What effect will the looming March 1 sequestration have on seniors?

Congress gave itself a deadline to come to agreement about the federal budget. It has pushed the deadline back, several times, actually. If it does not pull out a last-second budget deal seniors deserve to know how sequestration will effect them, and it's not easy to figure out.

First of all, just for the curious, why is it called "sequestration"? This actually goes back to the Gramm-Rudman-Hollings Deficit Reduction Act of 1985, in which Congress decided it should put a limit on the total budget outlay rather than just keep making it a function of the total of millions of lines of expenses resulting from multiple individual appropriations processes. Congress develops this limit early in the process by passing a Budget Resolution. Then if all the subsequent appropriations add up to more than that previously-set limit an automatic cutting process takes place across most (but not all) federal spending. They call it "sequestration" because the different between the total appropriated and the Budget Resolution limit is not disbursed but rather is held by the US Treasury, sequestered, while each federal agency reduces its budget equally to account for the shortfall. But there are a few large and notable federal programs that are exempt from the sequestration, so the do not suffer the across-the-board budget reduction.

If it's been the law since 1985 why haven't we had these sequestrations before? Because the intention of the law was to create pressure on lawmakers to resolve their disagreements and pass budgets to avoid the harshness of sequestration. They have successfully done that most of the time until now.

Here are a few of the programs that benefit seniors that are NOT effected by sequestration:
- Social Security
- Veterans pay
- SNAP (food stamps)
- Medicare coverage (there is a small reduction in provider reimbursement but no coverage change)
- Medicaid coverage

What will be cut that is important to seniors? Many senior services offered by county senior programs and WV Senior Legal Aid, including nutrition, transportation, some in-home services,and legal services will be cut perhaps by as much as 7.8% The exact calculation is not totally clear yet. Other services like Low-Income Energy Assistance (LIEAP), Senior Community Service Employment Program (SCSEP), the regional Long-term Care Ombudsman Program, senior HUD housing, and many more will be cut. Federal workers will be furloughed (forced to take temporary unpaid leaves) starting in April.

There is a lot at stake. You can find contact information for West Virginia's senators and house of representatives members here www.veterans.wv.gov/resources/Pages/UnitedStatesSenatorsRepresentatives.aspx

Federal Estate Tax made permanent

After years of instability, which gave rise to some macabre humor about heirs calculating the most advantageous expiration dates for wealthy elderly family members, the American Taxpayer Relief Act of 2012 (ATRA) establishes a permanent federal estate tax. Don't worry, most West Virginia estates will still be untaxed because ATRA also establishes a $5 million exemption. A West Virginia estate is only subject to state inheritance tax when a federal tax is imposed on it, so most of us will be unaffected by ATRA.

For those estates worth more than the $5 million exemption amount the federal tax rate will be 40%.

Federal benefit payments go electronic, deadline March 1, 2013

The U.S. Treasury will require that most recipients of Social Security, Veterans Affairs, and other federal payments receive their payments electronically instead of by paper check as of March 1, 2013. Recipients still receiving a paper check may receive their federal benefits via direct deposit to a bank account or through the U.S. Treasury-recommended Direct Express prepaid debit card. Prepaid cards offered on the private market can also be used for direct deposit, with some conditions.

Some limited waiver are available. Recipients who are receiving their benefits by paper checks on March 1, 2013 and are over 92 years old as of that date will be permitted to continue receiving their benefits by check if they request a wavier (see phone number below). Additionally, waivers will be permitted for mental impairment, or if the recipient lives in a remote geographic area which lacks the infrastructure to support the electronic financial transaction.

To request a waiver, recipients should call toll-free (800) 333-1795. However, persistence may be required. If needed, ask for a supervisor to assist you. If advocates experience significant problems, please contact National Consumer Law Center Attorney Margot Saunders for assistance via email at MSaunders@nclc.org.

The National Consumer Law Center has published an issue brief with additional information, including how electronic deposit of benefits can help protect bank accounts from debt collectors, available at: www.nclc.org/images/pdf/older_consumers/consumer_concerns/cc-electronic-payments-feb-2013.pdf.