Social Security surprises. Not the good kind.

stokkete | Deposit Photos

Consider this a cautionary tale.

As y'all know, I retired in mid 2020, several years before reaching my full retirement age. I crunched the numbers and figured I could make it work with Social Security and various investments, plus a part-time job. And it did work -- until I bought a condo and the condo association slapped the owners with a massive, multi-year special assessment. So I went back to work full-time in May of last year. 

Until you reach the year of your full retirement age, Social Security will let you earn a certain amount each year and still keep getting your benefits -- but if you earn more than their max, they'll dock your benefit by $1 for every $2 over the max you earn. The earnings limit in 2023 was $21,240. I knew I was going to make more than that last year, so in May, I sent Social Security a letter letting them know that I was going to make way more than their earnings limit for the year. 

In early November, I got a letter from Social Security that said -- I'm paraphrasing here -- "Oh hai, you are going to make way more than you should have this year, so we are going to stop paying you benefits for four months, starting now."

The face that guy is making up top is an approximation of my reaction. I mean, I went back to work because I needed the money. I'd made plans several months out based on what I thought would be my monthly income -- which was now being cut by about a third. 

It's not so much that they cut back my benefit. I knew they were going to -- that's why I sent them the letter. But what I want y'all to understand is how they do it: There's no monthly payment plan. They just stop paying you 'til they get back what they "overpaid" you. And they give you very little warning.

So how can you avoid this whack upside the head? You have three options:

1. You can wait 'til you reach your full retirement age before you start taking Social Security.
2. If you retire early, you should keep a close eye on your annual earnings to make sure you don't go over the max earnings for the year (it's $22,320 for 2024).
3. You can tell Social Security to stop sending you money for a while. 

There are a couple of ways to accomplish that third option. If you haven't reached full retirement age yet, you can do what's called a withdrawal of benefits. You can only do it within the first twelve months of retiring, and you can only do it once. And there's another catch: You have to pay them back everything they've already paid you. So let's say you retired for six months, then went back to work. You'd have to give Social Security back every penny they'd paid you -- money you had presumably been living off of, so you wouldn't have it to give back. And if the new job doesn't work out, tough bananas -- Social Security won't pay you anything again until you reach full retirement age.

The other way is called suspension of benefits. Basically, you tell Social Security you'd like to stop getting a check from them until you ask them to start paying you again (or until you turn 70). Under this option, you don't have to pay back anything they've already paid you. But the catch is that you have to have reached full retirement age to exercise this option. 

Both of these options reset the year that you started taking benefits, which will mean a bigger monthly payment for you when they do resume. But lawdy, they don't make it easy for you to change your mind.

Anyway, in my situation, option 3 was not an option; I had yet to reach my full retirement age, and it had been more than a year since I first retired. 

I've been using a term that I haven't explained: full retirement age. What is it? Well, it depends on when you were born. For decades, everybody's full retirement age was 65. Then Congress started dinking around with it, raising it to supposedly stave off a shortfall in the Social Security system (I have Opinions, but that would be another post). For me, full retirement age is 66 and a half. (Here's how to figure out yours. The chart is at the top of page 3.)

As for this withholding-part-of-your-benefits business: The rules change when you get to the year in which you will reach full retirement age. Then the amount you can earn that year raises by a lot -- for 2024, it's $59,520 -- and as long as you don't make that much before the month you reach full retirement age, you're golden. Even if you do make that much money that year, the penalty is less harsh; Social Security retains only $1 for every $3 (instead of every $2) you make over the limit.

Also, Social Security swears that once I hit full retirement age, they'll give me back the money they've withheld from me. It's not like they'll send me a fat check all at once, though; instead, they'll use some arcane formula to bump up my monthly benefit. In other words, they'll give it back in convenient monthly installments -- an option they didn't give me when they began withholding my benefits. Hmph.

The good news for me is that this is the last time I'll have to deal with this. I'll reach full retirement age in 2024, and no way I'll make $59,520 in the months before I get there. So soon all this folderol will be behind me. I just need to make it to March, when my benefit payments will resume.

But the moral of the story for you guys is this: If you're going to start taking Social Security before your full retirement age, pay attention to your earnings if you go back to work. 

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One more thing: If you have your Medicare premium taken out of your Social Security check, but Social Security starts withholding your benefits, Medicare won't drop you or suspend you. Social Security will simply take the missed premiums out of your check once they start paying you again. Isn't that a nice change from the way private insurance companies operate?

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These moments of hair-pulling blogginess have been brought to you, as a public service, by Lynne Cantwell. Stay safe!

Happy February. Bah, humbug.

I know I hinted about maybe posting more this week about that star-shaped afghan I've been working on because I'd almost finished it. 

