Category Archives: Individual and Medicare

Update on Exchanges, Obamacare and progress

I am pleased to report that the Federal Marketplace and the New York State of Health site (the two I use all day) are actually working.  It takes about 15 minutes to set up your account (if I do it- it will take you longer to understand the questions).  Then it will take me about 15 minutes to walk you through the options, explain them, and help you make a decision.

Remember – (Almost) Everything has changed.  More expensive plans, coupled with higher deductibles, are what everyone is talking about and they are a reality.  The rules have mostly changed as well.

One of the sneaky changes this year that I do not hear much about (yet) in the media is how the Networks have changed.   Obamacare has a large focus on cutting expenses and controlling costs, and to do this, network size is shrinking.  Hospital selections are being reduced.

You can no longer assume that your network has all the doctors and hospitals in it that it had in a couple of weeks ago.  There are preferred hospitals with higher deductibles for other hospitals;  preferred networks that – if you go out of the preferred network – you pay more for other “in-network” doctors, etc.

All in all, it appears chaotic, but we have a handle on it and are getting our clients enrolled where they need to go.  If you have questions (who doesn’t!) just give us a call.

 

Social Security Changes for 2014

Social Security in 2014 Next year’s small COLA isn’t the only adjustment related to the program. Here are six things you need to know about Social Security for 2014. For clarity’s sake, here is a rundown of what is changing next year, and what isn’t.

Social Security recipients are getting a raise – but not much of one. Next year, the average monthly Social Security payment will increase by $19 due to a 1.5% cost-of-living adjustment, one of the smallest annual COLAs in the program’s history. Since 1975, only seven COLAs have been less than 2%. Four of these seven COLAs have occurred in the past five years, however. The 2013 COLA was 1.7%.1,2 How does Social Security measure COLAs? It refers to the federal government’s Consumer Price Index, specifically the CPI-W, which tracks how inflation affects urban wage earners and clerical workers. Social Security looks at the CPI-W from July to September of the present year to figure the Social Security COLA for next year, so the 2014 COLA reflects the very tame inflation measured in summer 2013.1,2,3 Does the CPI-W accurately measure the inflation pressures that seniors face? Some senior advocacy groups say it doesn’t. The Senior Citizens League, a non-profit that lobbies for elders and retired veterans, contends that Social Security recipients have lost 34% of their purchasing power since 2000 because the CPI-W doesn’t track rising health care expenses correctly.3 On its website, the Bureau of Labor Statistics admits that the CPI “differs in important ways from a complete cost-of-living measure.” The CPI measures increases or decreases in rents, transportation costs, tuition, food, clothing, prescription drug and medical care costs, and the prices of consumer discretionary goods and services – 200 item categories in all. Still, some prices in the CPI rise faster than others; medical costs increased 2.4% from September 2012 to September 2013, and housing costs rose 2.3%.2,3,4 Chained CPI is not yet being used to determine COLAs. Some analysts and legislators would like Social Security COLAs to be based on chained CPI, a formula which assumes some consumers are buying cheaper/alternative products and services as prices rise. Supporters think that pegging Social Security COLAs to chained CPI could reduce the program’s daunting shortfall by as much as 20% in the long term.5,6 The CPI-W is still the CPI of record, so to speak. That’s good for retirees, as the Congressional Budget Office says that COLAs would be about 0.3% smaller if they were based on chained CPI. Perhaps this sounds bearable for one year, but according to AARP, a 62-year-old who retired and claimed Social Security in 2013 would be losing the equivalent of an entire month of income per year by age 92 if chained CPI were used to figure benefit increases.5,6 Groups like TSCL and AARP wouldn’t mind basing the COLAs on the CPI-E, an alternative CPI that the BLS maintains to track prices most affecting consumers aged 62 and up. From 1982-2011, the CPI-E showed yearly inflation averaging 3.1% compared to 2.9% for the CPI-W.4,5,6

Social Security’s maximum monthly benefit is increasing. In 2013, a Social Security recipient who had reached full retirement age could claim a maximum monthly benefit of $2,533. Next year, the limit will be $2,642.1

So is Social Security’s annual earnings limit. This limit is only faced by Social Security recipients who have yet to reach the month in which they turn 66. In 2013, retirees younger than 66 were able to earn up to $15,120 before having $1 in retirement benefits temporarily withheld for every $2 above that level. In 2014, the annual earnings limit rises to $15,480. Social Security recipients who will turn 66 next year can earn up to $41,400 in 2014; if their earnings break through that ceiling, they will have $1 of their benefits temporarily withheld for every $3 above that level. Once you get to the month in which you celebrate your 66th birthday, you can earn any amount of income thereafter without a withholding penalty.1

