2020 changes for social security and medicare: what ... webinar.pdf2020 changes for social security...
TRANSCRIPT
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2020 Changes for Social Security and Medicare:
What Clients Need to Know
By Elaine Floyd, CFP®Director of Retirement and Life PlanningHorsesmouth
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CoronavirusSocial Security
• SSA offices closed• Benefits not affected• Phone service still available: 800-772-1213 (“please be
patient”)• Online service still available: www.ssa.gov• In-person services for dire needs only; must call in
advance (see SSA office locator: https://secure.ssa.gov/ICON/main.jsp)
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http://www.ssa.gov/
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CoronavirusOriginal Medicare
• Coronavirus testing – no deductible or coinsurance• Telehealth services – covered under Part B, subject to
usual deductibles and coinsurance (may be covered under supplemental insurance)
• Hospitalizations and medically necessary services covered as usual under Parts A and B
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CoronavirusPart D plans
• Under public health emergency Part D drug plans must • Cover formulary Part D drugs picked up at out-of-network
pharmacies when you cannot be expected to pick up Part D drugs at an in-network pharmacy
• Remove restrictions that stop you from getting a refill too soon
• Cover the maximum supply of your refill if you request it
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CoronavirusMedicare Advantage plans
• Must cover everything Original Medicare does but can do so with different costs and restrictions
• During public health emergency Medicare Advantage plans must:• Allow you to receive health care services at out-of-network doctors’ offices, hospitals,
and other facilities • Charge in-network cost-sharing amounts for services received out of network • Waive referral requirements • Suspend rules that require you to tell your plan before you get certain kinds of care or
prescription drugs, if failing to contact the plan ahead of time would limit your access to care
• Cover the maximum supply of your refill if you request it
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What’s new for 2020
• Social Security cost-of-living adjustment (COLA)• New earnings test thresholds• New taxable wage base • New bend points: higher PIAs for maximum earners• Window closing for restricted application• Part B Medicare premiums, new IRMAA thresholds• The latest Social Security reform proposals
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1. Social Security cost-of-living adjustment
• Checks going up by 1.6%• May be partially offset by Medicare premium “catch-
up” for those with low benefit amounts• All PIAs raised by COLA, whether or not benefits
have started
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2. Earnings test thresholds
• $18,240 pre-FRA year• Benefits withheld $1 for $2
• $48,600 FRA year• Benefits withheld $1 for $3
• First-year monthly earnings test• $1,520 pre FRA• $4,050 FRA year
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3. Maximum wage base for 2020: $137,700
• Additional earnings (or lack thereof) may affect the PIA• Statement estimate may be off
• Early retirees: send to Retirement Estimator (www.ssa.gov/estimator) or ballpark $100-$200 less than statement shows
• Continued earnings make a bigger difference for clients with less than 35 years of earnings (but later earnings always count for more than earlier earnings so everyone who works can improve their benefit)
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http://www.ssa.gov/estimator
