Tag: #EstatePlanning

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Law Office Of Stephen J. Silverberg, PC

Stephen J. Silverberg, Esq., and Scott B. Silverberg  Named To 2025 Edition of Best Lawyers® In Elder Law

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For the eleventh consecutive year, Stephen J. Silverberg, based on extensive peer review, is listed in the 2025 Edition of The Best Lawyers in America® in the practice area of Elder Law.

Scott B. Silverberg is listed in the 2025 edition of The Best Lawyers in America in the practice areas of Elder Law and Trusts and Estates for the first time.

Over 23 million votes were analyzed for the 2025 edition of The Best Lawyers in America®, which resulted in more than 80,000 leading lawyers included in the milestone 31st edition.

Stephen holds the AV® Preeminent (5 out of 5) rating, the highest possible designation from Martindale-Hubbell, and has been on the Super Lawyer New York metro list since 2007.

Stephen J. Silverberg is a nationally recognized leader in estate and tax planning, estate and trust administration, asset preservation planning, and Elder Law. He has served as the President of the National Academy of Elder Law Attorneys (NAELA). In 2003 he was honored as a NAELA Fellow, the highest honor given by NAELA to attorneys who focus on Elder Law, who have made exceptional contributions to meeting the needs of older Americans and who have demonstrated commitment to the Academy. Silverberg has also served as a founder, president and member of the New York State chapter of NAELA. 

He has been designated as a Certified Elder Law Attorney (CELA) by the National Elder Law Foundation, authorized by the American Bar Association. To receive this designation, applicants must pass a stringent written examination and substantial independent peer review. Since its inception in 1993, fewer than 520 attorneys have earned the CELA designation. Silverberg is a Hartwick College and Brooklyn Law School graduate and has been a member of the New York and Florida Bars for over forty years.

Scott B. Silverberg is the Immediate Past President of the New York Chapter of the National Academy of Elder Law Attorneys (NAELA) and a member of the National Board of Directors of NAELA. He also serves as a member of the Board of Directors of the Elder Law Practicum of national NAELA. As a New York State Bar Association member, Scott serves as Vice-Chair of the Practice Management Committee of the Elder Law and Special Needs Section Executive Committee. Previously, he chaired the Technology Committee.

In 2022, Scott became a member of The Estate Planning Council of Nassau County, a member chapter of the National Association of Estate Planners and Councils (NAEPC).

Scott earned an LLM (Master of Laws) in Elder Law from the Stetson University School of Law, a leader in special needs planning. He is the only attorney in New York who holds this degree. He graduated from Fordham Law School (JD, 2013) and holds a Bachelor of Science from the internationally renowned Cornell University School of Industrial and Labor Relations.

The Law Office of Stephen J. Silverberg, PC, represents clients in estate planning, tax, estate administration, asset preservation planning, Elder Law, and related issues. The Law Office of Stephen J. Silverberg, PC is at 185 Roslyn Road, Roslyn Heights, NY 11577, 516-307-1236 and www.sjslawpc.com.


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What is the Purpose of a Promissory Note in Medicaid Planning?

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Medicaid planning is often a complex process aimed at preserving a person’s assets while qualifying for Medicaid benefits. Finding a way to pay for long-term care costs without depleting all your hard-earned assets is a key part of Medicaid planning.

One strategy for protecting assets and qualifying for Medicaid that has gained attention in recent years is the use of promissory notes. This article will provide an explanation of promissory notes in the context of Medicaid planning, including their purpose, legality, implications, and considerations. Note that not all states allow promissory notes.

What Are Promissory Notes?

A promissory note is a legally binding document that outlines the terms of a loan agreement between two parties: the lender (creditor) and the borrower (debtor). It includes details such as the loan amount, interest rate, repayment schedule, and any other relevant terms and conditions. Promissory notes are commonly used in various financial transactions, including loans between individuals, businesses, and financial institutions.

Promissory Notes in Medicaid Planning

Medicaid is a public assistance program that assists individuals with limited income and resources in obtaining health insurance. It also serves as the primary way for millions of seniors in the United States to pay for long-term care services.

