Best Nursing Homes Ranked 2010

 US News and World Reports has ranked the best nursing homes in America for 2010.  Unfortunately, not an single one in the Top 12 is in New Jersey.  However, the data gathered to produce the Honor Roll of Nursing Homes is all available online for you to search rankings of all senior care facilities in your area.  There are reports on over 15,500 facilities including nursing homes, assisted living, independent living and continuing care communities.

Thank you to Elder Law Prof Blog for bringing this to my attention.

Caring for the Caregiver

The caregiver cares for the ill and needy, but who cares for the caregiver?  Family Fortress Estate Planning Blog has an interesting post this week about "Help For Caregivers: 10 Steps Toward Taking Care of Yourself".  A staggering statistic:

The number of people serving as caregivers has exploded in recent years, and according to PR Newswire the number of caregivers now tops 65 million people (29% of the population of the US.)  This includes people providing care for elderly adults, special needs children, young adults with disabilities, and more. 

Caregiving is exhausting - physically, financially and emotionally.  I have seen caregivers end up in the hospital, or not be able to retire because they never joined the workforce and don't qualify for social security.   All of this can be summed up as "Caregiver Burnout".  The question is how to recognize and deal with Caregiver Burnout.  The blog post provides some help sources:

 But there are ways to combat the onset of Caregiver Burnout. provides an entire section on how to recognize and prevent Caregiver Burnout, including tips for family caregivers and a list of some of the warning signs of Caregiver burnout.  And that’s not all, this article in PR Newswire offers 10 steps caregivers can take to ensure they take care of themselves financially.


Consider Becoming an Organ Donor in New Jersey

 April is Donate Life Month and New Jersey is asking residents to consider becoming organ donors.  

National “Donate Life Month” is the perfect time to consider the difference you can make in the lives of others through organ donation,” said Health and Senior Services Commissioner Alaigh. “I urge all residents to register as organ donors. Just one person can make a difference in as many as 50 lives. The gift of life is truly the greatest gift of all.”

Nationally, there are more than 106,000 people—including nearly 4,600 New Jersey residents—on a waiting list to receive a life-saving organ transplants, according to the New Jersey Sharing Network.

Becoming an organ donor in New Jersey is a simple as a click of a mouse - you can find out more information at the online at the NJ Motor Vehicle Commission Organ Donor page, or simply download the organ donor form.

You can get more information on Organ Donation at


New NJ Case - Life Care Contract Deemed to be a Gift for Medicaid

 A basic question in determining Medicaid eligibility is "Did you make a gift in the past 5 years?"  If the answer is "Yes" a penalty period will be assessed before a person qualified for Medicaid.

A key distinction is that a transfer for fair market value is not a gift.  If I give my son my car, that is a gift equal to the value of the car.  If I sell my car to my son for the Kelly Blue Book value, I have made a transfer of property, but I have not made a gift because I exchanged the car for cash. If I sell my car to my son for 50% of the Kelly Blue Book value, then I have done a part sale/part gift.  To the extent I got paid, it is a transfer for fair market value and does not create a penalty period.  To the extent I did not get paid, it is a gift in an amount equal to the difference in the fair market value and what I got paid.

To take advantage of the fact that a transfer for "fair market value" is not a gift, some seniors began to enter into Life Care Contracts with their children.  These contracts would be structured along the lines of "I parent give you child $150,000, and in return, you child agree to care for me for life". The theory was that the Life Care Contract was a transfer for fair market value and not a gift since the child was promising to provide services in return for the dollars.

In re E.S. v. DIVISION OF MEDICAL ASSISTANCE  AND HEALTH SERVICES, et al the Appellate Division upheld an prior Administrative Law Judge ruling that a Life Care Contract where mother made a lump sum transfer to daughter for future personal care services was a gift, and not a transfer for fair market value, and a penalty period should be assessed.

This ruling is not surprising.  Logic says that how can you be sure that the lump sum is equal to future care - what if mom dies in 3 months, or needs a nursing home in 6, or lives until 110?  A contract between two unrelated parties would not create a situation that allowed for either such a windfall (if mom dies earlier) or detriment (if mom dies later).

Note that this ruling does not address "pay as you go" personal care contracts where a child might contract with a parent to be hourly for caregiver services actually rendered.