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4. New indexing factors and bend points
• Average wage index up 3.62%• Higher PIA for maximum earners turning 62 in 2020
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Average Indexed Monthly Earnings (AIME) for baby boomer born in
1958
Maximum earnings since 1980
$4,487,212 in total indexed earnings ÷ 420 months =
$10,683 AIME
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Example of benefit formula for max earner• Baby Boomer born in 1958 – turns 62 in 2020• Maximum Social Security earnings every year since age 22• AIME = $10,683• PIA formula:
• $960 x .90 = $864.00• $4,825 x .32 = $1,544.00 ($5,785 - $960 = $4,825)• $4,898 x .15 = $734.70 ($10,683 - $5,785 = $4,898)• Total = $3,142.70
PIA = $3,142.70Amount worker will receive at full retirement age
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5. Window closing for restricted application
• Strategy: Receive spousal benefit while own benefit builds delayed credits to age 70
• Phaseout: Only those born before January 2, 1954 are eligible• Everyone eligible will be FRA by end of 2019, but strategy not expiring:
can still do it up to age 70• Remember…
• Must not have previously filed for benefits• Other spouse must have filed• Other spouse need not be born before 1954
• See my Aug. 3, 2017 newsletter: “How To File a Restricted Application”• Does not apply to survivor benefits
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Trust fund balance on 12/31/18: $2.895 trillion
2019 results• Total income: $1.062 trillion• Total expenditures: $1.059 trillion• Net increase in assets: < $ 3 billion
Trust fund balance on 12/31/19: $2.897 trillion
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6. OASDI Trust Fund still growing (barely)
Source: Social Security Administration, Office of the Chief Actuary
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Long-term projections: without reform, benefits fall to 80% in 2034
Source: 2018 OASDI Trustees Report
Source: 2019 OASDI Trustees Report
Cost: Scheduled but not fully payable benefits
Income
Expenditures: Payable benefits =income after trust fund exhaustion
in 2034
Cost: Scheduled and payable benefits
Payable benefits as percentof scheduled benefits:
2017-2033: 100%2034: 80%2092: 74%
Cost: Scheduled but not fully payable benefits
Chart1
200020002000
200120012001
200220022002
200320032003
200420042004
200520052005
200620062006
200720072007
200820082008
200920092009
201020102010
201120112011
201220122012
201320132013
201420142014
201520152015
201620162016
201720172017
201820182018
201920192019
202020202020
202120212021
202220222022
202320232023
202420242024
202520252025
202620262026
202720272027
202820282028
202920292029
203020302030
203120312031
203220322032
203320332033
203420342034
203520352035
203620362036
203720372037
203820382038
203920392039
204020402040
204120412041
204220422042
204320432043
204420442044
204520452045
204620462046
204720472047
204820482048
204920492049
205020502050
205120512051
205220522052
205320532053
205420542054
205520552055
205620562056
205720572057
205820582058
205920592059
206020602060
206120612061
206220622062
206320632063
206420642064
206520652065
206620662066
206720672067
206820682068
206920692069
207020702070
207120712071
207220722072
207320732073
207420742074
207520752075
207620762076
207720772077
207820782078
207920792079
208020802080
208120812081
208220822082
208320832083
208420842084
208520852085
208620862086
208720872087
208820882088
208920892089
209020902090
Income
Scheduled
Payable
Calendar Year
0.1262
0.104
0.104
0.1272
0.1055
0.1055
0.129
0.1089
0.1089
0.1259
