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Malti Patel
WELFARE CONCERNS FOR ELDERLY IMMIGRANTS ADDRESSED
By MALTI PATEL - liftingthemists@gmail.com

Q. Will a one-time increase in my income (for example, due to property sales or capital gains) affect my Part B premium forever?

A. No. Each year Social security Administration department requests your most recent tax return information from the Internal Revenue Service (IRS). To determine the 2007 Part B premium, IRS generally provides information for tax year 2005. For 2008, IRS will generally provide information for tax year 2006. They use your modified adjusted gross income (MAGI) to determine your premium for one year. Your MAGI is a combination of your adjusted gross income and tax exempt interest income.

Your tax return for 2006 will reflect only your income for that year. So, if your premium increased in 2007 due to a one-time increase in your income in 2005, such as sale of property, it could decrease in 2008. Your 2008 Part B premium depends on your income for tax year 2006.

Q. If I cashed in an IRA, will it be reflected in my Income-Related Part B premium?

A. If you cashed in an IRA in 2005, it could affect your 2007 premium. To determine your 2007 Part B premium, they use the most recent tax return information provided by the Internal Revenue Service (IRS). Generally, this information is for tax year 2005. We use your modified adjusted gross income (MAGI) to make this determination. Your MAGI is a combination of your adjusted gross income and tax exempt interest income.

To determine your 2008 premium, the tax return information for 2006 is used. Your return for tax year 2006 will reflect only your income for that year. So, if your premium increased in 2007 because you cashed in an IRA in 2005, it could decrease in 2008. Your 2008 Part B premium depends on your income for tax year 2006. To learn more about Medicare Part B coverage, visit www.medicare.gov.

Q. What if my income has gone down because I retired, stopped working or my insured pension plan went down?

A. If your income has gone down because you or your spouse retired, stopped working or reduced your work hours, or your insured pension plan stopped or went down, and the change will make a difference in the income level they consider, contact Social security administration as soon as possible. Tell them you have new information and want a new decision about your Income-Related Part B premium.

You will need to show evidence of the event and provide proof or an estimate of your reduced income. Evidence of the event could be a letter from your employer about your retirement or something similar. Proof of the change in your income in 2006 could be a copy of your return for tax year 2006 or an estimate if you have not yet filed your 2006 taxes. If your income will not change until 2007, you can give an estimate of what you think your income will be. To report the change, you can use the form by visiting www.socialsecurity.gov/online/ssa-44.pdf

Q. Can I ask for a new decision about my Income-Related Part B premium?

A. You can request a new decision and ask that we use more recent tax return information if:

" 2004 tax data was used to determine your 2007 premium and you have a signed copy of your 2005 tax return; or " One of the following happened and the change will make a difference in the income level:

o You married;

o You divorced or your marriage was annulled;

o You became a widow/widower;

o You or your spouse stopped working or reduced work hours;

o You or your spouse lost income from income-producing property due to a disaster or other event beyond your control; or

o Your or your spouse's benefits from an insured pension plan stopped or were reduced.

Once you show evidence of the event and provide proof or an estimate of your reduced income, Social Security will update its records and correct your Part B premiums back to the earliest time in the year you had Part B.

These questions and answers are courtesy of Malti Patel, 1607 Wood Creek Lane, Allen, Texas-75002. Patel published a book "Lifting the Mists: A simple guide to a complex welfare system for elderly immigrants and their families." Email liftingthemists@gmail.com to order the book.






Ramesh Parekh
INSURANCE: LONG TERM CARE INSURANCE (LTCI) - IMPORTANT INFORMATION BEFORE YOU BUY ONE
By RAMESH PAREKH, CPA

As many people know, Long Term Care (LTC) cost could be high and is escalating at a high rate. Lack of a Long Term Care Insurance (LTCI) protection can wipe out all net worth of many senior citizens. Some important and basic knowledge on LTC policy:

1. Selection of insurance company:

Financial strength - It is important to select a company with good financial strength so that it may be around for a long time when your claim may arise. There are independent agencies that rate insurance companies based on their financial strength such as A.M. Best.

Experience - Select a company with long and good record of payments of claims and customer care. Such an experienced company will generally have a better knowledge in premium rate setting and claim payments.

2. The policy :

LTC policies are quite complex in terms of coverage, options, exclusions and limitation. LTCI policies vary tremendously. Here are some aspects of policy you will need to consider:

Deductible - Elimination period - Could be 20, 30, 90, 120 days or longer period during which you must pay for nursing-home care out of your own pocket. The longer the elimination period, the lower the premium.

Coverage

How are long-term home care expenses covered? Will the policy pay a relative for the home care?

Does elimination period apply to home care?

Is there a waiver of premium during the care? When does the waiver clause start?

Does the policy pay less benefits for home care or assisted living facility than nursing home stays?

What are the exclusions and limitations in benefit coverage? How much coverage will you have? What will be daily/weekly/monthly and total benefit limits?

Is there an automatic inflation protection rider?

Is the inflation adjustments "simple" or "compound"?

Most states require companies to offer inflation protection. It is up to you to decide whether to buy that coverage.

You have to select the number of years for the benefit period. Insurers do offer lifetime coverage but the premiums can become unaffordable. Usually, the benefit period of 3-6 years is adequate.

3. Pricing :

Make sure that you can afford a premium without affecting your lifestyle or depleting your assets even if the premiums go up in future.

Most of the policies reserve the company's right to increase the premium in future.

Inquire about the past rate increases of the company.

Check out if there is a spousal discount for spouse/partner coverage

The decision to buy the LTC insurance is an important financial decision and lifetime commitment.

There are many experts in the field. I believe your best help will probably come from an insurance representative who specializes in long-term care insurance. A trusted insurance professional can help you in guiding through the maize of information on insurance companies, policy selections and help you determine what suits your needs the best.

For those who want to make decisions on your own, there are resources available. Shopper's Guide to Long-Term Care by National Association of Insurance Commissioners at www.naic.org or contact Florida Department of Insurance at www.floir.com

Ramesh Parekh, CPA, can be reached at (727) 461-9770 or e-mail ramesh.parekh@genworthrr.com or parekhconsulting.cpa@verizon.net





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