Tuesday, March 30, 2010

NYTimes piece: more scare talk on social security?

Mary Williams Walsh had a piece in the Sunday New York Times, “Social Security to See Pay-Out Exceed Pay-In This Year”, with link here.

The article explains the accounting vernacular of “trust fund balance” as “all time total intake” minus “all time total outgo”. Once that’s zero, benefits would cease by law. That number right now is about $2.5 trillion and a lot of that was accumulated in the 80s after Reagan buttressed it with revenues and special taxes (and bringing in federal employees) when it was getting into trouble after the 70s Nixon-Ford-Carter stagflation.

There are three “treatments”: raise taxes, cut benefits, or print more money, Argentina style.

There are LTE’s on p A22 of the New York Times today March 30. Most readers point out that we could continue raising the wage base to raise revenue “painlessly” from more highly paid workers. Viewed as a tax, FICA is one of the most regressive that we have. But it can be viewed as forced savings for an annuity, too, which over time it has gradually become. That’s part of the argument for privatization.

Saturday, March 27, 2010

The CLASS Act appears to be a (somewhat) hidden benefit of Obama's Health Care Reform

There is an “AOL News Special Report” called “Health Care End Game” titled “Health Care Reform with Impact Long Term Care”, link (web url) here.

The story refers to” 49 million people” who “care for older family members” as being “hidden in plain sight.” Later it says “the strains of family caregiving can hasten the caregiver's need to be the recipient of care.”

Apparently the Health Care Reform Act (that's not the correct title) provides some provisions for middle class people to prepare for long term care, under the CLASS Act. Neither President Obama, the Congressional majorities and minorities, nor had (in 2008) candidate Hillary Clinton said much about eldercare specifically, but some progress seems to have been made.

The The Community Living Assistance Services and Supports Act, or CLASS Act, will provide a program to pay more lower premiums to be eligible for in-home (as opposed to institutional, such as nursing home and assisted living) care, being vested in five years. The report did not say when the CLASS act provision starts. The CLASS Act seems aimed to help the middle class, rather than those rich enough to have the savings to pay for long term care, or poor enough (after spending down savings) to qualify for Medicaid, which may become stingier with crimped state budgets (inducing some states to enforce filial responsibility laws).

CLASS would appear to presume that younger relatives will continue to be present to do part of the care or at least personally supervise it.

About 70% of those over 65 will need long term care assistance at some point.

The Kaiser Family Foundation has a brief here.

Wednesday, March 24, 2010

Fidelity Investments study finds that a typical retired couple needs $250000 for medical expenses even with Medicare (not counting long term care or dental)

From Bill Boushka retires

According to an AP story today by Mark Jewell, Fidelity Investments ran a study showing that the typical couple retiring at full retirement age would need $250000 to cover out-of-pocket medical expenses today, even with Medicare. The study didn’t even include dental, or nursing home or custodial care. It sounds amazing that supplemental insurance premiums and copays (including prescription drugs) would amount to this much ($125000 per person, probably more for women), with average life expectancies at retirement now of 82 for men and 85 for women.

The Fox43 news instance of the story is here.

The recent "Obamacare" health care bill signed today will help a wee bit.

I couldn’t find the study on the Fidelity Investments site yet.

Monday, March 22, 2010

Health care law: Seniors will benefit from narrowing of Part D Doughnut Hole

Check this MSNBC report on (by Phil Galewitz, Kaiser Health News KHN) how the new health care bill affects seniors. Some key points are a complicated mechanism to close the “doughnut hole” in Part D (involving subsidies for discounts amont other things), a rolling back of some “luxury benefits” under Medicare Advantage, and preventive screenings (including colonoscopies) for free. Actually, the doughnut hole will shrink slightly right at the outset, and a free annual physical for preventive care will be offered every year on Medicare, not just when starting -- that's supposed to save money, but it could lead to more angioplasties and "emergency corornary bypass surgeries" of the Dave Letterman "zipperclub" variety. The link is (web url) here.

