Is There Too Much Choice in Medicare Insurance?

Today marks the end of another annual open enrollment season for Medicare. Open enrollment provides existing beneficiaries the chance to explore all available private Medicare insurance plans that will be offered in 2021. They can look at their existing plans and decide if changed circumstances – either in their health needs or what private insurers are offering – warrants changing to a new mix of coverage.

In theory, shopping for Medicare is a great idea. Insurers make many changes each year in their plan offerings. Many people would get better coverage and pay less for their plans next year if they did their homework.

In practice, shopping for Medicare has been a bust. Even basic Medicare is complicated. And it’s been overtaken in recent years by an explosion of private insurance plans that have flooded the market with so many plans that consumers are befuddled. A key part of Medicare for many consumers is Medigap supplemental coverage. These private plans are regulated at the state level, introducing yet another bewildering chamber into the Medicare maze that consumers must navigate.

The Centers for Medicare & Medicaid Services (CMS) has built an impressive suite of Internet tools to help people navigate open enrollment and make informed coverage choices. Millions of people, however, find the tools so complex and confusing that they do nothing each year, thereby renewing their existing coverage by default.

There is a government-supported program to provide free Medicare counseling called the State Health Insurance Information Program (SHIP). Staffed largely by volunteers, SHIP is chronically underfunded.

Counselors may have a great understanding of what Medicare covers and the basic features and costs of original Medicare – Part A for hospitals and nursing homes and Part B for physician, outpatient, and equipment expenses. But they’re seldom equipped to tackle the extensive and sophisticated terms of private Medicare insurance plans – Part D drug plans and the fast-changing world of Medicare Advantage plans.

Consumers are largely on their own here. They are bombarded every year with mailings and online inducements for these plans. Often, the plans with the most appealing ads win out, regardless of whether they are the best or even appropriate for a specific person’s needs.

Readers regularly plea with me to put them out of their informational misery and choose their Medicare coverage plan! It doesn’t matter to them that I know little about them, their health condition, or their list of prescribed medications. I also don’t know much about their financial situation and ability to pay for private insurance plans. No matter! Just pick one!

The Affordable Care Act provides a partial answer to this problem by having four basic types of coverage defined by metal “tiers” – bronze, silver, gold, and platinum. Even this modest number of choices, along with dense tax-subsidy details, is too much for many people. So we have trained navigators to help consumers.

Medicare is already way past metal tiers, and recent CMS rule changes have introduced yet more features to Medicare coverage, especially in Medicare Advantage plans.

There is a solution to this mess, of course. It’s called universal health care, and it replaces consumer choice with a standard health plan that provides high-quality health coverage to everyone. Think of it as the 21st century equivalent of Henry Ford’s Model T – a dependable yet inexpensive product that filled a basic need. You could get one in any color so long as it was black!

I’m not convinced this is the right path for the U.S. But it becomes very appealing every year during Medicare open enrollment.

Reader Q&A

Medicare Enrollment Problem

How to File for Social Security Benefits

Medigap Effective Date

Tax Treatment of Health Savings Account Contributions

Medicare Enrollment Problem

Question: My wife and I are running into some issues in getting her qualified to participate in a special enrollment period (SEP) for Medicare due to her loss of employment coverage. She was born in 1948 and thus turned 65 in 2013. Since turning 65, she has had employer health insurance except for a 10-month period in 2015-2016. Medicare is saying this break in coverage prevents her from qualifying for an SEP and wants to charge her a late-enrollment penalty that will add 10 percent to her monthly Part B premium. This is bad enough, but they also say her inability to get a SEP means the earliest she can get Medicare in next July, leaving her without any health insurance at all!

Does this sound right to you?

Mike and Karen

Answer: Unfortunately, it does sound plausible. Her break in coverage in 2015 triggered an SEP but because she did not enroll then, her efforts to enroll now will trigger a late-enrollment fee and cause her to forego the quick-enrollment benefits of an SEP. Of course, you probably were unaware of Medicare’s rules but Medicare couldn’t function if it had to grant exceptions to its often complex rules because people didn’t know about such rules.