Well, I finished it. And it didn't turn out the way I thought it would -- one side of each star point was obviously narrower than the other side. So I ripped the whole thing. The. Whole. Thing. Weeks of work.

I'm starting over, though, and I'm going to be more careful this time. I was pretty cavalier about counting my stitches the first time, and it's possible that's why it didn't turn out the way it should have. Or maybe I should have tried to even things out by blocking the afghan. If it turns out the same way this time, even with careful counting and so on, I'll try blocking it and see if that fixes it. Anyway, you'll get a picture eventually. Maybe.

That's kind of how this last week or so has been going in general, and it's making me grumpy. Or at least I thought that's what was making me grumpy. Then I looked at the calendar, and it all became clear.

I won't bore you again with my antipathy for Valentine's Day; I've written about it it often enough in the past. Instead, I will offer you, Dear Reader, a Valentine, generated for free from the website of the Washington Post. Feel free to follow the link and make your own!

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As long as we're talking about hearts and stuff, I thought I'd mention Medicare. And, what the heck, Social Security, too.

This past week, President Biden kind of pulled a fast one on the Republicans in Congress. He made a big deal during his State of the Union speech about how some of them plan to cut Social Security and Medicare. That is absolutely true, and the White House issued a fact sheet to back him up -- naming names, even. But of course, the Republicans weren't going to admit it in front of 27 million people on live television. So they joined their fellow members of Congress on the Democratic side of the aisle by standing and cheering when Biden said, "we all apparently agree" that Social Security and Medicare will not be cut -- and if a bill containing such cuts does somehow get to his desk, he'll veto it.

It made for great political theater. But we all know how politics works -- or we should by now. The GOP will try to cut the programs anyway; they just won't admit that's what they're doing. They'll call it something else.

One cut/not-a-cut that's been done in the past is to increase the age at which people can collect their full Social Security benefits. My father retired in the mid 1980s at the age of 65. That was full retirement age for everybody back then. But in 1983, saying Social Security was running out of money, Congress began rolling back full retirement age. My full retirement age is 66 and a half; I won't get there 'til next summer. Folks younger than me face a full retirement age of 67. 

The idea was to "save Social Security" by encouraging people to work longer. But it hasn't worked. CNBC has a great analysis of why it has failed. In a nutshell: Congress thought 401(k) plans, which were brand new at the time, would fund a bigger chunk of retirees' income. But not everybody has access to a 401(k) plan at work, and not everybody who has access to one is as diligent as they should be about paying into it. The result? The vast majority of retirees still rely on Social Security for most of their income. (In fact, according to the CNBC article, lower-paid workers are taking Social Security early to supplement their income. When they can't work anymore, their income drops. That's one reason why the poverty rate among seniors is rising.)

Keep that in mind the next time you hear somebody suggest that Social Security should be privatized; that's what 401(k) plans were supposed to do, and it hasn't worked. (Ditto for Medicare Advantage plans, which are supposed to save Medicare but instead are rife with fraud and abuse. I railed against that here not long ago.)

Congress in '83 also thought, somewhat giddily, that American workers would be healthy enough to work longer. While that's true for well-educated White folks with office jobs, it's not universally true. In fact, it discriminates against minorities and those who aren't as well educated. (Even having a cushy office job doesn't guarantee a long life; I watched for years as secretaries I worked with at the BigLaw firm retired, then died just a few years later. Turns out being sedentary is bad for longevity. Who knew?)

Regardless, the Republican Study Committee in the House of Representatives has drawn up a budget that would once again "save Social Security" by rolling back full retirement age some more, phasing in the rollback until folks born in 1978 or later would not reach full retirement age until age 70. 

You know what this would do, right? It would kick the can down the road, just like in '83. As Alicia Munnell, the director of the Center for Retirement Research at Boston College, says in that CNBC article, there are only two ways to fix Social Security: "You can have less money go out or more money come in." And Republicans won't raise taxes. The only solution they'll entertain is to cut benefits -- and as Munnell says, "increasing the retirement age is a benefit cut." Twenty years from now, or sooner, we'll be right back where we are now. 

I suppose eventually, Congress could raise the full retirement age so high that most folks would die before they could collect anything. That'll save Social Security, all right.

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Now I'm getting grumpy again. I'm going to go knit. Happy Valentine's Day.

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These moments of grumpy blogginess have been brought to you, as a public service, by Lynne Cantwell. Stay safe!

Not everything is a sign.

