Monday, November 19, 2007

More private health insurance companies market to early retirees; what happens at age 65?

MSNBC and the AP have a recent story "Insurers catering to early retirees: Baby boomers are financially stable, and they don't qualify for Medicare, yet" here (Oct. 31, 2007). Many people have been "forced" to retire early and may have inadequate health insurance, and some companies do not offer it at all.

I do have health insurance from United Health Care from ING, and it is about 2/3 company paid, but still a high-deductible plan with only 70% inpatient hospital coverage costs about $200 a month out of pocket. I am holding off on some things (like hernia surgery) until I am 65 and inpatient care is "free". Is that a market-driven decision? UHC does offer extremely effective in-network discounts for out of pocket expenses (up to 70% discount on most procedures). Medicare eligibility starts at 65, and requires a premium for Part B, but not for Part A if the employee had enough FICA credit (40 quarters) to qualify for social security. Apparently, my ING policy becomes supplementary (like many Blue Cross Blue Shield supplementary policies for seniors) when I reach 65 as Medicare would cover much of the expense, but I will have to pay a Part B premium of almost $100 and may want Part D (but my ING plan covers many prescription drugs much better than Medicare does).

Other references on Medicare eligibility: Moheban Law Firm


Medicare PDF document is here. This covers 2007. Note the discussion of Medigap policies and the copays and deductibles even for Part A hospitalization, on P 44. It conveys a sense of how difficult it is to cover unlimited health care expenses for seniors. (We [Michael Moore, anyway] ask, then, what about Canada? Britain?)

Medicare enrollment

I followed the questionnaire this morning and eventually reached this page:

The following is a listing of the Medicare premium, deductible, and coinsurance rates that will be in effect in 2008:

Medicare Premiums for 2008:

Part A: (Hospital Insurance) Premium

Most people do not pay a monthly Part A premium because they or a spouse has 40 or more quarters of Medicare-covered employment.

The Part A premium is $233.00 per month for people having 30-39 quarters of Medicare-covered employment.
The Part A premium is $423.00 per month for people who are not otherwise eligible for premium-free hospital insurance and have less than 30 quarters of Medicare-covered employment.

Part B: (Medical Insurance) Premium

$96.40 per month*

Medicare Deductible and Coinsurance Amounts for 2008:

Part A: (pays for inpatient hospital, skilled nursing facility, and some home health care) For each benefit period Medicare pays all covered costs except the Medicare Part A deductible (2008 = $1,024) during the first 60 days and coinsurance amounts for hospital stays that last beyond 60 days and no more than 150 days.

For each benefit period you pay:

A total of $1,024 for a hospital stay of 1-60 days.
$256 per day for days 61-90 of a hospital stay.
$512 per day for days 91-150 of a hospital stay (Lifetime Reserve Days).
All costs for each day beyond 150 days

Skilled Nursing Facility Coinsurance

$128.00 per day for days 21 through 100 each benefit period.

Part B: (covers Medicare eligible physician services, outpatient hospital services, certain home health services, durable medical equipment)

$135.00 per year. (Note: You pay 20% of the Medicare-approved amount for services after you meet the $135.00 deductible.)

The specific link was this:

Today show discusses Sandwich generation

This morning (Monday Nov 19) the NBC Today show again discussed the caregiving responsibilities of the "sandwich generation" many of whom cope with eldercare, raising children and work (with some employers who may resist family responsibility time off). Tom Nelson from the AARP appeared. I could not find the web link for this specific item yet (despite the fact that the show said it should be there) but the website for the Today show is this.

I'll add a link from "New Retirement", blog here.

Update: Nov. 24

A story on another blog mentions stability of bonds and oil prices, certainly important now to retirees, here.

I followed up on Nov. 26 with another report on a USA Today story on the same topic, and investigated further, and found some contradictions. Link.

