Social Security Benefits to Increase in 2019
(COLA). Usually there is an increase in the Social Security and Supplemental Security Income (SSI) benefit amount people receive each month, starting the following January. By law, federal benefits increase when the cost of living rises, as measured by the Department of Labor’s Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W).
The CPI-W rises when prices increase for the things the average consumer buys. This means that when prices for goods and services we purchase become more expensive, on average, the COLA increases monthly benefit levels and helps you keep up with the changing cost of living.
As a result, more than 67 million Americans will see a 2.8 percent increase in their Social Security and SSI benefits in 2019.
January 2019 marks other changes that will happen based on the increase in the national average wage index. For example, the maximum amount of earnings subject to Social Security payroll tax, as well as the retirement earnings test exempt amount, will change in 2019.
Want to know your new benefit amount as soon as possible? In December 2018, we will post Social Security COLA notices online for retirement, survivors, and disability beneficiaries who have a my Social Security account. You will be able to view and save these COLA notices securely via the Message Center inside my Social Security.
Be the first to know! Sign up for or log in to your personal my Social Security account today and choose email or text under “Message Center Preferences” to receive courtesy notifications so you won’t miss your electronic COLA notice!
This year, you will still receive your COLA notice by mail. In the future, you will be able to choose whether you receive your notice online instead of on paper. Online notices will not be available to representative payees, individuals with foreign mailing addresses, or those who pay higher Medicare premiums due to their income. We plan to expand the availability of COLA notices to additional online customers in the future.
You can find more information about the 2019 COLA here.
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Tags: Social Security
Social Security and the Senior Market
"Social Security Benefits Lose 34% of Buying Power Since 2000, According To Latest Study By The Senior Citizens League"
Social Security remains the most stable retirement pillar for about 85% of the population, yet S.S. benefits have lost 34% of buying power since 2000, says the 2018 Social Security Loss of Buying Power Study.
The findings represent a significant one-year loss of 4% in buying power, with the loss growing from 30% to 34% from Jan. 2017 to Jan. 2018. The loss occurred even though beneficiaries received a 2% annual COLA for 2018.
The two expenses that have increased fastest since 2000 are both health care-related:
The average retired worker’s Social Security benefit is $1,412.14 per month in 2018, or $16,945.68 per year, just $4,805 above the poverty line.
The Social Security Retirement Age Increases in 2018
Most baby boomers are eligible to claim their full Social Security benefit at age 66. However, Americans who will turn 62 in 2018 need to delay claiming Social Security for an additional four months in order to claim their full benefit. Here is how the Social Security full retirement age is changing and what it means for your retirement payout:
An older retirement age. Americans who will turn 62 in 2018 (born in 1956) will need to wait until age 66 and four months to claim their full Social Security retirement benefit. That's two months longer than those who turned 66 in 2017 and four months longer than older baby boomers born between 1943 and 1954 who have a full retirement age of 66.
The full retirement age will continue to increase in two-month increments each year until it hits 67 for everyone born in 1960 or later. "Those born in 1956 will get less per month at any age that they start Social Security than people one and two years older than them," says John Shoven, an economics professor at Stanford University. "If you start benefits before the full retirement age, you have to accept a permanent discount in your monthly benefits, and if you start benefits after the full retirement age you get more."
Bigger reductions for claiming early. If your full retirement age is 66 and you start your Social Security benefit at age 62, you get 25 percent smaller payments. "Raising the full retirement age by two months means you get about 1.1 percent less at 62," says Andy Landis, author of "Social Security: The Inside Story". "To counteract that, consider delaying your Social Security by a few months, or even later for higher payments." For example, a worker eligible for $1,000 per month from Social Security at his full retirement age of 66 would get only $750 per month if he starts payments at age 62. Those with the slightly older full retirement age of 66 and 4 months will get about 27 percent smaller payments if they sign up at age 62, which would reduce a $1,000 Social Security payment to about $730. Once the full retirement age increases to 67, those who start payments at age 62 will get 30 percent smaller payments.
A smaller incentive to delay claiming. Workers who delay claiming Social Security between their full retirement age and age 70 have an opportunity to increase their monthly payments. "No one should claim without analyzing the options," says Anna Rappaport, chairwoman of the Society of Actuaries Committee on Post-Retirement Needs and Risks. "People who live long will have a benefit of greater value if they claim at higher ages."
However, those with an older retirement age have slightly less to gain by waiting. Baby boomers with a full retirement age of 66 can increase their monthly payments by as much as 32 percent by waiting until age 70 to start payments, which would boost a $1,000 benefit to $1,320 per month. Those with a full retirement age of 67 will only get 24 percent more if they delay claiming Social Security payments until age 70.
