In fact it seems that Jewel’s only physical activity is begging for food with her subtle smile and big round eyes and then going back to sleep.

In the morning she comes into the bathroom, sits there with her partner, Oscar, and waits patiently. When that doesn’t work, she marches off, goes back to sleep for an hour or so.  She comes back later, sits under the dining room table and waits patiently with her smile and stare. Not a word, just the stare. She clearly lets Oscar do all the work: rattle his plate, open doors, jump on the kitchen counter. Jewel, sits and stares until I melt.  You would think after growing up in the Big Apple I would have more will power. That smile is a killer. How can one resist?

After eating, she goes to my wife and squeaks like she hasn’t been fed in weeks. Jewel hasn’t learned how to meow properly. Fortunately, Oscar, still a kitten, hasn’t figured it out either, he squeaks too. Pumpkin and Pauletta, our late cats, used to wake up the dead and then the neighbors during morning food call.

Oscar and Jewel are only working on me silently so far.

Your home acts as the only collateral for this loan and is the only asset that can be tapped for repayment when the loan comes due. No monthly repayment is required during the loan term which ends when the last remaining borrower turns 15o years old, sells the home, permanently vacates the home or passes away.  If you are the borrower you must abide by the loan terms and pay your annual property tax and homeowners insurance premiums.

Additionally, you must live in the home and maintain it in livable condition. If you choose to remain in your home until you pass away, the home will then pass to your heirs. Your heirs have the right to keep the home by satisfying the mortgage, usually through a refinance. They may also choose to sell the home, pay off the loan balance, and distribute the remaining funds among the heirs.

If your property is worth less than the balance due on the reverse mortgage when you vacate the home, the estate or your heirs are not liable. FHA will pay the lender any deficiency. If you owe more than the home is worth and your heirs want to keep the home, they will have to satisfy the debt.

Single-family, townhomes, 1-4 unit buildings and FHA-approved condos are eligible.  Mobile homes, however, have special requirements.

A reverse mortgage can pay off a current mortgage or help you buy a new home. There are no income and credit worthiness requirements.

As we discussed previously, Congress favors the business owner over the individual when it comes to deducting the cost of Long Term Care insurance.   If you are self-employed, you can deduct the cost of long-term care insurance without having to meet the 7.5% of AGI threshold.  You will have to limit the deduction to the maximum the government allows for you age, unless you do it through an HSA plan as we discussed previously.

If you own a “C” Corporation and the “C” Corporation buys long-term care insurance for you, it can deduct 100%.  Your corporation cannot only buy insurance for you; it can also buy it for your spouse, your significant other, your partner, your children or anyone you want, as long as they are bonafide employees.

We all know that mom likes to tell you how to run your business.  Put her on the board of directors, let her do her do her thing and then you can deduct the cost of her LTCi premium! If Mom is retired, she might file her tax return using a standard deduction instead of filing with itemized deductions, if this is the case, then you will get the deduction as the corporation owned while she has no deduction.

This tax strategy, and others regarding LTCi are in my book, Naked in the Nursing Home.

An annuity may sound complicated, but it’s actually a fairly simple concept.  An annuity is a contract between an individual and an insurance company.  If you are the individual, then you would make either a single payment or a series of payments to the insurance company.  You can either keep the money in the annuity, growing tax-deferred, or you can have the insurance company make periodic payments to you beginning immediately or starting at some future date.

Some types of annuities will guarantee a yearly interest rate and others have formulas which will pay interest based on the growth of an index like the S&P 500.  These types of annuities are called fixed indexed annuities.

Annuities may be a good choice in a market like the one we’re experiencing today.  Your principal – the amount you initially contribute to the annuity – is guaranteed by a large, established and well rated insurance company; if you’re investing in a fixed-index type of annuity.  A drawback of an annuity is if you are under 59 ½ and take a withdrawal, you will pay a premature withdrawal penalty imposed by the IRS, because this is a tax-deferred vehicle.

Annuities have other benefits too.

• They  have been around since the 1900’s, so they’re proven investment vehicles
• They are easy to purchase with no upfront sales charges
• They aren’t subject to probate as they pass directly to your named beneficiary
• They can go into an IRA or 401(k)
• Some have a long term-care rider, which will enable you to pay for long-term care expenses with tax-free income from the         annuity

The book “Naked in the Nursing Home” shows you how annuities helps you pay for long-term care insurance in greater detail.

Social Security, unlike other income – earnings, investments or IRA’s – is taxed three times (Secret 1).

Here is how it works. Let’s say your earned income is $50,000. You pay in your Social Security which would be $2,100 for 2011. It’s normally 6.2% but in 2011 it’s 4.2%. Does that mean you are taxed at a reduced amount or the full amount?  You pay your Social Security dollars (tax 1) and you pay taxes on the full amount, effectively paying a tax on the money that went in for Social Security (tax 2) thus paying a tax on the tax. That occurs because Social Security taxes are not deducted from your taxable income.

