Sabrina Feliciano, Public Affairs Specialist, SSA. Lorraine York-Edberg, Regional Director, SHINE

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2 Today s Presenters Presenters John Shreenan, Wealth Management Advisor, TIAA-CREF Sabrina Feliciano, Public Affairs Specialist, SSA Lorraine York-Edberg, Regional Director, SHINE Bette Redgate, Account Service Consultant, BCBSMA

3 Lots of Information! Processes and details change over time, so be sure to request current information when you choose to retire Presentations are in a logical order, but there is overlap between agencies Save your questions until after all presentations are finished Handouts will be posted on The Bulletin in For Employees

4 John Shreenan, Wealth Management Advisor Building Your Financial Plan: A Holistic Process

5 Lifetime Plan for you 1. Create a tax efficient retirement income 2. Coordinate & diversify your investments 3. Planning for incapacity 4. Estate Planning & Leaving a legacy

6 Efficient Income Distribution We want to be able to take money out of our accounts with ease. We want to travel to at least one good place a Year - Africa/Antarctica. 2008/2009 was scary: We learned from it. What issues may you face creating tax efficient retirement income? What strategy do you have to minimize the tax liability of withdrawing more income than you need? How would you draw income in the most tax efficient manner? How would your retirement suffer because of inadequate income planning?

7 Portfolio Management: Coordination and Allocation It s tough to coordinate all of this-it s hard to track all of our accounts. We would like to consolidate. We want to buy low and sell high. 2008/2009 was scary-we learned from it. We fear we are still taking on too much risk. If 2008/09 happened again, it would sink us. What is your process for coordinating asset allocation across so many accounts? What challenges do you face managing asset allocation in the future? Who is responsible for managing the risk and what does that process look like? How do you optimize your asset allocation in order to generate a consistent and predictable flow of income? If 2008/09 happened again, what would be the ramifications to your retirement and legacy?

8 Planning for the Possibility of Incapacity Tom has been taking care of all of this I appreciate that. If he died, I wouldn t know who to turn to. Would we be able to afford catastrophic care? Who do you look to for financial advice? Who steps in if Tom is unable to make day to day financial decisions, and are they prepared to do so? Who else would this affect if you didn t have a plan for Incapacity?

9 Estate Planning We haven t looked at our will in 10 years, and we re not sure about health care proxies. Our assets will be split 3 ways: Whatever is left, they will get. We would like to do more gifting now if we could. We haven t planned enough as it relates to our business. How important is it that you leave money to your children? Is the amount important? What is your strategy to maximize what your children receive and minimize what the government receives in the form of taxes? Aside from leaving some money to your children, how do you want to be remembered? Who would suffer most if you didn't put effective estate planning in place? What planning could you do now that would protect your legacy for your beneficiaries?

10 Retirement Review Plan your next steps

11 Social Security Retirement Planning Sabrina Feliciano, Public Affairs Specialist

12 Who Gets Benefits from Social Security? 56 million people

13 Who Pays for Social Security? Today s Workers & Employers Today s Beneficiaries

14 U.S. Birth Rate Children Per Woman

15 The Number of Workers per Beneficiary is Decreasing

16 America is Getting Older (20% of total population) (14% of total population) (7% of total population) Million

17 Life Expectancy for Those Age 65 Today Men Women U.S. Population White African American Hispanic Asian American Indian 84 88

18 In 2010, Social Security Began Paying More in Benefits than is Collected in Taxes 16

19 Social Security Trust Funds Will Be Able to Pay Only About 75 Cents for Each Dollar of Scheduled Benefits in 2033 Calendar Year

20 Social Security Trust Funds During 2011 Where Does the Money Come From? Payroll Tax Reimbursement from the General Fund of the Treasury Trust Fund Interest 69% 13% 15% Taxation of Benefits 3%

