Social Security Beneficiaries Will Receive a 2 Percent Increase in 2018

In 2018, Social Security recipients will get their largest cost of living increase in benefits since 2012, but the additional income will likely be largely eaten up by higher Medicare Part B premiums.

Cost of living increases are tied to the consumer price index, and an upturn in inflation rates and gas prices means recipients get a small boost in 2018, amounting to $27 a month for the typical retiree. The 2 percent increase is higher than last year’s .3 percent rise and the lack of any increase at all in 2016. The cost of living change also affects the maximum amount of earnings subject to the Social Security tax, which will grow from $127,200 to $128,700.

The increase in benefits will likely be consumed by higher Medicare premiums, however. Most elderly and disabled people have their Medicare Part B premiums deducted from their monthly Social Security checks. For these individuals, if Social Security benefits don't rise, Medicare premiums can't either. This “hold harmless” provision does not apply to about 30 percent of Medicare beneficiaries: those enrolled in Medicare but who are not yet receiving Social Security, new Medicare beneficiaries, seniors earning more than $85,000 a year, and “dual eligibles” who get both Medicare and Medicaid benefits. In the past few years, Medicare beneficiaries not subject to the hold harmless provision have been paying higher Medicare premiums while Medicare premiums for those in the hold harmless group remained more or less the same. Now that seniors will be getting an increase in Social Security payments, Medicare will likely hike premiums for the seniors in the hold harmless group. And that increase may eat up the entire raise, at least for some beneficiaries.

For 2018, the monthly federal Supplemental Security Income (SSI) payment standard will be $750 for an individual and $1,125 for a couple.

For more on the 2018 Social Security benefit levels, click here.

Graham-Cassidy bill and Ohio Medicaid

The most recent version of the Republican bill to repeal Obamacare again proposes a block grant model for the State Medicaid programs. The federal funds given to the State Medicaid programs would be based on a per capita amount (i.e. per person). This would be an absolute limit that could not be exceeded. The method for determining this amount is somewhat complicated and I will not attempt to go over that here. However, as I have stated before, the effect on the Ohio Medicaid program would generally be to limit eligibility. An absolute funding ceiling puts pressure on the Ohio Department of Medicaid to find some way to restrict eligibility. Based on my experience, I am sure they will find a way.

One positive change in the Graham-Cassidy bill is that new exceptions are added for the new prohibition of not allowing three months prior retroactivity for Medicaid applications. Presently, an applicant may qualify for eligibility for the three months prior to the month of filing of the application. However, the applicant must have met all eligibility criteria for those prior three months. So they are not getting additional eligibility or anything that they are not entitled to. This just gives applicants some extra time to get the forms filled out and filed. Now they will have to rush to get the application filed or miss out on a month or more of eligibility even though they would have met the eligibility criteria. The new exceptions allow the three month retroactivity for: a) applicants age 65 or older; b) applicants who are blind or disabled. All others will need to rush to get their applications filed by the end of the month.

Avoiding Probate without using a Trust; Joint, POD & TOD Accounts

An estate plan can be set up to avoid probate without use of a Revocable Living Trust. For persons with a small estate consisting of only a few assets, a trust is often not economical.

You can plan your estate by using joint and survivorship (JTWRS), POD (pay on death) and TOD (transfer on death) accounts which pass to the named survivor or beneficiary outside of probate. However, there are some drawbacks to this type of estate plan. The more accounts and assets you have, the more difficult it is to plan your whole estate in this way. If you change your intentions, you will have to rearrange all your accounts. This may involve trips to the bank, filling-out forms, correspondence with financial institutions and much other paperwork. Unequal changes in value can leave some heirs getting more than others, contrary to your intentions. For example, if you give Microsoft stock to one child and Ford stock to another, the stock values may change dramatically before you pass away leaving one child with a larger inheritance. Also, there have been many cases where a son or daughter has withdrawn funds in a joint account while their parent was still living. If the other person on the JTWRS account owes money to someone or is sued for a debt, this creditor can attach your funds in the joint account. These joint and POD accounts only avoid probate and do not avoid estate tax. If an estate plan utilizing joint and survivorship accounts is the chosen plan, then this planning should be done with the advice and assistance of legal counsel to assure that all accounts are properly set up to avoid Probate. My experience has been that very few people who try to set up their estate to avoid probate in this manner do so successfully. They almost always forget to set up some accounts correctly and, after they pass away, the family needs to open probate for just one or two accounts.

A Revocable Living Trust plan offers the following advantages over use of JTWRS and POD accounts: a) all assets are held under one “umbrella” which simplifies management of the assets; b) if a change in the estate distribution is desired, the grantor only needs to amend the Trust instead of re-arranging some or all of the asset beneficiary designations; c) no risk of changes in account values or balances altering the desired equal (or other proportionate) distribution to the intended heirs; d) the Trust can include a “spendthrift clause” which will protect the estate share of any beneficiary who is sued, gets divorced, files bankruptcy or has any creditor claims against their share of the Trust. A Revocable Living Trust is usually the better estate planning technique for avoiding probate for most people.