Image: graur razvan ionut /


Quick Highlights of Health Care Legislation

The new health care legislation is massive - over 2000 pages.  It will be years before many questions are answered, but has an immediate effect on all of us.  I got this summary of quick highlights from Steven Kaplan, CPA, JD, LL.M at Sax Macy, Fromm & Co. and thought it did a great job of boiling down to the key points:

Penalty for remaining uninsured.
After December 31, 2013, taxpayers would have to maintain minimum coverage or pay a penalty.

Employer responsibilities.
After December 31, 2013, an employer that employs at least 50 full-time employees and does not offer health insurance coverage would have to pay a penalty.

Excise tax on high-cost employer-sponsored health coverage.
After December 31, 2017, the bill would place a 40% nondeductible excise tax on insurance companies for any health coverage plan to the extent that the annual premium exceeds $10,200 for single coverage and $27,500 for family coverage.

New employer reporting responsibilities.
After December 31, 2010, employers would have to disclose the value of the benefit for insurance coverage on the employee's W-2.

Additional hospital insurance tax (HI) for high-wage workers.
After December 31, 2012, the HI tax rate would be increased by 0.9 percentage points on an individual taxpayer earning over $200,000 ($250,000 for married couples filing jointly); these figures are not indexed. The current rate is 1.45%.

Surtax on unearned income.
After December 31, 2012, a 3.8% surtax would be placed on net investment income of a taxpayer earning over $200,000 ($250,000 for a joint return). Net investment income would be interest, dividends, royalties, rents, gross income from a trade or business involving passive activities, and net gain from disposition of property (other than property held in a trade or business).

Limit on health FSA contributions.
After December 31, 2012, contributions to health flexible spending accounts would be limited to $2,500 per year.

Increased tax on nonqualifying HSA or Archer MSA distributions.
After December 31, 2010, the additional tax for HSA withdrawals would be increased from 10% to 20% and for Archer MSA withdrawals would be increased from 15% to 20%. This applies to withdrawals for nonqualified medical expenses.

Modified threshold for claiming medical itemized deductions.
After December 31, 2012, the threshold for claiming an itemized deduction for medical expenses would be increased from 7.5% to 10% for those under age 65.

Image: m_bartosch /

47% American Households Pay No Taxes - Something is Wrong with this Picture

 A lead story in my Yahoo news today is "Nearly half of US households escape fed income tax".  "This can't be right" I am thinking as I open the link, but boy was I wrong.

According to the Tax Policy Center "About 47 percent [of American Households] will pay no federal income taxes at all for 2009. Either their incomes were too low, or they qualified for enough credits, deductions and exemptions to eliminate their liability."

And if a person has enough tax credits so that they equal more than their tax liability, they get a check from the government for the difference.

Now, I am a proponent of a progressive tax system - those who earn less have less ability to pay because more of  their dollars go to necessities, but this is ridiculous.  (A progressive tax system is one where the more you earn the more you pay).  However, half of American households make no contribution whatsoever to the operation of our country?!?  A progressive tax system doesn't mean un-aggressive - it is supposed to recognize a fair share based on total earnings.  Why are 53% of American households paying 100% of personal income tax? Something is clearly wrong with this picture.

And a tax refund for tax credits being greater than taxable income?  That just doesn't make sense. Under a progressive tax system, if you don't earn as much you pay less or no taxes.  That should the sole benefit - you pay no taxes and don't have to share anything with the government.  To issue a refund is nonsensical - just the administrative cost of calculating and issuing refunds for money you didn't earn really doesn't make sense.  Tax credits should be available only to reduce tax to zero, and if there is excess, it can be carried forward to be used against other income, or the benefit lost.

Note everybody is every going to agree on the best tax policy, but we need the throw in some common sense.

NJ Taxpayers May Have Extended Tax Filing Date of May 11

A silver lining has been offered by the IRS to some of us who have been battered by spring storms and flooding.  New Jersey taxpayers in 12 counties have an additional 4 weeks to file their taxes to address the severe flooding those counties have faced.

President Obama announced today that Atlantic, Bergen, Cape May, Essex, Gloucester, Mercer, Middlesex, Monmouth, Morris, Passaic, Somerset, and Union counties have been declared federal disaster areas qualifying for individual assistance.

