Fong Law Group

How the $1.9 Trillion COVID-19 Relief Bill Aids Seniors

President Biden has signed the latest COVID-19 relief bill, which in addition to authorizing stimulus checks, funding vaccine distribution, and extending unemployment benefits, also provides assistance to seniors in a number of ways. 

The $1.9 trillion American Rescue Plan Act (ARPA) delivers a broad swath of relief, covering families, employers, health care, education, and housing. The following are the provisions that most directly affect older Americans:

• Relief checks. The ARPA provides $1,400 direct payments to individuals earning up to $75,000 in annual income and couples with incomes up to $150,000. The payments phase out for higher earners, and there are no payments for individuals earning more than $80,000 a year or couples making more than $160,000. Eligible dependents, including adult dependents, also receive $1,400. People collecting Social Security, railroad retirement, or VA benefits will automatically receive the payment even if they don’t file a tax return. The checks will not affect eligibility for Medicaid or Supplemental Security Income as long as any amount that pushes recipients above the programs’ asset limits is spent within 12 months.  
• Medicaid home care. The Act provides more than $12 billion in funding to expand Medicaid home and community-based waivers for one year. This funding will allow states to provide additional home-based long-term care, which could keep people from being forced into a nursing home. The money will also allow states to increase caregivers’ pay. 
• Nursing homes. Nursing homes have been hit hard during the pandemic. The Act supports the deployment of strike teams to help nursing homes that have COVID-19 outbreaks. It also provides funds to improve infection control in nursing homes. 
• Pensions. Many multi-employer pension plans are on the verge of collapse due to underfunding. The Act creates a system to allow plans that are insolvent to apply for grants in order to keep paying full benefits. 
• Medical deductions. If you have a large number of medical expenses, you may be able to deduct some of them from your taxes, including long-term care and hospital expenses. The Act permanently lowers the threshold for deducting medical expenses. Taxpayers can deduct unreimbursed medical expenses that exceed 7.5 percent of their income. The threshold was lowered to 7.5 percent under the 2017 tax law, but was set to revert to 10 percent for some taxpayers in 2021.  
• Older Americans Act. The ARPA provides funding to programs authorized under the Older Americans Act, including vaccine outreach, caregiver support, and the long-term care ombudsman program. It also directs funding for the Elder Justice Act and to improve transportation for older Americans and people with disabilities. 

For more information about what is in the ARPA, click here and here.

The Bankruptcy Process

The Bankruptcy Process

Deciding whether to file for bankruptcy is a major decision, which should not be taken lightly. It must be made with a clear understanding of the steps you will need to take, what will happen and the obligations you will have. At the Fong Law Group, we take great care to explain the bankruptcy process to each client we serve.

Your Lawyer Will Answer All Your Questions about Filing for Bankruptcy

The bankruptcy process will begin with a thorough analysis of your overall financial situation. We will help you determine whether you should file a Chapter 7 or Chapter 13 bankruptcy filing. While some aspects of the process are similar, the type of protection you choose will outline many steps that must be taken.

Key points to consider include:

Once you hire Fong Law Group to file your case and represent you, you can direct all collection calls to our office and gain some immediate relief from your stress.

If you have an immediate need to stop a foreclosure, wage garnishment or another severe action against you, we can move quickly to do so once we have the necessary documents and information.

It is critical that you are truthful in the financial information you provide, including disclosing all your debts, and that you attend all court hearings unless your attorney tells you otherwise.

Chapter 7 bankruptcy is often a fairly straightforward process that can be wrapped up within a few months, resulting in a discharge (forgiveness) of all unsecured debts. If you file Chapter 13, you will be required to meet all the terms of the repayment plan approved by the trustee — over a period of three to five years. Your bankruptcy attorney will remain responsive to your needs and questions every step of the way.

Fong Law Group Will Be by Your Side

You can depend on Fong Law Group to provide clear information on bankruptcy law, each step you must complete, and how to best approach and manage life after bankruptcy.

To schedule your free consultation, contact Fong Law Group today for a free consultation at (626) 289-8299.

Help Paying for Medicare

Medicare is not free; there are premiums and deductibles. If you don't qualify for Medicaid and can't afford a Medigap policy, you may be able to get help paying for the costs of Medicare.