Compare your options. Retirees who claim Social Security early get smaller payments over a longer period of time. Those who delay claiming get bigger payments later on in retirement. The optimal age to sign up for Social Security ultimately depends on how long you and your spouse will live. People who live the longest have the most to gain by delaying claiming Social Security. You can get a personalized estimate of how much you will receive from Social Security at various claiming ages by creating a My Social Security account. "Everyone should have a My Social Security account so you have online access anytime, just like at your bank," Landis says. "You'll get not just your full retirement age, but a record of your earnings, a way to correct the record, if wrong, and you'll get estimates of your future payments."
Medicare eligibility remains the same. While the Social Security full retirement age is increasing, the age for Medicare eligibility is unchanged. Workers who wait until 66 or later to sign up for Social Security still need to take care to sign up for Medicare at age 65 or maintain other health insurance based on current employment to avoid Medicare late enrollment penalties. "Be sure to contact Social Security a few months before 65 to learn your Medicare options," Landis says. "You don't want to pay late fees because you waited too long."
Low inflation and something called hold-harmless provision are to blame.
Look out, high earners: Nearly a third of all Medicare beneficiaries, including those with higher incomes, are likely to face a steep increase in their premiums next year.
They have low inflation and something called the hold-harmless provision to blame. Social Security on Tuesday said its cost-of-living adjustment, or COLA, will bring a 0.3% increase for Social Security checks beginning in January, based on Tuesday’s consumer price index report.
The hold-harmless provision of the Social Security Act says Medicare can pass along only up to the dollar increase in the cost-of-living adjustment to the estimated 70% of all beneficiaries who will qualify for hold-harmless treatment in 2017.
Because a 0.3% increase in the cost-of-living adjustment would translate into a $4 raise in the average Social Security payment, this would effectively cap the average Medicare Part B increase at $4, said Dan Adcock, policy director at the nonprofit National Committee to Preserve Social Security & Medicare. Medicare Part B covers doctor visits and other types of outpatient care.
This means that Medicare must spread much of the projected increase in its costs across the remaining 30% of beneficiaries who aren’t covered under hold harmless. This group includes not only high earners, but also those who receive Medicare, but have deferred or aren’t eligible for Social Security benefits, and those who are new to Medicare in 2017.
It also applies to lower-income Medicare beneficiaries whose premiums are paid by state Medicaid programs. In the latter case, the increase would be paid by Medicaid, said Tricia Neuman, director of the Henry J. Kaiser Family Foundation’s program on Medicare policy.
The final premium increase won’t be announced immediately—the Centers for Medicare and Medicaid Services, or CMS, last year released it in November. However in June, the Medicare trustees projected that with a 0.2% COLA, the standard premium for the 30% who aren’t covered by hold harmless could rise by as much as 22% to $149 a month.
With a 0.3% COLA, “presumably their premiums will rise to less than $149 a month, but it’s hard to know how much less,” said Paul Van de Water, senior fellow at the nonprofit Center on Budget and Policy Priorities.
The highest earners within the 30% would pay more. The Medicare trustees projected—based on a 0.2% COLA—that individuals earning between $85,001 and $107,000 and couples earning between $170,001 and $214,000 would have their 2016 monthly premiums rise from $170.50 a person this year to about $204.40 in 2017. For those earning more than $214,000, or $428,000 for couples, the report projected an increase to about $467.20 a month, from $389.00 in 2016. Again with the 0.3% COLA, those increases are likely to be lower.
Last year, when the Social Security COLA was zero, Congress staved off an initial 52% premium increase for Medicare beneficiaries not covered by the hold-harmless provision via a deal in the budget agreement that raised their premiums by 16% instead.
Mr. Adcock said Medicare law gives Health and Human Services Secretary Sylvia Mathews Burwell “some discretion to use Part B trustee fund reserves” to reduce the premium increase for this group this year. “Whether she will have the flexibility to do that remains unclear to us,” he added.
In a statement Tuesday, CMS said it is “currently reviewing the Social Security cost of living adjustment amount and other data. As in prior years, Medicare Part B premiums will be announced this fall.”
If Ms. Burwell doesn’t take action, Mr. Adcock says his group will lobby Congress to intervene. He says he expects affected groups—including state governments whose budgets could be burdened by the projected increase for lower-income Medicare beneficiaries whose premiums are paid by state Medicaid programs—to push for a fix. Medicare is jointed funded by the federal and state governments.
Medicare covered 55 million people last year, according to the trustees’ report. Part B covered nearly 51 million. In 2017 Medicare is expected to have 58 million total participants and 53.5 million in Part B.
