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  • Archive for May, 2015

    Five Things You Better Know about Medicare

    Thursday, May 28th, 2015

    managing money in retirementMedicare is celebrating its 50th anniversary this year as the nation’s federal health insurance program, playing a vital role in the lives of most people age 65 and over.  In fact, Medicare currently covers 49 million Americans. Many people, however, do not know the very basic but important facts about the program. Here are five things you need to know about Medicare (and a few that will save you from the glitches that can cost expensive lifetime penalties!):

    1.     Medicare is not a “one size fits all” program.  

    While collectively referred to as Medicare, the program is actually made up of different parts: Part A covers inpatient hospital care, skilled nursing facilities and some home health care. Part B covers doctor visits (but not all routine exams), medically necessary supplies and equipment, physical and occupational therapy, outpatient mental health services and other outpatient hospital services. Part D is an optional program, but you need to enroll in Part D if you want to receive coverage for prescription drugs.

    Important decisions are involved as you enroll in each of these Parts, including whether or not you need or want supplemental insurance. Many people will buy supplemental insurance to cover health expenses not covered by Medicare Part A and B. Medigap Supplemental Insurance and Medicare Advantage Plans (sometimes referred to as Part C) are two options, but you need to do your homework and learn how these plans differ as lower out-of-pocket costs may also place more restrictions on physician and hospital choice.

    2.     Medicare is not free!

    Medicare is not a fully subsidized program; much like with private insurance, you have to pay premiums, deductibles and co-pays. The amounts can vary depending on income.

         •     Part A does not have a premium, but it does have an annual deductible and co-payments. The deductible in 2015 is $1,260.

         •     Part B has a premium and the amount you pay is based on income. In 2015, the monthly premium for Part B for those whose income is $85,000 or less is $104.90. Higher income seniors pay a higher premium. There is also an annual deductible, which in 2015 is $147.00. Co-payments apply to most Part B services.

         •     Part D also has a monthly charge that varies depending on which plan you choose. The average Part D premium is $31 a month, and you usually also have to pay out-of-pocket for a percentage of your prescription drug costs.

    It is also important to know that your Part B premium is automatically deducted from your Social Security benefit! Many people do not realize this and are surprised when their monthly Social Security benefit payment is less than they expected.

    3.     Medicare does not cover all of your possible health care needs.

    The recent healthcare reform increased the number of free preventive services available to Medicare beneficiaries such as the annual free “wellness” visit to develop or update a personalized prevention plan. Beneficiaries also get a free cardiovascular screening every five years, annual mammograms, annual flu shots, and screenings for cervical, prostate and colorectal cancers.

    But Medicare does not cover routine dental care, eye care, or hearing aids, and perhaps most importantly: Medicare does not cover most long-term care, and covers only limited home health care and nursing home costs (usually following a hospital stay). So even if you are eligible for Medicare, you need to also be thinking about and planning for your possible long-term care needs.

    4.     You risk a possible penalty if you do not sign up for Medicare once you are eligible.

    You are eligible for Medicare when you turn 65.

         •     If you are already receiving Social Security benefits, you will be automatically enrolled in Parts A and B (and you can choose to turn down Part B if you’d like).

         •     If you have not started taking Social Security, you will have to sign up for Parts A and B (or Medicare Advantage) during your initial enrollment period. The initial enrollment period to apply for Medicare is 3 months prior to your 65th birthday, the month of your 65th birthday, and 3 months after your 65th birthday (for a total enrollment period of 7 months). To ensure coverage starts by the time you turn 65, sign up in the first three months you are eligible.

    If you miss signing up during that initial enrollment period, you can sign up during the general enrollment period (that runs from January 1 to March 31, and coverage will begin on July 1), but you will have to pay a 10% penalty for life for each 12-month period you delay in signing up for Part B! The penalty does not apply if you delayed enrollment because you were actively employed and covered in a workplace plan or covered by an employed spouse’s workplace plan (but read this next point carefully!)

    5.     There are special rules you need to know if you have health insurance through your employer at the time you are eligible for Medicare.

