Monday, September 30, 2013

Predictions on how debt default would play out and affect retirees appear on web

Here we go again.  There’s rhetoric around (as on the Issues blog), that a shutdown, while painful for some people, will make a default over the debt ceiling in mid October less likely.  In fact, the New York Times just published some new analysis on how a default might play out and “escalate” this morning, link here. The article gives a link to the Alphaville blog (link  for details – just x-out the pop-up to see the content. Essentially, the second blog warns that it will be impossible for the Treasury to distinguish among valid and defaulted securities, “throwing sand into the gears” of the financial system. 

But in fact, I think there is every reason to think that Treasury would indeed pay bond holders first.  Still, this leaves “Tea Party” Republicans to explain why they are so willing to make others sacrifice for their own ideological goals (and, yes, there are some people – constituents – who can lose jobs to Obamacare). 
The most dangerous rhetoric came from Boehner himself in 2011 when he suggested that Congress should just stop paying better-off retirees Social Security and Medicare benefits,  as part of a way (in his mind) to handle “default”.  It doesn’t work that way, since a Trust Fund is involved, and the Social Security Trust Fund is effectively a bond holder.  Furthermore, he is ignoring the fact that retirement assets might suddenly become worth a lot less in fiscal chaos.  It sounds like a kind of bullying of seniors. Politicians can impose stiff means testing as a deficit reduction means even in the near future, but that would occur outside the scope of the debt ceiling debate. Again, that's why some of us would like legal ownership of our benefits -- "privatization".  

Friday, September 27, 2013

Fortune mag editor writes that debt ceiling debacle could turn Social Security into a "Madoff scheme", but he doesn't sound right on how the law really works

Allan Sloan, of Fortune, has an op-ed in the “Deals” page “A payment plan no better than Madoff’s”, p. A19, of the Washington Post Friday morning, Economy and Business section. The link is here. 
Of course, he’s referring to Social Security payments in case of a failure to raise the debt ceiling by mid October.
However, Social Security is a preferred bond holder, and could probably litigate to get first in line to get its regular payments.  
Even so, a few reckless politicians have suggested that better off retirees give up their benefits to help solve the crisis.   This is no way to run a democracy; it’s the way a warlord works.  Technically, Congress could pass a law to cut off benefits even for retirees receiving benefits now if they have over certain incomes or certain assets.  That sounds like expropriation, which is a favorite cry from the Left, not the Right.  But a few reckless politicians have suggested ideas like this. The problem is that, as we have covered, retirees don’t “own” their benefits the way they own private annuities. Even so, a law like that would not, as I understand things, do anything at all about a federal default.  And retiree asset values would plunge after a default, so the idea of asking for sacrifice is particularly galling.  But I have heard talk like this. 

Thursday, September 26, 2013

Orrin Hatch warns that raising debt ceiling alone won't stop a sudden financial crisis

Orrin Hatch (R-UT) has an op-ed in today’s Wall Street Journal that needs a read, “Obama’s Debt-Ceiling Stonewall”.  The link (paywall enforced) is here
Hatch doesn’t get into Obamacare; instead he goes right to the heart of entitlement reform.  To be honest, the proposals he makes are reasonable and gradual, and pretty much in line with what we have already heard.  
Hatch doesn’t specifically mention Stansberry’s theories on the “dollar as reserve currency” problem, but it isn’t hard to see it reading between the lines.  At some point, a financial crisis can erupt suddenly anyway, he maintains, because the current entitlement system is unsustainable. 

There is some debate on this, as with Social Security, but the math seems to be getting worse, as we noted recently with the disability payment system ambiguities.   

The significance to retirees is not just in Social Security payments, but the value of assets underlying savings of retirees.  

Sunday, September 22, 2013

For long-term care, CLASS evaporates; do we need a debate on "sacrifice"?

