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Client Presentation with Medicare 2023
- 1. Social Security Planning “OptimizeYour Benefits”
- 2. Agenda Why Social Securityis Important Social Security Basics Mastering the Complexities Getting to Know Medicare Questions & Answers
- 3. Social Security Planning “WhySocial Security is Important”
- 4. Social Security Importance Married Divorced Widows Children Disabled Self-Employed 4Important Social Security Facts 1. It is more than just a retirement program 2. It provides a guaranteed, progressive benefit 3. It provides a foundation of retirement protection 4. Many rely on it for a majority of their retirement income
- 5. How much wouldyou need to invest in other retirement accounts such as (Annuities, CD’s, IRA’s, 401ks, Pensions, etc.) to match the income you could receive from your Social Security income? Cornerstone of Retirement Planning
- 6. Problems You Face 2,728rules surround the Social Security program & thousands of claiming strategies Many are uneducated which is why 96% of claimants don’t optimize There are few reliable resources for expert Social Security help
- 7. Retirement Income Strategy "Optimizing”your Social Security and Retirement Strategy is taking a holistic approach and understanding your specific circumstances and how you can find a plan that matches your retirement goals Fixed Expenses Ø Mortgage Ø Credit Cards Ø Loans Ø Insurance Ø Food Ø Utilities Retirement Assets Ø 401K Ø Pension Plans Ø IRA’s Ø Roth IRA Ø Annuities Ø Stocks Variable Expenses Ø Travel Ø Shopping Ø Vacations Ø Hobbies Ø Entertainment Ø Lifestyle
- 8. Social Security Planning “SocialSecurity Basics”
- 9. Full Retirement Age PrimaryInsurance Amount Average Indexed Monthly Earnings Delayed Retirement Credits Cost-of-Living Adjustment Basic Social Security Terms
- 10. Full Retirement Age FullRetirement Age: 1. Receive Primary Insurance Amount 2. Full unreduced benefit 3. No longer subject to the earnings limit 4. 6-month retro payment 5. Voluntary Suspension Birth Year* Full Retirement Age 1943-54 66 1955 66, 2 months 1956 66, 4 months 1957 66, 6 months 1958 66, 8 months 1959 66, 10 months 1960 & higher 67
- 11. Social Security Calculations PrimaryInsurance Amount Data Full Retirement Age (FRA): 67 (04/2027) Sum of highest 35 years of indexed earnings: $4,789,438 Average Indexed Monthly Earnings (AIME): $11,403 Bend Point Breakdown Bend Point Portion Multiplier Amount $0 - $1,024 $1,024 X 90% = $922 $1,025 - $6,172 $5,148 X 32% = $1,647 >$6,173 $5,231 X 15% = $785 Primary Insurance Amount (PIA): $3,354 Ø Earnings before age 59 are indexed for inflation Ø Earnings from age 60 and after, are used at face value Ø Highest 35 Year Indexed Sum Ø Average Indexed Monthly Earnings
- 12. Social Security Reductions& Credits Monthly Benefits Richard 2024 2025 2026 2027 2028 2029 2029 2030 2031 2032 62 63 64 65 66 FRA 67 68 69 70 $2,611 $2,781 $2,966 $3,213 $3,461 $3,708 $3,708 $4,004 $4,301 $4,598 Percentage of Primary Insurance Amount 2024 2025 2026 2027 2028 2029 2029 2030 2031 2032 62 63 64 65 66 FRA 67 68 69 70 70% 75% 80% 87% 93% 100% 100% 108% 116% 124% *Images are examples used exclusively from RSSA Roadmap Software
- 13. Spousal Benefit Reductions MonthlyBenefits Percentage of Primary Insurance Amount 2024 2025 2026 2027 2028 2029 2029 2030 2031 2032 62 63 64 65 66 FRA 67 68 69 70 $1,205 $1,334 $1,464 $1,594 $1,724 $1,854 $1,854 $1,854 $1,854 $1,854 2024 2025 2026 2027 2028 2029 2029 2030 2031 2032 62 63 64 65 66 FRA 67 68 69 70 32.5% 35% 37.5% 41.66% 45.83% 50% 50% 50% 50% 50%
- 14. Cost-of-Living Adjustment Collecting Benefits: ØFor those who are already collecting a benefit when the COLA increase begins each January, that benefit will be adjusted to reflect that COLA increase Not collecting Benefits: Ø For those aged 62 and older will receive the COLA increase even if they have not begun collecting benefits. Clients who are not collecting, the COLA increase adjusts their PIA 2.8 1.6 1.3 5.9 8.7 0 1 2 3 4 5 6 7 8 9 10 2019 2020 2021 2022 2023 Cost Of Living Increase Last 5 Years Cost Of Living Increase
- 15. Social Security Planning “Understandthe Complexities”
- 16. Earnings Test Collecting WhileWorking Ø $1 for every $2 earned above $21,240* - In all years before reaching full retirement age year Ø $1 for every $3 you earn above $56,520* - In the year full retirement age will be reached Ø No earnings limits at or after reaching full retirement age The “Earnings Test” limits how much can be earned while collecting Social Security benefits Income That Does Not Count Income That Does Count Ø Pension Payments Ø Annuity Payments Ø IRA Distributions Ø Dividends Ø Interest Income Ø Capital Gains Ø Rental Income Ø Employment Income (W-2 Wages) Ø Net Income from Self-Employment *2023 figures
- 17. “Non-Covered” Pension A pensionfrom work in which Social Security taxes were not withheld • A Non-Covered Pension • Retirement or Disability Benefit • Over 2 million impacted in 2022 Windfall Elimination Provision (WEP) • A Non-Covered Pension • Spousal or Survivor Benefit • Over 724,000 impacted in 2022 Government Pension Offset (GPO)
- 18. Dependent Benefits Dependent BenefitKey Takeaways: 1. 50% of PIA while parent is alive 2. 75% of PIA if parent is deceased 3. Limited by family maximum benefit 3. Child In-Care Spousal Benefit (If Caring for One Above) *Spouse must be collecting benefits Eligible to receive 50% of the collecting spouse's PIA 2. Disabled Child (If Disabled Before Reaching Age 22) *Parent must be collecting benefits Eligible to receive 50% of the collecting parent's PIA 1. Minor Child Under Age 18 or 19 (If Still in High School) *Parent must be collecting benefits Eligible to receive 50% of the collecting parent's PIA Family Maximum Benefit Ø Limits the total benefits that can be paid out on one worker's earnings record
