By Ronald A. Fatoullah, Esq. and Yan Lian Kuang-Maoga, Esq.
Now that President Barack Obama has won a second term, what does it mean for seniors? What impact, if any, are seniors to expect with regard to long-term care costs and estate taxes? The good news is that his re-election means Medicare and Medicaid as we know them will likely be preserved for at least the next four years. However, with regard to estate, gift and generation skipping transfer taxes, we will have to wait for the final results. As of the writing of this column, President Obama and John Boehner are busy negotiating these issues. Only time will tell if we go over the so-called “fiscal cliff” or if Congress can put together a responsible fiscal plan that increases revenues while preserving important governmental entitlements that seniors rely on.
One of the biggest outcomes of the election is that the Affordable Care Act (ACA – a.k.a. “Obamacare”), which candidate Mitt Romney had promised to repeal, will almost certainly remain the law in our country. For seniors, the law has already begun to close the gap in Medicare’s prescription drug coverage known as the “doughnut hole,” and has been providing free preventative care for Medicare recipients. The ACA also included a number of provisions aimed at improving long-term care and helping recipients remain in their homes instead of being forced into nursing homes. These provisions will continue to be carried out.
On January 1, 2013, the terms of the Budget Control Act of 2011 will take effect (commonly referred to as going over the “fiscal cliff”) unless Congress acts to avoid it. Failing to act will bring about automatic tax increases and spending cuts agreed to as part of last year’s deficit reduction deal. Although Medicare and Medicaid will likely maintain their current structures, cuts may be made as a result of current negotiations. President Obama reportedly offered to increase the Medicare age to 67 in last year’s budget negotiations with Republicans.
According to a Reuters article, congressional Republicans are also expected to ask for concessions from the ACA, including delaying and scaling back the planned expansion of Medicaid. In addition, state lawmakers, many of whom are Republican, will decide how the ACA is carried out. Thirty states have Republican governors, some of whom have said that they will opt out of the Medicaid expansion provided for in the ACA. But President Obama’s re-election may boost the prospects for expansion, and prod reluctant states to move forward with the expansion, according to Kaiser Health News
With regard to estate taxes, if Congress fails to act the federal estate and gift tax exclusion is scheduled to be reduced from its current level of $5.12 million to only $1 million ($2 million for a couple). President Obama has proposed to set the federal estate and gift tax exclusion at $3.5 million ($7 million for a couple). New Yorkers must be reminded to engage in estate planning because even if the federal estate and gift tax exclusion does not revert back to $1 million, New York State has its own estate tax and will tax estates over $1 million.
While the re-election of President Obama provides some security to seniors with regard to the preservation of Medicare and Medicaid to pay for long term care costs, much is still up in the air. Now more than ever, seniors owe it to themselves and their families to get their affairs in order and to establish an elder law and estate plan in order to protect assets for themselves as well as their heirs.
Ronald Fatoullah is a leading expert in the fields of elder law & estate planning. He is the founder and managing attorney of Ronald Fatoullah & Associates, a law firm concentrating in elder law, estate planning, Medicaid eligibility, special needs, trusts, guardianships, & probate. He is certified as an elder law attorney by the National Elder Law Foundation, and he is the current Legal Committee Chair of the Long Island Alzheimer’s Association. The firm’s offices are conveniently located in: Long Island, Queens, Manhattan & Brooklyn and can be reached at: 1-877-Elder Law 1-877-Estates. This article was written with the assistance of Yan Lian Kuang-Maoga, Esq., an elder law attorney with the firm.