Now it is years later and you start to receive your Social Security check. Social Security income is taxable and the rate depends on your AGI threshold. Now we come to another little secret. The threshold is not inflation adjusted (Secret 2).

If SS is so good for the government, why is it going broke? Its going broke because of secret number 3. The government is robbing Peter to pay Paul. Congress uses the money in Social Security to support government expenses; thus cleaning out the coffers of your retirement dollars. The people working now are paying for the people receiving SS now.

The solution lies in raising the cost (more taxes), raising the age when SS income starts or eliminating the cap. There is no cap on Medicare taxes, so why is there one on Social Security?

As I’ve said previously the simplest solutions are the hardest for the government to embrace. What’s a simple solution? Just tax everyone until they stop working and take the cap off.

Why 90%?  Because 90% of the time he is this adorable sweetie pie of a cat, but the other 10% he is a monster picking on Jewel.  It’s hard to believe, but he has learned without our instruction or encouragement, how to open the kitchen door. One has to be deaf not to notice how he does it. “Rattle, rattle,” goes the door; in goes the paw and bam! The door slides open.  This enables him to pick on Jewel, even while she is eating, which used to be the only time of day she was guaranteed a little peace.  The other day I found him crying in the sink, in the kitchen that was originally closed off to him. And, speaking of open doors, he opens the door under my bathroom sink and takes out everything, shreds the spare toilet paper rolls and then looks up innocently. We are learning how to childproof our home for this crazy cat without making it too boring for him.

One of the few times Oscar and Jewel get along is at 6:30 AM when Oscar and his partner, Jewel, announce the morning food call. Jewel, who specializes in sleeping most of the time, sticks her face in my face with her big black eyes and smiles–yes, smiles – then begins to whine. Mr. 10% pounces on my stomach to make sure I know it’s feeding time. Sometimes the couple show up around 5:00 am, and occasionally it’s Jewel leading the pack.

It’s a trip living with Oscar.

Congress wants you to buy long-term care insurance.  The way they hope to inspire you to buy it is by giving you tax deductions.  The problem, however, is that when the government gets involved, it giveth and it can taketh.  The way they have set up the tax treatment for long-term care insurance is to favor the business owner more than the individual.  In this blog, we’ll look at the tax benefits for the individual and in the next blog the tax benefits for the business.

An individual can deduct the cost of LTC insurance up to a limit that the government sets based on your age.  An individual aged 51-60 can deduct $1271 of premium, while an individual over 70 can deduct over $4240 of premium for 2011.  The full table and tax treatment is covered in greater detail in the book “Naked in the Nursing Home”.

The catch, however, is that the premium, like the cost of health insurance, must exceed 7.5% of your adjusted gross income (AGI).  So if you’re a high earner and your AGI is high, the deduction may actually disappear.  This is where the taketh occurs.

If you have an HSA plan, you can deduct your premium in full through the HSA plan and then reimburse yourself for the premium from the same HSA plan.  In this way, you will have deducted the premium but it won’t be subject to the 7.5% threshold.  To benefit from the ability to deduct your premium, the policy must be a TQ (tax-qualified) policy.  The best part of a TQ policy is that the government can never tax your benefit (a good giveth).

Naked in the Nursing Home has a full explanation of the tax treatment.

Here’s a strategy that worked for me and is discussed in my first book, Four Steps to Financial Security for Lesbian and Gay Couples, and no, you do not have to be gay to benefit from this strategy. You have to be reasonably healthy and have a business.

It’s called a Professional Employer Organization or PEO. PEO’s are outsourced human resource firms. You basically become a co-employer for your employees. And if you are the one employee, the PEO is your employer.

There are other benefits to a PEO. You can deduct the cost of your health insurance at 100% as a business expense because you are paying the PEO. You can also deduct disability insurance or long term-care insurance at 100% if the PEO has a cafeteria plan. Some PEO’s have a medical reimbursement plan which enables you to deduct and get reimbursed for your medical expenses that are not covered by insurance. Many PEO’s also have a 401K.

Ok, maybe you don’t have a business, but you have a hobby you love. Consider finding a multi-level marketing company that fits your love. Once you have a real business talk to your CPA or tax advisor how to set it up, and then talk to a few PEO’s.

Simply charge every man, woman and child $10 per year starting at birth. The rich will pay their $10 per year and the poor will pay their 3 cents per day. Just check off the box on the 1040 for Medicare prepayment and add $10 per man, woman and child the tax return relates to. Oh, no tax return! Ok, file a short form then.

Let’s think about this. That’s $3.5 billion per year going into a fund exclusively for Medicare. By the time today’s toddler population reaches 65 Medicare will be flooded with money and funded along the way. In fact, there will be overflow cash available for Medicaid as the two can be linked to the same prefunding strategy.

As I said in my earlier blog on this subject, when it comes to simplicity, it’s generally too complex for government to embrace. Unless, of course, Mr. Ryan’s agenda is not saving Medicare but expanding and subsidizing the insurance industry. If that is the case, then we the public have to not only speak up but scream.