Tag Archives: retirement security

Medicaid: Long Term Care Security

As a gerontologist and a member of the Baby Boom generation, I think about what the state of long term care may be in seven years when I join the older-old, those above age 75.  Most of us would prefer to remain in our own homes as long as possible, but ultimately many of us will need more supervised care in a residential setting.  Most people don’t realize what various types of long term care cost, and many have not accumulated enough retirement savings to pay for all of the long term care they will need, especially given the extended lifespan that is now possible.  In addition, there are a lot of misperceptions about the scope of long term care benefits available through Medicare.

logo-genworth-desktopGenworth Financial Insurance Company conducts an annual survey of long term care costs in the United States.  In 2016, the national median annual cost of homemaker services in an individual’s private home came to $45,756.  The median annual cost of assisted living was $43, 536, and the median annual cost of a semi-private room in a nursing home was $82,128.  The median annual 2016 costs in Michigan were generally somewhat higher than the national median.  Genworth is predicting a 34% increase in costs in ten years, and an 80% increase in twenty years.

Americans are not great retirement savers compared with other nations, but there are reasons for that omission.  For the middle classes especially, wages have been stagnant since the 1970s, while the cost of living has increased.  The cost of a college education is more than eight times gregg-chicken-eggs-raw-eggs-eggshell-128885eater than it was in the 1970s, while the Consumer Price Index rose approximately four times  higher during the same period.  Pensions, which guaranteed retirement income for life, have virtually disappeared.  As a consequence, workers have lost one source of retirement income, since the pension replacements, the 401(k) or 403(b) plans, result primarily from employee savings, rather than employer contributions.  Finally, the economic downturn, which began earlier in Michigan than in much of the rest of the country, eroded the savings of many unemployed mature workers.

Our family story is no different; we experienced layoffs in the 2000s, which used up our retirement savings, up to then.  I paid off my student loans two years ago, and my husband just paid off his this year. We’re still paying on Parent PLUS loans for our son’s college education.  We expect to keep working as long as possible, and we’re also working hard to stay healthy so that we can do so.  But health is a result of past exposure and lifestyle, as well as present health practices, and we don’t know what lies ahead.

We do know that we can’t count on Medicare to cover our long term care expenses; it wasn’t designed for that.  Medicare will pay for skilled care, such as rehabilitation services, at home or in a nursing home,  for a limited period of time.  It will also pay for hospice care.  It does not pay for  assistance with managing personal care or housekeeping or ongoing nursing support in any setting, except for the brief period in which skilled care is also needed.  Each of us will have to manage those care expenses out of our retirement savings.  But when we live longer than expected, or health care expenses are greater than anticipated, or when both spouses require custodial care, then income and retirement assets often prove insufficient, and people rely on Medicaid to pay for their care.

Medicaid pays for the health care costs of qualifying poor people of all ages.  Low income older adults most often have Medicare coverage, and Medicaid helps them pay for the considerable out-of-pocket premiums, deductibles and coinsurance costs that Medicare does not cover, estimated to average between $1,700 to $3,000 per year.  Those costs can escalate quickly with surgery or expensive long term medications.  It also helps the low income elders receive care at home, rather than a nursing home, if they are lucky enough to qualify for a Medicaid waiver program.  The Medicaid waiver program allows for case management, in-home services, and community-based services for low income ill or disabled persons who would otherwise require nursing home placement.  In Michigan it’s called the MI Choice Waiver Program, and it’s about one third less costly than nursing home care.

But most areas have long waiting lists for Medicaid waiver services, and rural areas generally do not have sufficient supply of community-based services to keep people in their homes.  At a cost of more than $82,000 a year, most people needing custodial care in a nursing home will run out of personal savings and assets in a relatively brief period of time.  At that point more than half of nursing home residents apply for assistance from Medicaid.  Because of Medicaid older adults worry less at night about where they may end up when the money runs out.

