Tag Archives: social security

Medicare Premiums to Increase Slightly in 2021

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Medicare premiums are set to rise a modest amount next year, but still cut into any Social Security gains. The basic monthly premium will increase $3.90, from $144.60 a month to $148.50.

The Centers for Medicare and Medicaid Services (CMS) announced the premium and other Medicare cost increases on November 6, 2020. The hike could have been much worse due to rising costs during the coronavirus pandemic, but the bipartisan budget bill passed in October capped the increase. While the majority of beneficiaries will pay the added amount, a “hold harmless” rule prevents Medicare recipients’ premiums from increasing more than Social Security benefits, which are going up only 1.3 percent in 2021. This “hold harmless” provision does not apply to Medicare beneficiaries who are enrolled in Medicare but who are not yet receiving Social Security, new Medicare beneficiaries, seniors earning more than $88,000 a year, and “dual eligibles” who get both Medicare and Medicaid benefits.

Meanwhile, the Part B deductible will rise from $198 to $203 in 2021, while the Part A deductible will go up by $76, to $1,484. For beneficiaries receiving skilled care in a nursing home, Medicare’s coinsurance for days 21-100 will increase from $176 to $185.50. Medicare coverage ends after day 100.

Here are all the new Medicare payment figures:
•    Part B premium: $148.50 (was $144.60)
•    Part B deductible: $203 (was $198)
•    Part A deductible: $1,484 (was $1,408)
•    Co-payment for hospital stay days 61-90: $371/day (was $352)
•    Co-payment for hospital stay days 91 and beyond: $742/day (was $704)
•    Skilled nursing facility co-payment, days 21-100: $185.50/day (was $176)

So-called “Medigap” policies can cover some of these costs.

Premiums for higher-income beneficiaries ($88,000 and above) are as follows:

  • Individuals with annual incomes between $88,000 and $111,000 and married couples with annual incomes between $176,000 and $222,000 will pay a monthly premium of $207.90.
  • Individuals with annual incomes between $111,000 and $138,000 and married couples with annual incomes between $222,000 and $276,000 will pay a monthly premium of $297.
  • Individuals with annual incomes between $138,000 and $165,000 and married couples with annual incomes between $276,000 and $330,000 will pay a monthly premium of $386.10.
  • Individuals with annual incomes above $165,000 and less than $500,000 and married couples with annual incomes above $330,000 and less than $750,000 will pay a monthly premium of $475.20.
  • Individuals with annual incomes above $500,000 and married couples with annual incomes above $750,000 will pay a monthly premium of $504.90.

Rates differ for beneficiaries who are married but file a separate tax return from their spouse. Those with incomes greater than $88,000 and less than $412,000 will pay a monthly premium of $475.20. Those with incomes greater than $412,000 will pay a monthly premium of $504.90.

The Social Security Administration uses the income reported two years ago to determine a Part B beneficiary’s premium. So the income reported on a beneficiary’s 2019 tax return is used to determine whether the beneficiary must pay a higher monthly Part B premium in 2021. Income is calculated by taking a beneficiary’s adjusted gross income and adding back in some normally excluded income, such as tax-exempt interest, U.S. savings bond interest used to pay tuition, and certain income from foreign sources. This is called modified adjusted gross income (MAGI). If a beneficiary’s MAGI decreased significantly in the past two years, she may request that information from more recent years be used to calculate the premium. You can also request to reverse a surcharge if your income changes.

Those who enroll in Medicare Advantage plans may have different cost-sharing arrangements. CMS estimates that the Medicare Advantage average monthly premium will decrease by 11 percent in 2021, from an average of $23.63 in 2020 to $21 in 2021.

Husbands Usually Don’t Consider Their Wives’ Future When Deciding When to Take Social Security Benefits

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The amount of Social Security benefits a surviving spouse receives depends, in part, on when their deceased spouse began claiming benefits. However, husbands usually don’t take survivor’s benefits into account when claiming benefits, according to a recent study, meaning that many widows will needlessly experience a significant drop in income.

