Taking the Blind Fold Off of...

Senior Tax and Service Issues

From:

Zero Governors Avenue Suite 34 Medford, MA 02155 (781) 393-0021

INDEX:
Chapter / Sub-chapter Page # 4

1. Foreword 2. Paying Taxes on Social Security & Railroad Retirement Benefits

Do I have to pay income taxes on the benefits I receive? How much is taxable? Is a Lump-Sum SSA or RRB Death Benefit Taxable? Lump-sum election method for a SSA or RRB taxable benefit payment IRS Deductions Related to Your Benefits?

5- 6 6 6 6 6 7

3. Strategies for Optimizing Social Security Benefits 4. New Federal Income Tax Brackets
American Taxpayer Relief Act of 2012 (a.k.a. Fiscal Cliff Relief Bill) Capital Gains and Dividends Itemized Deduction Phase-Out

8 8 8

5. Alternative Minimum Tax (AMT)

2012 AMT Limits (Set) 2013 AMT Limits (Projected) 9 9

6. Obama-care Tax Impacts

Takes Effect January 2013 High Medical Bills Tax Elimination of tax deduction for employer-provided retirement Rx drug coverage in coordination with Medicare Part D Tax on Medical Device Manufacturers Flexible Spending Account Cap Takes Effect January 2014 or in Later Year Individual Mandate Excise Tax and Employer Mandate Tax Tax on Health Insurers Excise Tax on Comprehensive Health Insurance Plans 9 9 9 10 10 10 10

7. Medicaid Eligibility Requirements

General Medicaid Requirements Functional Medicaid Requirements Financial ($$) Medicaid Requirements 11 11 11 12

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Cover Picture: Illustration by Frits Ahlefeldt-Laurvig, the HikingArtist.com, under the Creative Commons license:

http://www.flickr.com/photos/hikingartist/4193332430 2

INDEX Continued:
Chapter / Sub-chapter Page #

7. Medicaid Eligibility Requirements - Continued

For Massachusetts Residents Only: How much do nursing homes cost? Assets or Resources Medicaid Long-Term Care (LTC) Services Transfer of Assets - Medicaid Estate Recovery Protecting Assets from Medicaid Massachusetts Section 1115 Demonstration Waiver 13 13 13 13 14 14

8. Massachusetts Healthcare System MassHealth

What is MassHealth? MassHealth Senior Services: What are MassHealth Adult Day Health (ADH) services? What are MassHealth Home Health Services? What is the MassHealth Personal Care Attendant Program (PCA)? What are MassHealth transportation services? 15 15 16 16 - 17 17

9. Medicare Eligibility Requirements

Does Medicare pay for nursing home care? 18

10. Medicare Costs for 2013

Medicare Part A Costs Medicare Part B Costs Medicare Advantage Plans (Part C) and Medicare Prescription Drug Plans (Part D) Premiums Part D Monthly Premium 18 19 19 19

11. Massachusetts Homestead Act Homeowner Protection

What is the Massachusetts Homestead Act? What are the types of homesteads? What are the benefits of the Massachusetts Homestead Act? 20 21 21 22 22 - 23 24 24 - 25 26 3

12. Massachusetts Rental Tax Deduction 13. Massachusetts Circuit Breaker Tax Credit Walnut Hill Advisors, LLC Legal Disclosure Statement APPENDIX Reference Sources Free Consultation Request Form Form

1. Foreword

People often ask friends and family about important money matters that really should be directed to a professional. Personal financial matters, and the consequences of financial decisions, are generally much too serious to be placed into the hands of a non-expert. That's why this booklet was written, to help the reader break free from the unhappy surprises that come with staying in the comfort of the crowd. The pages that follow this introduction should provide a good summary overview of the major impacts of several recently enacted federal tax law changes and healthcare issues facing seniors today. Can you do this research yourself? Yes, certainly. Smart and successful people can do many things themselves, but they astutely choose to use experts for a couple of key reasons: (a) to free up their time so they can do more of the things they love like playing golf, fishing, traveling, focusing on their own areas of expertise, gaining time to launch a new business, and spending time with family and friends; and (b) to leverage the skills of experts in specific core areas and for which they expect to derive some benefit from today, and most importantly; (c) to proactively follow and inform them of critical future issues / changes; and (d) to provide comprehensive solutions to mitigate the impact of these future events.

Enjoy! ...and happy investing!

