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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.

Originally posted to akmk on Fri Apr 05, 2013 at 03:38 PM PDT.

Also republished by Income Inequality Kos.


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Comment Preferences

  •  Excellent diary! (9+ / 0-)

    Your information is very helpful to me in terms of planning for the future.  I'm going to save this diary for future reference.

    I've recently turned 62 and just started receiving $713/mo (8556/yr) in Soc Sec retirement.  (I lost 16 working-years to disability, and have lived on an average of about $300/yr (plus HUD Housing and Food Stamps, as well as Medicaid) for the last 13 years.  I am just now getting used to the idea of having a little cash.  Left to my own devices, I would be socking away about 2/3 of the $713 and earning a little bit of interest.

    One oddity of my current situation -- having income once again -- is that it is now against my best interests to save, which I could easily do after the training of 13 years of extreme austerity.  All three of the government benefits which I receive have limits on both income and assets; exceed those limits, and you lose the benefit.  

    The most severe limits are part of Indiana's Medicaid program.  With Medicaid, the income limit (after a standard deduction) for a single person is $698/mo.  I come in just under that limit, and if I were to earn $.50 more a month (yes, fifty cents!) I would exceed the income limit and lose Medicaid for that month.  This means that I cannot put money in savings (current interest rate 5% for balances over $100) without losing Medicaid.

    Medicaid's asset limit is similarly draconian at $1500.00.  (Yes, fifteen HUNDRED dollars, not 'thousand').   'Cash on hand' counts as an asset, like bank accounts or any other reasonable saving/investment program. Once again, if I begin to save, I will soon lose Medicaid.

    The best path forward I can see is to just plain spend money each month until ACA/Obamacare become available nine months from now, and hope that the Federally-determined income/asset limits will be more reasonable.

  •  Fortunately I work for a healthcare co (0+ / 0-)

    And according to their rules, once my years of service + my age reach 75 I can retire and be covered (along with my husband) under my employee plan forever after.  Not sure exactly what I'll have to pay (if anything) but pretty sure it'll be better than anything I can get as a single person on the market.  I'll be 57 at that point, but of course that also requires me to continue working for them for 13 more years :(

    Republican threats amount to destroying the present if we don't allow them to destroy the future too. -MinistryOfTruth, 1/1/2013

    by sleipner on Fri Apr 05, 2013 at 05:15:03 PM PDT

    •  The current system is disjointed. (0+ / 0-)

      One plan for Congress and federal employees.
      Different plans for:
      other employees
      Indian Health care

      And finally, the many who are uninsured due to low income, but with just enough assets to not qualify for Medicaid.

    •  Good, but (0+ / 0-)

      They can always change the rules after you are in no position to change your planning.

      Bankruptcy is a great opportunity for outfits to abrogate their contracts.

  •  Safe deposit boxes. n/t (0+ / 0-)

    This health care system is a moral atrocity. Dr. Ralphdog

    by AllisonInSeattle on Fri Apr 05, 2013 at 05:33:39 PM PDT

  •  And here's an excellent current article regarding (1+ / 0-)
    Recommended by:

    the need to let Medicare negotiate prescription drug prices.

  •  Medigap plans differ in coverage and price, $104 (1+ / 0-)
    Recommended by:

    the lowest...there are several options well spelled out and terrifically organized in the Medicare/Medigap literature you will get.
       Mine just went from $141 to $149, because , you know, inflation.
    heh...but I had also had two major surgeries and they paid and paid, for the most part, so far...knock wood, ouch.
        There were only two things they screwed up and the providers had to rebill, but basically everybody acted very professional and accurate, including my medical teams....knock wood, ouch.

    Before I turned 65 I had junk Blue Sheild at $700 a month and never could afford to go to the doctor with a $4000 out of pocket policy....and couldn't afford not to have the junk insurance.
    So far, knock wood, ouch, I was mostly lucky, nothing terminal was found when I finally could go with Medicare at 65...but too to many seniors are not so lucky.
      That deferred health maintenance is very costly.
       The tremendous extra cost to Medicare, not paid for by prior junk insurances until 65 is a national disgrace. The costs to Medicare and to society in many ways is horrible.
      People put off care until they are 65 even if they have insurance.
      That must stop, we need early Medicare buyin now.

    If we had a progressive......nevermind...ACA is a start at correction.