Because women typically live longer than men and men are often the higher earners, most married women will be widowed and will have their income drop below what they need to maintain their accustomed standard of living. Spouses of a worker who has died are entitled to the worker’s full retirement benefits once they reach their full retirement age. If the worker delayed retirement, the survivor’s benefit will be higher. Husbands have the option of increasing their surviving spouse’s income by delaying Social Security benefits, but according to a study by the Center for Retirement Research at Boston College, most husbands do not take their wives’ future needs into consideration.

The study looked at whether greater awareness of Social Security Survivor’s benefits would affect claiming decisions. The study found that husbands tend to take more immediate concerns into consideration, such as their health and whether they have another pension, rather than their wives’ Survivor’s Benefits. Giving the husbands information about how they could improve their wives’ financial well-being by claiming benefits later did not change their claiming decisions.

The study concludes that in order to protect widows, the government should consider providing Survivor’s Benefits in a way that doesn’t tie the surviving spouse’s benefits to the decision of when to claim benefits. As things stands now, however, if you are the higher earner and are nearing retirement, you may want to take into account how your decision on when to claim benefits will affect your spouse if he or she survives you.

To come up with a plan that will best protect you and your spouse, contact your attorney.

A Modest Social Security Increase for 2021

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The Social Security Administration has announced a 1.3 percent rise in benefits in 2021, an increase even smaller than last year’s.

Cost-of-living increases are tied to the consumer price index, and a modest upturn in inflation rates and gas prices means Social Security recipients will get only a slight boost in 2021. The 1.3 percent increase is similar to last year’s 1.6 percent increase, but much smaller than the 2.8 percent rise in 2019. The average monthly benefit of $1,523 in 2020 will go up by $20 a month to $1,543 a month for an individual beneficiary, or $240 yearly.

The cost-of-living change also affects the maximum amount of earnings subject to the Social Security tax, which will grow from $137,700 to $142,800.

For 2021, the monthly federal Supplemental Security Income (SSI) payment standard will be $794 for an individual and $1,191 for a couple.

Some years a small increase means that additional income will be entirely eaten up by higher Medicare Part B premiums. But this year, that shouldn’t be the case. The standard monthly premium for Medicare Part B enrollees is forecast to rise $8.70 a month to $153.30. However, due to the coronavirus pandemic, under the terms of the short-term spending bill the increase for 2021 will be limited to 25 percent of what it would otherwise have been.

Most beneficiaries will be able to find out their specific cost-of-living adjustment online by logging on to my Social Security in December 2020. While you can still receive your increase notice by mail, you have the option to choose whether to receive your notice online instead of on paper.

For more on the 2021 Social Security benefit levels, click here.

How Will the Coronavirus Pandemic Affect Social Security?

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The coronavirus pandemic is having a profound effect on the current U.S. economy, and it may have a detrimental effect on Social Security’s long-term financial situation. High unemployment rates mean Social Security shortfalls could begin earlier than projected.

Social Security retirement benefits are financed primarily through dedicated payroll taxes paid by workers and their employers, with employees and employers splitting the tax equally. This money is put into a trust fund that is used to pay retiree benefits. The most recent report from the trustees of the Social Security trust fund is that the fund’s balance will reach zero in 2035. This is because more people are retiring than are working, so the program is paying out more in benefits than it is taking in. Additionally, seniors are living longer, so they receive benefits for a longer period of time. Once the fund runs out of money, it does not mean that benefits stop altogether. Instead, retirees’ benefits would be cut, unless Congress acts in the interim. According to the trustees’ projections, the fund’s income would be sufficient to pay retirees 77 percent of their total benefit.

With unemployment at record levels due to the pandemic, fewer employers and employees are paying payroll taxes into the trust fund. In addition, more workers may claim benefits early because they lost their jobs. President Trump issued an executive order deferring payroll taxes until the end of the year as a form of economic relief, which could negatively affect Social Security and Medicare funds.

