Articles & Blog

Medicare for 55 and Up Highly Popular, but Prospects Uncertain

Medicare for 55 and Up Highly Popular, but Prospects Uncertain


A tentative deal on Senate health reform legislation reportedly includes a provision that would allow individuals age 55 to 64 who are uninsured or cannot afford private health insurance to buy into the Medicare program. The Medicare buy-in provision would replace a proposal for a government-run insurance plan, or “public option,” which has met with opposition from some Democratic senators.

The idea of a Medicare buy-in has attracted the interest of senators who had opposed the public option, and even some proponents of the public option are applauding.

“Expanding Medicare is an unvarnished, complete victory for people like me,” said Rep. Anthony Weiner (D-NY). “It’s the mother of all public options. We’ve taken something people know and expanded it.”

But hospitals and doctors have launched a full-court press against the proposal. Both the American Hospital Association and the the Federation of American Hospitals are urging their members to speak out against the plan, arguing it would hurt their members because Medicare pays providers at a lower rate than private insurers.

(UPDATE: One senator whose vote is critical to health reform’s passage, Sen. Joseph Lieberman (I-CT), has signaled that he may join Republicans in opposing any bill if it permits uninsured individuals as young to 55 to purchase Medicare coverage.)

Polls Show Widespread Support

Nevertheless, the idea of a Medicare buy-in is highly popular among American voters, according to an updated Issue Brief on the Medicare buy-in released by the Kaiser Family Foundation. Based on polls conducted in 2000, 2004 and 2009, about three-quarters of adults in the U.S. have said they support the idea.

The Kaiser brief also offers a detailed profile of the population of older adults likely to take advantage of the program. The Foundation reports that while most adults ages 55 to 64 have health coverage through their work, about 13 percent — more than four million — are uninsured. More than one-quarter of these uninsured older adults are in fair or poor health and consequently face both higher premiums and higher denial rates in the individual market than younger uninsured adults.

At the same time, many of these four million older adults have low incomes and would likely require subsidies to afford Medicare, depending on the cost. The median family income for this group was $22,510 in 2008, says Kaiser. More than half of those in fair or poor health did not get needed care in the past year due to cost. A report last year by AARP based on data from the Congressional Budget Office estimated that an earlier proposal to expand Medicare to people aged 62 to 64 would cost participants $634 a month, or $7,600 a year.

Nevertheless, the Kaiser brief concludes that “[i]n the context of the current debate, a Medicare buy-in could provide coverage in a relatively short period of time, as early as 2011, and target help to those who are most likely to have difficulty purchasing coverage on their own in the individual market.”

A Jobs Program in Disguise?

Some commentators have suggested that a Medicare expansion could have beneficial effects beyond assisting the uninsured near-elderly. For example, many of the uninsured, who are currently financial burdens to hospitals, would switch to Medicare and start helping hospitals’ bottom lines. Others have suggested that the Medicare buy-in could be viewed as an economic stimulus program. A certain number of individuals aged 55 to 64 would be persuaded to retire hearly knowing they would be guaranteed health coverage, opening up jobs for younger workers.

Senate Democrats did not release details of how the Medicare buy-in would work, including whether subsidies would be provided to those who sign up and how extensive those subsidies would be. The Democratic leadership has sent its proposed deal to the Congressional Budget Office for a cost analysis, which could heavily influence the level of congressional support it eventually attracts.

Update on Estate Tax Bill Pending in Congress

It has been suggested that the Bill as passed by the House, will not become law by year end. Instead, legislation to avoid elimination of the estate, gift, and GST tax and adjustment to basis will be enacted during 2010 which will be retroactive to January 1,2010. John Buckley, Chief Tax Counsel of the House Ways and Means Committee, stated that Congress could not change the repeal retroactively. Will the Senate pass a Bill by year end for a one year extension of the current law? Stay tuned…………only 17 days left!


The House of Representatives Passes Estate Tax Amendment

Finally we have some answers. On December 3, 2009, the House of Representatives passed Mr. Pomeroy’s Bill HR4154 amending the Internal Revenue Code making permanent the current estate tax exemption of $3.5 million, and the current $1 million gift tax exemption and generation-skipping, and 45% tax rate. This is a compromise from the proposed bills of last spring of $2 million estate exemption and $5 million estate exemption. HR 4154 also retained the favorable adjustment to basis of assets so as to avoid a large capital gains on sale of inherited assets by the heirs. This is very important; because under current law, to become effective 24 days from today, there will be no estate tax and no basis adjustment. For example, if someone dies in 2010 with a closely held company, or publicly traded stock or real estate, lets say worth $1 million with a low basis and an heir receives said asset and subsequently sells the heir will have a large capital gain tax. If the House bill discussed above becomes law there will be no estate tax and no or little capital gains tax in the above example. Let’s hope the Senate follows the same route. We will keep you appraised.

Estate Tax Debate Begins on Capital Hill

There are 27 days left before the estate tax law changes which will eliminate the estate tax. The House of Representatives are debating today whether to extend the current law which provides an exemption of $3,500,000 to each citizen.  Also, the current law allows an adjustment in basis of property inherited equal to the date of death value; thus avoiding subsequent capital gains on sales by heirs.  The extension of the current law will continue with this favorable tax treatment for capital gains. Otherwise, the change beginning January 1, 2010, will disallow adjustment to basis for amounts above $1,300,000 for certain assets inherited; thus incurring capital gains on subsequent sales by heirs.  We will keep you advised.

Current Legislation, Case Law and Estate Planning

We expect Congress to pass new estate tax laws if not by year end by September of 2010.  Such changes as  increasing the estate and possibly gift exemption from the current law which provides for an amount of only $1 million in 2011 and later years ; and the ability to transfer credits between spouses upon death . Also there are changes in the Pennsylvania case law which have an effect on estate planning . 

For more in-depth review download pdf here:

Estate Planning update 12-1-09

Extending Payment of Estate Taxes for Closely Held Businesses

This article helps clients understand how to spread out estate tax payments if a small business does not have liquidity for immediate satisfaction of the tax…

Download pdf file:
Extending Payment of Estate Tax Closely Held Bus

The Need for a Last Will

Everyone should have a Last Will and Testament.  Read the attached to find out why…

Download pdf file:
Need for Last Will Checklist Review