Here’s a great article from US News & World Report about 5 retirement myths.  Here are the five myths they cite:  what would you add?

1.You can pick your retirement date.  Ask all the people who ended up taking Social Security at 62 in the last year because they couldn’t find work.  Research continually shows that over 40% of us leave the workplace early because of health issues or layoffs. 

2. $1 million doesn’t get you a lavish retirement.  Calculate your expected Social Security.  Figure out how much you can take out of your retirement savings without going broke.  If you’ve got a pension, consider yourself lucky.  And don’t forget to calculate in Medicare insurance costs – that can run $200-$300 per month.

 3. Social Security will be around when you retire.  Lots of controversy about this.  But generally if you’re near retirement age, experts say you can count on Social Security payments (though maybe less than you planned).  But younger folks are more often doing their financial plans without calculating Social Security. Figuring if it comes, it’s a bonus.

 4.  You’re too old to start saving.  Never too old!  And the rules on 401(k) plans let you do catch up contributions each year once you are older than 50.  That can help boost the retirement savings.

 5. Retirement is permanent.  More frequently people are working in retirement.  Picking up a part-time job or starting a new career – often referred to as encore careers.  With longer life expectancy and retirements that can stretch to 30-40 years, keeping engaged and making some money can lead to a more fulfilling life. 

What myths about retirement would you add to the list?

 Flu shots: Medicare and health plans will be offerings flu shots without co-pays or deductibles this year thanks to the Affordable Care Act.  Doctors highly recommend flu shots for all (except those with allergies or certain health conditiions).  No word yet on what flu strains we can expect to see this year, but officials say there should be enough vaccine.  For those over 65, there is a new high-potency vaccine available to see if it offers better protections for those with aging immune systems. 

Ann Schuchat, director of the Centers for Disease Control and Prevention’s National Center for Immunization and Respiratory Diseases, says no one can predict how the year will turn out, partly because no obvious pattern surfaced during winter flu season in the Southern Hemisphere, according to USA Today.

One of the three strains now circulating in the USA is H3N2, a variety often linked to more serious disease and death. “H3N2 hasn’t really hit the U.S. in large numbers yet. We do think most people will be susceptible to this,” Schuchat says.

 Smoking cessation classes:  the benefit will be available to all smokers, regardless of whether they have been diagnosed with a tobacco-related illness, or show symptoms of such an illness, as long as they “are competent and alert at the time the counseling is provided.” The counseling must be provided by a Medicare-qualified physician or other practitioner. Medicare will pay for two counseling attempts consisting of four sessions, for up to eight individual sessions per year for each qualified beneficiary. All Medicare beneficiaries will continue to have access to smoking-cessation prescription medication through the Medicare Prescription Drug Program (Part D). 

 Despite the expansive list of adverse effects caused by tobacco use, and smoking in particular, about 46 million Americans continue to smoke.  Of these, an estimated 4.5 million are Medicare beneficiaries 65 or older and less than 1 million are younger than 65 and are covered by Medicare due to a disability.   For smokers who successfully quit, the health benefits will begin immediately and continue for the rest of their lives.  These benefits include reducing their risk of death from coronary heart disease, chronic obstructive lung disease, and lung and other cancers. 

Previously the counseling was only available to those who had been diagnosed with or who showed symptoms of a tobacco-related disease.

The average monthly premium will be about $30 compared to $29 in 2010. 

Of course averages are just that averages – so some people will see smaller increases while others may see their rates increase more.  It all depends on your plan which is why it’s smart to shop and compare your current plan to the new plans when the information comes out in October, 2010. 

CMS (The Centers for Medicare and Medicaid Services) has not yet released information on  Medicare Advantage plan rates for 2011.  There has been speculation that those plans could see significant changes in rates and/or benefits, but we’ll have to wait and see. 

The monthly Part D premium should not be the only driver in your decision on which plan to choose.  Watch for changes in the formulary (drug list) which tells how much you will pay out-of-pocket for your medications.  Plans may shift drugs between tiers which can increase or decrease your co-pay( out-of-pocket rates). Also if you’ve changed the  medications you use regularly, you’ll want to see if your current plan is still the right plan when you consider both the premium and out-of-pocket costs. 

