Missing Money

This column deals with a benefit that 99.9% of eligible beneficiaries either do not know about, or do not take advantage of, and hence, lose a lot of money through no fault of their own.  If you choose not to read it, shame on you.

I recently received my annual letter from my former employer, from which I retired in 1995, to inform me that my retiree health coverage is noncreditable.  What that means is that it is not usable as a replacement for Medicare Part D prescription drug coverage.

The fact is that my prepaid, and therefore premium-free, retiree coverage cannot be used to replace my premium-based Medicare Part D coverage, for which my wife and I pay $1,217 annually.  However, the same letter reminds me that my retiree coverage coordinates benefits with Medicare Part A, B, C and/or D. 

If you are 65 or older and you do not have one of the Advantage plans that coordinates

all Medicare costs,  you  might also have a supplemental plan that has coordination of benefits with Medicare, and that is the reason I wrote this column. 

My supplemental Health insurance plan with United Healthcare guarantees that once I have satisfied the annual deductible of $150 out-of-pocket, any further health care costs will be covered at eighty percent up to $5,000.  My maximum expense is limited to $1,150 of the first $5,000. Beyond that amount different rules and provisions apply, but they don't concern most of us, so I won't go into them here.  Most supplemental health plans are set up in this fashion, so yours is probably similar to mine.

When you visit your doctor, when you are hospitalized, or when you are sent to a clinic for a procedure or test, the bill is first sent to Medicare for payment.  Then it is submitted to your supplemental insurance company for further payment before the unpaid balance is sent to you for payment.

The same billing sequence does not hold true for prescription drugs, though.  They are paid directly from your chosen insurer under Medicare Part D to the supplier of the drugs, and you pay the co-pay amount, usually at time of delivery at the drugstore.  No third party participation takes place.

Why is that important?  It is possible that your supplemental insurer would reimburse you for part of the out-of-pocket costs, and that can be a sizable amount.  If you take any of the non-generic drugs which are always very expensive, you might have to pay up to fifty percent of the cost each time you refill the prescription.  And when you get into the 'donut hole', that stage above the co-pay ($2,850 by 2014 rules; $2,960 in 2015), you pay full cost for those drugs. Your supplemental insurer may cover part of that cost, but you must submit the claim to them to get reimbursed. 

Your next question should be, "How do I do that?"

I'll use my own Medicare Part D provider - Humana Healthcare - and my Medicare supplemental insurance provider - United Healthcare - as my examples, but you should substitute your own insurers. Here is a step-by-step procedure you can follow to claim your reimbursement:

• I call Humana and requested an annual Summary of all Prescription Drug orders.  No matter how many drug stores or mail order providers I used, they will all be summarized at Humana for me in date sequence.
• When I receive the summary in the mail from Humana, I prepare an envelope and a short letter to United Healthcare with my UHC member number, requesting that UHC determine any reimbursement amount and mail me a check for that amount. I send that to United Healthcare.
• When I receive the check from UHC, I deposit it into my bank. It is not taxable income.

It is that easy, but it might be even easier for you.  You might be able to download the annual summary online from your Medicare Part D provider. You should only perform the above steps once per year after the preceding calendar year has expired, so it will likely be done in January or February.

In case you don't think it is worth all that time and effort to collect the reimbursement,

the last time I submitted the Rx summary to United Healthcare, I received a check for almost $2,400, and that was for just one year of prescriptions.  Of course, I have eight prescriptions and two of them are very expensive Stage 3 level drugs.  I usually enter the coverage gap known as the 'donut hole' in June because of those expensive prescriptions.

I'm not going to promise you that you'll get a ton of money back, and some insurers will not go back more than two or three years, but you really should look into it.  You might be pleasantly surprised.

For those of you who are not yet eligible for Medicare, I urge you to find some way to reference this column when you reach age 65, because nobody else is ever going to tell you about this benefit, especially not your health insurer, since it will cost them money

to do so.

When We Were Young

I'm certain that you are probably like me in your tastes, and I am referencing the taste buds, not your aesthetic or lifestyle choices.  Our tactile senses ripen and mature with age just like our mental and emotional ones.  Let me give some examples in my own life...