 First, a couple of housekeeping things:

• After I shared last week's post about Medicare, folks who've been through the gantlet reminded me about a couple of things:
• Not everybody pays the same monthly premium for Part B. It's tied to income, so some folks pay more. But I think a majority of folks on Medicare pay the base rate, which is $170.10 for 2022.
• It's a really good idea to shop for a Part D (prescription) plan every year. Insurance companies change their drug formularies at the drop of a hat, so the plan you have this year may not cover your meds next year at the same rate -- or at all, even. You can only change your Part D plan during open enrollment, which runs from October 15 through December 7 every year.
• Today is the 21st anniversary of 9/11. If you're interested in reading (or re-reading) what I experienced that day, here's a link to the blog post I wrote a couple of years ago. (Linking to it saves me from having to type it all out again.)

Okay, onward.

PxHere.com | CC0

If you thought, by looking at the photo, that I was going to write about politics again, you're forgiven. I'm not, though.

A couple of nights ago, I attended a small gathering of fellow Pagans at someone's house. She's kind of out in the country, with a good-sized chunk of land around her house, and so she gets a lot of local fauna roaming through. She also has a permanent labyrinth set up just the other side of her driveway, which is a cool feature that I wish I had enough room to do myself.

We were sitting outside in lawn chairs, socially distanced, next to the labyrinth. And as we talked, various critters made their way around us. This has happened before; during our get-togethers, we've seen a lizard and a few types of birds. It's their land, too, right? They were here before humans got here.

This time, as we chatted, a tarantula trucked across the labyrinth behind us, making for a copse of trees on the far side. It was a good-sized critter, about the size of your hand with your fingers extended. Some of the women got up to get a closer look, but I stayed in my seat. (Now I wish I'd gotten a photo; if I had, I wouldn't have have to resort to a stock photo for this post. Hindsight is 20/20, etc.)

Here's the thing: Our host was convinced that the tarantula was a sign -- for her. She'd never seen one on her property before, and here it was, crossing her labyrinth. And during our meeting, too! She was both fascinated and kinda scared, I think. 

This group tends to talk about animal sightings and What They Could Mean anyway, so I'd brought along my copies of Ted Andrews's books, which I mentioned in a post not too long ago. I looked up tarantulas and found them mentioned in the section about spiders. Andrews says the bite of a tarantula is poisonous, but the effect on an average human is no worse than a bee sting. He also says tarantulas don't weave webs, per se. Rather, they live in holes in the ground and catch food that comes near the rim of their hole. Of spiders in general, he says, their keywords are creativity and the weaving of fate.

A few of the other women at the meeting told our host that autumn is mating season for tarantulas. The females stay in their holes, and the males go walkabout in search of them. They said there was probably a female in a hole in the copse, and our boy was just heading over for a little boom chicka wow.

But our host would not be dissuaded. That tarantula was meant for her. Never mind that there were nearly a dozen of us at the meeting, so it could have been for any of us -- except that it stayed well away from our circle.

As I said last time this came up on the blog, "The biggest trick...is to not read too much into what you're seeing." It was cool to see a tarantula in person. But given the season, I'd say this was a spider doing spider things -- not any sort of message from the Universe.

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These moments of spidery blogginess have been brought to you, as a public service, by Lynne Cantwell. The omicron vaccine is available -- get boosted!

Medicare For All? Forget I said that.

I used to be a big proponent of Medicare for All. But I will be turning 65 in a few months, and now that I'm running the Medicare gantlet*, I have changed my mind. 

Nobody should have to do this -- certainly not anybody who has spent 40 or 50 years of their working life having their health insurance choices dictated to them by their employer. Medicare, as the system stands today, is overly complicated -- very possibly by design. It's also weighted toward private insurance companies. And if things keep going the way they've been going, Medicare as we've known it for generations will very likely cease to exist, only partly because it will "run out of money".

First, a quick primer. Everybody's eligible for Medicare once they turn 65. It has four parts:

• Part A covers hospitalization. It's free, and everybody gets it.
• Part B covers outpatient stuff like doctor visits. It is not free -- this year's premium is $170.10 per month -- and you don't have to get it. But most people do. Together, Parts A and B constitute "Original Medicare".
• Parts A and B don't cover every expense, though, so a lot of people also pick up a Medicare Supplement (a.k.a. Medigap) plan. These are designated by letter (I'd like to get hold of the genius who decided that both Medicare's Parts and Medigap Plans should have letter designations), and while these plans are sold by private insurance companies, the government decrees what's covered under each lettered plan. In other words, if you buy a Plan G, no matter who you buy it from, it has to cover the same stuff as every other Plan G. Below is a chart that I cadged from Medicare and You, the handbook that the government will send you when you enroll. (Ignore Plans C and F; if you turned 65 after January 1, 2020, you can't get them.) Most folks go with either Plan G or Plan N. Now despite that the coverage in each plan is mandated by the feds, premiums vary -- sometimes by a lot. The highest premiums are usually charged by the companies that do a lot of advertising (AARP, I'm looking at you).
  
