Category Archives: Finances

Veterans Benefits for Caregivers and Spouses

What are these benefits, who is eligible, and how to apply

More than 1.5 million wartime-service veterans and their surviving spouses are eligible for billions of dollars each year in U.S. Department of Veterans Affairs (VA) pensions to help pay for long-term care.

Many are not getting the assistance they’re eligible for because they don’t know these benefits programs exist, what the benefits can be used for, or how to apply. If you are caring for a veteran of the armed forces, is your loved one receiving the benefits he or she deserves?

Certain VA benefits can be used for medical and non-medical care in these settings:

  • A veteran’s own home
  • Independent and assisted living communities
  • Skilled nursing homes
  • Other long-term care settings

Some of these benefits can be used to pay family caregivers for providing in-home care services for vets.

Surviving spouses of eligible veterans can also make use of long-term-care programs like Aid & Attendance and Housebound Pensions. And there are veteran burial benefits to ease the financial burden of funeral costs.

Eligibility may be the primary focus for many caregivers, but other areas of confusion and misinformation could affect families’ success in obtaining veterans benefits.

The VA doesn’t recognize Power of Attorney (POA)

Caregivers often hear about the necessity of getting a POA as part of planning ahead for elderly care, but to manage a legally incompetent veteran’s financial affairs, an individual must be officially appointed as the veteran’s fiduciary. To serve as a fiduciary, you must submit the beneficiary’s name and VA file number, and your name and contact information to the VA Regional Office nearest you.

Expediting a VA application

The VA has rules to expedite the applications of people age 90 and older. If your veteran is in this age group, make sure that the VA office handling the application knows this.

Veterans don’t have to be ill to qualify for Aid & Attendance

It’s not well known that when veterans turn 65 they are considered 100 percent disabled in the eyes of the VA. This means that they could be eligible for the lowest level of Aid & Attendance assistance, even if they have no major health conditions.

When a veteran dies, spouses must reapply for benefits

If a veteran dies before their spouse, Veteran Aid & Attendance Improved Pension benefits being received by the couple will cease. The surviving spouse to submit a completely new application to the VA to get their benefits reinstated.

Talk only to the local VA office that services the area your vet lives in

Caregivers won’t be able to obtain information from offices that do not handle their loved one’s account. VA offices are not allowed to pull files on beneficiaries or applicants who do not live in their area.

Who Qualifies for Senior-Care Tax Deductions?

Tax season can be especially stressful for seniors on a fixed income and for family caregivers of elderly loved ones—groups that include millions of budget-conscious Americans looking to keep expenses down.

The good news is that seniors and caregivers may be eligible for tax deductions for medical and dental expenses. Another bright spot in 2017 is that final tax returns are due Tuesday, April 18, three days later than the standard April 15 date. This year the 15th falls on a weekend and Monday, April 17, is Emancipation Day, a federal holiday, giving tax filers until April 18 to complete their returns.

Seniors receiving medical care in assisted living may qualify for tax deductions. This includes residents with Alzheimer’s or other forms of dementia who require substantial supervision to protect their health and safety.

Taxpayers married to or related to seniors requiring care may be eligible for deductions if the senior qualifies as the taxpayer’s dependent according to IRS requirements. Detailed information on dependency can be found at http://www.irs.gov/publications/p554/ch05.html. Additionally, the caregiver must provide more than half of the support for the senior during the year.

Which Senior Living Expenses Can Be Deductible?

For certain assisted living expenses to be tax deductible, the resident must be considered “chronically ill.” A doctor or nurse needs to have certified that the resident either:

  • Cannot perform at least two activities of daily living, such as eating, toileting, transferring, bath, dressing, or continence; or
  • Requires supervision due to a cognitive impairment (such as Alzheimer’s disease or another form of dementia). 

To qualify for the deduction, the senior’s personal care services need to be provided according to a plan of care prescribed by a licensed health care provider. This means a doctor, nurse or social worker must prepare a plan that outlines the specific daily services the resident receives.

Typically, only the medical components of assisted living costs are deductible and ordinary living costs like room and board are not. But if the resident is chronically ill and the facility is acting primarily for medical care and the care is being performed according to a certified plan of care, then the room and board may be considered part of the medical care and the cost may be deductible.

