P.I.S.S.D. -- Personal Injury, Social Security Disability. Dallas Texas Lawyers

Danger Ahead For The Social Security System

According to a CNN story today, Treasury Secretary Henry Paulson is warning about the same dangers I mentioned in a January post on this blog — we're about to run out of money for Social Security and Medicare. Here are excerpts from the article:

Treasury Secretary Henry Paulson, saying that Social Security is "financially unsustainable," called Tuesday for quick action to keep the system strong and released a report detailing the program's funding shortfalls.

The federal government will have to start paying back what it owes the Social Security trust fund in 2017 so the program can continue paying 100% of benefits. By 2041, if the system is left unchanged, Social Security will only be able to pay out 78% of benefits promised to future retirees.

Shoring up Social Security is one of the main economic issues that will face the next president. Most proposals involve raising taxes or reducing benefits. Democrats typically have opposed benefit reductions while Republicans have opposed tax increases. 

"This year's Social Security Report again demonstrates that the Social Security program is financially unsustainable and requires reform," Paulson said at a briefing. "The sooner we take action ... the less drastic needed changes will be."

Borrowing from the future

For years, the Social Security program has been taking in more in payroll taxes from existing workers than it needed to fund benefits. The government borrowed that surplus and promised to pay it back with interest by issuing special issue bonds to the program.

But the proceeds from those bonds are finite, which is why the trustees estimate that the trust fund will run dry by 2041. Without that cushion, Social Security would only be able to pay out the money it collects in payroll taxes.

Demographics are a major reason for the funding shortfall. The number of workers, compared to retirees, has begun to shrink. That means the system will produce a smaller surplus, then none at all, and eventually it won't be able to pay out all benefits promised to future retirees.

Last year, the trustees also estimated that the government would need to start paying back the program in 2017, and that the Social Security trust fund would be exhausted by 2041.

Currently, the first $102,000 of wages are subject to the 12.4% payroll tax that funds Social Security. Typically, half the tax is paid by workers, and the other half is paid by employers.

To keep the system solvent over the next 75 years, the trustees estimated that the Social Security payroll tax rate would need to increase to 14.1%, up from the current 12.4%. Or lawmakers could bring it into balance by cutting benefits by 12%.

Nonpartisan experts say the pain of fixing Social Security can be lessened in two ways: Make changes soon so that they affect more people but in a less dramatic manner, and implement a combination of tax increases and benefit reductions so that neither is particularly steep.

Medicare a bigger problem

Medicare, which was also addressed in Tuesday's report, has an even larger and more immediate funding deficit to address.

The Medicare program is already taking in less than it has committed to pay out, and the trustees forecast that the Medicare trust fund will be depleted by 2019, at which point Medicare would only be able to pay out 78% of costs.

Medicare was designed to be funded by three sources: payroll taxes; Medicare premiums paid by beneficiaries; and general revenue or money from income taxes.

The payroll tax portion of that funding comes from a 2.9% tax on all wages - half of which is paid by workers and half by their employers. To make Medicare solvent over the next 75 years, the trustees estimate that 6.44% of wages would need to be taxed.

Link of the Day - Older Texans Hit By High-Pressure Medicare Insurance Tactics

The Dallas Morning News ran an article earlier this month about Medicare insurance sales people pressuring senior citizens to buy policies they don't want or need. Here are excerpts from the story:

The annual enrollment period for private Medicare plans has brought out overly aggressive and deceptive sales agents again, so consumer advocates and insurance regulators are warning seniors to be on guard.

The annual enrollment season for the private insurance, sold as "Medicare Advantage" plans, began in mid-November and runs until Dec. 31. In some cases, people may sign up until March 31.

The private insurance is an alternative to traditional Medicare and has grown in popularity in recent years because it offers enhanced benefits, such as preventive care and disease management.

About one in five Medicare beneficiaries is now in an Advantage plan.

Still, consumer advocates argue that the private coverage isn't as extensive as many traditional Medicare supplemental plans and may not be suitable for seniors with chronic or serious illnesses.

