The author and publisher have provided this e-book to you for your personal use only You may not make this e-book publicly available in any way Copyright infringement is against the law If you believe the copy of this e-book you are reading infringes on the author’s copyright, please notify the publisher at: us.macmillanusa.com/piracy Contents Title Page Copyright Notice Dedication Acknowledgments Introduction Epigraph ♦ Get Real Security from Social Security Retirement Benefits ♦ Social Security Survivor Benefits: A Security Blanket to Protect the Family ♦ Social Security Disability Benefits: A Treasure That Really Has Been Buried! ♦ Getting Uncle Sam to Play Fair with Medicare ♦ The Appeal of Medicare Appeals ♦ Retirement Plans: An Alphabet Soup That Spells Big Benefits ♦ COBRA: Insurance Protection That Takes a Licking and Keeps on Ticking ♦ Tax Treats for Older Americans ♦ Home Sweet Home: Treasures Right Under Your Roof 10 ♦ Supplemental Security Income: A Little Extra to Make Ends Meet 11 ♦ Invaluable Aid from Medicaid 12 ♦ Civil Service: It’s Time for Uncle Sam to Give Something Back 13 ♦ Railroad Retirement: Benefits to Keep Your Retirement on Track 14 ♦ Veterans’ Benefits: Uncle Sam’s Reward for Military Service Appendices Calculating Retirement Benefits Special Minimum Benefit Calculating Spouse Retirement Benefit Calculating the Maximum Family Benefit Calculating Survivor Benefits Checklist of Important Documents and Information for Application The Grids Calculating Disability Benefits Social Security Disability Questionnaire 10 Form for Request for Reconsideration 11 Form for Request for Hearing by Administrative Law Judge 12 Form for Request for Review of Hearing Decision/Order 13 Tips for Using HCFA 2649 14 Form for Request for Review of Part B Medicare Claim 15 Form for Appointment of Representative 16 Health Insurance Claims Activity Log 17 List of Medicare Carriers 18 Medicare Peer Review Organizations (PROs) 19 Health-Care Financing Administration Regional Offices 20 Samples of Form for Tax on Lump-Sum Distributions 21 The Credit for Elderly or Disabled 22 Earned Income Credit Table 23 Application for Hospital Insurance Notes Index Also by Armond D Budish Copyright To our beloved grandparents and parents who gave us a past worth remembering and a present worth living for And to our children who give us hope for an even better tomorrow Acknowledgments This book would not have been possible without the tremendous contributions of many individuals Four very special people spent a great deal of time and energy providing their expertise to make known the very best gems available Susan H Starr, consultant for The Wyatt Company, was of invaluable help with the Social Security chapters Diane Archer, Executive Director of the Medicare Beneficiaries Defense Fund, and Mike Klug, Senior Program Specialist for the Medicare/Medicaid Assistance Program of the American Association of Retired Persons, both nationally recognized for their knowledge and experience with Medicare, patiently and carefully worked us through the Medicare maze Gary A Zwick, Director of Tax for the public accounting firm of Cohen and Company, deserves tremendous thanks for the hundreds of hours he devoted to writing, developing, and shaping the many glittering Retirement Plan gems in Chapter Thanks to James M Brown, past president of the National Organization of Social Security Claimants Representatives and an expert in handling Social Security disability claims; Douglas C Carlson, tax partner at Hahn Loeser & Parks; Ken Scholen, founder and director of the National Center for Home Equity Conversion and the nation’s leading authority on reverse mortgages; and Ronald B Abrams, director of legal publications and training for the National Veterans Legal Services Project and editor of The Veterans Advocate; all of these experts in their fields helped us discover the keys to open the treasure chest of gems presented in the following pages We also want to acknowledge a number of other professionals who graciously shared their perspectives with us: Susan Axelrod, Director, City of Cleveland Department of Aging; Kathleen Hogue and Elaine Molis at Mediform, Inc.; Sue Biagianti, Tony Thomas, and Lynn Wasserman of Jewish Family Service Association; Janine Weisfeld, M.S.S.A., geriatric social worker at Mt Sinai Medical Center; Ned Grossman, president of Grossman and Associates; and Susan Strippy, President, Hospitalization Assistance And, not to be forgotten, Carl Jones, for providing the encouragement and strong java that kept Amy going through the seemingly endless drafts of this book There even were people within the Government who helped To make sure they don’t lose their jobs, we won’t thank them by name—but you know who you are You are public servants in the truest sense Finally, we would like to thank Melanie Handlovic, April Funke, and Joyce Gordon, who helped transform our scrawl into type And a very special thanks to Susan Kreps, who somehow managed to a thousand jobs at the same time! Introduction The “golden years.” We Americans spend our lives working and saving for the day when we will finally get the freedom to really start enjoying life At least that’s the dream But millions of older Americans have discovered that the gold in their golden years is of the “fool’s” variety The retirement they lived and planned for will never come to pass because they don’t have sufficient cash Forget about all those nice extras; we’re talking basics—money to buy food, shelter, and health care The pot of gold that is supposed to be waiting at the end of the rainbow does not have to be as fictional as a leprechaun Most seniors