Some experts believe that the pandemic could move up the depletion of the trust fund by two years, to 2033, if the COVID-19 economic collapse causes payroll taxes to drop by 20 percent for two years. Other experts argue that it could have a greater effect and deplete the fund by 2029. However, as the Social Security Administration Chief Actuary morbidly noted to Congress, this pandemic different from most recessions: the increased applications for benefits will be partially offset by increased deaths among seniors who were receiving benefits.

It remains to be seen exactly how much the pandemic affects the Social Security trust fund, but the experts agree that as soon as the pandemic ends, Congress should take steps to shore up the fund.

Social Security Shutters ‘Petri Dish’ Offices in Response to Coronavirus Outbreak

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To protect its workers and the public during the coronavirus pandemic, the Social Security Administration (SSA) has suspended face-to-face service to at its field offices and hearings offices nationwide until further notice. Payments to the nearly 70 million Social Security beneficiaries will not be affected.

While in-person appointments will still be made for certain critical services (see below), the SSA is encouraging beneficiaries to transact as much business as possible online using the agency’s website. (If you don’t have an online account yet, click here.)

Certain services also will continue to be available via the agency’s toll-free line, (800) 772-1213 or from local offices’ General Inquiry lines. (For the local office locator, click here.)

Why the Closure?

Budget cuts to Social Security over the years have led to crowded offices and long wait times.  With the advent of the coronavirus outbreak, this went from being an inconvenience to a public health threat.  The union representing the SSA’s 61,000 workers was deeply concerned about the health of the agency’s workforce as well as the danger to the public.

“The offices are petri dishes,” Richard Couture, a spokesman for the union, told The New York Times.  “People are sitting there for a long time, magnifying and multiplying the risk of infection for everyone there, and to people on the outside.”

How to Get in Touch During the Shutdown

Examples of tasks or inquiries that can be accomplished online include:

  • Applying for retirement, disability, and Medicare benefits;
  • Checking the status of an application or appeal;
  • Requesting a replacement Social Security card (in most areas); or
  • Requesting a replacement Medicare card.

(For a complete list, click here.)

Phone services will also be available, although the SSA says it is “focusing on providing specific critical services to people in dire need.” Examples of how the SSA can help by phone include:

  • If you did not receive your monthly payment;
  • If you are currently homeless or at risk of becoming homeless; or
  • If your benefits were suspended and can now be reinstated.

Expect long wait times if calling, however.

In-Person Appointments

In-person help will still be available for a limited list of critical services, including:

  • Reinstatement of benefits in dire circumstances;
  • Assistance to people with severe disabilities, blindness or terminal illnesses; or
  • Help for those in urgent need of eligibility decisions for Supplemental Security Income or Medicaid eligibility related to work status.

If you require such services, you must call in advance; there are no walk-ins at the field offices.

What if you already had a standing appointment or disability hearing scheduled?  If this is the case, the SSA will call you to reschedule or to take care of the issue by phone. Unfortunately, this call may come from a private phone number rather than from a government phone because employees are working remotely and do not necessarily have government-issued phones. Identity theft phone scams where callers impersonate SSA workers were already on the rise, and this will likely only add to beneficiaries’ confusion. Be aware that agency employees will never inform you that your Social Security number has been suspended, demand payment, or seek credit card information.  (Scams taking advantage of the situation have already started.)

For full details on changes to SSA services brought on by the response to the coronavirus, go to the SSA’s Social Security & Coronavirus page, https://www.ssa.gov/coronavirus/

If you are enrolling in Medicare, you can get free counseling from your State Health Insurance Assistance Program (SHIP).  To find your state program, click here.

The 2020 Social Security Increase Will Be Smaller than 2019’s

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The Social Security Administration has announced a 1.6 percent increase in benefits in 2020, nearly half of last year’s change. The small rise has advocates questioning whether the government is using the proper method to calculate the cost of living for older Americans and those with disabilities.