21 Social Security Cost-of-Living Adjustments Effective Date Amount June % June % June % June % June % June % June % June % Dec % Dec % Dec % Dec % Dec % Dec % Dec % Dec % Dec % Dec % Dec % Effective Date Amount Dec % Dec % Dec % Dec % Dec % Dec % Dec % Dec % Dec % Dec % Dec % Dec % Dec % Dec % Dec % Dec % Dec % Dec % Dec %

22 Value of Inflation Protection Example: Worker with average pre-retirement income of $ 30,000 (Retiring at age 66 in 2012) 1 st Year of Retirement Pension $ 13,000/50% Social Security $ 13,000/50% Inflation 3% per year

23 Value of Inflation Protection example continued: Worker with average pre-retirement income of $ 30,000 5 th Year of Retirement Pension $ 13,000/47% Social Security $ 14,632/53% 10 th Year of Retirement Pension $ 13,000/43% Social Security $ 16,962/57% 20 th Year of Retirement Pension $ 13,000/36% Social Security $ 22,796/64% 14

24 How Do You Qualify for You need to work to earn Social Security credits Each $ 1,200 in earnings gives you one credit You can earn a maximum of 4 credits per year Retirement Benefits? Example: To earn 4 credits in 2014, you must earn at least $ 4,800. Earning 40 credits (10 years of work) throughout your working life will qualify you for a retirement benefit.

25 Your Age at the Time You Elect Retirement Benefits Affects the Amount If You re a Worker and Retire At age 62, you get a lower monthly payment At your full retirement age, you get your full benefit You get an even higher monthly payment if you work past your full retirement age

26 Your Age at the Time You Elect Retirement Benefits Affects the Amount For example, if you were born from 1943 through 1954: Age 62 Age 66 Age 70 75% of benefit 100% of benefit 132% of benefit

27 In Addition to the Retiree, Who Else Can Get Benefits? Your Child Not married under 18 (under 19 if still in high school) Not married and disabled before age 22 Your Spouse Age 62 or older At any age, if caring for a child under age 16 or disabled

28 In Addition to the Retiree, Who Else Can Get Benefits? Your Ex-Spouse Marriage lasted at least 10 years Ex-spouse 62 or older Divorced at least two years and you and your ex-spouse are at least 62, he or she can get benefits, even if you are not retired Ex-spouse s benefit amount has no effect on the amount you or your current spouse can get

29 Spouse s Benefit Computation Benefit is 50% of worker s unreduced benefit Reduction for early retirement If spouse s own benefit is less than 50% of the worker s, the benefits are combined Does not reduce payment to worker

30 Who Can Get Survivors Benefits? Your Child if: Not married under age 18 (under 19 if still in high school) Not married and disabled before age 22 Widow or Widower: Full benefits at full retirement age Reduced benefits at age 60 If disabled as early as age 50 At any age if caring for child under 16 or disabled Remarriage after age 60 (50 if disabled) Divorced widows/widowers may qualify

31 Widow or Widower Benefit Computation At full retirement age, 100% of deceased worker s unreduced benefit At age 60, 71.5% of deceased worker s unreduced benefit Reduced benefits on one record at age 60, reduced or unreduced benefit on other record at age 62 or older Full benefits to both widow or widower and divorced widow or widower

32 Full Retirement Age Year of Birth Full Retirement Age 1937 or earlier & 2 months & 4 months & 6 months & 8 months & 10 months & 2 months & 4 months & 6 months & 8 months & 10 months 1960 or later 67

33 Use the Retirement Estimator Convenient, secure, and quick financial planning tool Immediate and accurate benefit estimates Lets you create What if scenarios based on different ages and earnings

34 my Social Security Your Online Account... Your Control... my my Social Security is an easy-to-access, easy-to-use portal to view and update some of your own Social Security information.

35 Who Can Create a my Social Security Account? You must be at least 18 years old and have: A valid address; A Social Security number; and A U.S. mailing address.

36 my Social Security is an Upgrade to Your Password Services If you have been using the old password system As of January 5, 2013, your old password will not work You will need to create a my Social Security account to use our upgraded online services You do not need your old password to create a my Social Security account

37 How To Get Your Online Benefit Verification Letter To get your benefit verification letter: Sign into your account; and Select Get a Benefit Verification Letter. Your letter will be displayed and you may print it or save it for later use.

