NJPP Monday Minute 5/3/10: Taxing seniors with higher fees is not shared sacrifice


Thirty-six percent of the 1.5 million seniors living in New Jersey have incomes under $25,000. For them, budget cuts that raise living expenses will have the disastrous effect of pushing more seniors into poverty. Consider the following policy proposals made in Gov. Christie’s proposed FY 2011 budget.

Homestead Rebates are eliminated – for both homeowners and tenants – for calendar year 2010.


The Homestead Rebate program is the state’s most significant homeowner and tenant property tax relief program – paying over $1 billion to homeowners and $74 million to tenants in 2009. In that year, more than 500,000 senior homeowners received average rebate checks of $1,300; while more than 100,000 senior tenants were eligible for maximum rebates of $800. This year homeowners and tenants will receive nothing – no matter what their income or their property tax.

The Christie administration proposes to change this program to a credit program in 2011 – the first installment of which would be made in May 2011 more than a year from now. Only homeowners would be eligible for the credit; tenants would be excluded entirely from receiving a credit. The FY 2011 budget recommends $268 million for the first quarterly credit in May 2011 which presumably would show up as a deduction on the property tax bill – not as a check in the mail.

Since 1963 when the state enacted its income tax, payments have been made directly to homeowners and tenants. Last year, the state sent checks to senior citizen homeowners with incomes below $150,000 and tenants with income below $100,000. Eligibility has varied through the years but this is the first year in memory where no payments will be made.

Senior Property Tax Freeze Program closed to new participants


The Senior Property Tax Freeze Program reimburses eligible senior citizens and disabled people for the amount their property taxes increase since the first year they become eligible for the program. The Christie administration would save about $26 million by closing this program to new eligible seniors in FY 2011 regardless of their income. Those already in the program would continue to benefit as long as their income remains below $70,000.

In 2009, this program paid out over $191 million to 136,000 repeat participants and 47,000 new participants. People already in the program received average checks just over $1,300; new participants received approximately $265. The 47,000 newly eligible seniors in 2009 cost the state $12.5 million.

In a year when property taxes are expected to increase because of severe cuts to school and municipal aid, the administration expects to pay just over $1,000 ($300 less than in FY 2010) to the 159,000 participating seniors in FY 2011.

Seniors likely will pay more for their prescription drugs


In order to save just over $140 million in prescription drug expenses for low income senior citizens, the Christie administration proposes to increase co-pays for brand name drugs to $15 from $7; decrease co-pays for generic drugs to $5 from $6; and institute a $310 annual deductible for the first time in history for those eligible for the Pharmaceutical Assistance for Aged and Disabled and Senior Gold programs.

Over 160,000 poor elderly residents participate in the PAAD and Senior Gold programs, according to the New Jersey Foundation for Aging. Couples over age 65 are eligible for PAAD if their incomes are under $29,956 and for Senior Gold if their incomes are under $39,956. Single individuals are eligible for PAAD if their incomes are under $24,432 and for Senior Gold if their incomes are under $34,432. For all of these people, the cost of getting the medicine they need to survive will likely increase based on the provisions included in the FY 2011 budget.

While encouraging use of generic over name brand medications is sensible in terms of cost, not every drug is available in generic form. About 36 percent of PAAD recipients use brand name prescriptions because no generic equivalent exists; another four percent use the brand name because their doctors believe the brand name is medically necessary. The New Jersey Department of Health and Senior Services estimates that on average brand name medicines cost $119 compared to $18.71 for generic. AARP notes that the average person on PAAD takes 4 to 5 drugs each month. The combination of the new $310 annual deductible and drug price changes could mean that some low-income seniors could face significant increases in their medical costs.

Cutting prescription drug assistance and property tax relief for New Jersey’s seniors, while giving the wealthy a tax break, does not represent compassion and shared sacrifice. Gov. Christie’s plan will see more seniors rationing drugs, getting sicker and ending up in emergency rooms and nursing homes that will cost taxpayers even more. New Jersey can do better than target the elderly who can barely afford to make ends meet.

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Filed under AARP, Monday Minute, New Jersey Policy Perspective, NJ Foundation For Aging, prescription drugs, property tax relief, senoir citizens

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