To qualify for Medicaid in most states, you must have no more than $2,000 in so-called “countable” assets to your name. Typically, five years before you apply, you may “spend down” your excess assets to bring them under this $2,000 threshold. Transferring assets within this five-year window of applying for Medicaid can otherwise result in a penalty period during which you may not be able to receive benefits.

Of course, not everyone plans this far ahead, as many people do not expect they will need long-term care. A Medicaid applicant may use a promissory note to transfer assets to other individuals, such as their children, while still complying with Medicaid eligibility requirements. By transferring assets through a promissory note, they can effectively reduce their countable assets, thereby helping them meet Medicaid’s asset limit criteria.

How Do Promissory Notes Work in Medicaid Planning?

A person seeking Medicaid benefits might opt to transfer some of their assets to a family member, typically a child, in exchange for a promissory note. Assets can also be transferred to a trust. The beneficiaries of a person’s trust are often their children.

When the assets are transferred, a legally binding promissory note is created. The promissory note lays out the terms of the loan, including the principal amount, interest rate, repayment schedule, and other relevant information.

The borrower agrees to repay the loan according to the terms outlined in the promissory note, usually through regular installment payments over a specified period.

By transferring assets by way of a loan and creating a promissory note for the loan, the person seeking Medicaid benefits effectively reduces their countable assets, potentially qualifying them for Medicaid coverage.

Legal Considerations

Though promissory notes can be a valuable tool in Medicaid planning, it’s important to ensure compliance with state and federal laws and regulations. As mentioned, Medicaid has strict rules regarding asset transfers and eligibility. Improper use of promissory notes could result in penalties or loss of benefits.

Key legal considerations include the following:

  • Fair Market Value: The terms of the promissory note, including the loan amount and interest rate, should reflect fair market value to avoid scrutiny from Medicaid authorities.
  • Payments: Payments on the loan must be made in equal amounts during the term of the loan with no deferral of payments and no balloon payments. (A balloon payment is a large payment made at the end of a loan’s term, after making much smaller payments along the way.)
  • Term of the Loan: The term (length of time) of the loan must not last longer than the anticipated life of the lender.
  • Debt Cancellation: The debt cannot be cancelled upon the lender’s death.
  • Arm’s Length Transaction: The transaction should be conducted as an “arm’s length” transaction, meaning it should be carried out as if the parties were unrelated and dealing with each other at arm’s length.
  • Look-Back Period: As stated above, Medicaid has a look-back period during which asset transfers are subject to scrutiny. In most states, the look-back period is five years. Any transfers made within this period may affect Medicaid eligibility, so it’s essential to plan accordingly.
  • State-Specific Regulations: Medicaid rules vary from state to state, so it’s crucial to consult with an experienced attorney familiar with Medicaid regulations in your state to ensure compliance.

Benefits of Using Promissory Notes in Medicaid Planning

Promissory notes offer several potential benefits in Medicaid planning, including the following:

  • Asset Preservation: By transferring assets through a promissory note, individuals can preserve their wealth while still qualifying for Medicaid benefits to cover long-term care expenses.
  • Control: The lender retains control over the repayment schedule and can customize the terms of the promissory note to suit their needs.
  • Family Involvement: Promissory notes provide an opportunity for family members to participate in Medicaid planning and contribute to the financial well-being of their loved ones.

Risks of Using Promissory Notes in Medicaid Planning

When considering the benefits of using promissory notes in Medicaid planning you should also consider the risks, which could include the following:

  • Regulatory Scrutiny: Improperly structured promissory notes may attract scrutiny from Medicaid authorities, potentially resulting in penalties or disqualification from benefits.
  • Complexity: Medicaid planning involving promissory notes can be complex and requires careful consideration of legal and financial implications.
  • Tax Implications: Transferring assets through promissory notes may have tax implications for the lender and the borrower, so it’s essential to seek professional tax advice.

Will a Promissory Note Work for Your Medicaid Planning?

Promissory notes can be a valuable tool in your Medicaid planning process. They could allow you to transfer assets while maintaining Medicaid eligibility. However, it’s crucial to navigate this strategy carefully, ensuring compliance with applicable laws and regulations.