38 You Can Work & Still Receive Benefits You Can If You Make More, If You Are Make Up To Some Benefits Will Be Withheld Under Full Retirement Age $ 15,480/yr. ( $ 1,290/mo.) $ 1 for every $ 2 The Year Full Retirement Age is Reached $ 41,4000/yr. ( $ 3,450/mo.) $ 1 for every $ 3 Month of Full Retirement Age and Above No Limit No Limit Note: If some of your retirement benefits are withheld because of your earnings, your benefits will be increased starting at your full retirement age to take into account those months in which benefits were withheld.

39 How Do I Apply for Retirement Benefits? Apply online at It is the most convenient way to apply; Call Social Security to schedule an appointment (TTY ); or Apply at your local Social Security office.

40 What Will You Need When Applying for Your Social Security Benefits? Social Security number for each applicant Proof of age (only if date of birth allegation doesn't match Social Security records) Latest W-2 or self-employment tax return Earnings estimate Bank information for direct deposit Information about marriages/divorces Information about military or railroad service

41 Your Benefits Can Be Taxable About 1/3 of people who get Social Security pay income taxes on their benefits. At the end of each year, you ll receive a Social Security Benefit Statement (Form SSA-1099). Use this statement to complete your Federal income tax return to find out if you have to pay taxes on your benefit.

42 Who Can Get Medicare? 65 & older -or- 24 months after entitlement to Social Security disability benefits -or- Amyotrophic Lateral Sclerosis -or- Permanent kidney failure and receive maintenance dialysis or a kidney transplant -or- Exposure to Environmental Health Hazards

43 When Can I Sign Up for Medicare Part B? Medicare Enrollment Periods: Initial at age 65 Special if still working General January-March 58

44 Why Apply Online? Step-by-step help screens guide you through questions Apply from any computer at your own pace Start and stop at any time return later to finish A relative, friend, or caregiver can help Online application is secure

45 For More Medicare Information MEDICARE ( ) TTY

46 Supplemental Security Income (SSI) Who Can Get SSI? Age 65 or older Blind any age Disabled any age Limited income Limited resources Noncitizens must meet special requirements to qualify

47 Social Security s Online Services Online Services for before or after you receive benefits Retirement Estimator Social Security Statement Retirement & Disability Applications Medicare Online Apply for Extra Help With Medicare Drug Plan Costs Retirement/Survivors/Disability Planner Change of Address Medicare Card Replacements Request a Benefit Verification Letter Start or Change Direct Deposit

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49 SHINE Serving the Health Information Needs of Elders New to Medicare Deerfield Academy February 12, 2014 Lorraine York-Edberg Regional SHINE Program

50 The SHINE Program SHINE stands for Serving the Health Information Needs of Everyone SHINE provides free, unbiased insurance information and counseling to Massachusetts Medicare beneficiaries 600 SHINE Counselors available throughout Massachusetts to meet with you one-on-one to review your options

51 What Is Medicare? Health insurance for People 65 years of age and older People under age 65 with certain disabilities People of all ages with End-Stage Renal Disease Managed by Centers for Medicare & Medicaid Services (CMS) Sign up with Social Security or Railroad Retirement Board (RRB) 09/10/

52 Applying for Medicare Apply 3 months before age 65 Don t have to be retired Contact Social Security Enrollment automatic if you get Social Security or Railroad Retirement benefits 09/10/

53 Medicare Part A Most people don t pay a monthly premium for Part A People with less than 10 years of Medicarecovered work Can still get Part A Will pay a premium For information about Part A eligibility Call Social Security 09/10/ TTY users call

54 Medicare Part A Hospital Coverage Premium free for most people Part A covers: Inpatient care in hospitals Inpatient care in a skilled nursing facility Hospice Care services Home Health Care Services