My wife and I were recently grocery shopping, and we came across a display of huge boxes of Kellogg's Frosted Flakes® for an unbelievably low price.  My memory of the taste of that cereal just kicked in and I grabbed a box and put it in the cart.  Judy looked askance at me and said, "I hope you intend to eat all of those."  I, of course, stated that I would, but I secretly harbored a notion that she would relent and try some, too.  after all, who can resist those crunchy, sugary corn flakes!

Well, when we opened the box for the first time we did share the Frosted Flakes, and we have done so ever since - several times.  It's amazing how far you can stretch one of those family-sized boxes of cereal!  And it is also interesting how different adult taste buds react to something we loved as a kid.  I don't like them as much as I did when I was young, sorry Kellogg   Never again for me.

On our recent trip we were treated to a complimentary breakfast at our hotel every morning.  One morning, there was bacon instead of sausage in the chafing dish, so I decided to try something I haven't had since I was a teenager back home; a sandwich my brothers and I dubbed "the Powgiver".  It was kind of a shortening of the words "power" and "giver", and we had assigned all kinds of mystical attributes to it.  It consisted of two pieces of toast with about four strips of crisp bacon between them - nothing else, not even butter.

Okay, you know the outcome . . . I used up my breakfast appetite on a greasy and mostly tasteless sandwich that didn't recall any of the magic of childhood.  It was, in a word, "blah!"

There is one other breakfast treat from my childhood that I haven't ever been able to find or even come close to duplicating.  My mother used to do a lot of canning, and one of her concoctions was peach butter.  It wasn't anything like what you might sometimes see in a farmers market or grocery store with that label.  This was big chunks of peaches, boiled in simple syrup until it turned thick and orange.  It was great on bread, but we used to put it on waffles with a splash of sweetened condensed milk over it.  It was yummy in the tummy!

I sometimes obsess over waffles and peach butter.  I know my sister has the recipe and has made it in the past, but I've never gotten to share it,  We live several hours apart now.   But I suspect that if I ever did try it, I would be disappointed.  Some things just aren't the same when we get older.  I think I'll just live with my memories of that wonderful meal.

Are You Better Off Now...

We are approaching a November election that promises to be a contentious one at best and a Republican win - predicted by some, but certainly not all prognosticators - in both houses of Congress.  Since it is not a presidential election, the turnout is questionable. That will, in turn affect the results dramatically.  One thing is certain; these elections are always unpredictable.

The question we are always supposed to ask ourselves is, "Are you better off now than you were (X) years ago?"  Usually, X equals 4, but that is the number of years between presidential elections, not congressional cycles.  In this election, the number has to be either 2 or 6, depending on whether you are voting for a representative or a senator. Confusing, isn't it?

There is a whole new field of public relations called Perception Management in which the object is to convince people that a lie - or at least a half-truth - is really completely true. Some have nicknamed it "spin control" while others refer to it as KSI, or "keep saying it."  The idea is the same in both cases; a lie, told often enough and supported by cleverly crafted "facts" can be foisted on a lazy or ignorant public.,

A lot of the political campaign advertising we will see and hear and read over the next month is going to be extremely negative, because the spin masters have determined that it is easier to broadcast innuendo and half-truth about the opposing candidate than it is to publish

the over inflated, or non-existent record for their candidate.  Negative ads will outnumber positive ads by over two-to-one.

When it comes right down to it, the only true gauge of the incumbent politician's record is how it has affected you during his term in office.  Hence, the question...  Are you better off now than you were before?

The answer isn't always that easy to get to for some.  We tend to pay too much attention to those so-call "facts" and base our own personal answer on the reported affects on others.  Many callers to radio talk shows and writers to newspaper opinion columns cite vague instances they've heard or read about to express their own situation.  If challenged to give specifics, more often than not they point to someone else's experience, not theirs.  I call the phenomenon, "I'm okay, but you should see what happened to..." syndrome.

