Posts Tagged ‘Social Security’

Ask anyone with a Social Security disability determination for a quick description of the process and be prepared for something like: Agony. Or glacial. Or maddening.

There may be a glimmer of hope for some. On February 12 the Social Security Administration added to the list of conditions that will be considered under the compassionate allowance program, which is a fast track approach to making disability determinations. Among those conditions is early (young age) onset Alzheimer’s disease. More on that below.

Why This Might Be Important

Social Security disability determinations are important for a number of reasons. As most know, all those years of payroll taxes fund a mandatory federal retirement benefit called Social Security. Work enough, turn 62 or so, stop working and collect retirement benefits. But what of the younger worker who becomes disabled?

Social Security Disability Income benefits are essentially an advance payment of retirement benefits for the younger disabled (former) worker. The extra income is nice, but the added bonus is that two years after Social Security says the disability began the (former) worker also collects Medicare. (Why a two year wait? It’s a mystery.)

Medicare is the mandatory federal health insurance program that normally goes along with the Social Security retirement benefits. That can be a godsend for the disabled individual who is no doubt racking up medical bills and may have no other health insurance (remember, she hasn’t been working a few years).

A Social Security disability determination is also important for the younger disabled person who is truly destitute (she can’t work, she’s disabled, and she doesn’t have any significant work history). Supplemental Security Income is a small benefit with all sorts of strings attached. But it has one very important feature: The doors to Medicaid instantly swing open. Medicaid is the federal health insurance program for the poor disabled.

Getting One Is Another Matter!

Getting the determination is another matter and not for the faint hearted. Years of budget cuts and under staffing have taken a toll. Overworked and under trained caseworkers make erroneous decisions and often do not understand what they are doing.

Good administrative law judges (the ones who straighten out the decisions made by the overworked and under trained caseworkers) are overwhelmed. Getting on a judge’s docket can take months . . . up to a year.

A final decision can take years. The process is so complex that lawyers can actually make a living at it . . . why else are all those ads on TV?

Cutting Through The Mess . . . For Some

That is why the compassionate allowance program can make such a difference to someone with a listed condition. Social Security Administration has determined that the conditions shown are easy to prove with a simple records review. Experience has also shown that people suffering from the listed conditions always win . . . eventually . . . a determination.

So, the thinking goes, why not fast track those conditions. Early onset Alzheimers disease is now one of those conditions. A break for those with a heartbreaking condition.

For a full list of the listed conditions go to www.ssa.gov/compassionateallowances. There are 88 conditions listed. Someone lucky (or unlucky) enough to be on the list may be on the way to a speedy determination.

Coastal Senior is a monthly periodical published in Savannah, Georgia and circulated throughout the Georgia and South Carolina low country. Bob Mason is its legal columnist.

A month or so ago I suggested that a husband think carefully – very carefully – before electing early Social Security benefits. This month I’m going to really step out and suggest, for terribly unromantic reasons, that you plan carefully – very carefully – before going into a later-in-life second marriage. The religious prescription not to enter a marriage “unadvisedly or lightly” applies in spades to a later marriage. 

“Bob,” you may ask, “are you suggesting we see an attorney before the preacher?” And I would answer: “Yes.” Here’s why.

Some of the biggest (and most expensive) messes I have had to clean up have been after the death of a second spouse when there had been little or no planning. Adult step-siblings (who may not even know or like each other) can be counted on to be looking out for whatever it is that they believe their natural parents accumulated for them.

Most “planning” I have seen is a simple verbal agreement that “what is your is yours, and what is mine is mine.” That won’t cut it. All couples are different, but here is a partial list of issues that may be important. 

Estate plans. The worst plan might be simple “I love you wills” that leave everything to the surviving spouse with the understanding that she will “do right”. Even with wills that leave everything to the children of the deceased spouse, there may be problems with an “elective share” statute. 

Georgia does not have an “elective share” statute, but most other states (including North Carolina and South Carolina) do. Most elective share statutes enable a surviving spouse to “elect” a share of around 1/3 of the deceased spouse’s estate if he or she does not like what was left in a will. 

In fact, one South Carolina case has been making waves. The deceased founder of Hooters (you know . . . the restaurant famous for . . . large burgers and chicken wings) left $1 million a year for 20 years to his fairly younger surviving spouse. She felt $20 mil wasn’t enough, so she elected for 1/3 of Mr. Hooter’s estate. Mr. Hooter’s son (not the widow Hooter’s son, by the way) has objected and claims the South Carolina elective share statute is unconstitutional. Yours truly believes that argument has as much chance as a Hoot Owl in, well, Horry County. 

Get a prenuptial (or premarital) agreement. Those sorts of difficulties can be addressed in such an agreement. 

The Family Home. Naturally the newlyweds do not want to see the bride or groom evicted upon the death of the other. On the other hand, children can become quite emotional over what may be perceived as “their home”. Chances are putting the house in both spouse’s names is not a good idea. Try a life estate, or maybe a trust.

