Rep. Tom Price (R-GA), M.D., Nominated Secretary of Health and Human Services

Dec 9, 2016

Rep. Price is a known critic of Obamacare with his own ideas for healthcare reform. His proposal, the Empowering Patients First Act, would modify the provisions of the law prohibiting insurers from denying coverage on the basis of preexisting health conditions, eliminate the tax penalty for Americans without health insurance, and offer tax credits for the purchase of individual and family health insurance policies—among other reforms.

Rep. Price has also proposed a rewrite of the Congressional budget process. The new provisions would require automatic cuts to federal programs if the nation exceeds established limits on its long-term debt. Price’s brief argues these “enforceable long-term debt targets” are necessary to place the country on a sustainable path to eliminating the national debt.

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Savvy Social Security December 1 Newsletter Online

Dec 2, 2016

In Social Security Under a Trump Administration, Elaine discusses the Trump administration’s initial outlook on Social Security, contextualizing his recent appointments in the broader history of conservative reform efforts.

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Buyer Beware: Medicare Advantage Plans

Nov 28, 2016

A recent study by the Kaiser Family Foundation found a dearth of reliable information for those shopping for Medicare Advantage plans.

Specifically, plan directories often contain dated or misleading information about the size and scope of hospital networks—a huge potential problem, as going out of network can be very expensive for those insured under Medicare Advantage. Of the 409 plans studied by Kaiser, only 23% offered what the report called “broad” networks, or networks covering more than 70% of a county’s hospitals.

In other words, it’s quite possible for a misinformed patient to go out of network. More commentary from the Wall Street Journal may be read here.

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2017 Workshop Dates Announced

Nov 18, 2016

Our workshop dates are as follows:

  • Financial Educator Marketing Workshop, Two-Day Intensive, Feb. 8-9 in Atlanta.
  • Spring Social Security workshops: The Social Security-Medicare Connection, Two-Day Intensive, March 2-3 in Atlanta and March 23-24 in San Francisco.
  • Fall Social Security workshops: The Social Security-Medicare Connection, Two-Day Intensive, September 14-15 in New York and October 26-27 in San Francisco.
  • Women’s Issues in Social Security and Medicare, Two-Day Intensive, June 15-16 in Washington DC.
  • Savvy Medicare Two-Day Intensive, April 27-28 in Washington DC.

Elaine’s full announcement and the registration links may be found here.

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Savvy Social Security Presentations Updated for 2017

Nov 9, 2016

All four Savvy Social Security presentations have been updated for 2017. Notable updates include:

  • The maximum taxable wage base rose from $118,500 in 2016 to $127,200 in 2017.
  • The earnings test rose from $15,720 in 2016 to $16,920 in 2017.
  • The SSA lowered its intermediate inflation projections from 2.7% to 2.6%; the examples given in the presentations now reflect this change.

We encourage you to download the new versions right away to use for your presentations going forward.

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PROGRAM UPDATE: Disability Feature Added to Calculators

Nov 8, 2016

The Spousal, WEP/GPO and Survivor Planning Calculators have been upgraded to include a “disability” function. You may now use these calculators to model scenarios for your disabled clients.

Disability benefits are distinct from retirement benefits in that they may begin at any age, and they are always based on the recipient’s full PIA—there is no actuarial reduction before full retirement age.

Furthermore, the language in the calculators’ reports has been modified to be gender-neutral. Remember, with the landmark Obergefell v. Hodges case, married same-sex couples are eligible for spousal and survivor benefits.

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Journalists Debate Social Security Solvency

Nov 7, 2016

A recent dust-up between the LA Times and Time’s Money Magazine has illuminated some of the difficult solvency questions surrounding Social Security.

In a November piece contextualizing Social Security within the 2016 Presidential election, editor-at-large Penelope Wang remarked that “the program has been running at a deficit since 2010.” This is true if you look at Social Security’s finances purely in terms of benefits paid relative to taxes levied; however, as Michael Hiltzik commented in his column at the LA Times, taxes are not the Social Security system’s only source of income.