As a reminder for those who currently have a Part D or Medicare Advantage plan.  Changes to these plans can generally be made only during the Annual Enrollment Period (AEP) from Nov. 15 – Dec. 31 in 2010 for plans effective in 2011.  Here’s the schedule leading up to AEP: 

September –Information about premium and benefits for each Part D and Medicare Advantage plan becomes available

October – More detailed plan information is available so that you can begin comparing plans

Nov. 15- Dec. 31 – applications for plans effective in 2011 can be accepted 

So make sure to mark your calendar for early to mid-October to start comparing plans.  while you can’t buy until November, you’ll give yourself some time to compare plans and think about the right plan for 2011.

Here’s the statement from Medicare on part D premiums for 2011.  

“Most Medicare prescription drug plan premiums should remain relatively stable next year, and all beneficiaries should compare their coverage under their current plan with the plans that will be offered in 2011 when that information becomes available in October,” said Jonathan Blum, deputy administrator of CMS’ Center for Medicare. “The Affordable Care Act improves the value of drug coverage people with Medicare will receive next year, providing discounts on brand name drugs and coverage of generics in the coverage gap, or donut hole.”

After all the media portrays a retirement filled with luxury yet the question for many near and current retirees is how to make sure the fixed income you have will cover the needs for a lifetime.  The recession has brought that home for many of us, yet still there’s a yearning for that dream retirement. 

A new research report says baby boomers who are not yet retired are willing to forgo some luxuries now to have a more comfortable lifestyle in the future. 

So, what do they consider basic needs? It sure goes beyond food, clothing and shelter. 

Among the must haves: healthcare coverage, Internet connection, shopping for birthdays and special occasions and pet care.  About half of those surveyed said they also consider an annual family vacation or weekend getaways, having eldercare/home aid, professional hair cut/color and funding children/ grandchildren’s education to be basic needs as well. 

Basic needs?  Here’s what might be happening. 

“An interesting pattern that we noticed throughout the research was that as consumers age, things that were once considered luxuries are more likely to be considered basic needs–thereby reaffirming that Boomers essentially want it all,” said Matthew Leung from MainStay Investments which sponsored the research.  ”In fact, almost half of consumers (47 percent) say they would downsize their home in retirement in order to afford these luxuries.” 

One thing these boomers got right is that health care is a need not a want. 

Virtually all Baby Boomers (98 percent) said healthcare coverage is not a luxury, but a very basic need—and a need that they are extremely concerned about being able to afford.  Almost three- quarters of respondents (74 percent) rated healthcare costs as either their greatest concern or their second greatest concern. 

“While a majority of consumers are setting aside funds specifically for future healthcare costs, a whopping 41 percent are not doing anything specific to save for healthcare, and will be relying on their retirement assets to cover healthcare and everything else,” said Leung. “Given their lack of allocating pre-retirement income toward these looming costs, we find Boomers’ actions do not always reflect their greatest concerns.” 

We find that many people are surprised by the cost of Medicare insurance when they reach 65 and the cost of long-term care. 

So as you are planning for retirement – or in retirement reassessing your budget – take a close look at what is really “need” and ‘want.”  Budget for the needs; be realistic about the “wants”.   Maybe on thing the recession is teaching us is that “need” list is really over-packed. 

Share what’s shifting in your “wants” and “needs” as you prepare for or live in retirement.

Medicare Questions

The New York Times blog “Bucks” just ran a great 3-part series of questions and answers about Medicare.   

You can find them here.

The expert answers were provided by the Medicare Rights Center and cover the basics to some very specific questions about benefits and coverage for the disabled. 

Whether you are new to Medicare or a Medicare beneficiary who has questions about coverage or getting ready for the annual election period (AEP), you’ll find the information helpful. 

If you like to plan ahead, the AEP is Nov. 15 – Dec. 31, 2010 for policies that will be effective in 2011.  For most of those with Medicare Advantage plans and Medicare Part D plans this is the one time of the year when you can change your coverage (there are some exceptions like if you move or your employer retiree insurance is cancelled). 

