Medicare Part B Premiums For Individuals Earning Above $85,000 & Couples Earning Above $170,000

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In 2003, Congress passed the Medicare Prescription Drug, Improvement, and Modernization Act of 2003. One of the provisions of this law was that, beginning in 2007, enrollees who have a “higher income” would pay a higher Medicare Part B premium each month. Specifically, if an enrollee’s “modified adjusted gross income” (* See below for definition) is greater than the legislated threshold amounts ($85,000 in 2012 for an enrollee filing an individual income tax return or married enrollee filing separate tax return, and $170,000 for a couple, both of whom are enrollees, filing a joint tax return) the enrollee is responsible for a larger portion of the estimated total cost of Part B benefit coverage.

(* Modified adjusted gross income (MAGI) is the total of your adjusted gross income and tax-exempt interest income, if any. The amounts of these items are shown on lines 37 and 8b of IRS from 1040 (2011 version, for 2010 tax return.) Some examples of tax exempt interest are interest free state and municipal bonds and interest-exempt dividends from a mutual fund or other regulated investment company.

In addition to the standard Part B premium, affected beneficiaries must pay an income-related monthly adjustment amount. These income-related amounts were phased-in over three years, beginning in 2007. About 4 percent of current Part B enrollees are expected to be subject to these higher premium amounts.

The 2012 Part B monthly premium rates to be paid by beneficiaries who file an individual tax return (including those who are single, head of household, qualifying widow(er) with dependent child, or married filing separately who lived apart from their spouse for the entire taxable year), or who file a joint tax return are shown in the following table. There may be a late-enrollment penalty

Table 1: Part B Monthly Premium

If Your Yearly Income Is
Your 2012 Part B Monthly Premium Is Beneficiaries who file an individual tax return with income Beneficiaries who file a joint tax return with income
$99.90 $85,000 or less $170,000 or less
$139.90 $85,001-$107,000 $170,001-$214,000
$199.80 $107,001-$160,000 $214,001-$320,000
$259.70 $160,001-$214,000 $320,001-$428,000
$319.70 Above $214,000 Above $428,000

Table 2: Part B Monthly Premium Beneficiaries who are married, but file a separate tax return from their spouse and lived with his or her spouse at some time during the taxable year

Your 2012 Monthly Premium is Beneficiaries who are married but file a separate tax return from his or her spouse
$99.90 $85,000 or less
$259.70 $85,001-$129,000
$319.70 Above $129,000

If you are having trouble paying your premiums, Social Security recommends that you contact your State Medical Assistance (Medicaid) office to see if you qualify for some help. Some states refer to the Medicaid office as the Public Aid office, the Public Assistance office, or the State Medical Assistance office. Additional information about the Medicare premiums, deductibles, and coinsurance rates for 2012 is available at Medicare Premiums And Deductibles For 2012, released October 27, 2011.

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Medicare Open Season Through 12/07/11 — Medicare Enrollees Need To Consider Their Options

What Are The Different Parts Of Medicare And What Do They Cover?

It is currently Open Enrollment season for Medicare. You may have seen this on the news or noticed a sudden increase in commercials about health insurance. Open enrollment pertains to signing up for private insurance plans, or for changing from one plan to another. For some reason everyone does this in November, not just those plans which are tied to Medicare. This includes Medicare Advantage plans under Part C of Medicare and prescription drug plans under Part D of Medicare, as well as Medicare supplemental plans, called Medigap plans, which pay for things which Medicare doesn’t, such as deductibles, coinsurance and other things.

Starting with the basics

1. If a wage earner isn’t already entitled to benefits, then he or she signs up for Medicare generally the month he or she attains age 65(*). Applications can be filed from 3 months before that month to three months after, but if the applicant files after that month, SSA will delay entitlement for Medicare. If one is already entitled to Retirement benefits, that person is automatically enrolled in Medicare the month after the month he or she attains age 65(*).

(*) If one’s birthday is the 1st, then SSA considers that he or she attained age 65 the prior month, so the month that actually contains his or her 65th birthday is the date of entitlement to Medicare, not the following month, as is usual.

2. If one is already entitled to either retirement or survivor benefits, or to disability benefits, (i.e., is already a beneficiary) the beneficiary is automatically signed up for Part A and Part B. If the beneficiary is receiving retirement or survivors benefits, he or she will automatically be enrolled with an entitlement date being the month following the month of attainment of age 65, as described above. If the beneficiary is already entitled to disability benefits, he or she will automatically be enrolled for Part A and Part B with an entitlement date being the 25th month of entitlement to disability benefits. In either case, the beneficiary has to make some decisions at this time.