    Thanks for this diary.

    This machine kills Fascists.

    by KenBee on Sat Apr 06, 2013 at 01:57:24 AM PDT

    •  Good points. Thanks. (1+ / 0-)
      Recommended by:
    •  All, however, is not well spelled out or clearly (1+ / 0-)
      Recommended by:

      explained in the literature one receives or from one's own SHIP personnel in their state.

      There remains much confusion over choices that must be made within a short time frame with lifelong financial and/or health consequences.

      The choices may be better than some policies folks held at a younger than Medicare age (like the example you cite), but they are still challenging (and not pretty) for those who have had no insurance (or income for even junk insurance) previously and whose incomes are very low and whose assets are modest but above the asset limit to qualify for additional premium assistance.

  •  Dependents of Disabled vets T and P (0+ / 0-)

    Total and permanent must move from Champ VA to Medicare at age 65.  This means one has to take Part B.
    That means losing 104 a month in social security to pay for what costs you nothing but a 50 dollar deductibe now.
    That should be addressed,  Upon turning age 65 one must pay part be to have Champ VA as a secondary kick in.

    It costs wives of disabled vets their social security retirement and with a lower cost of living adustment there is no catching up.  It is a lose lose situation.  Getting older
    and paying more...They are sister companies and you just play out of most of the Veteran benefit at age 65.   That really should be addressed,

    We the People have to make a difference and the Change.....Just do it ! Be part of helping us build a veteran community online. United Veterans of America

    by Vetwife on Sat Apr 06, 2013 at 04:16:59 AM PDT

  •  Some bad information about Medicare in this post (0+ / 0-)

    There seems to be some bad information in this post about Medicare. I think that is because the author is state specific

    Let me start with what is true:

    First, you will pay a higher percent of your income in retirement on healthcare than someone still working. Duh!! You’re older so you need more health care. And you’re not working so you have less income.

    Second, the idea of saving during your life is so that you can fund your retirement. The author implies you shouldn't have to spend those assets.

    Now here’s what’s wrong:

    First, this seems to be specific to one state.  All the numbers given vary widely state to state. Particularly the information about Medigap supplements is state specific. The information about who pays what for Medicare Part B and drug programs is also state specific.

    Second, I do not understand why the author of the post left out Part C Medicare health plans as an option; they were revised in 2003 particularly to make them a better option for low income seniors (although many cuts were made to Part C health plans in 2010, some of the benefits for the poor were retained).

    Third, no one with their “only source” of income in retirement being $8000 from Social Security has to pay $4000 for Medicare and supplements; if they have assets, then they have another source of income (not that interest is that great these days)

    Finally, the basic premise seems flawed.  Does the author want Congress to pass some legislation giving lower middle-income seniors some assistance so that they don’t need assistance?

    In addition the statistics about the relative incomes and savings of people on Medicare from the far-left Medicarerights lobby are totally misleading.  They do not take into account age cohorts, purposeful (but totally legal) spend downs (e.g., by giving money to kids to qualify for Medicaid), and pensions (which most older seniors have but fewer and fewer “new” seniors and about to be seniors will get). (And of course they don't count savings, which the author seems to think you should get to keep in your old age.)

    Those Medicarerighs lobby statistics are meaningless however when deciding what you do when you turn 65; you have to go with the facts in your own situation and forget statistics.

    •  Sorry, you are having a hard time relating. The (0+ / 0-)

      statistics are highly representative of the situation of many seniors.

      Yes, Congress should raise the asset limit to allow for some assistance for Medicare and Gap and drug premiums for those with significantly lower incomes.  They should negotiate for better prescription drug costs to increase access and improve overall health.

      Those with significantly lower incomes at retirement (like one third of the minimum allowed for assistance) will have to spend their assets faster (they are living off of and paying for premiums off their modest savings) and thus will become totally indigent and dependent on even more expensive Medicaid and other public assistance much sooner rather than later and/or be less healthy.

      It would be more beneficial to seniors and taxpayers and the economy overall to nudge things in better directions to  encourage folks to save, spend their funds responsibly, and remain more in control of their own finances and choices for a longer period of time.

      Chained CPI and raising eligibility ages are the exact opposite of what is needed.

      It is true that some information is state specific, including the lack of availability of plan C in some states.  Those situations exist and we all need to be aware of them.

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