's Press Release

http://santorum.senate.gov/public/index.cfm?FuseAction=PressOffice.View&ContentRecord_id=1673&Region_id=0&Issue_id=7

Article on Senator Santorum's legislation:

http://www.post-gazette.com/pg/06046/655388.stm  

Link To Senator Santorum's Legislation

http://thomas.loc.gov/cgi-bin/query/z?c109:s.2281:

Kaiser Commission Issue Brief: "Private Long-Term Care Insurance: A Viable Option for Low and Middle-Income Seniors?" go to http://www.kff.org/medicaid/7458.cfm 

Attorney Marshall can be contacted at webmail@paelderlaw.com or at 1-800-401-4552

Tax Laws Change for Individuals

 

Written By: Attorney Jeffrey A. Marshall, CELA*  

2006 ushers in a number of tax law changes that affect individual taxpayers.

Social Security and Medicare Taxes

For 2006, the employer and employee will continue to pay:

6.2% each for social security tax (old-age, survivors, and disability insurance) and

1.45% each for Medicare tax (hospital insurance).

Wage limits. For social security tax, the maximum amount of 2006 wages subject to the tax has increased from $90,000 to $94,200. For Medicare tax, all covered 2006 wages are subject to the tax.

Standard Deduction Amount Increased

The standard deduction for taxpayers who do not itemize deductions on Schedule A of Form 1040 is, in most cases, higher for 2006 than it was for 2005. The amount depends on your filing status, whether you are 65 or older or blind, and whether an exemption can be claimed for you by another taxpayer.

The basic standard deduction amounts for 2006 are:

Head of household - $7,550

Married taxpayers filing jointly and qualifying widow(er)s - $10,300

Married taxpayers filing separately - $5,150

Single - $5,150

The standard deduction amount for an individual who may be claimed as a dependent by another taxpayer may not exceed the greater of $850 or the sum of $300 and the individual's earned income.

Standard Mileage Rates

For tax years beginning in 2006, the allowable deductions for the standard mileage rate are as follows:

Business miles. The standard mileage rate for the cost of operating your car changes to 44.5 cents a mile for all business miles driven.

Charitable services. The standard mileage rate allowed for use of your car when you use your car to provide charitable services to a charitable organization is 14 cents a mile.

Medical reasons. The standard mileage rate allowed for use of your car for medical reasons is 18 cents a mile.

Moving. The standard mileage rate for determining moving expenses is 18 cents a mile.

Retirement Plan Limits

For the 2006 tax year the allowable contributions for certain retirement plans are as follows:

401(k), 403(b), salary reduction DEP, and 457 deferred compensation plans. The deferral limit rises from $14,000 to $15,000.  The catch up contribution for those at least age 50 rises from $4,000 to $5,000.

Roth Plan Expansion. For 2006 and after 401(k) and 403(b) plans can allow plan participants to make after-tax Roth contributions.  (Earnings on qualifying Roth contributions avoid tax upon distribution).

IRA Catch up Limits. The IRA catch up limit increases to $1,000 (from $500).

Federal Estate Taxes

For 2006, the top federal estate tax rate has dropped to 46% (from 47%).  The exemption equivalent amount of estate value that is free from federal estate tax is $2 million (up from $1.5 million). 

See:

"Tax Law Changes for Individuals" 

http://www.irs.gov/formspubs/article/0,,id=109876,00.html.

Attorney Marshall can be contacted at webmail@paelderlaw.com or at 1-800-401-4552

Change in Seniors' Thinking About Medicare Part D

Written By: Attorney Tammy Weber

  A new poll of 262 seniors conducted February 2 through February 7, 2006 by the Kaiser Family Foundation reveals that seniors view Medicare Part D less favorably now than they did last year.  In August 2005, an equal percentage of seniors had favorable and unfavorable views of Part D (32% for each viewpoint).  Now, 45% have an unfavorable view of Part D with 23% maintaining a favorable opinion.  Forty-five percent (45%) of seniors (an increase of 13% since August 2005) now understand how Part D will affect them personally.

Less than half of seniors (45%) have enrolled or plan to enroll in the Medicare Part D program by the May 15 deadline.   Twenty-nine percent (29%) have no intention of enrolling and 23% are unsure.  Participation in another drug plan or program that pays in whole or in part for their prescription drugs is a major factor of 68% of seniors' decision not to enroll.  Fifty-one percent (51%) cite a determining factor not to enroll as their belief that Part D will not save them money.  The remaining major reasons given by seniors for their decision not to enroll are: seniors not taking enough prescriptions to need a drug plan (34%); it is too complicated (29%); seniors do not know enough about it (28%); and it is too hard to figure out which plan to choose (28%).

For more information, please see http://www.kff.org/kaiserpolls/pomr021706pkg.cfm and http://www.kff.org/kaiserpolls/upload/7463.pdf.

Attorney Weber can be contacted at webmail@paelderlaw.com or at 1-800-401-4552

Union County Assisted Living Guide Now Available On-line

 

By: Melissa Bottorf, Director of Marketing & Public Education

 

  Today's seniors can look forward to living longer, healthier and more independent lives.  But, at some point in our lives, many of us may begin to need some help with the activities of daily living. Fortunately, today there are many residential options available to seniors who need a little more support and supervision than what can be provided at home.  Assisted Living facilities and personal care homes can be an appropriate option, but there are so many choices available. 

 

Many families that we work with don't know where to begin when they are considering assisted living as an option.  They don't have the time tour every facility to narrow down their choices.  That's why our staff at the Elder Law Firm of Marshall, Parker & Associates has prepared the Assisted Living Guide. The Guide contains a listing of the facilities in each county along with some important basic information on each.

 

The Union County Guide is now complete and can be downloaded on our website at

http://www.paelderlaw.com/assistedlivingguide.html.  Guides are also available for Lycoming County, Clinton County, Carbon County and Wayne County.  Please check back to our website often because more counties will also be available soon. 

 

Melissa can be contacted at mbottorf@paelderlaw.com or at 1-800-401-4552

In the Community.

The professional staff of Marshall, Parker and Associates will be presenting to the following groups and organizations over the next couple of weeks.  Many of these events are open to the public.  If you would like more information or would like to schedule someone to speak at your group, please contact Melissa at 321-9008 or at mbottorf@paelderlaw.com

-Attorney Matt Parker will speak about Essential Estate Planning Tools at Outlook Pointe in Loyalsock on Thursday, March 9th at 8:30 AM . 

-Attorney Kevin Grebas and Planning Specialist Jerry Petro will speak at the Edwardsville Senior Center about Medicare Part D on March 9th at 1:00 PM .

-Attorney Matthew Parker and Planning Specialist Lisa Barner will speak at the CPERI Nursing Home Administrators Conference in State College on Tuesday, March 21st from 1:45 to 3:45 PM .  Topics will include an Elder Law Update and Information on Medicaid Eligibility. For more information or to register, visit CPERI's website at www.cperi.com.

- Attorney Kevin Grebas and Planning Specialist Perry Landon will present a day-long legal training for the Pennsylvania Association of Area Agencies on Aging (P4A).  Three sessions are planned across the state and will take place in Hazleton , Harrisburg & Clarion on March 22nd thru March 24th.

-The Pennsylvania Association of Retired State Employees has asked Attorney Marshall to provide an Overview of the Changes in Elder Law at their March meeting.  It will be held on March 30th at 12:00 PM at the Genetti Hotel in Williamsport . 

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*Attorneys Marshall and Parker are certified as Elder Law Attorneys by the National Elder Law Foundation under authorization from the Pennsylvania Supreme Court