Something I've always wondered

[pb4uski]

My point is that these so-called "trust funds" are just a paper sham constructed by the government claiming it owes money to itself. The "funds" are really only bookkeeping records of the money that the government has collected under color of the entitlements but immediately spent.

With government bonds held by an outside party, the government has a legal obligation to pay them back. There is no one to whom the government is legally obligated to pay the "trust funds." At some point in the future when the government reduces benefits, try suing and see how far that gets you. Or watch and wait to see if the trustees of the funds sue to get the cash. Watch and wait for a long time, IMO ...

An interesting viewpoint, but what else would you have had the SS Trust Fund invest the trillions of surplus (excess of taxes collected over benefits paid) in?

 

[harllee]

My BCBS ACA plan had a $6000 annual deductible and monthly premium around $600 per month. My Medicare premium is less than $200 per month, supplement G is $103 and Part D drug is $13 and the deductible is under $200 annually. My Medicare is accepted all over the country, my ACA plan was limited to my state with no out of state coverage except emergencies. For me Medicare is much better coverage for half the cost. The only thing I don't like about Medicare is that if I want a complete physical I have to pay for it out of pocket but that is a minor issue. I was so grateful when I turned 65 and got Medicare. I celebrated.

 

[USGrant1962]

That's not health insurance - it is a gamble that they will pay your claims. Lots of unhappy folks out there who thought it was great up until they had a big bill and were denied.

Really? I'm not a proponent or fan of these arrangements, but have never seen any evidence that they have failed as you describe. Reference?

 

[Dtail]

My BCBS ACA plan had a $6000 annual deductible and monthly premium around $600 per month. My Medicare premium is less than $200 per month, supplement G is $103 and Part D drug is $13 and the deductible is under $200 annually. My Medicare is accepted all over the country, my ACA plan was limited to my state with no out of state coverage except emergencies. For me Medicare is much better coverage for half the cost. The only thing I don't like about Medicare is that if I want a complete physical I have to pay for it out of pocket but that is a minor issue. I was so grateful when I turned 65 and got Medicare. I celebrated.

Makes sense for you.
That is one of the continuing issues of the ACA coverage, in that the premiums/OOP/deductibles can have a vast range depending on what state/county one lives, plus of course the MAGI reported.
The only issue I have with my ACA plan is the out of network coverage for out of state medical. Hasn't happened yet, but who knows.
Nevertheless, with the continuing efforts to dismantle the program, Medicare in 2025 for me will be welcomed overall.

 

[Helen]

Really? I'm not a proponent or fan of these arrangements, but have never seen any evidence that they have failed as you describe. Reference?

This would concern me:

"While all of the healthcare sharing programs have strong histories of success, there is no guarantee of payment because, remember, these are voluntary programs and not an actual contract for health insurance benefits. In fact, each group makes it abundantly clear they are not insurance and membership is not a contract."

https://www.kitces.com/blog/healthc...hm-medicare-lhs-samaritan-health-share-plans/

 

[anethum]

Really? I'm not a proponent or fan of these arrangements, but have never seen any evidence that they have failed as you describe. Reference?

There are lots of cautionary tales out there about so-called "health care ministries". The following article has a few examples and links to others:

https://ctmirror.org/2020/03/02/im-...sharing-ministries-as-state-mounts-a-defense/

"But when Corridon submitted his medical bills for coverage, his provider – a religious health care sharing ministry – refused to pay the $280,000 he owed."

"A couple in Texas, who purchased coverage through a sharing ministry associated with Aliera, faced medical bills of $129,000 that the plan would not cover, the Houston Chronicle reported."

"A man in New Hampshire said his doctor recommended back surgery for a disk issue. Aliera and Trinity HealthShare assured him the procedure didn’t require pre-approval. But after the surgery, they declined to pay about $200,000 in medical bills, contending the back pain was a pre-existing condition, according to a story by NPR."

 

[OldShooter]

An interesting viewpoint, but what else would you have had the SS Trust Fund invest the trillions of surplus (excess of taxes collected over benefits paid) in?

Well, the implication of your question is that these paper "trust funds" are the least worst choice. I don't think that is the case.