There are four Medicare assistance programs, called Medicare Savings Plans:

• Qualified Medicare Beneficiary (QMB): The QMB program pays for Medicare Part A deductibles, Medicare Part B premiums and deductibles, and coinsurance and deductibles for Part A and Part B.
• Specified Low-income Medicare Beneficiary (SLMB): The SLMB program pays for Medicare Part B Premium.
• Qualifying Individual (QI-1) Program: The QI-1 program is an expansion of the SLMB program that you must apply for each year. It pays for Medicare's Part B Premium.
• Qualified Disabled and Working Individuals (QDWI) Program: The QDWI Program helps pay for Medicare's Part A premium.

To qualify for these programs, you must be eligible for Medicare Part A (even if you are not enrolled) and have limited income and resources. The income and resource requirements can vary from state to state, so check with your state before applying. In general the following limits are applied.

Program	Income Limits
QMB	Monthly income must be at or below 100 percent of the poverty level. To find the current poverty guidelines, click here.
SLMB	Monthly income must be between 100 percent and 120 percent of the poverty level. To find the current poverty guidelines, click here.
QI-1	Monthly income must be between 120 percent and 135 percent of the federal poverty level. To find the current poverty guidelines, click here.
QDWI	Monthly income must be below 200 percent of the federal poverty level.  To find the current poverty guidelines, click here.

In 2021, personal assets, including cash, bank accounts, stocks and bonds must not exceed $7,970 for an individual and $11,960 for married couples (For the QDWI program, your assets cannot exceed $4000 for an individual and $6000 for a married couple). Your house and car do not count as personal assets. Some states allow additional resources above these figures; for example, New York has no resource limits for the QI-1 Program.

To apply for one of these programs, contact your state Department of Social Services office or the equivalent agency in your state.

Bankruptcy Basics: 3 Types of illegal Asset Transfers during a Bankruptcy

Bankruptcy Basics: 3 Types of illegal Asset Transfers during a Bankruptcy

The desire to protect your assets from creditors is natural, and it’s the main reason debtors file bankruptcy. But there are certain types of asset transfers that are simply illegal when done right before filing bankruptcy. Let’s take a look at a few:

1. Transferring your property into someone else’s name. Some debtors unwisely transfer their assets into the name of a relative or friend because they don’t want to lose the asset in bankruptcy. However, such actions are illegal, and in many cases it’s unnecessary. If you transfer property into someone else’s name, especially in the year before your bankruptcy filing, the bankruptcy trustee may attempt to reclaim the property and deny your bankruptcy discharge.

2. Selling your asset for less than its market value. If you sell an asset for significantly less than its market value, this may be considered an illegal transfer by the bankruptcy trustee, especially if the property is not exempt in bankruptcy. For example, selling your used vehicle to your son for 50% of its value may be considered an illegal transfer by the bankruptcy trustee depending on the asset’s value, the timing of the sell, and whether or not the vehicle is considered exempt property.

3. Paying off family loans.The bankruptcy trustee will disallow any payments you’ve made to family members within 90 days before filing bankruptcy. These types of preferences are disallowed in bankruptcy because it leaves other creditors at a disadvantage. If you paid off a family loan right before filing bankruptcy, depending on the amount, the trustee may demand that the family member return the cash to the bankruptcy testate.

If you want to transfer or sell assets before filing bankruptcy, talk to an attorney at Fong Law Group at (626) 289-8299 to find out if you can do so without negative consequences.

Long-Term Care Benefits for Veterans and Surviving Spouses

Long-term care costs can add up quickly. For veterans and the surviving spouses of veterans who need in-home care or are in a nursing home, help may be available.

The Veterans Administration (VA) has an underused pension benefit called Aid and Attendance that provides money to those who need assistance performing everyday tasks. Even veterans whose income is above the legal limit for a VA pension may qualify for the Aid and Attendance benefit if they have large medical expenses for which they do not receive reimbursement. 

Aid and Attendance is a pension benefit, which means it is available to veterans who served at least 90 days, with at least one day during wartime. The veteran does not have to have service-related disabilities to qualify. Veterans or surviving spouses are eligible if they require the aid of another person to perform an everyday action, such as bathing, feeding, dressing, or going to the bathroom. This includes individuals who are bedridden, blind, or residing in a nursing home.