- 19. Survivor Benefits Survivor BenefitKey Takeaways: 1. Survivor benefit has a “base amount” 2. Benefits determined by age of claim 3. Survivor FRA is 4 months less than normal FRA Eligibility factors Ø Married at least 9 months Ø Collecting age starts at 60 Ø Collect at age 50+ if disabled Ø Any age if caring for a child under age 16 Ø Any age if caring for a disabled adult child Survivor Benefit Claimant Age Survivor Benefit Reduction % 60 71.50 61 75.58 62 79.65 63 83.72 64 87.79 65 91.86 66 95.93 67 (FRA) 100 68 100 69 100 70 100
- 20. Future Earnings Impacts DisabilityBenefits Life Expectancy & Break-Even Voluntary Suspension Deemed Filing Taxation on Social Security Many Social Security Factors to Consider
- 21. Social Security Planning “Getto Know Medicare”
- 22. What is Medicare& Who is Eligible? You must meet the following requirements: • U.S. citizen • Legal resident: must live in the U.S. for at least 5 years in a row, including the 5 years just before applying for Medicare And one of the following… • Age 65 or older • Younger than 65 with a qualifying disability • Any age with a diagnosis of end-stage renal disease or ALS What is Medicare? A federal health insurance program for eligible U.S. citizens and legal residents Funded in part by taxes you pay while working Individual health insurance
- 23. Working Past 65& Medicare? Medicare enrollment options when working past 65 may be different You may be able to delay, or you may have to enroll at age 65 What if I’m covered by my spouse’s employer? You may be able to delay if your employer-based health coverage is through your spouse. You may have to enroll. It depends on the spouse’s employer and any rules the employer has around covered dependents. Generally, you can delay Medicare past age 65 without penalty if: • The employer has 20 or more employees • The employer health coverage is considered “creditable” You need to enroll at age 65 if: • Your employer has fewer than 20 employees • Your coverage is not considered “creditable”
- 24. Original Medicare PartA Medicare Part A covers hospital stays and inpatient care, including: Your hospital room and meals Care in special units, such as intensive care Prescription drugs and medical supplies used during an inpatient stay Lab tests, X-rays and medical equipment as an inpatient Operating room and recovery room services Skilled nursing services Some blood transfusions Hospice care, including medications to manage symptoms and pain Part-time, skilled care for the homebound after a qualified inpatient stay Rehabilitation services after a qualified inpatient stay
- 25. Original Medicare PartB Medicare Part B covers doctor visits and outpatient care, including: Doctor visits, including when you are in the hospital An annual Wellness Visit and preventive services, like flu shots Clinical laboratory services, like blood and urine tests X-rays, MRIs, CT scans, EKGs and some other diagnostic tests Some health programs, like smoking cessation and obesity counseling Physical therapy, occupational therapy and speech-language pathology services Diabetes screenings, education and certain supplies Mental health care Durable medical equipment for use at home, like wheelchairs and walkers Ambulatory surgery center services, ambulance and emergency room services
- 26. Medicare Doesn’t CoverEverything Original Medicare (Parts A & B) does not cover: All the cost of your care — you have out- of-pocket costs, with no limit Prescription drugs Routine dental, vision or hearing care Eyeglasses, contacts or hearing aids Long-term or custodial care (help bathing, eating, dressing) Excess charges for services by doctors who don’t accept Medicare assignment Care received outside the U.S., except for certain circumstances
- 27. Additional Coverage Options Option1 Add one or both of the following to Original Medicare: Option 2 Choose a Medicare Advantage plan: OR Medicare Part D Plan Offered by private insurance companies Helps pay for prescription drugs Medicare Advantage (Part C) Plan Offered by private insurance companies Part C Combines Part A (hospital insurance) and Part B (medical insurance) in one plan Part D Usually includes prescription drug coverage May offer additional benefits like vision and dental coverage Medicare Supplement Insurance (Medigap) Offered by private insurance companies Helps pay some or all of the out-of-pocket costs not paid by Original Medicare
- 28. Medicare Costs Medicare costs Premium Afixed amount that you pay for coverage, usually is a monthly fee Deductible A set amount that you pay for covered services before your plan begins to pay Copay A fixed amount you pay at the time you receive a covered service Coinsurance An amount you pay when the plan splits the cost of a covered service with you by percentage, such as 80/20
- 29. Medicare Costs Part C,Part D and Medigap costs Costs you could pay may include: Medicare Advantage (Part C) Part D prescription drug plans Medicare supplement insurance (Medigap) plans • Low to $0 monthly premium • Deductible • Copay • Coinsurance • Monthly premium • Deductible • Copay • Coinsurance • Monthly premium • Deductible • Copays Plans will vary in the costs they choose to include and how much Medicare Advantage plans have an annual out-of-pocket maximum for covered services.
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