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Cypen & Cypen
NOVEMBER 18, 2010

Stephen H. Cypen, Esq., Editor

1.      HOW TO SLANT POLL RESULTS:   In September 2010, Florida League of Cities released results of a poll of registered voters dealing with pay and benefits of police officers and firefighters. Because we believe most questions were not fairly put, we choose to report only results of the first question, which asks what respondents think about salary and benefits provided to police officers and firefighters. Fifty-one percent said they were just about right, twenty-eight percent said they were too low and twenty-one percent said they were somewhat high/too high. The other 20 inquiries beg the question, leading respondents to answers the League apparently wanted. In addition, at least two questions posit (erroneously) that state law provides a service-connection presumption for an injured back. Another question makes it seem as if police officers and firefighters (but not general employees) can participate in a Deferred Retirement Option Program. G.I.G.O.

2.      AGE, NOT FINANCES, DRIVES RETIREMENT TIMING FOR PRE-RETIREE BABY BOOMERS:   Charles Schwab has released findings from its latest quarterly retirement pulse survey designed to understand how pre-retiree baby boomers approach fundamental questions about when it is time to retire. According to the results, 46% of 50-to-60 year-olds have a target date or age in mind, 38% have a target nest egg in mind and 34% have neither. To understand how people actually behave when it comes to subjective targets, Schwab also surveyed a group of retirees. Nearly half said they actually did retire when they reached their target date or age; another 27% said they retired once they had reached their financial target and 38% of retirees said they had no financial, date or age target in mind leading up to retirement. This latest survey also checked in with baby boomers about their feelings on Social Security, and found that, compared to the general population, 50-to-60 year-olds have far higher expectations for Social Security in retirement:

  • Counting on Social Security to supplement retirement savings—55% of 50-to-60 year-olds vs. 37% of all Americans
  • Not counting on Social Security to be a source of income in retirement—26% of 50-to-60 year-olds vs. 46% of all Americans

The traditional three-legged stool of retirement income—Social Security, pension and personal savings—has obviously changed dramatically. At a time when life expectancy and medical costs continue to rise, and the debate around Social Security persists, baby boomers should focus on their own ability to save and find ways to adjust their retirement lifestyles to achieve financial stability.

3.      DOL SUPPORTS REHEARING IN “PRESUMPTION OF PRUDENCE” CASE:     The United States Secretary of Labor, who has primary authority for enforcing and administering Title I of Employees Retirement Income Security Act of 1974, disagrees with a recent decision of the Ninth U.S. Circuit Court of Appeals that unjustifiably created a federal common law in conflict with the statutory prudence standard. Thus, as amicus curiae, she has filed a brief in support of appellants’ petition for en banc reversal of a panel decision, which adopted a version of the presumption of prudence first articulated by the Third Circuit Court of Appeals. By affirming dismissal of the basis of that case, the instant case replaced the objective “prudence” standard of care, embodied in ERISA, with a more lenient, judicially-created standard. Quan v. Computer Sciences Corp., Case No. S09-56910 and 09-56248 (U.S. 9th Cir.) (On Petition for Rehearing en banc).

4.        MEDICARE PREMIUMS AND DEDUCTIBLES FOR 2011 ARE ANNOUNCED:   Centers for Medicare and Medicaid Services has set Medicare premiums, deductibles and coinsurance amounts to be paid by Medicare beneficiaries in 2011. For Medicare Part A, which pays for inpatient hospital, skilled nursing facility and some home health care, the deductible paid by the beneficiary when admitted as a hospital inpatient will be $1,132 in 2011, an increase of $32 from this year’s $1,100 deductible. The Part A deductible is the beneficiary’s cost for up to 60 days of Medicare-provided inpatient hospital care in a benefit period. Beneficiaries must pay an additional $283 per day for days 61 through 90 in 2011, and $566 per day for hospital stays beyond the 90th day in a benefit period. For 2010, the per-day payment for days 61 through 90 was $275, and $550 for beyond 90 days. For beneficiaries in skilled nursing facilities, the daily co-insurance for days 21 through 100 in a benefit period will be $141.50 in 2011, compared to $137.50 in 2010. Those who enroll in Medicare Advantage plans may have different cost-sharing arrangements. All of such Part A program payment changes are determined in accordance with a statutory formula. Approximately 99% of Medicare beneficiaries do not pay a premium for Medicare Part A services since they have at least 40 quarters of Medicare-covered employment. However, some enrollees age 65 and over and certain persons with disabilities who have fewer than 30 quarters of coverage obtain Part A coverage by paying a monthly premium established according to a statutory formula. The premium will be $450 for 2011, a decrease of $11 from 2010. Individuals who have between 30 and 39 quarters of coverage may buy into Part A at a reduced monthly premium rate of $248 in 2011. The monthly premium paid by beneficiaries enrolled in Medicare Part B covers a portion of the cost of physicians’ services, outpatient hospital services, certain home health services, durable medical equipment and other items. The standard Medicare Part B monthly premium will be $115.40 in 2011 a $4.90 increase over the 2010 premium. However, the majority of Medicare beneficiaries will continue to pay the same $96.40 premium amount they have paid since 2008.

