Bill Boushka retires

Alzheimer's may start in one area of the brain and involve a special protein called the "tau" which propagates

2012-02-03T07:55:00.000-08:00

Recent research suggests that Alzeheimer’s disease may start in one area of the brain and spread through synapses by cell-to-cell movement of a “tau” protein. Previously the disease had been thought to be multifocal. This model suggests what is already known for a few diseases like “Mad Cow” where an “infectious protein” changes the geometry of cells it contacts and propagates. New medications could target the tau protein as well as the amyloid. But the story also presents the disease as a sort of pseudo-malignancy.

MSNBC reproduced the MSNBC story here.

There is a more detailed article by Rick Nauert from the University of Texas in Psych Central here.

Some references on trusts: "Grantor v. non-grantor"; "revocable" v. "irrevocable"

2012-02-02T07:35:00.000-08:00

Rocco Beatrice of Estate Street Partners and UltraTrust have a recent video explaining Grantor Trust and Irrevocable v. Revocable Trust here. In 2013, the estate tax exemption on a person is $5 million, but Rocco says the estate tax levels have changed 38 times since 1950.

A Grantor Trust creates a third legal person and gets assets out of the grantor’s (the real person with the money) name, for protection from creditors. The Grantor has the money but does not formally own the assets (often not even the home). It is typically desirable to make the trust irrevocable, which typically means that the Grantor cannot withdraw from it but may borrow from it “almost” without supervision and without repayment, and in the mean time files income and expenses on his regular income tax. The main provisions are in IRS codes 674-675 and 121 (for example, Tax Almanac gives this).

It would seem that the Grantor's behavior, while he has great powers to "borrow", could be questioned by others if he acted irresponsibly, particularly in today's sensitive political climate. If you draw on assets that are not yours, it's better if somehow they can help take care of other people (maybe by employing them).

A revocable trust would remain exposed to creditors. Rocco gives an example similar to my “back yard baseball” in the 50s. The “grantor” – in my case, me (in effect) allowing other boys to play softball in our backyard, could control the rules (how far it is to the outfield fences – we had a big yard). When the other boys “lose” they can whine and go home, particularly if the grantor changes the rule so he can personally get better results. The sports analogy of “home field advantage” makes sense (but not during Super Bowl week!).

The UltraTrust link (which was apparently first written around 2001) is here.

“Dummies” has a page explaining grantor v. non-grantor trusts here.

Trusts should look after potential "special needs beneficiaries"

2012-01-27T07:30:00.000-08:00

I can’t go into detail about ongoing personal developments, but I can say something general I have learned about what is considered good practice when single or childless (or people without dependents) make up living trusts and will their estates to it.

Although one may wish to distribute monies to charities or civil liberties organizations, one will name an executor, and in some states, that executor must live in the same state (or possibly within a certain distance). Some states have also dropped that requirement. (Executors are required to file statements if they have probate appointments at some point.) It’s considered good form to write the distribution instructions as to take care of the executor and associated family if any of them become “special needs” within a certain time frame related to one’s own passing. The point is the money would then help pay for the executor’s long term care (before going to charity) if ever necessary, and that, in these days, is coming to be viewed as “socially responsible”. If that need doesn’t develop, however, the money does go to the charities.

NAPA act would aim to end Alzheimer's by 2025; 15 million unpaid caregivers involved now

2012-01-17T18:44:00.000-08:00

Janice Llyod has a story in USA Today, “Alzheimer’s heaps unparalleled stress on caregivers”, link here. The article says that now about 15 million unpaid family members and “friends” pay for Alzheimer’s patients.

Janice also has another story linked there about the proposed National Alzheimer’s Project Act which aims to be able to prevent the disease by 2025. President Obama had signed NAPA in January 2010. It would obviously be of great concern that deficit reduction could affect public funding of Alzheimer’s research, given the debt battles of the past year.

Picture: from NBC4 Health and Fitness Expo, Washington DC, Jan. 14.

Pew finds contrasts between Baby Boomers, Seniors on Social Security, also on political candidates

2012-01-12T08:21:00.000-08:00

The Pew Center for Social Research has an interesting analysis on the attitudes of voting blocks, calling most seniors (66 to 83 and up) the “Silent Generation”, quite different from Baby Boomers (47-65), early Middle Age or “Gen X” (30-16), and Millennials or “Gen Y” or “Young People” (18-30). I’m not sure what happens with voters over 83 (there are a lot more of them). The report (Nov. 3, 2011) is here.

What’s interesting is that Baby Boomers are much more insecure financially than the “Silent Generation”. So they oppose raising retirement ages for Social Security but think that means testing should be imposed now on wealthier seniors. They are more likely to see Social Security as “welfare” even though they pay into it as it were an annuity premium. How would they feel about Cato-style privatization?

Washington Post readers weigh in on whether Social Security is really "insurance" or an "annuity"

2012-01-04T06:54:00.000-08:00

There have been some LTE’s to the Washington Post on Social Security means testing. The basic disagreement seems to center around whether Social Security is really “welfare”, “insurance”, or an “annuity”. While we have come to perceive it as largely the latter (mediated by legal spousal relationships), there are some components of the former.

The Dec. 22 editorial “Entitlements v. the poor”, which I wrote about that day, generated an LTE by Thomas L. Schwarz, who writes “The Social Security Administrations shouldn’t care if I’m rich or poor”. Today (Jan 4) there were (more) two responses on “The right or wrong of Social Security means testing”, linking to this letter, here. One person writes that total means testing would discourage separate savings (correct), and the other writes that there should be floors and ceilings between which Social Security doesn’t add to total income. In that case, what about accumulated assets? But the writer here refers to Social Security as “insurance”. It really is not insurance, at least now.

Print newspaper ad for live-in home health care raises possible ethical questions

2012-01-03T07:26:00.000-08:00

I saw a large print ad in the Washington Post this morning from a company called “Home Care Assistance”, with main link here.What caught my eye was the use of the acronym “live in” in the phone number.

The company says it does background checking (including immigration) and psychological testing of applicants.

I don’t know how costs are with this company, but I’ve covered before the issue that Live-in’s apparently do not fall under the legal rubric of eligibility for overtime compensation (after a notorious Supreme Case decision in 2007 about a case on Long Island, NY). See the posting March 2, 2011 on this blog.

I did not use live-in’s for a long time in my situation, but we did use them briefly in northern Virginia in 1997 (after mother’s hip surgery) and 1999 (after her coronary bypass surgery at age 85) when it was expected she would get better quickly – which she did. I was living in Minnesota (or about to move there) and working both of these times.

I find the question troubling – do “Live-in’s” have lives of their own? The print ad says “Home care lets you be a daughter again”. So it is for a son, too. But I’ve wondered about the ethics of all this. Could live-in employment be considered “exploitation”?

"Demographic Winter" and an aging population: it definitely gets personal

2012-01-02T06:44:00.000-08:00

It’s been a little more than a year since my own mother passed away at 97 – and in fact, a year ago today I left the house (fallow) for a week long journey associated with a “new job” as I “landed” into a new environment.

I’m still struck by how eldercare responsibility can turn “on a pinhead” our individualistic conception of relationships within the family.

We’ve developed a world of pre-nups and hesitancy for lifelong commitment (I won’t even guess how prenups work in same-sex marriage – the same way, I guess). Okay, it started in the world of “fame and privilege scarcity” of Hollywood and spread to “the general population” in the last three decades of the previous century.

We’ve also grown a world where the cost of raising children is extreme and the responsibility put on parents, until somewhat recently, was absolute. No wonder people put off having children forever. For women, the biological clock is a serious matter.

And we find we have fewer children – in middle class families and up – to pay into Social Security and Medicare funds while our elderly live even longer because of medical advances.

And we face an explosion of Alzheimer’s Disease which will become the nation’s Number One public health problem unless it’s wiped out first by H5N1. Everyone will have forgotten the hazards of HIV. Why is Alzheimer’s increasing? Because it may be inevitable if someone doesn’t die of something else first as a normal event after a normal life span, that used to be expected and accepted by previous generations.

That’s not to say that healthy lifestyle habits won’t increase longevity without disability. The experience of “Blue Zones” presented on Oprah prove that. I recall in a small California community a male surgeon was still practicing at 94, and so was a female attorney (another attorney in Texas is 102). But one fact that permeates Blue Zones if strong intra-family and community ties, not the hyperindividualism or pre-nups.

And, just New Year’s Eve, on the Metro, I had a conversation with a pre-med student. He wanted to do oncology – to extend lives even longer. Geriatrics hadn’t occurred to him.

What “demographic winter” predicts is that more childless people will wind up with “family responsibility” thrust on them anyway. It’s not a nice feeling to have it dumped in your lap when you were too “self absorbed” earlier in life to have a family of your own. I have to quote Philip Longman (“The Empty Cradle”) here. And yet I must "confess" that relating to people "in their own space" (for the moment) is not my own cup of tea. It makes effective and credible "volunteering" difficult and turns it into "community service".

It strikes me also that the whole issue of eldercare brings back the question of what “we feel about” in others – and the permanence of that feeling. The capacity for complementarity and permanence in passion is being lost.

In the meantime, expect cash strapped states to wake up to the idea that they can start enforcing their filial responsibility laws.

Also -- today, from a day trip, in the Potomac Highlands in West Virginia, the (private) "street name" there is "Retired and Broke". I didn't use a high enough resolution for the letters to show.

There's also a "Goldsworthy cairn" in a front yard on Braddock Mountain (above Frederick MD), didn't get the photo this time.

Social Security knocked away from being an annuity to another political entitlement

2011-12-30T11:52:00.000-08:00

Today (Dec. 30, 2011), on p. A19, the Washington Post offers an op-ed by Robert J. Samuelson, “My argument with the elderly.” Online, he calls it “Why we need to fix Social Security, and other year-end reflections”, link here.

Samuelson says he is 66 (one of "them" or one of "us"), and maintains it would be progressive to ask better-off seniors to forgo their Social Security right now (at least some of it) and pay more for Medicare, to help the next generation, especially given the economy. Means testing now, you bet.

Remember, last summer’s debt ceiling debate, when we could have stopped Social Security cold – depending on which lawyer you asked. Michele Bachman didn’t seem to care. John Boehner and Rand Paul were bellowing, “we can’t afford it; we don’t have the money.”

Yup, you can take someone like me, at 68, and say, “why won’t you go out and hucksterize for a few years, like everybody else. You spent 12 years in life insurance IT, why don’t you think enough of it that you want to sell it?” Bye to movies and blogs.

But I thought the benefits were promised, even contractually owed, based on “annuity premium” contributions. If you want to moralize, all right, but don’t play Robin Hood with what is already mine. Oh, nothing is mine – I get it. “It isn’t about you” Rick Warren says.

The Post has a detailed news analysis today, front page, by Jia Lynn Yang, “New fear for Social Security’s future: Payroll tax cut could take program off its political pedestal”, and eventually make promised benefits be perceived as political fodder. (Online the article is called simply "Tax cut shakes a premise of Social Security".) We’ve stopped making current workers pay their own full premiums. (Some want parents to be absolved of all FICA “taxes”). That’s why privatization, proposed during the Bush years – was so appealing – turn it into something you own, forced savings mandated by law, albeit, and regulated away from risk – but keep it out of the hands of Robin Hoods. Fight your battles of “deservedness” elsewhere.

(See Dec. 22 posting about related Post editorial.)

Public employees can often buy "air time" to pad their retirements.

