Under President Donald Trump, some older Americans and those with special needs may be concerned about possible changes to programs like Medicare, Medicaid, taxes, special needs planning and veterans’ benefits. These concerns reflect election discussions and Congressional Leadership statements.
The White House and Congress are now both in Republican hands. During the long campaign, there were differences between the major parties, particularly in social and health policy. There is now some uncertainty facing Americans who are older, disabled and medically needy, which is unsettling to some of them.
A group of nationally prominent elder law attorneys established the Trump Policy Analysis Group, partly to analyze changes in government policies that affect older Americans and those with disabilities. This article is based on that group’s initial report and was written before Trump’s inaugural address.
Social Security and Medicare
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Trump has said that the Social Security and Medicare programs will remain intact and solvent, even though both programs face possible bankruptcy. One of the proposals to counter insolvency by Republican leaders is privatization of both programs.
Affordable Care Act (aka ‘Obamacare’)
The Affordable Care Act took some steps designed to extend the solvency of Medicare. Trump announced that he would keep parts of the Affordable Care Act but has not given details. Congress has already taken the first step toward dismantling the Affordable Care Act, although for the present, there have been no actual legislative changes.
Many worry about the cost of health, especially long-term care. Legislative changes that reduce benefits or restrict or limit access to government programs such as Medicaid will not mitigate such fears. Additional spending on Defense and other programs may limit resources for Medicaid.
Currently, while Medicaid is administered at the federal level, each state has its own Medicaid plan, subject to national guidelines. Trump and House Speaker Paul Ryan have indicated support for allocating funds to states using “block grants.” In the 1980s, block grants were used for other funds to state and local governments. Block grants for Medicaid, first proposed by former Speaker Newt Gingrich in 1995, suggest that each state would receive a certain financial allotment and would individually decide how to spend their dollars. In some states, little would change. In other states, benefits could significantly change. Planning could also vary from state to state. Americans with special needs and their families also may face concerns about possible reductions in protections and services if block grants are used.
Moreover, plans under discussion may make it more difficult for older Americans to protect their homes and other assets while qualifying for Medicaid, particularly in a long-term care setting. The vast majority of older homeowners will view protection of the residence as a core value, a legacy for future generations. Planning is particularly important for families where the primary wage-earner owns most of the tax deferred assets and elected a “one life” pension, expecting to finance his spouse’s life after his death with tax deferred assets, since these may need to be spent on his care in a nursing home, leaving the surviving spouse at home with substantially diminished assets and no private pension.
Trump has recommended elimination of the gift and estate tax, also under discussion in Congress for some time. Estate tax receipts are a revenue item for the federal government, although only two out of every 1,000 estates, on the average, pay the tax. Perhaps a compromise package will not eliminate the tax but will significantly increase the level of estate and gift tax protection. Note that the threshold for federal gift and estate tax is $5,450,000 per person.
Different capital gains tax proposals have been proffered by Trump, Ryan and others. These include limiting “stepped up basis” for inherited property as well as possibly reducing capital gains taxes in general. This may result in net tax increases. Corporate and individual tax rates for higher earners, in particular, may be substantially reduced.
Americans with special needs
There are no proposals that would directly affect services for persons with special needs. Medicaid block grants could adversely affect services. Changes to resource rules could reduce or even eliminate using special needs trusts to supplement benefits.
Additionally, support for expanded charter schools and school choice, especially with Trump’s nomination of Betsy DeVos as Secretary of Education, an outspoken advocate for charter schools and the dismantling of publicly funded schools, may affect services for younger persons. Many special education advocates fear that these initiatives could come at a price of diminishing procedural and substantive protections of the Individuals with Disabilities Education Act.
Trump has publicly supported services for veterans. However, there are proposals predating the election that could restrict access to needed programs, such as Aid and Attendance. In addition, new legislative and regulatory restrictions may make it more difficult for veterans and their spouses to obtain benefits.
In times of uncertainty, families will protect themselves
The Trump Policy Analysis Group believes that families will become more focused on what they can control and truly value — their families — and less on public policies that are difficult to influence. A premium will be placed on advance planning. Inevitably, the demand for multigenerational planning — involving children and grandchildren — will expand dramatically.
Learn, watch, be advised and protect yourself and your family. The changes in store will take time to be adopted and implemented.
Amos Goodall is certified as an elder law attorney by the National Elder Law Foundation. He has an LL.M. in elder law (with distinction) from Stetson College of Law, and he practices in State College.