Revocable Living Trusts to Avoid Probate

Setting up a revocable living trust for the purpose of avoiding probate has become a popular estate plan in recent decades. The consumer movement to avoid probate began in the 1960’s with a book by Norman Dacey and has not abated since that time. Many clients prefer to set up a revocable living trust to make estate settlement easier for their beneficiaries.

Unfortunately, there are many misunderstandings and half-truths about avoiding probate. There are some advantages but some asserted advantages are misleading or not correct. There are also some disadvantages to avoiding probate. Any estate lawyer will tell you that there is much more litigation with estates now due to the lack of oversight with trusts and other property that is not subject to the probate court’s supervision. You will hear differing opinions on use of a living trust to avoid probate. Some persons advocate for them stating everyone should have one. Others believe there is no need to avoid probate. In reality, the truth is somewhere in the middle. The explanation below sets forth the advantages and disadvantages of using a living trust to avoid probate.


1) Attorneys fees for setting up a trust will generally be lower than fees for probate.

2) The privacy of your estate will be preserved by using a living trust. The probate inventory is a public record open to inspection by anyone.

3) Avoiding the delay of probate and immediate distribution of the estate are commonly expressed advantages. However, the trustee cannot distribute the whole estate to the heirs until estate taxes and all other debts are paid. If the trustee does so, he/she will be personally liable to pay these debts out of their own funds. However, the lack of time constraints and probate requirements will certainly be avoided and the trustee in most cases will be able to complete the administration much sooner and with less work.

4) The cost of an executor’s fee may be avoided if an executor would have been appointed who would have charged a fee. In most situations, an heir or family member can be appointed executor on the condition that he/she serves without compensation.

5) A guardianship proceeding in Probate Court may also be avoided. However, an inexpensive power of attorney may also accomplish this same objective.

6) Avoidance of estate taxes is often implied as an advantage of a living trust. Although a living trust can be part of an estate plan that eliminates estate tax, this can also be accomplished with a will. Therefore, estate tax savings is clearly not an advantage of a living trust.


1) There will be present costs to create the trust and transfer costs for putting the assets into the trust.

2) There may be additional complications and requirements associated with everyday transactions once you have transferred title to all your assets into the trust. Banks, stock brokerage companies etc… may require various forms to be filled out, a copy of the trust and other assurances that the trustee is authorized to take certain actions. However, living trusts have become more commonplace in recent years and most companies can now handle trusts without too much complication.

3) Upon death, the transfer to the heirs is not automatic. Various legal documents will be needed to fulfill legal requirements. Appraisals are needed for income tax purposes for certain assets. Although the administrative burden is less than probate, it is certainly not absent.

4) The trustee is not accountable to a court and the supervision of the Probate Court is not available. Some of the functions of probate are for the executor to report to the court all receipts and disbursements, an accurate appraisal of assets, payments of bills and distribution to the heirs. If the executor misapplied some money or did not distribute according to the will, the court would probably be aware of this and take action against the executor. A trustee of a living trust is typically not accountable in this fashion and the heirs may have no way of knowing if estate funds were misappropriated. Of course the trust beneficiaries have a right to sue, but this will be more costly and involved as opposed to filing an appropriate motion in Probate Court.

Each person must weigh the above factors, consider your circumstances and desires, and make an informed decision.

Using a Prepaid Funeral Contract to Spend Down Assets for Medicaid

No one wants to think about his or her death, but a little preparation in the form of a prepaid funeral contract can be useful. In addition to helping your family after your death, a prepaid funeral contract can be a good way to spend down assets in order to qualify for Medicaid.

A prepaid or pre-need funeral contract allows you to purchase funeral goods and services before you die. The contract can be entered into with a funeral home or cemetery. Prepaid funeral contracts can include payments for: embalming and restoration, room for the funeral service, casket, vault or grave liner, cremation, transportation, permits, headstones, death certificates, and obituaries, among other things.

One benefit of a prepaid funeral contract is that you are paying now for a service that may increase in price—possibly saving your family money. You are also saving your family from having to make arrangements after you die, which can be difficult and time-consuming. And, if you are planning on applying for Medicaid, a prepaid funeral contract can be a way to spend down your assets.

Medicaid applicants must spend down their available assets until they reach the qualifying level ($2,000 in Ohio). By purchasing a prepaid funeral contract, you can turn available assets into an exempt asset that won’t affect your eligibility. In order for a prepaid funeral contract to be exempt from Medicaid asset rules, the contract must be irrevocable. That means you can’t change it or cancel it once it is signed.

