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October 2015

Good, Bad and Worse News about Medicare

Washington Watch


The 50th anniversary of Medicare this fall brings good and bad news. The good news is that the long-term outlook has improved and the giant hospital trust fund will be solvent until 2030, according to a report from the program’s trustees.


But the bad news comes in a double dose. The trustee’s report warns that several million Medicare beneficiaries could see their Medicare Part B monthly premiums skyrocket this winter from $104.90 to $159.30, what one government aide called an “atypical” spike.


In addition, a new Government Accountability Office (GAO) report found that Medicare estimates that taxpayers lost some $60 billion –more than 10 percent of Medicare’s total budget – to fraud, waste, abuse and improper payments.


The big rate hike is predicted because of several factors. Medicare Part B, which is paid for by a combination of federal funds and beneficiary premiums, generally covers physician and outpatient costs. Part B costs increased more than last year and Social Security is not expected to have a cost of living increase next year.


Under the law, the cost of higher Medicare Part B premiums can’t be passed on to beneficiaries when they don’t get a Social Security raise. That means that the higher Medicare costs have to be covered by just 30 percent of Medicare beneficiaries. This will include the 2.8 million Medicare enrollees new to the program this year, 3.1 million beneficiaries with incomes higher than $85,000 a year and 1.6 million beneficiaries who pay their premium directly instead of having it deducted from Social Security.


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Trick or Treats over the Years

Social Insecurity


Relying on an IRA today that is invested in stocks is like trick-or-treating in the big city when we were kids. Just when we had walked up and down dimly-lit city streets until our recycled grocery bag was nearly full of candy – some big bully with chocolate dribbling down his chin would come up from behind, grab the bag, and empty its contents into his already bulging sack. Then he would run off laughing, leaving us fighting back tears and, literally, holding the bag!


It’s the same way with the stock market. Things are looking good, then overnight some bully like China or Greece decides to pull some financial shenanigans sending their economy into a tailspin, causing hyper-investors to pull back, leaving seniors like myself holding the bag!


Almost makes one pine for those good-old-days, candy bag bullies or not. At least then one could recover his losses quickly with a little extra leg work. Yet, even if there was still time to head back out and hit as many homes as possible before the porch lights all went out, a guy’s candy still wasn’t safe after returning home where my brothers and I would anxiously dump out our bags’ contents to get a better look at the night’s bounty.


Next step was to split up the candy into different piles based on quality. Anything the least bit healthy looking, say some sort of pumpkin cookie or some baby carrots, was relegated to the “Do not eat!” group. Whereas, full-sized candy bars were neatly stacked in a place of honor.


Of course, due to the fact that our mother lode of sugar was now fully exposed and vulnerable to attack, constant vigilance was necessary to protect the goods from devious brothers who could lock onto the location of a Hershey almond bar with a radar-like natural instinct.


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