I suggest calling a Medicare counselor at the State Health Insurance Assistance Program (SHIP) or the Medicare Rights Center and see if they have any ideas for getting Medicare to change its mind, or to find your wife temporary health coverage until next July.

How to File for Social Security Benefits

Question: I want to thank you from the bottom of my heart for your Social Security book, Get What’s Yours. It has changed my life. Thanks to your book, I learned two years ago that I could collect on my previous husband’s Social Security while, per your instructions, I continued to allow my benefits to increase. I turn 70 soon and understand that I must begin taking my Social Security at that age. I am sheltering at home during this pandemic. What do you recommend I do in order to CORRECTLY notify the Social Security Office, and how should I best do that?


 Answer: Given the complexities of Social Security that were presented in the book, my answer may surprise you. Enroll online! If this doesn’t work for any reason, call your local Social Security office and enroll over the phone or, if requested, make an appointment to enroll in person. I used online enrollment to sign up for my benefits and it was a snap. Your enrollment should be no problem as well. When you enroll, make sure that you receive your benefits under your own Social Security number and not your husband’s, which most likely was the number assigned to you when you began getting spousal benefits. Having your own My Social Security online account is also a good idea.


Medigap Effective Date

Question: Since I can’t purchase Medigap supplement coverage until I am already enrolled in Part B of Medicare, how do I avoid a gap in coverage between the time I am enrolled in Part B and the time my Medigap coverage begins?  By the way, your books are great.  Looking forward to the new one in January.


 Answer: This should not be a problem. Once you’ve selected the Medigap plan you’d like to purchase, call the insurance company you select and a representative (or an insurance broker, if you use one) will make the effective coverage date the same as your Part B coverage date.


Tax Treatment of Health Savings Account Contributions

Question: I am wondering if the years donating to a health savings account (HSA) prior to retirement will reduce my Social Security payments? Does the government base benefits on the gross salary I earn prior to my HSA deduction or the net figure?


Answer: Your HSA contributions are not subject to payroll taxes so I suppose you could say this will reduce the earnings base used to determine your Social Security benefits. However, I cannot conceive of a situation where shielding your HSA contributions from taxes would not produce a financial gain greater than any future benefit reductions.

Here’s more on the topic from the Society for Human Resource Management (SHRM):

“Among employees’ common misperceptions about health savings accounts (HSAs) is a lack of awareness that payroll-deferred HSA contributions are not subject to Social Security and Medicare (FICA) and federal unemployment (FUTA) taxes. So when employees contribute to their HSA through a payroll deduction, the money is excluded from federal income taxes and FICA/FUTA taxes.

“Two states—California and New Jersey—impose state income taxes on wages contributed to HSAs. Other states allow deductions on state income taxes for HSA contributions.

“HSA funds withdrawn for qualified medical expenses are not treated as taxable income.

“In comparison, with a traditional 401(k) plan account, no income taxes are deducted on employees’ payroll-deferred contributions, although FICA and FUTA taxes will be taken from amounts deferred; income taxes are then owed on withdrawals made during retirement. For a Roth 401(k) account, income and FICA/FUTA taxes are deducted from contributions, while withdrawals during retirement are tax free.”



How to Battle Pandemic Winter Blues

Good news seems in short supply these days, so when I find some, I like to pass it along. Older people, it turns out, are more resistant to mental stress and depression than younger age groups. As winter approaches with alarming COVID-19 case counts and lockdown protocols, resistance to stress and depression is a valuable attribute.

“Approximately eight months into the pandemic, multiple studies have indicated that older adults may be less negatively affected by mental health outcomes than other age groups,” a recent piece in the Journal of the American Medical Association said.

“Older adults tend to have lower stress reactivity, and in general, better emotional regulation and well-being than younger adults,” it noted. In reviewing research on how older persons have been affected by the disease, it added, “there was concern about a mental health crisis among older adults.”