To qualify a veteran (or spouse) must have a net worth limit of $130,773 (in 2021), which will increase each year with cost-of-living adjustments. But in the case of the VA, this number will include both the applicant's assets and income. It will be indexed to inflation in the same way that Social Security increases. An applicant's house (up to a two-acre lot) will not count as an asset even if the applicant is currently living in a nursing home. Applicants will also be able to deduct medical expenses from their income. This can include Medicare, Medigap, and long-term care insurance premiums; over-the-counter medications taken at a doctor's recommendation; long-term care costs, such as nursing home fees; the cost of an in-home attendant that provides some medical or nursing services; and the cost of an assisted living facility. These expenses must be unreimbursed (in other words, insurance must not pay the expenses). The expenses should also be recurring, meaning that they should recur every month.

There is also a three-year look-back to determine if the veteran transferred assets in order to qualify for benefits. Applicants will have to disclose all financial transactions they were involved in for three years before the application. Applicants who transferred assets to put themselves below the net worth limit within three years of applying for benefits will be subject to a penalty period that can last as long as five years. This penalty is a period of time during which the person who transferred assets is not eligible for VA benefits. There are exceptions to the penalty period for fraudulent transfers and for transfers to a trust for a child who is unable to "self-support."

The VA will determine a penalty period in months by dividing the amount transferred that would have put the applicant over the net worth limit by the maximum annual pension rate (MAPR) for a veteran with one dependent in need of aid and attendance. For example, assume the net worth limit is $130,773 and an applicant has a net worth of $117,773. The applicant transferred $30,000 to a friend during the look-back period. If the applicant had not transferred the $30,000, his net worth would have been $147,773, which exceeds the net worth limit by $17,000. The penalty period will be calculated based on $17,000, the amount the applicant transferred that put his assets over the net worth limit (147,773-130,773).

Annual Pension Rate (MAPR). Following are the MAPRs for 2021:

Single veteran	$23,238
Veteran with one dependent	$27,549
Single surviving spouse	$14,934
Surviving spouse with one dependent	$17,815

How it works. The amount a person receives depends on his or her income. The VA pays the difference between the veteran's income and the MAPR. John, a single veteran, has income from Social Security of $16,500 a year and a pension of $12,000 a year, so his total income is $28,500 a year. He pays $20,000 a year for home health care, $1,122 a year for Medicare, and $1,788 a year for supplemental insurance, so his total medical expenses are $22,910. Subtracting his medical expenses from his income ($28,500 - $22,910), John's countable income is $5,590. John could qualify for $17,648 ($23,238 - $5,590) in Aid and Attendance benefits.

To find out if you are eligible for Aid & Attendance benefits, contact your attorney.

To apply, contact a VA office near you.

For the VA's Guide to Long-Term Care, click here.

What Type of Bankruptcy Do I Qualify For?

What Type of Bankruptcy Do I Qualify For?

There are two main types of bankruptcies for consumers:

Chapter 7 allows you to eliminate most unsecured debts in a matter of months in return for giving up all "non-exempt" property -- if you have any.

Most people, who file for Chapter 7, have no available non-exempt property or equity. Whatever they still own by the time they file is either protected by exemption laws, or pledged to a secured creditor as collateral for a debt and therefore not available to pay off unsecured creditors.

These are known as "no asset" bankruptcies, and most Chapter 7s are of this type.

Chapter 13 takes 3 to 5 years. Instead of giving up property, you repay a portion of your debts and live within a strict budget that is monitored closely by the bankruptcy court trustee. If you can't make the required monthly payments, your Chapter 13 bankruptcy fails and your debts will remain (unless you convert to a Chapter 7 bankruptcy).

Chapter 13 is commonly used by people who are behind on secured debt payments (e.g., mortgages) and want to propose a Chapter 13 plan to catch up on these payments over time.

