Money in the Middle

Sandwich Generation Talking About Money Up, Down and Across Generations

Archive for August 2010

Preparing for the Medicare Shopping Season

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Medicare Part D Covers Prescription Drugs

 

Medicare Part D Prescription Drug plans will cost about the same in 2011 as they did in 2010 according to information released yesterday by CMS (Centers for Medicare and Medicaid Services).   

Good news for Medicare beneficiaries.  And good news for sandwich generation adult children who assist senior family members or aging parents with making Medicare plan selections. Maybe fewer will face the confusion of changing plans.   

But don’t assume the 2010 plan is still the best plan for your health care needs.  You’ll still want to shop and compare plans – and watch out for changes in the co-pays that can boost out-of-pocket expenses.     

This announcement marks the start of the Medicare shopping season also known as Annual Enrollment Period (AEP).  Medicare beneficiaries can change Part D and Medicare Advantage plans only from Nov. 15 – Dec. 31 for plans effective in 2011.  You can’t do much with the information yet.  But come mid-October there will be specific plan information available on the government website so you’ll be able to compare you current plan with 2011 plans.  

Here’s the schedule leading up to AEP:   

September –Information about premium and benefits for each Part D and Medicare Advantage plan  

October – More detailed plan information is available so that you can begin comparing plans  

Nov. 15- Dec. 31 – applications for plans effective in 2011 can be accepted  

 Here’s the statement from Medicare on part D premiums for 2011.   

 “Most Medicare prescription drug plan premiums should remain relatively stable next year, and all beneficiaries should compare their coverage under their current plan with the plans that will be offered in 2011 when that information becomes available in October,” said Jonathan Blum, deputy administrator of CMS’ Center for Medicare. “The Affordable Care Act improves the value of drug coverage people with Medicare will receive next year, providing discounts on brand name drugs and coverage of generics in the coverage gap, or donut hole.”

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Written by Laura Rossman

August 19, 2010 at 3:33 pm

Shop before you buy Medicare insurance

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If you’re getting ready to sign up for Medicare, there’s a great 3-part series of questions and answers at the New York Time blog “Bucks.” 

Even if you are already a Medicare beneficiary, you’ll find helpful information about new benefits next year and some guidance on the different types of Medicare insurance plans. 

The Medicare Rights Center is the expert behind the answers.  The topics cover the basics to some very specific questions about benefits and coverage for the disabled.

 If you have a Medicare Advantage plan or Medicare part D or think you might want to switch to one of these plans, the Medicare Annual Enrollment Period ( the AEP) is Nov. 15 – Dec. 31, 2010 for policies that will be effective in 2011. 

For most of those with Medicare Advantage plans and Medicare Part D plans this is the one time of the year when you can change your coverage (there are some exceptions). 

Comparing your current Medicare plan to other plans may be especially important this year as changes in prices and benefits are expected. 

Plan information and prices for policies effective in 2011 aren’t available yet.  You’ll have to wait until October.  

But it’s not too early to start reading up on the ins and outs of Medicare. 

If you’re new to Medicare, and must purchase your own plan (no retiree insurance), you may find the cost of insurance is more than you anticipated.   

Here’s what Jennie Phillips at Bankrate.com found when her husband turned 65:

“You add all this up and it comes to a minimum of  $257.50 per month or $515 for a couple. It is easy to go much higher if you want plans that offer more bells and whistles. That’s about $100 more per month than we contribute to our current health plan offered through my husband’s employer, including vision and dental insurance, which Medicare doesn’t offer.”  Read the rest of the story here

More evidence that it’s really important to research and find the right plan but also make sure you shop for Medicare insurance.  Don’t look at just one company.  Compare prices of at least 3 companies to make sure you get the right plan and don’t pay too much.

 Unlike your days as an employee where you could choose levels of coverage, but there was only one company offered, you do have a choice.  Make the most of it to get the best plan and price.

Written by Laura Rossman

August 16, 2010 at 2:47 pm

When Your Long-term Care Insurance Rates Rise

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Over the past several months, many long-term care insurance policy holders have received unwanted news from their LTC insurance company:  your rate is going up.

There are a number of reasons prices on policies issued years ago are going up now.  The current low-interest rate environment; more people are holding onto their policies rather than lapsing (stop paying); and people are living longer so more are expected to use their benefits than originally projected. 

But raising rates?  Can they do that?  You probably don’t remember it, but your policy includes language that the rate can be increased in the future.  And many companies have held off on increases.  But to maintain a financially stable program, the rates have to support potential claims.  Those insurance through the Federal government employees long-term care insurance program found that out last year when some rates increased as much as 25%.

It’s also important to recognize that the increase does not reflect anything about you as an individual.  When companies make these changes they do so for an entire class of policy owners, i.e. people who bought a certain policy during a certain period of time.  So you aren’t being singled out. 

You’ll receive a letter from the insurance company telling you when the rate is going to increase and the options you have if you don’t’ want to pay more.  

So, what are your options?  