Residents who are not chronically ill may still be able to deduct the portion of their expenses that are attributable to medical care, including entrance or initiation fees.

Which Medical Expenses Can Be Deducted?

  • Premiums for insurance policies that cover medical care are deductible, unless the premiums are paid with pretax dollars. Generally, the payroll tax paid for Medicare Part A is not deductible, but Medicare Part B premiums are deductible.
  • Payments made for nursing services.
  • Medical fees from doctors, laboratories, assisted living residences, home health care, and hospitals
  • The cost of long-term care, including housing, food, and other personal costs, if the person is chronically ill.
  • The cost of meals and lodging at a hospital or similar institution if a principal reason for being there is to receive medical care.
  • Home modifications costs such as wheelchair ramps, grab bars, and handrails.
  • The cost of dental treatment.
  • The cost of travel to and from medical appointments.
  • Personal care items, such as disposable briefs and foods for a special diet.
  • Cost of prescription drugs.
  • Entrance fees for assisted living.
  • Room and board for assisted living if the resident is certified chronically ill by a healthcare professional and follows a prescribed plan of care. Typically this means that they are unable to perform two activities of daily living (ADLs) or require close supervision due to dementia or other conditions.

To claim the deduction, the medical expenses have to be more than 10 percent of the resident’s adjusted gross income. (For taxpayers 65 and older, this threshold will be 7.5 percent through 2016.) In addition, only medical expenses paid during the year can be deducted, regardless of when the services were provided, and medical expenses are not deductible if they are reimbursable by insurance.

For more information on what can and cannot be deducted for medical expenses see Publication 502 on the IRS Web site at http://www.irs.gov/pub/irs-pdf/p502.pdf.

Free Tax Preparation Help for Seniors and Caregivers

Preparing tax returns for seniors and caregivers can be complex, and tax rules may change from year to year. Need help? Consult a tax adviser, or get expert advice at an IRS-sponsored tax center free of charge. To find out what services these tax help centers offer, how to find one near you, and what you’ll need to bring when you visit, go to the IRS Web site at https://www.irs.gov/Individuals/Free-Tax-Return-Preparation-for-You-by-Volunteers

 

Important Changes to Social Security in 2017

A look at the new Social Security rules for the coming year

Each October, the United States Social Security Administration (SSA) announces the changes to this critical social program for the upcoming year. Here’s a summary of the new rules that may affect Social Security recipients in 2017.

Slight increase in payments. Social Security payments will rise by 0.3 percent beginning in January 2017 to keep pace with inflation. The SSA says that cost-of-living adjustments (COLA) of 0.3 percent average out to an estimated $5 increase per month in 2017 for recipients.

Higher earners pay more. Most workers pay 6.2 percent of their earnings into the Social Security system and employers match this amount, until the worker’s salary exceeds the maximum taxable amount. That maximum amount will increase from $118,500 in 2016 to $127,200 in 2017. This change means that about 12 million higher-earning workers are expected to pay more into the Social Security system.

Maximum benefit is higher. In 2017, the highest possible payout for a person at full retirement age is $2,687, up $48 for 2016. However, those who delay starting payments until after they’ve reached full retirement age (up to age 70) may qualify for higher monthly payments.

Full retirement age rises. The SSA defines “full retirement age” (FRA) as the age at which an individual becomes entitled to full or unreduced retirement benefits. For those born between 1943 and 1954, the FRA is 66. In 2017, the FRA increases to 66 years and 2 months to those born in 1955. This FRA hike will continue each year, reaching 67 years for people born in 1960 or later.

Recipients can earn more. If you are age 65 and younger and you collect Social Security benefits but still work in 2017, you can earn up to $16,920 per year (up from $15,720 in 2016) without having benefits withheld. If you earn more than that annual amount, for every $2 you earn, $1 of benefits will be withheld. If you reach age 66 (full retirement age) in 2017, $1 of benefits will be withheld for every $3 earned above $44,880. At your full retirement age, the SSA recalculates your benefits to give you credit for the amount withheld. Starting at the month you reach full retirement age, Social Security payments are no longer withheld if you work, regardless of your earnings.

