Medicare premiums are rising sharply next year, cutting into the large Social Security cost-of-living increase. The basic monthly premium will jump 15.5 percent, or $21.60, from $148.50 to $170.10 a month.

The Centers for Medicare and Medicaid Services (CMS) announced the premium and other Medicare cost increases on November 12, 2021. The steep hike is attributed to increasing health care costs and uncertainty over Medicare’s outlay for an expensive new drug that was recently approved to treat Alzheimer’s disease. Because most recipients have their Medicare premium deducted from their Social Security check, the upswing in Medicare premiums means that the Social Security cost-of-living increase of 5.9 percent, which was the largest in 39 years, will be smaller for most people. 

While the majority of beneficiaries will pay the added amount, a "hold harmless" rule prevents Medicare recipients' premiums from increasing more than Social Security benefits. This “hold harmless” provision does not apply to Medicare beneficiaries who are enrolled in Medicare but not yet receiving Social Security, new Medicare beneficiaries, seniors earning more than $91,000 a year, and "dual eligibles" who get both Medicare and Medicaid benefits.

Meanwhile, the Part B deductible will rise $30, from $203 to $233 in 2022, while the Part A deductible will go up by $72, to $1,556. For beneficiaries receiving skilled care in a nursing home, Medicare's coinsurance for days 21-100 will increase from $185.50 to $194.50. Medicare coverage ends after day 100.   
Here are all the new Medicare payment figures:

• Part B premium: $170.10 (was $148.50)
• Part B deductible: $233 (was $203)
• Part A deductible: $1,556 (was $1,484)
• Co-payment for hospital stay days 61-90: $389/day (was $371)
• Co-payment for hospital stay days 91 and beyond: $778/day (was $742)
• Skilled nursing facility co-payment, days 21-100: $194.50/day (was $185.50)

Your "Medigap" policy may cover some of these costs. 

Premiums for higher-income beneficiaries ($91,000 and above) are as follows: 

• Individuals with annual incomes between $91,000 and $114,000 and married couples with annual incomes between $182,000 and $228,000 will pay a monthly premium of $238.10.
• Individuals with annual incomes between $114,000 and $142,000 and married couples with annual incomes between $228,000 and $2846,000 will pay a monthly premium of $340.20.
• Individuals with annual incomes between $142,000 and $170,000 and married couples with annual incomes between $284,000 and $340,000 will pay a monthly premium of $442.30.
• Individuals with annual incomes above $170,000 and less than $500,000 and married couples with annual incomes above $340,000 and less than $750,000 will pay a monthly premium of $544.30.
• Individuals with annual incomes above $500,000 and married couples with annual incomes above $750,000 will pay a monthly premium of $578.30.

Rates differ for beneficiaries who are married but file a separate tax return from their spouse. Those with incomes greater than $91,000 and less than $409,000 will pay a monthly premium of $544.30. Those with incomes greater than $409,000 will pay a monthly premium of $578.30.

The Social Security Administration uses the income reported two years ago to determine a Part B beneficiary's premium. This means that the income reported on a beneficiary's 2020 tax return is used to determine whether the beneficiary must pay a higher monthly Part B premium in 2022. Income is calculated by taking a beneficiary's adjusted gross income and adding back in some normally excluded income, such as tax-exempt interest, U.S. savings bond interest used to pay tuition, and certain income from foreign sources. This is called modified adjusted gross income (MAGI). If your MAGI decreased significantly in the past two years, you may request that information from more recent years be used to calculate the premium. You can also request to reverse a surcharge if your income changes.

Those who enroll in Medicare Advantage plans may have different cost-sharing arrangements. CMS estimates that the Medicare Advantage average monthly premium will be lower in 2022, from an average of $21 in 2021 to $19 in 2022.

​For Medicare’s press release announcing the new premium, co-payment and deductible amounts for 2022, click here.  

The Senate Democrats' proposal for a $3.5 trillion spending plan includes expanding Medicare to provide dental, vision, and hearing benefits. The proposal is now being negotiated in Congress. 

Currently Medicare does not offer much in the way of dental, vision, and hearing benefits. Medicare Part A will cover certain emergency or necessary procedures that are received in the hospital. For example, if you are hospitalized after an accident and require jaw reconstruction, Medicare Part A will pay for the dental work required as part of that procedure. 

Medicare Part B offers very limited coverage of some vision and hearing services. For example, while Medicare Part B won’t cover routine eye exams, it does cover yearly glaucoma screenings for people at high risk and cataract surgery, among a few other limited exceptions. Part B will also cover some diagnostic hearing and balance exams if they are ordered by a doctor, but it will not cover routine hearing exams or hearing aids. There is no coverage at all for routine dental work.

