Reports about IT: Social Security Collapse?

Whether the Social Security Trust Fund can remain financially viable is the subject of much study and debate, currently reported.  For example, see:

• Americans Have Every Reason to Doubt Social Security Solvency (04/21/10) posted by The Heritage Foundation

• Report -- Social Security Modernization: Options to Address Solvency and Benefit Adequacy (05/13/10; 89 pages, PDF), posted by the U.S. Senate's Special Committee on Aging

• 2010 Social Security Trustee’s Report (08/05/10; 243 pages, PDF), posted by the Social Security Administration

• Useless: The Social Security trust fund (08/10/10) by Allan Sloan, posted by Fortune on CNN Money.

• CRS looks at solvency status of Social Security trust funds (10/12/10), posted by CCH

• The Social Security Trust Fund Accounting Trick (12/23/10) posted on the PrawfsBlogs

• Proposals Addressing Trust Fund Solvency (updated 01/06/11) posted by the SSA, listing eight memoranda studying many of the proposals and options that address the projected exhaustion of the Social Security Trust Fund, between 2037 and 2041, under the intermediate set of economic and demographic assumptions provided in each of the five prior annual Trustees' reports. 

A lesser known, but perhaps more immediate problem, was identified by government officials, and reported recently by geeks and techies.

The information hardware facilities and software capabilities of the Social Security Administration are reported to be inadequate to handle the biggest database in the world.

In Social Security Data Center Approaching Collapse (01/03/11), published by InformationWeek - Government, reporter Elizabeth Montalban highlighted that "an inspector general finds agency operations at high risk due to delays in upgrading its critical infrastructure and software."

A report by SSA IG Patrick P. O'Carroll Jr., examining the top management challenges the agency will face in 2011, shows it grappling with a host of IT infrastructure projects the agency's IG, Congress, and the SSA's advisory board worry it can't handle.

One of the biggest problems is the agency's transition to a new data center, according to the report. The IG has characterized the replacement of the SSA's National Computer Center (NCC) -- built in 1979 -- as the SSA's "primary IT investment" in the next few years.

The agency has received more than $500 million so far to replace the outdated center, which is now so severely strained by an expanded workload over its time of operation that it may not be able to function by 2012, according to the report.

However, the SSA does not foresee completing the new center until 2015, a project the IG deems as "imperative" considering the precarious position of the existing NCC. * * *

This IT crisis comes just as the SSA intends to computerize even more aspects of its functions, hoping to achieve operating cost savings and improve customer service.  See:  Social Security CIO On What's Next In Online Engagement (01/06/11) by J. Nicholas Hoover, also posted by InformationWeek, reporting that "social media, digital credentials, and behavior modeling are being employed to get more Americans to use the Web to get their retirement benefits, says IT chief Frank Baitman."

Both these actuarial and technological challenges must be addressed -- and soon -- to avoid collapse of a system central to most Americans.

"The Social Security program plays an important part

in providing for families, children, and older persons in times of stress.

But it cannot remain static.

Changes in our population, in our working habits, and in our standard of living

require constant revision."
-- John F. Kennedy (June 30, 1961)

Tax Relief Enacted

As announced in a host of media publications today, December 17, 2010, we have a new federal tax act, representing a political compromise and a temporary Congressional consensus -- but not a long-term solution -- on crucial pending income, estate/gift/generation-skipping, and social security tax issues (among other subjects).

For example, on "Estate of Confusion" (a Forbes Blog) in its posting today entitled "House Passes The Middle Class Tax Relief Act of 2010, H.R. 4853", Hani Sarjii highlighted the compromise, and concluded that "the reform of the estate tax is only temporary."

On December 16, 2010, the United States House of Representatives passed H.R. 4853, the Middle Class Tax Relief Act of 2010. The vote was 277 in favor and 148 against.  The bill will now go to President Obama’s desk to be signed into law.

H.R. 4853 is a compromise between President Obama and Republicans. It will extend the Bush Tax cuts and provide temporary estate tax reform: an estate tax rate of 35% and a $5 million exemption for individuals, for two years.

H.R. 4853 is going to change estate planning.  * * * Also, H.R. 4853 will not end estate tax uncertainty. * * *

C-SPAN reports that "The President is set to sign in to law the Middle Class Tax Relief Act of 2010 (H.R. 4853) later this afternoon [3:50 p.m]."  See also: Bloomberg News, House Passes Tax-Cut Extension, Sends Bill to Obama  (12/17/2010, with video).

My intention now is not to summarize the law, but to list a few resources online for a reader to explore and research initially.

Professor Paul L. Caron lists excellent links -- including a shorter summary (PDF, 3 pages) and a longer summary (PDF, 12 pages) -- regarding the new federal tax law in his posting President Obama Signs Tax Package Into Law (12/17/10) on the Tax Prof Blog.  [Update:  See also: More on the Obama-GOP Tax Bill (12/19/2010).]

For a running reference on the political developments leading to the new law, see: Thompson Reuters Tax Watch and its Archive covering the period November and December, 2010.  See also: Blog posting entitled Are We Having Fun Yet? (12/13/2010), by William (Bill) D. Pargaman, Esq., of Austin, TX, who prepared a tentative summary of the pending legislation as of December 9, 2010.