Call our office to talk further about gaining acceptance into the Medicaid program. We can help you determine whether including a promissory note in your planning will work for your situation. We can also walk you through other benefits that may be available to you and help you understand how you can qualify for coverage.

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MEDICARE DRUG PLAN ADVISORY: Upgrades May Require Action for 65+ Wage Earners with Employee Prescription Plans

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If you’ve delayed signing up for Medicare prescription drug coverage (Part D) because you’re still working and have health insurance through your employer, you must know about some changes that may affect your budget in 2025.

Working people who qualify for Medicare sometimes delay applying, which is fine if you meet the requirements. Your employer’s prescription plan must pay as much on average as the standard Medicare plan for prescription drugs. Simple enough, right?

However, changes are coming because of upgrades that are part of the Inflation Reduction Act, which takes effect on January 1, 2025. Some employer plans that qualified because benefits were as good as Part D before this change may no longer be eligible. One example: the out-of-pocket maximum under Part D will be $2,000 yearly, starting on January 1.

If your private plan doesn’t cap the amount you need to pay at $2,000 a year or less, the policy may no longer qualify as a substitute for Part D, which means it won’t let you delay signing up for Part D without a penalty.

If you are working and eligible for Medicare and your job prescription plan is deemed not credible, you must immediately apply for Part D coverage. If you are not enrolled in Medicare, you must apply for Part A regardless of your employer’s health plan. If the plan does not provide credible coverage, you must also apply for Part D. If you delay enrolling, you may face a substantial penalty.

The penalty will hit your Medicare bill if, after your initial enrollment period, you have 63 or more sequential days without Medicare drug coverage or another creditable prescription drug plan.

What will the penalty be? Multiply 1% of the “national base beneficiary premium” — $34.70 – by the number of whole months you didn’t have Part D or creditable coverage rounded to the nearest 10 cents. Your monthly Part D premium is increased by this amount for life.

Take a breath – Medicare-eligible policyholders must be notified by law whether their prescription drug coverage meets the standard for being “creditable.” But if you are 65+, working and getting health benefits through your employer, and haven’t heard from your employer or the insurance company, now would be an excellent time to determine whether you need to make any coverage decisions when the Part D rules change.

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When Decoration Day Became Memorial Day, and Why It Still Matters  

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Memorial Day is a topic I return to every May because it is important to honor the Americans who gave their lives in service to our great nation. It’s a national holiday with a somber and respectful history, and we need, especially now, to keep that in mind.

Our activities on Memorial Day should include remembering and honoring the lives and sacrifices of our veterans—and their families.

For me, this last weekend of May will always be Decoration Day.

Decoration Day began in 1868 when General John A. Logan called for a holiday to honor the soldiers who died in the Civil War. Women placed flowers on the graves of their husbands, sons, and brothers. On the first Decoration Day, 5,000 people helped decorate the graves of the over 20,000 soldiers buried in Arlington National Cemetery – both Union and Confederate soldiers.

Similar ceremonies inspired the event in cities around the country. Soldiers would decorate the graves of fallen comrades with flags, wreaths, and flowers. By 1890, every Union state had a Decoration Day.

After World War I, the purpose of Decoration Day expanded to honor all soldiers who died in all American wars. It was considered a day of civic duty to honor the dead and remember why they gave their lives.

In 1971, Congress declared a national holiday on the last Monday in May.

Some civic groups and veterans’ groups continue to honor our servicemen and women by taking the time to attend ceremonies and decorate the graves of soldiers. Flags should be flown at half-mast until noon on Memorial day and a national moment of silence takes place at 3:00 pm.

Here on Long Island, we have two large military cemeteries – Long Island National Cemetery in Farmingdale and Calverton National Cemetery. We have a large population of veterans and families who know all too well the impact of the ultimate sacrifice their loved ones made for their country.

As the years and wars have come and gone, Decoration Day became Memorial Day. Unlike Veterans Day, which honors all who serve, the traditions of Memorial Day honor those who gave their lives in service to our nation.

I encourage you to find out where your town’s wreath ceremony is taking place and take the time to show your support. On Long Island, ceremonies take place at town halls, fire departments and other civic centers. Your presence will be appreciated.