Under the new bankruptcy law, which took effect in October 2005, a mathematical formula called the "means test" establishes an initial determination of the kind of bankruptcy you qualify for: Chapter 7, Chapter 13, or either. This formula takes into account:

• your monthly income
• the amount and kind of your debts, and
• other aspects of your financial situation

If your annual income is less than the California median income for your household size, then you can file for Chapter 7 or Chapter 13, (assuming you meet other qualifications). If your income is higher than the state median, you must first complete a long list of expense deductions to estimate what your 'disposable income' will be over the next five years. The result of this calculation determines whether you can file for Chapter 7, or are left with Chapter 13 as your only option.

Take the Bankruptcy Means Test to see if you qualify.

Contact Fong Law Group today for a free consultation at (626) 289-8299

What to Do With Your Stimulus Check if You Are in a Nursing Home

As the second (and maybe third) round of stimulus checks go out, it is important to know that nursing home residents are not required to turn their checks over to their nursing home. And Medicaid recipients need to spend the cash within a year if it puts them over Medicaid’s resource limit. 

In December 2020, Congress approved $600 stimulus checks for individuals making less than $75,000 a year. And Congress is currently considering whether to approve another round of $1,400 stimulus checks. Those checks should be sent to everyone eligible, including individuals on Medicaid and in a nursing home or assisted living facility. 

The Federal Trade Commission (FTC) is reminding nursing home and assisted living residents that their stimulus checks are for them, not their facility. With the first round of stimulus checks, there were reports that facilities were taking the checks without residents’ permission. The FTC says that if nursing homes ask for a resident’s check, the resident should contact the state attorney general and the FTC. 

Medicaid recipients who receive a stimulus check that puts them above Medicaid’s resource limit will need to spend down the money within a year or risk losing benefits. The Social Security Administration has said that it will not consider stimulus payments as income, and that the payments will be excluded from a Medicaid recipient’s resources for 12 months. The following are examples of what a Medicaid recipient may be able to spend the money on without affecting their eligibility:

• Make a payment toward paying off debt.
• Make small repairs around the house. 
• Update personal effects. Buy household goods or personal comfort objects. Buy a new wardrobe, electronics, or furniture.
• Buy needed medical equipment, see a dentist or get eyes checked if those items aren't covered by insurance.

If you have questions about how you or a family member in a nursing home can spend the money, contact your elder law attorney. 

How Bankruptcy Can Be Positive

How Bankruptcy Can Be Positive

Facing overwhelming debt and financial hardship can be a particularly stressful time in one’s life. As you try to navigate the coming days, weeks, and months, you will be faced with tough decisions, including whether or not you should consider filing for bankruptcy. While this can be an important time to consult an advisor such as a bankruptcy attorney, you may want to take this time to reflect on how bankruptcy can actually be positive, and provide you and your family with certain benefits. Here are just a few of the positive benefits of filing for bankruptcy, and how doing so can help get you out from under your crippling debt by giving you a fresh start.  

Dismissed Unsecured Debt

One way in which bankruptcy can help give you a fresh start is through the dismissal of any unsecured debt. When filing for bankruptcy, any debts you have which are not backed by an asset, such as a home or business, are discharged. These debts include debt acquired through medical and credit card bills.

Relief from Debt Collectors

When struggling with debt, encounters with creditors and collections agencies can become a daily reality. Getting back on one’s feet can be difficult enough without the stress of constant reminders of one’s debt. One of the benefits of filing for bankruptcy is that once you file, there is a stay period where creditors are not allowed to contact you and can be penalized if they do, which can give you a break from the harassment.

Protection of Certain Property

Filing for bankruptcy in a timely manner can actually help to protect you and your family by giving you a chance of keeping your home. Depending of the jurisdiction in which you live, when you file for bankruptcy, and the value of your home’s equity, your home could be protected from liquidation by filing for bankruptcy.

While filing for bankruptcy can be a scary, overwhelming process, for many individuals, doing so can be a positive experience as well. Filing for bankruptcy allows you to get a fresh start financially, and can help to distance yourself from the stress and anxiety of your previous financial struggles. Call Fong Law Group at (626) 289-8299 and talk to an attorney today.

Biden Administration May Spell Changes to Estate Tax and Stepped-Up Basis Rule

A new administration usually means that tax code changes are coming. While it remains unclear exactly what tax changes President Biden’s administration will usher in, two possibilities are that it will propose lowering the estate tax exemption and eliminating the stepped-up basis on death. The first would affect only multi-millionaires, but the second could have an impact on more modest estates and their heirs. 

