Senior Education Counsel, a nonprofit Since 1995, Arizona, California and North Carolina Mark Diamond, national senior advocate

Advancing the Welfare of
Seniors Through Education

Senior Education Counsel, a nonprofit Since 1995, Scottsdale Arizona, California and North Carolina Mark Diamond, national senior advocate

Educating Seniors on
Preserving their Wealth

Senior Education Counsel is a national non-profit senior advocacy group dedicated to the education and protection of seniors in retirement since 1995. Senior Education Counsel has hosted over 1,000 seminars for Seniors over the past 20 years.  The Senior Education Counsel team of professionals are well versed in various ways seniors can preserve their assets throughout their retirement years. Senior Education Counsel is Committed to Helping Seniors Achieve Financial Independence and Total Peace of Mind.

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Senior Education Counsel, a nonprofit Since 1995, Arizona, California and North Carolina Mark Diamond, national senior advocate

Learn How to Reduce Taxes on Social Security

Important Legislation Impacting Social Security, Medicaid & Medicare

Senior Education Counsel, a nonprofit Since 1995, Arizona, California and North Carolina Mark Diamond, national senior advocate

1935 Social Security was Enacted

The Social Security Act was enacted on August 14, 1935. The Act was drafted during President Franklin D. Roosevelt’s first term by the President’s Committee on Economic Security, under Frances Perkins, and passed by Congress as part of the New Deal. This Act was an attempt to limit what were seen as dangers in the modern American life, including old age, poverty, unemployment, and the burdens of widows and fatherless children. By signing this Act on August 14, 1935, President Roosevelt became the first president to advocate federal assistance for the elderly.

Back in 1935, thirty-three people paid into the program for each recipient. In 1990, three people paid into Social Security for each recipient. It’s estimated today that two people pay into Social Security for one recipient. This is not because there are less people paying in, but because more people are living much longer due to factors such as medical advances. It’s also estimated that by the end of 2018, Social Security, Medicare, Medicaid, and federal pensions will exceed federal revenues.

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Senior Education Counsel, a nonprofit Since 1995, Arizona, California and North Carolina Mark Diamond, national senior advocate

The Creation of the Medicare & Medicaid Act (1965)

The Social Security Amendments of 1965, signed into law by LBJ and enacted on July 30, 1965, resulted in the creation of two programs: Medicare and Medicaid.

Medicare is a taxpayer shared government subsidized program that, as a US citizen or permanent resident, will cover 80% of all our basic medical needs. The remaining 20% is covered by us, through Medigap. The Medigap program, requires us to: A) to purchase coinsurance “Medicare Supplement” and B) a required deduction from your social security check (approximately $100 – $120) a month to fill the 20% gap.

HEW (Health, Education & Welfare) was the umbrella organization that regulated the Social Security Administration (overseeing Medicare), and Social & Rehabilitation Services (overseeing Medicaid). HEW created the (HCFA) Health Care Finance Administration in 1977 and HCFA later changed its name to the Centers for Medicare & Medicaid Services (CMS) in 2001.

Many politicians were involved in drafting the final bill that was introduced to the United States Congress in March 1965, and on July 30, 1965, President Lyndon B. Johnson signed the bill into law.

The concept of national health insurance began in the early 20th century in the United States and then came to prominence during the Truman administration. Medicare and Medicaid became the United States’ first public health insurance programs.

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Social Security Amendments of 1983

In 1934, FDR came out in one of his famous radio fireside chats and stated that Social Security would never be taxed.

FDRBeginning in 1984, Regan signed a law that up to 50% of Social Security benefits is taxable income for taxpayers whose adjusted gross income, including their social security benefits, exceeds $25,000 for a single taxpayer and $32,000 for married taxpayers filing jointly.

On August 10th, 1993, under the Clinton Administration, Omnibus Budget Reconciliation Act (OBRA) was passed. The law affected the elderly qualifying for Medicare coverage. It also proposed an income tax on the Social Security benefits of higher-income individuals. The Clinton law, which went into affect January 1st,1994, raised the bar in the taxation of Social Security benefits to 85% taxation if a single earned $34,000 or more and if a couple earned $44,000 or more.
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Senior Education Counsel, a nonprofit Since 1995, Arizona, California and North Carolina Mark Diamond, national senior advocate

GAO Report B-250-340

Pursuant to congressional requests, GAO 1993 B-250340 determined the: (1) prevalence of Medicaid estate planning for purposes of becoming Medicaid-eligible; (2) value of assets sheltered through Medicaid estate planning; and (3) extent to which states are enforcing Medicaid requirements concerning Medicaid estate planning.

Congress and the states were concerned that many elderly Americans with substantial financial means were sheltering their assets through Medicaid estate planning, thereby being qualified for Medicaid nursing home benefits. Medicaid estate planning takes many forms, including transfer of asset ownership, making assets unavailable to pay for nursing home costs, or appealing the value of assets the spouse living at home is allowed to keep consistent with Medicaid requirements.

Converting assets that Medicaid considers available for nursing home payments (countable assets) to assets that Medicaid considers unavailable to cover nursing home care (non-countable assets) can help you qualify for Medicaid. Countable assets include cash, stocks, bonds, and mutual funds. Non-countable assets include prepaid burial arrangements, automobiles, *annuities, and, in certain circumstances, primary residences.