2011-12-28T20:17:00.000-08:00

Thomas Frank has a provocative story in USA Today Wednesday showing how workers in 21 states can buy “air time”. effectively credit for more time worked, to increase their pensions after they retire, link here.

In some states, the practice was part of a plan to try to encourage early retirement. In California, over 34000 people have “bought” the time, but Jerry Brown wants to end the practice. In many states, employees are not "contributing" enough to pay for their extra retirement benefits according to actuarial calculations.

Federal law allows “air time” purchases in public employee plans only, not in private industry.

Washington Post spurs debate on integrity of hospice care

2011-12-24T08:07:00.000-08:00

Today, in the Washington Post, several parties weighed in on the ethics if the hospice care industry, primary link (for a letter from the National Hospice and Palliative Care organization, here.

All of this refers back to a Dec. 18 Post Business story “The big payoff of pushing patients into hospice”.

It is true that a doctor must sign off on the prospect that the ordinary course of a patient’s illness means a life expectancy of less than six months. It can be renewed.

My own mother entered hospice Nov. 24, 2009 and stayed at home, actually entering the facility Dec. 10, 2010, four days before she passed away from aortic stenosis and congestive heart failure just after her 97^th birthday.

Admission to the program required an interview and examination by a nurse and detailed review of medical records, including recent tests (such as echocardiogram, where there are specific metrics predictive of probable survival when heart function is already severely impaired).

Hospice home care typically results in billing to Medicare of $3000 to $4000 a month.

Washington Post plays the "entitlements v. the poor" card today

2011-12-22T10:04:00.000-08:00

Today, the Washington Post has an editorial that does make sensible recommendations about state (VA) pension reforms and gradual Social Security changes. But there is some emotional language that is a bit off-putting.

The title of the editorial (link) is “Entitlements vs. the Poor” (then subtitle “Virginia’s proposed budget shows why liberals are wrong to resist pension reform”). But then it writes “There should be more means-testing, for example, so that poor taxpayers are not subsidizing wealthier ones.”

Remember, as repeated here like from a cracked CD, Social Security is, in large part, funded by past contributions by the recipient and his/her employers. Defined-benefit pensions are certainly related to service performed.

That’s one reason why I have felt sympathetic (to say the least) to gradual Social Security privatization, so that the recipient owns his own benefits and so that they can’t be confiscated for someone else’s political agendas.

For example, some on the “natural family” movement want to exempt people from social security taxes once they have children within marriage.

And a payroll tax holiday, however it may seem to help lower income wage earners in the short run, seems just to make the Social Security deficit grow. People have to continue making contributions for their own future benefits. The right way to address lower take home pay is to address the causes of lower wages. Maybe we need more guinea pigs like Barbara Ehrenreich to pay their dues.

Increased lifespans: we may be approaching a "singularity"

2011-12-18T17:54:00.000-08:00

An Opinion piece in the New York Times Sunday wonders of we’re approaching an inflection point, were we unlock the key to immortality and all become angels – at least digitally, maybe on the Web, without bodies. “Omni” magazine had proposed as much in the 1990s.

The piece by James Atlas is “Old Age – Life Goes On”, link here.

Atlas discusses a book by Ray Kurtweil, “The Singularity is Near: When Humans Transcend Biology” (Penguin, 2006). There’s a physics question, maybe: if anyone were immortal, would that contradict the Second Law of Thermodynamics? Entropy seems to make aging inevitable, but then what happens to the soul?

In the meantime, as biological lifespans increase sharply, Atlas writes, “One challenge my entitled generation faces is that many of our long-lived parents are running through their retirement money, which leaves the burden of supporting them to us.” The term “sandwich generation” is still relatively recent, and nobody applies it correctly to the childless.

In view of all of this, many of the proposals to fix Medicare sound meager indeed. But today’s Times has a major editorial and other materials on it. Generally, Congress is considering making public coverage v. subsidized private coverage a choice, giving states more control, trying to discourage first-dollar coverage, and trying to simplify reimbursements. And it considers increasing means testing – some of which happens now. I wasn’t aware that those making over $85000 pay more premiums now. What about looking at accumulated assets then (as Medicaid already does)?

"Wal-tirement" DRIP's: they're not like i,v;'s, but you can do them yourself

2011-12-15T18:46:00.000-08:00

The Washington Times today sent out an email (or at least an email was sent out in its sender name) talking about “Wal-tirement” and how to plan for your retirement without depending on social security or pensions.

The company selling the product of easy automated stock buybacks is Stansberry Research (link), and the email led to one of those manipulate videos that keeps leading you on and that you have to click a few times to get out of.

Here’s a discussion of (Dividend Reinvestment Plans) DRIP investing at “Stock Gumshoe” by Travis Johnson, link. It sounds like something you can do for yourself pretty easily, not gimmicks or hucksters needed.

In Memoriam: my mother's passing occurred one year ago today

2011-12-14T21:12:00.000-08:00

One year ago today, Tuesday Dec. 14, 2010, my mother passed away, at age 97, in Capital Hospice, in Arlington, VA.

She had entered four days before, but had been in Hospice care at home under Medicare rules since November, 2009.

There was a last day in her home (Dec. 10), a last meal (Dec. 9), and earlier last times she had gone to church, a last time she had traveled (to Ohio), and even a last time she had gone anywhere on her own (mid 2009).

She lived long enough to see introduction of the law that would repeal "Don't Ask Don't Tell", which had meant so much to me, even though at the end of her life she no longer understood what it had meant.

My father’s passing, on New Years Day of 1986, at age 82, had been much more sudden.

Of course, the idea that there is a last experience of many things for us is just a mathematical tautology. But we are much more aware of this now than earlier generations had been

Medicine is changing the last period of life for many people. There are discussions that new generic vaccines may wipe out most forms of cancer. People get many extra years with heart surgery and other treatments. But eventually, none of us is immortal. For many more people than ever before (even though not for all people) the length of time at the end of life with severe disability, and perhaps Alzheimers, is a new challenge for this generation, with fewer children and eventually fewer workers to take care of their parents. This will happen on a scale that earlier generations did not know, even with their more cohesive families.

I noted today that Congress is still discussing (and the president wants) the Social Security tax partial break to continue, while the trust fund to pay future beneficiaries gets weaker. We still don’t want to have to pay for our benefits, although many of us will wind up giving them to others through care. Even now, one can imagine tradeoffs and redistributions, like immediate means testing to “pay for” the social security tax cuts on lower income Americans.

I remember a day in October 2010, when I visited both the Capital Hospice offices in Ballston and the Facility on 16^th Street. I had worked in a life insurance company office building (at one time, United Services Life) that had been torn down on the site of the offices, and I had gone to elementary school at Woodlawn, which now houses the Hospice. For me, this had seemed like irony. I had taken first and second grades in the front atrium rooms of the building, now lobby and administrative areas, and other grades in parts of the building that now care for patients. The current elementary school is half a mile away, on Glebe Road, up the hill.

Today I heard again Josh Groban sing "You Raise Me Up", based on an Irish folk song "Danny Boy" (the subject of Stanford's Irish Rhapdsody #1).

New site discusses history of assisted living facilities

2011-12-13T06:38:00.000-08:00

There is a new site which gives a short but comprehensive history of Assisted Living Facilities, which started to develop in the 1970s. The link is here.

The story was recommended by email by Monica at the site.

The writeup talks about SNF’s (Skilled Nursing Facilities). My understanding, from having worked on the New York State MMIS (Medicaid Management Information System) in the 1970s, was that SNF’s give skilled nursing care for people expected to get better (up to 20 days for full Medicare coverage and 100 days with Medigap), where as ICF’s (Intermediate Care) give custodial care and are not Medicare-covered. Many facilities offer both.

But it is quite correct that Assisted Living facilities were developed to offer seniors with intermediate needs more privacy and more of a lifestyle. Some seniors carry on much of their former lives, and even have computers and Internet access. Some are in AL for very specific disability-related physical care needs and can still function well or even have employment at home.

During pension and retirement crisis, state legislators pad their pension pockets

2011-12-12T11:13:00.000-08:00

USA Today has recently reported on the continued abuse by states of the pension system, and it has a chart of pensions paid to former state legislators, with a chart, at this URL.

Curiously, some smaller states don’t pay pensions to legislators, and California stopped pensions for legislators elected after 1990.

But many states give their legislators perks that other state workers don’t get.

Of course, it’s all too easy for legislators to pad themselves and get away with it, even in times when the country faces a retirement, pension and social security crisis. It’s not clear from the chart what effect the pensions have (if any) on social security benefits.

Even with a trust, sometimes an executor appointment from a Probate court can be needed for special circumstances

2011-12-07T18:37:00.000-08:00

More on trusts. Sometimes, to satisfy the processing requirements of some financial institutions (especially life insurance companies paying benefits where the beneficiary situation is murky), an executor needs to be appointed as such by a Probate Court in his city or county and state even though named as such in a trust. Generally this should require the usual documentation (death certificate, originals of will and trust and signatures, identification), and payment of a processing fee and usually some taxes, typically low percentages. But a sticky question could arise if the percentages applied to the entire estate, instead of only the portion that an institution questioned and demanded appointment for.

So trusts may not do absolutely everything.

Picture: the Far Left would like to outlaw all inherited wealth.

Many seniors don't apply for Medicare on time, then go without insurance for extended periods

2011-12-06T09:29:00.000-08:00

The Washington Post Health section today, in a story from Caroline E. Mayer and Kaiser Health News, reminds seniors that they must apply for Medicare “on time” to get benefits and avoid waiting periods without benefits. Most seniors need to apply right at age 65, and supplemental benefits generally have lower premiums then. The Post link (section E) is here. Kaiser has a copy of the article on its own site here ("What Every Baby Boomer Should Know about Medicare"). It sounds surprising that some people were able to continue regular employee coverage after 65; most employers would try to get them over to Medicare. I know that was the case with my own retiree health insurance.

USA Today has a story Tuesday about savings Seniors have accrued because of a 50% discount on prescription drugs when in the “doughnut hole” and other benefits like free annual screenings (I don’t seem to have gotten them without the Part B Deductible myself). Here is the link.

Would trusts protect family caregivers in states with filial responsibility laws? Good question

2011-12-04T17:28:00.000-08:00

I got a question today on a posting made July 7, 2007 here on filial responsibility laws.

Someone had set up an irrevocable trust and was concerned that a state could still go after him or her personally for a parent’s nursing home stay, or that the nursing home could go after him.

I went to my first brainstorm session on trusts back in August 2008, in northern Va. Generally, one of the reasons people set up trusts is to protect the assets in them from litigation brought against individuals, either the patient or family members or caregivers (or all of these). What I remember is that a trust could protect the assets of the parent for actions brought against another household member coincidentally (negligence, libel, etc).

In any case, someone with this question would have to ask a trust attorney practicing in the state in which the patient lives, and possibly the state in which the family members lives if it is different. (Interstate issues could get complicated.) Sometimes people set up their own individual trusts.

This is a good question. I doubt much have been written about it yet.

I don’t think it is hard to see serious political, social and legal troubles ahead. There are more severely disabled elderly living longer (especially with Alzheimer’s), and people in many economic strata are having fewer children. That dynamic is already affecting the social security and pension debate. States, not having the ability to print money (much like European countries in the Euro zone now), are stressed, and will tend to go after adult children capable of paying rather than allow parents to go on Medicaid, even when assets haven’t been spent down. Look for real problems in California soon. (Not all states have filial responsibility laws, or “poor” laws, however.)