This has not happened.

Research finds that the main reason for this is an accumulation of coping skills the article’s authors label as wisdom, particularly compassion for the needs and problems of others. Having “seen it all,” or at least more than younger age groups, older persons often react to problems surprisingly well, including their ability to successfully weather isolation.

I prefer the term resilience to wisdom, especially after seeing the authors of the JAMA paper provide this definition: “a complex personality trait comprised of specific components, including prosocial behaviors like empathy and compassion, emotional regulation, the ability to self-reflect, decisiveness while accepting uncertainty and diversity of perspectives, social advising, and spirituality.”

I’m sure you couldn’t have said it better yourself, right?

While older people have admirable skills to weather this pandemic, understanding and access to communications technology can be their Achilles Heel. Without good internet access and tools to use it, including software apps, seniors in isolation may struggle to make the social and commercial connections essential to remote living. This is true of all groups, of course, particularly those in rural communications with poor access to internet broadband services.

If you have older family members and friends, reach out to them and see if they need technology help. Focus on these capabilities:

A robust internet connection and a strong Wi-Fi signal for smartphones and the growing array of home-based smart devices now available. Availability and price may be issues, of course, but getting the biggest internet “pipe” and fastest Wi-Fi speed usually is money well spent.

Use and shopping trips for the aforesaid smartphones and devices.

Virtual meetings tools and how-to help, including a video camera, audio capabilities, and ease-of-use tutorials. Check out free Apple and Android meeting tools, or the popular Zoom, if comfortable with a slightly more powerful (and technically demanding) platform. Being able to see and socialize with other people is essential these days.

And you seniors out there, if you have younger family members and friends, perhaps you can use some of your hard-won wisdom to help strengthen their coping skills.

As we all navigate the next several months, and eagerly await COVID-19 vaccines, reaching out to one another can be the strongest medicine we have.

How to Fix Annual Health Care Enrollments

Every fall, nearly everyone with health insurance must pick the coverage they want for the next calendar year. And every year since I’ve been writing about the subject, I see a flurry of stories about how people can make good choices but often do not.

On cue, health experts lament that open enrollments are so confusing that many people fail to make any decisions at all. Making no decision can be costly, however, as people often keep health plans that are less comprehensive and more expensive than others they could have chosen. It is a Groundhog Day to do justice to Bill Murray.

The culprits here are too much complexity and too much choice in coverage packages, particularly for the more than 60 million older and disabled persons with Medicare. The growth of private drug plans (Part D of Medicare) and Medicare Advantage (MA) plans have turned Medicare annual enrollment into a paralyzing ritual for many beneficiaries.

How can they evaluate dozens of different Part D and MA plans, each requiring several sophisticated assessments of their medication and health needs in a future not even the smartest health experts can know for certain? How well did anyone anticipate the pandemic when selecting 2020 health plans a year ago?

Confusion also attends Affordable Care Act enrollments. Here, the aggressive and persistent opposition to the ACA from the Trump Administration has done lasting damage. Funding for navigator programs to help guide people in ACA sign-ups has been sharply cut. As a result, per a New York Times piece last week, large numbers of people don’t believe the ACA even still exists, think its health plans are prohibitively expensive, and don’t understand how tax subsidies can make coverage affordable.

The U.S. Supreme Court heard open arguments last week about whether the entire ACA should be scrapped. Most experts who listened in on the justices’ discussion came away thinking it will survive.

If this is the case, one of the clear priorities for President-elect Joe Biden should be to greatly expand government-funded ACA communication and assistance programs.

This would be welcome, but why stop there? Why not also tackle the annual enrollment miseries inflicted on those with Medicare? And while we’re at it, how about helping the states do a better job of assisting upwards of 85 million adults and children who have or would like Medicaid?

Job losses from the pandemic have stripped employer health coverage from millions of people and their families, driving them to seek Medicaid and, at the same time, causing funding shortfalls in many states.