A fixed cap on federal Medicaid payments to states could remove that sense of security.  With increasing health care costs, increasing numbers of older adults, lengthening lifespans, and a stagnant economy, states will have to reduce Medicaid spending considerably.  What will we do with ill, disabled, and poor older people who no longer receive payment for their nursing home bills?

It is these thoughts that keep me exercising most days of the week, meditating daily, and keeping up my license and professional credentials.   However, these are just stop gap measures, and I don’t feel nearly as secure.

2015 White House Conference on Aging

logo-WHCOA2015This is the year for the decennial White House Conference on Aging.  However, the Older Americans Act, which traditionally has outlined the Conference process, has not been reauthorized and the President’s budget has not been approved.  As a result, there are very little structure and no additional funds for the 2015 Conference.

nora-super-140Ms. Nora Super is the Executive Director of the Conference.  Her background includes more than twenty years experience in aging policy and community outreach.  The four themes that have emerged from community input, so far, are Retirement Security, Healthy Aging, Long-Term Services and Supports, and Elder Justice.  There is a blog for the Conference at  http://www.whitehouseconferenceonaging.gov/blog/   A number of regional forums are also scheduled.  The closest one to SE Michigan is the conference in Cleveland, OH on April 27th.

The Administration is using social and electronic media as much as possible to receive grass roots input and conduct informational meetings.  Everyone can participate by going to the web site and signing up to receive notices of events, such as webinars, and opportunities to participate.  You can also provide your thoughts and/or a story about your experience with aging or aging services, such as Medicare, Social Security, or in-home services, by submitting them through the following link:  http://www.whitehouseconferenceonaging.gov/submissions/register.aspx

Here’s the contact information if you have specific questions:

White House Conference on Aging
200 Independence Avenue SW, Suite 637D
Hubert H. Humphrey Building
Washington, DC  20201
(202) 619-3636
info@whaging.gov
www.whitehouseconferenceonaging.gov

Aging touches everyone.  I encourage you to participate in this opportunity for civic engagement at a time when our society includes the greatest proportion of older adults in history.

Sue Sweeney, Chair, Department of Aging Studies, Madonna University

National Council on Aging Funding for Outreach for SNAP

ncoa-logoIn the January 13th issue of the National Council on Aging‘s NCOA Week e-publication, they announced grant proposals for $25,000 or $50,000 to increase enrollment of older adults who are eligible for the federal  Supplemental Nutrition Assistance Program (SNAP).  The details of the RFP will be available next week.  As stated in the e-publication, “NCOA soon will be seeking proposals from community-based organizations for Senior SNAP Enrollment Initiative grants in two competitive categories ($25,000 and $50,000). The Request for Proposals will be released on or around Jan. 20. Optional Letters of Intent are due Feb. 13, and applications are due March 6.”

FoodNutrSvcesLogoA 2012 presentation by Lura Barber of the National Center for Benefits Outreach and Enrollment of NCOA is available online.  Called SNAP and Older Adults, the presentation points out that only one out of three eligible older adults are enrolled in SNAP, and provides basic information about SNAP organizational structure, eligibility, application process, and techniques to reach out to older adults who qualify.

Planning for Retirement

A lot of people, whether younger or older, are anxious about retirement because of the various proposals to change Social Security and because of the number of businesses and governmental entities that are curtailing retiree benefits and eliminating pensions.  With these uncertainties, it makes sense to take advantage of any retirement accumulation programs each of us can manage, and to plan for the future.  The AARP has a Retirement Calculator that I found to be easy to use.  Included is a tool that allows you to make changes to your assumptions and plans to see how they will affect your income in retirement.  For example, the amount of a likely shortfall is adjusted if you elect to retire later, work part time in retirement, put aside a larger proportion of your current salary, or reduce your lifestyle in retirement.

The Social Security Administration has a Retirement Estimator that will work for many individuals.  It assumes that you already have enough work credits to qualify for benefits and that certain other conditions do not pertain, such as already collecting Social Security benefits.  You have to enter identifying information, then you can see what your monthly benefit will be depending on the age that you choose to retire.  The same page has links to other calculators, but they are not derived from your earnings record, as the Retirement Estimator is.  There’s also a link to a document that discusses when to start taking your benefits.