Both Donkeys and Elephants migrate toward viewing FICA as a "welfare" tax

2011-12-02T05:33:00.000-08:00

Despite failure of the Supercommittee to deliver its “Thanksgiving Turkey”, Congress is still looking at ways to extend the FICA contribution cut as well as extend unemployment benefits. Republicans and Democrats, as usual, disagree.

But what’s interesting is that both parties would consider using taxes (Democrats) or increased Medicare premiums (Republicans) even right now on the wealthy to help pay for FICA tax cuts, moving it away from an annuity large funded by employee and employer contributions over the years to “welfare”. A similar remark applies to the unemployment insurance.

The Friday morning CNN story is here.

Florida law firm explains class action suit over deficient long term care benefits

2011-11-28T07:37:00.000-08:00

Steven M. Dunn, PA, or Long Term Care Law Office in Florida has a YouTube video (5 minutes, detailed, informative, spring 2011) explaining a class action lawsuit against an insurance company (or companies) for not honoring inflation protection that it says was implied in the language of some riders in the company’s policy. He says the average age of the clients involved was 88 (with 98 the highest), and that the families of many clients had to go out and hire additional home health care.

Here is his Facebook site. Webroot plugin ((in late versions of Mozilla-Firefox only) gives a yellow caution warning on his main corporate site (“longtermcarelawoffice.com”), other site rating companies are OK with it; I hope he checks up on this.

New York Times revisits rule on paying home health aides (and live-in's) overtime

2011-11-27T15:29:00.000-08:00

The New York Times has a good editorial “Fair Pay for Hard Work” regarding the issue of overtime for home health aides often used to provide eldercare in the home, Nov. 25, link here.

The editorial discusses the 2007 Supreme Court ruling on the Evelyn Coke case, and explains the concept that Congress or the Labor Department, with a 1974 rule, had apparently made “companions” (that is, normally, "live-in's") exempt from normal overtime rules. Congress would have to change it.

It also points out that stiffing home health workers, even if it seems to save Medicaid money, is bad public policy because it could lead to more nursing home use (and nursing homes are going to get full).

It’s not too hard to put all this together with filial responsibility laws.

I can recall, while still in Minneapolis, back in 2002, being told that people over 60 (I was 59 then) were being recruited as “senior home companions” and paid only a “small stipend”.

Below is a YouTube "Trubute to Evelyn Coke". It says that home care workers are not protected by minimum wage and overtime laws at all. I thought that was true "only" for live-ins.

Long term care companies screen for anti-selection

2011-11-22T14:25:00.000-08:00

Today, I underwent (or was “subjected to”) a 45-minute telephone interview with a nurse from an insurance company for a possible single-premium long term care policy.

Besides detailed, and sometimes repeated, questions (mostly Y/N) on medical history, there were memory exercises. The applicant is told not to write anything down during the interview (to cheat on the memory test).

The applicant is asked again at the end of the interview if he or she did “cheat”.

The memory test comprises a list of ten words. A few times during the interview the applicant is asked to repeat as many words as possible. During my mother’s care, a neurologist told me that most people have trouble remembering more than seven items at a time without cribbing, and I was able to do seven or eight at a time. (If you got everything "right", that might suggest cheating.) The applicant is also given triplets of objects, and asked which is different from the other three, and then at the end asked to enumerate as many of these objects as possible. The applicant is also given a T/F test on whether a specific word was on the list. That’s easier to get almost right.

It’s easier to remember words that have some special significance.

I wasn't asked a lot of detailed questions about medical monitoring. I wasn't asked to do an EKG stress test, or colonoscopy, for example. I was asked about daily activities, including housekeeping.

Wells Fargo finds many seniors expect to work until age 80, have less than $25000 net worth

2011-11-19T08:17:00.000-08:00

A Wells Fargo study says that 25% if respondents say they expect to have to work to age 80, when life expectancy is 78. 30% of people in the 60s have saved less than $25000.

But are seniors better off than young people? It's a very mixed bag.

The story is on eCredit here.

Picture: a horror movie set?

Over 90 population is skyrocketing in US

2011-11-18T06:22:00.000-08:00

USA Today, in a story Nov. 18 p 3A, reports on recently published Census data showing that the over-90 population has tripled in the last three decades.

The definition of “oldest old” moves up from 85 to 90. Most people in their 90s had at least one disability. 37% lived with others, 37% alone, 23% in what Census calls group quarters. A majority of the very old are female.

The public perception of the moral responsibility to learn to take care of others will change with increased lifespans. No longer will it be just a matter of deciding to have children or not. This social value system is more common in non-western cultures.

The link for the story is here

Loney hearts columnist addresses filial piety

2011-11-14T09:58:00.000-08:00

The “Ask Amy” coilumn on p C5 of the Monday Washington Post deals with filial responsibility. The caption is “Sons need to step up to care for aging mother”, link here. The letter comes from a niece who had “sacrificed plenty” for he own mother, and now wants her two male cousins in other states to step up. Yes, hire help.

But I don't know if an email is a good enough way to for the niece to communicate this. Could wind up in a spam folder.

Utah GOP Representative Chaffetz proposes means testing of Social Security benefits by 2019

2011-11-13T06:25:00.000-08:00

On Nov. 8, Jason Chaffetz (R-UT) announced his own proposals for Social Security reform. The details are present on this Nov. 8 press release, here. Chaffetz is said to be shopping for cosponsors.

The story was mentioned in the Politco rag (see my Issues Blog yesterday), in conjunction with other GOP proposals from Sen. Tom Coburn (R-OK), and James Lankford (R-OK) to reduce and means test entitlements for wealthier or high income individuals while keeping income taxes and particularly capital gains taxes as low as possible while reducing federal debt.

There is a lot of technical language about cost of living in the proposal.

But the most controversial proposal is the last one, which means tests the benefit amount for retirees collecting benefits starting in 2019, for those who make over a certain amount a year (it doesn’t talk about assets testing, which would get very complicated when there are trusts). It also boosts amounts for those over age 85, and also supplies a minimum benefit for low income people. Some rumors had suggested means testing could start immediately on wealthier retirees.

For new retirees, starting in 2016, it also changes the formula for average earnings, including up to 40 years instead of 35.

Full retirement age for new retirees increases gradually. Early retirement, with a more severe lifetime actuarial penalty based on increasing life expectancy, can still start at 62.

One item that ought to be addresses is the whole subject of Social Security Offset, imposed by many corporate pension plans to subtract from private pension amounts, and which often presumes the person starts collecting at 62. This is another area for potential reform that both parties have missed.

The proposal seems to respect the idea that Social Security is at least partially like a retirement annuity based on a person's contributions over the years.

Seniors have much higher net worth than young adults, inspiring "Jonathan Swift" satire

2011-11-12T07:36:00.000-08:00

If you want to read a parody of Jonathan Swift’s “modest proposal”, try the Washington Post’s op-ed Saturday by Alexandra Petri, “A Modest Proposal for the Occupy Movement”.

It’s not “eat the rich”, it’s “eat the old”. There are social insects that do just that.

She writes that households headed by those over 65 have 47 times the net worth of those under 35. She says the median net worth household for over 65, $170000. For under 35, $3700. That’s partly because of student loan debt. The link is here.

It's true, there are life insurance companies with division that focus only on those individuals with "high net worth". It doesn't sound quite fair.

It’s true, that those about 70 now grew up in a time when employment was more stable and their own parents could actually amass wealth with relatively conservative investments. My own parents did that. Our family is lucky in that one member owned a gas well in Ohio (hence, high fuel prices help me). My father invested very heavily in utility stocks, because people will always need electricity. He was right. So I did the same thing at age 30 with Exxon stock, right before the first oil shock. That’s only because of his example

But go back to your ninth grade English literature for inspiration.

What if taxpayers were garnished to pay for underfunded public pensions; Could super-committee hit current Social Security beneficiaries now?

2011-11-09T06:03:00.000-08:00

MSN posted a blistering post from Smart Money by Jack Hough, “No Pension, You May Still Owe $30000 On One”, link here

The writer calculates what taxpayers would owe if they had to make up the difference on underfunded public pensions. He suggests that states and localities start collecting $1400 more per year from households now, almost like a garnishment.

The problem is that pension funds have been allowed to use default-prone investments in projecting their returns. They should be required to use default-free investments.

Other problems include public employees gaming the system by using the highest years of earnings.

There’s more. Today, Nancy LeaMond, executive vice president of the AARP has a LTE on p A22 in the Washington Post about a Nov. 5 editorial “A menacing message: The Supercommittee should resist AARP’s attempts to take Social Security off the table” ( editorial copy link ), and writes (“AARP:A help or hindrance”?) “Until recently, most proponents of Social Security benefits weren’t talking about current beneficiaries, but they are a target today”. The link for her letter is here. She goes on to talk about chained consumer price index and its effect on annual COLA and emphasizes that most seniors are relatively poor – but she doesn’t get into the biggest kahuna – that you could means test wealthier current beneficiaries right now. Maybe unlikely, but it the current committee came up with that, there would be nothing seniors could do. This time, not even the ballot box.

Another quote from her letter is appropriate: "The editorial said, “Social Security cannot pay all promised benefits, and a debt discussion is a useful place to make reasonable tradeoffs.” But the Social Security trust funds can pay all promised benefits until 2036."

MSNBC: Seniors may have it better than youngsters; Wash Post: Existing public employees need to accept cuts in future pension promises

2011-11-07T06:47:00.000-08:00

MSNBC has a lead story today maintaining that those over 65 are often better off than younger workers. Why?

Seniors are more likely to own older homes, either paid for or acquired long before the housing bubble.

Younger people are buying into a housing market that collapsed and is still sometimes falling. And younger people tend to have record student debt.

Despite claims of age discrimination, seniors may be more likely to be in second careers that they want, and may actually own their own businesses.

The MSNBC story is by John Schoen of its Lifeinc unit, here.

In the meantime, The Washington Post has a major editorial Monday morning on the pension tsunami, especially how Democratic governors are handling it with public employees in California, Illinois and New York, link here. The inconvenient truth is that governors will have to start cutting back on future defined benefits to existing public employees, not just new hires.

A personal cautionary tale on PSA screening and followup

2011-11-05T16:44:00.000-07:00

Here’s a little lifestyle tip. At my last physical in October, at age 68, we found that my PSA had actually gone down. An appointment with a urologist is no longer necessary.

Why? Since my mother’s passing, there has not been help in the house and I have done my own cooking. I certainly eat less fat (particularly at breakfast). The lower fat diet probably explains the gradual reduction in the PSA number as well as better cholesterol numbers.

This could be a word to the wise in the medical debate over PSA screening and followup on elevated numbers for older men. It could also have a bearing on Medicare expenses.

Greek, other European financial crises (specifically unsustainable pensions) affect value of US retirees' assets

2011-11-02T07:27:00.000-07:00

The crisis in Greece affects US retirees. Specifically, the high public pensions in Greece (and other countries in trouble, with low birth rates) affect the value of American’s retirement savings.

That’s because as long as Greece shares the Euro currency, repudiation of its debt would affect the value of savings everywhere. If Greece left the Euro and could have its own currency, which it could devalue, it would then have negligible effect outside its small borders (unlike in ancient times).

The president of Greece wants to put Europe’s bailout plan up for popular referendum. But if the referendum fails, Greece, for a while, would still be part of the Union and dragging down the assets of everyone in the world.

The Greek financial crisis is related in many ways to high pensions, which are about double those in the US. ABC news showed an example of a family where someone in Greece made twice as much in pension as her sister in the US, who would be personally affected by the lack of “shared sacrifice” in Greece itself.

