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The House-approved Build Back Better plan would improve retirement security in more ways than one — that is, if those retiree-friendly provisions pass through the Senate.
The $2 trillion spending bill, which recently passed in the House and is now awaiting revisions or approval in the Senate, includes proposals related to climate change, universal preschool, Medicare expansion and tax credits. Experts say older Americans could benefit from the bill — if certain provisions are left as is — in areas such as healthcare, affordable housing and long-term care.
There’s no doubt one of the most important aspects of retirement planning is how much people save for their future — after all, how much they can invest in a 401(k) or individual retirement accounts over their lifetimes dictate just how comfortably they’ll be living. But Americans also need to consider what healthcare options are available to them, what sort of coverage they’ll be able to receive and what they’ll do when they can no longer care for themselves.
Here are a few ways the Build Back Better plan addresses retirees:
Prescription drugs
The Build Back Better Act would allow Medicare to negotiate drug prices for medications available at a pharmacy or doctor’s office. The current process for determining drug prices varies for the type of medication and how long they have been on the market. This bill offers a few changes, such as imposing a penalty fee for drug companies that raise their prices faster than inflation and laying out the framework for price negotiations.
“We will finally put an end to the days where drug companies could raise their prices with impunity,” the White House said in a statement about its Build Back Better provisions on prescription drugs.
The plan would also lower the cost of insulin — a common expense for retirees, as well as younger Americans, said Max Richtman, president and chief executive officer of the National Committee to Preserve Social Security and Medicare. This provision would begin in 2023, requiring insulin to be no more than $35 per month. “I just talked to someone paying 10 times that for her insulin,” Richtman said.
The White House said it was working to lower out-of-pocket healthcare expenses for seniors, who currently have no cap on how much they pay for their medications. The plan would limit these costs to $2,000 per year under Medicare Part D, the section that covers prescription drugs.
Hearing aids
Medicare currently does not cover hearing, dental or vision but the Build Back Better plan addresses costs for hearing. Changes would not begin until 2023, but it would allow for coverage of hearing aids — an expense that can range drastically, from $1,000 to a few thousands of dollars.
“We’d like to see vision and dental under Medicare as well, but the hearing care is a positive step,” said Richard Fiesta, executive director of the Alliance for Retired Americans.
Long-term care
The spending bill earmarked $150 billion for in-home and community services through Medicaid over the next decade.
Americans don’t always consider long-term care when making their retirement plans, but they should. Already, a 65-year-old couple retiring could expect to pay $300,000 in retirement for healthcare alone, but that doesn’t include the costs of an in-home aide or nursing home, which could amount to thousands of more dollars every month.
The 6% annual increase in funding to these programs would assist in hiring qualified individuals to provide in-home and community service care, as well as provide grants to states and community organizations, Richtman said. The plan would also extend protections against spousal impoverishment for those who are receiving in-home and community-based care.
Paid family leave
If passed, the bill would allow family caregivers four weeks of paid leave, benefiting Americans with children as well as older relatives. “The need for more long-term care is important in an aging society, and also the ability to sustain a stable workforce,” Fiesta said.
Affordable housing
The Build Back Better plan includes additional funding, in the tune of $500 million, for HUD 202 housing, a program that benefits low-income older individuals, said Lisa Sanders, director of media relations at LeadingAge, a professional network of organizations focused on aging. Affordable housing for low-income older adults is a sector that will continue to grow, Sanders said. “More people can’t afford to live in their homes as they get older.”
Although many Americans want to age in place, such as living in their homes the rest of their days, not everyone can do so. For some, it’s a matter of health and support — they need to relocate to a place where they’ll get extra assistance with daily living, such as bathing or feeding. For others, it’s a matter of expense, such as if one spouse dies and the other is unable to afford the home or if their retirement income, including Social Security and any savings, isn’t enough to support their current housing budget.
Plenty of older Americans are already teetering on poverty lines. About 15 million people aged 62 and older were living in poverty in the United States in 2020, according to the Retirement Equity Lab at The New School. That figure is expected to jump 67% — to 25 million Americans — over the next decade. Another analysis, out of the Center for Budget and Policy Priorities, found without Social Security, more than 40% of elderly individuals would be in poverty.