Some Terminology

Part A (otherwise known as Health Insurance, or HI): Part A helps covers the following. There are deductibles, like any health insurance.

* Inpatient care in hospitals
* Inpatient care in a skilled nursing facility (not custodial or long-term care)
* Hospice care services
* Home health care services
* Inpatient care in a Religious Non-medical Health Care Institution

Part A is free.

Part B (otherwise known as Supplemental Medical Insurance, or SMI): Part B helps cover medically necessary services such as:

* Doctor’s services and tests.
* Outpatient care
* Home health services
* Durable Medical Equipment (DME)
* Other Services and Preventive Services

There is an annual deductible amount for Part B.

There is a premium for Part B. In 2011, it is $96.40 per month, which is deducted from the Social Security check. The premium will increase to $99.90 in 2012. In most states, if a person is eligible for both Part B and Medicaid, the state will pay the Part B premium. This is called “State Buy-In”

Doctors who accept Medicare patients are required to accept Medicare’s determination of what they can charge. Medicare pays 80% of this and the beneficiary is responsible for the rest.

Part D, the Medicare Prescription Program.

This is administered for Medicare by private insurance companies approved by Medicare. They have differing premiums (in southern California, these range from about $30 per month up to about $115 per month, the average around $50 or so.) They also have differing rules about deductibles, copayments and or coinsurance, and degree of coverage during the coverage gap period, called the “donut hole.”

This program works as follows, in 2011.

The first $310 of drug costs are paid by the beneficiary. This is the Part D deductible. Some plans require the beneficiary to meet a lesser deductible or no deductible at all.

After this, the beneficiary pays a copayment an/or coinsurance and the plan pays the rest, until the total amount paid by both, including the deductible, if any, reaches $2,840. At that point, the coverage gap begins. Up through 2010, coverage stopped at that point, and did not resume until the beneficiary qualified for catastrophic coverage. This occurred when the beneficiary had spent $4,550 out-of-pocket for the year. After that, the beneficiary only had to pay a small copayment for each drug through the end of the year.

In 2011, during the coverage gap, the beneficiary gets a 50% discount on covered brand-name prescription drugs. This discount is considered to be part of the beneficiary’s out-of pocket-expenses, making it easier to get out of the coverage gap.

In 2012, during the coverage gap, the beneficiary will continue to get the 50% discount on covered brand-name prescription drugs. As in 2011, this discount is considered to be part of the beneficiary’s out-of pocket-expenses, making it easier to get out of the coverage gap. In addition, the beneficiary will pay 86% of the cost of covered generic drugs. These payments will also be part of the beneficiary’s out-of-pocket expenses. In 2012, the beneficiary qualifies for catastrophic coverage when he or she has spent $4,700 out-of-pocket for the year. This ends the coverage gap.

By 2020, the coverage gap will be eliminated. This is part of the 2009 Affordable Care Act, Obamacare to the conservative nitwits.

The various health care plans may offer some additional coverage during the coverage gap. Generally speaking the plans with higher premiums pay better benefits.

What Do I Need To Decide?

The first decision the beneficiary has to make either when his or her entitlement to Medicare begins or during the annual open season is whether to go with traditional Medicare or Medicare Advantage.

* Traditional Medicare consists of Part A and Parts B and/or D, if the beneficiary wants them, along with some kind of Medigap insurance if the beneficiary wants that. Part B will cost $99.90 per month in 2012. Part D premiums can vary quite a bit, as described above. Medigap insurance is something the beneficiary obtains on his or her own; Medicare has no part to play in this decision, although it does provide information about them. See below.

* Medicare Advantage, also referred to as Part C or MA, consists of Parts A and B, along with enrollment in a privately administered, Medicare approved plan. In southern California, most of these plans have little or no premiums, a few have premiums up to about $200 per month. Most of them cover prescription drugs using Part D rules, so there is no need to enroll separately in Part D, unless you pick a Medicare Advantage plan without prescription drug coverage. If you enroll in Medicare Advantage, you cannot buy a Medigap plan, and, according to Medicare, you don’t need it anyway. Most Medicare Advantage plans are either HMOs or PPOs (the great majority are HMOs.) There were only a couple of Fee For Service plans in southern California, and they were restricted to certain unspecified counties.