A sign supporting Medicare is seen on Capitol Hill in Washington in 2015. Photo: Jacquelyn Martin/Associated Press
On Monday, November 2, 2015, President Obama signed into law a two-year budget deal that diverts a spike in Medicare Part B premiums, but conversely wipes out billions in potential future Social Security Disability Insurance (SSDI) program benefits for Baby Boomers.
While the Bipartisan Budget Act of 2015 has certainly granted much needed relief to nearly 15 million Medicare beneficiaries by lessening premium and deductible Part B increases, its approval has triggered an undesirable response to upcoming SSDI program changes.
Whether or not your clients will be negatively affected by the budget deal all comes down to one very important criterion: While the reforms within the budget deal are projected to save the SSDI program $168 billion over 75 years, seniors who rely upon implementing certain strategies to increase the amount they’ll get from SSDI will ultimately lose if they fail to rethink their retirement plans.
So, what are those strategies to disappear in just six short months and how can your clients get through this?
Saying “goodbye” to the “file and suspend” strategy
One strategy, commonly referred to as “file and suspend”, has meant an extra $10,000 to $60,000 in SSDI benefits for some married couples age 66 to 70. Under current law this strategy allows you to sign up for benefits at age 66, but not claim them. For four years those unclaimed benefits will grow at the rate of 8% per year through delayed retirement credits. In the meantime your spouse may immediately begin collecting half of your check starting at age 66. (Divorced persons may utilize the strategy if they were once married for 10 years and are currently single.)
Restricting a restricted claim of spousal benefits
Author of A Social Security Owner’s Manual, Jim Blankenship, believes divorced people “will be the big losers” due to the dismissal of the “restricted application” strategy. Under current law this strategy allows you or your spouse to file just for spousal benefits at Full Retirement Age and then let his or her own retirement benefits continue to grow.
The end to the lump sum
Senior policy analyst Web Phillips of the National Committee to Preserve Social Security and Medicare (NCPSSM) says the end of the lump sum SSDI benefits is another “good deal that goes away” in 2016.
Under current law if you are diagnosed with a terminal illness at age 68 you may collect a lump sum SSDI check for the benefits you had suspended over the past two years. Under the new law this would not be the case – you could certainly begin getting retirement checks immediately, but you sure wouldn’t get a check for those back payments.
What should senior couples do regarding the change?
David Leland, a managing director of Merrill Lynch in Beverly, Massachusetts advises seniors to refrain from panicking. In the future spouses will have a choice of the larger of either their own benefit or the spousal benefit when applying for SSDI benefits. Any benefit they choose they “are stuck with”, said Leland.
While your clients may have already seen headlines disclosing relief to their Medicare Part B premium and deductible (to rise by 15% opposed to the projected 52%), it is important to inform them of the above information regarding the vanishing of strategies to SSDI benefits to come. Checking up on and reaching out to your current clients to share news of this political and economic reform could be a wonderful platform for you to display your appreciation for their business. By doing so you’re essentially dropping by to say, “Hey, Mrs. Smith! I thought of you when you read this and how it could affect your and Mr. Smith’s financials.”
A.K.A. “Hey, I really care about you!”
Want to keep up-to-date with more stories like these? Give Precision Senior Marketing's Facebook page a “Like”, follow us on Twitter and request to join our LinkedIn group, titled "Senior Insurance Agents", providing a central exchange for information among insurance agents. to stay informed! :)
Sources: www.californiahealthline.com, www.forbes.com
With the number of people aging and the continual rise in health care costs, our Nation's health-care obligations are becoming increasingly harder to meet. Federal Reserve Chairmen Ben Bernanke projects that Medicare and Medicaid needs will double our national income within the next twenty-five years. Social Security, too, will be strained as less people enter the work force than those ready to receive their benefits. Bernanke calls US public finances an "unsustainable path" but understands cutting spending on Medicare and Social Security would be very unpopular with the American public. He offers no new ideas on reducing spending, leaving those decisions to elected officials. However, he warns that underestimating these challenges would be detrimental to our economic future.
Woodmen of the World Plan N Released in Select States
On Wednesday, Woodmen of the World/Assured Life Plan N was released in Iowa, Arkansas, Alabama, Washington, Utah, Montana, Idaho, West Virginia, Texas, and Oklahoma. Also released was the news of expansions to California, Colorado, Mississippi, and Tennessee. With benefits like excellent commissions, 12 month advancement, competitive premiums, and liberal underwriting - don't miss the opportunity to add this excellent product to your senior portfolio. Click Here for more information.
