Any which way one looks at it, turning 65 is a milestone in one's life. Grateful to get that far alive, and if medically uninsured, grateful for the opportunity to enroll in Medicare.
About three months prior to turning 65, one will receive their "Welcome to Medicare" brochure in the mail. Typical of government (and insurance) programs, the information is less than crystal clear and the choices far from optimal.
In a Huffington Post article in late fall of 2012, Joe Baker, President, Medicare Rights Center, outlines some of the cold, hard facts.
Most people with Medicare are in no position to pay more for their health care. Half of people with Medicare live on annual incomes of $22,000 or less--just under 200% of the federal poverty level. And half have $53,000 or less in personal savings. Health care costs are a significant expense for Medicare beneficiaries, regardless of income. Medicare households spend 15 percent of their total expenses on health care compared to 5 percent among non-Medicare households.The hit for those with extraordinary low incomes is especially harsh. It is not uncommon for example for many working women (with a lifetime history of working multiple jobs with low-pay and few benefits) to end up with Social Security income as their only source of income, and not uncommon for that income to be less than $8000/per year.
Medicare Part A will be "free". Medicare Part B will be $104/month or $1248/year. A Medigap Plan F from AARP in Alaska will cost one an additional $120/month or $1440/year. An average prescription drug plan will cost $41/month or $492. After all this there will remain significant exclusions and co-pays in one's ability to access needed health care.
This leaves a person with $8000/year Social Security income with only $4800/year income after Medicare premiums are taken into account. That's just the first year. Each year one ages, Part B, Medigap, and prescription drug plans rise significantly, predicted to be about double age 65 costs by the time one reaches age 75. Social Security benefits won't even begin to keep up.
If one has $50,000 in personal savings (due to being a responsible saver over a lifetime of relatively low income, and a desire to remain somewhat independent of public assistance programs), one does not qualify for additional help with Medicare premium costs.
The asset test for help with prescription drug costs is $13,300, which includes any assets other than one's home or vehicle. The asset test for help with Medicare Part B is $7,080 for an individual. The asset limit does not vary if one's income is $500/month or $1380/month for Medicare Part B or $1746.25/month (or much, much less) for Part D prescription drug benefits.
Wouldn't it make sense to raise the asset limit a bit for folks with exceptionally low (less than $1000/month, for example) income? To encourage folks to save and remain independent for as long as possible, rather than spend down their assets in order to qualify for Medicaid and other public assistance?
There is no help available for Medigap. Medigap or supplemental insurance covers much of what Part A and Part B don't cover, which could easily bankrupt anyone with assets of $50,000 with one medical emergency or typical chronic condition that occurs with aging.
It doesn't take a math wizard to see that the financial and/or health care future of low-income Seniors with moderate assets looks pretty dang bleak.
Does Congress have on blinders of some kind not to understand this? Does President Obama actually consider reduction in the COLA formula for Social Security benefits (otherwise known as chained CPI) a viable option for anything?
Making life more difficult for low-income seniors with moderate assets will force them to quickly draw down their assets to merely eat, pay Medicare premiums, and additional costs for vision, hearing, and dental care. Doesn't include utilities, home repairs, vehicle repairs, or an opportunity to replace a 15-year old car with one that is maybe only 5 years old.
Once assets are drawn down, one qualifies for Medicaid and assistance with about everything. But is that the direction independent seniors want to go in? Is that a cost savings for the government?
Realistic reform for US financial and health care issues needs better solutions than are currently on the table.