Medicare Asset

Medicare as an Asset: Why is the subject of changes to Medicare and Social Security such a hot topic on Capitol Hill? Because Medicare and Social Security benefits are among the biggest assets of so many Americans.

Medicare as an Asset: Social Security

Social benefits are not often thought of as an asset. Most people think of wealth only in terms what they personally own. For the majority of Americans that includes equity in a home, a retirement account, and perhaps some investments or bank accounts. Some also have defined benefit pension plans, though they are becoming less common. But for most families, the value of Social Security benefits and Medicare benefits far exceed the value of personally held assets. The present discounted value of those benefits for the average family is around $500,000, significantly more than most have saved up.

The Good and The Bad

In some respects, relying largely on socially held benefits is a good thing. They are protected from the ups and downs of the market. Also, they are protected from inflation because an annual cost of living adjustment is built into these benefits. Further, because they continue for life, unlike private assets, one cannot outlive them.

The bad thing about relying largely on socially held benefits is that they are subject to a great deal of political risk. Congress can change be benefits at any time. Also, except for survivor benefits they cannot be passed on at death. They end when you die.

Medicare as an Asset: Politics

For the very rich, Social Security and Medicare are not viewed as an important asset. If you have millions, you don’t need to worry about social assets. This fact poses a problem for those who rely primarily on those social assets for retirement income.

It is a fact of life that most of the policy makers in Washington, D.C. are among the wealthy elite for whom Social Security and Medicare are not particularly important. A change in the way of figuring the cost of living adjustment that results in each beneficiary receiving just a few dollars less each month seems almost inconsequential to them. However, to the widow living on less than $1,000 per month, almost totally dependent on Social Security, that few dollars may represent a meal or two.

Similarly, a change of a few dollars in the amount of a co-pay for a doctor visit would make no difference to upper-income policy makers. But it may be an important factor in the decision of a lower-income beneficiary to visit the doctor at the first sign of an illness. When that beneficiary waits until the illness becomes so severe that hospitalization is required, the cost to Medicare will be much greater than any amount saved by the increase in the co-pay.

The debates on proposed changes to Medicare and Social Security will be continuing for some time. It is important that middle and lower-income Americans, whose future security depends on the social wealth controlled by these programs, are well represented in these debates. There are a number of interest groups seeking to do this, but the more individuals who communicate with policymakers directly, the more influence they will have.

What Can I do?

You can make sure you have the most affordable Medicare Supplement plan.  In times like these any savings can be helpful.  Call 1-866-466-9118 to speak with a Benefit Advisor today!