actually are missing out on money that is legally available to them The treasure is out there—you just need to know where to dig In the pages that follow, we’ll help you find your way Sadly, thanks to our friends in Washington (the keepers of the keys), millions of tax-paying older citizens have suffered financial pressures that could have been avoided You not have to join the unhappy ranks We have committed an act of piracy—we have broken into the Fort Knox of Government benefits and uncovered the best legal strategies available to you for claiming your share of the gold from the Government’s treasure chest We’ll explain how you can “strike gold” in the Social Security, Medicare, and Medicaid programs; how you can s-t-r-e-t-c-h your income from company pensions, IRAs and other retirement programs, Supplemental Security Income, Civil Service, and Railroad Retirement; how you can find hidden cash in your home; and how you can beat the tax man Our proven techniques will empower you to change “old” to “gold.” With this book we are handing you the treasure map, deciphered from a mine of unintelligible government rules and regulations Read on to discover the resource-stretching gems that can add lustre to your golden years Here’s a sampling of what you are about to dig up: • Retiring at age 62, and even at age 60, rather than waiting until 65 or 70, can add tens of thousands of dollars to your bank account; here • A carefully timed divorce can add hundreds of dollars to your monthly income, and can also put extra cash into the pockets of your spouse and children Don’t worry; you may remarry your ex-spouse after you cash in (if you want to); here • The Government charges a top secret tax on Social Security benefits By spreading out the terms of investments, or making tax-free investments, you can cut this secret tax and save many hundreds of dollars; here • Working after you retire can cost you plenty—Uncle Sam takes as much as 50 cents of every dollar you earn! We’ll tell you about the legal loopholes that will let you keep a lot more of your money; here • Take stock of your income—by changing salary into dividends, you can reap big profits; here • Uncle Sam provides you with a lucrative life insurance policy—and it’s free for the asking; Chapter • If your spouse dies, you could retire with benefits as early as age 50—if you know how! Here • Strategically timed shifts from Social Security retirement to survivor benefits, or from survivor to retirement benefits, can add hundreds of dollars to your monthly checks; here • Back pain, arthritis, headaches, and any other health problems that prevent you from working may qualify you for lucrative disability benefits under Social Security We’ll give you the buried tips on how to cash in! Here • You can work and receive disability paychecks at the same time, but you need to know the hidden rules; here • If you are denied Social Security benefits, you can fight city hall and win! Our “gems” will help; here • Knowing your “real birthday” can gain you one extra month of Medicare benefits—a surprise present from Uncle Sam! here • The Government doesn’t tell you when to apply for Medicare, yet any delay can be very costly We’ll tell the secrets on how to time your application so you don’t get caught naked; here, here • Get retroactive Medicare coverage for bills already incurred; here • Medicare will pay for nursing home services and at-home care in many cases, but the Government doesn’t want you to know about it; here • The Government unfairly denies many valid Medicare claims But you can overcome! Chapter • You can get an interest-free and tax-free loan from your pension plan or IRA! Here • Have you been told your pension is locked up until you reach 59½? Wrong! We’ll tell you how to get your money early, without any penalty! Here • Have you been told you have to start withdrawing retirement funds when you reach 70½? Wrong again! We’ll explain how to increase income by delaying withdrawals until age 72; here • Should you take your pension money in a lump sum or in monthly installments? Or should you roll it over into an IRA? We’ll tell you which strategy is best; here • Instead of taking a monthly pension for your and your spouse’s lifetimes, save money by combining a pension with private life insurance! Here • If you are 50 or older, does it make sense to contribute to a pension or IRA? You bet! And we’ll tell you how to maximize the benefits available; here • A little-known program, called COBRA (Consolidated Omnibus Budget Reconciliation Act of 1985), providesinvaluable medical insurance protection when you retire or leave your job for any reason; see Chapter • Would you like to add $400, $900, even $1,100 to your monthly income for life? Of course you would We’ll tell you about three programs—SSI (Chapter 10), CED (387–389), and EIC (389–394)—which can just that! • The Government makes SSI eligibility look impossible to meet But just shuffling your assets may help you qualify; here • If you or your spouse have high medical bills, filing separate tax returns can cut your income tax bill; here • We’ll map out the little-known tips to help you claim a parent as a dependent—and get a nice tax deduction; here • Our special tax tips can cut thousands of dollars off the cost of selling your home; here • You can double your one-time $125,000 home sale tax exclusion—Uncle Sam won’t tell you how, but we will! Here, here • You can turn your home into a treasure house of money—without having to sell or move out Reverse mortgages and saleand-leaseback arrangements will let you cash in on the value of your home; Chapter • For those who like black humor, we have unburied