It isn't fair to judge, or form an opinion based on hearsay and rumor.  Certainly you have some personal experience that can be used to support your view.  If not, if you live in a total vacuum, free of any effects from what the politicians do or legislate, then you have no basis for either praise or complaint.  Please vote for the incumbent in all cases.  But, if you have been either positively or negatively affected, use your own experience, not that of some unknown entity or person to cast your vote. 

Now that we've cleared that up, let me propose the question for real...  Are YOU better off today than you were 2 years ago or 6 years ago because of the influence and actions of the incumbent representative or senator who is up for re-election?

If you can answer that question honestly and personally, you are ready to go to the polls on November 6th.  If not, you better begin to concentrate and formulate your response.  Make your vote count for something you truly believe in..

Why We Don't Need a Minimum Wage

There is plenty of talk these days about raising the minimum wage from its current level, $5.75-per-hour for most workers, by a large increment.  President Obama proposes that $10.10-per-hour for federal contract workers is a fair wage, and some would like it to be even higher than that.

I am opposed to any increase of more that a quarter to possibly fifty cents per hour, and I truly don't see a need for it at all right now.  For one reason, I offer that the states have their own minimum wage levels and several are already above the federal minimum.  And for a second, the market always controls wages, and that includes minimum, or as it is truly termed, starting wages. 

Let's face it, nobody who works for an hourly wage stays at minimum wage beyond the first few months of employment.  If they don't get a raise within ninety days, they are most likely to get fired for poor performance instead.  Minimum wage was never intended to be what the politicians term "a living wage."  It is mostly the wage given to teens who are starting a fast-food job or some other part-time or non-skilled job.  And even that is rarely the case, because wages are market-driven, and competitive, so most employers have to offer more than the minimum to get help.

Now, there is one category of help that doesn't get minimum wage; people who work mainly for gratuities.  That includes hotel/motel maids and bellhops, valets at hotels, restaurants and any clubs or associations that offer valet parking, wait staff at restaurants that offer table service and redcaps/skycaps who check bags at the curb.  Those people are paid $2.13-per-hour, and that wage hasn't changed in decades.  I know, because I worked as a skycap for six years after I retired from my airline job.  That was back in the 90s, and I know for a fact that skycaps who worked for my airline while I was employed there between 1966 and 1995 were paid the same $2.13 during that entire period.

If you've never worked at a job where you depend on tips for most of your income, you probably think that $2.13-per-hour is criminal.  After all, a lot of people are too cheap to tip, and some just don't know when and where tipping is appropriate.  Even when you can somewhat count on tips, how much can you make that way?

Let me recount my experience as a skycap.  I worked on weekends only, so my hours were usually around 12-16 in a week.  Even with a ratio of 1-in-3 people giving tips for service and at an average of $1-per-bag, I rarely came home with less than $150. So for two days of work, I was pulling down $18.75-per-hour exclusive of that $2.13 hourly wage.  It was very sufficient to live on.  Had I worked full-time, I could have been making as much as $800-per-week.

I can't tell you that others in restaurants, hotels and such make those kind of tips, but they certainly make "a living wage" without government help.  I, for one, am very generous with my tips, so I like to feel that I contribute to the good service you get as well.

Now, what is the real reason that politicians (or should I reference the Democrats instead) want higher minimum wages?  It is mainly due to the influence of unions, who hold a huge lobby in Washington.  Whenever the minimum wage is raised, it gives the unions the opportunity to use that wage as a basis for raising union wages in contract talks with management.  And I doubt that the unions request their increases in terms of nickels and dimes.  The union bosses demand $$$, and then take back some of that in union dues from each worker.  It is well known that unions contribute heavily to Democrats and the Democrat Party, as well. 

So I say, "minimum-schminimum!"  Pay the workers what they're worth, and market conditions will dictate that much better than some politico sitting on his or her fanny in a plush office looking for campaign money and votes.

New Word/Term

 I have a new word that is perfect for use in conversations between opposing sides in the abortion debate. It is not politically charged like the terms “pro-choice,” “pro-life” and “pro-abortion.”  If you think about it, “pro-choice” really can be taken as either “pro-life” or “pro-abortion” anyway; it doesn’t define your true opinion very well.