Cost-Effective Medicare Reimbursement Rates
With the constant need to control the growth of Medicare spending, two policy experts have proposed that new treatments should be studied and then given a monetary value based on whether they are superior, comparable, or inferior to treatments already available. Currently, the national health reform law has created the Patient-Centered Outcomes Research Institute (PCORI) to advise and set guidelines for federal agencies on effective research and on funding research. The PCORI panel consists of a majority of physicians who study new treatments and give ratings, but cannot make decisions based on cost. The policy experts suggest rewarding treatments with the highest outcomes with the most funding and then reevaluating the treatment after three years for continued funding. They believe that limiting spending to three years will not only force manufacturers and clinicians to continue research on the treatments but to prioritize products that will have the most effect and positive outcome.
Seniors face Medicare Advantage Plans Eliminated and Automatically Enrolled
Representative Republicans Dave Camp (MI) and Wally Herger (CA) are calling into question the Centers for Medicare and Medicaid's (CMS) decision to eliminate some Medicare Advantage drug plans, which will affect approximately 3 million seniors and automatically enroll 1.5 million of those seniors into a new plan, costing 15% more in premiums alone. In a letter to the Health and Human Services Secretary Kathleen Sebelius, the Republicans questioned the decision to terminate another plan which has nearly one-half million beneficiaries enrolled, raise 600,000 premiums by 45%, increase monthly premiums in the top 10 Part D plans by 10% next year, and eliminate prescription drug plans. They also requested that the Centers for Medicare and Medicaid provide all of the analysis used to determine the impact on their decisions, so Congress can protect seniors from these decisions in the future.
More News for Medicare Advantage Plan Cuts
President Barack Obama's famous quote, "If you like your health plan, you can keep it" is coming under scrutiny after news of drastic Medicare Advantage plan cuts, from 14.8 million to 7.4 million by 2017; with approximately 70% of the cuts in this plan hitting low-income seniors and the disabled. Those who remain in Medicare Advantage afterwards will receive less generous benefits. Medicare Advantage benchmarks under the new formula will be determined by a fixed percentage based on the average fee-for-service (FFS) spending in each county; and, lower percentages will be applied to the counties with a higher FFS spending. A study shows that nearly every single county will have lower benchmarks, forcing beneficiaries to face cuts and some plans will pull out of the market completely.
Sources: Human Events, Right Side News, KHN, MedPage, The Wall Street Journal Health Blog, The Fiscal Times, American Medical News, Dow Jones Newswire, The Associated Press
This year Social Security will pay more in benefits than it receives in payroll taxes. We all knew the day was coming, and that day will happen sometime this year and throughout next year according to an announcement by Social Security officials, including Treasury Secretary Tim Geithner, on Thursday. This is the first time in 30 years Social Security will pay out more than it collects, but it surely will become more common place in the near future. According to the same officials, Social Security will be in the red for the foreseeable future beginning in 2015.
Several factors contributed to this year’s dip into the red. First and foremost is our currently high 9.5% unemployment rate. Basically, there are a lot fewer employees paying into the system. Then combine this with 50% of baby boomers taking their Social Security benefits at 62, rather than the full retirement age of 66, and you have a deadly tonic for the Social Security system.
Is this a major cause for concern? Yes and no depending on how you look at it. This isn’t the first time Social Security has been in the red. When America experienced stagflation, Social Security was in the red from 1970 to 1983. Social Security recovered and has been fine until now. So this may very well be a bump in the road. However, as baby boomers continue to inflate the number of Social Security beneficiaries, and with a painfully slow recovery, the future outlook doesn’t look too rosy. Either way, Social Security officials project the system will be exhausted in 2037.
Medicare: Extending its Lease on Life
The same officials that made the Social Security announcement also stated that the new health care law (PP&AC Act) will extend the life of the Medicare Trust Fund 12 more years to 2029 from 2017. Of course this announcement has caused much debate. One doubter is the Medicare program’s independent actuary who said the extra 12 years projection isn’t based on “reasonable” expectations, according to the Wall Street Journal.
One of the unreasonable expectations is Medicare officials’ belief that since employers will save money on health insurance due to the new health reform law, they will transfer those savings to paying higher wages. These higher wages mean more tax collected to pay for Social Security and Medicare. Do you think this expectation is reasonable? Let us know in the comments below.
Medicare Advantage Outlook Not as Dire?
KHN has a good article that explains the consequences of Medicare Advantage cuts by the government may not be the universal doom and gloom that many news outlets are reporting. Check it out here.
Sources: CNN, Wall Street Journal, KHN, The Washington Post