Medicare Advantage

Disappointing News from Social Security for 2020

The annual Cost of Living Adjustment, aka COLA, for 2020, is a smidge of an increase: 1.6%. That’s only slightly more than half of the 2.8% COLA for 2019. For the average beneficiary that means about $23.50 more per month, says the Globe Gazette’s article “Disappointed in Your Social Security Raise? 3 Steps to Take.” It’s a lot like getting a tiny raise that doesn’t budge the budget needle at all. Remember, there’s also going to be an increase in Medicare Part B, which is expected to rise by $8.80. That puts a raise of just $14.70 per month in benefits, once New Year’s Day passes.

News from Social Security
News of the meager increase in the 2020 COLA from Social Security is disappointing.

The problem is, healthcare costs are continuing to climb. That puts seniors in a bind, especially those who count on Social Security for the bulk of their retirement income. Is there anything you can do to beef up your income despite this bad news from Social Security?

Review and revise your budget. You needed a budget when you were working, and you really need one in retirement. If you are using up all your available income every month, it may be time to make some changes. Maybe it’s finally time to clear out the big sprawling ranch and downside to a two-bedroom condo. Going from a two-car household to a one-car family could net considerable savings. If you eat most of your meals out at restaurants, consider trimming those outings to cut spending.

Work part-time. You may have a lot of time on your hands, as a retired person. Getting a part-time job during retirement has a number of benefits. One, you have less free time to spend money, two, you have income and three, you have more social interactions during working hours. There’s also no need to accept a job that you wouldn’t want. Maybe you are great at baking and can turn that into a side business, or dog walking or crafting. Pet-sitting and babysitting are in demand.

Move somewhere less expensive. The cost of living varies greatly from state to state. Look for states that don’t tax Social Security and that offer a lower cost of living and a relatively low income tax rate. However, check your Medicare benefits. Medicare Advantage and Part D plans vary from state to state. If you have supplemental insurance through Medigap, the cost of your plan may change.

If so much of your retirement income budget is based on Social Security, be prepared to make some changes. You can stretch those benefits and, at the same time, lessen your stress.

Reference: Globe Gazette (October 14, 2019) “Disappointed in Your Social Security Raise? 3 Steps to Take”

Medicare Facts and Penalties You Need to Know

Make sure to review your coverage and plan in advance to avoid any penalties.

Start with the basics, to make sure you’re making informed decisions.

Bigstock-Senior-Couple-8161132Created in July 1965 as part of the Social Security Act, Medicare is how most adults over age 65 cover their healthcare costs. Medicare has four parts. They are Part A: Hospital, Part B: Outpatient Services, Part C: Medicare Replacement and Part D: Prescription Drugs. This useful article from Think Advisor, “Essential Medicare Facts & Penalties Advisors Should Know on One Page,” covers Medicare fundamentals.

As a general rule, if you are 65 and you or your spouse have paid Medicare taxes for at least 10 years, you may enroll in the program. Those under 65 may also enroll, if they are disabled or have end stage renal disease.

Let’s look at the different parts of Medicare:

Part A is free for most people. If you didn’t pay Medicare taxes, you may be able to enroll and pay for Part A. If you’re under 65 and didn’t pay into Medicare, you may be eligible if you have been entitled to Social Security or Railroad Retirement Board disability benefits for 24 months or you are a kidney dialysis or kidney transplant patient.

Everyone is required to pay a premium for Medicare Part B, which is deducted from your Social Security retirement payment. If you’re eligible but haven’t yet begun to receive a Social Security retirement benefit, Medicare will send you a bill.

Part C is also known as a Medicare Advantage plan. It’s issued by a Medicare-approved private insurer. Even if you choose Medicare Part C, you still are required to pay a Part B premium. Although these plans cover all services in Part A and Part B, they frequently have other benefits like vision, dental, hearing, and prescription drugs.

Part D covers prescription drugs. Each Medicare drug plan list its approved drugs and a “tier” for them. A lower tier drug will generally cost less, and a higher tier drug will cost more.

The window to enroll in Medicare starts on the first day of the third month prior to your birth month and ends on the last day of the third month following the month of your birth.

There is a separate “late enrollment” penalty, if you go 64 continuous days or more beyond the end of your initial enrollment period and did not have a Medicare Prescription Drug Plan, a Medicare Advantage Plan (Part C) and another Medicare plan that offers prescription drug coverage, including a plan through an employer or union.

Make sure to review your coverage and plan in advance to avoid any penalties. If you make a mistake, you may end up paying a premium for certain types of coverage, for as long as you have Medicare.

Reference: Think Advisor (July 31, 2018) “Essential Medicare Facts & Penalties Advisors Should Know on One Page”

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