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Editor’s Note: Journalist Philip Moeller is here to provide the answers you need on aging and retirement. His weekly column, “Ask Phil,” aims to help older Americans and their families by answering their health care and financial questions. Phil is the author of the new book, “Get What’s Yours for Medicare,” and co-author of “Get What’s Yours: The Revised Secrets to Maxing Out Your Social Security.” Send your questions to Phil.
The government’s health care watchdog office has issued an early alert in advance of its upcoming formal report on egregious abuses of patients at skilled nursing facilities (SNFs). The U.S. Department of Health and Human Services Office of Inspector General (OIG) says it found 134 cases of potential abuse and neglect in 33 states, including cases of rape and sexual abuse; more than a quarter of the cases had never been reported to law enforcement authorities.
“Due to the importance and urgency of the preliminary findings,” the office said, “OIG is alerting citizens of potential cases of patient neglect and abuse in these facilities, many of which are temporary residences for our nation’s most vulnerable people.” The alert included a video depicting images of abused patients.
In an earlier letter to Seema Verma, administrator of the Centers for Medicare & Medicaid Services (CMS), the OIG said it had concluded that CMS was not providing needed oversight of the homes, and had not even begun to enforce a six-year-old law designed to protect nursing home residents.
“OIG’s study of adverse events in SNFs found that an estimated 22 percent of Medicare beneficiaries experienced adverse events during their SNF stays,” the letter said. “These adverse events included infections, pressure ulcers, and medication-induced bleeding. Medical record review determined that 69 percent of these patient-harm events could have been prevented had the SNF provided better care. Over half of the residents harmed during their SNF stays required hospital care to treat the adverse event.”
The office’s alert announcement urged family members of nursing home residents to be vigilant. “Visit your loved ones often who are in these facilities, ask them if they are being treated properly, and report potential cases of abuse or neglect to your local police and your state’s Medicaid fraud control unit,” the alert said.
Planning for future health care expenses
Fidelity Investments says a typical 65-year-old couple will need to spend $275,000 on health care during the rest of their lives. The big retirement investment firm says in its annual estimate that this total is 6 percent higher than in 2016, and that it includes the couple’s spending on Medicare and other health items, but excludes the cost of long-term care.
It is doubtful that more than a few percent of Medicare enrollees have that much money bankrolled for their future health needs, and there’s no question that rising health costs are and will be a serious challenge for most of us. However, if you don’t have an extra $275,000 lying around, all is not lost.
People don’t spend their health dollars all at once, so totaling up the lifetime tab is not the way such items are handled in the real world. For that view, I’d turn to the consumer spending work done by the U.S. Bureau of Labor Statistics (BLS). Its look at consumer spending in 2015 found that the for the year ended in June of last year, households where the survey respondent was 65 or older spent about $5,750 on health care in 2015.
This is a very rough approximation of what your expenses may be. First, it’s a household figure. Second, it includes all older Americans. Odds are that single seniors will spend less than this, while couples will spend more. There also will be major differences depending on household income and retirement savers. Folks on Medicaid will pay much smaller amounts, while those at the higher end of the income ladder easily can – and mostly will – pay several times the average.
Approximation or not, rising health costs are the major challenge to financial sufficiency in retirement. I doubt you need an “expert” to tell you how to respond, but here are a few thoughts:
This week’s reader Q&A
Jan: I’m looking for advice on when my husband and I should file for Social Security. He is 66 and retired; I am 64, still work, and make about $150,000 a year in commission income. I will qualify for a $48,000 annual pension when I turn 66. We have $1.7 million in savings, a $600,000 home (our mortgage will be paid off in four years), and no other debt.
Phil Moeller: It doesn’t appear that you need additional current income. If that’s the case, and neither of you have health issues that would shorten your expected life spans, I strongly favor delaying benefits until they reach their maximum amounts at age 70. Given expectations that both of you will live well into your 80s, and that at least one of you likely will live well into their 90s, maximizing Social Security makes sense.
I am assuming neither of you has worked for public employers, that your wages have been subject to Social Security payroll taxes, and that your pension is from a private employer. Otherwise, Social Security’s Windfall Elimination Provision and/or Government Pension Offset might come into play, and could alter your optimal strategy.
If you do want to generate some Social Security income prior to age 70, there is another approach. It won’t optimize your lifetime benefits, but it may nonetheless be attractive. When you reach 66, your husband would file for his own Social Security retirement benefit. This would make you eligible to file for a spousal benefit based on his earnings record. Under a grandfathered provision of the 2015 revisions to Social Security laws, you would be able to file a restricted application for just your spousal benefit while deferring filing for your own retirement benefit until you turn 70.
If you haven’t already done so, open My Social Security accounts online and see your lifetime earnings record and benefit projections. This will permit you to estimate the effects of different filing strategies.
I also should note that filing for Social Security requires the claimant to begin receiving Part A of Medicare. If you have a high-deductible health plan with a health savings account (HSA), filing for Medicare makes it illegal to continue making pre-tax contributions to an HSA.
Tom – Ohio: My wife is on Medicare now as secondary coverage. Her employer’s insurance is primary, and it has announced plans to change to a high-deductible health plan with a health savings account. That will be the only plan offered.