Descriptions about the underlying bill and its amendments are set forth by The Library of Congress (Thomas).  See also: Open Congress, which lists news articles and blog postings related to it, and which also sets forth the text of the House-approved bill.

The U.S. Senate's Committee on Finance posted links on a webpage entitled S.A.4753: The Reid-McConnell Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010, as follows:

• Summary of The Reid-McConnell Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010 [PDF, 485 KB, 12 pages] (12/10/10).

• JCT Estimated Budgetary Effects of the Reid-McConnell Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010 [PDF, 28.8 KB, 9 pages] (12/10/10).

• Legislative Text of The Reid-McConnell Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010 [PDF, 137.6 KB, 74 pages] (12/13/10).
  

BNA also provides a link to that last item above -- the final text of H.R. 4853, as amended numerous times -- being the "Senate Amendment to the House Amendment to the Senate Amendment."

Update: 2010-12-20:

In an article entitled CCH First to Offer Comprehensive Coverage of 2010 Tax Relief Legislation (12/20/2010), posted by the Centre County Times (State College, PA), a link leads to a Special Report -- CCH Tax Briefing, dated December 17, 2010, entitled President Signs Two-Year Extension Of Bush-Era Tax Cuts, Payroll Tax Relief, Estate Tax Compromise (PDF, 11 pages):

Congress has approved and the President quickly signed a mulibillion dollar tax cut package, the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010 (2010 Tax Relief Act) (H.R. 4853). The new law follows through on the framework agreed to December 6 by President Obama and GOP leaders in Congress. The 2010 Tax Relief Act extends the Bush-era individual and capital gains/dividend tax cuts for all taxpayers for two years. The bill also provides for an AMT “patch,” a one-year payroll tax cut, 100 percent bonus depreciation through 2011 and 50 percent bonus depreciation for 2012, a top federal estate tax rate of 35 percent with a $5 million exclusion, and more. * * *

This is an excellent resource, which was posted publicly (and quickly!) for professionals and the public.  I commend CCH for doing so.  It should be a timely and trustworthy summary.

Social Security & Medicare Slipping into the Future

CNN posted an interview headlined "Medicare is the real danger, not social security" on May 13, 2009, that highlighted the significant slippage in sustainability of the present Medicare and Social Security benefit systems.

Unfunded obligations of both Social Security and Medicare are "slipping into the future" faster than previously expected, which demand remedial action now, not later.

Bob Weiner says we should worry about Medicare before we worry about Social Security. The front page of the New York Times [on May 13, 2009] reads: Recession Drains Social Security and Medicare

The latest report card on the social safety net is not encouraging. The officials who oversee the program forecast Tuesday that the Social Security trust fund will be exhausted by 2037 — four years earlier than estimated last year. * * *

The New York Times article, reposted by Ocala.com, identified the problem created by the recession:

The labor secretary, Hilda L. Solis, noted that 5.7 million jobs had been lost since the recession began in December 2007. With fewer people working, the government collects less in payroll taxes, a major source of financing for Medicare and Social Security.

A resumption of economic growth is not expected to close the financing gap. The trustees’ bleak projections already assume that the economy will begin to recover late this year.

The Treasury secretary, Timothy F. Geithner, said the only way to keep Medicare solvent was to “control runaway growth in both public and private health care expenditures.” And he said Mr. Obama intended to do that as part of his plan to guarantee access to health insurance for all Americans.

But if cost controls do not produce the expected savings, Congress is likely to find it so difficult to preserve benefits without increasing taxes. * * *

The Social Security Administration has made periodic Long-Range Solvency Proposals that would address the solvency of the "trust fund."

Trustees Reports issued over the last several years have indicated that Social Security's Old-Age, Survivors, and Disability Insurance (OASDI) Trust Funds would become insolvent sometime in the next 30 to 40 years under the intermediate set of economic and demographic assumptions provided in each report.

Various proposals have addressed this long-range solvency problem. These proposals are generally intended to restore, or largely restore, solvency for the long-range period (the next 75 years).* * *

U.S. News & World Report considered the long-range effects of the Social Security system's underfunding in its consumer-oriented article, "What Social Security's Underfunding Means for Your Retirement" (05/13/09) by Emily Brandon.

After considering the Social Security system's shortfalls, the article addressed Medicare's more pressing situation:

Medicare's funding ailments are expected to occur even sooner than Social Security's.

Projected annual assets for the hospital insurance portion of Medicare are expected to exceed expenditures by 2012. The hospital insurance trust fund is expected to be exhausted by 2017, two years earlier than projected in last year's report.

Medicare Part B, which covers doctors' bills and other outpatient expenses, and Part D prescription drug coverage are more adequately financed in the short term, but increases in healthcare costs over the long term will average 6.4 percent annually and require increases in enrollee premiums and general revenue funding. * * *

The Center on Budget and Policy Priorities analyzed the 2009 annual reports issued regarding both the Social Security system and the Medicare program:

• Trustees’ Report Finds Social Security Is Not in Crisis, But Action Is Needed
  , by Kathy Ruffing and Paul N. Van de Water -- "The trustees’ report shows some deterioration in the program’s long-run outlook, a finding that was widely expected. Nevertheless, the report does not depict a program in crisis. Policymakers should act sooner rather than later to put the program on a sound long-run footing, but today’s beneficiaries and workers approaching retirement need not fear that their Social Security benefits are at risk...."