It seems like this would work quite nicely with an independently chartered and managed sovereign wealth fund. Norway's seems to work with over $1trn in assets. Others, like the Saudis and the state of Alaska have similar but smaller funds.

As a fiduciary, fund management would be prohibited from holding an imprudent position in the securities of a single issuer. The trigger for "imprudent" is often set at 10%, sometimes 15%. That should largely solve the paper trust fund problem.

 

[Gumby]

If the social security trust fund could be invested in private debt and equities, I would expect that almost immediately politicians would be trying to steer that investment in their preferred direction. You would have the out and out graft of course ("invest in the LBO put together by the friend who finances my campaigns"), but also steering driven by ideology ("I don't care if Altria pays a 9% dividend, we can't invest in tobacco stocks", or "we should invest in the Ruritanian market because we want them as our allies against West Nowheristan".) It seems safest simply to have special purpose government debt securities as we do now.

 

[OldShooter]

If the social security trust fund could be invested in private debt and equities, I would expect that almost immediately politicians would be trying to steer that investment in their preferred direction. You would have the out and out graft of course ("invest in the LBO put together by the friend who finances my campaigns"), but also steering driven by ideology ("I don't care if Altria pays a 9% dividend, we can't invest in tobacco stocks", or "we should invest in the Ruritanian market because we want them as our allies against West Nowheristan".)

I agree completely, with the word "trying" double-underlined. That would be the reason for a separately chartered and managed sovereign wealth fund. Some of the political interference might even get through, but not all of it. Witness the Federal Reserve and the constant attempts, mostly unsuccessful, at political meddling there.

It seems safest simply to have special purpose government debt securities as we do now.

Well, we'll differ on that. A political charade is not an "investment" IMO.

 

[Time2]

I tried to do that with my house and car insurance some years back. Wanted to try and get it down to dirt cheap premiums and play the same odds the insurance company was playing. After a certain level of deductible it didn't affect the premium price more than literally a few dollars per year. For me to carry the additional risk beyond their max "canned" deductible didn't pay.


I know medical insurance might math out a bit different but I'm sure the same general rule would apply. Especially as you get older, because the probs of having "A big one" are greater.

RE: the medical insurance. Back in 2010 I had a $2,500 deductible plan for my family of four, I got a premium increase that brought it up to $9,900 a year. I decided I needed to do something to lower it. I found that by raising my deductible to $10,000*, the premium would drop to $4,300!
That is a savings of $5,600. By raising my deductible $7,500, I saved $5,600. in one year.

We had been a healthy family and the most I ever spent on healthcare costs was about $4,500 and that was about twice what we normally spent.
So, I raised my deductible, and put the difference into an HSA. In two years I had my $10k deductible.

Then along came Obamacare, giving my 18% to 24% increases 3 years in a row.

I'm now on Medicare with a Plan G supplement. So far it's great, I'm have PT on my shoulder 3 times a week, no bills.
Except for the Medicare and supplement premium!


* People said I was crazy to get a $10k deductible insurance, (they didn't have $10k). But then, those on Obamacare, found their deductible was over $6,500.

 

[GaryM]

Folk don't get "rich" by ignoring income streams.

 

[ychuck46]

It comes down to fairness

After seeing taxes taken out of their paycheck for years for both SS and Medicare, many have the view that they want some payback for those $ taken from them for so long. If you are suggesting that those with more assets walk away from both programs, then you are suggesting that they are nothing more than wealth redistribution schemes, which in how they are structured SS certainly is.

 

[beowulf]

I support anyone who wants to walk away from either program. In fact I hope lots of folks will. That will keep the programs solvent for a few more days, maybe.

 

[Time2]

The OP used the phrase, "rack up millions to live on".
Certainly at $2M, SS and Medicare are supplements that make a difference.
So, how many millions would the SS and Medicare supplements not make a difference. Where would you place the cutoff point .

 

[Gumby]

When I start social security next year, I'll get $25k per year. I have retiree health insurance from my last employer, but I did recently look at an ACA plan for the young wife and me just to see how much that insurance would cost. A comparable policy would be well in excess of $25k per year. If we assume that Medicare replaces that, then the combination of SS and Medicare will be worth roughly $50k per year to me. Applying the 4% guideline in reverse implies that I would need roughly $1.25 million to cover that nut.