0.1103
0.1103
0.1252
0.1105
0.1105
0.1279
0.1116
0.1116
0.1279
0.1106
0.1106
0.1286
0.1133
0.1133
0.1273
0.1155
0.1155
0.131
0.1304
0.1304
0.1251
0.1344
0.1344
0.1268
0.1352
0.1352
0.1289
0.1383
0.1383
0.1283
0.1395
0.1395
0.1293
0.1398
0.1398
0.1295
0.1397
0.1397
0.1298
0.1394
0.1394
0.1301
0.1391
0.1391
0.1303
0.1396
0.1396
0.1305
0.1413
0.1413
0.1307
0.1437
0.1437
0.1311
0.1465
0.1465
0.1313
0.1497
0.1497
0.1315
0.1529
0.1529
0.1316
0.1559
0.1559
0.1318
0.1588
0.1588
0.132
0.1615
0.1615
0.1321
0.1641
0.1641
0.1323
0.1664
0.1664
0.1324
0.1683
0.1683
0.1325
0.1701
0.1701
0.1326
0.1715
0.1715
0.1327
0.1725
0.1725
0.1327
0.1733
0.1327
0.1328
0.1738
0.1328
0.1328
0.1741
0.1328
0.1328
0.1743
0.1328
0.1328
0.1743
0.1328
0.1328
0.1742
0.1328
0.1328
0.1739
0.1328
0.1328
0.1736
0.1328
0.1328
0.1732
0.1328
0.1328
0.1728
0.1328
0.1328
0.1724
0.1328
0.1328
0.1721
0.1328
0.1328
0.1719
0.1328
0.1328
0.1716
0.1328
0.1328
0.1714
0.1328
0.1327
0.1711
0.1327
0.1327
0.171
0.1327
0.1327
0.1708
0.1327
0.1327
0.1707
0.1327
0.1327
0.1707
0.1327
0.1328
0.1707
0.1328
0.1328
0.1708
0.1328
0.1328
0.1709
0.1328
0.1328
0.1711
0.1328
0.1328
0.1712
0.1328
0.1328
0.1714
0.1328
0.1328
0.1715
0.1328
0.1328
0.1716
0.1328
0.1328
0.1716
0.1328
0.1329
0.1717
0.1329
0.1329
0.1718
0.1329
0.1329
0.1719
0.1329
0.1329
0.172
0.1329
0.1329
0.1722
0.1329
0.1329
0.1724
0.1329
0.1329
0.1727
0.1329
0.133
0.1729
0.133
0.133
0.1733
0.133
0.133
0.1735
0.133
0.133
0.1738
0.133
0.133
0.174
0.133
0.133
0.1743
0.133
0.1331
0.1746
0.1331
0.1331
0.1749
0.1331
0.1331
0.1751
0.1331
0.1331
0.1754
0.1331
0.1331
0.1757
0.1331
0.1332
0.176
0.1332
0.1332
0.1764
0.1332
0.1332
0.1768
0.1332
0.1332
0.1772
0.1332
0.1332
0.1776
0.1332
0.1333
0.1779
0.1333
0.1333
0.1783
0.1333
0.1333
0.1787
0.1333
0.1333
0.1791
0.1333
0.1334
0.1794
0.1334
0.1334
0.1798
0.1334
2012
YearIncomeScheduledPayable
200012.62%10.40%10.40%
200112.72%10.55%10.55%
200212.90%10.89%10.89%
200312.59%11.03%11.03%
200412.52%11.05%11.05%
200512.79%11.16%11.16%
200612.79%11.06%11.06%
200712.86%11.33%11.33%
200812.73%11.55%11.55%
200913.10%13.04%13.04%
201012.51%13.44%13.44%
201112.68%13.52%13.52%
201212.89%13.83%13.83%
201312.83%13.95%13.95%
201412.93%13.98%13.98%
201512.95%13.97%13.97%
201612.98%13.94%13.94%
201713.01%13.91%13.91%
201813.03%13.96%13.96%
201913.05%14.13%14.13%
202013.07%14.37%14.37%
202113.11%14.65%14.65%
202213.13%14.97%14.97%
202313.15%15.29%15.29%
202413.16%15.59%15.59%
202513.18%15.88%15.88%
202613.20%16.15%16.15%
202713.21%16.41%16.41%
202813.23%16.64%16.64%
202913.24%16.83%16.83%
203013.25%17.01%17.01%
203113.26%17.15%17.15%
203213.27%17.25%17.25%
203313.27%17.33%13.27%
203413.28%17.38%13.28%
203513.28%17.41%13.28%
203613.28%17.43%13.28%
203713.28%17.43%13.28%
203813.28%17.42%13.28%
203913.28%17.39%13.28%
204013.28%17.36%13.28%
204113.28%17.32%13.28%
204213.28%17.28%13.28%
204313.28%17.24%13.28%
204413.28%17.21%13.28%
204513.28%17.19%13.28%
204613.28%17.16%13.28%
204713.28%17.14%13.28%
204813.27%17.11%13.27%
204913.27%17.10%13.27%
205013.27%17.08%13.27%
205113.27%17.07%13.27%
205213.27%17.07%13.27%
205313.28%17.07%13.28%
205413.28%17.08%13.28%
205513.28%17.09%13.28%
205613.28%17.11%13.28%
205713.28%17.12%13.28%
205813.28%17.14%13.28%
205913.28%17.15%13.28%
206013.28%17.16%13.28%
206113.28%17.16%13.28%
206213.29%17.17%13.29%
206313.29%17.18%13.29%
206413.29%17.19%13.29%
206513.29%17.20%13.29%
206613.29%17.22%13.29%
206713.29%17.24%13.29%
206813.29%17.27%13.29%
206913.30%17.29%13.30%
207013.30%17.33%13.30%
207113.30%17.35%13.30%
207213.30%17.38%13.30%
207313.30%17.40%13.30%
207413.30%17.43%13.30%
207513.31%17.46%13.31%
207613.31%17.49%13.31%
207713.31%17.51%13.31%
207813.31%17.54%13.31%