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As world population reaches 7 billion (today), futurists warn of aging crisis in wealthier societies

2011-10-31T09:14:00.000-07:00

Joel Achenbach has a big story as the world’s population reaches 7 billion: “A world growing – and growing grayer”, on the front page of the Oct. 31 Washington Post online it’s titled “World population not only grows, but grows old”, link here

The upshot is, of course, that the wealthier populations are not replenishing themselves, whereas in the third world, population is exploding. In the United States, Hispanics account for more of the population replacement. In Europe, Muslim immigrants, threatening a political crisis.

But the biggest problem is, of course, is that there are fewer workers per retired or unable-to-work person as life spans in wealthier countries increases. Hence, the pension crises as well as, obviously, Social Security challenges.

The article mentions two important books. One is by Matthew Connelly from Columbia University, “Fatal Misconception: The Struggle to Control World Population” (2011, Belknap of Harvard University, 500+ pages), and Ted C. Fishman, “Shock of Gray: The Aging of the World’s Population and How it Pits Young Against Old, Child Against Parent, Worker Against Boss, Company Against Rival, and Nation Against Nation”, (2010, Scribner, 400+ pages). I just ordered the second of these to review (the long title sounds more relevant to my specific concerns).

Some countries, varying from France to Russia, have started programs to encourage families to conceive of more children.

Social Security shortfall in 2010 getting attention, despite 2011 payroll tax holiday; Social Security was really just "insurance" when it started in the 1930s

2011-10-30T08:51:00.000-07:00

Lori Montgomery has an important and detailed front page story in the Sunday Oct. 30 Washington Post, “Social Security adding billions to U.S. budget woes; ‘Cash negative’ milestone comes early; Fearing backlash, parties reluctant to pursue fix”, link here. A secondary headline on p A8 is “Payroll tax holiday depriving Social Security of revenue”.

In 2010, the cost of social security retirement benefits outstripped collections from FICA for the first time since the 1980s. Replacing the revenue loss from the 2011 payroll tax abatement would require $105 billion.

There are graphical charts mapping “year you turn 65” to average annual wage (adjusted for inflation), and (1) currently scheduled monthly benefits (2) what you would receive if the trust fund runs out” and (3) “what you would get under the fiscal commission’s proposal”.

When social security was implemented in the 1930s, it was intended to guarantee a short period of comfort and security before death, not a period of “golden years”. Everyone was expected to keep working as long as they could, she says.

But the idea that you can combine “insurance” with “assets” (and repackage the whole thing as annuities) is a concept that the life insurance industry has been selling for decades.

Pictures: homelessness on DC streets, on way to Halloween party.

Now, I have to make a decision about purchase of LTC insurance (Lincoln Money Guard)

2011-10-24T14:17:00.000-07:00

As part of going through getting distribution from my own mother’s trust, I’m seriously looking at a single premium long term care policy, at age 68.

Now, it comes from Lincoln National Life. But it is a single premium Universal Life Insurance policy (wiki), with a payment of $100000, that provides a death benefit incorporating a residual death benefit equivalent to the Benefit Limit of a Comprehensive Long-Term Care Benefits Rider (“CCBR”) and also adds an Extension of Benefits Rider (“EOBR”).

The monthly premiums for the riders are subtracted from the cash value; they are not added to the original premium.

There is a total long term care benefit limit in the mid $300000 range, and a monthly maximum LTC benefit of about $4800. There is a maximum duration of 6 years. There is a surrender value equal to the premium.

To qualify, you have to fill out a detailed questionnaire, and undergo a long telephone interview. There is a memory test in the interview. From the documentation, it’s not clear, however, that the applicant must be submitted to all kinds of medical monitoring first (like repeated blood pressure measurements, EKG stress test, or maybe even Holter). An earlier visit in 2008 from someone with Genworth made it sound like one had to undergo such embarrassing monitoring (see Sept. 3, 2011 posting). I’ve also had another caller from still another company from a man who is selling LTC policies but trying to establish himself as a rock musician. Sounds tough.

Lincoln calls the product "Money Guard" (trademarked) and has an Internet description, with somewhat different numbers, here.

Is this pseudo-LTC policy "worth it"? Maybe since there is a no-penalty surrender value, it’s moot. To qualify for benefits, you need to have difficulties or impairments with two major life activities. Covered services would include adult day care, home health care, personal care services, hospice, nursing home, and assisted living. In the northern VA area, a private room in assisted living typically costs about $5000 a month minimum, nursing home, at least $7000 (except that some nursing homes have a minimal care option that is less). So the patient’s regular assets still must be used and spent down, before Medicaid can be used.

The government’s current reference on LTC is this.

Should people who had no children be required to purchase LTC coverage if available? That sounds like a good policy question. Should they be required to submit to monitoring first? Sounds like a privacy question, maybe running afoul of HIPAA.

Social Security announces 3.6% COLA increase in benefits, but warns rise in Medicare premiums may exceed benefits increase for many

2011-10-19T10:06:00.000-07:00

Social Security has announced a 3.6% increase in retirement benefits for 2012, starting in January. But SSA warns, in its press release, that Medicare premium increases may be more than the benefit increase for some recipients. The link is here.

The wage base maximum increases from $106,800 to $110, 100. That increase, in an actuarial sense, is supposed to support the COLA benefit increase.

It seems to make little sense, to me, to collect less than the full FICA taxes this year while Social Security approaches eventual breaking points. Yet some social conservatives want to stop FICA taxes altogether for married couples who raise “enough” children.

For the short run, Social Security still displays plenty of political inertia, and this may be protecting current beneficiaries only.

Obama administration won't be able to help with long-term care for now; CLASS is too expensive

2011-10-15T10:15:00.000-07:00

The Obama administration has had to scrap its plans to include opportunities for long-term care insurance through its CLASS Act, according to a story Saturday by N.C. Aizenman, link here.

Again, the premiums were high enough to discourage healthier people from enrolling.

Some companies are selling “single premium” long term care policies, especially to younger seniors (under 70) who inherit estates; what’s not clear is the degree of medical pre-monitoring required to qualify for such policies. I don’t want to have to wear a Holter and be “watched” (and worse) to get one (see Sept. 3).

Government will recommend greatly scaling back prostate cancer screenings; disruptive treatment unnecessary for most men

2011-10-07T08:03:00.000-07:00

Rob Stein writes in the Washington Post this morning that medical “authorities” (The U.S. Preventive Services Task Force -- USPSTF) will recommend dropping most routine prostate cancer screening for men (through the PSA Antigen test [link]). The results have consistently amounted to unnecessary tests and treatment, sometimes with real practical consequences, for a cancer that often grows so slowly that men will dies of something else (at the end of a natural life span).

Rob Stein has a Washington Post report front page on Friday morning Oct. 7, link here.

The USPSTF is also called the Agency for Healthcare Research and Quality, website here and the new press release should appear Tuesday. It’s recommendations affect what Medicare and private insurers pay for.

My own father died of suddenly metastasized prostate cancer just before age 83, in 1986, but was ill and incapacitated for only about four weeks. My mother died of heart failure at age 97 at the end of 2010, but in 2009, a surgeon had insisted on doing a lumpectomy and wanted to operate further when it didn’t “get everything”. At that age, we said “No”. Her decline accelerated after the late 2009 surgery.

Gardiner Harris reported considerable opposition to this new report in the New York Times on Saturday, link to the story here. But prostate patients do not want potentially unnecessary "castration", chemical or actual, to prevent future cancer blowback. Men are finding out what a more publicized problem for women can really feel like.

CNN says that the ratio of indolent prostate cancers to aggressive (like my father had) that would actually need to be removed with radical treatment to save a life, is 47:1. CNN says that men should be aware of the statistics (which seem to favor "watch and wait" most of the time.) I would think a biopsy could identify which type. But men may experience a "shame" factor.

Medicare cuts will be a very hard sell, especially in provider operating margins

2011-10-06T07:48:00.000-07:00

Look at this –no, I'm not talking about a pitcher's hitting a homer on MLB.com -- I'm pointing to Richard Wolf’s tome on Tuesday in USA Today, “Five Ways to Squeeze Medicare,” link here.

Targeting the “rich” was tried before, in 1989, when there was an attempt to provide catastrophic health care “at their expense”, and this sparked a rebellion, leading to repeal.

More interesting is reducing provider profit margins. But since the late 1980s, “K Street” has nurtured a cottage industry of consulting firms that help provider associations maximize their Medicare operating margins. I know this because I worked for one of them, Lewin (now very successful) in 1989.

Rooting out waste and inefficiency should be a no-brainer. But the hard part is going to be to stop over-treating seniors. I know that was the case with my own mother, who passed away at 97 in December 2010.

Life companies offer interest-bearing variable annuities than can be convenient for beneficiaries of trusts, for charitable giving

2011-10-03T17:36:00.000-07:00

A few life insurers are selling variable annuities which pay guaranteed interest rates, sometimes as high as 6% even now, and these products could be useful when people receive distributions of estates from trusts to meet the deceased’s wishes on charitable giving (using the interest income to fund the gifts, which may work in some tax situations).

In many cases, these products are offered by specific insurers only for specified periods (at least at higher rates0, according to the insurer’s market share situation.

I’ve found this to be the case with the Met Lifew MLI USA Varriable Annuity Series. But in general, the availability of this kind of product varies a lot with time, among different companies.

AARP story on a "hair test" and heart disease opens a Pandora's Box (with me, at least)

2011-09-29T09:50:00.000-07:00

The AARP has been reporting a number of factors that are predictive of heart disease. Perhaps the AARP laid an egg, or at least started something, with me at least, on a story today. Here goes.

Apparently elevated cortisol levels in (scalp?) hair can be predictive of future heart disease, according to one study, probably in both men and women. The AARP link ("What your hair says about your heart") is (website url) here. Now hear this: The study doesn’t go into whether loss of extremity hair (especially the lower legs) in early middle age is predictive of heart disease, but it makes sense that it could be related to poor circulation, possible (adult-onset) diabetes (and sometimes cigarette smoking), and this cosmetic embarrassment could become moderately predictive of future heart artery blockages. Check this "Health Boards" link. Peter Benchley actually mentioned this problem in his novel “Jaws” and attributed it to constant chafing of clothing and socks [on his policeman lead character]; on wonders about all the “results” on men from long stockings and garters of IBM’s and EDS’s dress codes in the 60s. Maybe socklessness is a good thing. And maybe early male pattern baldness (of the scalp) is slightly predictive of later balding legs, and maybe (below) slightly increased prostate cancer risk. I’d hate to take an interim job that required wearing of shorts (letter carrier?); and maybe that 60+ lifeguard who got fired from a job on Long Island (NBC story) for his “modesty” was on to something. I recall Dr. Phil's term for all of this, "tissue death". As I write (or type) this, I remember another controversy: hair tests for drug use, that sometimes life insurance companies require.

AARP also links to a story about “Type D Personalities” (distressed, but not necessarily depressed) as having elevated risks, outside of the normal measures of cholesterol and weight. CNN has been reporting that the size of cholesterol particles is predictive, since larger particles don’t stick to artery walls and create blockages.

AARP also supported a study, published in Human Reproduction (main link) which apparently finds that men who have been fathers are less likely to die of heart attacks at a particular age, but the cause is not clear-cut. Apparently fatherhood helps, regardless of marriage, so childlessness could be related to other genetic markers that increase heart disease. Other studies have found that fatherhood in marriage (with childcare responsibilities) actually lower testosterone levels in men. (Could that mean that non-father gay men have higher testosterone than married fathers? Good question. How would having childcare responsibilities in a two-dad family with adopted children affect testosterone?)