Contrast this complexity and confusion with private employer health insurance that covers more than 155 million people and their families. Even the largest employers limit employee plan choices to two or three. This can lead to some grousing about limited coverage choices, but most employers support solid private insurance plans and retaining employer coverage has become a major reason why people keep their jobs.

Helping people with government health insurance programs make more informed coverage decisions can and should be a priority of a new Democratic administration.

This is not rocket science. The State Health Insurance Assistance Program (SHIP) provides free Medicare counseling from volunteer-staffed offices in every state. Doubling SHIP funding would cost little more than $50 million – a rounding error for a program that costs taxpayers and enrollees than $700 billion a year. Funding more Medicaid counselors at the state level would be a relative bargain as well.

While we’re at it, Medicare itself does a mediocre job helping consumers navigate their health care choices. This doesn’t come across in the steady stream of self-congratulatory pronouncements that seem to be standard fare since 2017 at the Centers for Medicare & Medicaid Services (CMS).

Beyond greatly expanding its public-facing communications efforts (again, a funding bargain), serious thought should be given to developing standard packages of open enrollment choices similar to what employer 401(k) retirement plans began doing 15 years ago.

At the time, employees were being asked to make investment decisions that would challenge even Wall Street experts. By distilling choices into packages of professionally managed investment funds, participating employees found that less choice produced better investment outcomes.

Health care can be more complicated even than the world of stocks, bonds, and mutual funds. Creating standard packages of solid health coverage is an idea that merits serious study, and one that behavioral economics suggests is long overdue.


Medicare Announces 2021 Premiums and Deductibles

While the nation was mesmerized with election returns late last week, Medicare announced modest increases in premiums and cost-sharing figures that will take effect next year.


The standard monthly premium for Part B of Medicare will be $148.50, up by $3.90 (2.7 percent) from $144.60 this year. About 7 percent of Medicare enrollees earn incomes high enough to trigger monthly surcharges.

The annual out-of-pocket deductible for Part B expenses will rise $5 (2.5 percent) to $203 from $198. Part B covers doctors, outpatient expenses, and durable medical equipment.

About 7 percent of Medicare enrollees earn incomes high enough to trigger the program’s income-related monthly adjustment amount, or IRMAA for short. These charges vary by income and tax-filing status. IRMAA charges in 2021 will, for most people, be based on their 2019 tax returns. People whose 2020 incomes fell sharply, due to retirement or another important life change, can appeal for lower IRMAA charges.

Here are the IRMAA charges:

Beneficiaries who file individual tax returns with income: Beneficiaries who file joint tax returns with income: Income-related monthly adjustment amount Total monthly premium amount
Less than or equal to $88,000 Less than or equal to $176,000 $0.00 $148.50
Greater than $88,000 and less than or equal to $111,000 Greater than $176,000 and less than or equal to $222,000 59.40 207.90
Greater than $111,000 and less than or equal to $138,000 Greater than $222,000 and less than or equal to $276,000 148.50 297.00
Greater than  $138,000 and less than or equal to $165,000 Greater than $276,000 and less than or equal to $330,000 237.60 386.10
Greater than $165,000 and less than $500,000 Greater than $330,000 and less than $750,000 326.70 475.20
Greater than or equal to $500,000 Greater than or equal to $750,000 356.40 504.90


Beneficiaries who are married and lived with their spouses at any time during the year, but who file separate tax returns from their spouses: Income-related monthly adjustment amount Total monthly premium amount
Less than or equal to $88,000 $0.00 $148.50
Greater than $88,000 and less than $412,000 326.70 475.20
Greater than or equal to $412,000 356.40 504.90



Part A of Medicare covers hospital, nursing home, and hospice expenses. Part A charges no premium to people who’ve worked enough to qualify for Social Security. It does charge deductibles and co-insurance charges.