Many people choose Medicare Advantage plans, which are run by private insurers, instead of traditional Medicare because it is possible to get some dental, vision, and hearing benefits in most plans. According to the Kaiser Family Foundation, 79 percent of people in Medicare Advantage plans have vision coverage, 74 percent have dental coverage, and 72 percent have hearing aid coverage. 
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Under the Democrats’ proposal, Medicare beneficiaries would be able to receive dental, vision, and health benefits through traditional Medicare, making it more competitive with Medicare Advantage. The exact details of the proposal are unknown, but in a 2019 bill that passed the House, Medicare beneficiaries would have paid 20 percent of the cost for basic dental coverage and routine eye and hearing exams. Democrats want to pass the spending bill through the reconciliation process, which requires all 50 Democrats to agree to the plan. Negotiations are currently underway to craft a bill that has the support of all the Democratic senators.

​The coronavirus relief bill includes a direct payment to most Americans, but this has MassHealth recipients wondering how the payment will affect them. Because the payment is not income, it should not count against a MassHealth recipient’s eligibility. 
The Coronavirus Aid, Relief, and Economic Security (CARES) Act provides a one-time direct payment of $1,200 to individuals earning less than $75,000 per year ($150,000 for couples who file jointly), including Social Security beneficiaries. Individuals earning up to $99,000 ($198,000 for joint filers) will receive smaller stimulus checks. Payments are based on either 2018 or 2019 tax returns.  
The basic MassHealth rule for nursing home residents is that they must pay all of their income, minus certain deductions, to the nursing home. If the stimulus payment were considered income, it would likely have to go straight to the nursing home. Since MassHealth recipients cannot have more than $2,000 in assets, there was also concern that the stimulus payments could put many recipients over the asset limit. 
Nonetheless, a plan should be made as to how to spend down these funds to bring the recipient back under the $2,000 asset limit.  Everyone's situation is different but options may include prepaying for final arrangements, purchasing clothing, electronics or other items that the recipient can use.
In a blog post, the commissioner of the Social Security Administration (SSA) has clarified that the SSA will not consider stimulus payments as income for Supplemental Security Insurance (SSI) recipients, and the payments will be excluded from resources for 12 months. Because state Medicaid programs cannot impose eligibility requirements that are stricter than SSI requirements, the payments should not affect MassHealth eligibility. 

Prepaying for your funeral is one way to ease the burden on your family following your death and make sure your wishes are carried out. But pre-paid funeral plans come with risks, so you need to exercise care when purchasing a plan. 

Funerals are expensive and can take a lot of effort to plan. To help relieve your family of some of this expense and effort, you can pay for your funeral in advance with a pre-paid funeral plan purchased through a funeral home. In addition to making things easier for your family during a difficult time, pre-paid funeral plans can also be a good way to spend down money in order to qualify for MassHealth.
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However, consumers lose money every year when funeral homes go out of business before the need for the funeral arises. If the funeral home mismanages your funds, there may be no way to recover them. In addition, customers are not always entitled to refunds if they change their minds, and some funeral homes sell policies that require additional payments or that can't be transferred if the customer moves. 
If you decide to go ahead with a pre-paid funeral plan, the following are things to consider:

• Shop around. Prices among funeral homes can vary greatly, so it is a good idea to check with a few different ones before settling on the one you want. The Federal Trade Commission's Funeral Rule requires all funeral homes to supply customers with a general price list that details prices for all possible goods or services. The rule also stipulates what kinds of misrepresentations are prohibited and explains what items consumers cannot be required to purchase, among other things. 
• Make sure you have a reputable funeral home. There have been cases of unscrupulous funeral providers taking advantage of customers, so make sure you choose a funeral home with a solid reputation. 
• Read the contract carefully. Before signing, it is important to know what you are agreeing to. Can you cancel the plan and get a refund? Is the plan transferrable if you move to another area? Are you paying just for merchandise or for funeral services as well? If prices for funeral merchandise and services rise, will your estate be responsible for paying additional costs? 
• Find out where your money goes. The pre-paid plan should provide information on what the funeral home will do with the money you pay them. Some states have protections in place to make sure the money is safeguarded, but other states offer no protections. Is the money put into a trust account? What happens to the interest income? Is there a plan if the funeral home goes out of business? What happens to any money left over?
• Make sure the plan won't affect MassHealthbenefits. If you are buying the policy as part of MassHealth planning, you must purchase an irrevocable plan, which means you can't cancel or change it once it is bought. 

Once you've purchased a plan, be sure to tell your family about the plan you've made and let them know where the documents are filed. If your family isn't aware that you've obtained a plan, then the plan is useless.