The Criteria of the Exempt Annuity Must Be:

  • Actuarially Sound
  • Irrevocable
  • Non-Assignable
  • Non-Commutable

At the point where Medicaid assumes the cost of care (In most cases, after the first 100 days)

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The Omnibus Budget Reconciliation Act of 1993

The Omnibus Budget Reconciliation Act of 1993 was a federal law that was enacted by the 103rd United States Congress and signed into law by President Bill Clinton. OBRA ‘93 clearly defined penalties for gifting assets for anyone other than your spouse. The enforcement of OBRA ‘93 came 3 years later through the Kassebaum Kennedy Act in August 1996, which clarified penalties of up to $25,000 in fines and up to a 5-year jail sentence.

The new Medicaid rules were designed to restrict elderly persons from gifting their assets in order to qualify for Medicaid to pay for their long-term nursing home care.

First, however, the bad news: OBRA ‘93 increased the periods after a transfer of assets during which the individual will be ineligible for Medicaid. OBRA ‘93 extended this so-called “look back” period from 30 months to 36 months for outright gifts. The new law also extended the “look back” period to sixty (60) months for transfers to irrevocable trusts, which eliminated largely the ability of most families to use trust arrangements to protect assets.

Another piece of bad news is that the new law eliminated a person’s ability to disclaim an inheritance. If a person with a disability was in line to receive an inheritance, and if the receipt of this inheritance would jeopardize his or her eligibility for government benefits, he or she, prior to OBRA ‘93, could simply disclaim the inheritance.

OBRA ‘93, however, treats disclaimers as a transfer of an asset and a person would lose his or her eligibility for Medicaid if he or she disclaims an inheritance.

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Senior Education Counsel, a nonprofit Since 1995, Scottsdale Arizona, California and North Carolina Mark Diamond, national senior advocate

Kassebaum Kennedy Act

To use certain annuities in Medicaid planning, they have to be actuarially sound*, irrevocable, non-assignable, and non-communable. It took congress 3 years to come up legislation to enforce the law, which was drafted by senators Nancy Kassebaum and Ted Kennedy. The Kassebaum and Kennedy bill, was called the Health Insurance Reform Act, and was passed August 21, 1996. The government put in place penalties and potential jail sentencing for anyone they believe are attempting to bypass or defraud Medicaid. Mistakes in Medicaid planning could lead to a 5-year jail sentence and $25,000 in fines. More commonly known as the “Granny Goes to Jail” law.

Annuities can still be purchased, as long as it fits the government’s four criteria. For an annuity to be consider an unavailable asset (i.e., non-countable) for Medicaid eligibility purposes, it should be managed by a professional ‘Certified Medicaid Planner’. A properly annuitized income stream for the benefit of a community spouse, will meet the guidelines in this bill.

 

*Actuarially Sound: The income stream is scheduled for a time period that is equal to or less than your spouse’s life expectancy, and the life expectancy is calculated using the Social Security Administration life tables.

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View Business Week Article: Medicaid Getting Tough With Granny

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Senior Education Counsel provides financial education for Seniors, Mark Diamond Scottsdale
Senior Education Counsel a non profit since 1995, Mark Diamond Senior Advocate.

The Deficit Reduction Act of 2005

The Deficit Reduction Act of 2005 became law on Jan 2nd of 2006. This law changed the “gifting lookback” period for all gratuitous asset transfers to five years. The penalty period starts the day the transfer was made.

The bill also made any individual with home equity above $500,000 (currently $552,00) ineligible for Medicaid nursing home care, although some states will have higher thresholds. The legislation also established new rules for the treatment of assets, including a requirement that the state be named as the remainder beneficiary if there is no surviving spouse, and allowing Continuing Care Retirement Communities (CCRCs) to require residents to spend down their declared resources before applying for medical assistance.
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The Deficit Reduction Act of 2005

Ben BernankeBen Bernanke introduced the first round of quantitative easing during the worst of the financial crisis, as global markets tumbled and liquidity was sucked out of the system. Quantitative easing is an unorthodox application of monetary policy by which a central bank, in this case the Federal Reserve, loosens monetary policy further after having dropped the Federal Funds rate to the zero range. This is done by purchasing longer-term assets, such as 10-year Treasury bonds, in order to push down interest rates further down the yield curve.

The Federal Government’s diagnosis: deflation, not inflation, was putting the economy in grave danger. The central bank pushed the key short-term federal funds rate to zero, which would let businesses and consumers borrow at cheaper rates. But that still wasn’t enough to get the economy out of the intensive-care unit. So the Federal Government began buying long-term securities — Treasury bonds and mortgage-backed securities — to push long-term rates lower. The Federal Government essentially created the money to buy the bonds, expanding the U.S. money supply. And by taking those bonds off the market, the Federal Government pushed long-term rates lower — especially mortgage rates.

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The Most Important Knowledge You Need to Gain as a Senior

Senior Education Counsel – Seminar Topics

  • Reducing and Eliminating Taxes on Social Security
  • Optimizing Your Medicaid and Medicare Benefits
  • Strategies to Pay for Longterm Care
  • Protecting Assets from Catastrophic Illness
  • Protecting Assets from Nursing Home Expenses
  • Passing More Retirement Savings to Heirs
  • Pro & Cons of Revocable Living Trust
  • Methods for Reducing Income Taxes
Senior Education Counsel, a nonprofit Since 1995, Arizona, California and North Carolina Mark Diamond, national senior advocate

Relying on Social Security

In 2014, over 59 million Americans will receive almost $863 billion in Social Security benefits.  How does timing impact what you receive?

COUPLES OVER 65

By age 65, there’s a 72% chance that one of person will live to age 85 and a 45% chance that one will live to age 90.  How can you plan against outliving your income?



Longterm Planning is Critical

70% of all Americans over 65 will need some type of long term care. Do you have a plan in place to protect and preserve your valuable assets?

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