No file and suspend. In past years, a beneficiary between ages 66 and 70 could claim and then voluntarily suspend Social Security payments, allowing the beneficiary’s spouse to receive benefits on the beneficiary’s record while the beneficiary’s benefits accrued. Starting in 2017, no one can do this. This new rule does not affect payments to divorced spouses, who will continue to receive the full divorced spousal benefit if the ex-spouse suspends his or her retirement benefit.

No double claiming. Dual-earner married couples who are 66 or older have had the option to collect spousal payments worth half of the higher earner’s benefit amount, and then later switch to payments based on their own work record (and those payments are higher due to delayed claiming). But people who turned 62 on or after January 2, 2016, will no longer be able to claim both a spousal payment and an individual payment at different times. Married retirees will now automatically receive the higher of the two benefit options and can no longer claim both types of payments at different times.

Seniors and Caregivers May Qualify for Tax Deductions for Assisted Living Costs, Medical Expenses, and Elder Care

More than 700,000 seniors live in thousands of assisted living facilities throughout the U.S., says a recent study from the Centers for Disease Control ad Prevention (CDC). And nearly 87 percent of residents pay for these facilities out of their own and their families’ financial resources. The good news is that seniors and caregivers may be eligible for tax deductions for assisted living costs that are related to medical or dental expenses.

If a loved one is receiving substantial medical care in assisted living and/or is in a special needs unit in a community, he or she may qualify for a tax deduction. This includes residents with Alzheimer’s or other forms of dementia who require substantial supervision to protect their health and safety.

For seniors residing in independent living communities, however, the only eligible deductible expenses would likely be those directly related to medical costs. 

Qualifying for Assisted Living Deductions

Detailed record keeping throughout the year, even for related expenses like mileage to and from doctor visits, can add up to substantial writeoffs at tax time.  First, the taxpayer must determine if he or she is entitled to itemize deductions. If the taxpayer is the senior, he or she can deduct qualified medical expenses. If the taxpayer is the caregiver, that caregiver must first find out if the senior qualifies as a dependent, depending on these IRS requirements:

  • The person the caregiver is claiming as a dependent must be married to or related to the caregiver.
  • The senior must be a citizen or resident of the United States or a resident of Canada or Mexico.
  • The senior must not file a joint return.
  • The senior must not have an annual gross income in excess of $3,950 (in 2015). Gross income does not include Social Security payments or other tax-exempt income. For those with incomes above $25,000, some portion of Social Security income may be includable in gross income.
  • The caregiver must provide more than half of the support for the senior during the year.

Consult a tax professional to learn more. Also this website offers more information on dependency at: http://www.irs.gov/publications/p554/ch05.html.

Which Senior Living Expenses Can Be Deductible?

For assisted living expenses to be tax deductible, the resident must be considered “chronically ill.” A doctor or nurse needs to have certified that the resident either:

  • Cannot perform at least two activities of daily living, such as eating, toileting, transferring, bath, dressing, or continence; or
  • Requires supervision due to a cognitive impairment (such as Alzheimer’s disease or another form of dementia).

Who Can Qualify for the Deduction?

To qualify for the deduction, the senior’s personal care services need to be provided according to a plan of care prescribed by a licensed health care provider. This means a doctor, nurse or social worker must prepare a plan that outlines the specific daily services the resident receives.

Typically, only the medical components of assisted living costs are deductible and ordinary living costs like room and board are not. However, if the resident is chronically ill and the facility is acting primarily for medical care and the care is being performed according to a certified care plan, then the room and board may be considered part of the medical care and the cost may be deductible. Residents who are not chronically ill may still deduct the portion of their expenses that are attributable to medical care, including entrance or initiation fees.

Which Medical Expenses Can Be Deducted?