The program’s revenues also include the interest on Social Security’s treasury bonds. Accounting for this interest—as the Social Security Trustees do in their reports—leaves the program with a $23 billion dollar surplus for last year. Hiltzik believes Wang’s omission of this interest income in her analysis implies a lack of faith in Social Security’s treasury bonds, which critics frequently deride as “IOUs.”

Wang, Hiltzik, and the Social Security Trustees all acknowledge that the trust fund is set to exhaust in 2034, at which point benefits will fall to 79% of the promised payout. This worst-case-scenario assumes total inaction on the part of Congress.

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Social Security Under a New Administration

Nov 4, 2016

As we approach election day, it’s important to once again review the candidate stances on Social Security.

Hillary Clinton has expressed interest in defending Social Security from GOP cuts, as well as expanding benefits for people who took time from the workforce to raise children and care for family members. She’s proposed raising the ceiling on payroll taxes (already scheduled to rise to $127,200 in 2017) to fund this expansion.

Donald Trump has not expressed any direct plans for Social Security; he has said, however, that he believes his interrelated economic initiatives—tax reform, immigration reform, the renegotiation of trade deals, and so on—will stimulate the economy and secure Social Security for the future.

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Savvy Social Security November 3 Newsletter Now Available Online

Nov 4, 2016

In Parents as Representative Payees, Elaine covers the rare cases where a child might become entitled to Social Security benefits—and how their parents are expected to manage the money. The consequences for mismanaging this money may be serious.

Your clients may encounter this issue. You are free to copy and paste the entire article for your client communications. However, please understand that it has not been FINRA reviewed, and remember to give proper attribution (article by Elaine Floyd, CFP®, Director of Retirement and Life Planning, Horsesmouth). If you have any experiences to report about parents acting as representative payees, please pass them on to

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Maine Senator Urges Congress to Act on Low COLA

Oct 25, 2016

The announcement of the low cost-of-living adjustment for 2017 (0.3%) has led to demands for Congress to step in and manually issue America’s senior citizens a pay raise.

Senator Susan Collins (R-Maine) has said this $5 raise is not enough, especially given the possibility of a substantial rise in Medicare premiums. She has also advocated changing cost-of-living adjustments to more accurately reflect the spending patterns of senior citizens.

Medicare’s hold harmless provision protects most, but not all, 2016 beneficiaries from the hike. More details on who qualifies as held harmless may be found in last week’s newsletter.

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Savvy Social Security October 20 Newsletter Now Available Online

Oct 21, 2016

In 2017 COLA: 0.3%, Elaine goes into detail about how the paltry COLA amount was calculated, related Medicare issues, the role of the wage index, and individual inflation

The full newsletter may be read here.

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Maximum PIA for a Maximum Earner Born in 1955: $2,888

Oct 19, 2016

A baby boomer born in 1955 who earned the Social Security maximum from 1975-2016 (age 22 to 61) has a PIA of $2,888.

Total indexed earnings for this earner comes out to $4,109,280. When we divide this by 420 to figure the AIME, we get a maximum AIME of $9,784. Applying the 2017 bend points of $885 and $5,336 (up from the 2016 bend points of $856 and $5,157) produces a PIA of $2,888 (up from $2,788 for the 1954 cohort).

The PIA is the amount the 1955-born baby boomer will receive if he applies for his benefit in 2021 at full retirement age (in this case, 66 and 2 months). If he applies next year at age 62, then he’ll receive approximately 74% of that, or $2,137. If he applies at age 70, he’ll receive approximately 131%, or $3,783. These amounts may be increased by annual COLAs.

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0.3% COLA Adjustment Announced for 2017

Oct 18, 2016

This is a marginal improvement over the 0.2% projected last week, and the 0% COLA from last year. For the average retiree, this constitutes a five dollar increase in benefits.

This 0.3% increase follows several years of low COLAs. The COLA has consistently been under 2.0% since 2012, stoking a debate regarding whether or not the current formula adequately reflects the spending needs of senior citizens.

The SSA’s COLA announcement may be read here. More analysis can be found from the Wall Street Journal here.