the facts you need to make death pay off in reduced taxes; here • If taxes make you sick, our list of medical deductions is a good prescription for the tax-payment blues; here • Nursing-home costs continue to strip older Americans and their families of their life savings The “gems” we’ve uncovered can help you escape the “Medicaid Trap”; Chapter 11 This is just a small sampling of the “gems” we’ve extracted from Uncle Sam’s gold mine The hundreds of tips that follow can add many thousands of dollars to your retirement coffers Armond Budish’s book, Avoiding the Medicaid Trap: How to Beat the Catastrophic Costs of Nursing-Home Care, blew the shroud of secrecy off the Medicaid program; we hope that this book will end the secrecy that has been preventing older Americans from cashing in on all the “golden opportunities” they so richly deserve Ready to get started? Good! The gold is waiting definition of rollovers and self-employment and taxation of income from withdrawal options for see also employee stock ownership plans; 401 (k) plans property taxes PROs, see Peer Review Organizations prosthetic devices providers, Medicare annual directory of assignment and definition of filing of claims by Medicare denials from negotiating with nonparticipating overcharging by participating see also specific providers psychiatric programs psychologists Qualified Domestic Relations Order (QDRO) radiology Railroad Retirement Board, U.S Bureau of Hearings and Appeals of state offices of railroad retirement pensions age factors and appeals on denial of application for basic plan of calculating benefits of current connection requirement of disability benefits under divorce and documents needed for lump-sum death benefits of Medicare and military service and monthly survivor benefits of nonrailroad jobs and occupational disability and remarriage and residual lump-sum survivor benefits retirement benefits under Social Security benefits and spouses’ benefits under supplemental pension of survivor benefits under and work after retirement years of service and real estate food grown on joint ownership of personal support dependent on unsalable see also homes receipts recovery room services rehabilitation Medicare coverage of short breaks in skilled services for see also therapy remarriage: comparing all Social Security benefits options after of ex-spouses living together vs Medicaid and postponing of railroad pensions and Social Security survivor benefits and spouse retirement benefits and veterans’ benefits and rent Representative Payee Report representative payees Retired Senior Volunteer Program (RSVP) retirement: benefits and penalties of early vs delayed demonstration of determining optimal age for health reasons for, see Social Security disability benefits income earned before but received after investing income from early standard for “normal” age at work combined with Retirement Retirement Earnings Break Retirement Facts Retirement Income on the House retirement plans administrators of age factors and basic rules for breaks in employment and calculation of life expectancy and capital gains and changing jobs and death and deductible medical expenses and distribution of defined-benefit defined-contribution divorce and early distribution of early termination of jobs and employees’ contributions to employers’ contributions to five-year averaging and government employee government insurance on heirs’ benefits from income taxes on integration rules and investment of funds in late distribution of loans from lump sums vs monthly payments of and moving to Florida or Texas nondeductible contributions and distribution of nursing home costs and one-time use averaging rule and part-time work and penalty or excise taxes on reductions or termination of benefits from and returning to work after retirement rollover to IRAs from self-employed individuals and Social Security benefits and special capital gains treatment of special tax-cutters for lump-sum distributions of splitting fund among other plans and spouses’ benefits from stock distributions and substantially equal periodic payments of tax-deductible expenses and distribution of tax-deductions for tax-deferred ten-year averaging and types of vesting rules and withdrawal options for withholding taxes and years of service and see also specific retirement plans reverse mortgages age factors and available lenders for benefits of closing costs and debt incurred by definition of early repayment of eligibility for FHA insurance on home value limitations and income from interest on line of credit questionnaire on residency guarantees and sale-and-leaseback arrangements vs taxes, insurance and maintenance costs and tenure term uninsured revocable living trusts RSVP (Retired Senior Volunteer Program) rural health clinics sale-and-leaseback arrangements benefits of other benefits affected by overview of protective conditions of reverse mortgages vs taxation and savings and loan institutions Savings Bonds, U.S second opinions self-employment: before 1951 calculation of net income from deductible business expenses and and divestment of authority and dividends vs salary FICA taxes and retirement plans for; see also specific plans timing of income from senior centers Senior Companion Program Service Corps of Retired Executives (SCORE) sick pay simplified employee pensions (SEPs) basic rules for definition of self-employment and skilled nursing care: drug administration and extensions of full-time home health care and limited and predictable need for part-time or intermittent permanent basis Skilled Nursing Facilities and supervision and training as unlimited home visits and Skilled