Experts say that comparing your current Medicare plan to other plans may be especially important this year as some plans could see major changes in prices and benefits.  It’s a good idea anyway to check your plan each year if you buy your own policy to make sure the rate is competitive and the polilcy still fits your health care needs.

Plan information and prices for policies effective in 2011 aren’t available yet.  You’ll have to wait until October. 

 But if you’ve got general questions, now is the time to start reading up on Medicare.  Or post them here and we’ll help you find the answers.

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.

 Andy Griffith, Patty Duke, Chubby Checkers.  You know the faces…and the songs!

As part of the recognition of the 45^th anniversary of Medicare,  a new public service announcement was released by the Centers for Medicare and Medicaid Services (CMS) staring Andy Griffith.  You likely remember him from The Andy Griffith Show and Matlock.   

The commercial highlights the new services Medicare beneficiaries will receive thanks to health care reform including free checkups, lower prescription drug costs and continuing crack down on Medicare fraud.

Here’s a link to the Andy Griffith Medicare public service announcement.

 The new advertisement will begin running immediately on national cable television stations.  The advertisement is part of CMS’ efforts to educate and inform people with Medicare and their family members about the many changes and improvements to the program’s various options in advance of Medicare Open Enrollment. 

A new report from CMS reports that savings to Medicare will rise to more than $575 billion over the next decade.  These reforms include new provisions that will improve the quality of care, develop and promote new models of care delivery, appropriately price services, modernize the health system, and fight waste, fraud, and abuse.  The Affordable Care Act is projected to more than double the life of the Medicare Trust Fund, extending its life from 2017 to 2029. 

Social Security has been using celebrities to draw attention to signing up for Social Security online.  For many people, a long wait at the Social Security is no longer necessary to sign up for Social Security benefits.  When it launched the Patty Duke commercial in 2009, Internet application jumped 9% in the next 30 days.   Click here to find the video of Patty and Chubby

There’s something comforting about seeing those familiar faces delivering important messages about Social Security and Medicare.  And I find myself humming those opening tunes for their old TV shows – funny what gets locked away in the brain? 

What do you think about celebrities in public service announcements for Medicare and Social Security?

That’s because the rates can vary substantially from insurance company to insurance company.  But, the plan benefits are identical because they are standardized by the government.

So in a nut shell – the insurance companies must offer the same plan benefits, but can set their own rates.  So that makes it really easy to shop and compare! 

And while there is more to a Medicare Supplement plan than the rate – you want to know the company is stable, has a good track record on paying claims and good customer service if you need it– the monthly premium is a good way to begin to separate the choices. 

Medicare supplement plans cover the “gaps” in Medicare – so when Medicare pays 80% of your bill, rather than pay the remaining 20% out of your own pocket, a Medicare supplement (Medigap) plan picks up that 20%.  It pays when Medicare pays.  So if Medicare doesn’t cover it, your Medicare supplement plan doesn’t either. 

Generally you can select your own doctors and don’t have co-pays.  Two new plans introduced in June – Plan M and Plan N – vary from the standard Medigap plan and may require co-pays, deductibles or a network – so check  your total costs carefully if you look at either of these two plans.  

So if you think a Medicare Supplement plan might be right for you, here are four tips when shopping for a Medicare supplement plan:

• Check prices from at least 3 different companies.  The plans are lettered (Plan A, Plan F, etc.) so it is easy to compare a plan F to another Plan F. It can save you hundreds of dollars a year in premiums.
• If you are moving, don’t assume that the company you have is the best rate in your new location.  Some carriers have preference for some states over others.  And there might be some regional carriers you didn’t have a choice of in your old location.
• If you are healthy and willing to share some of the health care cost risk (pay copays and deductibles), the new Plan N is a plan to look at.
• Medigap plans don’t cover your prescription drug costs.  You’ll need a Part D Prescription drug plan for that.  And that can be a different insurance company, so shop and compare that plan too.(more on Part D later)

 Resources: 

Medicare.gov 

Longevity Alliance – more than 20 different insurance companies – MedSup, Medicare Advantage and Medicare Part D plans. 1-800-713-6250

 Related MomentumToday article:

Deductibles and Copays

Well what about 74?  What does life look like in the 70s?  

