Now that the election is over (thank God) many of our clients are concerned about how the election will affect them. Following is a summary of the current laws on three areas:
Long-Term Care Planning
While Obamacare does involve an expansion of Medicaid; the expansion does not affect the long-term-care portion of Medicaid coverage. Rather, it affects the general health insurance coverage for the poor.
It is important to remember that Medicaid is a health insurance program for all poor in society. It is a program that is based on asset and income limitations. Obamacare changes those limits in a manner that allows Medicaid to be a catchall health insurance program for those who do not and cannot afford to have insurance under the new system.
However, it is important to note that the healthcare system is distinctly different from the long-term care program. Obamacare left the eligibility rules for long- term care intact. There should be no impact on Medicaid planning as a result of President Obama being re-elected.
What we currently know is at the end of 2012 the estate tax exemption will drop from $5 million to $1 million. Additionally the estate tax rate is scheduled to jump from 35 percent to 55 percent.
There are three basic actions that President Obama and Congress can take with respect to the Estate Tax structure:
1. Extend the current rates - Some legislatures want to simply extend the current $5 million estate tax exemption and 35 percent estate tax rate for at least one additional year.
2. Many Democrats have aligned themselves with President Obama and want to reinstate the $3.5 milllion estate tax exemption and the 45 percent estate tax rate from previous years.
3. There are some Democrats who want the estate tax law to revert back to 2001-02 roles, which would result in a $1 million estate tax exemption and a 55 percent estate tax rate.
It is difficult to forecast what will happen with the estate tax rates beyond 2013, but "betting money" is that we will revert to the $3.5 million estate tax exemption and 45 percent estate tax rate. While it seems like $3.5 million is a significant amount of money before estate taxes would have to be paid, it is important for individuals to understand that the value of a decedent's oil and gas rights would be included in their estate, resulting in individual decedent's estates paying taxes.
It was no secret that the candidates had different views with respect to income tax rates. Now income tax rates are at the front and center of the "fiscal cliff" negotiations. Neither party would seem to not want to increase taxes on the middle class. It is generally accepted that the Democrats would like to raise taxes on those making more than $250,000 while the Republicans do not want to raise any taxes.
Again, at the time of this article it is difficult to say where the income tax rates will be beyond 2012. Recently, there have been some discussions that a compromise would be reached where taxes would be raised but only on those individuals making more than $500,000. Another compromise currently being discussed is that rates would not change; however, deductions for those making a certain level of income would be reduced. This would have the effect of raising revenues to help offset our deficit without raising taxes.
If you would like to submit a question for publication, email it to firstname.lastname@example.org. Jeffrey J. Rokisky is an elder law attorney with offices in Wheeling, Weirton, Elkins, Clarksburg and Robinson Township.