2007 Medicare Figures Announced: Special Rules for High and Low Income Beneficiaries

Written By: Attorney Jeffrey A. Marshall , CELA*

 Federal officials have announced the Medicare premium, deductible, and co-insurance amounts that beneficiaries will have to pay in 2007.  The Part B premium paid by most Medicare recipients will increase by 5.6% to $93.50 in 2007. This is on top of a 13% increase last year and a 17% increase the year before.

 However, this is less than the projected 6 % increase in per capita national health spending for 2007 and the projected 7 % increase for 2007 retail prescription drug spending.

 By law, Medicare beneficiaries have historically paid 25% of the cost of Part B benefits with the Federal Government picking up the remainder.  However, as a result of the new Medicare law, higher income individuals and couples will be required to pay a larger proportion (up to 80%) of the costs of their Part B benefits.  Beginning in 2007, approximately 4 % of Medicare Part B enrollees with higher incomes will pay a higher Part B premium based on their income.

 The income-related Part B premiums for 2007 will be $106.00, $124.70, $143.40, or $162.10, depending on the extent to which an individual beneficiary's income exceeds $80,000 (or a married couple's income exceeds $160,000) with the highest premium rates paid by beneficiaries whose incomes are over $200,000 (or $400,000 for a married couple).

 The 2007 Part B monthly premium rates to be paid by these higher income beneficiaries are:  

Beneficiaries with incomes below 135 % of the poverty level and limited resources are eligible for subsidies that pay for some or all of their Medicare premiums. About one-fourth of Medicare beneficiaries can receive assistance that pays for their entire Part B premium.  (For more information on premium assistance, please see our article "An Alphabet Soup for Saving on Medicare Costs: QMB, SLMB and QI" at http://www.paelderlaw.com/capchanges.html ). Unfortunately, many seniors who are eligible for this help with Part B premiums do not receive it either because they are unaware of its existence or find it too difficult or confusing to apply.

 The announced Medicare Part A and B deductibles, premiums, and co-pay amounts for 2007 are as follows:

  Medicare Hospital Insurance (Part A)

 - Deductible - $992 per Benefit Period ($952 in 2006).

 - Coinsurance - $248 a day for the 61st through the 90th day (was $238 in 2006), per Benefit Period; $496 a day for each "nonrenewable, lifetime reserve day" ($476 in 2006).

 - Skilled Nursing Facility Coinsurance - $124 a day for the 21st through the 100th day per Benefit Period ($119 in 2006).

 Medicare Medical Insurance (Part B)

 - Deductible - $131 per year ($124 in 2006).

 - Monthly Premium - $93.50 ($88.50 in 2006).

 The Federal Government's News Release on the 2007 Medicare figures is available online at http://www.cms.hhs.gov/apps/media/press/release.asp?Counter=1958.

 Medicare is a federal health insurance program for people 65 years of age and older, some disabled people under 65 years of age, and people with end-stage renal disease.  Medicare plays a significant role in providing health care in the United States .  Nationally, it covers approximately 35 million seniors and 6 million younger people with disabilities.  In Pennsylvania , over 2 million people (17% of the population) are Medicare beneficiaries.

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

Small Businesses Threatened by Medicaid Reforms

The following article has been adapted and reprinted with permission from Eye on Elder Issues, a newsletter provided as a public service by the National Academy of Elder Law Attorneys (NAELA).

   Small family-run businesses -- often passed from one generation to the next -- maintain employment for not only the younger generation, but also those in the community who work in small businesses.  Small businesses are responsible for much innovation in our country, as well as much of the growth in our economy. In 2005, David A. Sampson, the U.S. Department of Commerce's Economic Development Administration Assistant Secretary, said "Entrepreneurs are the engines of economic vitality and job creation because they are committed to tapping in and leveraging the power and the opportunities that private markets provide."  Many of these small businesses have values of less than $500,000 and are subject to many market and governmental threats to their very existence.  While the nation's leaders depend on small business as a driving force, changes in Medicaid law - from legislation passed by Congress and signed earlier this year by President Bush - present a threat to the livelihood of family businesses and reduce the likelihood that their children or grandchildren will own or maintain the family business.  

The new Medicaid legislation, the Deficit Reduction Act of 2005, increases the look-back period from three years to five years for those who transfer assets.  In addition, the disqualification penalty period that results from a transfer no longer begins on the date of the transfer.  Instead, it now begins only after the person would be otherwise eligible for Medicaid assistance. These changes will have a significant impact upon small businesses.

For example

Consider a family that owns a small lumber and hardware operation. We'll call them the Jackson family. The father started the business and employs all four of his children and several of his grandchildren.  The children, three of whom are college educated, are underpaid but willing to continue working in order to build the family business for their future.  The father, as an incentive to carry on the family business, gifts 50 % of the ownership to his children in August of 2006.  The business is worth approximately $350,000, and the family has little by way of assets, besides the business and their residence.   

