Social Security Administration Releases “Status of the Social Security and Medicare Programs”

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expert perspective telescopeGrahall’s Robert Cirkeil shares some thoughts on the Social Security Adminstration’s SUMMARY OF THE 2009 ANNUAL REPORTS

For years, older men would marry younger women. More recently, older women have been marrying younger men. Historically this was done for love (or lust). Now the mature crowd is searching for youthful spouses for one reason and one reason only – MEDICAL BENEFITS! It would seem that this is the only way seniors can continue to have medical coverage. Private sector employers don’t provide medical coverage to retirees like they used to thanks to changes in the accounting rules.

But until recently, even with these accounting rule changes, keeping health care benefits was not an insurmountable problem. Older workers merely switched careers to the public sector where retiree medical benefits were still offered. Now the same accounting rules are being applied to the public sector plans and soon those retiree plans will go by the wayside. So what are employees to do? They are either engaging in “reverse gold-digging” or they don’t retire. Employers who did away with retiree medical benefits for cost reasons are in for a big surprise. If they thought that covering a 65 year-old retiree was expensive, wait ’till the see how much a 65 year-old WORKER costs! It’s roughly triple because Medicare does not offset the benefit for workers as it does for retirees.

The 2009 Social Security and Medicare Trustees Report was released today. This always bleak report is even more depressing this year. Shortfalls are larger than ever and insolvency looms sooner than ever. The report is very credible and is written in a matter-of-fact in tone. But a careful read proves there is no need for sensationalism in the text, the numbers accomplish that by themselves. Basically, Social Security falls into a deficit in 2017 and goes belly up by 2037. Medicare’s dates are 2012 and 2017 respectively. Good thing too; otherwise eventually they’d become 100% of the GDP (which as I get older doesn’t sound so bad, come to think of it.)

The Hospital Fund needs to more than double its tax rate or cut benefits in half. No magic there. This is a major reason why National Health Care Reform will pass this year. By folding Medicare into a universal health care plan, these shortfalls can be eliminated in a less apparent way as the tax increases and/or benefit decreases are spread among a broader population base than just seniors. Once that happens, maybe seniors can go back to marrying each other and retiring.

Link to the Social Security Adminstration’s Summary of the 2009 Annual Reports 

Email Robert Cirkiel at robert.cirkiel@grahall.com

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