  • Premiums paid for insurance policies that cover medical care are deductible, unless the premiums are paid with pretax dollars. Generally, the payroll tax paid for Medicare Part A is not deductible, but Medicare Part B premiums are deductible.
  • Payments made for nursing services. An actual nurse does not need to perform the services as long as the services are those generally performed by a nurse.
  • Medical fees from doctors, laboratories, assisted living residences, home health care and hospitals
  • The cost of long-term care, including housing, food, and other personal costs, if the person is chronically ill.
  • The cost of meals and lodging at a hospital or similar institution if a principal reason for being there is to receive medical care. The amount included in medical expenses for lodging cannot be more than $50 for each night for each person.
  • Home modifications costs such as wheelchair ramps, grab bars and handrails.
  • The cost of dental treatment.
  • The cost of travel to and from medical appointments.
  • Personal care items, such as disposable briefs and foods for a special diet.
  • Cost of prescription drugs.
  • Entrance fees for assisted living.
  • Room and board for assisted living if the resident is certified chronically ill by a healthcare professional and following a prescribed plan of care. Typically this means that they are unable to perform two activities od daily living (ADLs) or require supervision due to Alzheimer’s disease or other conditions.

To claim the deduction, the medical expenses have to be more than 10 percent of the resident’s adjusted gross income. (For taxpayers 65 and older, this threshold will be 7.5 percent through 2016.) In addition, only medical expenses paid during the year can be deducted, regardless of when the services were provided, and medical expenses are not deductible if they are reimbursable by insurance.

For more information on what can and cannot be deducted for medical expenses see Publication 502 on the IRS Web site at http://www.irs.gov/pub/irs-pdf/p502.pdf and/or seek the advice of a tax professional.

Ways to Pay for Assisted Living

How can families afford the costs of senior living communities?

Once families have decided that a senior living community is a safe and comfortable option for aging loved ones, the big question looms: how to pay for it. The national median monthly rate for a one-bedroom unit in an assisted living facility is $3,500, according to a recent Cost of Care Survey. Other research shows monthly fees can range from $1,500 to more than $10,000.

The National Center for Assisted Living (NCAL) reports that the typical assisted living resident has an income of about $19,000 per year. Most residents therefore must tap additional resources to cover the costs of assisted living.

Consider talking to an elder law attorney to help your family figure out how to pay the costs of senior living accommodations. These specialized attorneys can answer important questions about qualifying for Medicaid to pay for care, protecting family assets while still affording needed care, and making sure a spouse has money left after his or her partner’s care expenses are covered. The lawyer fees could be well worth it if your family ends up saving thousands of dollars.

Here’s an overview of options to consider when you’re looking for ways to pay for senior living options.

Personal savings. If your older adult has substantial savings or access to family money, paying out of pocket can cover the costs, but for how long? Consult with a financial adviser to confirm that personal savings or family assets will last though the years.

Sell the house. Some older adults can sell their house and use the money to pay for senior-living expenses. If the senior’s need for assisted-living care is too urgent to wait for the house to sell, consider a bridge loan until the house sells. Be aware that these are short-term loans, and can be risky in some situations, so consult with a financial adviser.

Reverse mortgage. This special type of home loan for homeowners who are age 62 or older allows long-time homeowners to borrow cash against the value of their home without having to sell the home. These loans may not be the best option for some seniors. Consult with an independent financial adviser—a neutral party, not a salesperson who wants to sell you a loan.

Long-term care insurance. This insurance covers nursing home care, home health care, assisted living care, and other medical services. Consult with an insurance agent to find out what coverage you can afford. Premiums are based on factors such as age, health, benefit amount and duration, and when the insurance company will start paying benefits. Other factors can affect the cost of coverage, including the region you live in.

Veterans benefits. Assisted-living costs can be covered by veterans benefits. To apply, you’ll need military discharge papers, a valid medical condition with a doctor’s letter, and minimum financial asset conditions. Spouses of veterans may also qualify.

Medicare and Medicaid. For those who qualify (based on disability and income), Medicaid pays for long-term assisted living care. Medicare does not pay for long-term assisted living, but sometimes pays for short-term rehab stays, usually after hospitalization. Each program has specific rules about what services are covered, how long you can receive benefits, whether you qualify for benefits, and how much you have to pay in out-of-pocket costs.

Is it the IRS Calling?

As we enter the tax season, the incidence of IRS scams rise. The Federal Trade Commission reports that from 2013-2014 complaints about IRS scams increased- with 54,000 complaints filed in 2014 alone. Fraudsters often look to target older Americans who may appear to be more susceptible to such actions.