Alfred L. Angelici, Managing Director Walnut Hill Advisors, LLC February 2013

2. Paying Income Taxes on Social Security and Railroad Retirement Benefits

Do I have to pay income taxes on the benefits I receive? If the only income you received during 2012 was your Social Security Benefit or the SSEB portion of tier 1 Railroad Retirement Benefits, your benefits are generally not taxable and you probably do not have to file a return. I you have income in addition to your benefits, you may have to file a return even if none of your benefits are taxable if your base income is: $25,000 if you are single, head of household, or qualifying widow(er). $25,000 if you are married filing separately and lived apart from your spouse for all of 2012 $32,000 if you are married filing jointly, or $ -0- if you are married filing separately and lived with your spouse at any time during 2012 U.S. Citizens residing abroad in the following countries are exempt from U.S. Tax on their social security benefits: Canada Egypt Germany Ireland Israel Italy (You must also be a citizen of Italy for the exemption to apply) Romania United Kingdom Non-Resident Alien Is an individual who is not a citizen or resident of the U.S.. If you are a non-resident alien, the rules discussed in IRS Publication 915 do not apply to you. Instead, your benefits are taxed as follows: 85% of your benefits are taxed at a 30% rate, unless exempt (or subject to a lower rate) by treaty Under the tax treaties with the following countries: Canada, Egypt, Germany, Ireland, Israel, Italy, Japan, Romania and United Kingdom, residents of are exempt from U.S. Tax on their social security benefits. Under a treaty with India, benefits paid to individuals who are both residents and nationals of India are exempt from U.S. Tax if the benefits are for services performed in the U.S., its subdivisions, or local government authorities. If you are a resident of Switzerland, your total benefit amount will be taxed at a 15% rate. Social security will not withhold U.S. tax from your benefits if you are a resident of the tax treaty countries listed.

If your railroad retirement benefits are exempt from tax because you are a resident of one of the tax treaty countries listed, you can claim an exemption from withholding by filing Form RRB-1001 with the RRB. (Contact the RRB to get this form.) Canadian and German social security benefits paid to U.S. residents. Under tax treaties with these countries, social security benefits paid by those countries to U.S. residents are treated for U.S. income tax purposes as if they were paid under the social security legislation of the U.S. How much is taxable? Maximum taxable part of benefits Generally, up to 50% of your benefits will be taxable. However, up to 85% of your benefits can be taxable if either of the following situations applies to you: - The total of of your benefits plus all of your other income is: a. More than $34,000 and you are single, head of household, qualifying widow(er), or married filing separately and lived apart from your spouse for all of 2012. b. More than $44,000 and you are married and filing jointly, or c. You are married and filing separately and have lived with your spouse at any time during 2012. Is a Lump-Sum SSA or RRB Death Benefit Taxable? SSA and RRB pay many of their beneficiaries a lump-sum death benefit. No part of this lump-sum death benefit is subject to tax. Lump-sum election method for a SSA or RRB taxable benefit payment Generally, you use your 2012 income to figure the taxable part of the total benefits received in 2012. However, this method allows you to figure the taxable part of a lump-sum payment for an earlier separately, using your income for the earlier year. You can elect this method if it lowers your taxable benefits. If you received a lump-sum benefit payment in 2012 you must include the taxable part of the lump-sum (retroactive) payment of benefits received in 2012 in your 2012 income, even if the payment includes benefits for an earlier year (e.g. 2011) and once the taxable method is chosen. No subsequent adjustment is made to the earlier year's return. Do not file an amended return for the earlier year. Note: Once you elect this method of figuring the taxable part of a lump-sum payment, you can revoke your election only with the consent of the IRS. IRS Deductions Related to Your Benefits? Disability Payments: If you received a lump-sum payment from SSA or RRB, and you had to repay the employer or insurance company for the disability payments, you can take an itemized deduction for the part of the payments you included in gross income in the earlier year. If the amount you repay is more than $3000, you may be able to claim a tax credit instead. Legal Expenses: You can usually deduct legal expenses that you pay or incur to produce or collect taxable income or in connection with the determination, collection, or refund of any tax.

3. Strategies for Optimizing Social Security Benefits

A. Is a Reverse Mortgage for you? Perhaps, if you can answer yes to all of the following questions: Are you still living in your home? Do you plan to stay in your home for the rest of your life? ...and You do not plan to leave the full value of your home to any heirs? If a reverse mortgage is a good option for you, it may possibly reduce your overall taxable income, too, as the equity withdrawn from your home is not taxable. This may also reduce the taxes owed on your Social Security or Railroad Retirement benefits; thus, providing an increase in spendable income. B. If you have sufficient alternative income sources to live on, you may wish to consider delaying your and/or your spouse's application for Social Security benefits until one or both of you reach Full Retirement Age, or better, the maximum SSA benefit payout age of 70. Date of Birth 1937 or Earlier 1938 1939 1940 1941 1942 1943-1954 1955 1956 1957 1958 1959 1960 or Later C. Full Retirement Age 65 65 and 2 months 65 and 4 months 65 and 6 months 65 and 8 months 65 and 10 months 66 66 and 2 months 66 and 4 months 66 and 6 months 66 and 8 months 66 and 10 months 67

One partner receives his/her spousal benefits while deferring their own benefits until the maximum age of 70. By doing so you can collect a lower benefit at an earlier age and then collect a much higher amount when you reach the maximum age. To be eligible to receive 50% of your spouses benefits, you have to have reached Full Retirement Age. Why would you ever choose to take spousal benefits if they are less than the benefits you can get from your own social security? Because while you are receiving spousal benefits, you still are not considered to have actually started social security yourself yet, meaning that you can defer your own benefits until the maximum age of 70. At 70 you would switch over to receiving your own benefits at their full payout value!