• 2009 Trustees' Report Underscores Urgency of Health Reform, Medicare Changes, by Paul N. Van de Water -- "The 2009 annual report of Medicare’s trustees underscores the need for system-wide reform of health care financing that will slow the growth of health care costs in both Medicare and the private sector and extend health coverage to the uninsured."

A commentary published in Forbes, entitled "A Medicare Explosion -- How to diffuse a ticking time bomb" (05/19/09), by John C. Goodman, reacted to the projections contained in the Medicare report with some revolutionary proposals:

For some time, Social Security and Medicare combined have been paying out more than they are receiving in dedicated taxes and premiums. To cover that deficit, we have been drawing on the general revenues (mainly income taxes) of the federal government. Currently, we are taking more than 1-in-7 income tax dollars for this purpose. By 2020, it will be 1-in-4, and by 2030, 1-in-2.

Basically, elderly entitlements are on a path that will crowd out spending on every other federal program. Throw in Medicaid, and health care spending alone will crowd out every other thing the federal government is doing by mid-century!

Clearly we are on a path that is unsustainable. How can we get off of it?

First and foremost, we must move from a pay-as-you-go system to a funded system.

Instead of having each generation of retirees look to the next generation of workers to pay for its benefits, each generation must pay its own way. * * *

Mr. Goodman offers three fundamental reforms that could restructure Medicare into a workable system.

• On the funding side: "Suppose we ask workers and their employers to put aside 4% of their wages in savings accounts for post-retirement health care. These balances would grow tax free and would replace taxpayer obligations under traditional Medicare. The result: Instead of growing through time, the taxpayer burden for Medicare would eventually shrink to current levels."

• On the demand side: "[A]ll new Medicare beneficiaries should be able to manage up to one-third of their health care dollars, using a special type of Health Savings Account (HSA). With these accounts they would be able to keep each dollar of wasteful spending they avoid and bear the full cost of each dollar they waste."

• On the supply side: "[P]hysicians should be free to repackage and reprice their services, thus profiting from innovations that lower costs and raise the quality of care. Any health care provider should be able to propose and obtain a different reimbursement arrangement, provided that (1) the total cost to government does not increase, (2) patient quality of care does not decrease and (3) the provider proposes a method of measuring and assuring that (1) and (2) have been satisfied."

He concludes, however, with a warning: "The longer we wait, the more costly and painful reform will be."

Time keeps on slippin, slippin, slippin
Into the future
Time keeps on slippin, slippin, slippin
Into the future

I want to fly like an eagle
To the sea
Fly like an eagle
Let my spirit carry me
I want to fly like an eagle
Till I'm free
Oh, lord, through the revolution

Feed the babies
Who don't have enough to eat
Shoe the children
With no shoes on their feet
House the people
Livin' in the street
Oh, oh, there's a solution
* * *
--"Fly Like an Eagle" (1977 Version)
by The Steve Miller Band

Post-Election, What Does the Future Hold?

Janet Colliton, Esq., of West Chester, PA, wrote an article published on November 10, 2008, in The Daily Local News (West Chester, PA), entitled “The Presidential Election Is History – What Does the Future Hold?”

She told me that crafting her predictions "took a fair amount of time and research." I find her "predictions" fascinating, and sufficiently detailed to be credible.

With her permission, I reprint her article here (edited slightly by me, and annotated with some Internet links).

At the conclusion of her article, I'll make two predictions of my own.

The Presidential Election Is History –
What Does the Future Hold?
Copyright © by Janet Colliton, Esq.

On November 4, the Presidential campaign season finally came to a halt with the election of Barack Obama as 44th U.S. President. While first on the new President Elect’s agenda are measures to restore the economy, other matters will likely soon follow.

Having hauled my figurative crystal ball from storage, I will venture some predictions on the policy winners and losers for the next four years.

Social Security and Medicare

The Social Security prediction is easy and one I share with others. See, for instance Mark Miller’s “Retiring on Obama’s Watch: What To Expect From 44.” Mark’s expression was “First things first: privatization of Social Security is dead as a doornail.”

Readers will remember the plan introduced by the Bush Administration in 2005 to allow younger workers to invest at least a portion of their Social Security contributions in private accounts. Since these investments would include equities (stocks), probably more of us today would recognize the risk involved in the plan.

On a subject that I covered extensively in previous columns, Medicare was also edging its way toward privatization with Medicare Advantage Private Fee For Service (PFFS) plans, which still exist but without the prior heavy federal government subsidization. PFFS plans can charge to offer worse coverage than can be received under plain Medicare without a premium. The aggressive marketing of PFFS plans will likely at least slow over the next four years.

Health Insurance

If the idea of taxing employer subsidized health insurance benefits was a serious notion, it is dead too.