207913.31%17.57%13.31%
208013.32%17.60%13.32%
208113.32%17.64%13.32%
208213.32%17.68%13.32%
208313.32%17.72%13.32%
208413.32%17.76%13.32%
208513.33%17.79%13.33%
208613.33%17.83%13.33%
208713.33%17.87%13.33%
208813.33%17.91%13.33%
208913.34%17.94%13.34%
209013.34%17.98%13.34%
2012
Income
Scheduled
Payable
Calendar Year
Slide 9
YearIncomeScheduledPayable
200012.62%10.40%10.40%
200112.72%10.55%10.55%
200212.90%10.89%10.89%
200312.59%11.03%11.03%
200412.52%11.05%11.05%
200512.79%11.16%11.16%
200612.79%11.06%11.06%
200712.86%11.33%11.33%
200812.73%11.55%11.55%
200913.10%13.04%13.04%
201012.51%13.44%13.44%
201112.68%13.52%13.52%
201212.89%13.83%13.83%
201312.83%13.95%13.95%
201412.93%13.98%13.98%
201512.95%13.97%13.97%
201612.98%13.94%13.94%
201713.01%13.91%13.91%
201813.03%13.96%13.96%
201913.05%14.13%14.13%
202013.07%14.37%14.37%
202113.11%14.65%14.65%
202213.13%14.97%14.97%
202313.15%15.29%15.29%
202413.16%15.59%15.59%
202513.18%15.88%15.88%
202613.20%16.15%16.15%
202713.21%16.41%16.41%
202813.23%16.64%16.64%
202913.24%16.83%16.83%
203013.25%17.01%17.01%
203113.26%17.15%17.15%
203213.27%17.25%17.25%
203313.27%17.33%13.27%
203413.28%17.38%13.28%
203513.28%17.41%13.28%
203613.28%17.43%13.28%
203713.28%17.43%13.28%
203813.28%17.42%13.28%
203913.28%17.39%13.28%
204013.28%17.36%13.28%
204113.28%17.32%13.28%
204213.28%17.28%13.28%
204313.28%17.24%13.28%
204413.28%17.21%13.28%
204513.28%17.19%13.28%
204613.28%17.16%13.28%
204713.28%17.14%13.28%
204813.27%17.11%13.27%
204913.27%17.10%13.27%
205013.27%17.08%13.27%
205113.27%17.07%13.27%
205213.27%17.07%13.27%
205313.28%17.07%13.28%
205413.28%17.08%13.28%
205513.28%17.09%13.28%
205613.28%17.11%13.28%
205713.28%17.12%13.28%
205813.28%17.14%13.28%
205913.28%17.15%13.28%
206013.28%17.16%13.28%
206113.28%17.16%13.28%
206213.29%17.17%13.29%
206313.29%17.18%13.29%
206413.29%17.19%13.29%
206513.29%17.20%13.29%
206613.29%17.22%13.29%
206713.29%17.24%13.29%
206813.29%17.27%13.29%
206913.30%17.29%13.30%
207013.30%17.33%13.30%
207113.30%17.35%13.30%
207213.30%17.38%13.30%
207313.30%17.40%13.30%
207413.30%17.43%13.30%
207513.31%17.46%13.31%
207613.31%17.49%13.31%
207713.31%17.51%13.31%
207813.31%17.54%13.31%
207913.31%17.57%13.31%
208013.32%17.60%13.32%
208113.32%17.64%13.32%
208213.32%17.68%13.32%
208313.32%17.72%13.32%
208413.32%17.76%13.32%
208513.33%17.79%13.33%
208613.33%17.83%13.33%
208713.33%17.87%13.33%
208813.33%17.91%13.33%
208913.34%17.94%13.34%
209013.34%17.98%13.34%
Slide 9
Income
Scheduled
Payable
Calendar Year
Slide 8
YearOASDI
2000216%
2001239%
2002263%
2003288%
2004305%
2005318%
2006335%
2007345%
2008358%
2009353%
2010357%
2011353%
2012347%
2013341%
2014334%
2015328%
2016321%
2017314%
2018306%
2019296%
2020284%
Slide 8
OASDI
Calendar Year
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18
https://www.ssa.gov/oact/solvency/provisions/index.html
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19
https://www.ssa.gov/oact/solvency/index.html
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Social Security 2100 Act
• Would increase first bend point multiplier from .90 to .93• Would base cost-of-living adjustments on the CPI-E (expected to increase COLA by
0.2 percentage points per year)• Would increase the special minimum PIA• Would replace current taxation thresholds to $50,000 for single individuals and
$100,000 for couples. Would not be adjusted for inflation• Would withhold OASDI taxes on income over $400,000. A “second AIME” would be
created to credit these earnings, with a 2% multiplier• Would gradually increase the payroll tax rate from 12.4% to 14.8% for 2042 and later• OAS and DI trust funds would be combined
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Would restore full solvency