The IRS continues to warn consumers to guard against scam phone calls. Criminals pose as the IRS to trick victims out of their money or personal information.

According to the IRS, here are several tips to help you avoid being a victim of these scams:

  • Scammers make unsolicited calls. Thieves call taxpayers claiming to be IRS officials. They demand that the victim pay a bogus tax bill. They con the victim into sending cash, usually through a prepaid debit card or wire transfer. They may also leave “urgent” callback requests through phone “robo-calls,” or via phishing email.
  • Callers try to scare their victims. Many phone scams use threats to intimidate and bully a victim into paying. They may even threaten to arrest, deport or revoke the license of their victim if they don’t get the money.
  • Scams use caller ID spoofing. Scammers often alter caller ID to make it look like the IRS or another agency is calling. The callers use IRS titles and fake badge numbers to appear legitimate. They may use the victim’s name, address and other personal information to make the call sound official.
  • Cons try new tricks all the time.  Some schemes provide an actual IRS address where they tell the victim to mail a receipt for the payment they make. Others use emails that contain a fake IRS document with a phone number or an email address for a reply. These scams often use official IRS letterhead in emails or regular mail that they send to their victims. They try these ploys to make the ruse look official.
  • Scams cost victims over $23 million. The Treasury Inspector General for Tax Administration, or TIGTA, has received reports of about 736,000 scam contacts since October 2013. Nearly 4,550 victims have collectively paid over $23 million as a result of the scam.

The IRS will not:

  • Call you to demand immediate payment. The IRS will not call you if you owe taxes without first sending you a bill in the mail.
  • Demand that you pay taxes and not allow you to question or appeal the amount you owe.
  • Require that you pay your taxes a certain way. For instance, require that you pay with a prepaid debit card.
  • Ask for your credit or debit card numbers over the phone.
  • Threaten to bring in police or other agencies to arrest you for not paying.

If you don’t owe taxes, or have no reason to think that you do:

  • Do not give out any information. Hang up immediately.
  • Contact TIGTA to report the call. Use their “IRS Impersonation Scam Reporting” web page. You can also call 800-366-4484.
  • Report it to the Federal Trade Commission. Use the “FTC Complaint Assistant” on FTC.gov. Please add “IRS Telephone Scam” in the notes.

If you know you owe, or think you may owe tax:

  • Call the IRS at 800-829-1040. IRS workers can help you.

Phone scams first tried to sting older people, new immigrants to the U.S. and those who speak English as a second language. Now the crooks try to swindle just about anyone. And they’ve ripped-off people in every state in the nation.

The New Year is a Good Time to Explore New Living Options

We in the senior living industry always see an increase of inquires in the beginning of the New Year.  Why? The answer is really quite simple.  Over the holiday’s the reality of where a seniors loved ones mental and physical health is currently at becomes apparent when children or loved ones are home for the holidays and spending more time together.  We often find that if you are starting to ask the question ‘is assistance needed?’ then it may be time to begin inquiring into senior living options.

It is best to begin the search into senior living options, earlier rather than later so that all involved have the time and the best choices available to make the right decisions for a loved one.

Consider these questions when deciding whether it is time to inquire into senior living community options:

  • Emotions: How are they emotionally? Are there changes in their activity level and mood? Are they seeing friends and partaking in activities they have loved for years?
  • Health: Are they taking their medications correctly? Has there been significant weight loss? Unexplained weight loss could indicate a major health problem.
  • Home: What shape is the home in? If the home is in need of repair and un-kept, these can be signs that more help is needed.
  • Hygiene: Neglecting personal hygiene and cleanliness can be a sign that help is needed. Are they taking care of themselves physically? Look to see if they are keeping up with basic daily routines such as bathing, brushing teeth and wearing clean clothes.
  • Mobility: Are they having difficulty moving around their home? Having trouble walking or being unsteady on their feet puts them at risk for falling and injuring themselves.
  • Memory: Are you noticing changes in their personality? Memory loss, difficulty in performing familiar tasks, poor judgment, misplacing items, disorientation, rapid mood swings, increased apathy or passiveness are all early warning signs of Alzheimer’s. A doctor’s evaluation can help determine the cause and treatment of these symptoms.
  • Money: How are the finances? Any mishandled finances to cause concern?
  • Transportation Do you see any dents in a car? This may indicate erratic or unsafe driving.

