In 2014, Congress passed the federal Achieving a Better Life Experience (ABLE) Act. The Act made an ABLE Account possible. An ABLE Account is an investment account that permits qualified persons with disabilities to save and invest money without losing eligibility for certain public benefits. These public benefits are generally needs-based programs such as Medicaid and SSI (Supplemental Security Income).
On June 1, 2016, Ohio became the first state to begin an ABLE program. The program is administered by the State of Ohio Treasurer’s Office and became known as the STABLE Account. Prior to the STABLE Account, those with disabilities could save no more than $2,000 before losing needs-based benefits.
With a STABLE Account, an individual with disabilities could save and invest (with Vanguard) up to $15,000 per year, $27,490 if the individual works. The money in a STABLE Account must be spent on Qualified Disability Expenses, including: housing, education, healthcare, transportation, basic living expenses, etc. As long as the money in the Account is spent on these expenses, earnings on the Account grow tax-free. The money in a STABLE Account is not considered a resource for Medicaid or SSI purposes; therefore, the STABLE Account will not prevent an individual from pursuing those benefits.
An individual is eligible for a STABLE Account if their disability began before the age of 26 and the individual must have lived with the disability for one year or expect the disability to last for at least one year. In addition, the individual must be eligible for SSI or SSDI (Social Security Disability Income which is not a means-tested benefit) or have a condition on the Social Security Administration’s list of allowable conditions or “self-certify” their disability.
A STABLE Card, a loadable debit card acceptable wherever VISA is accepted, can be given to the individual with disabilities to be used for Qualified Disability Expenses. There is no cost to open a STABLE Account and can be opened by an individual with disabilities, or an Authorized Legal Representative (ALR) such as a parent, a guardian of the individual, or a designated Power of Attorney.
There are negative aspects of a STABLE Account. While STABLE Accounts appear to be an excellent resource for someone who is eligible, there are some limitations.
If the account exceeds $100,000, the individual’s SSI benefit, but not Medicaid, would be suspended but not terminated until the account is reduced to $100,000. This could affect planning for the individual in case of an inheritance of more than $100,000.
The maximum that a STABLE Account can hold is $482,000 (similar to a 529 Account). Again, this may affect an individual’s inheritance.
Excess contributions to a STABLE Account must be returned to the contributor to avoid a 6% penalty.
Individuals who may have these financial issues, should consider establishing a Self-Settled (“First Party”) Special Needs Trust, known as a (d)(4)(A) Trust. Previously, individuals were not permitted to establish such a Trust for themselves; however, such individuals are now permitted to establish such Trusts for themselves.
There is no limit as to how much a person can have in this Trust. The money in the Trust is not considered a resource and does not affect the individual’s Medicaid or SSI.
As the STABLE Account permits broader payments for expenses, more so than the Trust permits, many people establish this account and the Trust simultaneously.
Upon the passing of the individual, the money in a STABLE Account and the Special Needs Trust, after certain permitted payments, must be paid to the State under the Medicaid Estate Recovery Program to re-pay the State for the amount of Medicaid benefits received by the individual during their lifetime; however, the STABLE Account is obligated to pay the State for Medicaid benefits paid subsequent to the establishment of the STABLE Account.
If you have any questions about your special needs, estate planning or elder law issues in general, please contact Joseph P. Mattera at 937-223-1130 or jmattera@pselaw.com.

The post STABLE Accounts and Special Needs Trusts appeared first on Pickrel Schaeffer & Ebeling.

Medicaid is a joint Federal-State Program which can pay for the expenses of a nursing home, assisted living facility and home care, if a person qualifies. However, the States may differ on the policies it offers to its residents.  Ohio is about to make a major policy change which can benefit a Medicaid applicant, and the non-applicant spouse, if properly planned for when drawing up an asset protection plan.