Cancelling should be the last resort.  Unless you have a provision in your contract that lets you stop the policy and receive the benefits you’ve accrued to date, you will lose all the money you have paid in for the insurance.  Work with the insurer to find a benefit level that you can afford. 

Buying a new policy at a lower cost usually isn’t an option.  LTC insurance is priced by the age at the time you apply – the older you are, the more it costs.  So switching probably won’t save you money if you’ve had your policy more than a few years. 

If you are happy with the policy and you can afford the rate increase that solves the problem. 

But, if you can’t afford the increase, you can change the benefits.  The letter will outline what you can change and the impact it will have on your price. 

A good place to start can be the additional “riders” you purchased.  See if they are still as important to you as they were when you bought the policy.  Be careful about cutting inflation protection if you have it (the percentage at which the daily benefit increases each year — for example, 5% compound growth.  That’s what keeps your pool of money growing to keep pace with the costs of care when you need it in the future. 

Then take a look at the core benefits: daily benefit, policy years, and elimination period (deductible).  Your agent or the company can help you work through the tradeoffs.  Ask about the average costs of care in your area.  That can help you determine how far your coverage will go.

For those in the sandwich generation, if your parent is finding it difficult to pay the higher amount you might want to consider chipping in and paying the difference.  Continuing the level of coverage may be a huge financial relief in the future for all of you.

Don’t wait until the last minute to make the decision.  Give yourself time to review and consider the financial tradeoffs.

Written by Laura Rossman

August 13, 2010 at 3:28 pm

Baby boomer tips to their children on retirement

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 There was generally good news about the state of Medicare and Social Security last week when the trustees released their 2010 Annual Report.  Good news for  baby boomers.  Not so good for the generations following us.

 Medicare is looking much healthier, thanks to the changes in the health care reform bill that reduces costs for prescription drugs and physician services..  The Hospital Insurance trust fund is expected to remain solvent an additional 12 years – until 2029.  While Medicare finances have improved, further reforms will be needed. 

Social security isn’t sitting quite so pretty, but there’s no reason for alarm.  The recession’s combination of fewer workers and more early retirees means that Social Security expenditures are expected to exceed tax receipts in 2010 for the first time since 1983.

 “The fact that the costs for the program will likely exceed tax revenue this year is not a cause for panic but it does send a strong message that it’s time for us to make the tough choices that we know we need to make,”  said Michael J. Astrue, Commissioner of Social Security. 

The report said that the deficit is expected to shrink substantially for 2011 and to return to small surpluses for years 2012-2014 due to the improving economy.   But as the baby boomers begin retiring in larger numbers in 2014 the number of beneficiaries grows substantially more rapidly than the number of covered workers.

So we’re beginning to hear a lot more –from both political parties – about the need to tackle the issue of retirement age. It’s unlikely that it will impact the benefits of baby boomers – most of whom will reach full retirement at age 66.

But for those younger, the role of Social Security is likely to change as is the nature of retirement planning and work.

It’s a very difficult environment for people who are good planners when it comes to their finances. 

The best advice baby boomers can give their children: count on long and varied careers.  Keep funding that 401(k) plan as much as you can.

 Learn from our mistakes : plan better; rely on your own savings; live within your means (that one’s from your grandparents) and find work you enjoy

You’re going to be counting on your own resources more than your parents or grandparents!

Written by Laura Rossman

August 9, 2010 at 7:33 pm

Money or Meaning More Important in Retirement?

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Young and old agree that meaning trumps money when it comes to leading the “good life.”

I get a lot of research across my desk that spells gloom and doom for future retirement prospects based primarily on the lack of adequate financial resources. True, retirement savings is pretty dismal for much of the population, though savings have picked up in the past two years.

 But this new research from MetLife Mature Market Institute paints a very different and hopeful picture of the future. 

The conclusion:  the recession has had a noticeable impact on people’s live, particularly in the financial areas.  But when it comes to meaning and purpose, the negative impact has been relatively modest. 

And as we move into retirement years, it is meaning and purpose that are prominent in defining “living the good life.” 

Meaning, closely associated with the importance of family and friends, remains the primary component of the Good Life for all age groups, despite instability in financial and other aspects of their life.  People plan to spend time with family and friends above all else, regardless of age. 

The study, done with Richard Leider, emphasizes that the people who achieve “living the good life” are those who focus and plan.  That gives them the resiliency to cope with negative “trigger” events –think recession, job loss –whatever their life stage or circumstances. 

The 45-74 year-olds in the studies who maintained a steady perspective on their “vision for the future and the “focus” on the ways to get there were able to weather the storm. 

The younger generations, maybe because things have been so financially challenging for them early on in their professional lives, hold very similar views about the importance of meaning and purpose in life.  Maybe the baby boomers have raised a thoughtful, less consumption focused generation than their own.

More food for thought from Leider: 

“The longevity revolution demands a new mindset and skills, not to mention courage.  As life expectancy continues to increase, Money, Medicine, Meaning and Place will become even more significant and challenging.  Yet those challenges can also be positive because they can lead to new points of view and knowledge essential to succeed in the future.” 

Or said another way – aging isn’t for sissies.