Michelle Singletary, in a syndicated business column, writes in the Washington Post Sunday morning about “Our looming long-term care crisis”, link here. The column concerns the demise of the CLASS Act, which would allowed voluntary payroll deductions to save for future long term care.  The problem was, as always, that people most likely to need it can’t afford even the deductions.
The key interim step was a “commission” or committee, kicking the can down the road.

Singletary points out that Medicare doesn’t normally pay for custodial care, and that people are forced to depend on “family and friends”, often requiring unelected sacrifice from them.  (I can remember some Sunday School sessions in the fall of 2008 about “sacrifice”.)   But that seems to be what social conservatives (of the Rick Santorum ilk) want to see, more “social capital”.   But the moral responsibility of people, outside of their scope of choice in having their own children, to step up to these sacrificial challenges does need to be debated, formally. 

Saturday, September 21, 2013

Social Security disability benefits program use grows, pressuring a sooner "day of reckoning" for retirement benefits

Social Security disability benefits, which are available to workers who become unable to work for medical reasons, have increased markedly and threaten the sustainability of the retirement program, which is, of course, much better known.  The Washington Post has a major front page story Saturday morning by Michael A. Feltcher, link here.
Social Security disability income should not be confused with SSI, which is totally separate and not funded by FICA.  SSA explains the difference (web url) here
The Post story focuses on eastern Maine, which I have visited myself in 1974 and 1995. 
As a weaker blue collar job market, especially in manufacturing, takes over, employers are less willing to hire mildly disabled workers. I would have thought that such practice was illegal under the ADA.  
That may be part of the problem.  Qualification for disability benefits seems to be a gray area and loosely defined, so employers and workers may “abuse it”.  Growing use of the disability program can threaten the actuarial sustainability for retirees in the long run, hastening the date when SSA can no longer pay full benefits, and increasing pressure to raise FICA taxes or wage ceilings and delay retirement age, or perhaps prohibit “early” retirement.
But FICA taxes also pay for the disability benefits program, and law firms specialize in helping workers get them (they even advertise on daytime television).  When people collect disability benefits, they generally have not paid as much into the system relative to benefits as retirees.  Therefore, the disability program can contribute to the notion of the Social Security program as a kind of “welfare” rather than an “annuity”, which is how most retirees see it.
As noted here before, the debt ceiling issue probably would not stop the Social Security Trust Fund from being “reimbursed” by the Treasury since SSA is a legal priority bond holder. But Congress, according the Supreme Court ruling (Flemming v. Nestor) does not have to honor the value of FICA paid as “property” and could implement means testing (even based on wealth as well as income) if it had the political desire to do so.

Wednesday, September 18, 2013

Home health caregivers will be protected by federal minimum wage, overtime rules by 2015

Amanda Becker, of Reuters, is reporting that the Obama administration has decided to apply the federal minimum wage law for home health aides, starting in 2015.  The federal minimum wage now is only $7.75 an hour.  The link is here. The New York Times has also reported on the matter Wednesday (Steve Greenhouse) here
If you do the math, it appears that 24 hours of hired caregiving would cost about $200 a day or a little over $6000 per month.  With Mother, who passed away in December 2010, the 24-hour bills in the last three months were about $12000 a month with two different home health agencies, so I know that the minimum wage could have reasonably been paid.  Minimum wage laws for caregivers do exist in 21 states and in Washington DC. 
The article says that exemptions will still apply for some workers hired directly by the family.  That part sounds murky to me.  However, it has long been true that families can save money by hiring home health themselves, but then they have to deal with all the employment paperwork, deductions, and immigration status verification.  Hiring directly can sometimes present other legal conflicts, since one is directly the caregiver’s “boss”. 
It's not immediately clear how this change would apply to "live-in's",  

Of additional concern is overtime for home health workers.  The article implies that Fair Labor Standards Act overtime rules will apply, so it could take up to five workers on rotating shifts to cover an entire week without an agency’s incurring overtime liability.  The agencies I used charged time-and-a-half on holidays and slightly more on weekends and evenings, but the rates did not appear to follow overtime rules as in the FLSA.  The Supreme Court had ruled on this with an important case in Long Island, covered earlier, in 2007.
Lawyers had told me that it is possible for a client to be held responsible for overtime directly if he or she knows or reasonably suspects (from the math) that a home health agency is breaking the law.  Home health agencies normally must check and verify immigration or “green card” status, and have become much more careful about this since 9/11.  Still, a family that knows that immigration law has been broken might be criminally liable. 