Note: Please consult a professional planner or adviser to see if the numbers will work for you as well as to learn about other possible strategies that may work for you. 7

4. New Federal Income Tax Brackets

American Taxpayer Relief Act of 2012 (a.k.a. Fiscal Cliff Relief) Taxable Income Head of Household Single and MFS* Married Filing Jointly 10% >$ 0 >$ 0 >$ 0 15% >$ 8,925 >$ 17,850 >$ 12,750 25% >$ 36,250 >$ 72,500 >$ 48,600 28% >$ 87,850 >$ 146,400 >$ 125,450 33% >$ 183,250 >$ 223,050 >$ 203,150 35% >$ 398,350 >$ 398,350 >$ 398,350 39.6% >$ 400,000 >$ 450,000 >$ 425,000 (*) Married Filing Separately NOTE: Future Income limits post 2013 to be inflation-adjusted Capital Gains and Dividends 0% for taxpayers in the 10% and 15% IRS tax brackets 15% for taxpayers in the 25%, 28%, 33% and 35% IRS tax brackets 20% for taxpayers in the 39.6% IRS tax bracket Itemized Deduction Phase-Out Personal exemptions will be reduced by 2.0% for each $2,500 that the taxpayer's Adjusted Gross Income (AGI) exceeds: Married Filing Separately* Single Head of Household Married Filing Jointly $150,000 $250,000 $275,000 $300,000 Rate

*Note: For Married Filing Separately, personal exemptions are reduced by 2.0% for each $1,250 of taxpayers AGI in excess of limit listed above.

5. Alternative Minimum Tax (AMT)

American Taxpayer Relief Act of 2012 Changes were made to the AMT to permanently index it to inflation and thus to avoid the annual "patch" that was previously required to prevent it from impacting middle-class families. 2012 AMT Limits (Set) Married Filing Separately Single Married Filing Jointly 2013 AMT Limits (Projected) Estates and Trusts Married Filing Separately Single Married Filing Jointly $39,375 $50,600 $78,750 $23,100 $40,400 $51,900 $80,750

6. Obama-care Tax Impacts (Patient Protection and Affordable Care Act - PPACA)
Takes Effect on January 2013
Medicare Payroll Tax Hike First $200,000 ($250,000 Married) Employer/Employee 1.45%/1.45% 2.9% self-employed 1.45%/1.45% 2.9% self-employed All Remaining Wages Employer/Employee 1.45%/1.45% 2.9% self-employed 1.45%/2.35% 3.8% self-employed

Current Law (2012) Obamacare Tax Hike (2013)

** Bill: PPACA, Reconciliation Act; Page: 2000-2003; 87-93 High Personal Medical Bills Tax For 2012, those facing high personal medical expenses are allowed a deduction for medical expenses to the extent that those expenses exceed 7.5% of adjusted gross income (AGI). In 2013 the new PPACA provision imposes a threshold of 10% of AGI. Waived for 65+ taxpayers in years 2013-2016 only. **Bill: PPACA; Page: 1,994-1,995 Elimination of tax deduction for employer-provided retirement Rx drug coverage in coordination with Medicare Part D **Bill: PPACA; Page: 1,994 Tax on Medical Device Manufacturers Medical device manufacturers employ 360,000 people in 6000 plants across the country. This law imposes a new 2.3% excise tax. Exempts items retailing for less than $100. **Bill: PPACA; Page: 1,980-1,986

Flexible Spending Account Cap aka Special Needs Kids Tax Imposes cap on FSAs of $2500 (now unlimited). Indexed to inflation after 2013. There is one group of FSA owners for whom this new cap will be particularly cruel and onerous: parents of special needs children. There are thousands of families with special needs children in the United States, and many of them use FSAs to pay for special needs education. Tuition rates at one leading school that teaches special needs children in Washington, D.C. (National Child Research Center) can easily exceed $14,000 per year. Under tax rules, FSA dollars can be used to pay for this type of special needs education. **Bill: PPACA; Page: 2,388-2,389 Takes Effect January 2014 or in Later Year Individual Mandate Excise Tax and Employer Mandate Tax Individual: Anyone not buying qualifying health insurance as defined by Obama-appointed HHS bureaucrats must pay an income surtax according to the higher of the following:

Year
2014 2015 2016 2017+

1 Adult
1% AGI or $95 2% AGI or $325 2.5% AGI or $695 2016 Inflation-Indexed

2 Adults
1% AGI or $190 2% AGI or $650 2.5% AGI or $1390 2016 Inflation-Indexed

3+ Adults
1% AGI or $285 2% AGI or $975 2.5% AGI or $2085 2016 Inflation-Indexed

Note: Surtax for dependents under 18 years of age is 50% of 1 Adult tax rates. AGI = Adjusted Gross Income Exemptions for religious objectors, undocumented immigrants, prisoners, those earning less than the poverty line, members of Indian tribes, and hardship cases (determined by HHS). Surtax not to exceed the cost of a standard plan as to be defined by HHS. **Bill: PPACA; Page: 317-337 Employer: If an employer does not offer health coverage, and at least one employee qualifies for a health tax credit, the employer must pay an additional non-deductible tax of $2000 for all full-time employees. This applies to all employers with 50 or more employees who are not exempted under the law. If any employee actually receives coverage through the exchange, the penalty on the employer for that employee rises to $3000. If the employer requires a waiting period to enroll in coverage of 30-60 days, there is a $400 tax per employee ($600 if the period is 60 days or longer). **Bill: PPACA; Page: 345-346 Tax on Health Insurers (Takes effect Jan. 2014): Annual tax on the industry imposed relative to health insurance premiums collected that year. Phases in gradually until 2018. Fully-imposed on firms with $50 million in profits. **Bill: PPACA; Page: 1,986-1,993 Excise Tax on Comprehensive Health Insurance Plans (Takes effect Jan. 2018): Starting in 2018, new 40% excise tax on Cadillac health insurance plans ($10,200 single/$27,500 family). Higher threshold ($11,500 single/$29,450 family) for early retirees and high-risk professions. Indexed for inflation (Formula: CPI +1%) **Bill: PPACA; Page: 1,941-1,956 10

7. Medicaid Eligibility Requirements

General Medicaid Requirements For long-term care services you must: Be 65 years of age or older Have a permanent disability Be blind Be a U.S. citizenship or meet certain immigration rules Be a resident of the state where you apply Functional Medicaid Requirements A medical specialist in your state must evaluate your needs and decide if you need long-term care services. The specialist will make their decision based on whether you need assistance performing certain Activities of Daily Living (ADL), such as: Bathing Dressing Using the toilet Transferring to or from a bed to a chair Caring for incontinence Eating If you do not meet Medicaid's functional eligibility criteria, Medicaid will not cover long-term care services, regardless of financial eligibility. If you do need long-term care services, the specialist will usually determine if you need nursing home care, or home and community-based services. Financial ($$) Medicaid Requirements Your state will look at your available income and assets INCOME Includes the following sources: Regular payments such as Social Security Veterans' benefits Pensions Salaries Wages Interest from bank accounts Medicaid will count payments to which you are entitled even if you dont receive them. For example, if you receive $500 a month from a trust that could pay you $1,000, Medicaid counts $1,000 as your income. If you and your spouse receive joint payments (rental income) the state allocates 50% to you and 50% to your spouse.

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ASSETS You will have to document your assets during the application process Assets that do not get counted for eligibility include the following: Your primary residence your personal belongings One motor vehicle Property that is essential to self-support Life Insurance with a face value under $1,500 Certain burial arrangements Assets held in specific kinds of trusts

Unless specifically excluded, any other real or personal property that you and your spouse own is counted in the Medicaid eligibility determination. If you own assets jointly with others, the assets are generally divided equally among all owners when the state determines your Medicaid eligibility. The amount of assets you can have and still qualify for Medicaid varies from state to state. In most states, you can retain about $2,000 in countable assets and married couples who are still living in the same household can retain about $3,000 in countable assets. If one spouse lives in an institution and the other lives in the community, the community spouse is allowed to keep more assets without disqualifying the spouse in the institution from Medicaid coverage. In most states, the community spouse is allowed to keep 50% of the married couples combined assets, subject to both a minimum and a maximum amount. In 2010, the minimum was $21,912 and the maximum was $109,560.

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For Massachusetts Residents:

How much do nursing homes cost? The average cost of nursing home care nationwide is about $75,000 per year ($6,250 per month) for a semi-private room and can range to $144,000 per year ($12,000 per month) or more for a private room. Massachusetts nursing home costs are above the national average. Some residents pay these costs themselves, or have private long-term care insurance. The majority of nursing home residents get financial help. Assets or Resources Assets include all the money, real estate, stocks, bonds, etc. which you own. Not all assets are counted (See page 11). An applicant will not be approved for Medicaid until he/she owns no more than $2,000 in countable assets plus a $1,500 account set aside to pay for burial expenses. When one member of a married couple applies for Medicaid, all of the couple's assets are considered together. The spouse left in the home (the "community spouse") will be allowed to keep a significant portion of the couple's pooled assets. If the assets total $80,000 or less, the community spouse can keep all but $2,000 of it. However, if the assets exceed $80,000 the community spouse keeps the first $80,000 and the Medicaid recipient must spend down the remainder portion to $2,000. If the community spouse needs more income than is otherwise available, then a special provision may be made for keeping more assets than ordinarily allowed. Assets of a person without a spouse are not divided. The nursing home patient must spend all of his/her countable assets until they are worth no more than $2,000 before Medicaid will pay for nursing home costs. Medicaid Long-Term Care (LTC) Services Medicaid covers nursing home services for all eligible people age 21 and older. Medicaid also covers home and community-based services for people who would need to be in a nursing home if they did not receive the home care services. Transfer of Assets - Medicaid Estate Recovery If you receive Medicaid coverage for long-term care services, federal law requires each state to recover the amount Medicaid spent on your behalf from your estate after you die. An estate is all of the personal property you own when you die, such as your home. Estate recovery happens after the death of a Medicaid recipient who was either permanently institutionalized, or is 55 years of age or older. Some estates are exempt from estate recovery. For example, if your spouse is still alive, your estate is exempt from recovery. In these cases, states may recover from the spouses estate after his or her death. Your heirs can also seek a hardship waiver from estate recovery.