Saturday, November 17, 2007

Life Insurance industry supports "death tax"; Senate tries to help with Long Term Care

The life insurance industry has a dirty little secret out in the open, according to libertarian-leaning columnist Timothy P. Carney (whom I met once at a Cato function, as I remember), with his column Nov. 16, 2007, “Death tax is a lifeline for insurance industry.” The article appeared in The DC Examiner Nov 16 on p 17 under commentary, link here.

There has been a lot of witchcraft (“you create your own reality”) with the death tax, which the Bushies set to disappear in 2010, to reappear in 2011. Relatively few people pay it, but those who are exposed to it spend a lot of money on financial planners (working for insurance companies or brokerage houses) to avoid it. According to the article, the life insurance industry gets 10% of its business this way.

The American Council on Life Insurance (ACLI) reported spent amount $10 million last year on keeping some form of estate tax. ACLI president Frank Keating (no relation to Peter Keating in Ayn Rand’s “The Fountainhead”) suddenly started repeating leftist talk from the collectivist 70s on the moral evils of too much “unearned” inherited wealth staying within families.

In 2005 I was approached about becoming a life insurance agent, since I have twelve years of information technology experience in the area. I did not want to “live the life” (trying to build up lists of leads, and behaving in a publicly partisan manner about certain issues) and I hardly am interested in helping “rich people” get around taxes. I can see a career in helping develop and sell long term care insurance, however.

The ACLI website should be explored for the long term care issue. For one thing, it has a story “Senate Introduces Long-Term Care Affordability and Security Act”, details here. The bill would allow long term care insurance to be included in employer cafeteria plans and flexible spending accounts. The long title of the story is “"Long-Term Care Affordability And Security Act Of 2007" Will Help Americans Prepare For Long-Term Care Needs

Thursday, November 15, 2007

Life Alert and other home emergency monitoring services: why haven't the media reported on them much?

As a never married childless older man, I have dealt with a troubling question: should I allow eldercare needs to affect where I live, where I take employment, and my strategy for dealing with employers? This sounds like a Dr. Phil topic, although I don’t see it there now (I’m thinking about email the Dr. Phil show to bring this up). I don’t want to be more specific here about personal business, other than to bring up what is a troubling question that ought to be up among the frontrunners in public policy debate. In the past, I have been pressured by others not to live out of the area where I have some eldercare issues. Is this appropriate? (I realize there could have been other options, like being able to buy a house big enough while in place.)

There are a number of home monitoring products that seniors who live alone but who may be at risk from sudden accidents or emergencies can purchase. Recently, Life Alert has been advertising on CNN with a spot by former Surgeon General (under the Reagan Administration) C. Everett Koop. This spot promotes the use of the device (with Koop’s blessing) for seniors in this circumstance. That gives it some credibility. The website has relatively little information and encourages the consumer to call an 800 number for a brochure. I did so. I await the brochure in the mail, but a salesman, who said that he was himself 64, called me back. He says that the service has been in effect for 25 years.

Life Alert claims that the average age for entering a retirement home is 79, but for their clients it is six years later, 85. The link is here. That statistic by itself does not support the notion that single adult children can rest easy living away from elderly parents indefinitely, Koop's promotion of the product notwithstanding.

It’s curious, then, that the major media have not discussed home monitoring devices much when presenting the eldercare issue. There are plenty of stories in the media of teenagers caring for their parents, and of adult children in the “sandwich generation.” I’m surprised that I haven’t heard more about this in the major media.

There have been a few stories, and I recall at least one that required that the customer’s computer run a monitoring application and webcam all the time. Life Alert would not require that.

Apparently, according to a quick Internet search, there are a number of such products, some of them cheaper than Life Alert. (Typically the hardware, including wearable pendant, costs a few hundred dollars, and there is a monitoring contract with a monthly fee, similar to a home security company). One such website is this.

There have also been some complaints about Life Alert, discussed on by Joseph S. Enoch, “Seniors' Fear of Falling Keeps Life Alert Flush”, Former U.S. Surgeon General cashes in on seniors' fears, here. The visitor will have to judge the veracity of these for herself. The tone of the article (the title) seems to miscast the problem.