Some of the changes for everyone, such as the pre-existing condition discrimination ban, don’t take effect fully until 2014, with some high risk pool mechanisms in place soon. And small businesses may have some assistance in buying health care for employees soon, well before the mandate in 2014.

Seniors should still press the issue of assistance for homebound services for the elderly, which apparently is being debated outside this health care bill.

Sunday, March 21, 2010

Some nursing homes will not allow Medicare to cover treatments in homes

I was told in a personal conversation recently that some nursing homes that accept only private pay (that is, no Medicaid) will not allow residents or guests to file for Medicare for medical treatments or prescription drugs available in the nursing home (that is, treatments that would be partially reimbursable by Medicare, usually part B). It’s possible that nursing homes that charge varying rents given level of care expect to be compensated by the patient (for family) for the care delivered regardless of whether Medicare would have covered it. A good question would be, what would happen if the patient were covered by a replacement Medicare Advantage policy?

Monday, March 15, 2010

AARP gives a quick checklist on living trusts

AARP Magazine has an interesting column in the March/April issue, 2010, p. 26, “The Truth About Living Trusts”, link here.

The plusses are “convenience” and “avoiding probate”. The minuses are the lack of tax reduction and hefty legal fees to draw them up (compared to wills). Probate is not difficult in all states. Many items (like life insurance death benefits) don’t get probated and don’t need the trust vehicle. The article makes one alarming statement: “And despite living trusts, many estates end up going through probate because some asset intended for a trust was never transferred to it.”

Does that mean that if another bank account or mutual fund or treasury note that the secondary trustee (essentially the heir) did not know about turns up in the mail, the whole estate has to be probated? That makes no sense. Many times adult children find that elderly parents have assets hidden away that turn up later, that the children never knew about. A trustee can only transfer what he or she can find out about. It is usually desirable to place the deed for a home in a trust (with your local government).

Thursday, March 11, 2010

Delaying Medicare Part B premiums can cause a penalty

The March 2010 AARP Bulletin, on p. 34 (on the “Ask the Experts” column), warns retirees about a trap when enrolling in Medicare Part B. If someone does not enroll when turning 65 and enrolls later, he or she is penalized. The penalty is an extra 10% surcharge for each year of delay of premium payment.

However, if you are covered by a spouse’s medical insurance, you can delay enrollment without penalty. I don’t know if the exemption would penalty would apply for a gay partner covered by a domestic partner’s employment-derived policy, but that sounds like a problem as long as there is a “Defense of Marriage Act” and as long as the federal government doesn’t recognize same-sex marriage (so that’s a subtle perk of marriage).

Also, if your state has paid Part B premiums under a long income program and then you join later on your own, you don’t pay the penalty.

Generally, social security recipients have their Part B premiums deducted from their social security payments.

Monday, March 08, 2010

State budget cutbacks jeopardize in-home care for some seniors, possibly backfiring by increasing Medicaid nursing home costs

Here’s an important AP story, dated today, March 8, republished on MSNBC, by Stephanie Reitz, about how seniors may be forced into nursing homes (sometimes under Medicaid) because states have been cutting programs for in-home care. The link is here.

The article discusses Connecticut as an example, with a surcharge being imposed.
In-home care typically costs less than $20000 a year, whereas nursing home care is often over $70000 a year. However 24 hour inhome care may cost more than nursing home care.

States could find they are paying more for nursing home care under Medicaid, a development which could drive some states to try to chase adult children under filial responsibility laws (28 states).

Medicare generally does not pay for long term care of a custodial nature. Medicaid does, given that the individual has less than certain resrouces. The topic (and giveback or lookback rules) has been covered on this blog.

Saturday, March 06, 2010

NYTimes Retirement Issue offers advice on estate planning, Roths, life insurance

The New York Times Retirement Section Thursday (see posting March 4) also contained two important pieces on financial planning for retirees (link in previous post).