21
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7. New Medicare numbers for 2020
• Part B base premium: $144.60• IRMAA income brackets adjusted for inflation• Medigap Plan F closed to those turning 65 after
2019—i.e., must pay Part B deductible• Part D donut hole closed in 2020
22
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Monthly premiums for Parts B & D Including Income Related Monthly
Adjustment Amounts
23These do not include premiums for Medicare Advantage or Medicare supplement plans
MAGISingle
MAGIJoint
MAGI Married
filing separately
Part B monthly premium paid to
Medicare
Part B income-related
adjustment amount paid to
Medicare
Part D monthly premium (average)
paid to insurer
Part D income-related
adjustment amount paid to Medicare
Total Parts B & D
premium
≤ $87,000 ≤ $174,000 ≤ $87,000 $144.60 $0.00 $40.00 $0.00 $184.60
$87,001 -$109,000
$174,001 -$218,000
$144.60 $57.80 $40.00 $12.20 $254.60
$109,001 -$136,000
$218,001 -$272,000
$144.60 $144.60 $40.00 $31.50 $360.70
$136,001 -$163,000
$272,001 -$326,000
$144.60 $231.40 $40.00 $50.70 $466.40
$163,001-$499,999
$326,001-$749,999
$87,001-$412,999
$144.60 $318.10 $40.00 $70.00 $572.70
≥$500,000 ≥$750,000 ≥$413,000 $144.60 $347.00 $40.00 $76.40 $607.40
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Medicare deductiblesAmount You Pay
• Part A - $1,408 per spell of illness• Part B - $198/year
• Waived for some preventive services such as flu shots, some mammograms and Pap smears, bone mass tests, prostate screening, diabetes tests, some others
• Part D – $435/year
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Part D drug plans
• Donut hole closing in 2020, but Medicare’s standard drug plan design not relevant anymore
• Find a drug plan that meets client’s needs based on the medications they take
• Find cheapest drug plan if not taking drugs• Go to www.medicare.gov/find-a-plan
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What to do now
• Become the go-to expert on Social Security and Medicare• Learn the rules• Teach the public• Recommend strategies• Follow up with seminar attendees
26
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• 76% of future retirees who currently work with – or plan to work with – an advisor say they would likely switch and find an advisor who could advise on Social Security. (Nationwide
Retirement Institute)
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The Advice Opportunity: Boomers in the pipeline
28
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1946 Boomers started claiming in 2008, finished claiming in 2016
29
20162008
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1954 Boomers entered the claiming pipeline in 2016, will finish in 2024
30
2016 2024
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1962 Boomers will enter the claiming pipeline in 2024, will finish
in 2032
31
20322024
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3 to 4 million Boomer prospects enter the claiming pipeline every year
They need help deciding when to claim Social Security and how to manage the
rest of their retirement assets
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2016 2024 2024 2032
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Boomer spike coming
33
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Learn Social Security
• How benefits are calculated• How to maximize benefits• Rules for spousal and survivor benefits• Benefits for divorced people• How and when to switch from one benefit to another• How the earnings test works in the first year
34
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35
https://www.horsesmouth.com/store/888-336-6884