    If you are still working and have insurance through your employer when you become eligible for Medicare, you may want to delay signing up for Medicare. If this is the case, you also have an 8-month Special Enrollment Period to sign up for Part A and Part B that starts the month after the employment ends or the group health plan insurance based on current employment ends, whichever happens first. Usually, you don’t pay a late enrollment penalty if you sign up during a Special Enrollment Period.

    This is another important item to note: COBRA and retiree health plans are NOT considered coverage based on current employment. That means you are not eligible for a Special Enrollment Period when that coverage ends. So it is important to also understand how COBRA and Medicare work together:

    •     If you have Medicare first and then become eligible for COBRA upon leaving your employer plan, you can have both. But remember that Medicare pays first and COBRA pays second, so you do not want to drop Medicare to take COBRA—without it you have no primary insurance, which is like having no insurance at all.

    •     If you have COBRA first and then become eligible for Medicare, your COBRA coverage may end. Since you will not be fully covered with COBRA, you should enroll in Medicare Part A and Part B when you are first eligible to avoid a late enrollment penalty.

    To learn more about Medicare and other resources available, check out WISER’s Medicare Basics fact sheet, and visit www.medicare.gov and www.medicarerights.org. The website, www.mymedicarematters.org also provides an easy online guide for exploring coverage options, costs, and the enrollment process.

     

    This blog is part of an ongoing series for the “Campaign for a Secure Retirement:  Helping Millions of Americans Plan and Save for Retirement;” the Campaign is a joint educational retirement campaign to encourage retirement planning and saving and to promote the online Social Security Statement, available through my Social Security, as an important retirement planning tool. 

    The Financial Impact of Widowhood

    Wednesday, May 13th, 2015

    Key to HomeAt WISER, we frequently hear from women who find themselves struggling financially after their husbands pass away; many of them saying “If only I knew…” when it comes to financial matters. Women’s longer life expectancy puts them at greater risk for running out of money in their older years, but other factors often compound this longevity risk and make the situation even more challenging.

    While more women today are becoming involved in their family’s long-term finances[i], those seniors who are experiencing widowhood now were part of a generation where women were less likely to be involved in their family’s retirement planning and investments. This can make the difficult experience of losing a spouse even harder for a widow who then does not know what assets she has or whether she will have enough money to live out the rest of her life.

    Surveys also show that women are less likely to trust financial advisors, and more likely to rely on family and friends for financial advice.[ii] Even when a couple has a financial advisor, if the husband dies, the wife may not feel comfortable working with the advisor alone. This is especially true if the advisor does not give her the same level of attention or respect, or communicate in a way that resonates with her.

    Finally, women do not understand their Social Security benefits as well as they should. Many women rely heavily on Social Security as a leading source of income in their later years, yet most are not familiar with even the basic rules of spousal and survivor benefits, nor do they understand what the different options are for claiming Social Security that can greatly impact their benefit.

    Recent research by WISER confirms many of the findings in this report. In 2013, WISER released A Survey of Recent Widows. Among some of its findings:

    *    Half of the widows lost at least 50% of their income when their husbands died.

    *    37% had difficulty both determining what they were entitled to receive from Social Security and initiating Social Security benefits after their husbands died.

    *    26% had difficulty locating bank accounts and investments and obtaining access to them after their husbands died.

    *    26% of the widows whose husbands were responsible for financial planning had to move to less expensive housing as a result of their spouse’s death.

    There is much that can be done to better educate and support women on their financial journey. It starts with encouraging women of all ages to get actively involved in their finances; helping them understand the basics and where to go for help; and building their confidence and motivation to take further action. Here are some key tips:

    *    Know what all the different financial accounts are that both you and your spouse have (bank accounts, investments accounts, Social Security benefits, insurances, loans, credit cards, etc.). You can access your Social Security statement online by going to www.ssa.gov/myaccount;

    *    Organize all the necessary information about those accounts in one place and review them together (names of the financial institutions where accounts are held, passwords, contact information for any account representatives or agents, etc.);

    *    If you have a financial advisor, be involved with those meetings and conversations and make he or she is working with both of you;

    *    Educate yourself about the basics of finances and investing, including Social Security and how that may be impacted if you become a widow.

