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April 2014

Proposed Medicare Part D Changes Incite Cheers, Jeers

Washington Watch


When do you fix a government program that’s not broken?


That’s the question many in Washington are asking, after Medicare recently proposed a series of changes to its Part D prescription drug program a program that, by most everyone’s view, is working very well.


The Centers for Medicare and Medicaid Services (CMS) proposed new rules recently that would fundamentally change the program’s private insurance coverage for certain drugs, alter the pharmacy networks that some plans cover and limit the number of policies available to beneficiaries in any given region.


The proposed rules change is stirring a hornet’s nest of opposition from an unlikely coalition of opponents, concerned about the potential for turmoil that critics fear could leave some Medicare beneficiaries without coverage for the drugs they need and with fewer choices overall.


Medicare Part D started out controversial in 2003, when the House passed the measure after then‑President George Bush made late‑night, last‑minute phone calls during an all‑night session of the House of Representatives, leading to an unusually long three‑hour vote when a 218‑216 defeat was miraculously flipped to a 220‑215 victory at 6 a.m.


But since it was implemented in 2006, it has been considered a tremendous success story by Republicans and Democrats alike, helping all 52 million elderly and disabled beneficiaries get access to the Medicare drug benefit through private plans approved by the federal government. Over 10 years, its costs of $346 billion have been 45 percent lower than initially projected and...


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Everything You Want and Need to Know About Gift Taxes

Legal Ease


Dear Jonathan: Now that 2014 has arrived, are there any changes to the annual gift tax exemption or the estate and gift tax applicable exemption amounts?


Jonathan Says: In 2014, the annual gift tax exemption remains at $14,000. This means that an individual can make $14,000 gifts to as many people as he or she wants without incurring any gift tax liability or having to file a gift tax return. In the case of a husband and wife, they can make a joint gift of $28,000 (this is known as gift splitting because the gift is considered to have been made one-half by each spouse) without incurring any gift tax consequences.


If the gift exceeds $14,000, then a gift tax return needs to be filed reporting the gift. Also, if spouses split their gifts, even though there is no taxable gift involved, they must file a gift tax return.


The estate and gift tax applicable exemption, which was $5,250,000 in 2013, is $5,340,000 in 2014. What this means is that in addition to the $14,000 annual gifts a person can make without gift tax consequences, a person can gift during lifetime or at death up to $5,340,000 without any estate or gift tax consequences. Bear in mind, however, if a person makes a gift of $3,000,000 during lifetime...


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