Medicare puts out a very good publication every year called “Medicare And You.” Newly enrolled Medicare beneficiaries get a copy automatically when they enroll. All Medicare beneficiaries get a copy each year. People who aren’t enrolled in Medicare can obtain a copy by calling 1-800-MEDICARE (633-4227) or view it online at this URL: Medicare And You. This document is about 150 pages long, but it is very informative and easy to read. The .pdf file does not have local price and coverage tables, but the prices and coverages are obtainable at Medicare.gov – The Official U.S. Government Site For Medicare.

http://www.medicare.gov home page (top)

This is the top of the home page. Right in the center is a section entitled “Finding Plans.” The first two choices are links to “Compare Drug And Health Plans” and “Compare Medigap Plans.” Click these and you will be taken to a page where you can obtain information about the drug and health plans, and the Medigap plans available in the local area, which it determines from the ZIP Code which you enter. The paper book has tables in the back for the area where the book is mailed to (although I don’t know if copies requested by non-beneficiaries have these tables.) They may just get a generic, national copy, but the information is on-line.

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DHHS Announces 2012 Medicare Part B Premium – It’s Smaller Than You Think!

The 2012 Medicare Part B Premium Amount

The U.S. Department of Health and Human Services (DHHS) announced that Medicare Part B premiums in 2012 will be lower than previously projected. While the Medicare Trustees predicted monthly premiums would be $106.60, premiums will instead be $99.90. This is an increase of $3.50 for most people. Earlier this year, HHS announced that average Medicare Advantage (Part C) premiums would decrease by four percent and premiums paid for Medicare’s prescription drug plans (Part D) would remain virtually unchanged.

Beneficiaries who became eligible to Medicare in 2010, whose Part B premiums are $110.50 and beneficiaries who became entitled to Medicare in 2011, whose Part B premiums are $115.40, will see their premiums decrease to $99.90.

Deductibles

The Part A deductible paid by beneficiaries when admitted as a hospital inpatient will be $1,156 in 2012, an increase of $24 from this year’s $1,132 deductible. This change is well below increases in previous years and general inflation.

Medicare Part A pays for inpatient hospitals, skilled nursing facilities, and some home health care.

The Part B deductible will be $140, a decrease of $22 from 2011.

Medicare Part B covers physicians’ services, outpatient hospital services, certain home health services, durable medical equipment, and other items.

These decreases in Medicare costs to beneficiaries are attributed by DHHS to overall savings to Medicare caused by the Affordable Care Act, derisively referred to by Republicans as “Obamacare.” It’s easy to see that they do not agree with anything that makes ordinary Americans’ lives easier. Next year, let’s unemploy the lot of them.

For more information, please see Medicare Part B premiums for 2012 lower than projected.

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USMC Veteran Shamar Thomas Faces Down & Scolds 25-30 Cops In Times Square; They Leave

The gruesome violence against unarmed protesters in Oakland by the police made me think of a recent and potentially similar situation in Times Square. In the Times Square situation, a single man, former Marine Sergeant Shamar Thomas, spoke the truth loudly to the police, made them see for just a moment that what they were doing was un-American and without honor, faced them down, caused them to leave the area, and defused the situation before violence occurred.

This happened on October 15, two weeks ago this upcoming Saturday. A group of the Occupy Wall Street protesters had marched from Zucotti Park to Times Square. The police, who were out in large numbers had separated them into several smaller groups and were firmly trying to force them back. The protesters were trying to rejoin together, but the police were preventing this. There was no violence this time, but there were some arrests.

Sergeant Thomas was in one of the smaller groups which was slowly falling back under pressure from the police. Thomas was himself moving toward the police. When he was face to face with them, he started. If you haven’t seen this video, watch it. If you have, watch it again. We need more Sergeant Thomases.

Transcript — it’s a crowd on a street at night with parked police vehicle and at least three kinds of cops, hatted black uniforms, hatted white shirts with megaphones, and helmeted black uniforms, all milling and coming and going, some gathering around, some engaging Sgt. Thomas, eventually walking away from him, defusing the situation.

MARINE SGT. SHAMAR THOMAS wearing camos, walking up the street towards clump of people, cops, calling back over his shoulder: Have a good night, guys. (laughs) See it, baby. They don’t lie. (stopping, holding his chest ribbons out for the cops to see) They don’t lie. They don’t lie. They don’t lie, tough guy. This is not a war zone. This is not a war zone. These are unarmed people. It doesn’t make you tough to hurt these people. It doesn’t make you tough to hurt these people. It doesn’t.