During the campaign, Senator McCain introduced the idea of taxing employees on their employer health insurance benefits in exchange for a tax credit. The plan was to level the field for individuals who purchase their own health insurance since they also would receive a similar credit. The move was based on the premise that each of us can bargain individually with health insurance carriers for the best coverage. With overwhelming leverage resting with health insurers, this perception could be questioned.

Greed Is Out. Is Community In?

The stock and mortgage market downturns have highlighted greed in our society. To blame greed as a cause, however, would be oversimplifying.

What is fairly obvious is that the creativity of businesses in packaging and selling debt products that no one understands seriously contributed to today’s problems and, when coupled with ostentatious displays of wealth by high level executives, evoked anger.

If greed is out, does this mean that community in? It is too soon to say but it does seem there is a sense of common purpose to solve financial problems.

Personal Responsibility is here to stay

One rallying cry of the early 21st century has been the mantra of “personal responsibility.” I predict that personal responsibility is with us indefinitely which, if softened by common sense, is not a bad thing.

In broadest terms, personal responsibility means that we do not expect another person or society in general to provide for us where we have the ability actually or potentially to do so on our own.

Where the idea goes awry is when it is interpreted to mean every person for himself regardless of the circumstances. Despite our idealization of the rugged individual, I do not believe we ever were a country that believed personal responsibility eliminates concern for the elderly, youth, sick and disabled.

Legislation that may remain

Some of the legislation that dramatically altered the landscape over the past few years is likely to remain although there could be some consumer friendly revisions over time.

The federal Deficit Reduction Act that radically tightened requirements for the Medicaid program went into effect February 8, 2006. It has no immediate replacements on the horizon.

The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, widely understood as being sponsored by the credit card industry to prevent consumers from getting out from under credit card debt has no apparent challengers at this time.

Relief on the Way

Look soon for passage of these measures, among others, proposed by the new administration to help individuals through the financial downturn.

• Unemployment benefits will be extended.
  
• Required minimum distributions (RMD) from retirement accounts will temporarily not be required and withdrawals, if made up to the RMD amount will temporarily be exempt from federal tax.
• IRA and 401(k) owners who have not retired will temporarily be permitted hardship withdrawals up to $10,000 or 15% of the account without penalty but subject to regular income tax.

* * *

Under an additional heading of "New Legislation," I now make my two predictions:

First, Congress -- finally, after continuous past introductions of bills on this subject into Congressional Sessions since 2002 -- will refine and adopt an "Elder Justice Act". It will be signed into law by the new President within the first two years of the new administration. For background on the matters that could be covered by such federal legislation and the wide-base of national proponents for it, see: PA EE&F Law Blog posting "Federal "Elder Justice" Acts Appear Elusive" (09/12/08).

Part of my belief for passage of a federal elder justice law derives from the family connection of the new, incoming Vice-President, to the current Attorney General of Delaware, who already is very committed to elder justice issues in that state.

In the October 2008 issue (PDF version, or text version) of the newsletter of the National Center on Elder Abuse, this update appeared under the heading Delaware: Senior Protection Initiative:

State Attorney General Joseph R. “Beau” Biden, III recently announced new measures to enhance the prevention of senior victimization and to enhance the prosecution of crimes committed against older Delaware residents.

“Through the Senior Protection Initiative, the Delaware Department of Justice is redoubling its efforts to prosecute those who have committed senior abuse, encourage victims to come forward and bring together state agencies, law enforcement and advocates to tackle these issues,” said Biden. * * *

In addition to the newly created multidisciplinary team, the initiative will include public outreach efforts and increased training in detecting abuse for local law enforcement. [Link added.]

Second, I predict that Congress will adopt remedial Federal Estate, Gift, & Generation-Skipping Tax legislation by July, 2009, consistent with Senator Obama's campaign proposal, for implementation on January 1, 2010:

Sen. Obama wants to freeze the 2009 estate-tax structure, which taxes roughly 0.3% of estates -- those valued above $3.5 million per person -- at a top rate of 45%. According to Deloitte Tax, a $5 million estate would pay a tax of $675,000 under this plan. * * *

See: PA EE&F Law Blog posting "Presidential Candidates on the Issues" (11/03/08).

Hey, my guess is as good as anyone's, right?

I thank my friend and respected practitioner, Janet Colliton, Esq., for her contribution, again, to this Blog as a guest author. She practices through Colliton Law Associates, P.C. (790 East Market St, Suite 250, West Chester, PA 19382; Ofc: 610-436-6674; E-mail: colliton@collitonlaw.com) on matters limited to elder law, Medicare, Medicaid, life care, special needs, retirement planning, and estates & trust administration.

Federal "Elder Justice" Acts Appear Elusive

On September 11, 2008, in an update entitled "Senate Finance Committee Approves Two Bills To Help Prevent Neglect, Abuse of Elderly Patients", the Kaiser Health Daily Policy Report stated: "The Senate Finance Committee on Wednesday by voice vote approved two bills that seek to prevent neglect and abuse of elderly patients, CQ Today reports."

