Sunday, April 29, 2012

Washington Post columnist appears to support means testing for current social security retirees


Here’s another column “Fixing Social Security, the Right Way”, by Allan Sloan, in the Business Section of the April 29 Washington Post, (website url) here

Sloan offers analysis of the proportion that Social Security contributes to the net worth of people in different demographic categories.

He says that cutting benefits could be targeted demographically so that it doesn’t hurt the well off.  But this just sounds like means testing something that had become a “quasi-annuity”.

I checked on Wikipedia and Sloan seems to be about my age (I’m 68).  So he must think it’s OK to means test people already receiving benefits.  If so, I wish he was clearer about it.  

Of course, upping the retirement age for people about to retire soon, based on net worth or income, would certainly involve some selective "sacrifice". 

Tuesday, April 24, 2012

Social Security admits trust fund will run out 3 years earlier than expected, in 2033


The Social Security Board of Trustees reports that the OASDI  (Old Age and Survivors Insurance) trust fund will be exhausted three years sooner than had been expected.  That means that the "trust fund" (if you can call it that) runs out in 2033 (I'd be 90).  The actuarial deficit is 2.67% of the FICA-taxable payroll.   The SSA link is here.

The deficit increased more rapidly because of the FICA tax "holiday" and the increase in energy prices, leading to COLA uptick.

Medicare’s trust fund would run dry in 2024.  

CBS has a detailed story by Jill Schlessinger here.  The AP had a one-sentence story in the Washington Post Tuesday evening as breaking news.

Even more attention will be paid to the “nature” of social security (a “tax” or an “annuity”) in the near future as a result. But if is really a "tax", it is one of the most regressive.  The whole nature of "wages" as compensation comes under challenge in a modern economy.

Sunday, April 22, 2012

ING Americas informs its retirees of its Annual Funding Notice


This weekend, the retirement plan for my “last major employer”, ING Americas, sent its “Annual Funding Notice,”  as required by the PBGC.

The notice has the ironic mechanical wording “This notice does not mean that the Plan is terminating.”

There is a row called “Valuation Date” with columns noting January 1 of each of 2011, 2010 and 2009. But the text says that each column applies to that entire year.

The Funding Target Attainment Percentage is 81.9% for 2011, a slight improvement from 80.0% in 2010. But both are way down from 94.8% in 2009, still well after the 2008 crisis surfaced.

Saturday, April 21, 2012

LGBT people need to plan carefully for long-term care


Michael J. Glassman has a special article in the “bladebusiness” section, p. 55, of the April 20, 2012 issue of the Washington Blade, “LGBT Community needs long-term care”, link here

The truism is, of course, that LGBT people may seem less likely to have children upon whom they can “depend” as caregivers if they become disabled while elderly. 

The article points out that some insurance companies are offering some discounts for long term care insurance premiums to members of a couple that has been together for at least three years, and when both qualify medically for normal coverage.

Glassman’s article discusses some technical and legal details for seniors with C-corps and self-employment in long term care planning. 

I haven’t heard specifically anything about HIV and long term care issues.  But because medications are so successful for some people, there could eventually be a population of seniors with HIV needing long term care. 

From a psychological viewpoint of the caregiver, HIV issues such as buddy programs involved very different dynamics from eldercare (as I have done both).  At one time, in the 1980s and early 1990s, people with infection usually could not live long.  Anti-retroviral medications (protease inhibitors) have so thoroughly turned around the prognosis that many, maybe even most people return to  (or remain in) full independence and employment for years or even decades, and then may face problems similar to others in old age. 

Wednesday, April 18, 2012

Congress weights rolling back IRA deposit "tax shelter" which benefits many retirees


Congress is considering rolling back the ability of people to exempt 401(k) or IRA deposits from taxes, as a way to keep top rates “lower” according to GOP ideology, according to a story by Lori Montgomery, “Changes to tax breaks on retirement savings weighed; lawmakers seek reform options; Both parties looking to recapture money”, link here.

Retired people sometimes move additional money into IRA’s right before April 15 to reduce taxes, to a total of up to $6000 to offset “wage” income for seniors.  This may happen if there was more income than expected, such as K-1 income this year in my case. In some tax brackets, additional income causes “double taxation” because it causes the social security payment income to start getting taxed at up to 85%.

