Reasons to Worry – and Agitate – About Your Financial Security
Are policy makers in touch with the realities showing up in your mailbox?
On my desk, for weeks, there have been unopened envelopes from the Social Security Administration, from my provider of Medicare Part D drug coverage, from my long-term care insurance carrier and from the Guild Benefits Fund at The New York Times, my former employer, which pays for my supplemental Medicare and also provides my monthly fixed-benefit pension.
Last week, in anticipation of writing this, I screwed up my courage and opened them all, my heart fluttering and my stomach sinking, like an elevator falling down the shaft. Any or all of them could be bad news, adding to my expenses as a retiree — or subtracting from my benefits, which already do not match my modest monthly expenses, the gap closed by tapping a lifetime of savings.
And I am one of the lucky ones, given the rarity of old-fashioned pensions, largely replaced by 401(k) plans that are vulnerable to stock market shifts, and the fact that those already reaping the benefits of Medicare and Social Security are likely to be grandfathered in if changes occur in these bedrock programs. As for savings available to spend down in retirement, although sooner than I’d hoped, I can already hear you clucking about the poor little rich girl. Savings are a luxury (and the result of being a lifetime cheapskate).
My brother, for example, five years younger than I, has no pension and — as a trailing-edge boomer — more to worry about regarding the solvency of Social Security and Medicare. At least, being far more la-di-da about these things than I am, he has no long-term care insurance. I expect that this actuarially-unsound product will likely go bust before I ever use it, taking decades of my paid premiums along with it when it goes.
Rumblings From the Candidates
So let’s get back to those envelopes, which have preoccupied me for weeks, and will preoccupy me even more as the 2016 election approaches.
At least four of the current Republican candidates (Donald Trump, Chris Christie, Jeb Bush and Marco Rubio) have already been muttering about “fixing’’ Medicare and Social Security: Phasing them out, raising the eligibility age, indexing the benefits to income or privatizing the programs via a voucher system. Don’t these folks know that old people vote?
My envelope from Social Security, which recently celebrated its 80 anniversary, brought momentary good tidings. The trust fund, the letter said, was secure through 2034. That takes me through my 87 birthday and even an inveterate worrier can’t wring her hands about what might happen that far in the future when the proverbial bus could hit me first.
Medicare Part D: More for Less
The envelope from my Medicare Part D plan, which actually was a series of envelopes, could only be bad news, I knew. This diabolical program, which began in 2006, is a Rube Goldberg contraption, offered by private insurers on behalf of the government, and all but incomprehensible except for the fact that every year it costs more and offers less.
The addition of Part D was the first major change to Medicare since its inception 50 years ago. In the intervening years, a single payer system had become politically untenable, despite widespread belief among health care economists that it is the most cost-effective, efficient approach and much beloved by its beneficiaries.
Switching Part D plans is a daunting calculation, which takes days, if not weeks. I chose a plan when I turned 65 and two years later switched to another. I don’t think I have the stamina to do it again. Even without reading the fine print or calling the 800 number on my AARP MedicareRX card, I can tell that my monthly premium, come Jan. 1, will rise from $36 to $45.90 and my annual deductible will increase from $320 to $360.
Any one of the prescription drugs I use could go up in cost or be removed from the formulary, too. But so far, I've only received a partial list, so why bother even looking at it? My pharmacy may also have lost its network status. To find that out, I’m directed to the website or the 800 number. Since the “open enrollment” period to change Part D plans runs from Oct. 15 to Dec. 7, and thinking about it gives me a headache, these envelopes are now back on the procrastination pile.
High Cost of Long-Term Care Insurance
Next up is my long-term care insurance policy, which now costs $1,357.85 a year but, this letter tells me, is raising its premiums by 48 percent — unsurprising but still breath-taking.
It would be way more than that, the MetLife representative told me by phone, but for the fact that New York State has one of the nation’s most stringent insurance commissions. I ratcheted the new cost down a bit, from $2,009.63 to $1,683.74 by lowering the automatic inflation increase, from 5 percent to 3.4 percent.
In 2019, MetLife told me, the state commission will again allow the insurer to raise its prices. When that happens I’ll reduce my benefit duration from three years to two. Is there a point when I’d flush down the toilet 13 years of premiums already paid? I haven’t a clue.
The communication from the Guild Times Benefit fund was inconclusive. It is clearly marked that “this is not a bill’’ but “an explanation of benefits statement.’’ Medicare had paid $118.46 of some recent physical therapy sessions for a frozen shoulder. Either The Times had paid $23.69 or I still owe that small amount; I can’t tell. But, no doubt, if the latter is the case, I’ll get a bill from Spear Physical Therapy.
And I had been braced for that envelope to bear news of a pension reduction — currently $1,192.67, since I took half in a lump sum when I retired, which comes the first of the month, with a $2,414 Social Security check on the second Wednesday. So maybe owing a mere $23.69 counts as a blessing.
Social Security: We Earned It
Worth mentioning, since Social Security is often mistakenly called an “entitlement’’ program, is that it is not, as that word implies, a giveaway. It is an “earned benefit’’ — part of a social contract wherein workers contribute a portion of earnings through payroll taxes to help pay benefits for current retirees in return for their retirement being partially funded by future workers.
And as for Medicare, despite the widespread belief that it is guaranteed health care for those over 65, it covers only acute care (say, a heart transplant) and not long-term care (like a home health aide or bed in a nursing home). For that, you’re on your own. It also doesn’t cover dental expenses, eyeglasses or hearing aids, which most of the elderly will need if they don’t already.
For whatever it’s worth, President Obama told the White House Council on Aging in a July address that neither program was in crisis.
Why do I find that less than reassuring?