  
  
• Part D (I'm going out of order intentionally) is drug coverage. It's provided by private insurance companies, and the premiums vary widely. Plus each company has its own formulary, or tiers of drugs they will pay for; just like with the drug coverage you have now, generics are cheapest and brand-name drugs can be hella expensive. Medicare.gov has a search function where you can plug in your prescriptions and your favorite pharmacies, and it will generate a list of Part D plans available to you, which you can then sort by cheapest combined premium and drug costs. Most people who do Parts A and B also pick up a Part D plan.

You can see why people might get bewildered by the choices: You don't just get Medicare, poof! done! You get Parts A and (maybe) B, and (maybe) a Medigap plan, and don't forget your drug coverage. There are a lot of moving parts. Even folks whose employers served up a cafeteria plan might find this overwhelming.

There's another choice, though: You can leave all this confusion behind and go with Part C, a.k.a. Medicare Advantage. You've probably seen lots of ads for MA. It sounds like a terrific deal. Many policies include drug coverage, just like the insurance you have right now. Some policies include dental, hearing, and vision benefits, which Original Medicare doesn't cover even if you buy a Medigap plan. (I'd like to get hold of the genius who decided that Medicare shouldn't cover dentures and hearing aids.) You can even get a policy with a zero premium! How can that not be a great deal?

Well, here's how:

Medicare Advantage is regular old insurance. The vast majority of plans are either HMOs or PPOs, which means each plan has a network of doctors, hospitals, and other healthcare providers that they want you to see. Maybe your primary care doc is in-network, but what if she wants you to see a specialist? You're back to the game of "Do I need a referral?" and "Do they take my insurance?" -- games you don't have to play with Original Medicare.

There's also the matter of out-of-pocket costs. Your MA plan may not charge you a monthly premium, but your maximum annual out-of-pocket cost could be thousands of dollars higher than Original Medicare's -- to the tune of as much as $7,550 in-network or $11,000 out-of-network per year, compared to $233 per year for Original Medicare. (I saw this bullshit with Obamacare over the past couple of years. A whole lot of plans on the exchange have cheap premiums and insane annual deductibles.)

But here's the biggest problem with MA. You see, Original Medicare pays per service: Your doctor provides your care, and Medicare pays the doctor a set price for that care. But MA insurers are paid by the government per customer. Most are for-profit insurance companies, so they have an incentive to pocket as much of that fee as they can -- which means they have an incentive to deny care, sometimes even care that would have been covered without question under Original Medicare. Also, the government pays more for customers with certain diagnoses -- the more diagnoses, the better. So these insurers have been discovered combing customers' health histories and having their customers complete "health risk assessments" to find diagnoses to add to their charts, thereby bilking the government out of $12 billion in 2020 (and, by the way, making their customers look sicker than they are). All of this came out in a hearing held in July by the House Energy and Commerce Subcommittee on Oversight and Investigations. The subcommittee also heard evidence that many MA customers in their last year of life switch to Original Medicare -- an indication that MA plans aren't providing the best care for their sickest customers.

In addition, Sen. Ron Wyden (D-Oregon), who chairs the Senate Finance Committee, is looking into possible deceptive advertising practices by insurers that provide MA plans. Wyden says the federal government received twice as many complaints about MA plans in 2021 as it had in 2020. He's seeking information from 15 state governments about complaints they've received about MA plans.

The percentage of older Americans enrolled in MA plans is expected to top 50 percent within the next couple of years. MA was supposed to save the government money on senior healthcare. But some MA plans cost the government more than they should, and some aren't providing the level of care that Medicare requires them to provide. 

I'm mindful of the fact that conservatives have wanted for years to get rid of Medicare (and Social Security). And my inner conspiracy theorist is urging me to say that it's no accident that Original Medicare is so confusing while MA plans seem so simple. My rational mind is holding my inner conspiracy theorist back. But I will say this: I've set up a spreadsheet for my Medicare choices, and none of them are MA plans.

And when I said before that Americans should have Medicare for All? What I meant was single-payer insurance -- like Medicare's Parts A and B, but better.

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There are a ton of websites and YouTube videos purporting to help you through this process. This video has a good summation of the pros and cons with MA plans, but in linking to it, I'm not endorsing her company in any way.

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*Before somebody says I misspelled gauntlet: A gauntlet is a type of glove. A gantlet is the thing where people form two lines and have you run between the lines while they try to beat the crap out of you -- which is a pretty accurate description of the process of picking Medicare coverage.

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These moments of bloggy clarification have been brought to you, as a public service, by Lynne Cantwell. Stay safe out there!