A common concern among advocates is that some physicians and hospitals don't accept patients on private Medicare plans – a point the advocates say isn't always explained to seniors before they enroll.

The recent complaints about unscrupulous agents come despite Medicare's efforts to curb hard-sell tactics.

This year, the federal agency began requiring insurance companies to make follow-up calls to beneficiaries to check whether the seniors understood the terms of the coverage they had just purchased from an agent.

Here are some tips from the article:

GUARD AGAINST FRAUD

Don't join a plan until you've confirmed that your doctor and other health care providers will accept it.

Don't buy anything from a salesperson who comes to your home uninvited. It's illegal to sell Medicare Advantage plans door-to-door.

Don't be fooled if a salesperson claims to be with Medicare or Social Security. Neither agency makes home visits or unsolicited phone calls.

Don't say yes to a salesperson who tries to pressure you to make a quick decision.

Don't sign anything you haven't read or don't understand.

SOURCE: Texas Department of Insurance

HOW TO GET HELP

If you think you've been misled or pressured into enrolling in a Medicare Advantage plan:

Call Medicare at 1-800-633-4227 or the Senior Source at 214-823-5700.

If you want to report fraud or other agent misconduct:

Visit the Texas Department of Insurance Web site at http://tdi.state.tx.us or call 1-800-252-3439.

If you need help with an insurance question:

Call the Texas Department of Insurance at 1-800-252-3439 or the local Area Agency on Aging at 211.

The Dallas Morning News provided a chart comparing various Medicare insurance plans.

Link of the Day - Benefits Checkup Site

The National Council on Aging has a helpful site called Benefits Checkup that lets people search or sign up for for more than 250 different types of medical and retirement benefits. Here is a description from the site:

About BenefitsCheckUp

Many older people need help paying for prescription drugs, health care, utilities and other basic needs. Ironically, millions of older Americans — especially those with limited incomes — are eligible for but not receiving benefits from existing federal, state and local programs. Ranging from heating and energy assistance to prescription savings programs to income supplements, there are many public programs available to seniors in need if they only knew about them and how to apply for them.

Developed and maintained by The National Council on Aging (NCOA), BenefitsCheckUp is the nation's most comprehensive Web-based service to screen for benefits programs for seniors with limited income and resources.

BenefitsCheckUp includes more than 1,550 public and private benefits programs from all 50 states and the District of Columbia, such as:

• Prescription drugs
• Nutrition (including Food Stamps)
• Energy assistance
• Financial
• Legal
• Health care
• Social Security
• Housing
• In-home services
• Tax relief
• Transportation
• Educational assistance
• Employment
• Volunteer services

Since 2001, millions of people have used BenefitsCheckUp to find benefits programs that help them pay for prescription drugs, health care, rent, utilities, and other needs. For more information on BenefitsCheckUp, contact us at comments@benefitscheckup.org.

Link of the Day - Medicare And You Handbook -- 2007 Edition

The government has released the 2007 edition of "Medicare and You." This is an Adobe Acrobat document, and you will need the free Adobe Reader to view it.

Change Proposed In Physician Reimbursement Under Medicare

A note at ModernHealthcare.com mentions the continual problem with Medicare reimbursement to doctors. Under the current system, reimbursements should be cut by about 5% each year. Of course if the government actually did that, no doctors would see Medicare patients. So Congress has to "fudge" the law each year. Here's the note from the Web site:

A House bill would tie Medicare physician payments to the Medicare Economic Index, yielding a 1.8% increase for 2007 instead of a scheduled cut of about 4.6%. Medicare's current system for valuing physician services -- known as the sustainable growth rate formula -- "doesn't work," said Rep. Michael Burgess (R-Texas), the bill's sponsor. The bill would replace the sustainable growth rate formula with the Medicare Economic Index "minus 1%," according to Burgess' office. It also would require physicians to report certain quality measurements to the CMS. A companion bill hasn't been introduced in the Senate.