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Protecting Assets from Medicaid The Social Security Administration (SSA) laws regarding Liens, Adjustments and Recoveries, and Transfers of Assets (Section 1917) states:

No (Medicaid) lien may be imposed against the property of any individual prior to his death on account of medical assistance paid or to be paid on his behalf under the State plan... (c)(1)(A) In order to meet the requirements of this subsection for purposes of section 1902(a)(18), the State plan must provide that if an institutionalized individual or the spouse of such an individual ... disposes of assets for less than fair market value on or after the lookback date specified in subparagraph (B)(i)
Look-Back Date: Individuals needing long-term care who do not qualify for MassHealth Standard because their assets are too high, can qualify by spending down their assets. To become eligible, you must follow MassHealth rules regarding transfer of assets: You must report all asset transfers for the five (5) years before you enter a long-term care facility. This is referred to as the "look-back date. For trust transfers, the look-back date is also five (5) years.

Massachusetts Section 1115 Demonstration Waiver Current federal and state eligibility regulations impose a penalty on persons applying for long-term care services if they transferred assets for less than fair market value within a specified look-back date. Establishing a Look-Back Date (DHHS) Starting Point prior to Starting Point 11/1/2010 11/1/2010 or later, but prior to 11/1/2012 3 years (36 months) November 1, 2007 for prior to starting point for most transfers; 5 years most transfers; 5 years prior to starting point for (60 months) for transfers transfers to to trusts/annuities. trusts/annuities. Starting Point 11/1/2012 or later 5 years prior to starting point for transfers of all types.

Look-Back Date

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8. Massachusetts Healthcare System - MassHealth (a.k.a. Romney Care)

What is MassHealth? MassHealth is a public health insurance program for eligible low and medium-income residents of Massachusetts. MassHealth is the name used in Massachusetts for Medicaid and the Children's Health Insurance Program (CHIP), combined in one program. Basic program includes: Dental Care Mental Health Services Adult Day Health Services* Home Health Services* Personal Care Attendant Program* Transportation Services*

MassHealth Senior Services: What are MassHealth Adult Day Health (ADH) services? Adult Day Health (ADH) services are day programs for frail seniors and other adults who need supervision and health services during the daytime. Adult Day Health programs offer nursing care, therapies, personal care assistance, social and recreational activities, meals, and other services in a community group setting. Adult Day Health programs are for adults who return to their homes and caregivers at the end of the day. MassHealth pays for Adult Day Health services for MassHealth members who meet clinical eligibility requirements and have a MassHealth coverage type that includes ADH services. To be eligible for MassHealth Adult Day Health (ADH) services: Your MassHealth coverage type must be MassHealth Standard or CommonHealth You must have a physical or mental dysfunction that requires nursing care You must be under the care of a doctor, and your doctor must order adult day health services as medically necessary You must be living at home (not in a facility) and have a need for daytime services in a structured adult day health setting. You must need help with one or more activities of daily living (bathing, dressing, toileting, transfers, ambulation, or eating) or need at least one skilled service (nursing service, speech therapy, occupational therapy, physical therapy) ordered by a doctor The Adult Day Health program you choose must be approved by MassHealth

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What are MassHealth Home Health Services? Home health services include nursing care; home health aide care; and occupational, physical, and speech/language therapy. MassHealth pays home health agencies to provide these services for eligible MassHealth members. To be covered by MassHealth, home health care services must be medically necessary and part of a doctors plan of care. To be eligible for MassHealth Home Health (ADH) services: Your MassHealth coverage type must include home health services. Home health services are included in: MassHealth Standard CommonHealth MassHealth Family Assistance (Direct Care, and Premium Assistance for HIV members) Note: MassHealth members with Prenatal, Limited, or Essential not eligible Members with Premium Assistance or Buy-In are covered only if their private insurance plan includes these services. Members with MassHealth Basic (Managed Care) get limited coverage You must be living in a private or group home or other non-institutional setting. This can be a temporary residence such as a homeless shelter. You must be under the care of a doctor. Your doctor can be a medical doctor, a dentist, or a podiatrist. The home health services must be part of your doctors care plan. Your doctor must review and sign your plan every 60 days The home health services must be medically necessary. If a family member or other caregiver is providing the services you need, then MassHealth will not pay for home services provided. The home health services you need cannot cost more than care in an institution. Your doctor and home health agency must agree that you can live safely at home with home health care services. MassHealth members age 60 or older must have a referral from their Aging Service Access Point (ASAP). What is the MassHealth Personal Care Attendant Program (PCA)? The Personal Care Attendant Program (PCA) is a MassHealth program that helps people with long-term disabilities live independently at home. The PCA program gives each eligible MassHealth member funds to hire a personal care attendant to help with activities of daily living (ADLs) such as bathing, dressing, eating, toileting, exercising, taking medications, and moving about inside the home. The MassHealth member becomes the employer, and is in charge of hiring, firing, training, and supervising the PCA.