Spouses who are turning full retirement age this year are the last group who can choose whether to take spousal benefits or to take benefits on their own record. The strategy, used by some couples to maximize their benefits, will not be available to people turning full retirement age after 2019. 
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The claiming strategy -- sometimes known as "Claim Now, Claim More Later" -- allows a higher-earning spouse to claim a spousal benefit at full retirement age by filing a restricted application for benefits. While receiving the spousal benefit, the higher-earning spouse’s regular retirement benefit continues to increase. Then at 70, the higher-earning spouse can claim the maximum amount of his or her retirement benefit and stop receiving the spousal benefit. To use this strategy, the lower-earning spouse must also be claiming benefits. Workers cannot claim spousal benefits unless their spouses are also claiming benefits. 

A 2015 budget law began phasing out the strategy. If you were 62 or older by the end of 2015, you are still able to choose which benefit you want at your full retirement age. You do not have to make the election in the year you turn full retirement age. If your spouse is still working, you can wait to collect benefits until your spouse begins collecting. For example, if your spouse does not begin collecting benefits until you are 68, you can wait to collect benefits and file a restricted application at age 68. However, when workers who were not 62 by the end of 2015 apply for spousal benefits, Social Security will assume it is also an application for benefits on the worker's record. The worker is eligible for the higher benefit, but he or she can't choose to take just the spousal benefits and allow his or her own benefits to keep increasing until age 70. 

The budget law’s phase-out of the claiming strategy does not apply to survivor's benefits. Surviving spouses will still be able to choose to take survivor's benefits first and then switch to retirement benefits later if the retirement benefit is larger.  

​Having a loved one with dementia can be scary, but if you add in a firearm, it can also get dangerous.  To prevent harm to both the individual with dementia and others, it is important to plan ahead for how to deal with any weapons. 

Research shows that 45 percent of all adults aged 65 years or older either own a gun or live in a household with someone who does. For someone with dementia, the risk for suicide increases, and firearms are the most common method of suicide among people with dementia. In addition, a person with dementia who has a gun may put family members or caregivers at risk if the person gets confused about their identities or the possibility of intruders. A 2018 Kaiser Health News investigation that looked at news reports, court records, hospital data and public death records since 2012 and found more than 100 cases in which people with dementia used guns to kill or injure themselves or others. 

The best thing to do is talk about the guns before they become an issue. When someone is first diagnosed with dementia, there should be a conversation about gun ownership similar to the conversation many health professionals have about driving and dementia. Framing the issue as a discussion about safety may help make it easier for the person with dementia to acknowledge a potential problem. A conversation about guns can also be part of a larger long-term care planning discussion with an elder law attorney, who can help families write up a gun agreement that sets forth who will determine when it is time to take the guns away and where the guns should go. Even if the gun owner doesn't remember the agreement when the time comes to put it to use, having a plan in place can be helpful. 

What to do with the guns themselves is a difficult question. One option is to lock the weapon or weapons in a safe and store the ammunition separately. Having the guns remain in the house--even if they are locked away--can be risky. Another option is to remove the weapons from the house altogether. However, in Massachusetts you need to have the proper firearm license to even remove the weapon from the house. Families should talk to an attorney and familiarize themselves with state and federal gun laws before giving away guns.

If a sale of the weapon turns out to be the best solution, we recently had a client sell their weapons to New England Ballistic Services.  President Steve Dahl made the process easy and ensured the safe transport of the weapons. 

The Internal Revenue Service (IRS) is increasing the amount taxpayers can deduct from their 2019 income as a result of buying long-term care insurance.
Premiums for "qualified" long-term care insurance policies (see explanation below) are tax deductible to the extent that they, along with other unreimbursed medical expenses (including Medicare premiums), exceed 7.5 percent of the insured's adjusted gross income.  (The 7.5 percent threshold is for the 2017 and 2018 tax years.  It is scheduled to revert to 10 percent in 2019.)
These premiums -- what the policyholder pays the insurance company to keep the policy in force -- are deductible for the taxpayer, his or her spouse and other dependents. (If you are self-employed, the tax-deductibility rules are a little different: You can take the amount of the premium as a deduction as long as you made a net profit; your medical expenses do not have to exceed a certain percentage of your income.)
However, there is a limit on how large a premium can be deducted, depending on the age of the taxpayer at the end of the year. Following are the deductibility limits for 2019. Any premium amounts for the year above these limits are not considered to be a medical expense.

Another change announced by the IRS involves benefits from per diem or indemnity policies, which pay a predetermined amount each day.  These benefits are not included in income except amounts that exceed the beneficiary's total qualified long-term care expenses or $370 per day, whichever is greater.
For these and other inflation adjustments from the IRS, click here.  

What Is a "Qualified" Policy?
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To be "qualified," policies issued on or after January 1, 1997, must adhere to certain requirements, among them that the policy must offer the consumer the options of "inflation" and "nonforfeiture" protection, although the consumer can choose not to purchase these features. Policies purchased before January 1, 1997, will be grandfathered and treated as "qualified" as long as they have been approved by the insurance commissioner of the state in which they are sold.