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Lower COLA Expected, Again

Oct 13, 2016

The Social Security Trustees are projecting another low cost-of-living adjustment this year. The number, which will be finalized next Tuesday, is currently projected to be 0.2%.

Under Medicare’s “hold harmless” provision, individuals receiving both Medicare and Social Security will not experience a rise in premiums if the Social Security COLA is not enough to cover the increase in premiums. To qualify as “held harmless” in 2017, beneficiaries must receive Social Security in November and December this year and have their Medicare premiums deducted from their Social Security check. They also must not earn enough money to qualify for Medicare’s income-related monthly adjustment amount, or IRMAA.

Given these restrictions, Medicare beneficiaries may be tempted to claim their Social Security now, to avoid a spike in premiums. Generally speaking, this is not a good idea. Social Security’s delayed retirement credits are more valuable than the lower Medicare premiums, and high-net-worth earners—the ones with the most to gain by delaying their benefits—do not qualify for the hold-harmless provision in any case.

Mary Beth Franklin supplies more analysis here: Social Security timing can affect Medicare premiums.

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Savvy Social Security October 6 Newsletter Now Available Online

Oct 12, 2016

In Trust Fund Solvency: Trustees vs. CBO, Elaine takes a look at the different assumptions and methods used to project Social Security’s finances, and how the outcome can be quite different depending on those assumptions.

The full newsletter may be read here.

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SSA Cracks Down on ‘Graveyard Benefits’

Oct 5, 2016

According to an audit by the Office of the Inspector General the SSA has identified $165 million in benefits erroneously paid to deceased OASDI beneficiaries and another $12.4 million paid to deceased SSI recipients.

The SSA uncovered this information by partnering with the Centers for Medicare and Medicaid Services (CMS) to identify beneficiaries over 90 who have not used Medicare Part A or B in 3 years or longer. Now, the OIG is recommending the SSA take this approach one step further by using both Medicare and Medicaid claim data to identify potentially deceased recipients.

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Ways and Means Committee Convenes Meeting on Social Security Solvency

Sep 28, 2016

Last week, Rep. Sam Johnson (R-TX) held a hearing on the financial health of Social Security.

The specific impetus for the meeting was the discrepancy between the long-term projections of two trusted groups of Social Security experts: the Congressional Budget Office and Social Security’s own Trustees. While both agencies agree the program spends more than it takes in, they differ on when the program’s funds will exhaust. The CBO puts the exhaustion date at 2029, while the Trustees have it at 2034.

Naturally, it is more difficult for Congress to devise a workable solution when they’re unsure of their deadline. Experts from both agencies sat down with Rep. Johnson in an effort to account for the discrepancy. The full hearing may be viewed here.

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Savvy Social Security September 22 Newsletter Now Available Online

Sep 27, 2016

In it, Elaine discusses the recent GAO critique of SSA claims processes.

The full newsletter may be read here.

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IRS Fails to Notify Over 1M Victims of Identity Theft

Sep 20, 2016

The IRS identified about 1.1 million taxpayers who were victims of employment-related identity theft between 2011 and 2015, but informed almost none of them.

Employment-related identity theft occurs when someone uses another individual’s Social Security number to get a job.

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Americans Remain Ignorant About Retirement Benefits

Sep 16, 2016

According to the Government Accountability Office, the continued popularity of 62 as a Social Security claiming age may be attributed to a misunderstanding on the part of pre-retirees.

Representatives of the GAO observed 30 in-person claims at SSA offices and found that, more often than not, frontline SSA employees will not discuss delayed claiming with beneficiares. The issue only came up in 8 of the 26 interviews in which it was relevant. Similarly, the earnings test was pertinent to 18 cases, but only discussed 7 times.

Furthermore, the GAO review of several academic surveys exploring pre-retiree knowledge of Social Security reveals a consistent pattern of ignorance. For example, a phone survey given by the Financial Literacy Center found that 36% of respondents did not understand the relationship between claiming age and the monthly benefit amount.

The full GAO report, including proposals to bridge this knowledge gap, may be read here.

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