    Widowhood is a vulnerable period both emotionally and financially. The more we can help women (including ourselves!) prepare for this likely event, the better their chances for living out their retirement years with a sense of security and dignity.

    EXTRA! Important facts that every woman should know to prepare for the possibility of widowhood:

    *    A widow’s income may only be two-thirds of what it was prior to the spouse’s death. In fact, a recent GAO report found that the income of women near or in retirement dropped 37 percent as a result of widowhood.[iii]

    *    Federal pension law requires company and union pension plans to provide a joint and survivor benefit option. The right to the joint and survivor pension benefit can only be given up if the wife gives her permission in writing.

    *    When selecting the pension benefit at the time of the husband’s retirement, a wife needs to consider the options very carefully. The joint and survivor annuity offers a smaller monthly payment than other pension benefit options; however, for women who expect to depend on their husband’s pension as a source of income throughout their longer lives, this is generally a better option. Without the joint and survivor benefit, all pension payments will stop once the husband dies.

    *    Different rules apply to certain other retirement savings plans, such as 401(k)s. Death benefits from a 401(k) are generally paid out in a lump sum, which can be rolled over—tax-free—into an Individual Retirement Account (IRA).

     

    This article is adapted from an essay written by Lara Hinz, WISER’s Director of Programs, that was featured in the Impact of Retirement Risk on Women, a report published by the Society of Actuaries and WISER.

    The “Campaign for a Secure Retirement:  Helping Millions of Americans Plan and Save for Retirement”  is a joint educational retirement campaign to encourage retirement planning and saving and to promote the online Social Security Statement, available through my Social Security, as an important retirement planning tool. 

    [i] Fidelity Investments, Couples Retirement Study. September 2013.

    [ii] TIAA-CREF, Financial Advice Survey. October 2013.

    [iii] U.S. GAO. Retirement Security: Women Still Face Challenges. GAP-12-699.  July 19, 2012.

     

     

     

     

    With Caregiving in Overdrive, Nurses Have Little Time for Financial Matters

    Wednesday, May 6th, 2015

    Show A Nurse You Care About Her Financial Wellbeing Today

    nurse-project-boxesNurses spend their professional lives taking care of us when we need them, and they spend their personal lives taking care of family and friends. They often work shifts that defy sleep logic, forcing personal matters to the back burner. This is where planning for their financial security sits – on the back burner while they’re busy taking care of everyone else.

    Fidelity released a Money FIT Nurses Study for Nurse’s Week (May 6 -12) that spells out the lack of financial confidence nurses carry. WISER’s earlier work with the FINRA Investor Education Foundation and the Center for American Nurses uncovered similar findings. Our Nurses Investor Education Survey revealed that nurses may be saving for retirement, but few were planning and investing to meet retirement needs. In fact, most nurses said they didn’t know what those needs would be. The Center and WISER used the survey results and information from focus groups to create retirement planning and investing workshops, webinars, and other resources for nurses, available here.

    We learned through our survey and focus groups that nurses are wary of outsiders when it comes to financial issues. So WISER worked with the Center to identify interested nurses who could run group workshops for their peers. (This ‘train the trainer’ approach is one WISER continues to have great success with in communities around the country.) Trained nurses went on to run sessions in their workplaces and as part of nursing conferences in several states. The results of that project are available in our report “Changing Investment and Savings Behavior of Nurses.”

    Nurses’ concern for the welfare of others is not just professional. They consistently report putting their children and families’ needs above their own. During WISER’s nurses project, one nurse explaining that she is the “go-to” person in her extended family and in her neighborhood when it comes to health concerns and questions. This role alone was practically a fulltime job for her.

    We owe our nurses a debt of more than just gratitude. We owe them peace of mind that they can have financial security. In our survey, 96% felt it was important to increase their investment knowledge. Show you care for a nurse, and share these resources with one today.

    WISER

    About Us

    WISER is a nonprofit organization that works to help women, educators and policymakers understand the important issues surrounding women's retirement income. WISER creates a variety of consumer publications including fact sheets, booklets and a quarterly newsletter that explain in easy-to-understand language the complex issues surrounding Social Security, divorce, pay equity, pensions, savings and investments, banking, home-ownership, long-term care and disability insurance.

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