Nursing Facilities (SNFs): appeals on denial of availability of continuity of care and criteria for Medicare coverage of custodial care in definition of denial of claims by inpatient care at location of Medicaid coverage of Medicare certification of Medicare coverage of non-Medicare nonparticipating sections of personal services in preplanning for prior hospitalization and readmission to rehabilitation in respite and short-term care in room assignments in services covered by Medicare in services not covered by Medicare in skilled care in sources of information and assistance on tax deductions for time requirements and travel and transference to visits and selection of see also nursing homes skills: abilities considered as outdated talents vs transferability of SNFs, see Skilled Nursing Facilities Social Security Administration appeals to attorneys employed by brochures and fact sheets published by checking computation of benefits with checking earnings records with, see Personal Earnings and Benefit Estimate Statement false information reported to help with applications to hotline number for keeping records of contact with local offices of personal visits vs mail to personnel of representative payees appointed by status change notification of toll-free numbers of Social Security Appeals Council Medicare appeal reviews by Social Security benefits appealing denial or reduction of application for application for switching among types of cost-of-living increases in direct deposit of eligibility for other benefits triggered by gathering information necessary for increasing income by switching among types of interest and dividend income and IRAs and limitations on family income from, see Maximum Family Benefits limitations on switching among types of Medicare and monthly pension payments and purpose of railroad pensions and retirement plans integrated with retroactive taxation of theft of time limits on certain applications for various government benefits vs work not covered by Social Security disability benefits age factors and amounts payable under appeals on denial or termination of application for approval of blindness and calculation of claim number for COBRA and combined benefits possible under deductible items and earnings calculations for degrees of physical capacity and denial of claims for duration of disability and early retirement benefits vs earnings limitations and education and work experience considerations for eligibility for factors reducing levels of family eligibility for five-month waiting period for improved health conditions and interviews and examinations for lack of information and understanding about lists of disabilities qualifying for Medicare and MFB on nonmedical factors and nonphysical impairment and part-time work and periodic disability reviews and personal assets and preparation and documentation for private disability insurance and questionnaire for reapplication for regaining of retroactive payments of and returning to work separate or renewed disabilities and and severity of disability Social Security retirement benefits vs special payment after termination of spouses’ earnings and SSI and switching from early retirement benefits to taxation of termination of three extra months of transferability of skills and treatment of disabilities and trial work period and various government benefits vs veterans’ benefits and and waiting period for Medicare work credits required for Worker’s Compensation and Social Security numbers lost or forgotten verifying of Social Security Office of Hearings and Appeals Social Security retirement benefits age factors and loss of appeal on denial or reduction of application for approval of benefits and penalties of early vs delayed taking of brochures and fact sheets available on calculation of claim numbers for dependent and disabled children and earning “extra credits” to qualify for earnings requirements for effects of additional income on eligibility for eligibility for Social Security survivor benefits and estimated full-age retirement payments of extra cash available under factors reducing levels of family members’ eligibility for government pensions and investing income from investments as supplement to Medicare and options available for overpayment of recalculation and increase of repayment of extra money from retaining supporting documents for retirement-year loopholes to minimize losses of Social Security disability benefits vs Social Security survivor benefits vs special benefits for very elderly under Special Minimum Benefits Rule and spouses’ benefits from, see spouse retirement benefits spreading out repayments of switching from Social Security survivor benefits to switching to Social Security survivor benefits from switching to spouse retirement benefits from taxation of timing of application for verifying and checking on, see Personal Earnings and Benefit Estimate Statement withdrawal of application for work credits required for working to supplement income from Social Security survivor benefits appealing denial or reduction of application for benefits and penalties of early vs delayed taking of calculating of children benefiting from and death of ex-spouses deceased relative’s work record and determining amounts of determining optimal age for disabilities and divorce and documenting proof of claims for early application for eligibility for eligibility for Social Security retirement benefits and factors reducing levels of investing income from and lack of personal work record losing rights to Medicare and MFB and monthly payment of one-time special benefit and options available for overpayments of parents benefiting from