Social Security Benefits. Remarriage can affect the Social Security benefits a newlywed had been receiving under a deceased or divorced spouse’s account. If you divorce after 10 years or more of marriage, you can collect retirement benefits on your former spouse’s Social Security record if you are at least age 62 and if your former spouse is entitled to or receiving benefits. If you remarry before age 60, however, you generally cannot collect benefits on your former spouse’s record unless your later marriage ends (whether by death, divorce, or annulment). 

Annuities and Survivors Pension Payments. You might be kissing a hefty survivor’s pension (corporate or military) goodbye when you kiss your new spouse. Check them all out before heading to the altar. 

Income Taxes. There may be some tax planning advantages to marrying if estate taxes are a concern because many planning techniques are available to married couples only. Income taxes might also drop if one spouse is earning significantly more than his or her new spouse. On the other hand, many income tax breaks phase out for couples at less than twice the phase-out level for a single person. 

Long Term Care (Nursing Home) Planning. A big consideration for older people considering remarriage. The state does not care at all what sorts of plans or promises a couple has made when it comes to Medicaid and nursing home benefits. A carefully drafted prenuptial agreement is worthless. All Medicaid programs consider the assets of the couple. While rare, some couples have divorced within a few years of marriage when one spouse in declining health (usually the “poorer” spouse) has entered a nursing home.

It may be sad to see, but many couples are electing to do exactly what they would have DIED seeing a child do 30 years ago . . . moving in with a boyfriend or girlfriend!

Coastal Senior is a monthly periodical published in Savannah, Georgia and circulated throughout the Georgia and South Carolina low country. Bob Mason is its legal columnist.

Ladies, Is Your Husband A Cad?

The first Boomers are applying for Social Security! I distinctly remember – like it was yesterday – these same people saying “don’t trust anyone over thirty!” I guess it wasn’t yesterday, but more like ’68.

Guys, if burning your draft card was dumb then, applying now for early Social Security benefits might not be much smarter. Carelessness with matches in ’68 got you in trouble with the feds. Carelessly applying for early Social Security now could hurt your wife.

Here is my free legal advice for the month: Hang on, there, fellas and don’t apply for Social Security until you’ve read this article . . . which won’t be hard unless you’re almost up to the window at the Social Security office while you’re looking at this column.

A recent study at Boston College’s Center for Retirement Research has concluded that men are applying for Social Security benefits too early. That hurts a surviving wife because it will lower her benefits when her husband dies first (which is what the odds makers say will happen).

To understand why, you need to understand the math. At this point I’d like to ask the actuaries and accountants to take a break while I explain in English.

Social Security retirement is a mandatory retirement system for most US citizens. The size of your benefit depends upon how long you worked and how much you earned. The longer your work history and the more impressive your earnings, the bigger the retirement benefit. Remember all those payroll taxes you paid?

Mathematically, that earnings history is then reduced to a present value or lump sum. It then becomes a question of: How much retirement benefit will that lump sum pay for if you live as long as the fed’s actuaries say you should?

If you take a “normal” retirement benefit beginning at age 65, you might receive $1,000 monthly. If you elect to work longer, you might receive $1,200 monthly when you do eventually begin to receive a check. Why? Since the feds didn’t pay you during the years you continued to work, that lump sum on hand has gotten bigger. Also, the feds won’t have as many years to pay out.

On the other hand, you may think dropping out and beginning a benefit as early as possible (age 62) seems attractive. But in my example you might receive only $750 monthly. Why? Because the feds have to pay you longer.

If you are think you will not live much past 71 or 72, taking the lower early retirement benefit might make sense because $750 a month for ten years is better than $1,000 a month for 7 years.

But that is if you are single. If you are married and your wife (I’m talking to the guys, here) plans on living quite awhile, your early retirement benefit is not such a great idea. Why? Because the feds calculate your wife’s survivor benefit (what she will be paid after you die) as a percentage of your monthly benefit. Because you retired earlier, your monthly benefit was lower.

In fact, the Boston College study concluded that the survivor’s benefit for the widow of the early retiree was about 20% lower than the fellow who retired at normal retirement age.

So . . . are the early retiree husbands “cads” (Boston College’s term)? Or are they just ignorant?

Very cautiously the study tied educational level to later claiming of benefits. Of course, many things could account for that, including the possibility that the better educated brethren simply liked their jobs more and worked longer. However the Boston College study suggests that educational level could tie more closely to financial awareness.

As the Social Security “normal” retirement age starts inching up (which it is scheduled to do), the “early retirement problem” could get worse.

The Social Security Administration’s Web site (www.ssa.gov) has a number of excellent calculators to assist beneficiaries in deciding when to retire. Unfortunately, none calculate spousal benefits. Based on the Boston College report, adding such calculators would be a good first step.

Also, bear in mind that none of this applies if you burned your draft card in ’68 and moved to Canada.