Bankrate, an aggregator and publisher of bank rate information, has made a number of calculators available that allow a person to compare their retirement prospects depending on the retirement instrument he or she uses, such as traditional IRA, Roth IRA, 401(k), 403(b), or annuities.

It may be scary to see what would be needed to have a comfortable retirement, but I think it’s better to know what one’s prospects are rather than be painfully surprised when it’s too late to do anything about it.  Sue Sweeney, Chair, Gerontology Department, Madonna University

Do the Old Gain at the Expense of the Young?

This past July, Lansing Community College economics professor Jim Luke gave a presentation sponsored by the Michigan Intergenerational Network on our Country’s intergenerational transfer programs:  Social Security and Medicare.  You can view his PowerPoint slides and read his blog post on the topic at www.econproph.com.  The point that impacted me the most is the fact that intergenerational transfer programs are inevitable, because the very young and the very old cannot possibly generate the resources necessary to support their well being.  When societies lack formal intergenerational transfer programs, the task of supporting the two ends of the lifespan usually falls to the family.  However, that arrangement allows many children and old people to lack support because of death, social changes, economic instability, acrimony within families, mental illness, war or other hazards.

MoneyA form of social insurance is more reliable and benefits the society as a whole, due to the economic stability provided by predictable income, and therefore predictable cash infusion into the economy.  In other words, our intergenerational transfer programs are not perks that old people receive to the detriment of the young.  They’re an organized way of addressing a universal social problem, and the current solution provides additional advantage to everyone in the society.   Indeed, we need to preserve them so that the economically productive group that is contributing now to Social Security and Medicare will ultimately receive the same benefit that they are providing to their elders.  Breaking the intergenerational compact, that would be an injustice to the young!  Sue Sweeney, Chair, Gerontology Department, Madonna University

Retirement Security

We know that the “three-legged stool” of retirement security has largely become a “two-legged stool” over the last several decades.   The “legs” of pension, Social Security benefits, and personal savings, have been reduced to personal savings and Social Security benefits for many.  Company and public pensions (defined benefit programs) are on the wane, while 401(k) or 403(b) plans (defined contribution programs) have become much more common.     While companies often contribute to defined contribution plans up to a given percent of income, the bulk of the contributions come from the employees, and represent personal savings in a tax deferred instrument. Thus the demise of the “third leg” of the retirement security foundation.

According to the Bureau of Labor Statistics, Monthly Labor Review of December 2012, pension coverage of private industry workers has declined from 35% in the last 1990s to 18% in 2011.  Of those who are covered by a pension plan, 1 out of 5 of them participate in frozen plans.  That is, new employees of their companies are not permitted to participate.  Only 10% of private industry companies offer a pension plan, and 48% of those are larger organizations with at least 500 employees. ( But 52% of U.S. workers are employed by firms with less than 500 employees.)  Among private industry employers, there is great variation in the existence of a pension program by industry sector .  Utilities and banking related industries far exceed any other industry sector in the frequency of including a pension among employee benefits.

The National Institute on Retirement Security is a non-profit research and education organization formed by member organizations who are concerned with retirement plans and policies. The Institute recently conducted a poll to assess the attitudes of American adults toward retirement security.  The poll was administered to 800 individuals aged 25 or older through telephone interviews held between December 3 and December 22, 2012.  The findings were released in a report, Pensions and Retirement Security 2013:  A Roadmap for Policy Makers.

The report reveals that 85% of those polled expressed anxiety about their prospects for a decent retirement income, and nearly as many feel that federal elected officials fail to understand their struggles to save toward retirement.  These attitudes are not limited to Baby Boomers (those born 1946-64).  Millennials  (those born after 1976) also express concerns, and 90% of them believe lawmakers need to make improvement of the retirement system a higher priority.  Sue Sweeney, Chair, Gerontology Department, Madonna University