remarriage and Social Security retirement benefits vs as sole option survivor disability and switching from Social Security retirement benefits to switching to spouse retirement benefits from switching to Social Security retirement benefits from taxation of time limits and working to supplement income from social workers special care units specialists Special Minimum Benefits Rule spells of illness benefit periods and definition of multiple spouse retirement benefits calculation of determining optimal age for divorce and eligibility for eligibility for personal benefits and ending of government pensions and lack of personal work record and other Social Security benefits vs railroad pensions and remarriage and switching from Social Security retirement benefits to switching from Social Security survivor benefits to spouses: disabled filing of joint income tax return by filing of separate income tax returns by retirement plans benefiting see also specific benefits SSI, see Supplemental Security Income stock bonuses stocks retirement plans and selling of taxation of Supplemental Security Income (SSI) appeal on denial or reduction of application for asset reductions for assets test for blindness and buying of protected assets for deemed income and disability benefits under divorce and earned vs unearned income and eligibility for emergency payments under food and shelter considered for gifts and government reviews of homes and income and wealth limitations and income counted for income not counted for income reductions and income test for instant coverage of certain impairments by and institutionalization in public facilities investing assets into homes for and loans from children Medicaid and other benefits and overpayments of overview of payment amounts under proof of income and assets for protection of assets for purpose of retroactive payments of and separation or divorce Social Security disability benefits and state supplements included in status test for surgeons surgical procedures target benefit plans taxes, see estate taxes; excise taxes; Federal Insurance Contribution Act taxes; income taxes; inheritance taxes; Internal Revenue Service; penalty taxes; property taxes “Tax Information for Older Americans” Technical Assistance and Inquiries Division telephone books telephones Tele-Tax television testamentary trusts tests: diagnostic I.Q laboratory Medicare coverage of occupational therapy maintenance occupational physical radiation respiratory speech ultrasound, short-wave and microwave tips Transportation Department, U.S transportation services travel benefits Treasury Bills, U.S Treasury Bonds, U.S Treasury Notes, U.S trusts irrevocable revocable living testamentary see also Medicaid Trusts Understanding Social Security unemployment compensation benefits United States Code Utilization Review Committees (URC) vaccines Veterans Administration (VA) hospitals and nursing homes of regional offices of Veterans Affairs Department veterans’ benefits age factors and appeals on denial of application for blindness and death of veterans and death payments to family members of disabilities unrelated to service and disability payments of discharge from services and eligibility for eligibility for disability survivors’ payments of family members medical benefits and health-related travel and home health care and hospitalization and marriage between veterans and medical benefits of medical care categories and military records and miscellaneous net worth considerations and nursing home care and other government benefits and outpatient medical treatment and pensions for surviving spouses and children under prosthetic appliances and ranking of disabilities and remarriage and service categories qualifying for service-related disabilities and Social Security disability benefits and status of spouses and upgrade of discharge and veteran status and Veterans of Foreign Wars Viet Nam Veterans of America Vietnam War vocational experts volunteerism weight-loss programs When You Get Social Security Retirement or Survivor Benefits … What You Need to Know wills changing of Women’s Army Auxiliary Corps work: awards for disabilities related to early retirement impacted by government health improvement not related to light to heavy part-time returning to sedentary substantial gainful supplementing Social Security disability benefits with supplementing Social Security retirement benefits with supplementing Social Security survivor benefits with training for trial periods of volunteer see also businesses; jobs; self-employment Worker’s Compensation benefits Social Security disability benefits and World War I World War II W-2 forms FICA tax information on retaining of X-rays Also by Armond D Budish Avoiding the Medicaid Trap: How to Beat the Catastrophic Costs of Nursing-Home Care Henry Holt and Company, Inc Publishers since 1866 115 West 18th Street New York, New York 10011 Henry Holt® is a registered trademark of Henry Holt and Company, Inc Copyright © 1992 by Armond Budish and Amy Budish All rights reserved Published in Canada by Fitzhenry & Whiteside Ltd., 91 Granton Drive, Richmond Hill, Ontario L4B 2N5 Library of Congress Cataloging-in-Publication Data Budish, Amy Golden opportunities : hundreds of money-making, money-saving gems for anyone over fifty / Amy Budish and Armond Budish — 1st ed p cm Aged—United States—Finance, Personal Middle-aged persons—United States—Finance, Personal Retirement income— United States—Planning Social Security—United States I Budish, Armond D II Title HG181.B86 1993 332.024'01—dc20 92-30815 CIP ISBN 0-8050-1290-7 First Edition—1992 eISBN 9781466859760 First eBook edition: November 2013