Medicare and Social Security are in pretty good shape according to the 2010 Annual Report of the Trustees.  That’s good news for all of us.  But especially those who are retired or close to retirement and counting on specific benefits from both programs. 

The report said that Medicare is looking much healthier, thanks to the changes in the health care reform bill that reduces costs for prescription drugs and physician services..  The Hospital Insurance trust fund is expected to remain solvent an additional 12 years – until 2029.  While Medicare finances have improved, further reforms will be needed. 

It is not quite so rosy a picture for Social Security, but there’s no reason for alarm.  The recession created a double-whammy of fewer workers and more early retirees.  So Social Security expenditures are expected to exceed tax receipts in 2010 for the first time since 1983.  Read the full report here. 

 “The fact that the costs for the program will likely exceed tax revenue this year is not a cause for panic but it does send a strong message that it’s time for us to make the tough choices that we know we need to make,”  said Michael J. Astrue, Commissioner of Social Security. 

The report said that the deficit is expected to shrink substantially for 2011 and to return to small surpluses for years 2012-2014 due to the improving economy.   But as the baby boomers begin retiring in larger numbers in 2014 the number of beneficiaries grows substantially more rapidly than the number of covered workers. That’s the problem we’ve been talking about for years – too few workers to support the number of retirees.

So for those nearing retirement, counting on Social Security at current levels sounds pretty safe.  But, the changes will continue to come in Medicare to keep the program financially sounds.  That means it will be more important than ever to review your Medicare insurance plan each year. Expect that to be particularly true for Medicare Advantage and Medicare Part D plans.

The Social Security Administration expanded its list of diseases that qualify for expedited processing including early-onset Alzheimer’s.  The addition of 38 new conditions means that “tens of thousands of Americans with devastating disabilities will now get approved for benefits in a matter of days rather than months and years,” according to Commissioner of Social Security Michael J. Astrue.

Among those who will be eligible for speedy action on their applications – known as Compassionate Allowance– are people diagnosed with early-onset Alzheimer’s and mixed dementia. About 200,000 people in the U.S. are thought to have early-onset Alzheimer’s, according to the Alzheimer’s Association. 

Compassionate allowance is a way of quickly identifying diseases and other medical conditions that clearly qualify for Social Security and Supplemental Security Income disability benefits.  It allows the agency to electronically target and make speedy decisions for the most obviously disabled individuals. 

“The diagnosis of Alzheimer’s indicates significant cognitive impairment that interferes with daily living activities, including the ability to work,” said Harry Johns, President and CEO of the Alzheimer’s Association.  “Now, individuals who are dealing with the enormous challenges of Alzheimer’s won’t also have to endure the financial and emotional toll of a long disability decision process.” 

It is estimated that about five million* Americans suffer from Alzheimer’s disease, and about 360,000 people are newly diagnosed every year. Alzheimer’s affects about 10 percent of people ages 65 and up, and the prevalence doubles roughly every 10 years after age 65. Half of the population ages 85 and up may have Alzheimer’s. 

The new Social Security process begins March 1. Here is a checklist from the Alzheimer’s Association on how to apply for Social Security disability and Supplemental Security Income Benefits for early-onset Alzheimer’s. 

Go to this Social Security website for more information on Compassionate Allowances and a list of the 38 new diseases eligible for the program.  The Alzheimer’s Association has information here that is a bit easier to understand.  

A reminder, too, for those with long-term care insurance with a diagnosis that impacts two or more activities of daily living — contact your long-term care insurance company as soon as  possible after the diagnosis.  This will provide you with clear information about your policy coverage and help you plan for future care.  If you are qualified, it may also trigger the creation of a care plan and beginning of the count on elimination days (your deductible). 

If you have a history of Alzheimer’s in your family, you might want to consider purchasing a long-term care insurance in your 40s or 50s to cover some of the potential costs of care – whether at home or in a long-term care facility.compassion

It’s official.  There won’t be a cost of living adjustment for Social Security beneficiaries in 2010.  But there is support for one-time $250 payment to each recipient in 2010.  President Obama announced his support for the $250 payment yesterday and Congress is expected to take up the measure soon. 

The COLA is tied to consumer prices which were down last year.  In 2008, Social Security beneficiaries received a 5.5% COLA – the largest  increase since 1982, based largely on increases in consumer energy costs. More about 2010 Social Security changes here.  

For those who are still working, there will be no increase in the maximum amount of earnings subject to the Social Security tax.

 The earnings test for those workers who are younger than “full” retirement age also remains at 2009 level of $14,160. 

No word yet from Medicare on Part B premiums. Consumers should have received notice from their insurance company about their Medicare Part D Prescription Drug premium rates and Medicare Part C (Medicare Advantage) rates for 2010.

 If you are thinking about changing Part D or Part C plans for 2010, now is the time to start shopping and comparing plans.  Generally, applications can be taken beginning Nov. 15.

Resources:

Associated Press article

If the drop in the stock market has turned your Social Security payment from “vacation money” to “mortgage money”, then it’s time to figure out how to maximize your benefit.

• Don’t be tempted to take benefits at age 62.  If you can, wait until your normal retirement age to begin Social Security.

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• Staying in the workforce longer not only gives you the chance to build retirement savings but also your Social Security benefits.

• Don’t exceed the maximum income levels if you are receiving Social Security.  You lose $1.00 in benefits for each $2.00 you earn over the limit.  Ouch!

• You can stop Social Security payments that you started before your normal retirement age.  You’ll have to pay back what you received in a lump sum.  But then you can start benefits later at a higher rate.

• Your benefit level impacts the amount your spouse receives if you die.  Use the Social Security estimator tool and understand the long-term impact before you turn on benefits.

Remember Patty Duke?  Well, you’ll see her again when you visit the Social Security website at http://www.ssa.gov.  She’ll tell you how easy their new online sign-up is to use.  And it is!

Especially compared to the hours you could have spent on the phone or in line at a local Social Security office.

Try the benefit estimator.  It will show you what happens to your benefit level at different ages.

When you are ready, apply for benefits online.  It takes you just about 15 minutes.  There is a webinar online that will walk you through the process first.  Or just plunge in – it’s pretty easy to follow.  Then, you can check the status of your application online as well.

There are also great questions and answers and brochures that explain the rules.