The median cost of a private nursing home room in the United States increased to $100,375 a year in 2018, up 3 percent from 2017, according to Genworth's Cost of Care survey, which the insurer conducts annually.  Massachusetts came in with a state median cost for a private room at a nursing home at $12,775 a month or $153,000 a year. 

At the same time, Genworth reports that the median cost of a semi-private room in a nursing home is $89,297, up 4 percent from 2017. While significant, the rise in prices is not quite as steep as the 5.5 percent and 4.4 percent gains, respectively, in 2017.

But the median cost of assisted living facilities jumped 6.7 percent, to $4,000 a month. The national median rate for the services of a home health aide is $22 an hour, and the cost of adult day care, which provides support services in a protective setting during part of the day, rose from $70 to $72 a day.

Alaska continues to be the costliest state for nursing home care by far, with the median annual cost of a private nursing home room totaling $330,873. Oklahoma again was found to be the most affordable state, with a median annual cost of a private room of $63,510.

The 2018 survey, conducted by CareScout for the fifteenth straight year, was based on responses from more than 15,500 nursing homes, assisted living facilities, adult day health facilities and home care providers.  Survey respondents were contacted by phone during May and June 2018.

As the survey indicates, nursing home care is growing ever more expensive. Contact us today to learn how you can protect some or all of your family's assets.
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For more on Genworth’s 2018 Cost of Care Survey, including costs for your state, click here.

A recent case involving basketball star Caldwell Jones demonstrates the danger in having only one spouse's name on a reverse mortgage. A federal appeals court has ruled that an insurance company may foreclose on a reverse mortgage after the death of the borrower, Mr. Jones, even though Mr. Jones’ widow is still living in the house. While there are protections in place for non-borrowing spouses, many spouses are still facing foreclosure and eviction.

A reverse mortgage allows homeowners to use the equity in their home to take out a loan, but borrowers must be 62 years or older to qualify for this type of mortgage. If one spouse is under age 62, the younger spouse has to be left off the loan in order for the couple to qualify for a reverse mortgage. Some lenders have actually encouraged couples to put only the older spouse on the mortgage because the couple could borrow more money that way. But couples often did this without realizing the potentially catastrophic implications. If only one spouse's name was on the mortgage and that spouse died, the surviving spouse would be required to either repay the loan in full or face eviction.

In order to protect non-borrowing spouses, the federal government revised its guidelines for reverse mortgages taken out after August 4, 2014 to allow spouses to stay in the house as long as they meet certain criteria, including proving ownership within 90 days of the borrowers death. In 2015, the federal government allowed lenders to defer foreclosure on a widow or widower and assign the mortgage to the federal government. Advocacy groups looking at reverse mortgage foreclosures have found that despite these new regulations, lenders are still foreclosing on non-borrowing spouses. Of the 591 non-borrowing spouses who have sought help to avoid foreclosure, only 317 received assistance.

These regulations did not help Mr. Jones' wife, Vanessa. Mr. Jones, who blocked more than 2,200 shots during his 17-year professional basketball career, obtained a reverse mortgage in 2014 on the Georgia home he lived in with his wife. The contract defined the "borrower" to be "Caldwell Jones, Jr., a married man." Ms. Jones did not put her name on the reverse mortgage because she was under age 62 at the time of the mortgage. Mr. Jones died later that year, and when Ms. Jones did not repay the loan, the insurer began foreclosure proceedings.

Ms. Jones sued the insurer in federal court to prevent the foreclosure, arguing that federal law prohibited the insurer from foreclosing on the house while she lived in it. Under a provision in federal law, the federal government "may not insure" a reverse mortgage unless the "homeowner" does not have to repay the loan until the homeowner either dies or sells the mortgaged property and defines "homeowner" to include the borrower’s spouse.

On appeal, the 11th Circuit Court of Appeals (Estate of Caldwell Jones, Jr. v. Live Well Financial (U.S. Ct. App., 11th Cir., No. 17-14677, Sept. 5, 2018)) ruled that the federal law in question only covers what the federal government can insure and does not govern the insurer's right to foreclose. The court agrees with Ms. Jones that the law is intended to safeguard widows and implies that the federal government should not have insured the loan in the first place, but finds that federal law does not cover the insurer's private right to demand immediate payment and pursue foreclosure.
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When purchasing a reverse mortgage, it is always safer to put both spouse's names on the mortgage. If one spouse is underage when the mortgage is originally taken out, that spouse can be added to the mortgage when he or she reaches age 65. If you have a reverse mortgage with only one spouse on it, contact us to find out the best way to protect the non-borrowing spouse.