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To be eligible for the MassHealth Personal Care Attendant (PCA) Program: You must be a MassHealth or CommonHealth member. Other coverage types do not cover personal care services. Note: MassHealth has special income eligibility rules for people age 65 or older who need personal care attendants. The rules allow a PCA deduction that lowers countable income and makes it easier to meet the MassHealth Standard income limits. Your doctor or nurse practitioner must prescribe the personal care services for you. You must have a permanent or chronic disability that prevents you from taking care of your personal needs yourself. You must need physical help with two or more of the following activities of daily living (ADLs): mobility/transfers, bathing/grooming, dressing/undressing, range-of-motion exercises, taking medications, eating, toileting. The personal care services must be medically necessary, and you must have prior authorization from MassHealth

What are MassHealth transportation services? MassHealth members who need non-emergency transportation to and from medical appointments may be eligible for free transportation services. Eligible members who use public transportation can get reimbursement for their transportation expenses. Eligible members who need dial-a-ride services can get van or taxi service free of charge. Eligibility: You can get reimbursement for your transportation expenses if: You use public transportation You have documentation of the MassHealth service(s) you received You have transportation expenses (bus fare, etc.) and receipts (when available) Your medical appointment is not within reasonable walking distance Your travel costs are $5 or more You submit your claim to MassHealth within 90 days of date your expenses were $5+ Note: in special cases if you get prior approval, MassHealth may reimburse you for private transportation expenses You can get free dial-a-ride van/taxi service if: There is no private transportation or public transportation that you can use Your health care provider authorizes your need for transportation by filling out a Prescription for Transportation (Form PT-1) You cannot get MassHealth transportation services to pick up prescription medicine at a pharmacy. Note: ALL MassHealth members are covered for emergency ambulance services.

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9. Medicare Eligibility Requirements

Does Medicare pay for nursing home care? Medicare does not pay for long-term care. However, Medicare will pay some of the costs of skilled nursing care or rehabilitation services if you have been hospitalized for more than three (3) days. To be covered, you must go to a Medicare-certified skilled nursing facility. With the Original Medicare plan, Medicare will pay 100% of the skilled nursing facility charges for the first 20 days. For the next 80 days, you must pay a daily co-payment and Medicare pays the rest. After 100 days, your Medicare skilled nursing care coverage stops. With Medigap or a Medicare Advantage plan, your coverage may be different.

10. Medicare Costs for 2013

Medicare Part A Costs Part A Premium Most people do not pay a Part A premium because they paid Medicare taxes during their working careers. If you do not get a premium-free Part A, you will pay up to $441/month. Hospital Stay $1,184 deductible per benefit period $0 for the first 60 days of each benefit period $296 per day for days 61 90 of each benefit period $592 per lifetime reserve day after day 90 of each benefit period (up to a maximum of 60 days over your lifetime) Skilled Nursing Facility Stay $0 for the first 20 days of each benefit period $ $148 per day for days 21 100 of each benefit period All costs for each day after day 100 of the benefit period

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Medicare Part B Costs Part B Premium You pay a Part B premium each month. Most people will pay the standard premium amount. However, if your modified adjusted gross income as reported on your IRS tax return from 2 years ago is above a certain amount, you may pay more. If Your Yearly Income is 2011 was File Individual Tax Return
$85,000 or less above $85,000 up to $107,000 above $107,000 up to $160,000 above $160,000 up to $214,000 above $214,000

You Pay per month

$104.90 $146.90 $209.80 $272.70 $335.70

File Joint Tax Return

$170,000 or less above $107,000 up to $214,000 above $214,000 up to $320,000 above $320,000 up to $428,000 above $428,000

Part B Deductible - $147 Per Year Medicare Advantage Plans (Part C) and Medicare Prescription Drug Plans (Part D) Premiums Call 1-800-633-4227, or visit www.medicare.gov/find-a-plan to get plan premiums for 2013. Part D Monthly Premium Chart below shows estimated prescription drug plan monthly premiums based on your income. If your income is above a certain limit, you will pay an income-related monthly adjustment amount in addition to your plan premium. If Your Yearly Income is 2011 was File Individual Tax Return
$85,000 or less above $85,000 up to $107,000 above $107,000 up to $160,000 above $160,000 up to $214,000 above $214,000

You Pay per month

Only Plan Premium $11.60 + Plan Premium $29.90 + Plan Premium $48.30 + Plan Premium $66.60 + Plan Premium

File Joint Tax Return

$170,000 or less above $107,000 up to $214,000 above $214,000 up to $320,000 above $320,000 up to $428,000 above $428,000

2013 Part D National Base Beneficiary Premium - $31.17 This figure is used to estimate the Part D late enrollment penalty and the income-related monthly adjustment amounts listed in the table above. The national base beneficiary premium amount can change each year. See your Medicare & You handbook or visit www.medicare.gov for more information.

