Retirement & Income Planning: Chapter 11

This year, Ralph and Lauren received $14,000 of Social Security income and had $6,000 of interest income. What portion of the Social Security benefits will be taxable on their married filing jointly income tax return?

$0

Quinton is fed up with his supervisor, Sally, and decides his health would improve if he retired early. Quinton is 63 years old, and his normal Social Security retirement age is 67. If he retires today, and his normal age retirement PIA is $1,500, how much can Quinton expect to receive as a monthly retirement benefit?

$1,125

Brandi retired at age 62 and began to collect Social Security retirement benefits. After a year of playing three rounds of golf per day, Brandi is bored and decides to go back to work part-time. In 2023 (when Brandi is age 63) she earns $31,240 at her part time job. Her Social Security benefit before any adjustments for 2023 is $18,000. What will her actual Social Security benefit be for 2023?

$13,000

Deidra is 75 years old and is covered by Medicare. In 2023, she had spinal fusion surgery to correct problems caused by three ruptured disks and was transferred to a skilled nursing care facility for rehabilitation after three days of recovery in the hospital. If Deidra remained in the skilled nursing facility for 30 days, how much will she have to pay as a coinsurance amount?

$2,000

Wally's PIA for determining Social Security Retirement Benefits is $2,200. What is the approximate maximum family benefit that Wally's family can receive?

$3,850

A single individual has an adjusted gross income of $28,000, no tax-exempt interest, and Social Security benefits of $14,000. How much of this individual's Social Security benefits is subject to income tax?

$5,350

Nimoy is single, retired, and received Social Security retirement benefits of $18,000 this year. Her other income consists of $15,000 from her former employer's pension plan; $10,000 in tax-exempt municipal bond interest; and $1,000 in dividends. How much of Nimoy's Social Security Benefit will be subject to income tax?

$5,350

Valentina is a widow and 82 years of age. She gave her three children $20,000 each three years ago and has exhausted all of her other assets. Valentina has just entered a nursing home that costs $6,000 per month and applied for Medicaid. The average monthly cost of nursing home care in Valentina's state is $6,000. How long after entering the nursing home will Valentina be eligible for Medicaid payment of her nursing home care?

10 Months

Melanie is 83 years of age and a widow. Melanie made transfers of $12,000 to each of her two children seven years ago, four years ago, and one year ago. The average cost of nursing home care in Melanie's state is $6,000 per month. Melanie had $62,000 of assets when she applied for and entered a nursing home where the costs are approximately the state average. When will Melanie most likely be eligible for Medicaid payment of her nursing home care?

18 Months

Anne, age 78, is confined to a nursing home. Which of the following programs is / are likely to pay benefits toward the cost of the nursing home? 1) Medicare may pay for up to 100 days of care after a 20-day deductible. 2) Long-term care insurance may pay part of the nursing care costs if policy coverage of the facility type is broad enough. 3) Medicaid may pay if Anne has income and assets below the relevant state threshold.

2 & 3

Which of the following statements concerning long term care is (are) correct? 1) Social Security provides many benefits, including long-term care, although it is limited to the participant and the participant's spouse. 2) Medicare is inadequate to cover long-term care, in that it will not cover custodial care, if that is all that is needed.

2 ONLY

Which of the following statements concerning the Social Security system is (are) correct? 1) Workers entitled to retirement benefits can currently take early retirement benefits as early as age 55 if they are separated from service. 2) A worker who takes early retirement benefits will receive a reduced benefit because the worker is expected to receive more monthly benefit payments, as payments commence earlier than if the worker had waited and retired at full retirement age.

2 ONLY

Edna earned $4,000 during January of this year. She was unemployed for February and March, and during April she earned an additional $3,000. She did not work again until December, during which time she earned $1,000. How many quarters of coverage has Edna earned for Social Security during this year?

4

For part of the summer of this year, Sammi worked full time at a local accounting firm. Sammi is a 19-year-old accounting student attending a state university and does not work during the rest of the year. Over the summer, Sammi earned a total of $9,500. How many quarters of coverage has Sammi attained for Social Security purposes based only on this year's earnings?