We need to know quickly what she can and cannot do. Her employer thinks this is not an issue. We are concerned about what the effects will be if she does accept this new plan, and what the effects will be if she does not. For example, will Medicare not cover her as her new primary because she “voluntarily” turned down enrollment in the new employer plan?
Phil Moeller: Under IRS rules, Medicare enrollees may not contribute to a health savings account. This is true even if the person has only the premium-free Part A of Medicare, which everyone receiving Social Security benefits must have.
I am assuming that your wife has only Part A. If this is the case, and she is not receiving Social Security, she could withdraw from Part A and maintain full eligibility for the new HSA plan. She would lose the secondary protection of Part A, of course, but under the circumstances, I’d think this would be the way to go. Perhaps this is why her employer thinks this is not an issue.
However, if your wife has Part A because she is receiving Social Security benefits, the only way she could withdraw from Part A is to also withdraw from receiving Social Security benefits. I don’t see how this would make sense.
In that event, perhaps she could still be in the new health plan, but she would not be able to contribute to the HSA. She would thus be on the hook for all of the plan’s high deductibles. I suppose that’s a “solution” of sorts, but it seems like a bad one to me.
People eligible for Medicare who have employer insurance are free to leave the employer plan and sign up for Medicare as their primary insurer. If your wife elected to do this, she would have an eight-month special enrollment period once her employer plan ended. However, I’d urge her to arrange for Medicare coverage to take effect on or before the date her employer coverage ended. The cost of being uninsured, even for a day, can be ruinous.
I’d appreciate knowing how she fares. With more and more employers moving to high deductible health plans, your wife’s quandary will be shared by a growing number of employed seniors.
John – Fla.: Why is our doctor unwilling to certify my wife for a Medicare home health aide? She called her doctor’s office and asked for one. A secretary called back saying. “Go out and hire one and pay for it yourself.” Are doctor’s afraid to go out on a limb? Is it a black mark against the doctor? We cannot afford to pay for this help ourselves, but my wife’s physical condition certainly warrants physical, occupational, and speech therapy.
Phil Moeller: Medicare provides limited home health benefits but, as you’ve discovered, only if a physician prescribes them. I don’t know if her doctor is afraid to go out on a limb or simply does not feel her condition is serious enough to qualify for this benefit.
Here’s a fuller explanation I recently wrote concerning this benefit and the problems people are having in getting access to it. And here is Medicare’s own explanation of the coverage. I hope there is something in here of value to you.
Carla: I am a widow, and will reach my full retirement age of 66 in October. I am thinking of applying for my late husband’s social security, and understand that if I wait until then my benefits will not be reduced by my employment earnings. Also, I have an ex-husband that I was married to for more than 10 years. One of the Social Security representatives told me I could get either a survivor or ex-spousal benefit, whichever is more. Another one told me if my ex is alive I only get half. I am not sure who is right on this. My ex is alive and makes more than my late husband. If the ex-spousal benefit was half of what my ex made, that benefit would be smaller than my survivor benefit. Lastly, are any of these benefits retroactive?
Phil Moeller: Carla, you have asked the kind of complicated question that affects lots of people, and for whom we wrote a whole book about Social Security. On the slight chance that you do not want to read an entire book to find these answers, here is a shorter reply!
Both survivor and ex-spousal benefits reach their maximum level if you wait to file them until you reach full retirement age.
Social Security is correct in saying that the most you could ever collect from an ex-spousal benefit is half of what your ex-spouse was entitled to receive when he reached his own full retirement age. This is true whether or not he had actually filed for his benefits at that time.
Because you turned 62 on or before the beginning of 2016, you are grandfathered under a 2015 Social Security law. If you decided to file for the ex-spousal benefit (assuming your ex- had reached retirement age or you’d been divorced for two or more years), you would be allowed to file what’s called a restricted application for only this benefit. This will permit you to wait until 70 to file for your own retirement benefit, at which time you’d receive an additional payment equal to the amount by which your retirement benefit exceeded your ex-spousal benefit.
Survivor benefits also can be taken by themselves, thus permitting you to delay your own retirement filing. From what you wrote, it appears that your survivor benefit would be larger than your ex-spousal benefit. If so, that is the one you should take.
Also, if your ex-husband were to pass away, you could file for a survivor benefit based on his earnings record. If it was larger than your current survivor benefit, you should receive an additional benefit equal to the amount by which your new survivor benefit was larger than the old one. Then, at 70, you still could switch to your own benefit if it was larger.
If you file for a benefit at your full retirement age, there is no retroactive benefit, so this should not be part of your filing strategy. Lastly, you’re correct that filings made on or after full retirement age are not subject to Social Security’s earnings test reductions.
Phil Moeller is the author of “Get What’s Yours for Medicare: Maximize Your Coverage, Minimize Your Costs” and the co-author of the updated edition of The New York Times bestseller “How to Get What’s Yours: The Revised Secrets to Maxing Out Your Social Security,” with Making Sen$e’s Paul Solman and Larry Kotlikoff. On Twitter @PhilMoeller or via e-mail: email@example.com.
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