There are many issues which people need to consider in deciding how to vote. Very few people are "one issue voters." However, as a retirement blog, I was interested when Kiplinger's Magazine wrote a series of well-researched articles on "The Election and Your Money." One article, in particular, compared the positions which President Trump and his opponent, Vice-President Biden, have taken on the future of Social Security and Medicare. The information provided by Kiplinger's might help some undecided voters make up their minds on how they want to vote in the 2020 Presidential Election, especially if their Social Security benefits will be a major source of their retirement income.
Most experts and Social Security actuaries believe that some changes need to be made to the funding for Social Security and Medicare, or their trust funds will soon run out of money, and benefits will be cut. Currently, if nothing changes, the Social Security trust fund will be empty by 2035, and the Medicare trust fund could run out even sooner. If this is allowed to happen, Social Security will only be able to pay out about 79% of the promised financial benefits, and Medicare will have to cut back on the healthcare benefits it provides.
Consequently, nearly everyone who is retired or who plans to retire in the future will be affected by how these shortfalls are handled. While the presidential candidates are dramatically different in their plans for Social Security, they actually agree on some of the ways they would like Medicare to save money in the future. Below is a summary of the Kiplinger article.
President Trump's Proposals for Social Security and Medicare
* Trump has already issued an executive order stopping the payroll tax withholding whcih funds Social Security and Medicare, for the remainder of this year for millions of people. He has said he would like to completely end payroll tax withholding permanently, which would cause the Social Security and Medicare trust funds to run out of money even sooner than projected.
* Trump wants to continue to promote Medicare Advantage plans more than plans which offer traditional Medicare plus a Medicare Supplement. Medicare Advantage plans save the government money, but people who choose these plans usually are able to only use the network of providers which are part of their plan. (Regular readers of this blog know that I have a Medicare Advantage plan called Kaiser Permanente which I am very happy with. However, the majority of retirees prefer the freedom of having traditional Medicare plus a Medicare PPO Supplement.) If the differences between Medicare Advantage plans and traditional Medicare with a Supplement confuses you, you are not alone. It could be helpful to read a book such as "Medicare for Dummies." It will answer a lot of the questions you may have. (Ad)
* Like Biden, Trump supports proposed legislation to limit increases in Medicare prescription drug costs, so medication prices cannot rise faster than inflation. He wants to limit out-of-pocket drug costs to $3,100 a year.
* Like Biden, Trump wants to allow U.S. citizens to be able to purchase prescription drugs from other countries, such as Canada, if certain conditions are met to insure their safety.
* Trump wants to cut government Medicare costs by reducing payments to doctors, hospitals and other healthcare providers. This could make it harder for patients to find a doctor who will accept Medicare, which could be especially challenging for people who choose traditional Medicare plus a supplement.
Vice-President Biden's Proposals for Social Security and Medicare
* Biden wants to strengthen the funding for Social Security and Medicare. He wants to keep the current cap on payroll taxes for most workers, which pays for these programs. The payroll tax cap is indexed to wage growth and, in 2020, is capped at $137,700. However, in order to make sure there is enough money so the trust funds do not run out of money, Biden also wants to apply the payroll taxes to incomes on wages over $400,000. People who earn between $137,700 (or the annual cap) and $400,000 would not pay the payroll taxes.
* Biden wants to expand benefits by increasing survivor benefits for low-income beneficiaries and gradually increase benefits for seniors, starting at age 78. Social Security beneficiaries over the age of 82 could receive a 5% increase in their basic retirement payout. (Many of you may know of retirees who have received virtually no increases in their benefits for several years, and that has left some elderly people nearly destitute, since their income has not kept up with inflation. This benefit increase could help them "catch up" a little.)
* Biden has proposed a more fair way to calculate the Social Security cost-of-living increases for retirees. The government would switch to a cost of living index which puts more weight on items which account for a larger portion of seniors' spending, such as the cost of housing and healthcare.
* Contrary to reports you may have seen, Biden does NOT support Medicare-for-All. He prefers, instead, to strengthen the Affordable Care Act for most people. However, he does support lowering the eligibility for Medicare from age 65 to age 60.
* Biden wants to repeal the laws which prevent Medicare from negotiating drug prices with pharmaceutical manufactures. (Who originally forced this law on American seniors? It was a bad idea to begin with. What other government agency is forbidden to negotiate?)
* Like Trump, Biden also wants to limit price increases for most prescriptions so their cost cannot rise faster than the rate of inflation.
* Like Trump, Biden also wants to allow U.S. citizens to be able to purchase prescriptions from other countries, as long as they are determined to be safe.
Overview of Candidate Plans for Social Security and Medicare
While both Trump and Biden want to find ways to lower the cost of prescriptions, there are major differences in their plans for Social Security and Medicare. Vice-President Biden wants to make sure that both Social Security and Medicare remain financially strong for years to come, while President Trump wants to cut funding for those life lines for senior citizens, and he no plan to replace their funding. Both candidates want to give you a choice between traditional Medicare and Medicare Advantage plans, but Trump wants more emphasis to be given to Medicare Advantage plans, and wants to pay doctors less money if they accept traditional Medicare. Both candidates want to restrict price increases for prescription drugs to the rate of inflation, and both want to allow U.S. citizens to buy some medications from other countries.
Which candidate you vote for is up to you, and there may be other issues which are more important to you than Social Security and Medicare. However, it is important to make sure you know the facts when you make the decision, and the September, 2020 issue of Kiplinger's Magazine has made it much easier to assess the candidate's similarities and differences.
If you are confused about how different types of Medicare Plans work, you may find it helpful to read a book such as "Maximize Your Medicare: 2020-2021 Edition: Qualify for Benefits, Protect Your Health, and Minimize Your Costs" or "Medicare for Dummies." Everyone will find it helpful to read books like these before they choose or change their plan. (Ad)
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