(camera pans around to black-uniformed cops, at least five standing facing him, one has his hand on his nightstick, one has his hand on his holstered gun, one reaches over to put his hand on his holstered gun) (somebody yells something to Sgt. Thomas) I don’t care! I don’t care about these people. I put in my work. It doesn’t lie. (again holding his shirt, schooling the cops) It does not make you tough to hurt these people. There’s nothing tough about it. Nothing. If you want to go fight, go to Iraq and Afghanistan. (camera pans again, it’s eight cops in this clump) But you want to be here, huh? U.S. citizens. Where is that in the contract? Where is that in the contract? Leave these people alone. They’re U.S. citizens. U.S. citizens! U. – S. – citizens! U.S.! It does not make any sense to do this to them! It doesn’t. Stop hurting these people, man! Why are y’all doing this to our people? I been to Iraq 14 months for MY PEOPLE! You don’t get to hurt them! They don’t have guns! They – don’t – have – guns! They don’t! Why are you hurting these people? It doesn’t make any sense! It doesn’t make any sense! How do you sleep at night? There is no honor in this! There is no honor in this! There is no honor in this, man! There is no honor in this shit! There is no honor in this shit! There is no honor! In what you’re doing! Chase people! No honor!

How do you do this to people? How do you do this to people? How do you sleep at night doing this to people? Why do you do this to people? Huh? You’re here to protect them! You’re here to protect them! Protect us! Why are you hurting U.S. citizens? This is the United States of America! Why are you hurting people? If you want to go kill Iraqis, go to Iraq. Why are you hurting U.S. citizens? Why? What’s that do, make you? Do you get honor out of this? You get honor out of hitting these people with batons? Is that what you get? (cop upstreet to his side gestures in our direction, says “Let’s go,” walks toward us, past Sgt. Thomas and camera) Why are you doing this to people? (Now white-shirted officer facing him talks in megaphone, gestures with hand like traffic cop directing people to move away. Cops are in a loose ring around Sgt. Thomas, crowd of people with cameras gather beyond them)

This is unbelievable, that y’all are doing this to people. That y’all are doing this to people. (Camera faces cops, you see their faces, taking it in. “Come on. Let’s go people.”) Why are y’all doing this to people? (One young cop walks up to Sgt. Thomas and says something quietly. Sgt. Thomas is speaking now, not yelling.) No, I know that everybody’s not bad, but why are y’all doing this to people? Y’all walk around and why … this is a war?! (screaming again) These people don’t have guns! (lots of cops and officers are gathered, milling, watching… “crazy”) Okay, maybe I’m crazy … you people … y’all protect … ! (cops say something to him, “back up”) No … me, protecting this country! I under– but I’m not out here trying to hurt these people, I’m not walking around trying to hurt – (Cops are gathered tighter around him — “just keep moving” “but your history doesn’t” “I was in Iraq with you”) So why, so why do you allow this? (“What?”) Why are you walking around trying to hurt people? (camera is tight on cops, conversation officer taking pushy steps toward Sgt. Thomas, “keep walking”, megaphone officer to crowd “Please … just walk down the block please”) And I can’t speak, y’all want to shut me up. Y’all want to shut me up. (Camera pans around again, milling cops and crowd, one cop is filming Sgt. Thomas)

Why are you all walking like there’s a war going on? Nobody has guns! (camera pans and you can see bunch of helmeted cops coming up, stop) Why are y’all treating people like this? This is America! Why are y’all treating people like this? Why are y’all gearing up like this is war? (“… sir, move back”) This is not war! (“Let’s go folks … ”) This is not war! Why are y’all acting like this? No one has guns. It takes a tough guy to act like this. (“Let’s go folks … ”) … put away your guns. Nobody’s trying to hurt you guys. There are no bullets flying out here. (“Folks … “) There are no bullets flying! How tough are you? How tough are you? (three white-shirt megaphone officers meet beyond Sgt. Thomas, turn away, gesture others)

Jump cut

SGT. THOMAS addressing people gathered around, no cops now: There is no honor in hurting unarmed civilians.

FILMING GUY: What did you see today that bothered you?

SGT. THOMAS: I was here October 5th. I saw them beating people – people that had nothing to do with anything, just grabbed them from out of the crowd. There is no honor in that. My mom, my father, everybody has served in Iraq, Afghanistan, where I did 14 months in Iraq. My father was in Afghanistan. My mother did a year in Iraq. We fought for this country. I don’t come home – I’m in New York City! I am from New York City and these cops are hurting people that I fought to protect. There is no reason for this. There’s no rea– There is no honor in hurting unarmed civilians and I won’t let it happen. Have a good night.