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Hand of a senior woman reaching to place tomatoes on checkout conveyer belt at supermarket

Social Security Administration Releases Final Rule Omitting Food from In-Kind Support and Maintenance Calculation for SSI      

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The most important takeaway from the Social Security Administration’s rule change is that any purchases of food for Supplemental Security Income recipients from Special Needs Trusts and families will not decrease the SSI payment. The new rule was approved on March 27 and effective September 30, 2024.

This new ruling makes Special Needs Trusts (SNTs) even better for those who depend on SSI benefits.

Food will no longer be considered in the calculation of In-Kind Support and Maintenance (ISM). The definition of income will be changed to align with this, which will make it far less cumbersome to administer and more accessible for the general public to understand. The goal is to improve the equitable treatment of food assistance within the SSI program.

The SSA traditionally included in-kind receipt of food in its ISM calculations because food assistance helps people meet a basic need, but the rule needed to be revised for several reasons. One is to make policies easier to understand, and another is to promote equity by treating food assistance equally, regardless of the source. The goal is not to harm an already vulnerable population when receiving food assistance.

SSI recipients historically have low income and resources, facing barriers across a wide range of social and economic outcomes. Disabled individuals are more likely to be food insecure, and this will remove barriers to receiving informal food assistance from friends, family, and community networks of support.

SSI recipients will still be asked about their food sources to determine specific values about other benefits, including shelter, as part of their maintenance calculations.

For disabled family members who depend on SSI benefits, this makes a Special Needs Trust even more valuable. When trust assets are used to buy food, they will not be countable against the recipient’s SSI benefits.

Please contact the office if you have questions about the impact of the rule change.

Source: Federal Register (March 27, 2024) Social Security Administration Final Rule

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What are the New IRA and Retirement Saving Rules for 2024?

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If your New Year’s resolutions included increasing your retirement savings efforts in 2024, there are a few changes to rules about IRAs, 401(k)s, and even 529 College Savings Plans you’ll want to know about.

Contribution limits for 2024 have gone up. Annual contributions for IRAS in 2024 are now $7,000, up from $6,500 in 2023. It applies to the total contributions to all traditional and Roth IRAs. For those 50 and older, the contribution limit is $8,000 because of the $1,000 “catch-up” contribution allowed for older savers.

401(k) annual contributions are now $23,000. It applies to similar employer-sponsored retirement accounts, including 403(b) plans, most 457 plans, and the Thrift Savings Plan for federal government workers. Older savers (50-plus) may contribute up to $30,500 this year to a 401(k), 403(b), and most 427 plans and Thrift Savings Plans.

Funds in a 529 college savings account may now be rolled over into a Roth IRA for the beneficiary with no penalty. This tax-free rollover rule is part of SECURE 2.0. Individuals may roll over as much as $35,000 from 529 savings accounts, subject to annual Roth IRA limits. There are rules to follow: the account must be owned for at least 15 years before you can roll over the funds, and you may only roll over money that’s been in the account for at least five years. The account holder, typically a child’s parent or grandparent, may roll no money into their own Roth IRA – it can only go into an account established for the beneficiary of the 529 plan.

Rules about emergency withdrawals have changed. Previously, if you had an immediate financial emergency, you could get an early distribution from 401(k)s and IRAs. You’d have to pay income tax on the withdrawal, and if you were younger than 59 ½, you’d also get hit with a 10% penalty.

In 2024, you may make one withdrawal of $1,000 per year to pay for an emergency expense without owing the 10% penalty, as long as you “self-certify” that you need the money for an emergency.

There is another penalty-free withdrawal allowed to victims of domestic abuse under age 59 1/2, who may withdraw up to $10,000 from IRAs and 401(k)s.

“Starter 401(k)s” were introduced in 2024. These leaner plans have lower costs, fewer administrative burdens, and are designed specifically for small business employers. Employees may contribute up to $6,000 yearly, and small businesses have until tax time to set up the plans. The goal is to expand access to workplace retirement plans for people who work in small businesses.