On the job, the wage base for Social Security taxes is rising. American workers will pay a 6.2% payroll tax on the initial $114,000 of their incomes in 2014. The 2013 payroll tax cap was set at $113,700. About 6% of working Americans will pay more in Social Security tax next year as a consequence of this seemingly insignificant adjustment.1,6

Reeve Conover may be reached at 877-423-9990or Reeve@Reevewillknow.com.  This material was prepared by MarketingLibrary.Net Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. All information is believed to be from reliable sources; however we make no representation as to its completeness or accuracy. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment. Citations. 1 – money.usnews.com/money/blogs/planning-to-retire/2013/10/30/how-social-security-will-change-in-2014 [10/30/13] 2 – blogs.marketwatch.com/encore/2013/10/30/social-securitys-2014-raise-a-modest-1-5/ [10/30/13] 3 – seniorsleague.org/agenda/ [11/7/13] 4 – stats.bls.gov/cpi/cpifaq.htm#Question_4 [10/24/13] 5 – baltimoresun.com/news/opinion/bs-md-federal-chained-cpi-20131106,0,7051573,full.story [11/7/13] 6 – aarp.org/politics-society/advocacy/info-02-2013/the-chained-consumer-price-index-explained.html [2/13]

Test your knowledge- who gets a Subsidy?

The subsidy rules are complicated and a little strange.  A great way to learn is to take this quick quiz – and I gave you the answers:

1)  A single employee whose small employer offers a bronze plan?  NO, his employer offers coverage.

2)  The same employee cannot afford the dependent coverage offered by his employer.  Can they get a subsidy?  NO- his employer offers the coverage

3) Dependents of an employee of a large company that offers single-only coverage.  Their earning are below the 400% Federal Poverty Level line.  YES

4) Employee of a small company whose employer offers coverage but does not pay for it?  MAYBE- depends on their income and how much the coverage costs.

5)  Unemployed person with an income of less than $5000 a year.  NO- they will have to go on Medicaid

6)  Person who works from home, earns 10,000 a year, and does not have insurance now.  NO- in some states they will go on Medicaid, but in many states that have refused the “Medicaid Expansion” they are not eligible for either a subsidy or Medicaid.  However, they are eligible to be fined $95 for not having coverage!

BONUS QUESTION-

A person applies to the exchange and gets a subsidy.  While the plan costs $500 a month on the open market, they only have to pay $250 a month.  What happens if, 6 months into the year, if their income increases beyond the subsidy levels?

Answer- At the end of the year, the IRS will verify their eligibility for the subsidy, which is really a tax credit. In this case, they probably owe the government $1500 ($the $250 a month paid by the government for the 6 months of higher income).

If you know someone that needs guidance, just have them call the office.  We are always glad to help!

What is Medical Tourism?

Taking a vacation to see the medical facilities in another country?  No fun.  However, hundreds of thousands of people around the world are flying to another country to save enormous amounts on their care.  Here are 7 popular destinations:

Mexico- Cost-effective and close, Monterey alone has “four first-rate American-accredited hospitals” that specialize in weight treatment.

India- With savings on surgery in the 65-90% range, India offers”…the best to the world in terms of quality, cost and care.”

Thailand- Asias first american-accredited hospital is Bumrungrad International, and they see 400,000 patients a year from 120 different countires.

Germany- In 2010 , 77,000 foreign patients were treated, according the the German national tourist Board.

Brazil- Big on Cosmetic Surgery  (as is Thailand) and savings of 20-30%.

Singapore- The country ranks sixth in health care worldwide (we rank 36th), and is well-known for its Cancer treatment.

Costa Rica- Perhaps the grandaddy of the bunch, with 40-65% savings on some procedures.  Popular for dental, orthpedics, spinal and cardiology.

2014 MEDICARE COPAYS

THE CENTERS FOR MEDICARE AND MEDICAID SERVI ES (CMS) HAS RELEASED THE 2014 CHANGES:

 

Part A Deductible (Hospital)              $1216

Hospital Copay day 61-90                   $304/day

Hospital Copay Lifetime Reserve      $608/day

Part B Deductible (Doctors)               $  147 (no change)

Premiums:

Most people do not pay for part A but if you do, the premium for 2104 will be $426/month, reduced from $441 last year

Part B Premiums for most people will be $104.90 in 2014, no change.  If your income tax shows more than $85,000/$170,000 joint, then you will pay more, between $146.90-$335.70 per month, dependent on the level of income.

 

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Reeve Conover is a Registered Representative. Securities offered through Cambridge Investment Research, Inc., a Broker/dealer member FINRA/SPIC. Cambridge and Conover Consulting are not affiliated. Licensed in SC, NC, NY, CT, NJ, and CA.
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