We don’t like to admit it, but lower testosterone levels later in life in men could be somewhat protective against prostate cancer, at least the more aggressive forms of it. So the old Army joke (in my case, at least, in 1969), “you’re losing hormones”, may have a twist.

AARP opened a "Pandora's Box", at least with me, on this story, Maybe this sidebar belongs in Richard Kelly's film "The Box".

Seniors become "foster grandparents" to job corps students in Washington DC (CNN)

2011-09-24T08:20:00.000-07:00

A jobs center in Washington DC is using informal “foster grandparents”, who receive commuting allowance and possibly a small stipend, to help train unemployed youth and even young adults (including college graduates), in a CNN report by Athena Jones broadcast Saturday.

The example shown here was a cooking class.

The report covered Jobs Corps center where youth actually live as residents.

Picture: a restaurant in downtown DC that closed. With the amount of demand in downtown, when will someone else move in and start a business?

Maryland professor explains why Social Security is a Ponzi Scheme; Obama's plan to means test Medicare would start in 2017

2011-09-22T14:21:00.000-07:00

Peter Morici, professor at the University of Maryland’s Smith School of Business, has an op-ed on p 19 of the Baltimore Sun Thursday, “Yes, Social Security is a Ponzi Scheme”, link here.

It’s a Ponzi scheme because the original beneficiaries never contributed anything for their benefits, back in the 1930s. The system has always depended on more workers to support the mechanism. Because of much longer life spans and fewer kids, it can’t sustain itself.

But privatization, as a defense against possible “expropriation”, isn’t an adequate answer.

Morici gives several reasons, the most interesting is which the original benefits for which beneficiaries made no contributions would need to be recovered, which means that members of future generations must somehow be “stiffed”, whatever the scheme.

He also says that private investments generally don’t work out that well for “ordinary people”.

He says there is no choice but to raise the retirement age, to about 70 at least, and stop companies from pushing people into early retirement. (That’s what happened with me in 2001, at age 58.).

I have insisted that Social Security retirement benefits generally behave like an annuity, where the accumulated lifetime FICA taxes (including self, spouse, and employer) are used to calculate a benefit, in a tiered fashion, however (and subject to other restrictions such as a minimum of 40 covered quarters).

Yahoo! reproduced a Market Watch article today on the likely course of Obama’s plans for Medicare changes. A moderate version of means testing would apparently start in 2017, for new retirees, and would particularly affect Medicare Supplemental (Medigap) and Part D premiums and deductibles, link here.

Is means testing FICA-based Social Security a form of "expropriation"?

2011-09-19T06:58:00.000-07:00

Here’s a wrinkle in thinking about any future means testing and Social Security.

If you don’t pay social security benefits to someone who paid the actuarially necessary amounts into FICA (including spousal and employer contributions) because of his/her current salary or accumulated (or even inherited) assets, you’ve basically committed expropriation. If you repudiate a debt, that’s expropriation, too.

The radical Left used to talk about repudiation and expropriation as tools of “revolution”.

Moderate tax increases, especially related to ability to pay, related to a need to reduce debt or build public infrastructure, is not “expropriation”, even though some radical members of the Tea Party might see it that way. Making sure that the “rich” pay at least at the same rate as the middle class is not expropriation.

The concept is hard to define, but I know it when I see it.

Update:

There are reports mid-day Monday that President Obama is proposing "means-testing Medicare". The best I can find is on p 35 of a WhiteHouse report where it is proposed that, by 2017, wealthier seniors pay more and receive fewer benefits for some Medicare services, and accept incentives for less "knee-jerk" treatments, link here.

NY Time columnist reviews situation on estate taxes, slowness of IRS in releasing forms; Bill Gates SR argues FOR estate tax

2011-09-12T06:51:00.000-07:00

On Saturday, Sept. 10, Paul Sullivan wrote a recap of the inheritance tax situation in his “Wealth Matters” column of the New York Times, Personal Business, p. B5, “In agreement on estate taxes, even more complications,” link here.

When someone passes in 2011 or 2012, the agreement exempts the first $5 million in assets per person. In 2010, it’s very complicated, there is a “Hobson’s Choice”, and the IRS doesn’t even have all the paperwork available yet to make the choice. It appears as though heirs can opt out of the estate tax but later face a liability basis calculation based on original value, not on date of death.

The AICPA, American Institute of Certified Public Accountants (AICPA) has an information page here for CPA's.

It’s interesting that the Left has not been more vocal about “inherited wealth” this time around, given the debate on the budget crisis.

Here, on this video, Bill Gates Sr,. interviewed by his famous son, argues for the estate tax. He says, "We have a situation where there is no estate tax". The interview was conducted mid 2010, before the Dec. 2010 agreement.

Seniors hobbled by debt, especially lower home values

2011-09-07T17:07:00.000-07:00

The Wall Street Journal today has an important subscriber article “Debt Hobbles Older Americans”, by E.S. Browning, link here.

The single biggest problem for many seniors is their upsidedown mortgages, or at least lower home values, that would hinder getting effective reverse mortgages.

And far too many seniors are withdrawing 401(k)’s too early and paying penalties. And their kids could wind up on the hook.

Here’s another wrinkle. Sometimes older Americans do inherit houses as parts of trusts from even older parents. But as long as a house remains in a trust, you can’t take out a reverse mortgage. You have to sell it in a bad market and live in something else.

I still think that the “free market” can do a much better job of building more CCRC’s. I would think Trump would get into the business. Maybe this would be a good job for the next “Apprentice.”

Rhode Island may cut pension amounts for existing retirees

2011-09-06T17:52:00.000-07:00

Michael Fletcher has a front page story in the Washington Post about pensions in Rhode Island, where problems are in the whole state and not just Central Falls (July 20). The print title is “Strapped Rhode Island May Take Ax to Pensions”, link here. The story discusses the town of Cranston at length.

State officials may actually reduce the amount of public employee pensions, as well as move some of it to 401(k)’s.

Over time, will we see more public employee pension promises broken, as our system just can’t sustain them?

Virginia and Maryland have cut defined benefit pensions to new hires while keeping them for existing retirees.

States have tended to depend on overstatement of investment income for pension funds, which is also unsustainable, given US and European debt.

This is the real beginning of the "pension tsunami".

NBC Today finance host talks about financial responsibility for parents

2011-09-05T08:12:00.000-07:00

Their children will not only be concerned with their own student debt; they are likely to be saddled with enormous bills taking care of their parents as people live longer, she warned.

She didn’t mention filial responsibility laws, in effect in about 28 states, specifically. She got into a discussion of premature IRA withdrawals (before age 59-1/2) and suggested that could burden kids with eldercare bills later.

She suggested that family adopt prepaid debit cards for use of a whole family, and that families learn they are in the same boat together.

Her blog is here.

Upon further review, it looks as though the speaker was in fact Manisha Thakor, with her comments about saying for both kids' college and your own retirement here:

Visit msnbc.com for breaking news, world news, and news about the economy

On longevity and lifestyle-associated diseases with aging, it's time for tough love

2011-09-03T08:10:00.000-07:00

Having stopped a part-time job (IT jobs blog, Aug. 29), I probably will spend more effort soon on medical matters, including the ruthless colonoscopy and followup on a PSA antigen test. I can imagine, because of some heart arrhythmia, being shaved for a Holter Monitor. (The preps for the stress test, which I probably wouldn’t pass, are bad enough.) No thank you.

And, at 68, I have to be braced for the idea I could get “bad news”. So, yes, I need to get some other affairs in order. I do know that if my life were to end violently, because of aggression from others (as in a terrorist attack), I might have different intentions as to what I want. Sometimes there are lessons to be learned; some things have permanent consequences.

I also believe that with some seniors, in terms of medical care, “less is more”. Some people might remain productive and active much longer than medical “experts” predict, with little treatment in the way of chemotherapy or potentially mutilative surgery. One trouble with today’s Medicare system (whatever all the talk about means testing) is that doctors have every incentive to over-treat, and it can be difficult to get them to stop at exactly what you want and have faith will be acceptable.

I’m finishing up the reading of Albert Brooks’s “2030”, which I will review soon on the Books blog, but his point that our society cannot afford infinite longevity (without generational warfare) is obvious. Consider the lifestyle we live. Growing children need proteins and fats, and having enough food has been a valid concern in the past (and still is in most parts of the world). But our high fat diet reasonably allows most people to make it only to their 70s (or maybe early 80s) at best without major medical interventions. We used to accept that. (We didn’t even bother people to purge out for colon screenings.) During the last months, an unmarried family member stayed home with the elderly parent, who usually did not expect to live long. There was no moral controversy. But now we can try to keep people going for 15 or 20 more years with bypasses and transplants, the last years of which will get bad anyway. And the diseases, mostly coronary artery disease and Type Ii diabetes and many cancers, have been brought on largely by behavior and excess food consumption. If people want thirty more years and to live regularly to 100 or more, they will have to switch over to all vegetarian diets in early adulthood. And exercise more. In moral terms, it’s that simple. (See TV blog, “The Last Heart Attack”, Aug. 28.)

Wikipedia attribution link for Holter Monitor picture.

Update: Sept. 13

Check Sandra Boodman's story in the Washington Post, "Seniors get more medical tests than are good for them, experts say", link.

Proposal floats to look at seniors' assets as part of means testing

2011-08-19T10:00:00.000-07:00

A reader of the Washington Post, Robert Glenn in suburban Maryland, lays it on the line with how to balance the budget, partly in terms of entitlement cuts (which won’t do as much to balance as conservatives think).

For Social Security, he wants to raise the retirement age to 70 (how quickly?) and include assessment of net worth or accumulated or inherited wealth as well as annual income in means testing (even for current beneficiaries?) This is the first time I’ve seen anyone mention looking at assets in a fashion similar to what is done with Medicaid. But, remember, the FICA contributions were supposed to be related to your final level of benefits (in a tiered system, to be sure). So, did someone like me “earn” my benefits? I thought so. If it could really be yanked away by redistribution, I would want a totally privatized system (like the Tea Party).

This reminds me of the behavior of the radical Left , which regarded “upper middle class” individuals as part of the “enemy” and wanted to outlaw all inherited wealth, back in the early 1970s.

Glenn also suggests age cutoffs for certain procedures under Medicare at public expense, and mentions means testing. Why should someone be allowed to keep his own wealth and use public expenses for coronary bypass surgery when lifestyle matters could have prevented it? Why not recognize that life is not infinite, and everyone has their “turn” and time limits? It sounds like cold rationality.

As previous posts have suggested, Medicare benefits, especially Parts B and D, are covered much less by individual premiums and previous Medicare taxes than is Social Security.

The link is here. The letter appears in print on p A26 in the Washington Post Aug. 19.

Tom Coburn (R-OK) would means test Medicare Part B in premium collection, raise retirement age gradually

2011-08-15T06:48:00.000-07:00

Walter Pincus has a column on p A15 of the Monday Aug. 15 Washington Post, in which he discusses a proposal to reform Medicare by Sen. Tom Coburn (R-OK). The link is here.

Coburn, compared to Campbell Aug. 11, maintains that Medicare taxes and premiums may well cover the Part A inpatient, but not Part B, which he says is only 25% covered by contributions, or Part D, which he says is 83% taxpayer funded despite the notorious “doughnut hole”. He wants to raise premiums markedly for Part B for individuals making over $150000 a year or couples making $300000. Why the sharp cutoff, I ask? Should accumulated or perhaps inherited (generational) wealth be included in the means testing?

