State of the Union: Status of Senior Programs

Q. My husband and I watched the State of the Union address on Tuesday night, until we fell asleep. We heard a little bit about Social Security and Medicare, but couldn’t get the complete gist of what President Obama was saying. If you watched, what do you think are some of the key takeaways for seniors, about important programs such as Social Security, Medicare, and Medicaid and other areas that might affect us? Thanks for your help!

A. In Tuesday night’s State of the Union Address, President Obama laid out his vision for the country’s economic and social future. He touched upon Social Security and Medicare, referring to them as “more important than ever.” In the speech and on the White House website, he expressed his beliefs that all seniors should be able to retire with dignity, not just a privileged few. He reiterated that if Americans become disabled or if they lose the breadwinner in the family, Social Security will be there to protect them.

Nearly 54 million Americans receive Social Security benefits, including 38 million retirees and their family members, 10 million Americans with disabilities and their dependents, and 6 million survivors of deceased workers. The following was stated by President Obama:

-For many Americans, Social Security is their primary source of income.  In fact, for more than half of Social Security recipients aged 65 or over, the program provides over 50% of their family income and, because of its lifetime income protection and survivors benefits, Social Security is particularly important for elderly women.

-The President expressed his commitment to protecting and strengthening Social Security—and securing the basic compact that hard work should be rewarded with dignity at retirement, or in case of disability, or in case of early death.

-He called on Congress to preserve Social Security as a reliable source of income for American seniors and as a program that provides robust benefits to survivors and workers who develop disabilities.

-He expressed that no current beneficiaries should see their basic benefits reduced and an approach that slashes benefits for future generations will not be accepted.

-He mentioned that Social Security is not just for seniors. Because of features like survivors benefits, Social Security is one of the largest antipoverty programs for children, and disability benefits also help younger workers and their families.

-He also stated that he is opposed to privatization and rejects the notion that the future of hard-working Americans should be left to the fluctuations of financial markets.

President Obama didn’t go into great detail about Medicare at the State of the Union address, but he did express his commitment to keep Medicare strong, accessible, and affordable for the 55 million Americans who rely on it and for those who will come to rely on it in the years to come. This past year:

-The Bipartisan Budget Act of 2015 spread out the cost of maintaining the Medicare Trust Fund for doctors and outpatient services, or Part B. This change prevented a sharp premium increase in 2016, as well as in 2017 if there is again no cost of living adjustment in Social Security. The law also prevented overpayments for certain physicians and surgical services performed outside of the hospital. As a result, taxpayers are projected to save about $9 billion over the next decade, while seniors and individuals with disabilities will save upwards of $3 billion in reduced premiums and cost sharing. Read more about the Balanced Budget Act in our blog post, Balanced Budget Act: Good or Bad for Seniors?

-The Medicare Access and CHIP Reauthorization Act of 2015 eliminated the flaws in how Medicare pays physicians, permanently extended a program to help low-income seniors pay for their Medicare premiums, and “continued to move our health system toward one with patients at the center.”

In the coming year, the Administration expressed that it will continue its important work to implement these improvements to Medicare.

President Obama didn’t mention Medicaid in his State of the Union address. However, according to the Wall Street Journal, in his fiscal 2017 budget he will ask Congress to extend a financial incentive to states that expand their Medicaid programs, in a bid to persuade more to do so before he leaves office.

-White House officials said the President will ask Congress to include three years of full federal funding of expansion for any state that extends eligibility for the program to most low-income residents.

-The proposal will be made in Mr. Obama’s fiscal 2017 budget, to be released Feb. 9.

-The funding has previously only been available to states for the calendar years of 2014, 2015 and 2016—meaning that its value had all but expired for the 20 states that haven’t agreed to participate.

-Under the terms of the 2010 Affordable Care Act, the federal government funds most of the cost of expansion, but states eventually have to pay around 10% of the costs of expansion themselves.

Currently over 75 million working Americans—about half the workforce—lack access to retirement plans through their employers. In addition to protecting and strengthening Social Security, President Obama mentioned that he will make it easier for Americans to save on their own for retirement and prepare for unforeseen expenses. How?

The President’s budget lays the foundation for all Americans to participate in retirement accounts at work, proposing simple rules and automatic enrollment—that will automatically enroll workers in IRAs who, until now, haven’t had a workplace retirement plan, while allowing them to opt out if they wish. This should dramatically increase savings participation rates.  According to the President, in 401(k) plans, automatic enrollment has tended to increase participation rates to more than nine out of ten eligible employees. In contrast, for workers who lack access to a retirement plan at their workplace, the current IRA participation rate tends to be less than one out of ten.

Many seniors are struggling in the face of the economic downturn, having seen their savings fall.  The Recovery Act provided a one-time payment of $250 to retirees, other Social Security beneficiaries, disabled veterans, and SSI recipients. Fifty-six million retirees and other individuals received this one-time payment, totaling $14 billion. In light of continued economic hardship for too many seniors, the President will call for Congress to enact another $250 Economic Recovery Payment for seniors this year, as well as to veterans and people with disabilities.

As you can see from the State of the Union address, the laws and programs that affect seniors are always changing, for better or for worse. However, the need to plan in advance remains. If you have not done Incapacity Planning, Estate Planning, or Long-Term Care Planning (or had your documents reviewed in the past several years), or if you have a loved one who is nearing the need for long-term care or already receiving long-term care, please don’t hesitate to call us for a no-cost initial consultation:

Fairfax Elder Law: 703-691-1888
Fredericksburg Elder Law: 540-479-1435
Rockville Elder Law: 301-519-8041
DC Elder Law: 202-587-2797