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Be aware of upcoming Social Security, Medicare changes

3 min read

As we approach the end of the year, we are learning important news and making major decisions about financial issues that apply to seniors. The Social Security Administration recently announced a cost of living increase for 2018 of two percent.

This is the biggest jump in years and will pay the average recipient an extra $27 per month. This is the largest increase since 2012, but still small by historical standards. Social Security is one of the only retirement assets that have a cost of living adjustment.

The cost of living is determined by using the inflation rate from the third quarter of one year until the following year. Because of the small rate of growth in the economy, reported inflation has been low for a number of years. There are indicators that inflation will be picking up. Rising interest rates often lead to inflation. Remember, inflation measures loss of purchasing power due to rising prices for certain commodities.

The Social Security Administration also announced the amount of annual wages subject to payment of the benefit will increase to $128,700. This year’s amount was $127,200. Medicare taxes are continued to be added to any earned income above this threshold.

Medicare announced it will begin issuing new cards starting in April 2018. It will take a year to have all of the new cards issued to everyone on Medicare which is everyone over age 65 unless they or their spouse are covered by an employee plan with 20 or more employees. AARP and many other groups have been pushing Medicare to make this change because current Medicare card numbers are the holder’s Social Security number followed by a letter. This makes seniors more vulnerable to identity theft. In 2014, there were around 2.6 million cases of identity fraud involving seniors.

Centers for Medicare and Medicaid Services has issued several recommendations about the new cards. Make sure your mailing address is up to date. Corrections can be made at ssa.gov/myaccount or by calling 1-800-772-1213. CMS warns everyone to beware if anyone contacts you to ask for personal information supposedly to get your new card. You do not need to give any additional personal information to anyone. Also, it will take a year to issue all new cards. You may hear about friends or family members that receive a card before you do. It will take until April 2019 for everyone to receive a new one.

There will be bumps in the road as hospitals, doctors, insurance companies and others adjust to your new randomly generated number. Your records must be merged with current information. As a result, there will be two periods where both your new and old number may be used.

Annual enrollment for Medicare is currently under way. It last from Oct. 15 until Dec. 7. This occurs every year for people on Medicare and it is when you make choices for the next calendar year. Make sure that your choice is still the right one for any changes in the last year. It is especially important to consider any changes in medicine that may have occurred. Check the formulary of the new medicines to see if your plan covers them. Careful review during annual enrollment could save you money next year.

Gary Boatman is a Monessen-based certified financial planner and author of “Your Financial Compass: Safe passage through the turbulent waters of taxes, income planning and market volatility.”

To submit columns on financial planning or investing, contact business editor Michael Bradwell at mbradwell@observer-reporter.com.

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