Edward Cates, Chairman of the Board, TSCL
Poverty has increased among Americans aged 65 and up. According to the most recent U.S. Census Bureau data, it grew from 8.9% in 2020 to 10.3% in 2021. TSCL was concerned to learn that older adults were the only age segment to experience increased poverty in 2021. We are closely watching to learn if more fall into poverty when the 2022 data is released this fall.
Inflation has put unprecedented financial pressures on today’s retired and disabled Social Security beneficiaries, making it more important than ever to work with Congress to prevent more older Americans from sliding into poverty. Here are five legislative priorities that we feel would help.
1. Do more to lower prescription drug costs. Although the recent Inflation Reduction Act reduced some prescription drug costs. There’s more work to be done. The fastest-growing expense that older Americans face is the cost of prescription drugs. Unfortunately, Medicare prescription drug coverage does not lower prices enough to protect retiree finances. Prescription costs have grown 311% since 2000 — an average increase of 13.5% per year. This growth reflects the out-of-pocket spending by those covered by either a Medicare Part D plan or enrolled in a Medicare Advantage plan with drug coverage.
As many as one in three beneficiaries skip filling a prescription due to cost, which often worsens health. High costs also affect our government budget.
2. Add dental coverage to Medicare. The cost of dental services has grown 275% since 2000, growing by 16% from 2022 to 2023 alone. In 2020, dental practices were hit particularly hard by COVID-19 policies which required the complete cancellation of dental services for several months. By 2021, many practices were sold to new management. Those who could hang on had waiting lists as long as one year ahead as practices struggled to locate and hire experienced dental hygienists and other staff. In addition, at least 50% of Medicare patients with no dental coverage pay dramatically higher costs in 2023 because Medicare does not cover routine dental services.
3. Adjust the income thresholds that subject Social Security benefits to tax. About half of all Social Security recipients pay tax on a portion of their Social Security income. Up to 85% of Social Security benefits can be taxable when your “provisional” income is greater than $25,000 (single filers) or $32,000 (joint filers). Provisional income includes your adjusted gross income, one-half of Social Security benefits, and certain non-taxable interest. Unlike tax brackets adjusted annually as wages rise, the income thresholds haven’t been adjusted since the tax first became law in 1984.
TSCL’s surveys indicate that Social Security recipients are very much opposed to the taxation of their benefits, but repealing the tax is tricky because the revenues currently go towards funding Social Security and Medicare benefits. For any legislation to repeal that taxation, there needs to be a way to replace those revenues, or the solvency of Social Security and Medicare Trust Funds would erode sooner than currently forecast.
The Senior Citizens League supports adjustments to the income thresholds that subject benefits to taxation or even abolishing the tax on Social Security if the revenue is replaced by other revenues, such as applying the 12.4% payroll tax to all earnings rather than capping the taxable amount of earnings at 160,200.
You can help us understand your legislative priorities. Please take our 2023 Retirement Survey, and let us know what you think! https://seniorsleague.org/2023-retirement-survey/.