What has 80 years of Social Security taught us?
Presented by Leonard Berthelsen Looking back on the eighty years since the creation of Social Security, the idea of retirement has changed for many of us, and in some respects, not changed anything at all for others. Understanding that in 1935 when Social Security was established, there weren’t many opportunities for workers to save for the future. Our nation was coming off the worst financial disaster in history just six years earlier and was still struggling to get people back to work and recreate faith and trust in the financial markets and the government. Now here is a president who wants people to save for the future (retirement) when folks were still struggling to put food on the table and pay for basic necessities, a bold move for any elected official. It may have been prudent back then to hold the position of waiting for the economy to improve and more folks were working. However, President Franklin D. Roosevelt saw this as an opportunity to provide some minimum protection and savings for the average American worker when they did want to retire because he knew America was on the verge of enormous growth and prosperity. The average American worker lived to be about 65 in 1935, so when you look at how the program was built it seemed to make actuarial sense. Now we see the average individual living well into their 70’s, 80’s and beyond. It’s no wonder there’s endless pressure on the system. In addition, baby boomers are retiring en masse. We have a system that hasn’t kept pace with the realities of economic changes. And we have a political environment that for over 50 years hasn’t wanted to address the real need for change to the formula or make the tough decision to increase taxes. Seems to be really negative, right? Not so fast. As I watched my grandparents retire and rely on Social Security as their full source of retirement income and then my parents, it became clear early on that it did make a difference for them and it made their quality of life better. It was a simpler time back then. They stayed in the home they bought early in their marriage through those retirement years. No mortgage payments after retirement. They did not live beyond their means and watched their expenses. They were able to take annual vacations and “splurge” every now and then on something special. As pensions became popular with many companies in the 50’s, 60’s, and 70’s as a way of recruiting good, hard working loyal employees, Social Security quickly became viewed as a secondary source of income for these pensioners when they retired. This was a real game changer in the eyes of many Americans. For those who weren’t lucky enough to have a pension where they worked, they were left to fend for themselves and save for retirement. For the ones who didn’t save, at least Social Security was there. We entered the era of pension elimination in many companies beginning in the 1970’s as a means of scaling back expenses for companies and eliminating the huge liability that kept many companies from expanding and growing due to their obligation on these pension plans. As the pensions slowly faded away, we were introduced to savings via the employer, with both the employer and employee contributing but the employee owning the savings plan, the 401(k) was born. The one thing through all of these changes that remained a staple was Social Security. It’s been there since 1935 providing retirement benefits to millions of American workers. For some it is their only means of financial independence; for others it simply supplements their income during retirement. Whatever group you fall into, Social Security does make a difference. This is a program that, 80 years later, is still delivering on its promises. I want to look at Social Security from the glass half-full perspective, because it is doing what it was designed to do. As we age into the next two decades, certainly some things will need to change. It is being projected that in ten years from now, there will be only three to four workers supporting every one retiree. Technology replaces workers as it has done for decades. We have to be smart and sharp with our attitudes and our actions. I believe Social Security will be there for every working American that contributed the minimum requirement, and will continue to do it through their retirement years. Will the system change, probably? Will we agree or like all the changes, maybe, maybe not? I think the one constant will always be there and that constant is Social Security. President Roosevelt saw a future where American workers could live in retirement with dignity, without worry of where their next meal was coming from, but also recognizing that each individual needed to take personal ownership in how that retirement was going to be financed. Social Security can only do so much. We need to do the rest.
Major Premium Increases Projected for Part B Medicare in…
Presented by Leonard Berthelsen Several reports recently, including one from CSG Actuarial, have indicated that there is going to be a major shift in the financing of Medicare Part B in 2016. It is being reported that the Part B premium that Medicare recipients pay will increase from $104.90 per month to $159.30 per month. That is a 51% increase! The Part B deductible is projected to increase from $147 annually to $223. Again, a 51% increase! The big unknown here is whether the Medicare Supplement carriers will follow suit and increase premiums as well. Plan F Medicare supplements are projected to have claim costs of up to 8% higher in 2016 due to the increased Part B deductible. On the other hand, the Plan G Medicare supplement is anticipated to be premium neutral for the carriers as the deductible is paid by the Medicare enrollee. There has been no official report from Medicare or CMS about these reported increases but we have come to accept that those announcements are generally made late in the year prior to implementation. What does it mean to a producer that has the discussion with their clients about Medicare and supplemental coverage? Simply put, some real opportunities for you and your clients. If someone has a Plan F Medicare supplement and is insurable, there very well may be an opportunity for a discussion about a Plan G Medicare supplement. Carriers will undoubtedly tout the major differences between the G & F plans that they offer, and pricing certainly will be at the forefront. There could be an unusually large group of Medicare supplement clients looking at alternatives when these new rates go into effect. With Financial Brokerage rolling out our Medicare supplement line of carriers later this month, there will be some opportunities presented to you with these changes. We are offering a great carrier line up, competitive commissions, state of the art quoting-to-application electronic quote system and Shared Success credits all in helping you be successful in your practice.
Does Open Enrollment with Medicare Mean the Same Thing…
Presented by Leonard Berthelsen The answer is, probably not! We field calls frequently from brokers and agents that don’t work the Medicare market often and we are asked, “When does open enrollment start for Medicare Supplement coverage? There has been a fair amount of attention and publicity surrounding Medicare Advantage plans and the open enrollment period each year. Unfortunately it is called Medicare open enrollment; this of course applies to the Medicare Advantage plans and not Medicare Supplement coverage. Medicare Advantage open enrollment starts October 15 and ends December 7, Pearl Harbor Day. The changes or enrollment a person makes during open enrollment takes effect January 1st of the following year. A person turning 65 during the year can also elect a Medicare Advantage plan outside of the specified open enrollment period as they age into Medicare. There is no specified date range or time for an “open enrollment” with Medicare Supplement coverage. Now before readers send comments in stating that yes there is an open enrollment with supplements, let me be a little more specific. A person turning age 65 and aging into Medicare technically has an “open enrollment” or “guaranteed issue” time frame in which to select a Medicare Supplement carrier without evidence of insurability. That of course, centers around their birthdate. This happens all year long with all folks aging into Medicare and wanting to secure a Medicare Supplement. A person losing coverage at work that is 65 or older, retiring or having an employer drop their medical insurance, as well as a carrier failing, all have a right to supplemental coverage from a private insurer without proving insurability under Medicare provisions. This of course is with them providing a creditable coverage certificate to both the insurer and Medicare. Many Medicare Supplement carriers send out advertising and make announcements that they are not affected by open enrollment right about the time open enrollment with Medicare Advantage is about to begin. There is quite a bit of confusion surrounding this, and we just wanted to bring a little clarity to the matter. Remember, a person can purchase a Medicare Supplement policy any time during the year provided they meet the eligibility requirements either by age, life event or they can medically qualify. Medicare Advantage plans have a specific time each year that a person can move into, out of, or change a Medicare Advantage plan. Aging into a Medicare Advantage plan can happen at any time during the year at the time they reach age 65. Hopefully, now you know the difference and it helps you and your clients understand what those differences are.