Social Security Administration Releases Key Figures for 2012

By
December 27, 2011

The Social Security Administration (“SSA”) recently released key figures for 2012 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 these changes and their impact on various benefits.
Social Security Retirement
For the first time in two years, there will be a cost-of-living adjustment (or “COLA”) to social security benefits in 2012. 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 after comparing the third quarter of the current year with the third quarter of the most recent year for which there was an increase, there will be a corresponding percentage increase to social security benefits. The third quarter 2011 CPI-W number was greater than the third quarter 2008 CPI-W number by 3.6%. Consequently, individuals receiving social security benefits will see a 3.6% increase in their monthly payments. COLA’s for 2013 social security benefits will be based on comparing the third quarter 2012 CPI-W number against the third quarter 2011 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 2012, SGA is defined to mean capable of earning $1,010 per month. This amount is $10 more than the amount for 2011. In other words, if an individual is capable of earning more than $1,010 per month in 2012 despite any physical or mental impairments, that particular individual will not be able to receive SSDI.
Supplemental Security Income
Because there is a COLA for 2012, the base monthly supplemental security income (“SSI”) payment will now be $698 for individuals and $1,048 for married couples. These figures may be reduced as the result of earned and unearned income.
Medicare
Although there is a social security benefit increase for 2012, Medicare deductibles and premiums have both increased and decreased for 2012. 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 2012 as follows:

Medicare Part A
(Hospital Insurance)

2012

2011

Days 0 – 60; Patient pays:

$1,156

$1,132

Days 61 – 90; Patient pays:

$289 per day

$283 per day

Days 91 – 150; Patient pays:

$578 per day

$566 per day

If an individual has a qualifying medical stay at a hospital (which means admission for 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. Afterwards, the patient is liable for $144.50 per day for the next 80 days and Medicare will pay the balance. This is an increase from $141.50 in 2011. Many “Medigap” policies will pay the $144.50 per day patient liability for days 21 through 100, but for no further coverage. However, some “Medigap policies” do not have this coverage. After the 100 day “Medicare coverage period,” the skilled nursing facility will receive no further payments from Medicare and the individual, long-term care insurance, or Medicaid, will be responsible.
Perhaps the most confusing part of Medicare cost adjustments 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 2011 minimum monthly premium for Medicare Part B coverage was $115.40, but many Medicare enrollees still had Medicare Part B premiums of only $96.40 in 2011 (which was the 2009 premium amount because Medicare Part B premiums may not be increased unless there is an increase in social security benefits). The 2012 minimum monthly premium for Medicare Part B is $99.90, a 13.4% decrease from the 2011 level. Consequently, many Medicare enrollees will realize an increase in their Medicare Part B premiums in 2012 (from $96.40 to $99.90).
Most individuals will have to pay the $99.90 monthly premium for Medicare Part B coverage in 2012. 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 2012 will range from $139.90 to $319.70 depending on the actual amount of income reported on 2010 income tax returns.
The Medicare Part B deductible for 2012 has decreased to $140. It was $162 in 2011. After the deductible has been paid, Medicare typically covers 80% of future Medicare Part B services in that calendar year. Again, many “Medigap” policies are designed to cover the 20% shortfall.
Social Security, Supplemental Security Income, Medicare, and Medicaid benefits are complex and can be quite difficult to understand. Ruder Ware’s elder law attorneys are well-versed in these various laws and can help guide you through their 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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