A New York Times article paints a picture of the diverse lifestyles of those their 70s.  And two of the defining factors that become more prominent in how you live are financial security and good health. 

We’ve highlighted the chart in this article but recommend reading the article if you’re interested in how society’s attitudesof aging are changing.  and some good food for thought about your life in the 70s.

Whether you look at the positives or the negatives of living longer , it’s clear that good financial planning and healthy living can give you more options in later life.

What do you think about your life in the 70s?

When it comes to figuring out Medicare coverage understanding the difference between a co-pay and co-insurance is a good place to start.  This article from the New York Times has some helpful information, especially when it comes to employer plans. You might want to pass it along to someone figuring out their workplace health insurance.

The same basic concepts apply in Medicare – but how they apply to different types of plans is important to know. So let’s take a look at the basics in figuring out your cost of care: co-insurance, co-payment and deductible (we’ll cover insurance premiums in a later post.)

Deductible is the amount you must pay for health care or prescriptions, before Original Medicare, your prescription drug plan, or other insurance begins to pay. For example, in Original Medicare, you pay a new deductible for each benefit period for Part A, and each year for Part B. These amounts can change every year.

Co-insuranceis the amount you may be required to pay for services after you pay any plan deductibles.  In Original Medicare, this is a percentage (like 20%) of the Medicare approved amount. You have to pay this amount after you pay the deductible for Part A and/or Part B. In a Medicare Part D Prescription Drug Plan, the coinsurance will vary depending on how much you have spent (the doughnut hole issue.) so, if the procedure is $100, Medicare pays $80 and you must pay $20.

Co-payment (co-pay) on the other hand is the amount you pay for each medical service, like a doctor’s visit, or prescription. You’ll find this most frequently in Medicare Advantage plans and Medicare Part D plans. A co-payment is usually a set amount you pay. For example, this could be $10 or $20 for a doctor’s visit or prescription. Co-payments are also used for some hospital outpatient services in Original Medicare.

Also, Medicare doesn’t cover everything.  That surprises a lot of people …often at a critical time of need when they find that the cost of care is theirs alone.  For example, generally long-term care is not covered.  So, for example, Medicare may cover rehabilitation services following a stroke, but once the person is ready to go home, they will pay for their own care.

So how does all this fit together when you are trying to decide among Medicare Advantage, Medicare Supplement and Part D prescription drug coverage?

Here are a couple rules of thumb as you consider different Medicare plans:

Medicare supplement insurance covers the gap (that’s why it’s called Medigap insurance) in Medicare Part A and Part B coverage – the 20% of cost that Medicare doesn’t cover, some plans cover the Part B deductible, provide additional days of coverage beyond what Medicare provides.  A good way  to think about medigap insurance is that it pays only when Medicare pays. You generally won’t find co-pays in these plans.  But, two new plans: Plan M and Plan N do have co-pays – so calculate in those costs if you consider these Medigap plans. All Medigap plans are standardized which means all insurance companies offering the plans must offer the same benefits.  But prices can vary, so compare plans before you buy.

Medicare Advantage (Medicare Part C): These plans wrap Medicare Part A and Part B together – sometimes includePart D and sometimes additional benefits like vision or dental.  Cost sharing in these plans takes all types of forms.  It depends on the individual plan.  So ask lots of questions and make sure you understand deductibles, co-insurance, and co-payments.

Part D prescription drug plans vary widely.  So look closely for deductibles, co-payments, co-insurance and the coverage gap (donut hole).

So when you shop and compare Medicare plans make sure you fully understand your cost of care:  know the deductibles, co-pays and co-insurance of any plan you are considering so you won’t be surprised when the bill comes due.

Resources:

Medicare and You 2010  Government resource

What’s New About Medicare Supplement Plans from Longevity Alliance