 NJ taxpayers who reside in or have businesses in the effected counties now have until May 11 (instead of April 15) to file their 2009 Income Tax Returns, make payment, and make contributions to an individual retirement account (IRA).

In case you run into any problems with late filing, the IRS website advises that:

If an affected taxpayer receives a penalty notice from the IRS, the taxpayer should call the telephone number on the notice to have the IRS abate any interest and any late filing or late payment penalties that would otherwise apply. Penalties or interest will be abated only for taxpayers who have an original or extended filing, payment or deposit due date, including an extended filing or payment due date, that falls within the Postponement Period.

IRS computer systems automatically identify taxpayers located in the covered disaster area and apply automatic filing and payment relief.

See the IRS NJ Disaster site for more information.

 Image: Francesco Marino /

Wall Street Journal is Wrong that Seniors want to "Game" Medicaid

Over the weekend the Wall Street journal ran an article on elder law  planning entitled "Inoculating Estates From Health Costs". While I'm always happy to see an article about elder care planning in the news because it's such a critically important and mis-understood problem, in this article the Wall Street Journal missed the mark.

The article opens as follows:

Should you give away your nest egg to your heirs—and then stick Medicaid with your nursing-home tab when the time comes? Outrageous though it might seem, it is a perfectly legal estate-planning strategy.

 The author seems to think that this is what Medicaid asset protection planning is all about -- happily giving away millions in assets so you can "stick it" to the government should you get sick. This assumption couldn't be further from the truth.

The vast majority of clients I see who seek elder care advice from an attorney are not rich -- they typically have a modest home that they have owned for 40+ years which has appreciated in value primarily because of its location in Northern New Jersey. They may have $100,000 to $300,000 in savings - they may have less or none. They are generally living off of the fixed income of Social Security, a small pension, and income off their meager assets, in the most expensive state in the country. Real estate taxes for that modest home easily range between $6000 and $15,000 per year.  Given current interest rates, the income off of a $100,000 CD may be approximately $4000 a year (which might cover part of their real estate taxes).

The clients and audiences I speak to about elder care planning are retired -- they generally worked their whole lives for one company or a small business, and are falling further and further behind every year as promises made about pensions and healthcare are reneged upon, or the companies that they work for go out of business, while living expenses, and most dramatically health care expenses, spiral beyond their means. They typically have little or no debt, because it was always important to them to pay their bills. Many are veterans, because they cared enough to serve their country.  They're scared - scared that they might lose their house, scared that their spouse will not be able able to financially survive if they get sick, scared that their illness might bankrupt their children.

And let's talk about the author's assumptions about how "great" it is to be on Medicaid should you get sick.  In order to qualify for Medicaid, you must have less than $4000 of assets in your name. When was the last time you had less than $4000 of assets? Needing Medicaid means that you are stripped of all financial security whatsoever. Do you want to ask your kids for money whenever you need it? Well, neither do my clients.  Furthermore, under Medicaid, your choice of care is limited -- generally Medicaid only pays for care in an institutionalized setting (i.e. nursing home), and will not pay for you to be cared for in your home (even though that will cost less). So, not only have you been stripped of all your finances, but you are also stripped of the comfort and dignity of aging and dying at home. Gee, doesn't that sound like something you should "plan for"?

So why does it matter to plan to pay for long-term care for yourself? Well, nursing homes in New Jersey easily run at $10,000 after-tax dollars a month. That's four times as much as you might pay for tuition for a single year of a college education. Our seniors didn't plan for this -- heck, those of you reading this right now have not planned for this. It is mind-bogglingly expensive and could wipe you out financially.

So, should the result be to punish people for getting old and getting sick before they die?  Does a person "deserve" to be institutionalized because they didn't "strike it rich" during their working years?  Or, should our seniors be afforded the most dignity and security that they can in the face of a whole host of bad choices, each one worse than the one before it?

Sure, there are people out there who "game" the system -- but that's called fraud, and there are civil and criminal penalties to address that. The seniors that I talk to just don't want to be scared anymore -- they want to have a sense of security about their future, to know what it could cost them if they get sick, and to know how it is that they're going to pay for it. The Wall Street Journal article uses far too wide of a brush -- don't paint those seeking education to make informed decisions about a harsh reality as leeches on society.

Image: Maggie Smith /