4 Open Estate Planning Windows (closing soon!)
June 9, 2011 | 
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As many of you know, Congress enacted legislation late in 2010 (the 2010 Act) that extended many of the Bush income tax cuts that were due to expire on December 31, 2010. The 2010 Act also included many favorable estate and gift tax provisions.
The 2010 Act provides for an increase in both the estate and gift exclusions to $5 million. The Generation Shipping Transfer Tax (GSTT) exemption is also increased to $5 million and indexed for inflation. The top tax rate for taxable estates is 35%.
However, in usual Congressional fashion, these provisions are only in effect for 2011 and 2012, creating the same planning dilemma we experienced last year. Without further Congressional action, on January 2013 we will go back to the pre-Bush tax cut estate and gift rules that provide for $1 million estate and gift tax exclusion, a $1 million GSTT indexed exemption and a top estate tax rate of 55%.
Therefore, the 2010 Act gives us a limited window of opportunity for planning in 2011 and 2012. Planning opportunities include:
- Substantial Gifts to Heirs: Since the $5 million gift exclusion is per individual, a married couple has a combined limit of $10 million. Even if they previously used their prior combined limit of $2 million, a couple now has an additional $8 million gift exclusion remaining. Coupled with the increased GSTT exclusion, direct gifts could be made to grandchildren or great grand children. This could include forgiving loans previously made to heir
- Maryland Estate Tax Considerations: Maryland previously de-coupled from the federal law and still has a limited $1 million estate exclusion with a top estate tax rate of 16 percent. However, Maryland does not have a gift tax, which provides an opportunity to give away assets up to $10 million for a couple and avoid Maryland estate taxes without incurring any federal gift tax.
- Life Insurance Trust: Substantial gifts could be made to life insurance trusts to fund current and future premium payments. The trusts could contain generation skipping provisions allowing the trusts to provide support for generations of heirs.
- Leveraging Technique: There are a number of more sophisticated gift discounting techniques available. These strategies are very attractive in our current low interest rate environment and work best with assets that are expected to increase in value.
This is just a brief summary of some of the planning opportunities available in 2011 and 2012. For a more complete discussion of your particular situation, please contact your Glass Jacobson representative.
Questions?
gary.anderson@glassjacobsonia.com
New Medicare Part B Claims Process (MPPR)
June 6, 2011 | Subscribe to our RSS Feed
Effective January 1, 2011, Medicare enacted a new policy that affects Part B therapy services in a long term care setting. The Multiple Procedure Payment Reduction (MPPR) is now applied to the practice expense of select therapy services when more than one unit or procedure is provided to the same patient on the same day. The type of bill that is affected by the change is 22x. The revenue codes affected are 042x, 043x and 044x.
The MPPR applies to all services furnished to a patient on the same day regardless of whether the services are provided in one therapy discipline or multiple disciplines (PT, OT, and SLP).
Procedure codes or HCPCS codes are broken down by three components: 1. Work 2. Practice Expense (PE) and 3. Malpractice. The MPPR payment methodology is applied to the PE component of the HCPCS code.
Full payment is applied to the unit of HCPCS code with the highest PE and 75% payment is calculated for subsequent units and procedures furnished to the patient on the same day.
MPPR Calculation Example:
| Component | HCPCS Code | HCPCS Code | HCPCS Code | Prior Total Payment | Current Payment Calculation | Current Total Payment |
| 97016 | 97016 | 97018 | ||||
| Work | $7.00 | $7.00 | $11.00 | $25.00 | No reduction | $25.00 |
| PE | $10.00 | $10.00 | $8.00 | $28.00 | $10+$7.50 +$6 | $23.50 |
| Malpractice | $1.00 | $1.00 | $1.00 | $3.00 | No reduction | $3.00 |
| $56.00 | $51.50 |
Providers must remember to use the condition code “5” when identifying MPPR on their billing.
The FI will adjudicate claims accordingly and the remittance advice will include a claim adjustment reason code of “45”. Charge exceeds fee schedule/maximum allowable or contracted/legislated fee arrangement.
Questions about how to properly process your Medicare Part B claims under the new policy?
patrick.trotta@glassjacobson.com
carolyn.cunningham@glassjacobson.com
MD’s New Alcoholic Beverage Tax
June 3, 2011 | Subscribe to our RSS Feed
As you are probably aware, Governor O’Malley signed off on the new 9% sales tax rate on alcoholic beverages in May. The new law is more complicated than many people thought it would be. Everyone who sells alcoholic beverages — e.g. restaurants, bars, caterers, liquor stores — should make preparations in their businesses and accounting systems. Here are some FAQs put out by the Comptroller’s Office on how they intend to administer the tax to help you prepare.
If you have any questions about how this tax will affect you or your business:
An Extra 2%
May 25, 2011 | Subscribe to our RSS Feed
If you’re an employee, 6.2% of your wages (up to the taxable wage base–$106,800 in 2011) would normally be withheld for your portion of the Social Security retirement component of FICA employment tax. But legislation passed in December 2010 included a temporary one-year 2% reduction in this tax. That means for 2011, you’re paying the tax at a rate of 4.2%. If you’re self-employed, the 12.4% your would normally pay for the Social Security portion of your self-employment tax is reduced to 10.4%.
Have you earmarked the resulting extra dollars in your paycheck efficiently, by, for example, paying down high-interest debt or saving for retirement? If you haven’t, consider making up for it by contributing an extra 4% of your income to your 401(k) or an IRA for the remainder of the year. By applying the extra money toward a long-term goal, the potential benefit of the temporary tax reduction can extend beyond 2011.
Questions on making a plan?
vanessa.duchman@glassjacobsonia.com