Crowd cheers

LADY WITH CAMERA: What’s your name? What’s your name? What’s your name? What’s your name?

SGT. THOMAS: Sgt. Shamar Thomas. I was born in New York. Sgt. Shamar Thomas. I was born in New York.

MAN: … President!

SGT. THOMAS answering guy with camera, gestures down the street: Huh? I don’t know what they’re doing. They walked away. They’re scared.

Sgt. Thomas walks up the street to cheers and handshakes, hugs a guy in a red hoodie.

SGT THOMAS: Did you see that?

For more information on this story, including an interview Sergeant Thomas had with Keith Olbermann a couple of nights later, please refer to The Daily Kos at Marine vet scolds/puts NYPD in their place(AMZNG VID!)Now w/Olbermann interview!

Posted in Political Events Affecting Social Security | 2 Comments

Update on Scott Olsen’s Condition

Former Marine Sergeant Scott Olsen has been upgraded from critical to fair condition. He has been moved from the emergency room to the intensive care unit. His doctors have decided that he will require surgery. I suspect that this will be to remove a portion of his skull, where the fracture is, and leave a opening for as long as it’s needed to accommodate the swelling of his brain. Olsen’s brain is probably swelling in two areas, directly under the fracture, and on the opposite side. This is called a countercoup injury and happens because the brain sits fairly loosely in the skull. A blow on one side of the head will often result in brain injury on the opposite side of the head.

The Daily Kos has analyzed individual frames from the video and has identified which policeman fired the tear gas round at Olsen’s head. The same policeman also threw the flash-bang which chased away the other people who were trying to help Olsen. They have put up Mayor Quan’s phone number and fax number and are urging everyone to call her to demand that she either prosecute this policeman for attempted murder or else resign as Mayor. A recall against Mayor Quan was already underway before these events. Her constituents were already unhappy with the job she was doing as Mayor and had started the process. The attempted murder of Scott Olson by an Oakland Policeman and the lack of any consequential action or even statement on the issue from Mayor Quan will undoubtedly accelerate the process.

Here is a link to this Daily Kos page UPDATED: Oakland Mayor Quan Prosecute This Cop or Resign: Photo Evidence, Scott Olsen Shooting.

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Savage Police Attack On Unarmed Protesters In Oakland – One Critically Injured

From the San Jose Mercury Telegraph (MercuryNews.com) <a href=”http://www.mercurynews.com/breaking-news/ci_19199894″>Occupy Oakland: Iraq vet critically injured by police projectile</a>

OAKLAND — A 24-year old former Marine Corps corporal and Iraqi war veteran remained in critical condition at Highland Hospital on Wednesday night after friends said he was hit in the head with a police projectile in Tuesday’s Occupy Oakland confrontation.

Scott Thomas Olsen, 24, of Onalaska, Wis., was admitted to Highland after he was hit on the head above his right eye during clashes with police, said hospital spokesman Curt Olsen, who is not related to the veteran.

Scott Olsen appears to be the first person nationwide to suffer a serious injury while participating in the Occupy Wall Street movement that has spread to virtually every major American city, and many smaller ones, as millions of people continue to express their anger and disappointment with the country’s banking, regulatory and health care systems.

“It’s absolutely unconscionable that our citizens are going overseas to protect other citizens just to come back and have our own police hurt them,” said Joshua Shepherd, a six-year Navy veteran and friend of Olsen’s, who attended a vigil late Wednesday afternoon for the injured man.

Fellow protesters brought him in after he failed to respond to basic questions. Doctors at the hospital said that Olsen had brain swelling and placed him under immediate supervision. CBS News reports that witnesses state he was hit by a tear gas cannister, which are fired under pressure from a sort of gun.

This happened last night.  There has been no change in his condition.  He is described as having a 2 inch long curved skull fracture and swelling of the brain.

Scott Thomas Olsen. At this point he is unresponsive to questions.

Shortly after this picture was taken, an Oakland Policeman threw a flash-bang grenade into the crowd tending to Olsen. The crowd scattered, leaving the injured Olsen laying on the street by himself. This video clearly shows this happen, near the end. By the way, the Oakland Police Department has denied using flash-bang grenades, even though they can be clearly seen in various videos taken of the confrontation. The videos have shown that every statement made by the police about this confrontation has been a lie.