One bill (S 1070), sponsored by Sen. Orrin Hatch (R-Utah), would authorize $777 million to establish state and local training and assistance programs for long-term care employees. In addition, the legislation would establish a database used to identify and track elder abuse cases. * * * A companion bill (HR 1783) awaits a vote in the House.

The second bill (S 1577), sponsored by Sen. Herb Kohl (D-Wis.), would seek to establish a nationwide system of background checks to screen potential long-term care employees for a history of abuse or a violent criminal record. The legislation, which would expand a seven-state pilot program established under the 2003 Medicare law, would provide as much as $160 million in grants over three years to states that seek to participate in the program. * * *

The posting noted that, according to CQ Today (Mattingly, 09/11/08), the Senate "has a limited number of days to try to reach agreement with the House on the bills, which groups representing America's elderly are pushing as a major priority."

AARP supports the federal legislation, as described in its Bulletin Today in the article "What the Elder Justice Act Would Do" (07/11/07), by Elizabeth N. Brown. The National Council on Aging also supports it, as explained in its Issue Briefs: Elder Justice Act – S. 1070 and H.R. 1783.

Indeed, the Leadership Council of Aging Organizations, "a coalition of over 56 national not-for-profit organizations concerned with the well-being of American’s 87 million people over age 50," forwarded a letter to the co-chairs of the Senate Finance Committee urging immediate action. See: Letter in Support of the Elder Justice Act and the Patient Safety and Abuse Prevention Act of 2007 (PDF, 2 pages).

We are writing to express our support for the Elder Justice Act and the Patient Safety and Abuse Prevention Act of 2007 and to urge you to mark-up this landmark legislation and move it to the Senate floor as soon as possible when the Senate returns from its state work period.

With few legislative days remaining in the 110th Congress, it would be a tragedy to allow any more older Americans to suffer the pain of abuse, neglect, and exploitation because Congress failed to act. * * *

But, in the past, facing similar opportunities, Congress failed to act on such bills.

A federal "Elder Justice Act" was proposed in each of the past three Congressional sessions -- as the Elder Justice Act of 2002 (S. 2933), the EJA of 2004 (S. 333), and the EJA of 2006 (S. 2010). The Senate Finance Committee had approved the last two versions, too.

But no enactment occurred.

For evidence of past failed attempts, read the few "News" updates posted by the Elder Justice Coalition since March, 2004.

As to the status of the current legislation in this Congressional Session, see: Elder Justice Act Update presentation (06/24/08), by Bob Blancato, National Coordinator, of the Elder Justice Coalition.

The House version of an Elder Justice Act, H.R.1783, introduced on March 29, 2007, would amend the Social Security Act to enhance the social security of the Nation by ensuring adequate public-private infrastructure and to resolve to prevent, detect, treat, intervene in, and prosecute elder abuse, neglect, and exploitation, and for other purposes.

It is also noteworthy that, in this Congressional session, Pennsylvania Representative Joe Sestak (7th District, Delaware Co.) sponsored H.R. 5352, The Elder Abuse Victims Act of 2008, which was reported favorably out of the House Judiciary Committee in June, 2008.

He promoted it in the Press Release "Congressman Joe Sestak Testifies on Elder Abuse" (04/23/08), which noted that the "[f]irst hearing on senior abuse in 17 years in the House of Representatives addresses Congressman Sestak’s Elder Abuse Victims Act."

"With 2 million senior citizens, the third largest elderly population in the country, this legislation is particularly important to the Commonwealth of Pennsylvania, my home state."
* * *
"[A]s as Hubert Humphrey once said, the moral test of a government is how it treats the elderly, those in the twilight of life."

-- Rep. Joe Sestak, in House Testimony on April 23, 2008

New Social Security Benefits Calculator

On July 23, 2008, the Social Security Administration unveiled its new Retirement Estimator which "produces estimates that are based on your actual Social Security earnings record." A link to it is featured on SSA's Home Page.

According to the SSA's description, this new Benefits Calculator:

• Provides an estimate of your retirement benefits comparable to the estimate you receive on your Social Security Statement each year, and

• Lets you create additional "what if" retirement scenarios based on current law.

In the past, SSA offered some form of online benefit projection calculators since at least Spring, 2000. See: "SSA Unveils Online Social Security Benefits Calculator" (04/12/2000) by Karen Stevenson posted by ElderWeb. Previously, three versions were offered:

A "Quick" version computes future benefits from current earnings, by making an assumption that earnings will stay at that level long enough to qualify for benefits.

An "Online" version allows the user to input actual historical salary amounts for each year for a more accurate estimate.

A "Detailed" version allows the user to download a program which can make the most accurate predictions, including disability and death benefits.

Because of privacy concerns, those prior SSA planners were not linked to the active SSA databases, and therefore required users to input their own salary information used for calculations. For many, the effort to input data crippled the usefulness of the calculator, or made its use just too much trouble.

For "hip shot" calculations, vendors also have provided online calculators for generic social security benefit projections. See, for example, the Social Security Benefits Financial Calculator still offered online by Commerce Clearinghouse.

Now, the new SSA Retirement Estimator will perform its calculations based on SSA's data drawn from an actual earnings history, without a need for numerical input.