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2024 Bringing Big Savings for Medicare Patients Relying on Expensive Drugs

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There is good news for Medicare recipients in 2024 who count on costly prescriptions. The Inflation Reduction Act passed in 2022 puts an annual ceiling of $3,300 in 2024 for Part D drugs. The number could shift slightly depending on whether they take brand-name or generic medications.

In 2025, the news is even better: the cap changes to a flat $2,000.

Here’s how it worked: people who pay for their medications through Medicare Plan D, the government insurance plan covering most prescription drugs, paid thousands for medications until they reach what’s known as the “catastrophic zone of spending.” After that, they pay a 5% deductible for the rest of the year, often in the thousands.

In 2024, the IRA eliminates the 5% coinsurance. And once patients spend roughly $3,300, they have met the “catastrophic zone.” And they won’t have to pay any more out of pocket for Part D drugs.

Here’s an example of the new rules. Let’s say a 69-year-old man has a plan with a $505 deductible. He takes a blood cancer drug that costs $200,000 per year—roughly $16,600 monthly. In 2023, he pays his full deductible, plus 25% coinsurance, until he hits the $3,100 catastrophic limit for 2023, plus 5% coinsurance after. On his next refill, as he has remained in the catastrophic zone, he paid only the 5% deductible–roughly $830. He’ll pay about $830 every time he fills his prescription, spending more than $12,000 out of pocket for the year.

In 2024, the same man taking the same drug will save a few hundred dollars the first time he fills the prescription, topping out at around $3,300. Subsequent refills will cost nothing. He will not pay for the blood cancer drug, or any other drug, for the year. In 2025, his first trip to the pharmacy will cost him $2,000, the cap for the year, unless he wants to participate in a “cost-smoothing” program and spread the $2,000 over 12 months.

The Inflation Reduction Act lets Medicare officials negotiate the price of drugs. By doing away with the 5% coinsurance, the law forces insurers and drugmakers to pick up part of the tab. Part D covers most outpatient prescription drugs, although some medications, including physician-administered infusions, are covered under Part B.

The downside is that premiums may go up, and Part D paperwork may become more complex. Premiums for stand-alone Part D plans were up an average of 20% in 2023. Because Part D plans are paying for more medications, they may be motivated to use techniques pushing patients to less expensive drugs or requiring them to get insurers’ approval before filling prescriptions. They may also change the list of drugs covered.

It’s always important for Medicare recipients to check their plans and medications, but these changes make it even more important.

Reference: The Wall Street Journal, January 15, 2024, “Medicare Patients on Pricey Drugs Are Saving Big This Year”

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NAELA News Article on QLACs Is Top Pick for 2023

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This past year, I’ve enjoyed contributing articles to prestigious professional journals, including one of our field’s most respected publications, NAELA News, by the National Academy of Elder Law Attorneys. With great pride, I announce that my article, “SECURE 2.0 Opens the Door for Qualified Longevity Annuity Contracts (QLACs),” has been recognized as the most-read article in NAELA News for 2023!

A Qualified Longevity Annuity Contract is an annuity purchased from an insurance company with a portion of the assets of an IRA. Before SECURE 2.0, the maximum premium was set very low, limiting the benefit of the QLAC.

SECURE 2.0 removed the percent limitation and raised the maximum premium to $200,000, making the QLAC a viable planning strategy. A QLAC allows an individual to defer distribution from a QLAC until age 85. Since the QLAC is structured as a Medicaid Qualified Annuity, it is not a resource for Medicaid purposes, even in states that count an IRA as an available resource. Also, if there is a surviving spouse and the account holder dies before payments begin or the balance of the annuity, they take priority over any state Medicaid recovery.

Click here to read the full article. If you have any questions, please feel free to contact me at sjs@sjslawpc.com.

Thank you to my colleagues at NAELA, who share my passion for an admittedly complex area of the law – and our shared commitment to improving the lives of our clients.

Here’s to a year filled with health, happiness, and innovative estate planning!

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Seniors Beware – Medicare (dis)Advantage Plans – Part Two.

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If you’re not worried about your Medicare Advantage plan, a recent article from The Washington Post, “Hospitals and doctors are fed up with Medicare Advantage,” might motivate you to check on your Medicare plan before the open enrollment period ends – next Thursday, December 7.