Here are 2021 and comparable 2020 amounts:

Part A Deductible and Coinsurance Amounts for Calendar Years 2020 and 2021
by Type of Cost Sharing
2020 2021
Inpatient hospital deductible $1,408 $1,484
Daily coinsurance for 61st-90th Day $352 $371
Daily coinsurance for lifetime reserve days $704 $742
Skilled Nursing Facility coinsurance $176.00 $185.50


People with private Medicare Advantage insurance plans generally must pay monthly Part B premiums in addition to any Medicare Advantage premiums. They also usually pay the annual deductibles and Part A charges. Some plans have different expense structures, so check with your plan for its 2021 charges.

Medicare’s annual open enrollment period for selecting 2021 plans began Oct. 15 and extends through December 7.

Divided Government Means Small Ball for Health Reform

President-elect Joe Biden may be facing off the next two years against Senate Majority leader Mitch McConnell, who is unlikely to depart from his consistent and effective refusal to consider substantive health reforms.

That was Wall Street’s take-away last week. Health stocks soared after it became clear that the Senate would retain its Republican majority. There is a slim chance Democrats could prevail. Both U.S. Senate contests in Georgia denied any candidate 50 per cent of the vote, triggering January runoff elections under state rules. If Democrats won both of those seats, they would have 50 seats and Vice President-elect Kamala Harris would cast the tie-breaking vote as Senate president if needed.

The Dow Jones index of 30 industrial stocks dipped a bit Friday but still closed at 28320, up nearly 7 percent (1820 points) for the week. (26501 on Friday, Oct. 30). The Dow index of health stocks fared even better, closing at 2440, up 13 percent (280 points).

“Bipartisanship on health care is hard to come by, especially for big-ticket items,” Catlin Owens wrote for Axios. “Lawmakers tried to find common ground last year on drug prices and fixes for surprise medical bills, but both of those efforts failed.”

The big exception to meaningful health-care changes would occur if the U.S. Supreme Court strikes down the Affordable Care Act. Vox has a solid explainer on the tortuous legal path of ACA challenges.

If that occurred, Democrats would mount a major offensive to reinstate key ACA safeguards. Without Donald Trump in the White House, Senate Republicans are likely to be more receptive to an ACA compromise. For their part, health care companies and employers have little appetite for returning to pre-ACA rules.

Mercer, the employer benefits firm, polled employers at a webinar last week (before the Presidency had been decided but after it was clear that Republicans likely would retain control of the Senate).

“We asked our participants to consider which of the patient protections mandated by the ACA they would continue even if the law were struck down,” said Tracy Watts, senior partner for health policy. “The top three protections that respondents would keep: no pre-existing condition exclusions (87 percent), preventive care covered in network with no cost sharing (77 percent), and child coverage eligibility to age 26 (64 percent). Fewer employers thought they would continue with no annual dollar limits (33 percent would maintain no limits), or with the current mandated limit on out-of-pocket maximums (44 percent would maintain the limit).”

“We gave participants a long list of possible healthcare priorities for the next Congress and let them pick up to five from the list,” Watts said. “There were two clear winners: reduce prescription drug prices (83 percent) and promote greater healthcare cost transparency (66 percent). Both of those would be a real win for plan sponsors and consumers alike.”

The Coming Battles Over Disclosing Real Health Costs

The Trump Administration last week issued sweeping price disclosure rules that would require health providers and insurers to tell consumers the real prices of care, permitting them to comparison shop for the best deal and understand what their out-of-pocket costs would be.

The disclosure requirements would take several years to implement, are strongly opposed by health providers, and might not survive intact in either a Biden White House or even a second term for President Trump.

Nonetheless, they represent an inescapable consequence of how enormous amounts of digitized health information are being used to transform health care. One of the major themes of my forthcoming health care book is that such “big data” is already triggering significant health reforms.

Led by big, self-insured health plans, employers have built tools that identify health care providers producing the best care for the lowest prices. The lack of such price transparency has meant, for example, that there is no relationship between the quality of care and its price. Doctors who charge the most money for their services may, in fact, provide the worst care, but consumers have had no way of telling or making informed decisions.