Cost-of-living increases are tied to the consumer price index, and a modest upturn in inflation rates and gas prices means Social Security recipients will get only a small boost in 2020. The 1.6 percent increase is lower than last year’s 2.8 percent rise and the 2 percent increase in 2018. The average monthly benefit of $1,479 in 2019 will go up by $24 a month to $1,503 a month for an individual beneficiary, or $288 yearly.

The cost-of-living change also affects the maximum amount of earnings subject to the Social Security tax, which will grow from $132,900 to $137,700.

For 2020, the monthly federal Supplemental Security Income (SSI) payment standard will be $783 for an individual and $1,175 for a couple.

The smaller increase may mean that additional income will be entirely eaten up by higher Medicare Part B premiums. The standard monthly premium for Medicare Part B enrollees is forecast to rise $8.80 a month to $144.30. According to USA Today, advocates are questioning the method used to calculate cost-of-living increases. The Bureau of Labor Statistics uses the Consumer Price Index for Urban Wage Earners and Clerical Workers to set the inflation rate. This method looks at prices for gasoline, electronics, and other items that younger workers rely on. The advocates suggest using a different index (the Consumer Price Index for Elderly) that puts greater emphasis on medical and housing expenses.

Most beneficiaries will be able to find out their cost-of-living adjustment online by logging on to my Social Security in December 2019. While you will still receive your increase notice by mail, in the future you will be able to choose whether to receive your notice online instead of on paper.

Maximizing Social Security Survivor’s Benefits

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Social Security survivor’s benefits provide a safety net to widows and widowers. But to get the most out of the benefit, you need to know the right time to claim.

While you can claim survivor’s benefits as early as age 60, if you claim benefits before your full retirement age, your benefits will be permanently reduced. If you claim benefits at your full retirement age, you will receive 100 percent of your spouse’s benefit or, if your spouse died before collecting benefits, 100 percent of what your spouse’s benefit would have been at full retirement age. Unlike with retirement benefits, delaying survivor’s benefits longer than your full retirement age will not increase the benefit. If you delay taking retirement benefits past your full retirement age, depending on when you were born your benefit will increase by 6 to 8 percent for every year that you delay up to age 70, in addition to any cost of living increases.

You cannot take both retirement benefits and survivor’s benefits at the same time. When deciding which one to take, you need to compare the two benefits to see which is higher. In some cases, the decision is easy—one benefit is clearly much higher than the other. In other situations, the decision can be a little more complicated and you may want to take your survivor’s benefit before switching to your retirement benefit.

To determine the best strategy, you will need to look at your retirement benefit at your full retirement age as well as at age 70 and compare that to your survivor’s benefit. If your retirement benefit at age 70 will be larger than your survivor’s benefit, it may make sense to claim your survivor’s benefit at your full retirement age. You can then let your retirement benefit continue to grow and switch to the retirement benefit at age 70.

Example: A widow has the option of taking full retirement benefits of $2,000/month or survivor’s benefits of $2,100/month. She can take the survivor’s benefits and let her retirement benefits continue to grow. When she reaches age 70, her retirement benefit will be approximately $2,480/month, and she can switch to retirement benefits. Depending on the widow’s life expectancy, this strategy may make sense even if the survivor’s benefit is smaller than the retirement benefit to begin with.

Keep in mind that divorced spouses are also entitled to survivor’s benefits if they were married for at least 10 years. If you remarry before age 60, you are not entitled to survivor’s benefits, but remarriage after age 60 does not affect benefits. In the case of remarriage, you may need to factor in the new spouse’s spousal benefit when figuring out the best way to maximize benefits.

Window Closing for Couples to Use ‘Claim Now, Claim More Later’ Social Security Strategy

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Spouses who are turning full retirement age this year are the last group who can choose whether to take spousal benefits or to take benefits on their own record. The strategy, used by some couples to maximize their benefits, will not be available to people turning full retirement age after 2019.