4 Quarters

For persons with substantial income in addition to Social Security benefits, the beneficiary's modified adjusted gross income (MAGI) includes which of the following? a) Interest earned as savings bonds used for higher education. b) Amounts deducted for interest paid for educational loans. c) Income earned in a foreign country that is excluded from income.

ALL OF THEM

Which of the following statements concerning the consequences of the "spend down" of assets strategy to qualify for Medicaid is correct?

After the Medicaid recipient's death, states may recover the value of exempt assets such as a home from the recipient's estate.

Which of the following assets belonging to a Medicaid recipient is generally a countable asset under Medicaid rules?

An IRA

Which of the following statements concerning Social Security retirement benefits is (are) correct? 1) If an individual receives retirement benefits based on his spouse's earnings record, his benefits will cease upon his divorce from the spouse, unless he is 62 years of age or older and he was married to that spouse for at least 10 years. 2) Widows and widowers will continue to receive survivors benefits upon remarriage of the widow or widower if 60 years of age or older.

BOTH

Which of the following statements concerning the Social Security system is (are) correct? 1) To qualify for retirement benefits, a worker must be "fully insured,' which means that a worker has earned a certain number of quarters of coverage under the Social Security system. 2) Earning a specific amount of money, regardless of when it was earned during the year, will credit the worker with a quarter of coverage for that year.

BOTH 1 & 2

Miriam, age 78, is confined to a custodial nursing home. Which of the following programs is / are likely to pay benefits towards the cost of the nursing home? 1) Medicare may pay for up to 100 days of care after a 20-day deductible. 2) Long-term care insurance may pay part if coverage of the facility type is broad enough. 3) Private medical insurance may pay part if it is a comprehensive major medical policy. 4) Medicaid may pay if Miriam has income and assets below state thresholds.

BOTH 2 & 4

Which of the following statements concerning the reduction of Social Security benefits is (are) correct? 1) Besides early retirement, there are two other situations in which beneficiaries can have their benefits reduced: through the retirement earnings limitations test and through the taxation of benefits. 2) A person who has not reached full retirement age generally can continue to work even though they are considered "retired" under Social Security; however, those earnings for a person under normal retirement age must not exceed certain dollar limitations without an impact to their benefits.

Both 1 & 2

Tony died suddenly at the age of 42, leaving behind his wife, Carmela (age 44), and their six-year-old son, A.J. Tony and Carmela had been married for 15 years. All of the following statements concerning Social Security benefits available to the family are correct, except:

Carmela will be able to collect Social Security benefits on Tony's account until A.J. reaches the age of 18.

Ellen is 75 years of age and is covered under traditional Medicare Parts A and B. On March 1st of this year, Ellen fell and broke her hip while skiing, requiring her to be hospitalized for 10 days. At that time, Ellen paid the $1,600 (2023) deductible for a hospital stay. Today, October 15th, Ellen was celebrating her wedding anniversary in the usual way, by going skydiving, and broke her hip again in a bad landing. She was admitted to the hospital for a stay anticipated to be approximately 14 days. Which of the following is true regarding Ellen's out-of-pocket costs regarding the hospital stay?

Ellen must pay another $1,600 (2023) deductible.

For purposes of qualifying for Medicaid, a person must have a limited amount of income. However, not all income is counted. For example, Veterans benefits are not counted. T/F

FALSE

Most citizens of the United States who are age 65 or older qualify for LTC services under Medicaid. T/F

FALSE

Most individuals will have sufficient LTC coverage under Medicare, assuming they are age 65 or older. T/F

FALSE

The Medicaid look-back period generally extends to six years. T/F

FALSE

While wealthy individuals may be able to self-insure for LTC needs, individuals with modest or low wealth should generally purchase LTC insurance. T/F

FALSE - low income folks can get Medicaid to cover it

Glen is 85 years old and is covered by Medicare parts A and B. While walking down the wooden stairs at his home last week, Glen's stylish Italian loafer slipped out from under him, and he fell and broke his hip in three places. All of the following medical expenses will be covered under Part A of Medicare EXCEPT:

Follow up visits to his primary care physician after Glen's recovery.