 
Previously, a retirement account was treated as a countable asset when applying for Medicaid.  This meant requiring an applicant to liquidate, and perhaps spend down, all retirement accounts as an applicant cannot have more than $2,000 in countable assets.  If the applicant is married, the spouse may keep more, depending on the value of their combined assets.
Recently, the Ohio Department of Medicaid has made a policy change on how retirement accounts are treated for eligibility purposes.  If a retirement account is in payout status (for example, if a person is receiving required minimum distributions from a retirement account), it is no longer considered a countable asset when determining Medicaid eligibility.  The required minimum distribution, if coming from an applicant’s retirement account, is considered unearned income which may affect other aspects of a Medicaid case.  Liquidating an applicant’s retirement account is still an option and may benefit the plan.
 
 
COVID-19
To assist those considering Medicaid, many rules have been updated with the following added:
“This rule is being filed as an emergency rule for the immediate preservation of the public health in order to provide greater flexibility to ensure Medicaid eligible individuals are able to quickly and efficiently obtain and maintain Medicaid services during the COVID-19 state of emergency.”
The respective rule must be reviewed to see if COVID-19 affects the rule.
If you have any questions about Medicaid or about your elder law issues in general please contact Joseph P. Mattera, Esq. at 937-223-1130 or jmattera@pselaw.com.

The post Major Changes to Medicaid appeared first on Pickrel Schaeffer & Ebeling.

Effective January 1, 2020 is a new spending bill called the SECURE Act (Setting Every Community Up for Retirement Enhancement Act of 2019). 

Prior to 2020, most participants were required to take RMDs (required minimum distributions) from employer plans or IRAs by age 70-1/2; however, for those who have not reached 70-1/2 by the end of 2019, the RMD date is April 1 of the year following the calendar year in which you reach age 72.  Every year after your start date you are required to take a RMD by December 31.  The change allows more time for your qualified accounts to grow before they are reduced by distributions or taxes.  If both spouses still work, the later age will allow the couple to contribute $14,000 more to an IRA if they contribute the maximum of $7,000 each to their IRA.

Another advantage to the later date is more time to do a Roth IRA conversion from a traditional IRA, if certain requirements are met.  Withdrawals from a Roth IRA are tax-exempt (again, if certain requirements are met) and with a Roth IRA, there are no RMDs during a person’s lifetime.  

The Act also eliminates the prohibition from contributing to a traditional IRA after age 70-1/2, similar to a Roth IRA which does not have the restriction.

The SECURE Act also encourages employers with retirement savings plans to permit employees to convert their savings into annuities, structuring a lifetime income.  Employers will be protected from lawsuits if the insurance company selling the annuities does not pay out a lifetime benefit.

Many agree that the most important provision of the SECURE Act includes the elimination of the stretch for IRAs or 401(k)s in favor of the 10-year (after death of owner) distribution rule.  This change will decrease wealth transfer and may involve a need for changes to clients’ estate plans.  However, while the Act requires that all assets be distributed by the end of the 10^th calendar after date of death, there are no RMDs required.  If a beneficiary is an “eligible designated beneficiary”, they may keep the stretch over their lifetime.

An “eligible designated beneficiary” includes the following: a surviving spouse, a minor child, a disabled individual (as defined by the Internal Revenue Code), a chronically ill individual (as defined by the Internal Revenue Code), and an individual not more than 10 years younger than the decedent.

Those that have named a trust as beneficiary of an IRA or 401(k) should review the trust’s language to make sure the trust follows the new beneficiary rules.  We will be hearing a lot more about the SECURE Act in the upcoming months. 

If you have any questions, please contact Joe Mattera at jmattera@pselaw.com or call 937-223-1130 to discuss the issues with him or any of our other Probate and Estate Planning attorneys.

The post Secure Act appeared first on Pickrel Schaeffer & Ebeling.

The post Payment for Necessaries appeared first on Pickrel Schaeffer & Ebeling.

The post Medicaid and Ohio Work Requirements appeared first on Pickrel Schaeffer & Ebeling.

The post Under-Performing Nursing Facilities appeared first on Pickrel Schaeffer & Ebeling.