5.      SOCIAL SECURITY JUDGES FACE MORE THREATS:   Judges who hear Social Security disability cases are facing a growing number of violent threats from claimants angry over being denied benefits or frustrated at lengthy delays in processing claims. According to The Associated Press, there were at least eighty threats to kill or harm administrative law judges or staff the past year—an 18% increase over the previous reporting period. One claimant called his congressman’s office to say he was going to “take his guns and shoot employees” in the Social Security hearing office. Another man who was denied benefits said he is “ready to join the Taliban and hurt some people.” Yet another man denied benefits told a judge that he was a sniper in the military and “would go take care of the problem.” For some reason, fifty of the incidents came between March and August. Nearly two million people are waiting to find out if they qualify for benefits, with many having to wait more than two years to see their first payment. Judges say some claimants become desperate after years of fighting for money to help make ends meet. About 1,400 administrative law judges handle appeals ofSocial Security disability claims at 150 offices across the country. Many are in leased office space, rather than government buildings. The agency provides a single private security guard for each office building that houses judges. Visitors and their belongings are screened before entering hearing offices and hearing rooms, and receptions desks are equipped with duress alarms to notify the guard immediately of any disturbance.  Very comforting.

6.      NEXT R.I. GOVERNOR SAYS HIS PAY HIKE WILL REWARD WORKERS:    Rhode Island Governor-elect, Lincoln Chafee, says he will accept his pay raise, but will use it to create a fund to reward stellar state employees. Chafee said he will accept the pay hike, which is authorized by state statute, because he did not want to penalize his successor. But, he will take the net amount of the increase and put it toward a fund that recognizes the work of outstanding state employees. reports that Chafee, an Independent, will announce more details of the fund after he is inaugurated in January. Let’s see: the reward should amount to at least 50 cents per employee. However, we guess it is better than a sharp stick in the eye. 

7.      2010 PBGC ANNUAL REPORT:   In Fiscal Year 2010, the Pension Benefit Guaranty Corporation took over failed pension plans covering nearly 109,000 workers and retirees. In addition, the agency helped prevent plan terminations covering 250,000 workers. In total, PBGC is responsible for retirement benefits of almost 1.5 million workers. The agency took in $2.3 billion in premiums and had $7.8 billion in investment income. PBGC’s total obligations increased by $11.5 billion, with a resulting deficit of $23 billion, an increase from $22 billion in 2009. The single-employer program posted a $21.6 billion deficit for 2010, up from $21.1 billion in 2009. The separate multiemployer plan deficit is $1.4 billion, up from $869 million in 2009. PBGC is a federal corporation established by Employee Retirement Income Security Act of 1974 to protect pensions of American workers and retirees participating in private-sector defined benefit plans. PBGC administers two insurance programs. The single-employer program protects nearly 33.8 million workers and retirees in about 26,100 plans. The multiemployer program protects about 10.4 million workers and retirees in about 1,460 plans. PBGC has made uninterrupted on-time payments for pensioners for 36 years. Good news and bad news.

8.      ALL PUNS INTENDED: It happened 24 hours ago but it felt like yesterday.

9.      OXYMORON:    People want to change everything and, at the same time, want it all to remain the same.

10.    AGING JOKES:   Youth is when you're allowed to stay up late on New Year's Eve.  Middle age is when you're forced to.

11.    FABULOUS RANDOM THOUGHTS:  Experience is something you don't get until just after you need it.

12.    QUOTE OF THE WEEK:   “Who timidly requests, invites refusal.” Seneca

13.    KEEP THOSE CARDS AND LETTERS COMING:  Several readers regularly supply us with suggestions or tips for newsletter items? Please feel free to send us or point us to matters you think would be of interest to our readers. Subject to editorial discretion, we may print them. Rest assured that we will not publish any names as referring sources. 

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Items in this Newsletter may be excerpts or summaries of original or secondary source material, and may have been reorganized for clarity and brevity. This Newsletter is general in nature and is not intended to provide specific legal or other advice.

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