The claiming strategy — sometimes known as “Claim Now, Claim More Later” — allows a higher-earning spouse to claim a spousal benefit at full retirement age by filing a restricted application for benefits. While receiving the spousal benefit, the higher-earning spouse’s regular retirement benefit continues to increase. Then at 70, the higher-earning spouse can claim the maximum amount of his or her retirement benefit and stop receiving the spousal benefit. To use this strategy, the lower-earning spouse must also be claiming benefits. Workers cannot claim spousal benefits unless their spouses are also claiming benefits.

A 2015 budget law began phasing out the strategy. If you were 62 or older by the end of 2015, you are still able to choose which benefit you want at your full retirement age. You do not have to make the election in the year you turn full retirement age. If your spouse is still working, you can wait to collect benefits until your spouse begins collecting. For example, if your spouse does not begin collecting benefits until you are 68, you can wait to collect benefits and file a restricted application at age 68. However, when workers who were not 62 by the end of 2015 apply for spousal benefits, Social Security will assume it is also an application for benefits on the worker’s record. The worker is eligible for the higher benefit, but he or she can’t choose to take just the spousal benefits and allow his or her own benefits to keep increasing until age 70.

The budget law’s phase-out of the claiming strategy does not apply to survivor’s benefits. Surviving spouses will still be able to choose to take survivor’s benefits first and then switch to retirement benefits later if the retirement benefit is larger.

IRS Issues Long-Term Care Premium Deductibility Limits for 2019

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The Internal Revenue Service (IRS) is increasing the amount taxpayers can deduct from their 2019 income as a result of buying long-term care insurance.

Premiums for “qualified” long-term care insurance policies (see explanation below) are tax deductible to the extent that they, along with other unreimbursed medical expenses (including Medicare premiums), exceed 7.5 percent of the insured’s adjusted gross income.  (The 7.5 percent threshold is for the 2017 and 2018 tax years.  It is scheduled to revert to 10 percent in 2019.)

These premiums — what the policyholder pays the insurance company to keep the policy in force — are deductible for the taxpayer, his or her spouse and other dependents. (If you are self-employed, the tax-deductibility rules are a little different: You can take the amount of the premium as a deduction as long as you made a net profit; your medical expenses do not have to exceed a certain percentage of your income.)

However, there is a limit on how large a premium can be deducted, depending on the age of the taxpayer at the end of the year. Following are the deductibility limits for 2019. Any premium amounts for the year above these limits are not considered to be a medical expense.

Attained age before the close of the taxable year Maximum deduction for year
40 or less $420
More than 40 but not more than 50 $790
More than 50 but not more than 60 $1,580
More than 60 but not more than 70 $4,220
More than 70 $5,270

Another change announced by the IRS involves benefits from per diem or indemnity policies, which pay a predetermined amount each day.  These benefits are not included in income except amounts that exceed the beneficiary’s total qualified long-term care expenses or $370 per day, whichever is greater.

For these and other inflation adjustments from the IRS, click here.

What Is a “Qualified” Policy?

To be “qualified,” policies issued on or after January 1, 1997, must adhere to certain requirements, among them that the policy must offer the consumer the options of “inflation” and “nonforfeiture” protection, although the consumer can choose not to purchase these features. Policies purchased before January 1, 1997, will be grandfathered and treated as “qualified” as long as they have been approved by the insurance commissioner of the state in which they are sold.

Learn About Social Security’s Online Tools

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With the aging population becoming increasingly tech savvy, the Social Security Administration (SSA) has moved a lot of services online. From applying for Social Security benefits to replacing a card, the SSA has online tools to help.

To access most of the online services, you need to create a mySocial Security account. This account allows you to receive personalized estimates of future benefits based on your real earnings, see your latest statement, and review your earnings history. You can also request a replacement Social Security card, check the status of an application, get direct deposit, or change your address. If you are a representative payee, you can use my Social Security to complete representative payee accounting reports. Even if you don’t get benefits, you can use the account to request a benefit verification letter.

In addition to my Social Security, other online services are available, including the following:

For a full run down of the online services available, click here.