The question remains, however. There is an increasing population of older Baby Boomer adults with no parenting experience of their own who may need to carry eldercare responsibilities as their own parents live longer, and this can affect major decisions that they make for themselves. There seems to be little public discussion of this yet. That seems surprising, and that will probably change. Monitoring will handle some perils, such as when an elder falls but is conscious and can press a pendant button to call for help. It can also provide home security when an elder is home alone. It does not provide custodial care itself, guarantee the taking of medication, or meet any number of other needs. That is why the cost and availability of home health aides (complicated by immigration issues perhaps) and assisted living are becoming important problems, as is long term care insurance.—all in conjunction with the likelihood that some states might become more aggressive in enforcing filial responsibility laws.

A comparable suggestion could be that an senior living along gets a cell phone and learns how to use if (if able, not always the case). In my own situation, as I look back over the past ten years or so, I can see that I was not as aggressive or as resourceful as I could have been in seeing how these newer communications devices could have helped me manage my issues. I had a clumsy cell phone in 1998, but didn’t start using them much until 2002 when they were smaller. I can recall stopping at convenience stores on the road and calling for messages from pay phones, or from motel phones (which charge a lot). No more.

Wednesday, November 14, 2007

Questions on social security offset (from pension payments) continue

I get emails about the social security offset on pensions, which I discussed on July 1. Many people approaching retirement are shocked to learn about this concept. It seems to be especially an issue in airlines. Unions will normally become concerned about this issue in collective bargaining.

Since employers match the social security taxes of their employees, many employers believe that it is proper to recover this contribution from the person's pension. So they subtract an amount from the pension based on the person's expected social security benefit at the same age the pension starts. The offset is based on the number of years of service, just as the pension itself is, and is less if retirement is started early. It will be less if the pension was frozen. In some companies the offset, as a percentage, is much less than in others. Some companies offer a "social security bridge" until age 62 for early retirement.

The picture gets more complicated when there have been acquisitions, and the pension calculation is the sum of many separate components.

Saturday, November 10, 2007

Alternative Minimum Tax relief; Are reverse mortgages in jeopardy?

On Friday Nov. 9 the House of Representatives passed a bill to provide some relief from the alternative minimum tax, which has started to affect more moderate income families that take lots of certain kinds of deductions. The tax was originally constructed to make sure that richer people pay some tax, but was not correct with regard to inflation. The House also approved moderate income families that do not itemize deductions getting a home mortgage deduction in some cases.

The shift in policy is supposed to be paid for by treating “pyramid” income in certain sales businesses (mostly financial products and hedge funds) as work income rather than capital gains. It’s not clear if this could affect agents, renewal commissions, or partial volume offsets paid to distributors in many businesses. These are important to retirees, since many people go into sales businesses after formal retirement and earn commissions this way.

The story is by Jonathan Weisman, p A01, The Washington Post, Sat. Nov. 10, “House Passes Bill to Ease Alternative Minimum Tax,” link here.

The AMT could become important in the future to adult children if states start enforcing filial responsibility laws and adult children find ways to take extra deductions.

David S. Hizenrath has a story “Fannie Mae Expenses Up Sixfold from Bad Loans: Mortgage Firms Declines Contribute to Market Loss,” p D01 on today’s Washington Post, here.

The company doesn’t expect housing prices to mount a stable recovery until the endo of 2009. Many parts of the country may see a real estate recession similar to what struck Texas at the end of the 1980s and lasted well into the 90s. Many seniors have taken home equity loans and reverse mortgages and these could come.

Update: Nov. 13, 2007

The Washington Times has an op-ed on p A23 by Sen. Jeff Sessions (R-Alabama) "Families First: Tax Reform where it counts". He argues that even the reform bill will leave in place a system that favors high state taxes and penalizes families with children in those states. He believes that personal exemptions should count in figuring an AMT.