To utilize the new SSA Retirement Estimator, first you must authenticate yourself online as a social security member with an earnings history. And you must not block the website's interaction with your computer, that is, JavaScript must be enabled to interact with the SSA website.

Before you enter data, you are met with a stern warning:

Acknowledgement For Online Services

IMPORTANT: You can use this website to gain access to your personal information. If you are acting on behalf of another person, or if you are a Representative Payee, you cannot use this online service and should contact a Social Security representative.

Any person who knowingly and willingly makes any representation

1. that is false to obtain information from Social Security records, and/or
2. that is intended to deceive the Social Security Administration as to the true identity of the individual,

could be punished by a fine or imprisonment, or both. The OMB control number for this form is 0960-0596; expiration date 09/30/2009.

I have read and agreed to the above statement. I am the individual whose personal information I am requesting.

Once you agree, then you can enter the required data for authentication:

• Your full name (first name, middle initial, & last name, plus suffix if any, and any other last name used)
• Your Social Security Number
• Your date of birth
• Your place of birth (state, territory, or foreign country)
• Your mother's maiden name

Once authenticated, you can enter your last year's earnings, so that projections can be calculated based on your earnings record and contributions.

SSA cautions about the projections, however:

Retirement estimates are just that, estimates. They will vary slightly from the actual benefit you may receive in the future because:

• Your Social Security earnings record is constantly being updated;
• Our calculators use different parameters and assumptions (e.g., different stop work ages, future earnings projections, etc.); and
• Your actual future benefit will be adjusted for inflation.

This benefits calculator is not intended for use by those who are already covered by Medicare, or currently receive benefits based on earnings.

This benefits calculator is intended for use by future social security recipients if:

• You are not currently receiving benefits on your own Social Security record;
• You are not a Medicare beneficiary;
• You have enough Social Security credits at this time to qualify for benefits; and
• You are not eligible for a Pension Based on Work Not Covered By Social Security.

I used the calculator, which then determined a monthly benefit level for me if I "stop working and start receiving Social Security benefits" at three different ages:

• At age 62 (early retirement)
• At age 66 (full retirement)
• At age 70

The results were based upon certain standard assumptions:

• We estimate your benefits using your average earnings over your working lifetime.
  
• We also assume that as you continue to work you will make about the same as you entered for last year's earnings.

Then there was a disclaimer about the estimates, which "are similar to the estimates you receive in your annual Social Security Statement: "These estimates do not include Medicare premiums or other amounts that may be deducted from your benefit."

The Retirement Estimator is a useful planning tool that allows immediate, personalized projections for potential Social Security retirement benefits.

Again, the new online calculator is available at: www.socialsecurity.gov/estimator.

PA Joins "Own Your Future" LTCI Campaign

On March 26, 2008, Governor Edward Rendell announced Pennsylvania's version of the "Own Your Future" publicity campaign, which urges "Pennsylvanians to begin planning ahead to better meet their future long-term care needs."

This statewide campaign is tied into the federal government's "Own Your Future" awareness campaign, as conducted by the National Clearinghouse for Long-Term Care Information in a few states since January, 2005.

The Own Your Future Campaign is a collaboration of the Centers for Medicare & Medicaid Services (CMS), the Office of the Assistant Secretary for Planning & Evaluation (ASPE), and the [U. S.] Administration on Aging (AoA), and has support from the National Governors Association (NGA). * * *

The “Own Your Future” Long-Term Care Awareness Campaign is a joint federal-state initiative to increase awareness among the American public about the importance of planning for future long-term care needs.

As of March 2007, 15 states [see map] have participated in the Own Your Future Campaign to increase the awareness of the need to plan for future long-term care services.

State efforts include letters to constituents between the ages of 45-70, promotion of the Campaign, including through an initial press conference, and development and dissemination of state based information and resources, such as long-term care websites. Check the activities and resources of individual Campaign States highlighted on the map. * * *

Pennsylvania is not yet marked on that "map", but soon will be, along with Ohio, another state that joined the Campaign in 2008.

The Governor's Press Release is entitled "Governor Rendell Announces 'Own Your Future" Campaign; Urges Consumers to Better Plan their Long-Term Care Needs".

“Planning for the future is not something that can be put off. If people do fail to prepare, it can carry very difficult and expensive consequences,” Governor Rendell said. “The ‘Own Your Future’ campaign empowers consumers to take steps now that will give them peace of mind and improve their future quality of life.”

Pennsylvania has the third largest percentage of people over age 65, trailing only Florida and West Virginia. By 2020, approximately one in four Pennsylvanians will be age 60 or older.

According to surveys cited by the U.S. Department of Health and Human Services, many consumers do not realize that standard health insurance, Medicare, and/or disability coverage do not pay for most long-term care services. Medicaid pays for some long-term care services, but only for consumers who qualify because of limited income and financial resources.

As part of Pennsylvania’s Own Your Future outreach effort, 1.7 million state residents ages 45 to 65 are receiving letters this week from Governor Rendell that offer information about planning for the future in areas including finances, legal services, housing, health care and long-term care insurance. * * *

Various resources are posted already on websites of the PA Department of Aging and the PA Department of Insurance.