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11. Massachusetts Homestead Act Homeowner Protection

What is the Massachusetts Homestead Act? The Massachusetts Homestead Act is a law that protects Massachusetts homeowners from having their homes sold to pay off unsecured debts. The law applies only if the homeowner lives in the home as his/her principal residence. The protection applies to unsecured creditor claims such as credit card debt or lawsuits. The home is not protected from claims secured by the home, such as a mortgage or lien on the property, or certain other types of debts. Under the amended Homestead Act, up to $125,000 of a homeowner's equity is automatically protected by law. A homeowner can protect up to $500,000 in equity by filing a Declaration of Homestead with the Registry of Deeds. To qualify for Massachusetts Homestead Act protection: You must own a home in Massachusetts. The home can be a: Single-family home 2-4 unit multifamily home Condominium unit Mobile home Manufactured home, or Cooperative housing unit You must occupy the home, or intend to occupy the home, as your principal residence. If you own more than one home, homestead protection only applies to your principal dwelling. You can be a sole owner, joint owner, or beneficiary of a trust

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What are the types of homesteads? There are three (3) types of homesteads under the current law: (1) Automatic Homestead Section 4 homesteads apply if a homeowner does not file a Declaration of Homestead, the homeowner automatically receives homestead protection up to $125,000 of equity. The protection is for the homeowner and the homeowner's family who live in the home as their principal residence. (2) Declared Homestead Section 3 homesteads are protected for up to $500,000 equity for all owners combined. For Section 3 protection, homeowners must file a Declaration of Homestead with the Registry of Deeds. The protection applies to the homeowner, the spouse of the homeowner, and family members who live in the house as their principal residence. Both spouses must sign the homestead declaration if both are owners. If the homeowner dies, the homestead protection continues for the spouse and minor children if they continue to live in the house as their principal residence. (3) Homestead for Elderly or Disabled Persons Section 2 applies to homeowners who are age 62 or older, or disabled. To be considered disabled, a homeowner must meet the SSI disability requirements. For Section 2 protection, the homeowner must file a Declaration of Homestead with the Registry of Deeds. Each elderly or disabled owner can file for up to $500,000 protection per owner. A married couple who own a home can get up to $1,000,000 protection if both spouses qualify as elderly or disabled. Section 2 homestead protection does not extend to other family members and ends upon the homeowner's death. What are the benefits of the Massachusetts Homestead Act? The Homestead Act protects your home from being attached, secured, or sold to pay off unsecured debts such as credit card debt or claims from a lawsuit. The Homestead Act does not protect your house from mortgage debt or liens on the property, and does not prevent foreclosure. The amount of homestead protection is: $125,000 automatic protection $500,000 of protection if you file a Declaration of Homestead with the Registry of Deeds If you sell your house, the proceeds of the sale are protected until you buy a new home, or for one year, whichever happens first. If your home was damaged or destroyed by fire or other casualty, the proceeds from your insurance claim are protected until the repairs are completed, or until you buy a new home, or for two years, whichever happens first. The protection applies to all debts, including preexisting debts, except: Federal, state, and local taxes and liens Liens on the property that existed before the homestead protection went into effect Mortgages on the home Court orders for spousal support or child support Attachments to land not owned by the owner of the homestead Court-ordered judgments based on "fraud, mistake, duress, undue influence or lack of capacity" Note: Homestead protection does not protect your home if you go into a nursing facility paid for by Medicaid. The Medicaid lien is a government lien and is exempt from protection. 21

12. Massachusetts Rental Tax Deduction

Applicable Codes of Massachusetts Regulations: 830 CMR 62.3.1 Rent Deduction 830 CMR: DEPARTMENT OF REVENUE 830 CMR 62.00: INCOME TAX 830 CMR 62.00 is hereby repealed and replaced with the following: 830 CMR 62.3.1: Rent Deduction (1) General . An individual who rents property located in the Commonwealth as his principal residence is entitled to an income tax deduction from Part B adjusted gross income equal to 50 percent of the rent, as hereinafter defined, paid to the landlord. For taxable years beginning on or after January 1, 2001, the maximum deduction shall not exceed $3,000. Mass. General Law Ref: [M.G.L. c. 62, 3(B)(a)(9) as amended by St. 1999, c. 127.] The link below to the Mass DOR (Dept. of Revenue) site contains details and examples for how to properly assess your potential rental deduction eligibility and amount you may take on your State taxes: http://www.mass.gov/dor/businesses/help-and-resources/legal-library/regulations/62-00-income-tax/830cmr-6231-rent-deduction.html

13. Massachusetts Circuit Breaker Tax Credit

What is the Circuit Breaker Tax Credit? The Circuit Breaker Tax Credit is a state income tax credit for eligible Massachusetts residents age 65 or older who paid rent or real estate taxes during the tax year. Even though the credit is based on property taxes, the state government, not the city or town, pays the credit. The credit is for senior homeowners and renters who meet income limits and other eligibility requirements. Homeowners may claim the credit if they paid more than 10% of their total income for real estate taxes, including water and sewer debt charges. Renters can count 25% of their rent as real estate tax payments. You must "file a MA state income tax return" to claim the Circuit Breaker Credit, whether or not you have to file otherwise. If your credit is greater than the amount of income taxes you owe, the state will give you a refund for the difference. The maximum credit for tax year 2012 is $1000. (The maximum credit for tax year 2011 was $980.) Am I Eligible? The Circuit Breaker Tax Credit is for low and moderate income seniors whose real estate tax payments* are greater than 10% of their income. Homeowners and renters can claim the credit. *Renters can count 25% of the rent payments they made during the tax year as real estate tax payments.