https://www.horsesmouth.com/store/
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36
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Learn Medicare
• When you can, should, or must enroll in Medicare• How Medicare works with employer plans• How supplemental insurance works• Who pays the IRMAA and how you can help clients
avoid it• How to help clients transition to Medicare at
retirement
37
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https://www.horsesmouth.com/store/888-336-6884
https://www.horsesmouth.com/store/
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39
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Teach Social Security and Medicare
• Seminars• Workshops• Classes
• Baby boomers (general)
• Couples• Women• CPAs
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Updated Social Security presentations
41
https://www.horsesmouth.com/store/888-336-6884
https://www.horsesmouth.com/store/
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Updated Medicare presentations
42
https://www.horsesmouth.com/store/888-336-6884
https://www.horsesmouth.com/store/
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Recommend Social Security strategies
• How to maximize benefits• When to claim• Discuss other issues: retirement income planning,
insurance, investments
43
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44
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Recommend Medicare strategies
• When to enroll: avoid coverage gaps and late-enrollment penalties
• Which plan is best? Original Medicare or Medicare Advantage?
• Estimate health care costs, avoid or reduce the IRMAA
• Discuss long-term care
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46
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www.horsesmouth.com/meddem
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48
Thank you!
�2020 Changes for Social Security and Medicare:�What Clients Need to KnowSlide Number 2Coronavirus�Social SecuritySlide Number 4Coronavirus�Original MedicareCoronavirus�Part D plansCoronavirus�Medicare Advantage plansWhat’s new for 20201. Social Security cost-of-living adjustment2. Earnings test thresholds3. Maximum wage base for 2020: $137,7004. New indexing factors and bend pointsAverage Indexed Monthly Earnings (AIME) for baby boomer born in 1958��Maximum earnings since 1980��$4,487,212 in total indexed earnings ÷ 420 months =�$10,683 AIMEExample of benefit formula for max earner5. Window closing for restricted application6. OASDI Trust Fund still growing (barely)Long-term projections: �without reform, benefits fall to 80% in 2034Slide Number 18Slide Number 19Social Security 2100 ActWould restore full solvency7. New Medicare numbers for 2020Monthly premiums for Parts B & D Including Income Related Monthly Adjustment AmountsMedicare deductibles�Amount You Pay�Part D drug plansWhat to do nowSlide Number 27�The Advice Opportunity: �Boomers in the pipeline�1946 Boomers started claiming in 2008, finished claiming in 20161954 Boomers entered the claiming pipeline in 2016, will finish in 20241962 Boomers will enter the claiming pipeline in 2024, will finish in 20323 to 4 million Boomer prospects enter the claiming pipeline every year��They need help deciding when to claim Social Security and how to manage the rest of their retirement assetsBoomer spike comingLearn Social SecuritySlide Number 35Slide Number 36Learn MedicareSlide Number 38Slide Number 39Teach Social Security and MedicareUpdated Social Security presentationsUpdated Medicare presentationsRecommend Social Security strategiesSlide Number 44Recommend Medicare strategiesSlide Number 46Slide Number 47