55 Enrolling in Medicare Part B You choose whether or not to enroll in Part B Will pay monthly Part B premium $ in 2014 Initial Enrollment Period (IEP) 7 months, starting 3 months before month eligible General Enrollment Period (GEP) January 1 through March 31 each year Coverage begins July 1 Premium penalty, in most cases 09/10/

56 Medicare Part B Medical Coverage Part B covers: Medically-necessary services or supplies that are needed to diagnose or treat your medical condition Physician services Outpatient hospital services Preventive services Medical Equipment and Supplies Ambulance

57 Enrolling in Medicare Part B Some people can delay enrolling in Part B without penalty If you have employer or union group health plan Based on your or your spouse s current job Will get a Special Enrollment Period (SEP) Sign up within 8 months after coverage ends 09/10/

58 Paying the Part B Premium Taken out of monthly payments from Social Security Railroad retirement Federal government retirement If you are not collecting Social Security it will be billed quarterly by Medicare For information about premiums Call Social Security, Railroad Retirement Board, or Office 09/10/2009 of Personnel Management 58

59 Part B - Preventive Benefits ACA Affordable Care Act provides access to many free preventive benefits Mammograms Some pap smear and pelvic exams Colorectal Screenings Diabetes Self-Management Training/Tests Bone Mass Measurements Prostate Cancer Screening Annual Wellness Visit Update individual s medical & family history Record height, weight, body mass index, blood pressure and other routine measurements Provide personal health advice and coordinate appropriate referrals and health education

60 2014 Gaps in Coverage Medicare does not cover all costs for services received Costs to Medicare beneficiary: $ hospital deductible per benefit period $152 - daily co-pay for days in a skilled nursing facility $147 - annual medical deductible 20% of the Medicare approved amount for services under Medicare Part B

61 The Medicare Card Jane Doe 09/10/

62 ORIGINAL MEDICARE Part A Hospital Insurance Your Medicare Coverage Choices Start Step 1: Decide how you want to get your coverage Part B Medical Insurance OR Step 2: Decide if you need a Prescription Drug Plan MEDICARE ADVANTAGE PLAN (like an HMO or PPO) Part C Combines Part C A, Part B and usually Part D Part D Stand Alone PDP Step 3: Decide if you need to add supplemental medical coverage Medigap Supplement Core or Supplement 1 plan End Part D Drug coverage is limited to plan offered by HMO or PPO. End If you join a Medicare Advantage Plan with drug coverage (MAPD), you cannot join another drug plan and you don t need and cannot be sold a Medigap policy. HP081111

63 Medigap Plans Sold by private insurance companies Only available to people who are enrolled in Medicare Part A & Part B (continue to pay Part B premium & use Medicare Card) Pays second to Medicare only after Medicare recognizes service as a covered service Continuous open enrollment in Massachusetts Medigap plans do not include prescription drug coverage Two Medigap Plan types sold in Massachusetts: Core - leaves some gaps behind (hospital deductible & SNF) Supplement 1 - covers all gaps, foreign travel, but costs more

64 Medicare Advantage Plans Private insurance companies that contract with Medicare to provide coverage comparable to Original Medicare Members must still pay Part B premium Plans usually charge an additional premium & members pay co-pays when receiving services. Plans may add additional benefits (e.g. eye glasses, hearing aids) Plans typically use networks of physicians

65 Medigap vs. Medicare Advantage Original Medicare + Medigap Supplement 1 Higher monthly premium but no co-pays Freedom to choose doctors No referrals necessary Some routine services not covered (vision, hearing) Covered anywhere in US and foreign travel Medicare Advantage Plan Generally lower premiums but has co-pays Generally restricted to network May need referrals for specialists May include extra benefits (vision, hearing, fitness) Only emergency or urgent services provided outside certain area

66 Medicare Supplement (Medigap) Medigap Carriers Plans in 2014 Medicare Supplement Core Medicare Supplement 1 Blue Cross Blue Shield of MA $92.64 $ Fallon $ $ Harvard Pilgrim Health Care Health New England $ $97.00 $ $ Humana $ $ Tufts $ $ United HealthCare $ $216.25