Three years later, Mrs. Jackson (who is not involved in the family business) has a stroke on Thanksgiving Day and requires nursing home care.  Under the new federal law the gift of the business now disqualifies her from Medicaid assistance.  Before the new law, a gift more than three years ago would not have caused a problem.  Now, because of the five year look-back period, this gift will be penalized.  More importantly, before the new restrictions the penalty start date would have been the date Mr. Jackson gifted the family business to his children, and in most states the penalty period would have already passed.  Now, the waiting has just begun since the penalty period will not start until she would otherwise be eligible for Medicaid.  This will take a major toll on the family business.  

Mrs. Jackson is 66 years of age, while Mr. Jackson is 67 years of age.  Even if she qualifies neither Medicare nor her healthcare insurance will pay for the nursing home care beyond the first 100 days, and as such, Mr. Jackson will be faced with the reality that the family business does not generate sufficient income for him to continue paying salaries to all four of his children, continue to employ other members of the community for ordinary labor, and still pay himself sufficient amounts to pay for his wife's care. Further, as he has no additional sums for retirement, he will have to sell the business.  Based upon the practice in most states, the state will likely require that the business be sold to the highest bidder.  

Congress has taken great pains to relieve small business owners of the federal estate tax, and in truth, most small business owners do not have sufficient assets to worry about the "death tax".  However, most small business owners, like Mr. Jackson, are faced with a 100% healthcare tax that has been thrust upon them with these recent Medicaid reforms.  

The National Academy of Elder Law Attorneys (NAELA) believes that this new legislation will be harmful to the economy, harmful to the culture, and highlight the fallacies of our current patchwork healthcare system. 

Attorney Marshall Serves as Panelist for National Conference on "Strategies for Coping with the Deficit Reduction Act"

Written By: Melissa Bottorf, Director of Marketing & Public Ed ucation  

  The Deficit Reduction Act of 2005 has significantly changed planning options for seniors not only in Pennsylvania , but across the nation. Elder Law Attorneys from New England , New York , New Jersey and Pennsylvania will gather at the 9th Annual Northeast Elder Law Symposium sponsored by Boston 's Suffolk University Law School .  The day-long conference will be held in Southbridge , Massachusetts on Friday, October 13, 2006 . Attorney Marshall has been asked to discuss critical issues related to the implementation of the new law, with special emphasis on Pennsylvania .  In addition to a state-by-state update on the DRA, the conference will include a report on related developments in Washington and discussion of specific strategies for coping with the new law.  More information about the Symposium is available online at http://www.law.suffolk.edu/academic/als/coursedetail.cfm?cid=518.  

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

  New Addition To The Marshall, Parker & Associates Family

 Written by:  Jo Steadman , Paralegal  

  There is a new addition to the Marshall, Parker & Associates family!  Congratulations to Melissa Bottorf, our Director of Marketing and Public Education, on the birth of her son, Cooper Dominic Bottorf.  He was born on September 25th weighing in at 6 lbs. 8 oz. and measuring 19 inches long.  Both Melissa and Cooper are happy, healthy and doing very well.  The staff at Marshall, Parker & Associates have been anxiously awaiting Cooper's arrival and send Melissa's family our best.    

 In The Community: Marshall, Parker & Associates' Staff Invited to Speak at Upcoming Events  

  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 Grebas will speak about Essential Estate Planning Tools at the next Senior Network Alliance meeting on October 3, 2006 at 9:30 AM .  It will be held at Mercy Center Skilled Nursing Unit in Dallas .

-Attorney Tammy Weber and Planning Specialist Lisa Barner will provide a half-day CEU course for Dubois Regional Medical Center on October 3, 2006 .  Topics will include: Planning for Incapacity, Potential Ways to Pay for Long Term Care and New Changes in the Medicaid Laws. For more information, please contact Program Coordinator, Jennie Shaffer at 814-375-3278.

-Attorney Marshall will provide a teleconference for the National Association of Personal Financial Advisors on Wednesday, October 4, 2006 at 3:45 PM .  The topic of the session will be The Deficit Reduction Act's Impact on Financial Professionals & Their Clients.

-NorthCentral Sight Services has asked Attorney Matthew Parker to discuss Financial Abuse of the Elderly on October 19th at 1:15 PM .  The meeting will be held in the Community Room at the William Hepburn Apartments in Williamsport .

-The Mended Hearts Association that meets at Mercy Hospital in Scranton has asked Attorney Kevin Grebas to speak about Essential Estate Planning at their October 19th meeting.  It will begin at 7:00 PM .

-Planning Specialist Lisa Barner will present an I Can Cope: Money Matters presentation for the American Cancer Society on October 26, 2006 . 

-The Elder Law Section of the Luzerne County Bar has invited Attorney Parker to provide a presentation on Immediate Annuities.  It will be held at the Westmoreland Club in Wilkes-Barre on October 31, 2006 at 12:00 PM .

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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