Social Security Switching to Electronic Payments in 2013

Posted: 5/14/2012

The Treasury Department announced that they will discontinue mailing out paper checks to beneficiaries receiving federal benefits (including Social Security) next year.

Once in effect, people who receive Social Security, veteran’s benefits, railroad pensions and federal disability payments will need to choose between direct deposit and a debit card to receive their benefits.

This switch is mandated by a Treasury rule issued in December 2010, with the main purpose of reducing the costs required to mail out paper checks. However, this change will also help reduce fraud, as there will no longer be checks floating around for people to steal.

Note: If you are currently receiving your benefits electronically then this change will not affect you.

People who are receiving federal benefits by check will need to switch to electronic payment by March 2013. You can choose to get your payments by direct deposit to a bank or credit union account or to a Direct Express® Debit MasterCard® card account.

If you choose the debit card option, then once you receive your debit card your benefits will be deposited directly to your card each month. The debit card can be used at any retailer that accepts MasterCard, or cash can be withdrawn from any ATM. There will not be any fees for using the debit card to make purchases, and beneficiaries can make one free ATM withdrawal each time a payment is registered to the card. Additional withdrawals will cost 90 cents each, and the owner of the ATM may also impose fees.

Some of the benefits of receiving electronic payments include:

Electronic payments are safer. According to Walt Henderson, the director for the Treasury Department’s electronic funds transfer division, over 540,000 federal benefit checks were reported lost or stolen in 2010. Having your benefits deposited directly into your bank account will eliminate the possibility that your check will be lost or stolen.
Perhaps the biggest reason is how much money will be saved by switching to electronic payments. This switch is expected to save the federal government approximately $120 million per year. Social Security alone is expected to save $1 billion over the next 10 years!
Other benefits include eliminating the need to go to the bank each month, or having to find/hire someone to go to the bank if you are unable to get there yourself.

As with any change, there are concerns as well. One of the biggest concerns is that people who don’t have bank accounts will not transition to debit cards easily. And of course, debit cards can be lost or stolen, which brings the chance of fraud back into the equation. As a result AARP is requesting that some people be given exemptions from the requirement that they must switch to electronic payments.

Currently, there are a few exceptions. For example, people who are age 90 or over will not be required to switch to electronic payments. Other exceptions will be made in extreme, rare cases, such as if using a debit card would be a hardship for an individual.

The federal government is trying to educate people well in advance of the switch. For more information about the upcoming change, the government has created a website, www.GoDirect.org and a toll-free phone number, 1-800-333-1795, people can call for assistance.

http://www.socialsecurityretirementincome.com/social-security/social-security-electronic-payments/

Social Security, 2012 elections loom large in debt talks

Posted: April 17, 2012

Republican advocates are skeptical while Democrats are concerned about news reports saying the White House is willing to accept significant cuts in Social Security spending.

“It’s probably their best play under their current circumstances,” because the vague offer portrays President Barack Obama as a moderate seeking to curb out-of-control spending said Wes Anderson, a partner at OnMessage, a GOP-affiliated polling firm based in Crofton, Md.

The gambit could also help Democrats slam Republicans as anti-Social Security, Anderson said.

“This is pure political theater” intended to divide the Republican caucus, demoralize GOP voters and provide more ammunition for negative advertising during the 2012 election, he said.

“It will take a little while to determine how serious the White House is being,” said Frank Donatelli, the chairman of GOPAC, which helps train aspiring state and local GOP legislators. GOP legislators should press the president to make a detailed offer, he said. “Tell us what you’re talking about here. Are you talking about raising the retirement age, [or instituting] means testing? Give us some details.”

On the left, Eric Kingson, a co-chair of the Strengthen Social Security Campaign, combined skepticism about the news report with hard-nosed advocacy against any cuts. (GOP senators move to prevent executive order on debt ceiling)

“If true, it is problematic,” Kingson said, adding “it needs to be taken seriously by those who want to protect Social Security.”