67 Medicare Prescription Drug Coverage Medicare Part D Plans Eligible if an individual has Part A or Part B Available through Stand-alone Prescription Drug Plans (PDP) Medicare Advantage Plans with Prescription Drug Coverage (MA-PD) Voluntary but A late enrollment penalty of 1% per month for each month without creditable coverage and eligible for Medicare Part D

68 Medicare Part D in 2014 Standard plan in 2014 Annual deductible: No more than $310 ($325 in 2013) Coverage gap begins at $2,850 ($2,970 in 2013) The donut hole is shrinking! In 2020 beneficiary cost will be 25% in the coverage gap due to ACA! In the coverage gap you pay Generics 72 % Brands 47.5%

69 Medicare Part D in plans are available Some members receiving Extra Help towards the cost of their drugs will receive either a blue or tan letter, if their plan is changing its premium

70 2014 Annual Open Enrollment Open Enrollment Time Period October 15 th December 7 th Plan change will take place on the first of the following year

71 Open Enrollment Period Every year, every plan changes! Make sure your doctor and hospital accept the plan Make sure all of your drugs are covered (with the fewest restrictions possible) If you elect to do nothing you will be automatically renewed in your current plan Don t forget, all enrollment changes need to be made by December 7 th!

72 There are programs to assist you! Extra Help Lowers prescription drug plan costs throughout the year. Full or Partial Extra Help Medicare Savings Programs 3 different programs to assist with Part B Premiums Qualified Medicare Beneficiary (QMB) Specified Low Income Medicare Beneficiary (SLMB) Qualified Individual 1 (QI-1) Prescription Advantage Helps lower your prescription costs when you reach the coverage gap

73 Bette Redgate, Account Service Consultant Medicare Related Plans- How do you decide what works for you? 73 Blue Cross Blue Shield of Massachusetts

74 Types of Medicare Plans When someone has Medicare A and B they are responsible for Medicare cost sharing- coinsurances and deductibles. This can add up. Medicare Plans can give more benefits and reduce Medicare out of pocket costs. There are several types of plans offered by insurers: Medicare Supplements ( Medigap) Medicare Advantage Plans Medicare Part D drug plans 74 Blue Cross Blue Shield of Massachusetts

75 The Way to Add Coverage to Original Medicare You can get Medicare health care coverage in one of two ways: Original Medicare Starting Point + Medigap Policy Optional Add-on + Medicare Prescription Drug Plan Optional Add-on OR Medicare Advantage Plans Choice of plan types: HMO PPO Most Medicare Advantage Plans include Part D drug coverage. You must continue to pay your Medicare Part B premium for both health care options. 75 Blue Cross Blue Shield of Massachusetts

76 Medigap Plans What is a Medigap Plan? A plan that you add to Original Medicare It pays Medicare s deductible, coinsurance costs for you Also called a Medicare Supplement plan How Medigap Plans Work Show both Medicare and Medigap cards Medicare pays first; Medigap pays balances Continue to Pay Medicare Part B and Pay your Medigap premium People who prefer Medigap plans look for: Freedom to see Medicare providers No referrals, no copayments, added world wide coverage Willing to buy separate Part D plan Premium cost not the most important factor 76 Blue Cross Blue Shield of Massachusetts

77 Medex from Blue Cross Blue Shield 2014 Medicare Gaps Part A Inpatient Hospital Deductible $1,216 Part A Inpatient Hospital Coinsurance Days $304/day Days $608/day Part A Skilled Nursing Coinsurance Days $152/day Part B Deductible $147 per calendar year although certain preventive services are paid in full (Medex Core) $92.64 = Plan Pays (Medex Bronze) $ = Plan Pays Part B Coinsurance* 20% of Medicare Approved amount Outpatient Prescription Drugs Care Received Outside of U.S. 77 Blue *To Cross view Blue Shield Medigap of Massachusetts plans outside of MA please visit Medicare.gov under Resource Locator.