While Medicare Advantage plans have about 31 million members (nearly half of all Medicare enrollees), many doctors and hospitals have had their fill and refuse to accept the plans – even from companies like United Healthcare and Humana.

Consumer policy representatives say today’s pushback has changed as doctors and hospitals become more vocal about their frustration with the insurance companies’ cost-control efforts.

In Louisville, Baptist Health, which runs nine hospitals, clinics, and physician groups, says it will cut ties with Advantage plans from UnitedHealthcare and WellCare Health Plans starting in January unless they can come to terms. The plans “routinely deny or delay approval or payment for medical care recommended by your physician” was the message to patients from Baptist Health. Those are strong words from one institution to another.

Baptist’s medical group of 1,500 doctors and other providers left the Humana network in September.

Scripps Health in San Diego said they accept no Medicare Advantage plans because “revenue doesn’t cover the cost of patient care.”

Last year, the Health and Human Services Department’s inspector general published a study finding some Advantage plans improperly denied covered care coverage created under Medicare’s new rules. The Biden administration’s new rules, set to take effect in January, are in part a response to the OIG report.

Virtually all Medicare Advantage enrollees are in plans requiring the insurer to sign off in advance for at least some of the care. The insurance sector says the process ensures treatments are coordinated and appropriate. In 2021, Medicare Advantage participants submitted over 30 million requests for approvals, according to the KFF, an independent, healthy policy research, polling, and journalism organization. 11% of those denied filed appeals. Upon final determination, the review organization reversed 85% of the denials.

Bottom line: doctors and hospitals have many complaints about original Medicare, but approvals and claim denials are much more limited.

Make an informed choice about your healthcare by researching original Medicare and Medicare Advantage. 

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Seniors Beware – Medicare Advantage Plans – Part 1

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Seniors who sign up for a Medicare Advantage plan may find themselves in a world of trouble – the complete opposite of what they expected.

Once you turn 65, you are eligible to sign up for health coverage under Medicare. You can choose traditional Medicare (Parts A, B, and D) or Medicare Advantage (Part C).

Traditional Medicare is administered by the federal government while Medicare Advantage allows insurance companies to manage their policies. The insurance companies spend enormous amounts on marketing Medicare Advantage plans. Ad campaigns focus on how your out-of-pocket spending will be much smaller with an Advantage plan than with original Medicare. Last year, the Center for Medicare and Medicaid Services (CMS – the government agency that administers Medicare and Medicaid) found the television advertising for Medicare Advantage to be misleading and confusing. This year, CMS imposed severe restrictions on how Medicare Advantage plans are marketed.

The better choice is to go with traditional Medicare and purchase a Medigap policy. Here’s why.

With traditional Medicare, you can see any doctor who accepts Medicare, but Medicare Advantage plans limit your healthcare providers to a specific network of hospitals, doctors, and pharmacies. Go out of network, and your costs could skyrocket.

Provider networks for Advantage plans can change from one year to the next. So just when you’ve finally found a doctor you like one year, they can be out of network the following year.

Other benefits heavily marketed to seniors include supplemental benefits, like dental coverage, fitness club benefits, and meal delivery services. But to qualify for some benefits, you need a documented medical condition justifying your ability to receive them. If you have diabetes, for instance, you may qualify for meal delivery services. But if you don’t, you’re paying for something you can’t use.

Most Medicare Advantage programs require prior authorizations for many services. Medicare doesn’t have this requirement. You are paying more for an additional level of stress, which could lead to delayed essential treatment or diagnosis because of this extra step.

What if your local hospital system doesn’t accept your Advantage plan? Many hospital systems are dumping Medicaid Advantage because of high prior authorization denial rates and slow insurer payments. Last year, Mayo Clinic dropped Advantage plans in certain states, and Scripps recently notified patients it’s terminating many Medicare Advantage contracts. The Hospital for Special Surgery and Memorial Sloan Kettering do not participate in Medicare Advantage.

Do your research before you make this critical decision. It could affect not only your wallet but your health.

Reference: The Motley Fool “4 Pitfalls You Might Encounter With a Medicare Advantage Plan”