In 2017, Republicans in Congress and President Trump doubled the federal estate tax exemption and indexed it for inflation. For the 2021 tax year, the exemption is $11.7 million for individuals and $23.4 million for couples. As long as your estate is valued at under the exemption amount, it will not pay any federal estate taxes, and the vast majority of estates do not owe any tax. President Biden has expressed an interest in lowering the estate tax exemption. It could be more than halved to $5 million or even reduced to the previous exemption of $3.5 million for individuals. 

Another possible tax change is to how property is valued when it is passed on at death. "Cost basis" is the monetary value of an item for tax purposes. When determining whether a capital gains tax is owed on property, the basis is used to determine whether an asset has increased or decreased in value. For example, if you purchase a stock for $10,000, that is the cost basis. If you later sell it for $50,000, you will have to pay taxes on the $40,000 increase in value. 

Under current law, when a property owner dies, the cost basis of the property is "stepped up." This means the current value of the property becomes the basis. For example, suppose you inherit a house that was purchased years ago for $50,000 and it is now worth $250,000. You will receive a step up from the original cost basis from $50,000 to $250,000. If you sell the property right away, you will not owe any capital gains taxes.

According to an article in the New York Times, the current administration may propose to eliminate the basis step-up rule. In the past it was difficult to determine the original cost basis of some property, but in the digital age that information is more easily gathered. The change could result in tax increases for some people inheriting property that has risen significantly in value. 

Another question is whether either of these changes will be made retroactively. It is unlikely, but possible, that if Congress changes these rules later in the year, they could be made retroactive to the first of the year. 

If you are concerned about these rules changing, a trust may be a good way to protect your estate. Property in a trust passes outside of probate, and there are specific types of trusts that are designed to protect assets against estate taxes and capital gains. Talk to your attorney to determine if a trust is right for you. 

Tax experts agree that while changes to the tax code are likely, they probably won’t happen right away. The coronavirus pandemic and the recession it has triggered mean that Congress has other priorities at the moment. 

Congress Fixes Some, But Not All, Medicare Enrollment Problems

Tucked in the federal spending bill that passed at the end of December 2020 are some changes aimed at simplifying Medicare enrollment and addressing coverage gaps. But Congress chose not to deal with the biggest problem.

Currently, Medicare enrollment begins three months before the month of your 65th birthday and continues for three months after your birthday month (for a total of seven months). Medicare Part A has no premiums, but if you do not enroll in Medicare Part B or Medicare Part D (prescription drug coverage) during the initial enrollment period, you will face penalties (with exceptions; read on). For example, your Medicare Part B premium may go up 10 percent for each 12-month period that you could have had Medicare Part B, but did not take it.  (You can delay signing up for Part B and Part D without penalty for a number of reasons, including if you have valid coverage through an employer with 20 or more employees that you still work for, or, in the case of Part D, you have private insurance that is at least as good as Medicare’s. Check with your employer or insurer to find out whether you can safely delay enrolling.) 

In addition, if you fail to enroll during the seven-month initial enrollment period, you will have to wait for the general enrollment period, which usually runs between January 1 and March 31 of each year. If you enroll during the general enrollment period, your coverage does not start until July 1. This means that you may have to wait up to seven months before you can get Medicare coverage. And, to make matters even more confusing, the general enrollment period for Part B is different from the enrollment period for Part D and Medicare Advantage plans. 

Congress has now taken a stab at ending these coverage gaps and clearing up some of the confusion. Under the new law, starting in 2023, whether you enroll during your initial enrollment period or you enroll during the general enrollment period, Medicare coverage will begin the month after enrollment. The law also allows Medicare to make exceptions for people who delay enrollment because of an “exceptional circumstance,” such as a natural disaster. Finally, the new law directs the federal government to align the Medicare Part B, Medicare Advantage, Medicare Part D enrollment periods by 2023.

While these changes will help eliminate coverage gaps, there are still problems. As tax and retirement policy expert Howard Gleckman points out, Medicare beneficiaries often miss the initial enrollment period because they are not aware of it. An earlier version of the law would have required the Social Security Administration to send notifications to individuals who are turning 65 to alert them of their eligibility for Medicare, but that provision was dropped from the final version.