But, the consumer would be well-served to be inquiring & discerning in consideration of long-term care insurance, as noted in a previous posting, "PA to Promote Long-Term Care Insurance" (03/12/08).

The promotion of long-term care insurance in Pennsylvania coincides with the roll out, by the PA Insurance Department, of Pennsylvania's version of a Long-Term Care Partnership, authorized by Act 40 of 2007, as described on its web page entitled "Long-Term Care Partnership Policies -- Questions and answers about Pennsylvania's newest option for long-term care insurance", updated on March 26, 2008.

On July 17, 2007, Governor Edward G. Rendell signed Act 40 into law, granting strong consumer protections for purchasers of long-term care insurance and helping to address the growing need for long-term care services.

Act 40 also establishes a “Long-Term Care Partnership”, which offers Pennsylvanians the opportunity to provide for their own needs while helping to conserve taxpayer resources.

The new law protects consumers by requiring that all long-term care insurance policies sold in Pennsylvania provide comprehensive coverage and also gives consumers the ability to exchange existing policies for Partnership Policies. Additionally, the law increases the guaranty fund to protect consumers against loss if an insurance company becomes insolvent. * * *

The Long-Term Care Partnership encourages Pennsylvanians to purchase long-term care insurance by providing asset coverage equal to the benefits paid by the policy. This means dollar-for-dollar asset protection. For example, a person whose qualifying policy paid for $100,000 of care would be entitled to keep $100,000 in assets if they need to apply for Medical Assistance in the future. * * *

For further background about Act 40, see: PA EE&F Law Blog posting "PA's Act 40 of 2007 on Long Term Care Insurance" (07/19/07).

Update: 04/21/08:

Attorney Janet Colliton, of West Chester, PA, addressed PA's "Own Your Future" long-term care insurance promotional campaign in her article published on April 21, 2008, in the Daily Local News (West Chester, PA), entitled "Pennsylvania tells boomers to own their future". In her article, she mentioned the posting made on this Blog.

USA Today on Costs of Seniors' Programs

On February 14, 2008, USA Today reported, in the article "Senior benefit costs rise 24% since 2000", by Dennis Cauchon, that "the cost of government benefits for seniors soared to a record $27,289 per senior in 2007."

That's a 24% increase above the inflation rate since 2000.

Medical costs are the biggest reason. Last year, for the first time, health care and nursing homes cost the government more than Social Security payments for seniors age 65 and older.

The average Social Security benefit per senior in 2007 was $13,184. * * *

The federal government spent $952 billion in 2007 on elderly benefits, up from $601 billion in 2000.

It's the biggest function of the federal government. States chipped in another $27 billion in 2007, mostly for nursing homes.

All three major senior programs — Social Security, Medicare and Medicaid — experienced dramatically escalating costs that outstripped inflation and the growth in the senior population. * * *

The USA Today article reported key findings of its analysis:

•Medicare experienced the most explosive growth from 2000 to 2007. The Medicare prescription drug benefit, started in 2006, accounts for about one-fourth of the increase in Medicare, which provides health benefits for people 65 and older.

•Long-term care costs per senior have declined slightly in the last three years because of a move away from nursing homes to less-expensive home care.

•The cost of senior benefits is equal to $10,673 for every non-senior household.

•About 35% of the federal budget is spent on senior benefits, up from 32% in 2004. * * *

In a related USA Today article by the same author, entitled "Price of seniors' care to soar as boomers age", the trend in spending on senior citizens is shown as accelerating substantially during the past seven years.

Now such spending represents the largest expenditure in the federal budget:

The federal government spends more on seniors than on any other group or program. Last year, states paid $27 billion of the $979 billion in senior benefits, primarily for Medicaid payments to nursing homes.

	Federal spending in 2007 (billions)	Percent of budget
Senior benefits	$952.3	34.9%
Defense	$552.6	20.2%
Interest on debt	$237.1	8.7%

Sources: Office of Management and Budget; and USA TODAY research

Now here's the warning: Such costs will rise further as the "baby boomers" age.

The number of people ages 65 and older increased by 2.3 million to 36.5 million from 2000 to 2007, mostly because of increased life expectancy.

Seniors remained at 12% of the population during that time because of overall population growth.

That will change when the 79 million people born during the baby boom — from 1946 to 1964 — begin turning 62 this year and 65 in 2011. * * *

The senior population boom — combined with rising Social Security payments and medical costs — is projected to cause the cost of senior benefits to accelerate at an unprecedented rate. The government predicts that the cost of Medicare, the most expensive program, will double in the next decade. * * *

Such warnings have been sounded at the federal level by the Comptroller General of the United States since September, 2005, in reports & presentations. See: PA EE&F Law Blog posting, "GAO's Warnings about US Fiscal Future" (11/01/07).

Contrast the present fiscal situation, and the projections for increase in expenditures related to seniors, with another present fact reported by USA Today: "The Urban Institute estimates that kids receive an average of about $4,000 per child in benefits, including the child tax credit and other indirect assistance."

