Archive for the ‘Social Security’ Category

Open Enrollment Period begins January 1st and ends March 31, 2010. During these dates there are some guidelines that must be followed when offering products to the Beneficiary. Click here  to review a list of products you can and can’t sell, as well as rules and regulations.

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In 2010, it appears that because there is no increase in Social Security slated (due to low inflation), there will be no increase in Medicare Part B premium for about 75% of Medicare Beneficiaries.  This is how the law stands now.  Due to increases in Medical Inflation, the Medicare Part B premium was supposed to rise from the 2009 level of $96.40/month to $104.20.  However, there are some Medicare Beneficiaries who are exempt from the current law:  the very high earners, the very low earners and new enrollees to Medicare Part B.

The US House of Representatives passed a law to exempt ALL Medicare Beneficiaries from increases in Part B.  Under current law, since a majority of Medicare Beneficiaries are already exempt, the magnitude of the increase would be even greater.  The CBO projects the increase for non-exempt Medicare Beneficiaries to be in the $119.40/month range.

OK, since the low income earners have their Part B premiums paid by the Medicare Savings Program, by passing this bill, the Federal Government is basically saving the individual states money.  The high income earners (about the top 5% of income) have seen their subsidization of their Part B premium reduced over a period of years (2007-2009).  The other 95% of Medicare Beneficiaries have their Part B premium subsidized by 75% and the lowest income earners have their premium subsidized by 100%.  Given the phase out of subsidy for high earners, there would be a magnified effect.

The House voted 406-18 to pass this measure.  One of those voting against was House Majority Leader Steny Hoyer of Maryland.  Here was his quote on why he voted against the bill, “If we take care of everybody, we won’t be able to take care of those who need us most.”  He was referring to the bill “helping” the highest income earning Medicare Beneficiaries. 

That quote struck me.  I’m wondering who is the “we” who are taking care of everybody (meaning the high income earners)? 

For fun, let’s how good a deal Medicare is for the highest income earners and exactly how well “we” are taking care of them. . .

Let’s look at a married couple, age 65 who owned a business earning $426,000/year.  Keep in mind, that this couple most likely would have paid into the Medicare for FORTY-FOUR years, in theory, so they could collect a nice Medicare Benefit when they turn 65.  This high earning couple would currently pay $308.30/month each for Part B (due to the reduced subsidization for high earners).  Given a the 23.9% increase which the CBO projects, their premium would increase to $381.90 each.  Thus, this couple would pay $9,165.60 for Part B in 2010.  But wait, there’s more!  Earning $426,000/year as a business owner would mean the couple is subjected to 1.45% payroll tax which has no limit.  In addition, they pay another 1.45% “self employment” tax which also has no limit.  Thus, the couple would pay $12,354/year in taxes to fund the Medicare Part A Trust Fund.  Assuming they each purchased a Medigap policy for $125/month and a Part D plan for $50/month each, that would amount to $4,200/year.  

But WAIT, that’s not the 1/2 of it, considering that INCOME TAXES are used to fund Medicare Part B Subsidies (for their fellow Medicare Beneficiaries) and Medicaid and CHIP (which they don’t participate in), we have to attribute a portion of their Income taxes to subsidize these programs as well.  First, assuming their taxable income was $300,000 (after itemized deductions, which is VERY generous), they would pay $76,821 in total income taxes (see tax tables).  To calculate the proportion of their income taxes which goes to fund Medicare, Medicaid and CHIP, look at the 2009 Federal Budget receipts and expenditures.  Expenditures on Medicare, Medicaid and CHIP totalled $632 Billion in 2009.  Total Receipts from ALL sources excepting Social Security totalled $1.72 Trillion, so 36.7% of non-Social Security receipts go to fund Medicare, Medicaid and CHIP.  Applying 36.7% to their income taxes of $76,821 means they will have contributed $28,193 to these 3 programs in 2009.

Adding up Part B Premiums, Part D Premiums, Medigap, Medicare Trust Fund Payroll Taxes and a pro-rated portion of their income taxes to fund Medicare, Medicaid and CHIP, the total bill for health insurance is $53,912/year for these 2 people.  (Keep in mind, this is AFTER paying into the system for FORTY FOUR years!!) 

Can Steny Hoyer please explain to me how, after paying into Medicare for 44 years and then paying almost $54,000/year toward health insurance when they FINALLY get Medicare, these people are being “taken care of” by the Government because their Part B increase is waived in 2010??  I think he should just keep his mouth shut about the whole issue (or say a polite, “thank you”!)

OK, my rant is over. . .here is the Article from the Wall Street Journal.

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I thought this news item from the Dallas Morning News might be interesting for those who work with Seniors.

The author suggests the 2009 increase in Social Security benefits may be 5.7 – 6.1%.  The official announcement comes out in mid-October.

This would be the largest increase in Social Security benefits since 1982.

Here is the link to the article.

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