He would also gradually raise the eligibility age up to 69 over many years. The average person should have about ten years of access, with increasing life spans.

Coburn is himself a physician.

Medicare hospice spending increases 70% in four years

2011-08-11T07:03:00.000-07:00

The National Coalition on Health Care (NCHC) is reporting that Medicare spending on hospice care has risen 70% over four years (since mid 2007), as for-profit companies are a larger portion of the “market”. The link for the story is here.

My own experience for Mother from late 2009 to her passing at the end of 2010 was with Capital Hospice in Arlington VA, which I believe is non-profit, though “private”. From what I recall, the Hospice bills to Medicare tended to average close to $4000 a month for visits.

Normally, to qualify for in-home hospice visits, someone must have a diagnosis where the expected life expectancy is six months or less, although it can be recertified every two months if the person lives longer.

Cap lifetime Medicare benefits and then use a tradeable voucher system, conservative scholar says

2011-08-10T10:28:00.000-07:00

Don Campbell has a column in USA Today Aug. 10, “Ration health care with Medicare credits”, link here.

While Social Security benefits are “largely” covered by FICA tax “premiums” (including spouses’ and employers’), typical Medicare benefits run about three times what was paid in Medicare taxes, the article says.

Campbell suggests a personal lifetime limit of $150000, with a system of credits that can be bought or sold for extension. Some higher income beneficiaries may have paid enough Medicare tax to cover their benefits, he admits. He connects the idea of means testing to premiums that might have been paid.

He thinks that “deservedness” decisions will inevitably happen (effectively rationing) because the current way Medicare works is not sustainable.

But other “conservative” scholars recommend greatly extending deductibles, at least to recipients who can afford them.

There is a possibility that these sorts of changes could occur even with current beneficiaries.

There is another question on life extension, as to whether “less is more” and whether enormously expensive treatments to extend life a few months (as for prostate cancer once metastasized) add any meaningful quality. My own father died on New Year’s Day 1986 only four weeks after diagnosis of widespread prostate cancer in the lungs, liver and brain.

It's dangerous to leave the future welfare of seniors in the hands of "The (Super) Committee"

2011-08-07T08:27:00.000-07:00

I remember the idea of a “Committee” from the days of the military draft back in the 1960s, as student deferments were to be ended. The “Local Board”, whose members didn’t seem accountable to anyone, could decide whom to put on the front lines.

So we have a Super Committee now on the budget. It serves us old turkey right before Thanksgiving. Congress must take it or leave it. The Committee can do what it wants.

There is some talk that the Committee will stick kick the toughest cans down the road, until after the 2012 election. That means it could be likely to keep its cuts on entitlements to those of future beneficiaries. There’s not much question that retirement ages will have to rise, and benefits will have to increase more slowly, if at all.

But, as I’ve noted, there’s not much question that, if it really wanted to, it could demand some sacrifices of current beneficiaries, at least those with “means”. Maybe not much on Social Security because of legal challenges that could result on the Trust Fund issue, but certainly much higher deductibles on Medicare benefits, based on means, could be put in immediately. And Congress will no longer have the ability to exclude any specific controversial provision from the final bill. If you need coronary bypass surgery and have some cash, you could wind up parting with a lot more of it first.

It could mean that some seniors wonder about whether to “get everything done” this fall. Or maybe accept the way it used to be, before lifespans started to increase rapidly while the number of adult children to support the extra years did not: everybody gets old, and there is a limit to how much we can do, at public or even private dole, for anyone.

One other thing to keep in mind: despite all the talk about entitlements as the biggest drain on the debt, they probably aren’t. The biggest problem is probably contract overruns.

Would a "Committee" find the Ryan anti-Medicare plan appealing?

2011-08-03T17:06:00.000-07:00

Reuters is analyzing the Tea Party “victory” in the recent skirmish in Congress, as an opportunity for “The Committee” to reform Medicare, and speculates about the Ryan Plan.

This plan would leave current retirees alone, but future retirees, at some age, would lose guaranteed Medicare coverage and have it replaced by a voucher system for purchasing private insurance. It’s pretty obvious that seniors could have issues with pre-existing conditions or “moral hazard” (and all the problems usually documented by Michael Moore), or could be means tested.

One can make the argument that seniors with means should not have the government pay their medical bills so they can pass on money to their kids. But the money saved this way would proportionately not be that large in trimming budget deficits.

In theory, similar arguments could be made about current beneficiaries. The practical resistance would come from the large percentage of seniors who vote in elections. But to an "Committee", it could sound more appealing.

The Reuters story is here.

Are married people (with adult kids) better prepared for retirement than singletons?

2011-08-02T18:29:00.000-07:00

Robert Rowell has a Market Watch story on Yahoo!, “The Retirement-Savings Crisis Is Overblow”, link here.

There is a curious statistic reported, that, according to a Rand study, 55% of single persons are prepared adequate prepared for retirement, but 80% of married people are. That may be because two can live more efficiently than one, and having kids (at least in marriage) ultimately works both ways financially. 89% of college-educated people were prepared.

Of course, recent Census reports show that minorities are falling behind, partly because of negative equity in homes, and because Hispanics particularly tend to live in areas where real estate was hit the hardest.

In this story, follow the CNN link, “why I took social security early”.

Obama announces wobbly deal on debt; What happens to seniors in the future given "demographic winter"?

2011-07-31T18:33:00.000-07:00

Sure, we need the spending cuts, and Congress needs to pass the “deal” for the US just to pay all its bills as already obligated. (Note: they were just talking about the “30 hour threshold” in the Senate as I typed this. Don’t know if it matters.)

But what happens down the road as people live even longer and the predicted Alzheimer’s epidemic explodes?

Of course, Medicare doesn’t generally cover custodial care. Families (and filial responsibility) do. But it seems as though the “demographic winter” argument has been overlooked completely so far in all the discussions.

Let’s hope August isn’t as nerve-racking a month for seniors as July has been.

CNN Money: Social security stoppage could force filial responsibility on other family members

2011-07-30T11:21:00.000-07:00

A CNN Money story by Tami Luhby Saturday starts out “Don’t you dare withhold our Social Security payments”, link here.

The internals of the story get juicy.

We’ve written here that it’s likely that government has separate authority to borrow for Social Security, and both sides in the debate have accused the other of taking seniors hostage, inviting almost a Jonathan Swift like reply, which wouldn’t be funny.

A New York State resident told CNN that her bank told her, “If the government defaults on me, I still have an obligation not to default on them.” On the other hand, there are reports that the administration is talking to banks about forbearance.

But a man in Ohio told CNN that if social security checks stop coming, he would have to move in with his daughter. That brings up the next fire that social conservatives can set – reinstituting filial responsibility laws (or at least a strong cultural, even Confucian, expectation of filial piety. That seems to be what some “conservatives” want – throw everything one off public doles and make other family members (childless or not) legally responsible for them. That’s how it was generations ago, before social programs made us soft, they will say.

It’s easy to say, this won’t happen, because government seems to have other ways to keep Social Security rolling even without the debt ceiling extension (so the Tea Party says). But consider the fiscal chaos if the government, even with an extension, simply can’t find lenders of the money. It has to roll over $500 billion in principal every month. Hardly anyone talks about this.

Poppy Harlow of CNN talks about “why you care about a debt downgrade”:

According to Constitution, govt must pay existing obligations; does that mean Obama could borrow for Social Security anyway? I think it does.

2011-07-29T12:57:00.000-07:00

It’s hard to say what will happen this weekend, with the GOP having put the balanced budget amendment back onto the cafeteria tray, but we have to keep looking at what happens to various benefits that seniors depend on. I’ve also discussed all this recently on my “Issues” blog, including an analysis, day-by-day (not door-to-door!) of what would happen in case of “default” by the Bipartisan Policy Center.

Remember an underlying idea. The President and Treasury are required by the Constitution to pay the debts for services and products the government has already purchased, and to honor contracts already made. But Congress is not giving the president the authority it needs to make the payments even though it had authorized the expenditures. To me, that sounds like a constitutional question worthy of the courts’ attention.

The argument that the government (eg, Obama and Geithner) can borrow without legislative permission to meet Social Security obligations is persuasive to me, because of the Trust Fund/IOU mechanism (previous post, last portion), in so far as it would pay back monies to beneficiaries actuarially based on FICA collections (even if the benefit formula is complicated and “layered”, as I discussed July 12). I see it this way despite a 1937 Supreme Court opinion that said that FICA is not “earmarked”. I don’t think that’s a big problem, because Social Security retirement has always been managed as if it were largely a life annuity. Remember, there is still a constitutional presumption that government must pay promises already made.

The ability to handle Medicare obligations is much less reassuring, because Medicare taxes collected are much less relative to needs. But providers would be entitled to payments (slightly late) for services already rendered at contract prices (usually about 35% of an uninsured price). Beneficiaries would be entitled to Part B (and D) benefits justified by the premiums they have paid (those with supplementary insurance are obviously better off).

There could be very serious problems about benefits for any treatments rendered after Aug. 2, or after borrowing authority has expired, however. The government could decide not to cover any future treatments, and Congress could turn to aggressive means testing as part of any settlement to resume borrowing authority (although such legislation would be complicated to write, technically, politically and morally).

That’s because these funds are not yet committed or owed. In my own situation, I would put off any medical tests that could deliver “bad news” until this situation is resolved. I know, it’s dangerous, maybe life threatening to some seniors. You don’t want to suddenly become poor and dependent.

NYT: Treasury has enough money through Aug. 9 w/o ceiling lift, but big Soc. Sec. payment on Aug 10 could be in trouble; should benefits be recalculated after missed payments?; Also Trust Fund IOU's count under ceiling

2011-07-28T17:45:00.000-07:00

The New York Times and MSNBC are reporting that the federal treasury will be able to pay all bills as demanded through Aug. 9, including Social Security payments due Aug. 3.

But there would then be a problem Aug. 10 (the day of mine).

The government can reborrow money as it pays it back, but this can become more difficult each day.

What happens if it is missed for a few weeks, and we come around into September (13) and are still unable to pay? Or what if there is a partial payment (50%)?

One idea to make it easier to make huge cuts quickly would be, after a deal finally is struck, is, for anyone under age 70-1/2, to recalculate the benefits as if retirement had occurred later, but not repay. When the benefits resume, they are larger for life. But the person has to live long enough to come out ahead, and the government is on the hook for a larger liability, eventually.

But then another idea would be to encourage seniors capable to doing so to return their benefits and not restart until age 70-1/2, with a larger amount. Again, only seniors with sufficient longevity benefit. Social Security ended that opportunity earlier this year, but renewing it certainly should be considered as part of the solution to the current mess.

The link for Binyamin Applebaum’s story is here.

Also, CNN has a story tonight explaining that the Social Security Trust Fund IOU's are already counted against the debt limit, so this is why it may be possible to borrow for them, but the technical legality is tricky. The link is here. Most likely, the courts would permit it, or Congress could pass a quick emergency bill to allow it.

An accidental meeting on Capitol Hill with a Medicare advocacy group

2011-07-27T16:54:00.000-07:00

After visiting the Tea Party “rally” on Capitol Hill, I had lunch in the Capitol Visitor’s Center, and was joined by three women from a Medicare advocacy organization (and I cannot remember the exact name, it may be the Alliance for Retired Americans (link). They were in town to lobby, but not specifically because of the debt crisis.

