To say that Social Security and Medicare are important to the financial well being of seniors would be an understatement.
Sixty two percent of eligible beneficiaries rely on Social Security income for more than half of their income. And, almost everyone who is eligible uses Medicare to help fund their healthcare after 65.
So, any increases in benefits or payments are important. Last week, both Social Security and Medicare had major announcements about benefits for 2019.
Social Security Benefit to Rise 2.8% in 2019
Every year Social Security announces a Cost of Living Adjustment (COLA) for Social Security benefits. Over the last 40 years, benefit increases have been as high as 14.3% and as low as ZERO.
This year, benefits for 2019 will rise 2.8%. This is the biggest raise beneficiaries have received in seven years.
However, the Social Security Raise is Probably Not Enough
Social Security benefit increases are based on the Consumer Price Index for Urban Wage Earners and Clerical Workers. This index only takes into account 3 months of inflation data, not a whole year. Therefore, it sometimes does not do a good job of reflecting true inflation — leaving beneficiaries behind.
If Social Security does not keep pace with the actual rise in prices, then beneficiaries can afford less.
A report from the Senior Citizens League found that the purchasing price of Social Security benefits has declined by a whopping 34% over the last 18 years. In other words, if a big trip to the grocery store in 2000 cost you $100, today you would only be able to afford about 2/3 of those goods.
Medicare Costs to Rise, But Only Slightly
The costs and benefits of Medicare are also adjusted every year.
This year, the Centers for Medicare and Medicaid announced only slight increases for 2019:
- The standard monthly premium for Medicare Part B will be $135.50 in 2019, up from $134 in 2018.
- The annual deductible for Medicare Part B (covering some costs related to physicians, outpatient hospitals, home health, medical equipment and other services not covered by Part A) will be $185 — a $2 increase.
- The Medicare Part A inpatient deductible (covering inpatient and skilled nursing facility care and some home health services) will be $1,364, an increase of $24 annually.
What About Medicare Supplemental Insurance? Open Enrollment for Medicare Advantage and Medicare Part D is Now
Every year there are significant changes to Medicare supplemental health plans. It is wise to review your coverage annually to see if changes in your health or changes in plans warrant a switch.
The open enrollment period for Medicare Advantage and Medicare Part D runs from Oct. 15 through Dec. 7 for coverage starting Jan. 1, 2019.
Here are a few changes to look for:
More Options: According to the Centers for Medicare and Medicaid Services, there will be approximately 600 new Medicare Advantage plans available. Your particular options depend on your location.
Premiums Dip: The average premium for Part D plans will fall by about $1 a month. And, premiums for Medicare Advantage will fall $1.81 to $28 a month.
Preferred Pharmacies: Some of the most cost effective Part D plans have “preferred pharmacies.” This means that if you can get your prescriptions at the pharmacy chain the plan is associated with, then you will pay less.
Easier to Back Out: If you end up choosing a Medicare Advantage plan that you are unhappy with, you now have from Jan. 1 through March 31 to switch. (It used to be that you only had until Feb. 14.) The couple of extra weeks should be helpful.
Is it Time to Update Your Retirement Plan?
It is important to keep your retirement plans up to date.
You may want to update your:
- Social Security benefit amount
- Optimistic and Pessimistic inflation rates
- Medical inflation rates
- Anything else in your plan that may have recently changed
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