Using millions of paid health insurance claims, employers and tech-driver entrepreneurs can now identify caregivers with the best health outcomes and, within this group, which ones charge the least money.

Even this single achievement can produce staggering changes. For example, Walmart and other savvy employers can now fund top-notch care for employees and save so much money they can afford to a pay employees a wellness bonus to take better care of themselves.

At the same time, such number-crunching is exposing huge price inefficiencies in U.S. health care, which costs twice as much per capita as in any other advanced society. This knowledge has, in turn, attracted thousands of venture capitalists into health care, where they often are disrupting long-established and often anti-competitive business patterns within the fraternities of big pharma, hospitals, equipment companies, and insurers.

The government’s price transparency rules would require health insurers to provide consumers with “personalized out-of-pocket cost information, and the underlying negotiated rates, for all covered health care items and services, including prescription drugs, through an internet-based self-service tool and in paper form upon request.” An initial list of 500 “shoppable” health services would be required in two years and all remaining items in three.

In only a year – lightning speed for health care – insurers would be required to provide three data files that would be provided to consumers: 1) negotiated rates for all covered services provided by a health plan’s in-network providers; 2) historical payments and billed charges from non-network providers, and, 3) in-network rates and prices for all covered drugs at a consumer’s local pharmacy.

Previous transparency rules would require comparable transparency from hospitals. They have sued but the hospitals’ case was not favorably greeted in an earlier court hearing.

ACA Open Enrollment Begins November 1

The annual enrollment period for coverage under the Affordable Care Act (ACA) begins in most states on November 1. Rules may differ in your state, so check  for details.

Typical premiums are expected to decline a bit (2 percent), although the costs for family coverage are hardly a bargain. More insurers are offering ACA plans, meaning that you are more likely to have two or three plans to choose from where you live instead of one, which of course is really no choice at all.

“At the same time, deductibles continue to rise, according to an assessment by Health Affairs.  “For bronze plans, the median individual deductible increased from $6,755 for 2020 to $6,992 for 2021. For silver plans, deductibles rose from $4,630 to $4,879. And gold plan deductibles rose from $1,432 to $1,533.”

The average cost of a benchmark “silver” plan will be about $380 for a 27-year old and $1,485 for a family of four. If you qualify for an ACA subsidy – and nearly nine out of ten policyholders do – your out-of-pocket costs will be much less.

The news this year is not so much about available ACA policies and costs but about how COVID-19 has sharply changed economic fortunes of many people who might seek coverage. If you’re one of them, it’s worth spending the time to see what kind of deal you can get for 2021 ACA coverage.

Figuring this out can be challenging. If you need a refresher on different ACA “metal” plans and the workings of ACA tax subsidies, check out Kaiser Family Foundation’s extensive ACA guides.

The Trump Administration has been trying for years to kill the ACA but it still funds a slimmed-down navigator program to help people enroll in plans. Here’s a list of state-by-state navigator programs with contact information. Georgetown University’s Center on Health Insurance Reforms also provides a Navigator Resource Guide.

Social Security Announces Modest 2021 Benefit Increase

Social Security benefits will rise 1.3 percent in 2021, the agency announced. Such a modest cost of living adjustment (COLA) — $20 a month for the average beneficiary — normally would translate into meager 2012 benefit gains once Medicare beneficiaries back out higher 2021 monthly premiums for Part B of Medicare.

The Centers for Medicare & Medicaid Services (CMS) has not yet announced the 2021 Part B premium. It is $144.60 a month this year for most people and would be expected to eat up much of the 1.3 percent Social Security COLA.

Last fall, however, Congress enacted a new rule limiting Part B premium increases to 25 percent of the rise that CMS otherwise could levy. In their annual outlook report last spring, Medicare trustees projected the 2021 Part B premium would rise to $153.30, an increase of $8.70. Under the new rule, CMS would be able to pass on only 25 percent of this amount, raising the Part B premium to roughly $147.40.