There are different types of senior living communities to accommodate the varying needs of seniors. The three most common types of senior living options are:

  • Independent Living communities are for active older adults who require little or no assistance from others. They enjoy private dwellings, control over their own schedules, and freedom to come and go as they choose. Social networking, optional events, special interest clubs, and conveniently located services may be offered onsite as well as resort-like amenities with all the comforts of home.
  • An Assisted Living residence is a combination of housing, services, personalized assistance and care tailored to the individual needs of those who require help with activities of daily living
  • Memory Care is designed especially for residents with memory loss including Alzheimer’s and other forms of dementia. Many independent and assisted living communities offer memory care areas within their communities. Residents live in a secured space and enjoy an environment and activities coordinated by staff members trained specifically for caring for those with memory impairment.

Thankfully there are many wonderful options in the 21st century for seniors. Check with us about the many senior living opportunities available today!

2016 Medicare Open Enrollment: October 15 to December 7

Make Needed Changes Now to Medicare Plans 

Now is the time to review and reassess Medicare plans for older adults so that coverage will be adequate and cost-effective for 2016. From October 15 to December 7, 2015, the 2016 Medicare Open Enrollment period is designated for older adults enrolled in Medicare to take these actions:

  • Change their Part D (prescription drug) plan
  • Enroll in a Medicare Advantage plan
  • Change Medigap plans
  • Change Medicare Advantage plans

DailyCaring, an organization that supports families caring for older adults, says that “even though we all wish we could ‘set it and forget it’ with health insurance, Medicare plans change all the time.” To save money, older adult’s plans should be reassessed every year so that necessary changes can be made during the Open Enrollment period.

DailyCaring offers tips for knowing which changes to look for in the paperwork and how they could make a big difference in costs.

How to Find and Evaluate Key Plan Changes

In early October, older adults should have received an annual notice from their health insurance company. The package might be dauntingly thick, but look for the Annual Notice of Change (ANOC), a thinner booklet. The first pages of the ANOC booklet should summarize key plan changes for 2016.

Will the current plan still cover needed services and prescriptions for 2016? You don’t need to take any action or make any changes if:

  • Current plans are still being offered
  • Ongoing medical care and prescription needs for 2016 will be covered
  • New medical care and prescription needs for 2016 will be covered
  • Procedures or tests that may be needed in 2016 will be covered

But if plans are changing and you think switching plans might be a good idea, look into these issues:

  • If the plan premium is increasing 10 percent or more, you might be able to find a better plan.
  • Has the deductible gone up? It used to be zero and now it’s not? Consider switching plans.
  • For prescription drug coverage, figure out changes in drug premiums and tiers, and how these will affect what’s paid out of pocket. This investigation process might take some work, but this is where you can save a lot of money.
  • How much did you spend in co-pays this year? Were some expenses not covered, and might those expenses happen in 2016? If so, consider switching to a Medigap plan with fixed costs.
  • Are you paying for a Medigap plan but your senior doesn’t have many doctor visits (apart from annual checkups and preventive care)? A better option might be Medicare Advantage plans with lower premiums and other benefits like hearing and vision coverage.

For more information on this topic and related topics of interest to caregivers of senior adults, visit the DailyCaring website.

Tax Season is a Good Time to Talk Money

When it comes time to do taxes, it can also be a good time to start the conversation about money with the senior in your life. Discussions about their financial well-being are necessary but not easy. But tax time is an excellent time to open the dialogue — and perhaps an upside to this trying annual rite we experience each year.

Often seniors don’t want those younger than themselves involved in their finances, and conversely the younger adults don’t always want to know how much the senior has or what they’re doing with it which is understandable.

Yet tax season gives a natural opening to start the conversation. Money is an issue filled with emotion and not just for seniors. But take it slow and steady; give yourself time to talk to the senior in your life about their finances. Begin or continue the conversation sooner than later. It is an important task, and one that is best done when there is time and the ability to address the matter at hand.