These USA Today articles were discussed beginning on February 14th in postings on the AARP Bulletin Board, with varied responses. I recommend reading the comments in this debate, which will not be resolved easily.

These verified trends affect established federal programs that have created long-held individual expectations. But benefits expected by some, will create substantial burdens on others to fulfill. Future fiscal realities likely will compel adjustments to the programs.

What will be an acceptable realignment of payments to senior citizens versus taxation of younger generations? How can we balance elder care versus child development? These issues should be discussed constructively now, with a high priority for solutions that can be politically acceptable.

In my next posting, I will note how these issues and this debate are playing out in Pennsylvania right now, and also in other states -- in the context of their budgets.

Update: 02/28/08:

On February 26, 2008, The Wall Street Journal posted an article entitled "Medicare Spending to Surge", by Jane Zhang (Page A3):

Government spending on health care could nearly double by 2017 to more than $2 trillion, according to a new federal study, reflecting a surge that promises to complicate the campaign debate about health care.

Driven by the aging of the baby-boom generation and rising costs of new drugs and medical technology, Medicare, the big federal health program for the elderly, will take up 20.7% of national health spending by 2017, according to the report. * * *

• What's New: Government spending on health care is expected to nearly double by 2017 to more than $2 trillion.

• The Reasons: Two main factors are driving up costs: the aging population -- especially baby boomers -- and the rising price of new drugs and medical technology.

• What's at Stake: The latest data renews the spotlight on the question of how the government should pay for the bulging cost of health care. * * *
  

New Social Security Debit Card

The Wall Street Journal reported on January 4, 2007, in an article entitled "Treasury Plans Social Security Debit Card", by Eleanor Laise, that "[t]he Treasury Department plans to introduce a prepaid debit card for Social Security recipients in an effort to provide safer and cheaper benefits payments."

On January 3, 2007, the U. S. Treasury Department, through its Financial Management Services Program, had announced & explained the initiative its "Overview -- Direct Express Card", updated that day on the web regarding the "new" card planned:

In the Spring 2008, the Financial Management Service (FMS) will be offering the Direct Express card through a new financial institution. The new Direct Express card will have more features and lower fees. In the Spring, cardholders will receive information about the new program, its features and fees, and how to sign up. * * *

People who receive Social Security payments can now enjoy the benefits of receiving them electronically even if they don't have a bank account. The Direct Express Card offers a safer, easier way for people to get their benefits.

With a Direct Express Card, Social Security beneficiaries receive their payment every month without having to worry about cashing a check, losing a check, or having it stolen.

The Direct Express Card can be used 24 hours a day, 7 days a week, to get cash at automated teller machines (ATMs) and make purchases and buy money orders anywhere MasterCard debit cards are accepted. Cardholders may also get cash back at many retail locations when the Direct Express Card is used to make purchases. * * *

The Wall Street Journal article reported about the expanded card services:

The Direct Express debit card, set to be announced today, will be introduced in a handful of states this spring and rolled out nationwide by the end of the summer.

Dallas-based Comerica Inc.'s Comerica Bank has been selected as the card issuer for the program, which is targeted at Social Security and Supplemental Security Income recipients who don't have a bank account.

The card could mean significant cost savings for benefits recipients as well as the federal government, Treasury officials and banking experts say. People who sign up for the card will also gain faster access to their money and avoid some security problems, like stolen checks.

But there are some cardholder fees associated with Direct Express, and a significant education effort may be required to get users to accept and understand the card.

The debit card is part of a broader effort by the Treasury to move to electronic payments. In 2005, the department started its Go Direct campaign, which is designed to encourage benefits recipients with bank accounts to switch to direct deposit. * * *

The debit card should mean cost savings for many Social Security recipients who don't have a bank account and who use check-cashing services to cash their benefits checks, banking experts say. * * *

The debit cards should be more secure than paper checks, the Treasury and banking experts say. In 58,000 cases last year, Social Security checks were forged, Ms. Tillman says. Nine times out of 10, problems with benefits payments are associated with paper checks, she says. The debit-card accounts are protected by PIN numbers and FDIC insured.

For other articles on the same topic, see:

• "Coming soon: Social Security debit cards", posted by CNN Money (01/04/08) -- "Treasury Department's upcoming Direct Express program aimed at cutting costs and problems associated with mailing paper checks."

• "Social Security to introduce debit cards", by Ellen Yan, posted by Newsday (01/04/08) -- "Plastic is coming for recipients who want it, a federal effort to save money and improve theft protection."

• "Social Security Plans To Offer Debit Cards", by Martin Crutsinger, posted by The Washington Post (01/05/08) -- "The Treasury Department said yesterday that it would offer Social Security payments on debit cards and that it hopes millions of people who do not have bank accounts will use the new service."

Update: 01/19/08:

Professor Gerry Beyer noted this posting on the Wills, Trusts & Estates Prof Blog, which he authors, in his own posting, entitled "Treasury Department Going Plastic" (01/19/08). He provided a link here too.

A technology publication, oriented to federal data processing systems, published an article noting the proposed new Social Security Debit Card. See: "A debit card you can bank on", by Mary Mosquer, posted by Federal Computer Week on January 18, 2008.