White House spokesman Jay Carney downplayed the news reports today. “There is no news here,” he said in a morning press release. “The president has always said that while Social Security is not a major driver of the deficit, we do need to strengthen the program, and the president said in the State of the Union address that he wanted to work with both parties to do so in a balanced way that preserves the promise of the program and doesn’t slash benefits.”

Carney was more dismissive in his morning press conference. “There is an empty chair [at the press room] for the organization that produced that story,” he said.

Once the morning’s talks ended, Obama appeared in the White House’s briefing room to spin the media’s coverage of the talks.

“The parties are still far apart on a wide range of issues … all the leaders came here in the spirit of compromise and wanting to solve problems on behalf of the American people,” he said, before walking away from reporters’ shouted questions. (Limbaugh: Don’t let Obama frame debt ceiling debate)

According to the Washington Post’s report, the president was scheduled to use this morning’s White House meeting with GOP and Democratic legislators “to consider a far-reaching debt-reduction plan that would force Democrats to accept major changes to Social Security and Medicare in exchange for Republican support for fresh tax revenue.”

The Post did not describe the details of a proposal, except to say it might include a new way of calculating inflation’s impact on Social Security payments.

The proposal, however vague, helps Obama to present himself as a reasonable moderate, and to portray the GOP’s priorities as the main obstacle to the negotiations. For example, the Post’s report declared that “with Obama offering major savings from entitlement programs, Republican intransigence on taxes looms as the biggest sticking point in the debt negotiations.”

The GOP should respond to Obama’s overtures, said Anderson, by demanding a detailed proposal on Social Security reform before it begins negotiating any deal on the vast retirement program, and also by underlining the Republicans’ current compromises. “Republicans, lots of conservatives, are actually talking about raising the debt-ceiling [and] that is a huge compromise” because it defers to the Democrats’ continuing desire to continue deficit spending.

“As a Republican operative, I would certainly tell all our members that any attempt to be rational with the Democrats will only incur more wrath, more vitriol when they they attacks us on Medicare and Social Security,” said Anderson, who recently completed a poll on voters’ attitude towards deficit spending.

“That’s coming … [but] the one thing you can’t do is also disappoint a huge majority of voters by not getting spending and debt under control,” he said.

A bad deal will could split Republican legislators, demoralize the GOP base, and give Obama an advantage going into the 2012 election, he said. Republicans should insist on real, long-term cuts to government spending, because swing voters know that Obama and the Democrats “have spent us to the bring of bankruptcy and don’t want to do anything about it.”

The outcome of the debt-ceiling talks, Anderson said, “is hugely consequential to the outcome of next’s year’s election.”

http://news.yahoo.com/social-security-2012-elections-loom-large-debt-talks-194443211.html

Get Ready for 2012 Social Security, Medicare Changes

Social Security’s annual cost of living adjustment (COLA) seems assured of rising in 2012 by a few percent—its first increase in three years. Whether that gain winds up putting many dollars in beneficiaries’ pockets is another matter.

Posted: March 19, 2012

There are complex links between annual changes in Social Security and Medicare insurance premiums. Depending on your annual income and when you began Medicare, much or all of your COLA gains could be eaten up by higher Medicare premiums.

The Social Security COLA is based on a version of the U.S. Consumer Price Index tailored for people who work. It’s called the CPI for Urban Wage Earners and Clerical Workers, or the CPI-W. Every year, Social Security looks at the CPI-W average during the third quarter of the year, compares it with the average during the previous year’s third quarter, and designates any percentage increase as the following year’s COLA.

Following a big surge in oil prices in the summer of 2008, the CPI-W spiked and led to a big 5.8 percent COLA increase for 2009—the program’s largest in 25 years. Oil prices later declined and so did overall inflation. In both 2009 and 2010, the third-quarter average for the CPI-W was less than it was during 2008′s third quarter. As retirees know all too well, this meant no COLA in 2010 or 2011.

Since last summer, however, energy and other prices have risen. At the end of July, the CPI-W was 4.1 percent higher than in July 2010, and the index stood at 222.686. This is 3.3 percent higher than the CPI-W average of 215.495 during the third quarter of 2008.