The COLA announcement also triggered other key program metrics for next year:

The wage ceiling subject to payroll taxes will rise to $142,800 from $137,700.

The earnings test limits that reduce benefits for recipients with wage income will rise to $18,960 ($1,580 a month) from $18,240 ($1,520) this year for people who have not yet reached full retirement age. For those who have, the limits will rise to $50,520 ($4,210 a month) from $48,600 ($4,050) this year, for those earning wages during the year they reach full retirement age. Wages earned after full retirement are exempt from earnings-test benefit cuts.

The agency’s COLA fact sheet lists other 2021 changes.

2021 Employer Insurance Trends; Shaky Social Security Benefit Projections

Employee health insurance will cost a bit more next year and, save for some pandemic tweaks, will look much like it has in recent years.

Surveys taken by Mercer, an employee benefits and consulting firm, and the National Business Group on Health, which represents big-employer plans, concur on these trends:

Rates will rise between 4 and 5 percent, and the typical employer plan will continue to pay 70 percent of the total insurance bill. Check with your plan during this fall’s open enrollment season for 2021 coverage details.

The rise in digital and telehealth services will continue, with many plans boosting virtual mental-health services to acknowledge the substantial rise in depression, anxiety, and drug abuse associated with the continued health and economic damage caused by COVID-19.

Big-employer plans will expand their use of onsite clinics and centers of excellence — high-quality health providers around the country who offers superior care at reasonable prices.

“Many employers are adding new resources to support and engage employees in the COVID era,” Mercer’s outlook said. “At the top of the list: virtual office visits and other digital healthcare resources . . .  such as telemedicine for episodic care, artificial-intelligence-based symptoms triage, ‘text a doctor’ apps and virtual office visits with a patient’s own primary care doctor.”

In 2020, according to a study by Kaiser Family Foundation, “the average annual premium for single coverage rose 4 percent, to $7,470, and the average annual premium for family coverage also rose 4 percent, to $21,342. Covered workers, on average, contributed 17 percent of the cost for single coverage and 27 percent of the cost for family coverage.”

Roughly 157 million people were covered by employer plans before the pandemic triggered widespread job losses. Many who have lost coverage were expected to enroll in Medicaid but specific numbers are not yet available.

Shaky Social Security Benefit projections

The Social Security Administration recently released an internal briefing paper that documents what most experts have long said – the agency’s benefit projections are often not accurate, especially for younger workers decades from claiming benefits. Briefing papers are not official SSA policy but evidence-based research to help senior agency managers. Here’s a table showing the wide variation of statement projections to actual benefits.

Age     Percentage of projections accurate to within 

            5%       10%     15%     20%     25%

25        7          14        20        27        32

30        14        25        34        41        46

35        23        38        45        50        55

40        31        45        54        61        65

45        40        57        66        73        77

50        55        71        79        84        87

55        74        86        90        92        93

The low percentages of many benefit projections in the table can mislead people. If your younger than 55, in particular, the odds are very high that your statement’s retirement projections sharply underestimate the actual benefits you will later receive. This is a big deal.

Researchers tried and failed to find a more reliable projection methodology. They concluded:

“We recommend enhancements to the benefit-estimating tools available online via the my Social Security portal, including permitting uninsured workers’ access to the portal, and increased capability for existing interactive calculators. Providing access to a benefit estimate for uninsured workers based on future covered work would allow workers with less than 40 credits to see the impact of continued covered work on becoming fully insured for benefits in the future. Expanding the flexibility of the interactive benefit calculators may improve the accuracy of the benefit estimates for workers whose knowledge of their current and future work situations may be better than SSA’s assumptions and so may be best suited to enter accurate expected future earnings and claiming-age variables.”

You can find your projected benefits in your My Social Security online statement. If you don’t have one, create it. It’s essential to informed retirement planning – essential, but often inaccurate. The message here is to not passively accept the accuracy of your statement.