Social Security Administration Releases Key Figures for 2010

By
January 13, 2010

The Social Security Administration (“SSA”) recently released key figures for 2010 that will affect all elderly and disabled individuals who receive program benefits, including social security benefits, supplemental security income benefits, and Medicare benefits. This notice summarizes the changes and their impact on various benefits.
Social Security Retirement

As many seniors already know, there will be no cost-of-living adjustment (or “COLA”) to their social security benefits in 2010. Increases in social security benefits are tied to the Consumer Price Index for Urban Wage Earners and Clerical Workers (“CPI-W”) which is published by the federal Bureau of Labor Statistics. If there is a percentage increase in the CPI-W when comparing the third quarter of the current year to the third quarter of the previous year, there will be a corresponding percentage increase to social security benefits. However, the third quarter 2008 CPI-W number was greater than the third quarter 2009 CPI-W number. Consequently, there is no COLA for 2010 social security benefits. COLAs for 2011 social security benefits will be based on comparing the third quarter 2010 CPI-W number to the 2008 CPI-W number.
Social Security Disability Income

Individuals receive social security disability income (“SSDI”) if they are unable to maintain “substantial gainful employment.” In making the determination of whether someone is able to maintain substantial gainful employment, the SSA will consider whether the individual can perform any “substantial gainful activity” (or “SGA”). In 2010, SGA is defined as $1,000 per month. This is an increase from $980 per month in 2009. In other words, if an individual is capable of earning more than $1,000 per month despite any physical or mental impairment, that particular individual will not be able to receive SSDI.
Supplemental Security Income

Because there is no COLA for 2010, the base monthly supplemental security income (“SSI”) payment will remain at $674 for individuals and $1,011 for married couples. These figures can be reduced based on earned and unearned income.
Medicare

Medicare deductibles and premiums have been increased for 2010 in conjunction with rising health care costs. Many deductibles are offset by supplemental health insurance policies, also known as “Medigap” policies.
Deductibles for hospital coverage under Medicare Part A have been increased for 2010 as follows:

Medicare Part A
(Hospital Insurance)

2010

2009

Days 0 – 60; Patient pays:

$1,100

$1,068

Days 61 – 90; Patient pays:

$275 per day

$267 per day

Days 91 – 150; Patient pays:

$550 per day

$534 per day

If an individual has a qualifying medical stay at a hospital (which means a minimum of three nights) and requires skilled nursing or rehabilitative care from a skilled nursing facility upon discharge from the hospital, Medicare will pay the first 20 days in full. Afterward, the patient is liable for $137.50 per day for the next 80 days and Medicare will pay the balance. This is an increase from $133.50 in 2009. After the 100-day “Medicare coverage period,” the skilled nursing facility will receive payment from the individual, long-term care insurance, or Medicaid. Many “Medigap” policies will pay the $137.50 per day patient liability for days 21 through 100. However, some “Medigap policies” do not have this coverage.
Perhaps the most confusing part of the 2010 Medicare changes is the monthly premium amount for Medicare Part B benefits. Medicare Part B benefits typically provide insurance for outpatient services, such as doctor visits. The 2009 minimum monthly premium for Medicare Part B coverage was $96.40. The 2010 minimum monthly premium is $110.50, a 15% increase. However, most Medicare Part B participants will not pay that monthly increase because monthly Medicare Part B premiums cannot be increased for most participants if there is no corresponding COLA with respect to social security benefits.
Individuals who will have to pay at least the $110.50 monthly premium for Medicare Part B coverage in 2010 include: (1) those who do not have the premium automatically withheld from their monthly social security benefit; (2) those who begin to receive Medicare coverage in 2010; and (3) those who have high incomes. For individuals who have high incomes (in excess of $85,000 for single filers and $170,000 for joint filers), monthly Medicare Part B premiums for 2010 will range from $154.70 to $353.60 depending on the actual amount of income reported on 2008 income tax returns.
The Medicare Part B deductible for 2010 has been increased to $155 from $135 in 2009. After the deductible has been paid, Medicare typically covers 80% of future Medicare Part B services. Again, “Medigap” policies are designed to cover the 20% shortfall. Social Security, Supplemental Security Income, Medicare, and Medicaid benefits are complex and difficult to understand. Ruder Ware’s elder law attorneys are well-versed in these laws and can help guide you through these complexities so you can better understand what benefits you are entitled to and how to maximize them as part of your long-term care and estate planning. If you have questions regarding the above, please contact any of the attorneys in the Trusts & Estates Practice Group of Ruder Ware.

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