Prices for crude oil have plunged in recent weeks, so it’s possible that the CPI-W would dip during the next two months. However, food prices have been rising, and prices for imported goods are up 14 percent from a year ago, due primarily to the diminished purchasing power of a weaker U.S. dollar.

If the COLA does rise by a few percent, it would also trigger the first increase in three years for Part B Medicare premiums. Parts A and B, commonly known as traditional Medicare, cover hospitals plus physician and outpatient expenses. There is no premium for Part A coverage. The government backs Part B premiums directly out of a beneficiary’s Social Security payment.

There is a “hold harmless” clause that prohibits Social Security payments from declining from one year to the next. So, the absence of a COLA in 2009 and 2010 meant that there could be no increase in Part B premiums for existing beneficiaries. This premium has thus been frozen at $96.40 a month for about 75 percent of beneficiaries.

Another provision of the law requires Part B premiums to finance 25 percent of the costs of providing covered services. With premiums frozen for most beneficiaries but healthcare costs still rising, Medicare had to look to the new and higher-income beneficiaries to pay bigger premiums to maintain that 25 percent finance level.

New enrollees in 2011, for example, pay a monthly Part B premium of $115.40 if they earned less than $85,000 a year ($170,000 for couples). Rates for higher-income earners rise substantially, and the wealthiest beneficiaries pay premiums approaching 80 percent of their costs, not 25 percent.

“In most years, a significant portion of the cost-of-living increases received by most Social Security beneficiaries” is used to pay for higher Medicare premiums, Rudolph G. Penner wrote in a recent study for the Urban Institute. Social Security benefits thus are “not keeping up with inflation, and for those retired a long time, the real value of the net benefit can erode significantly.”

Looking ahead, Penner said in the study, “the rapid growth in healthcare costs is leaving the entire population with relatively less to spend on non-health goods and services, and the elderly are affected the most because so much more of their income goes to healthcare.”

One of the impacts of raising Part B premiums would be to make it more attractive for beneficiaries to seek coverage through a Medicare Advantage (MA) policy. MA policies compete with traditional Medicare. Dan Mendelson, head of Avalere Health, a Washington, D.C.-based healthcare consultancy, says he projects MA premium increases in 2012 to be modest. Open enrollment for 2012 plans begins October 15 and extends until December 7. Details on any changes to the 2012 COLA and increases in Part B premiums are expected to be announced later in October.

Mendelson says he expects lots of insurance-plan changes next year, particularly involving the use of preferred pharmacy providers. By requiring policyholders to use a certain pharmacy, he explained, an insurer can drive lower costs at that pharmacy. “Consumers are going to have to be thinking about their out of pocket liability” when they shop for 2012 coverage, he said, “and also the fact that there will be more innovative products in the marketplace.”

Twitter: @PhilMoeller

http://money.usnews.com/money/blogs/the-best-life/2011/08/19/get-ready-for-2012-social-security-medicare-changes

Obama budget cuts health spending by $360 billion

By Julian Pecquet – 02/10/12 06:09 PM ET / The Hill

President Obama’s budget proposal will cut federal healthcare spending by $360 billion – including $300 billion from Medicare – over the next 10 years, according to a summary of the spending blueprint that will be fully unveiled Monday.

The savings target for Medicare, Medicaid and other federal health programs is nearly identical to the $320 billion in healthcare savings included in the president’s $3 trillion deficit-reduction plan last September. Senior administration officials confirmed in a media call that the proposals would be not identical but very similar, with most of the savings coming from provider cuts and changes to drug reimbursements. September’s deficit-cutting proposal would have required wealthy seniors to pay more for their Medicare benefits, cut payments to doctors and hospitals and shifted Medicaid costs to the states.

The new budget keeps funding for biomedical research at the National Institutes of Health level at $30.7 billion for the fiscal year starting Oct. 1. The budget will propose “new grant management policies to increase the number of new research grants by 7 percent,” according to the budget summary.

http://thehill.com/blogs/healthwatch/medicare/210071-obama-budget-cuts-health-spending-by-360-billion-