Kurt will be turning age 65 in five months (in 2023) and his wife, Goldie, is currently 63. Kurt hasn't started collecting Social Security benefits yet because he is still working, and he is unsure whether he will retire this year or wait a few more years. Goldie has never worked outside the home. As long as he continues to work, Kurt will have health insurance for both himself and Goldie through his employer with a $250 annual per person deductible, 90% coinsurance, and a maximum out-of-pocket limit of $5,000. Kurt's share of the premium is $50 per pay. All of the following statements regarding Kurt and Goldie are correct, except:

Goldie will be eligible for Medicare as a spousal benefit when Kurt turns age 65.

Medicaid is provided to certain individuals and families with low income or resources. Which of the following items is not counted towards the income requirements?

Housing assistance provided by the federal government.

Many workers considering Social Security benefits are faced with the decision to retire early, on time, or late. Which of the following is incorrect regarding this decision?

If a worker begins Social Security benefits prior to full retirement age, the reduction in benefits is temporary or permanent, depending on the file and suspend option selected.

Which of the following statements is true?

If an individual who will reach full retirement age for Social Security purposes at the age of 67 begins taking benefits at age 62, they will take a 30 percent reduction in benefits.

Martin (age 63) has enjoyed abundance during his lifetime and decided to share that abundance with three wives. His first marriage to Karen (currently age 65, who has never remarried) lasted 25 years. Two years after divorcing Karen, Martin married Christine (currently age 65), but that marriage ended three years later when Christine fell madly in love with, and married, Martin's brother. Martin and his current wife, Jean (age 58 this year), have been married for eight years. Which of the following statements concerning spousal benefits under Social Security is correct?

Karen can collect a spousal benefit from Martin's Social Security record.

Which of the following is not correct regarding the benefits provided by Medicaid?

Medicaid pays for approximately 65 percent of nursing home expenditures in the United States.

Assume that all of the following strategies are available in the state where the client is seeking Medicaid eligibility for nursing home care. The client is a married couple who are both over age 75 and one of the spouses has just moved into a nursing home. The couple has assets above the eligibility level for Medicaid but will not be able to afford more than two years of nursing home costs. Which of the following strategies would be most appropriate for this married couple who want to provide adequate means for the community (non-institutionalized) spouse and preserve some assets for family members?

Medicaid-compliant annuity.

The Qualified State Long Term Care Partnership program is designed to encourage more people to purchase long-term care insurance. Which of the following statements is not correct regarding partnership-qualified (PQ) long-term care policies?

PQs allow people to receive a tax credit equal to up to 80 percent of the policy premiums.

A Medicaid applicant who needs to spend down assets to become eligible for Medicaid benefits may make all of the following expenditures of assets, EXCEPT:

Payment of a child's debts

Ramona is turning 65 years of age and has been receiving Social Security benefits. Which of the following statements concerning her eligibility for Medicare benefits is correct?

Ramona will be enrolled automatically in Parts A and B.

Assuming all of the following individuals meet the financial requirement for Medicaid, which of them is not likely receiving benefits?

Ryan, who is collecting disability insurance income, but is only 29 years old.

Which of the following statements is correct about paying for long-term care services?

Special needs trusts can be established to provide for benefits while maintaining eligibility for federal and state benefits.

For purposes of qualifying for Medicaid, a person must have a limited amount of income. However, not all income is counted. For example, nutritional assistance benefits are not counted. T/F

TRUE

With a partnership qualified LTC policy, individuals may be able to keep more assets than the maximum amount normally permitted by Medicaid and still qualify for benefits under Medicaid. T/F

TRUE

All of the following statements concerning the Social Security system are correct except:

The Social Security retirement benefit is payable at normal retirement age with reduced benefits available as early as age 59½, to anyone who has obtained at least a minimum amount of Social Security credits.

Social Security cost of living adjustments affect which of the following:

The monthly retirement benefit checks.

Medicaid planning occurs when individuals reduce their assets so that they can qualify for benefits under the Medicaid system. Which of the following is not correct regarding Medicaid planning?

Transferring assets for more than FMV results in individuals being subject to penalties under the Medicaid system.