Monday, September 16, 2013

Current Medicare beneficiaries do not need to change anything under Obamacare; don't allow sales people to "trick" you, that's against the law

Susan Jaffe, of Kaiser Health News, has a story on p. A15 of the Monday, September 16, 2013 Washington Post, p. A15, reporting that selling health exchange coverage to current beneficiaries is illegal because they are already covered according to the law and do not need duplicate coverage.  It is not illegal, of course, to sell Medicare Supplemental or Medicare Advantage plans, as they are now and have been for a long time.  The link is here .  It is lawful for Medicare beneficiaries to buy exchange coverage on their own, but it would not make economic sense.
The government is concerned that sales people could actually mix the plans up.
If I were still in the job market, I think I would be getting solicitations to go to work selling these.  Maybe some of the email I don’t open deals with this.   

Tuesday, September 10, 2013

Assisted living group provides some important references for family caregivers

A company called “Assisted Living for Today” has passed on some information to me recently.
One item is a list “10 Essential Tips for Caregivers”, link here.  There is discussion of respite care.
eHealth has a blog posting on the financial impact of caregSurveys show a lot of adult children providing their parents with direct financial support. here.
The company provided a link for drug rehabs and addiction treatment (website url) here
It also provided a reference to physicians search by specialty, Zocdoc, (url) here

I’m told that Medicare has changed its hyperlink for forms, help and resources, to here
These items came from “Assisted Living for Today”. 

Thursday, September 05, 2013

Could collapse as dollar as world "reserve currency" wipe out retiree's assets?

Should retirees fret over Porter Stansberry’s theory that most US financial assets (cash, stocks and bonds) – retirement savings – could implode suddenly (like overnight) if the rest of the world no longer accepts the dollar as a reserve currency?  Stansberry says that this can happen because the US continues to print money, Weimar-like, to cover up its debts which are even larger than what politicians will admit to.
I discussed this on the Issues blog Aug. 30 and the “cf” blog Sept. 1.   But the current flack over the debt ceiling, which could crash down in mid October, seems to make his ideas relevant again.
I don’t see why such an event would stop the domestic economy, but it could make overseas goods and services much more expensive overnight.
Stansberry seems to favor owning gold and silver, overseas and offshore assets, and even barter (he’s vague – you have to buy a “discounted” subscription to his e-newsletter).  There certainly is a push to consider living overseas, particularly in Central America, especially Belize or Panama.  Real estate is said to be reasonable there, as is health care.  A local Arlington VA church sends its teens to Belize on a mission for ten days every summer. 

Tuesday, September 03, 2013

Northwestern University assigns patients with Alzheimer's to medical students as mentors; a note on the "senior moment"

NBC News reported, with Maria Shriver, that 5.5 million people in the US have Alzheimer’s. Northwestern University has set up a “buddy” program where Alzheimer’s patients, still in milder stages of progression, act as mentors of first year medical students.
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One question that comes up is the “senior moment”, or “literal paraphasia”.  An example is trying to recall a word or name and not being able to recall it, until it pops into mind moments later.  There is an “About” explanation here. It is hard to predict if this process in normal aging can become progressive to the point that it interferes with daily life (frank dementia) or “Mild cognitive impairment” (MCI).   One tip:  when you have a dream, try to jot down what it was and keep a list (don’t post it online!)   That’s a good short term memory strengthening exercise.