Okay, I won’t keep you in suspense any longer.  The word is “prolific.”

pro·lif·ic   /prəˈlifik/  adj.

1. (of a plant, or animal, or person) Producing much fruit or foliage or many offspring.

2. (of an artist, author, or composer) Producing many works.

Synonyms: fertile; fruitful; fecund; productive; rich

The appropriate definition is the first one, since it does refer to a lot of fruit or foliage or, in this case, kids.  The person who claims to be “prolific” is stating that he or she likes many kids, which has to mean they like pregnancy carried to term.

The coolness of the word is that it is sure to confuse the opposition.  The pro-abortion guy or gal won’t really know just what the heck the user really advocates, and therefore will have to listen on to try to determine the mindset and formulate a response.  There will actually be a debate instead of a lot of name-calling.

Now isn’t that an improvement?

Nesting in Iowa

I don't know how many of you followed the Decorah Eagles this year.  I did for a while, but then it got kind of boring to sit and watch nothing happen for minutes and sometimes hours at a time.  I eventually lost interest completely and didn't return.

In case you don't know to what I'm referring, the Decorah Eagles are a pair of bald eagles who have nested for several years in or near the town of Decorah, Iowa, and they had a trio of babies this spring.  There is a webcam set up over the nest to track the eagles 24/7 (not 365, because they do migrate as do all birds.)

You could tune in to the webcam whenever you wanted to and watch the goings on.  In fact, according to Wikipedia, it became one of the most-visited live-stream websites in history. but more on that later...

One of my good friends who stayed with the eagle watch informed me recently that, of the three eaglets, one died when it flew into a power line and was electrocuted, another was apparently mauled by some larger predator and suffered a broken wing and loss of tail feathers, and the third is doing well.  The injured one is being cared for at a rescue center and will probably be returned to the wild soon.

Isn't it prophetic that there were three infants and only two survived infancy, while one of those two was injured and might not have a full life after all.  That is Darwinism at its most basic level, and mirrors life for most species.  Man is the only creature on God's Earth that intervenes and/or interferes with natural selection by salvaging the defective ones. But that is a topic for another column.

While I was researching the material for this column, I ran across the original Wikipedia source for the Decorah Eagles, and I learned a lot of interesting, if unverified, facts.  For one, the original webcam was set up by Raptor Resource Project in 2007 and was used by PBS for a documentary on eagles in 2008.  For another, the 2013 season was missed due to the eagles moving their nest to a new location, which wasn't found and re-equipped with the webcam in time.  I've linked the Wikipedia webpage above so that you can read all you want from it at your leisure.

"And now..." as the late and great commentator, Paul Harvey, coined the phrase, "...you know the rest of the story."

Rules for Lazy Investors

I  could have titled this column "How to become a millionaire" and it wouldn't have been overstated, but many of you would have probably tuned out and just deleted it without even reading the message.  Smart people see that come-on as either a false promise or an outright scam.

Let me clear the air right up front... I cannot promise anyone that they will enjoy great wealth if they read this column and follow the instructions. In fact, I can tell you that I never have been, nor do I expect in the future to be, a millionaire.  However, had I known and practiced what I'm going to tell you shortly from the time I turned 18 and started my working life, I probably would have achieved that goal. 

This is no scam and you won't have to pay me anything; the advice is absolutely FREE. If you follow it, I can almost guarantee that you will, like me, never outlive your savings and have the freedom to keep crossing items off your bucket list.

Rule One: Start early

Begin saving something out of each paycheck from day one.  The amount is up to you, but try to make it at least 5%, five cents of every dollar you get.  Where you put that is also up to you, but try to make it grow both by your contributions and with some kind of internal interest or dividend.

Rule Two:  Live within your means

Limit your purchases to what you can afford to pay for in cash and to what you actually need, not what you want.  The only exceptions to this rule are the purchase of a home, furniture, and a car, but even they should be limited to needs instead of wants.  In other words, don't buy a steak when chicken will fill you up just as nicely.

