New 2023 Numbers for Tax and Medicaid Planning

Description

The start of the new year brings new numbers that affect financial decisions and health care. Jeff provides an update on the 2023 numbers you should know for tax planning and Medicaid qualification.

Jeffrey R. Bellomo, founder of Bellomo & Associates, is a licensed and certified elder law attorney with a master's degree in taxation and a certificate in estate planning. He explains complex legal and financial topics in easy-to-understand language.

Key Takeaways

01:45 – Tax Planning

The annual exclusion gift amount is $17,000/person for 2023
Most people will not be subject to federal estate tax due to the high dollar amount that triggers the tax
Pennsylvania (PA) does have an inheritance tax
Actions in one area of planning (e.g., taxes) can affect other areas of planning (e.g., estate planning)

09:00 – Medicaid Planning

Case workers use PA's Long-Term Care Handbook
If a person's income is more than $2,742/month, PA could recover assets if the person has more than $2,400 in assets in their name alone at time of death
If a person's income is less than $2,742/month, PA could recover assets if the person has more than $8,000 in assets in their name alone at time of death
PA can pursue asset recovery from probate estate only
Non-probate assets are jointly owned or tied to a beneficiary
Sound estate planning can avoid asset recovery by the state

12:25 – The Waiver Program

A PA program that can be thought of as "Medicaid in the home"
The income cap limit to qualify is $2,742/month
PA might allow a person to qualify even with an additional $500/month in income if the $500 is funneled to an Excess Income Trust

14:32 – Married Couple Assets

Different rules apply for "institutionalized" spouse and "community" spouse
The community spouse can keep the house, the car, and their own retirement account—all remaining assets go into a pot
When the pot is less than $29,724, the community spouse can keep the entire pot
When the pot is between $29,724 and $148,620, the community spouse can keep one half of the pot

17:21 – Married Couple Income

If the community spouse's monthly income is between $2,288.75 and $3,715.50, then they can keep it
If the community spouse's monthly income is less than $2,288.75, then they can get a portion of the institutionalized spouse's income
Minimum excess home equity limit for 2023 is $688,000