 

[bmcgonig]

When I start social security next year, I'll get $25k per year. I have retiree health insurance from my last employer, but I did recently look at an ACA plan for the young wife and me just to see how much that insurance would cost. A comparable policy would be well in excess of $25k per year. If we assume that Medicare replaces that, then the combination of SS and Medicare will be worth roughly $50k per year to me. Applying the 4% guideline in reverse implies that I would need roughly $1.25 million to cover that nut.

I reckon that when I pick up Medicare and SS (at 70) that each will actually be worth in excess of 1m.

 

[beowulf]

I reckon that, if you wait until 70 to pick up Medicare, you will be paying a 50% penalty. Unless, of course, if you are still working and have coverage through Your employer until age 70.

 

[pb4uski]

.... It seems safest simply to have special purpose government debt securities as we do now.

.... Well, we'll differ on that. A political charade is not an "investment" IMO.

So says the guy who is big-time into government bonds (TIPS).... so a government bond is a totally suitable investment for you but a "political charade" in the case of the SS Trust Fund. Poppycock.

I suppose under your thinking that if the SS Trust Fund were carved out of the U.S.Government and were an entity unto itself like one of the Federal Reserve Banks and then invested in special purpose U.S. government bonds then it would not be a charade?

I agree with Gumby that if the SS Trust Fund could invest more broadly than special purpose U.S. government bonds it would be a disaster.... Wall Street would be paying l kinds of political graft to get a foot in the door. I'll have to admit being curious about the arrangement that the Fed and the Treasury has for these SPE's investing in BlackRock ETFs that the Fed is buying.

 

[bmcgonig]

I reckon that, if you wait until 70 to pick up Medicare, you will be paying a 50% penalty. Unless, of course, if you are still working and have coverage through Your employer until age 70.

I meant only SS at 70. Medicare at normal age.

 

[beowulf]

So says the guy who is big-time into government bonds (TIPS).... so a government bond is a totally suitable investment for you but a "political charade" in the case of the SS Trust Fund. Poppycock.

I suppose under your thinking that if the SS Trust Fund were carved out of the U.S.Government and were an entity unto itself like one of the Federal Reserve Banks and then invested in special purpose U.S. government bonds then it would not be a charade?

I agree with Gumby that if the SS Trust Fund could invest more broadly than special purpose U.S. government bonds it would be a disaster.... Wall Street would be paying l kinds of political graft to get a foot in the door. I'll have to admit being curious about the arrangement that the Fed and the Treasury has for these SPE's investing in BlackRock ETFs that the Fed is buying.

+1000

 

[beowulf]

I meant only SS at 70. Medicare at normal age.

Never mind .

 

[OldShooter]

So says the guy who is big-time into government bonds (TIPS).... so a government bond is a totally suitable investment for you but a "political charade" in the case of the SS Trust Fund. Poppycock. ...

ROFL. Pray tell, do you have any strong feelings on this subject?

I am pretty sure that if I spend $1000, then write a $1000 IOU to myself and put it in my jeans pocket that I am not actually even on the deal. It's the self-dealing aspect that I think is phony.

Re political influence on a special purpose entity like a sovereign wealth fund, that is always a risk that must be guarded against. The politicians love to spend OPM. No news there.

 

[Paulz]

You know that this stuff is bankrupting the country. Seriously - why not just ditch that crap and use your savings?

So this is the same argument phrased differently. Instead of lets tax the "rich" more, it's don't take these Government services you paid into and qualify for.

Does the OP also espouse not taking deductions on income tax as well?

 

[mickeyd]

How selfish of me for having taken my pension from Megacorp. If I would have declined to take the monthly check, there would have been more for others in the corporation. Wonder if it is too late to refund back to them about 10 years of receipts?

 

[Gumby]

How selfish of me for having taken my pension from Megacorp. If I would have declined to take the monthly check, there would have been more for others in the corporation. Wonder if it is too late to refund back to them about 10 years of receipts?

I have long suspected the OP was trolling us, but it wasn't completely clear, so he is still with us. No need to feed him though.