Deborah A. Jacobs offers, on p F2, “For shift to Roth IRA, Know the Pitfalls to Avoid”. There are several tips, such as taking this year’s distribution before converting to a Roth, and be wary of time limits (60 days) on redeposits to avoid taxation, opting out of withholding, and particularly naming beneficiaries (which must be done even if one already has a will, which one should have, of course). Talk to an attorney about this if setting up a trust.

Charles Delafuente has an article on the same page, “When Life Insurance Is More Valuable than Cash.” There is a lot of discussion of viatical settlements and purchases, which are regulated in some states, sometimes only allowed for patients with life expectancies of less than two years. Despite popular wisdom (and a push by some companies to get customers to convert whole life to term), whole-life policies have worked out well for much older people who held them a long time.

And Deborah L. Jacobs has a page-heading article “Estate Planning as a Family Conversation”. The article discusses the issue of coercion and competence, which can lead to contesting a will or trust.

Thursday, March 04, 2010

NY Times offers big timed advice on new careers in retirement, with emphasis on people skills

The New York Times, on Thursday March 4, offers a full section “Retirement” (link) with several important articles.

Some of the pieces concentrate on how baby boomer retirees should continue their careers. Steven Greenhouse has a cover piece “The Job You Make: older workers mine their skills and connections to go their own way.” Many of the careers involve people skills, especially mediation. Eldercare mediator, a professional who tries to settle family disputes informally before involving lawyers, and patient advocate are possibilities. Someone might, for example, become an agent helping arrange entertainers for nursing homes or assisted living centers.

Elizabeth Pope has an article “Matching life experiences with new careers”. Again, there is talk of “navigators, advocates, and coaches.”

Please, don’t suggest purchasing a franchise! I want to be my own brand.

Tuesday, March 02, 2010

Medicare 21% doctor or provider reimbursement cut takes effect March 1, as a result of Sen. Bunning's gambit in the Senate

A 21% reduction in Medicare reimbursement rates took effect Monday, March 1, automatically, as a result of a Sustainable Growth Rate Formula (SGR) that took effect in 1997. But doctors are warning that Medicare patients may have a hard time finding care if Congress does not reverse the cut in the next couple of weeks, the amount of time it takes Medicare billing to start.

The cut is a result of a block put in by Senator Jim Bunning (R-KY), also affecting extended unemployment benefits and highway funds. Now Bunning says that he will support these appropriations of Congress will find a way to pay for them, by taking off the table some unspent TARP or economic stimulus money. (Jim Bunning is a former Detroit Tigers pitcher who made a career of shutting out the Washington Senators back in the 1950s.)

The CBS news version of the story (by Lynn Taylor Rick) is here.

Particularly hit (and disturbing if affected) could be skilled nursing facility stays, often intermediate placements when patients leave the hospital for rehabilitation that could make them better. This could become very disruptive to families.

CNN’s story is even more alarming: “Ditched by your doctor: blame Medicare”, link here.

A similar AP story is widely circulating today.

Later Tuesday:

A deal was reached to end Bunnung's filibuster (multiple sources).

Monday, March 01, 2010

A VAT tax in the US would not be a panacea for retirees who pay little income tax

Yesterday (Feb. 28) Fareed Zakaria, on his GPS program, argued for the United States to adopt the European strategy of a value-added tax, which would eliminate the income tax for many people and pay for health care reform.

However, many seniors and retirees pay little or no income tax and would be hit hard by a VAT. There would follow a politically volatile battle over what to exempt (“necessities”).

I guess that a VAT would apply “goods”, but what would the effect be on assisted living or nursing home care, even if the “service” itself were not included (since institutions have to buy the VAT-affected goods, especially for medical purposes). Could home health care and its affordability be affected?

This proposal seems to need careful thought. It shouldn’t sound like a panacea in a Global Public Square.