78 Medicare Part D (continued) Coverage Periods in 2014 Medicare Prescription Drug Plans Coverage Period What You Pay with a standard Medicare Prescription Drug Plan Annual Deductible Before benefits begin 100% of the cost of your prescription up to the first $310 in a year I. Initial Coverage Until total retail costs reach $2850 II. Coverage Gap After initial coverage, until Catastrophic Coverage begins You pay copay/coinsurance For covered generics you pay 72% of the costs. For covered brand drugs you pay 47.5% of the negotiated price (excluding dispensing fees) III. Catastrophic Coverage After yearly out-of-pocket costs reach $4550 You pay greater of: $2.55 generic or drugs treated like generics $6.35 all other drugs Or 5% coinsurance Benefits design (deductibles, cost share, and formulary) determine monthly premium. 78 Blue Cross Blue Shield of Massachusetts

79 Medicare Advantage Plans Provides all of Original Medicare benefits, in addition to extra benefits such as routine vision/hearing exams, preventive dental, fitness rebates, could include prescription drugs. An all in one plan! When you join a plan, it becomes primary coverage while you are on it. Members pay co-payments and/or co-insurance when services are received, and follows plan rules such as using network providers for HMO plans. Medicare HMO Plan Designate a Primary Care Physician (PCP) Use In-Network providers for most care Pay co-payments and/or co-insurance Medicare PPO Plan May include Physician-of-Choice (POC) Use either In-Network or Out-of-Network providers; generally pay more for Out-of-Network care Pay co-payments and/or co-insurance * To view Medicare Advantage plans please refer to the Medicare and You 2014 handbook. 79 Blue Cross Blue Shield of Massachusetts

80 Medicare Advantage Plans continued People who prefer Medicare Advantage look for: An all in one plan for lower monthly premiums Extra benefits such as preventive dental, routine vision, hearing, Part D included They are ok with using network Providers They may choose a PPO for a choice of Out of Network Providers benefits They are ok with cost sharing, copayments, coinsurance for services Worldwide Urgent and Emergency Coverage Members are ok with plan rules, ex. HMO requires referrals 80 Blue Cross Blue Shield of Massachusetts

81 Medicare-Related Options Enrollment Initial Eligibility Annual Election Period MADP Disenrollment Period Special Open Enrollments 3 months before your 65 th birthday, the month of your birthday and up to 3 months after. Older than 65, 3 months before electing Part B Medicare due to disability 3 months before to 3 months after your 25 th month of disability Oct. 15 th Dec 07 th, for a Jan 1 st effective date Jan.1 st Feb.14 th If you are in a Medicare Advantage Plan you can switch to Original Medicare. If you switch during this period you will have until Feb. 14 th to join a Medicare prescription Drug plan. Coverage will begin the 1 st day of the following month after the plan gets your enrollment form Special circumstances such as the involuntary loss of heath insurance; just moved out of/into a Plan service area Applies to Applies to Applies to Applies to Medigap Medicare Advantage Medicare Part D Medicare Advantage Medicare Part D Medicare Advantage Medigap Medicare Advantage Medicare Part D Please contact CMS or Plan Carrier for additional information 81 Blue Cross Blue Shield of Massachusetts

82 2014 Medicare Options Brochure from BCBSMA 82 Blue Cross Blue Shield of Massachusetts

83 Which plans and when do I start? Read the Medicare and You Handbook or refer to Go to free Medicare seminars offered by Insurance Companies- Make an appointment with SHINE at your local Senior Center Plan at least 6 months in advance and educate yourself! What makes sense for you and how do you decide? Monthly cost and coverage Do you want to see network providers, or is freedom of choice more important Are you looking for extra benefits beyond Original Medicare benefits? Is out of area coverage important? Medicare Advantage urgent and emergency or Out of Network. Does the Drug formulary and do the prescription copayments and cost sharing meet your needs Every year you can change your plans! 83 Blue Cross Blue Shield of Massachusetts

84 Helpful web links Today s Presenters TIAA-CREF Social Security Administration SHINE Blue Cross Blue Shield of Massachusetts

85 Today s Presenters QUESTIONS