Medicaid's death tax
And more of the week's best financial advice
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The smartest insight and analysis, from all perspectives, rounded up from around the web:
Medicaid's death tax
Medicaid is "the only major welfare program that can function like a loan," said Rachel Corbett at The Atlantic, and states will seize houses and other assets after those recipients die in order to satisfy that debt. A little-known 1993 law made it mandatory for states to seek repayment on the largest category of Medicaid spending — long-term care — to ensure that taxpayers were not "shouldering the burden for rampant abuse of the system." "The goal was not to deter people from going on Medicaid, but to mitigate the cost of an already expensive program." But critics argue that the "punitive" program destabilizes low-income families for meager returns. A Massachusetts woman received a 28-page bill saying she owed the state's Medicaid program, MassHealth, $198,660.26 for the costs of her deceased mother's five years of care.
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A stronger sting from SALT
The effect of the 2017 tax cut's limit on state and local deductions — known as the SALT deduction — is "starting to be felt" in high-tax states like New York, New Jersey, and California, said Brian O'Connor at The Wall Street Journal, as residents do the math on moving to low-tax havens such as Florida and Nevada. The tax set the maximum SALT deduction at $10,000. So a couple in Illinois with taxable income of $500,000 could "escape a tax bill of close to $25,000 by moving to a no–income tax state" like Florida or Texas. For Californians, the savings would be more than $46,000. While moving to Florida has always meant a savings on taxes, for some people the new limit on the federal deduction is proving to be the straw that broke the camel's back, says one tax planner.
The 'work from anywhere' office
Employers should think about replacing "working from home," with "working from anywhere," said Claire Suddath at Bloomberg Businessweek. A recent study looked at the effects of such a policy at the U.S. Patent Office, "which in 2012 started allowing its patent examiners to leave its Virginia headquarters and move anywhere they wanted in the U.S." With the new policy, patent examiners — who were already allowed to work from home — became more efficient, processing 4 percent more applications. The patent office also saved $38 million in real estate costs. The researchers found that many patent examiners "moved to areas with lower costs of living," driving up the purchasing power of their paychecks.
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