Monday, April 16, 2012

Nursing homes unprepared for major disasters


The Washington Post (Monday, April 16, 2012, p. A11 on the Fed Page, p. A11) and the Associated Press are running a story by Ricardo Alonso-Zaldivar about the lack of preparedness of nursing homes for natural disaster, particularly in disaster-prone gulf states, link here

The Department of Health and Human Services will release a report April 16, based on detailed examinations of 24 facilities.

Preparedness issues would obviously affect families, which might have to take back residents from damaged facilities or even in anticipation of disaster.

During Hurricane Katrina in 2005, 35 residents of the St. Rita’s home near New Orleans drowned in their beds.  The AP reports on damage to a nursing home in the Dallas suburbs during a recent torando outbreak (link) and at least one resident had major injuries. 

A large portion of nursing home residents today are female and over 80.

There is a comprehensive report on nursing home demographics back in 2008, at “The Rubins”.    Over 40% of those over 65 today may spend some time on a nursing home during their remaining years. 

Monday, April 09, 2012

FDR had intended Social Security to be an individualized, contributory pension program


Robert J. Samuelson has an interesting perspective in the Monday April 9 Washington Post, “How Social Security Got Away from FDR”, p. A13, online link here. The online title is "Would Roosevelt recognize today's Social Security?"

Samuelson says that Roosevelt actually intended Social Security to become a “contributory pension plan” for workers (although it would remain "defined benefit").  But liberals and conservative disliked that for their own reasons – although today conservatives would call that “privatization”.

Early beneficiaries did indeed receive an "undeserved" windfall. 

Overtime, Samuelson says, Social Security has been budgeted as if today’s FICA taxes paid for yesterday’s retirees, and the money is not saved, but sent elsewhere to the treasury.  As I noted Friday, this argument (that Social Security is a “tax”) could lead to new cries for immediate means testing.

As Samuelson points out, today’s demographics do not bode well for Social Security. 

Friday, April 06, 2012

If FICA is really just a "tax", there could be real issues soon with means testing and debt ceiling issues


One more argument regarding Social Security has been brought to my attention. I’ve been told that in the past, in the 1930s, it was defended legally as a “tax”, given the way Congress’s explicit powers are interpreted.

If it is a “tax” and not a “premium” related actuarially to an expected retirement benefit (including spousal benefit), then there is more legal justification for immediate means testing, should the idea come up again.

There could also exist more legal justification for withholding benefits should there be a future debt ceiling fight and should the government not have the ability to pay all its bills. 

The “tax” argument, of course, came up during the first day of the health care hearings in front of the Supreme Court, in conjunction with the “Anti-Injunction” act.   See my “Issues” blog. 

Wednesday, April 04, 2012

More pressure mounts to require older drivers to have medical clearance to keep licenses


ABC Good Morning America is reporting that there is more pressure to require older drivers to have medical clearance to keep their driver’s licenses.  Some people want screening to start as early as age 65.
The story, also appearing on Yahoo!,  by Lara Salahi is here.  Some medications could disqualify for keeping licenses. Doctors might have to stay away from blood pressure prescriptions (often less expensive) that can cause drowsiness.  

In Canada, there is more attention to restricting licenses after moving violations, with measures similar to those against teenagers, such as driving at night. Canadian Yahoo! has a story by Diana Mehta of the Canadian Press, here

My own mother rented a car in Ohio in March 2006, at age 92.  The last time she was ever allowed to drive was in late July 2009, at age 95, just to drive to the grocery store.  

Sunday, April 01, 2012

Could Congress force people to buy Long Term Care insurance as well as ordinary health insurance?


So, here we go again.  If Congress can force individual Americans to purchase health insurance based on the “common good” (or the reasonable assertion that everyone pays higher premiums for the care for the uninsured), could Congress subsequently force people to buy long-term-care insurance, at least if they can afford it?  Would that be “forced commerce”?

There could be compelling reasons for such a “modest proposal”. The population is aging, and people are living longer with disabling diseases (especially Alzheimer’s).  Other family members must sacrifice.

One could even propose that if one does not have children and can afford to do so, one must buy long term care.  But then, in exchange for the mandate, would insurance companies be regulated as to “pre-existing conditions”, such as with pre-purchase medical monitoring or memory tests?