Before purchasing a contract, you should shop around and compare prices to make sure it is the right contract for you. Buyers need to be careful that they are buying from a reputable company and need to ask for a price list to make sure they are not overpaying.

For information on planning a funeral, see my checklist on my website

Medicaid & Life Estates under Ohio Medicaid

The phrase “life estate” often comes up in discussions of estate and Medicaid planning, but what exactly does it mean? A life estate is a form of joint ownership that allows one person to remain in a house until his or her death, when it passes to the other owner. Life estates can be used to avoid probate and to give a house to children without giving up the ability to live in it. They are sometimes suggested for use in Medicaid planning.

In a life estate, two or more people each have an ownership interest in a property, but for different periods of time. The person holding the life estate — the life tenant — possesses the property during his or her life. The other owner — the remainderman — has a current ownership interest but cannot take possession until the death of the life estate holder. The life tenant has full control of the property during his/her lifetime and has the legal responsibility to maintain the property as well as the right to use it, rent it out, and make improvements to it.

The life tenant cannot sell or mortgage the property without the agreement of the remaindermen. If the property is sold, the proceeds are divided up between the life tenant and the remaindermen. The percentage shares are determined based on the life tenant’s age at the time using life expectancy tables that assign a percentage to the life estate depending on the age.

Be aware that transferring your property and retaining a life estate can trigger a Medicaid ineligibility period if you apply for Medicaid within five years of the transfer. The remainder portion is considered to have been transferred to the remainder persons on the deed. Many years ago, it was argued that the life estate had no market value and, thus, it was not countable as a resource. This argument has failed in Ohio. Thus, creating a life estate actually presents a problem when the person has applied for Medicaid thinking they are eligible because they have spent down to less than $2000. The life estate will have a value that is probably more than $2000. In short, use of a life estate deed is not a good planning option in Ohio for purposes of Medicaid eligibility.

When the life tenant dies, the house will not go through probate, since at the life tenant’s death the ownership will pass automatically to the holders of the remainder interest. However, in Ohio a life estate is included in the definition of the estate which is subject to Medicaid estate recovery. There have been a few cases in Ohio ruling on this issue of a life estate and estate recovery. One case held a life estate was subject to estate recovery and the other that it was not. However, the portion of the property that is subject to estate recovery is only the life estate portion. Thus, the full value of the property is not exposed to recovery.

In summary, life estate deeds are not good planning tools in Ohio for purposes of Medicaid eligibility or estate recovery.

Ohio Governor Kasich Veto of Ohio Medicaid Expansion Freeze

The Ohio General Assembly inserted into the state budget bill a provision that would stop new enrollment for the Medicaid expansion group beginning July 1, 2018. Governor Kasich vetoed this provision on June 30. Presently, the General Assembly is attempting to get together enough votes to override this veto. There has been some confusion and concern among my clients whether, if this does pass overriding the veto, it would affect their existing or expected eligibility for Medicaid payments of nursing home costs. It would not. The Medicaid expansion group is a totally different eligibility group. This group of eligible persons was added as part of Obamacare and grants eligibility for persons meeting certain qualifications and who do not qualify under any other group. If the applicant is under age 65 and not on Medicare, he/she may be eligible for this expansion group which is also known as MAGI group eligibility. A single individual is eligible if their income is less than 138% of the Federal Poverty Level (FPL). Again, even if this Medicaid expansion group is eliminated or restricted, this will have no effect on Medicaid eligibility for persons in nursing homes who are or may be eligible for Medicaid payment of their nursing home bill.

Ohio Medicaid Residence Exemption for Single Persons

The Ohio Medicaid rule governing the exemption of a residence for a single person changed as of last August 2016. A single person who enters a nursing home must spend down to less than $2000 in order to be eligible for Medicaid payment of the nursing home costs. Their residence remains an exempt resource as long as they have an “intent to return home.”  In our office we have successfully retained this exemption by submitting an Intent to Return Home Affidavit.

Although this may seem very favorable by retaining the residence as an exempt resource, is really not that advantageous. If a person remains on Medicaid and passes away the home will be subject to estate recovery. Thus, the value of the home will be lost to pay back Medicaid. However, this exemption is important for persons who can spend down quickly before the home can be sold. It allows them to obtain Medicaid approval quickly without having the sale of the home delay eligibility. Once the home is sold they will need to spend down again before regaining Medicaid eligibility. As a practical matter, it is best just to sell the home as soon as possible and take advantage of spend down and other planning strategies to save some of the estate from nursing home costs.

Ohio Medicaid MMMNA

The annual inflation adjustment for the Minimum Monthly Maintenance Needs Allowance (MMMNA) and the Excess Shelter Allowance (ESA) under the Ohio Medicaid program was just announced to be effective July 1, 2017, as follows: MMMNA Standard $2030; ESA standard $609. These numbers affect the calculation of the community spouse’s Monthly income allowance allowed under Ohio Medicaid regulations. For more information see