There was general recognition that major changes in Medicare and Social Security are needed over time. There was even an understanding that wealthier seniors could be expected to pay more for their own medical bills now, even if it meant they passed less on to their children, because inheritance itself has inherent moral ambiguities (but seems to escape the attention that taxes on the rich gets). There was discussion that the problems could spill over into the area of filial responsibility.

Update:

I found the business card from the meeting. Indeed, it was Alliance for Retired Americans.

It's noteworthy that the Cato Institute has suggested upping the Medicare deductible to $2000 a year, those saving billions and reducing frivolous use of medical care, but not means testing as such.

Should retirees panic about the value of their assets if the government defaults?; Toomey introduces bill to prioritize payments if default

2011-07-26T17:57:00.000-07:00

Should retirees cash in their 401(k)’s now just in case of default? ABC World News Tonight mentioned one Wall Street Analyst today who said, he would listen to older clients who wanted to get out of everything.

Jim Cramer’s Mad Money, however, takes a rather benign road, here.

Another speaker on CNN said that the administration, in case of default, might pay “by the clock”, randomly, bills as they come in. That could mean that Aug. 3 Social Security checks go out (because they come up quickly) but Aug. 10 do not (my date). I think this would provoke litigation from the AARP and others (including me), and a federal court might well force the government to meet the Trust Fund obligations and sovereign bond debt first. There are also law professors who say that without an extension the Treasury can still borrow to reimburse the Trust Fund.

Senator Toomey, of PA, introduced a bill today to prioritize payments by law in case of default, to protect bond holders, Social Security, military, and veterans. It is called the Fiscal Integrity Act, descriptive story here.

Ron Paul of Texas, 6 days ago, talked about destruction of our currency, and hints at repudiation.

Social Security Trust Fund IOU's can be "borrowed for" without debt ceiling extension, but there is a catch (Texas A&M professor in WSJ)

2011-07-22T10:55:00.000-07:00

On p. A13, Opinion, of Friday’s Wall Street Journal, Thomas R. Saving (ironic name), director of the Private Enterprise Research Center at Texas A&M (hint, conservative, Bush-like -- link), gave us an analysis “Obama’s Debt Ceiling Scare Tactics”.

What he says is interesting. In effect, because of the Social Security Trust Fund, even without a debt ceiling increase, the administration can borrow specifically to meet Trust Fund obligations and pay full Social Security benefits without eating on the remaining available funds from federal “cash flow”. But there is a double-helix twist. In 1937, in Helvering v. Davis (Cornell law text), a Supreme Court ruled that FICA tax contributions were not earmarked and could be regarded as a tax collection, however regressive (and potentially politically unpalatable as such). So the Obama administration could conceivably borrow the money, and then spend it on things other than Social Security, legally. Practically speaking, nobody thinks the government would do this, as this would amount to confiscation or virtual repudiation of a promise of benefits. Of course, there will be lawyers who will challenge his analysis, maybe in court if necessary.

Even given Saving's analysis, that leaves about a $60 billion shortfall starting Aug. 2 for the month. He says this could be made up by backing spending down to 2001 levels (but that's before 9/11 and before TARP). Furthermore, the government would still have to pay money already owed because of the earlier "generous" budget.

Jack Cafferty points out that on a day-to-day basis there could be issues with the Social Security checks, most of which go out early in the month (starting Aug. 3; mine comes Aug. 10), here. But generally it sounds as if there are legal workarounds, if you are to believe "conservative" law professors around the country (particularly from Texas).

The link is here (requires WSJ paywall subscription).

Rhode Island town tells municipal retirees and employees: give up half your pension, or else!

2011-07-20T18:21:00.000-07:00

The town of Central Falls, RI (north of Providence) has told city retirees as well as active police and fire, with the “Big Ask”, to give up half their pensions or risk losing it all. Furthermore, the town had opted out of Social Security for its municipal workers.

Lindsay Davis. She said “broken promises” could be coming to a town “near you.”

I don't think PBGC has anything for municipal employees, right?

Update Aug. 2

According to a New York Times story by Mary Williams Walsh and Katie Zezima, Central Falls, RI has declared bankrupcy, link. Murky accounting had hid the problems for years. This is an early victim of the "pension tsunami".

As one ages, one has to decide on a strategy if a major illness is ever diagosed

2011-07-19T06:03:00.000-07:00

What’s my own game plan for my own medical issues as I get older? It’s relevant, because I turned 68 a week ago Sunday, and celebrated Monday by riding up Mount Washington, NH.

My GP warned me about the PSA some months back, and gave me referrals to urologists. My father died just before his 83^rd birthday of metastasized prostate cancer, that spread to his lungs, liver and brain. But he was ill only the last four weeks of his life. He was active until almost the end. At 74, he had undergone an aorta resection for an aneurysm (at age 74). My mother died in December at 97, after a very long decline. She had coronary bypass surgery in 1999 at age 85, and got about eight good years.

I can tell my own body is slowing down, and I can tell I have signs of coronary artery narrowing. (I saw a note of concern on my doctor's chart for me a few years ago.) An uncle had a cardiac arrest at 68 and died of myopathy at 70. The men on my mother’s side did not do nearly as well as the women. You know what happened to David Letterman. He went to the doctor, did not come home, did not pass “Go”, was wheeled into the operating room at age 53 or so for emergency coronary bypass surgery, and joined the zipper club.

My point is, fifty years ago, older people did “what they wanted” and nobody bugged them. Some lived a long time, and some didn’t. Some even smoked (I don’t and never have). But disability at the end of life, and the need to be cared for personally, was not perceived as an issue then. It’s true, usually there was an unmarried woman who was expected to stay close to home and take care of grandparents in their last year, but terminal illnesses usually weren’t drawn out very long. End-of-life did not become humiliating.

I think that staying active is the best plan. Go ahead and do the “Do Ask Do Tell” film. With many conditions, the cure is worse than the disease. I have a feeling that some people will live as long without the chemotherapy, mutilative surgery (for prostate cancer that sometimes includes castration) and humiliation as with. But of course, some of the ideas about “humiliation” come from a life of “standing alone.” As you get older, the idea that parents are supposed to pass on the idea of social interdependency onto their kids starts to make sense (and doing so can strengthen parents’ marriages, too, although it didn’t jump-start them).

With Medicare, we face the prospect that, because of the debt situation, there will be political pressure to means test Medicare treatment, to treat it the way Medicaid is treated now. To get bypass surgery or anti-cancer treatment, some patients might have to choose poverty to stay alive, or even demand poverty of their adult children. The numbers, however, show that these fears could be overblown.

Would a debt default mainly punish seniors? No, it would "punish the country". Just do the math, look at the numbers

2011-07-18T20:00:00.000-07:00

OK, here we go again, on whether seniors are really at risk if the debt ceiling is not extended by Aug. 2.

It sounds disloyal to even look at the question to some people, but let’s look at the numbers. Also, look at the link I gave to a Washington Post default cheat sheet on my Thursday July 14 on my Major Issues Blog.

You can pay the following items: Interest on bonds (29.0). Social Security checks (49.2, the largest item), Medicare (28.6), federal salaries (14.2), unemployment benefits (12.8), IRS refunds (3.9), Military salaries (2.9), Veterans (2.9), Medicaid (21.4), and TANF (9.3). That totals to 174.2 billion, with income of 172 billion. But Congress could simply restore the full FICA collection and raise a little more. The most critical item you can’t pay is Defense Vendors (31.7). That’s pretty serious. That’s like having a mechanic’s lean on the US. That could jeopardize national security, homeland security, and maybe the power grid and Internet. But you could pay vendors if you ditch Medicaid and TANF.

The biggest non-specific item in the Post cheat-sheet is “Other Spending”, over $52 billion. A lot of that may be contractor overruns or various questionable foreign aid. So the Tea Party Patriots could have a point. You can whack a lot out of the budget right now by ending contractor abuse and foreign problems. You can raise tolls, user fees, and transit, rail and air fares even more to pay for some transportation services (that’s not the same as raising taxes, but it might have an effect). But you can’t whack enough.

Still, seniors will be mostly concerned with Social Security (big), Medicare, and the value of their retirement nest eggs, particularly stocks and bond funds. But it does look like the federal government could make all the interest payments and SSA-related payments. It could up FICA tax and whack benefits slightly to the extent that they aren’t covered by a bene’s own FICA history. The value of Social Security benefits is probably somewhat sheltered by the Trust Fund, even if the money was spent, because it was collected for beneficiaries’ use; seniors could probably take the government to court (through the AARP) and get a judge to back them up if they don’t get their Social Security checks.

But the problem is, you’re putting the rest of the country in danger. There’s a shortfall in August of about $134 billion, and from looking at the Post, it looks like about half of this is really essential. True, a lot of it isn’t. It doesn’t help seniors or retired or disabled people to gut national security and invite terror attacks, or gut public transportation. (Or you have to have an economy that can support a sustainable transportation infrastructure just with private profits and fares.)

And it doesn’t help seniors to have the country’s credit rating gutted (it will be), and have investors panic, which would happen even if seniors and bond holders get every penny at first.

Ultimately, in a world of deep budget cuts, we’re headed for means testing and a lot of actuarial recalculations – but maybe not as quickly as the Democrats predict (or as I have warned in previous posts). Is (as ultra-conservatives say) the president using seniors as a “shield” to defend himself from the Tea Party? Well, a little, but really all Americans – including those who can lose their jobs and draw unemployment – are part of Pickett’s Charge, too.

Remember something else about the T.P. cuts: the August deficit would refer to obligations that the government has already incurred. Cutting future spending is not the same thing as not paying your current debts. If I cut out my own luxuries in the future, I still have to pay for what I have already bought on credit.

I love Barney Frank’s phrase from TARP days: “why punish the country?”

Florida congressman offers bill to guarantee social security payments without debt extension

2011-07-15T16:35:00.000-07:00

Some media sources report that Daniel Webster (R-FL) has a bill to prioritize spending in case debt extension does not pass and there is a default. He says military salaries, social security and Medicare benefits would continue to be paid in full. The link is here.

Although I personally appreciate this proposal, my own math doesn’t bear this out.

Actually, August Social Security payments are based on July eligibility, so conceivably there is an extra month.

How is he going to pay for defense, the war on terror, etc. with 60% of revenues?

Could social security benefits really stop Aug. 3 in case of default?

2011-07-14T18:14:00.000-07:00

Tonight, NBC Nightly News examined what would happen during a default, and hinted that payments of Social Security benefits might be sheltered somewhat by the mechanics of the Trust Fund. But, still, cash flow into the Trust Fund must occur.

Visit msnbc.com for breaking news, world news, and news about the economy

One obvious “opportunity” would be to restore the full FICA tax rates (see original roll back story here ). It does not make sense not to collect the full taxes during a debt crisis.

But no one has suggested that immediate "means testing" to determine "need" among Social Security recipients right at the beginning of August is feasible.

Social Security retirement benefits calculations already have some partial "means testing" with percentage tiers

2011-07-12T19:58:00.000-07:00

Back on Feb, 15, 2011 Kevin Drum had authored an important factual article in Mother Jones, “Means Testing Social Security” in which he productively argues that means testing the rich would not save the federal budget very much money, but, more importantly, the benefit calculation is already somewhat means tested. He says that your benefit calculation comes from 90% of your first $749 in monthly earnings, 32% of the next $4517, and 15% above that – until you reach the annual cap on the FICA taxable amount. In other words, as we have said, the FICA tax cap does tend to make social security benefits behave somewhat like an annuity, but within the capped amount there are layers of progressivity which do not occur in private annuities with insurance companies, and which would probably go away if Social Security were “privatized” in “George W Bush” (or Cato) fashion.