Rule Three: Trust the power of compounding

Although bank accounts and  bank CDs are currently horrible ways to save, there are alternatives that can pay enough to make your savings grow.  Most have risk involved, but there are ways to minimize risk while maximizing gain.  The best I've found are the no-load index funds of some of the largest and well-known investment companies. No- load because none of the original money you put in is taken as a commission, and index fund because it tracks and invests in all the companies in a particular stock or bond index.

The Standard & Poor's 500 Index is one you may know of, and it has stocks of 500 companies in it, so the risk of some companies performing poorly is compensated for by the other companies doing well.  The risk is lowered by that measure, and the index almost always tracks upward.

I don't know that Albert Einstein said it, but the quote I use is, "there is no greater power than that of compound interest!"  An 18-year-old can put $300 a month into an IRA and with the power of compound interest at 10-percent can retire a millionaire.  However, if he or she starts at age 40, the amount necessary becomes over $1000 a month to get to that same amount.  And most of that million dollars comes from compound interest, as the 18-year old would only save $96,000, while the 40-year-old would have to put away $300,000.  That brings us back to rule one - start early.

Rule Four:  Take every withholding allowance on your W-4

This rule will show how to "find" that extra money for retirement to put into your savings, and for that reason, it is maybe the best rule of all.

The average tax refund for American taxpayers is about $3,000.  That means that after we either self-prepare or pay a tax consultant to figure our income tax due by April 15th, most of us receive a check or direct deposit of around $3,000.  It further means that most of us have overpaid our taxes by that amount, thereby giving our federal government an interest-free loan every single pay period.  What a horrible way to save!

If you are one of those who gets a tax refund every year - and many spend it immediately on non-essentials - here is where your money for retirement savings can be found.  It is very easy to request a W-4 at work, or you can even download one from the IRS Website. It will take you less than an hour to fill it out, taking every allowance you are entitled to, and turn it in to your payroll department or your boss.

Most businesses have a payroll provision to deduct a set amount or percentage from each paycheck to invest in the company 401(k). If yours doesn't have a 401(k) or some other tax-deferred savings plan, you can set up your own plan with an investment firm or even a bank.  Just make sure you don't get access to it without some effort on your part.  You'll be surprised at how easy it is to save, but don't expect huge returns at first.  This brings us to the next rule.

Rule five: Be patient and don't expect miracles

One of the pitfalls of investing in general and compound interest in particular is that the growth of funds takes time, and the rapid growth and large gains only come in the latter stages after the fund has gotten sizeable.  Too often, people lose their patience and decide that they need to do something different with the money.  That is almost always wrong.

The absolute best way to make it to your goal is to buy and hold.  Using the index funds I mentioned earlier, a manager or a group of managers does the buying for you and you just have to wait for the returns.  Managers are not day-traders and they don't take on a lot of risk, instead spreading out your money over many investments for good returns and leaving it to grow.  Even in downturns in the markets, most index funds suffer least and recover the fastest.

Regarding the power of compounding, if you have $100 in your account and it gains a 10% rate of interest, it will grow by about $10 in a year, and by $11 the following year. Once you get a larger amount, say $100,000, it will now grow by about $10,000 in a year, and $11,000 the following year.  In two years it will have grown by 21% to $121.000, even though the interest rate stayed at only 10%.  If you are adding to the fund at the same time, those amounts are even higher.  And if the interest is paid monthly instead of yearly,  it will be more than $121,000.  That is the power of compounding at work.

Here is a short example of patience and compounding paying off and it is my own experience, so I can vouch for it.  I started withdrawing from my IRA ten years ago to supplement my retirement and Social Security income.  Even so, my IRA fund has not only stayed even, it has actually grown over those ten years.  I now have more in the fund than I did when I started withdrawing a substantial monthly amount from it.  I don't think I will outlive my savings, even if I were to live to age 100.

There you have it.  There are only five simple rules to follow, but each one is as important as every other one.  Like I said, I cannot guarantee that you will become a millionaire (I didn't), but I can assure you that you can have a very comfortable and rewarding retirement and if you don't live all the way to retirement, you can at least leave a pretty good nest egg to your heirs.