The demonstrators were unarmed. They were not acting in a hostile manner towards the police or anyone else. The police have claimed that the demonstrators threw plastic water bottles and rocks at them, but no proof of this has been made available. The police also claim that two policemen were injured “when a protester doused them with cans of blue and pink paint.” Since they were helmeted and visored, none of this alleged paint would have gotten into their faces, and again, no proof of any kind has been made public. The protesters have produced many videos showing all aspects of the confrontation. The police are clearly seen acting in a hostile and brutal manner; the demonstrators are just as clearly seen doing nothing but being present. The police have had to repeatedly change their story as these videos come out. They should just start with the truth, but they cannot do that — it would mean admitting a premeditated police riot.

Daily Kos was running a live blog from the scene which you may find interesting. It gives a feel for what was going on last night in Oakland. The link is Liveblog:NYC Marches, Live Video, Jesse La Greca at Denver, Arrests, Nation Marches w/ OccupyOakland.

A voice from an Oakland resident.

“My part of Oakland is full of poor people. There’s at least one murder a week. Old creeps pimp out teenaged girls in broad daylight. You can buy crack or heroin 30 feet from my door, and two of my neighbors have been held up at gun point this summer. And the City of Oakland says they don’t have the police to stop any of that. But a bunch of people protesting the fact that rich people got a bail out and everyone else got nothing? The city shuts them down tight. Bang. Done. Riot act. Do you ever get the feeling you’ve been cheated? I do. Every day.”

— el_gallo, found here.

Oakland Police on the night of October 25, 2011

Posted in Political Events Affecting Social Security | 5 Comments

Just Scrap The Cap

Watch this. It’s hilarious, and has a lot of truth to impart. Text continues below the video (which is just a little over 3 minutes lont.

Senator Patty Murray (D-WA) is collecting signatures for a petition to “scrap the cap!”

Here’s what this means.

Some members of Congress want to cut Social Security benefits to pay for Wall Street’s greed. Even though 401(k)s were decimated by reckless bankers, home values have plummeted, and nest eggs are gone, conservative politicians defend a lower payroll tax rate for millionaires than what is paid by middle class families.

Social Security has a surplus of more than $2 trillion – enough to cover benefits for 25 years or more. It is fully funded by the payroll contributions of American workers; it doesn’t contribute a dime to the nation’s deficit. And now more than ever, Social Security benefits are critical to more than 50 million Americans who rely on them.

Instead of cutting benefits or raising the retirement age, our elected leaders should protect working class families and “Just Scrap the Cap”.

What’s “the cap”?

Right now, everyone pays Social Security taxes only on the first $106,800 they earn, which means most people pay Social Security taxes on their whole paycheck. But after $106,800, no contribution is made to Social Security – so a whole lot of wealthy people don’t pay a dime in Social Security taxes on most of what they make. That’s “the cap”.

Social Security could pay full benefits forever if millionaires simply paid the same Social Security tax rate as most other people do. Heck, we could even afford to improve benefits a bit.

But unless we tell Congress to “Just Scrap the Cap,” they could cut Social Security benefits instead.

Please sign this petition to tell Congress – tell them: No cuts to benefits, and Scrap the Cap! To reach the petition, please go to Just Scrap The Cap.

Effect of “Scrapping The Cap”

The Congressional Budget Office (CBO) is a federal agency within the legislative branch of the United States government. It is a government agency that provides economic data to Congress. The CBO was created as an independent nonpartisan agency by the Congressional Budget and Impoundment Control Act of 1974.

The CBO reported in July 2010 the effects of a series of policy options on Social Security’s “actuarial balance” shortfall, which over the 75 year horizon is approximately 0.6% of Gross Domestic Product (GDP.) The shortfall has increased from about .54% of GDP in the 6 years since 2004. There is a cost for delay. On a GDP of $14.5 trillion, this represents approximately $90 billion per year; the dollar amount would grow along with GDP.

One policy options that the CBO studied was to “Tax (At Current Rates) All Covered Earnings Above the Taxable Maximum; Do Not Increase Benefits.” The purpose of not increasing benefits is that over time, wealthy individuals who paid a lot of FICA taxes would qualify for truly enormous Social Security benefit amounts. This policy change would result in an increase to Social Security’s OASI trust fund of about 0.9%, which would entirely cover the shortfall into the foreseeable future and would result in some surplus besides, which could be used to improve benefits over what they are now.

Posted in Future Of Social Security, Political Events Affecting Social Security | 2 Comments