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To qualify: you or your spouse must be age 65 or older by the end of the tax year if married: you must file jointly you cannot be the dependent of another taxpayer you must rent or own a home iin Massachusetts that is your principal residence if you are a homeowner, your property's assessed value cannot be greater than $705,000 on January 1, 2012 if you are a renter, you cannot be getting a federal or state rent subsidy (such as Section 8), and your landlord must pay property taxes you must meet the income limits the amount you paid for real estate taxes must be greater than 10% of your total income What are the Income Limits? Your total income cannot be greater than these limits for the 2012 tax year: $53,000 single $67,000 head of household $80,000 married filing jointly IMPORTANT NOTE: "Total income" includes some types of non-taxable income, such as social security, retirement, pensions and annuities, cash public assistance, tax-exempt interest and dividends, and certain other income. Link to the Mass Resource Organization site with details and examples for how to properly assess your potential rental deduction eligibility and amount you may take on your State taxes. http://www.massresources.org/circuit-breaker-tax-credit.html

ATTENTION! Legal Disclosure Notice

IMPORTANT NOTE: This material reflects the opinions of Walnut Hill Advisors, LLC (WHA), and has been developed from sources that WHA believes reliable. WHA does not guarantee the accuracy or completeness of such information. This material is provided for informational purposes only and is not meant as investment advice. There is no assurance that any predictions or projections will occur. Individual portfolios may hold positions or pursue strategies that differ from the views expressed herein and WHA may make different investment decisions for different clients. This material is dated as indicated, and opinions and viewpoints may change as economic conditions change. CIRCULAR 230 DISCLOSURE: To comply with U.S. Treasury Department regulations, please be informed that, unless otherwise expressly indicated, any tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties that may be imposed under the Internal Revenue Code or any other applicable tax law, or (ii) promoting, marketing or recommending to another party any transaction, arrangement, or other matter.

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APPENDIX Reference Sources

Social Security Administration (SSA) http://ssa-custhelp.ssa.gov/app/answers/detail/a_id/493/~/paying-income-tax-on-social-security-benefits See IRS Publication 915 http://www.irs.gov/publications/p915/ar02.html Capital Gains & Dividends Itemized Deduction Phase-Outs Alternative Minimum Tax (AMT) will be Inflation-adjusted Modifications of Estate Tax http://www.gpo.gov/fdsys/pkg/BILLS-112hr8eas/pdf/BILLS-112hr8eas.pdf Patient Protection and Affordable Care Act (PPACA - a.k.a. Obama-care) http://www.gpo.gov/fdsys/pkg/BILLS-111hr3590enr/pdf/BILLS-111hr3590enr.pdf Medicaid Eligibility http://www.longtermcare.gov/LTC/Main_Site/Paying/Public_Programs/Medicaid/Eligibility.aspx MassResources.org MassHealth Program http://www.massresources.org/masshealth.html Adult Day Health (ADH) Program http://www.massresources.org/masshealth-adult-day-health.html Home Health Services Program http://www.massresources.org/masshealth-home-health.html Personal Care Attendant (PCA) Program http://www.massresources.org/masshealth-pca.html Transportation Services http://www.massresources.org/masshealth-transportation.html Massachusetts Homestead (Protection) Act http://www.massresources.org/homestead-act.html How much do Nursing Homes Cost? http://www.massresources.org/nursing-homes.html Mass Legal Service Estate Planning http://www.masslegalservices.org/content/planning-long-term-care-and-medicaid-eligibility

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Trust Protection and Medicaid Lien Waivers: 2013 Medicare Costs http://www.medicare.gov/Pubs/pdf/11579.pdf U.S. Dept of Health & Human Services http://aspe.hhs.gov/daltcp/reports/maliens.htm MassResources.org http://www.massresources.org/masshealth-financial-eligibility.html DHHS N.C. http://info.dhhs.state.nc.us/olm/manuals/dma/abd/man/MA2240-04.htm Social Security Administration - Liens, Adjustments and Recoveries, and Transfers of Assets http://www.ssa.gov/OP_Home/ssact/title19/1917.htm How Much is the Obama-care Tax? http://www.factcheck.org/2012/06/how-much-is-the-obamacare-tax/

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Request for a Meeting Form

With Alfred L. Angelici, MSIM Walnut Hill Advisors, LLC Zero Governors Avenue Suite 34 Medford, MA 02155 781.393.0021

www.walnuthilladvisorsllc.com
_____ Yes, please call or email me to schedule a meeting time _____ Yes, please call or email me to schedule a phone appointment with me

My Contact Information:
Name: Phone Number: Email Address: US Postal Address:

Notes:
Zero Governors Avenue is located on the corner of High Street and Governors Avenue. Parking is available rd for free on the street or in the municipal lot on Governors Avenue. We are located on the 3 floor. Take the rd elevator or stairs up. Enter through the door for Suite 35 (we lease two connected offices on the 3 floor.). If documents are needed for the first meeting, we will email or US postal mail you a list of documents to bring along.

To deliver this form:

By US Postal Mail Service: Walnut Hill Advisors, LLC Zero Governors Avenue, Suite 34 Medford, MA. 02155 By Fax: 888.278.0203 By Email:

ala@walnuthilladvisorsllc.com
Questions? Call us and we'll take care of it 781.393.0021

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