Means testing could presumably be accomplished fairly quickly by eliminating the third and maybe even the second benefit levels for those with large incomes or assets. The Mother Jones article is here.

Readers may wish to check out a “Jonathan Swift” style satire in “Real Clear Markets” titled “Social Security Shutdown? Bring It On!”, link here. Yes, I can imagine the angry “arguments” against the undeserving.

Obama ready to deal on Social Security: could it affect current retirees?

2011-07-07T09:24:00.000-07:00

As I noted on my TV blog late last night in reporting on AC360, President Obama said late Wednesday that he could consider massive spending cuts in Social Security and Medicare as part of the “debt extension deal” with the GOP.

This was reported in the Washington Post late Wednesday, and CNN has a slightly more detailed story here. Democrats have been unwilling to state specifically who the cuts could affect, although one area mentioned by CNN is COLA (cost of living) increases.

The obvious question, raised by Rand Paul yesterday, is that should “better-off” seniors be means tested even now, if already retired, to continue receiving benefits. This does get into the question of “who sacrifices” but some seniors could work – or maybe not. Read Michelle Singletary’s Washington Post “Color of Money” column, “Delaying retirement might not improve your financial prospects” on that today here .

Here’s the rub. SSA ought to calculate and present the percentage of anyone’s benefit actually accounted for by their own FICA (or a spouse’s FICA) “annuity premiums”. (SSA might have to spend money on the contracting services of a couple of accounting firms to do this.) It could be possible to reduce benefits to those seniors who are better off to that amount now – but it gets complicated when you consider the effect of early retirement (promoted by employers who downsize older employees into packages predicated on the social security offset) – because early retirement already has a slight “longevity” penalty built in. Further, it could be complicated by the ‘trust fund” issue, as touted by Rand Paul and others in the GOP. I don’t think this can be done by Aug. 2.

In Medicare, there are so many saving to be made by ditching "fee for service" that one does not know where to begin.

Debt ceiling extension will "kick can down road"; we must start considering gradual privatization of entitlements now

2011-07-06T07:04:00.000-07:00

As the debt ceiling “blackmail negotiations” go on, we ought to bear in mind a few points.

First, even if the debt ceiling is extended (as I think it must be), we would effective “kick the can down the road” and face another crisis by New Year’s if we didn’t address entitlement spending.

Several fundamental questions have to be sorted out.

How much of their “entitlements” did seniors (or their legal spouses) “earn” by paying FICA and Medicare taxes over their working years, when these “taxes” are viewed as “annuity” or “insurance” “premiums”? How much of their care do supplemental premiums cover today?

How will we face the question that medicine can keep people living longer, but likely with much longer periods of disability, requiring family and institutional services?

A half century ago, aging and end-of-life were normal experiences. Families dealt with them. We did not go to great lengths with preventive care and screenings to add 10-20 years to life spans. Families generally took care of their own elderly (often unmarried members were expected to), but usually the periods of end-of-life dependency were not long, because medicine could not prolong life that much.

Today, we have overextended public resources to care for an aging population, and fewer people working to pay for their care and fewer adult children to care for them. But all of this discussion is bound to lead to a new look at filial responsibility (which is already on the books in 28 states), and a new way of looking at what generates “family responsibility”. It is partly a collective experience, not totally governed by one’s own “personal choices” (to have one’s own children).

If people live longer and have reasonable health, they will have to work longer. Employers will have to rethink their attitudes toward an aging workforce. We also have subtle problems in the nature of work we want seniors to do. Sometimes employers want seniors to become their new hucksters, in a world that has become less social and less receptive to personalize selling and marketing. This could become sensitive for some seniors “in the economic middle” if we start means testing social security as if it really were welfare and not an annuity.

Will we have norms for how long life saving treatment by Medicare is appropriate? Will we treat people “better” if they did raise children themselves? I can imagine the moral questions that the “natural family” crowd will raise.

That’s why I like the idea of a gradual shift to privatized, but carefully managed (as far as safety of principal is concerned) retirement security savings, to gradually replace social security. The Cato crowd is right on this one. We want people to wind up with annuities that can't be confiscated.

Later Wednesday:

On CNN, Senator Rand Paul (R-KY) suggested that the way to make the "rich" pay their fair share of debt reduction is to means test their Social Security and Medicare, even right now (presumably) with current retirees, rather than raise taxes on those who are working. In a way, this makes sense. One can't complain about taking away benefits even right now that aren't actuarially justified by past FICA or Medicare tax "premium contributions". One of my points is that nobody has told us what those numbers are, and could Congress (or a consulting firm like Lewin) come up with the numbers by Aug. 2? I doubt it. That's generates another argument for the Bush gradual privatization proposal a few years ago. You know what you really earned!

But focusing on older people also plays the "generational wars" car and asks the question, should those who have already lived admit that it is another generation's turn? This also plays into another argument: the intrinsic "value" of the lives of older people is tied to intact extended families and "role modeling" -- a concept of the "natural family" crowd.

Here's a perspective on Rand Paul's ideas from "The Daily Paul", link. "AT LEAST give that person all the money they paid into it and THEN stop the benefits." Makes sense. Here's another perspective from the "Barefoot and Progressive" (or "Barefoot Contessa") blog, link.

Update: Late Wednesday, the Washington Post reported that Obama will offer Social Security cuts to get a debt ceiling deal. It is not clear if or how this latest idea could affect current recipients.

Social Security benefits would be cut immediately in August or September if there were no debt ceiling extension (CNN)

2011-06-26T12:30:00.000-07:00

A discussion on CNN “Your Money” this weekend (Saturday and Sunday) confirmed that, if Congress fails to raise the debt ceiling Aug. 2, 2011, draconian cuts in existing benefits to seniors would go into effect immediately, including social security checks and Medicare benefits even that month (or Sept., since Social Security pays a month behind) in 2011.

The government would have to “balance the budget” right on the edge of the dime, the show said.

There might even be time to figure out a “means testing” formula. Government worker layoffs and furloughs would happen, the stock market would take a hit, and people would even be much less wealthy.

But some conservatives believe ordinary Americans need a “shock treatment” now to learn to live within their means.

And I had a conversation this morning suggesting that most conservative believe that the failure to raise the debt ceiling would cause long term harm. But some people would have to sacrifice. My own personal experience in talking to people is that many don’t believe the debt ceiling problem is “real” so GOP politicians get away with pretending it isn’t.

Again, Democrats say that the main issue is GOP refusal to raise any taxes on those already wealthy (so they don’t sacrifice, they take care of everyone else!)

The “means testing” would have to address two questions as to social security:

(1) Given that the Social Security Trust fund actually belonged to Social Security (which it doesn’t – that’s the problem in point (2)), how much of a benefit amount is accounted for by his or her FICA tax contributions (and his or her employers’, which otherwise could have been paid as wages, so they are indirect contributions from the beneficiaries anyway). Take the self-employment tax into account, too, in answering the question. The percentage might approach 100% except for the longer life spans, and the ability of medicine (supported by Medicare) to prolong life spans so indefinitely in some cases. So benefits could be cut immediately (but relatively slightly) based on life span increases.

(2) Given that the Treasury spent a lot of the Social Security trust fund through IOU’s and no longer has the money, how much should be taken out of seniors’ benefits to pay this back? It sounds like stealing, or maybe more like how bankruptcy works, doesn’t it. Or another way to look at this is to say that a good part of the FICA tax was not really an “annuity premium” but a general, however regressive, tax. If so, how much of it? Perhaps 1/3 of benefits have been lost this way.

Another obvious question is, why do we have a FICA-tax break this year when we have such a debt issue, and increasing questions of Entitlement Solvency (Social Security and Medicare)? True, it’s a stimulus or sorts. Can we afford it? That tax break could obviously go away in August.

Some social conservatives (the “natural family” camp) want to exist parents with large families from some FICA taxes.

AARP has a YouTube video that opposes means testing here. I’ll look for some other videos.

Early retiree writes to me that Social Security classified his stock option exercise as "wages" for Annual Earnings Test

2011-06-21T07:28:00.000-07:00

A reader on Ohio emailed to me a story where he exercised a stock option from a New York State employer after layoff or severance and possibly early retirement buyout from the employer, a common occurrence. Later, he filed for early Social Security benefits and was told that the monies from the stock option exercise would be treated as “wages” and caused him to have benefits reduced by the Annual Earnings Test.

I am quite surprised by this. I would have thought that income from stock options (essentially investment) from previous employment did not count as wages.

Comments anyone?

Picture: Family farm near Oberlin, OH, around 1946.

AARP comments on Social Security trust fund and Medicare (vs. debt crisis); quotes President Obama

2011-06-20T06:33:00.000-07:00

Look at the article “Social Security: Fears vs. Facts” on p 33 of the July-August 2010 issue of the AARP Magazine, “Your Money” column, piece by Liz Weston, link here.

Yes, she debunks the idea that “the Social Security trust fund assets are worthless” (point 2). But the government did spend some of these assets, backed up only by “IOU’s”, and threatens to default on Aug. 2 if the GOP really does forestall raising the debt ceiling limit. That could give creditors a legal basis to demand means testing, even now for some current retirees, to help settle the debt. A court order to do so is at least conceivable. The other point is that Social Security should tell each beneficiary how much of his or her monthly benefit is actually accounted for by the FICA contributions, when compared to how private insurance companies compute annuity benefits.

Medicare is in fact in worse shape (and even more liable to means testing claims), because medicine keeps finding new ways to keep people alive longer but very expensively. Previously paid Medicare taxes could not account for this.

On p. 64 of the same issue of the Magazine, President Obama is quoted as saying “Well, seniors have paid into Social Security. They’ve paid into Medicare over a lifetime of hard work. And the notion that somehow they are asking for something they don’t deserve makes no sense to me.”

Let’s hope John Boehner and President Obama made some progress on the golf course Saturday, light rain showers (no storms) notwithstanding.

As communities and states tighten driver's license renewal on seniors, some are left with few transportation options

2011-06-16T05:26:00.000-07:00

The Washington Times has an important story June 14 by Audrey Gertz about the mobility of aging seniors, here, “Aging drivers have few alternatives for a car”.

A report from Transportation for America called “Aging in Place: Fixing the Mobility Crisis” notes that communities and states may start requiring more supervision of aging drivers, including more performance tests (parallel parking?) and evaluations of family members (which raises real questions for the childless – like me). At age 75, seniors start to have accident rates comparable to those of teenagers. The report has this link.

Seniors often live in areas with poor public transportation, and even those in major communities like CCRC’s require targeted assistance getting around. The report ranked cities with poor access to public transportation. Atlanta was the worst. New York City came out well.

At 67 I hope I have a little more time.

MetLife study reports staggering income losses (present and future pensions and s.s.) to current family caregivers

2011-06-14T21:23:00.000-07:00

Insurance Broadcast has published an article on the Metlife Study of Caregiving Costs to Working Caregivers and reported over $3 trillion lost in wages, future pensions and even social security benefits, with the link for the report here.

Women are more likely to do hands-on caregiving than men, and women may be losing more future income financially.

Metlife’s own link is here.

The study reports enormous policy implications which so far are being overlooked in most of the major candidate debates. Long term care insurance and the building of CCRC's (Continuing Care Retirement Communities) are still skimming on the surface of the problems.

Many people are caught as the “sandwich generation”, but this also now includes people who did not have their own children, and will include many LGBT people.