2025 Presidential Budget Proposal

Today President Biden released his 2025 Budget. While nothing is guaranteed during the budget negotiations, Biden once again re-affirmed his commitment to protecting and strengthening Social Security and Medicare. While there have been solid strides over the last few years to reign in Medicare costs, prescription drugs in particular, both programs still need major reform.

The upcoming budget includes proposals to

Protect and Strengthen Medicare. The Budget strengthens Medicare by extending the solvency of the Medicare trust.  The proposal increases Medicare taxes on incomes above $400,000 from 3.8 percent to 5 percent..   The Budget also speeds up the pace of negotiation of prescription drug prices, expands the Inflation Reduction Act’s inflation rebates and extends the $2,000 out-of-pocket prescription drug cost cap to non- Medicare participants. The budget proposal also extends the $35 cost-sharing cap for a month’s supply of insulin to the commercial market. 

Protects the Social Security Benefits that Americans Have Earned. The Administration is committed to extending the solvency of Social Security by increasing taxes on higher income earners.

Ensures That Americans Can Access the Benefits They’ve Earned. The Budget also invests in staff, information technology, and other improvements which will improve customer service at SSA’s field offices. If you have spoken to a member about visiting a Social Security office recently you will know how important improved services are.

Read the full proposal 

How Retirement Benefit Policies Impact Your Members

99% of your members will enroll in Social Security and Medicare when they retire.  Social Security is your members largest retirement asset, their only source of lifetime/ inflation protected income and a 25+ year direct deposit stream for the credit union.  Medicare is members largest cost in retirement ($300k for a couple, excluding long term care) and the stakes are high. 1 wrong decision can lead to a lifetime of penalties and burdensome healthcare expenses.

#1 Social Security

We all agree that Social Security needs to be reformed to ensure long term solvency.  The question is how to do this (eg who pays). 

Some of the key proposals include:

• Eliminating State/ Federal Taxation of SSA: Several proposals are on the Hill right now to eliminate both state and federal taxation of Social Security.  Many retirees are surprised when they learn Social Security is taxed.  If the tax is eliminated, SSA will have to make up these funds from other places...

• Delaying Full Retirement Date:  Over the years the definition of 'full retirement date', the age when you are eligible for 100% of your benefit, has been delayed.  Currently age 67, one way for Social Security to increase solvency is to delay full retirement date.  This may be viewed unfavorably by soon to be retirees, particularly those in labor related jobs.

• Increasing Earnings Cap:  Another way to increase solvency is to increase the amount of workers salaries that is subject to Social Security tax.  Today earnings above $160,200 are not subject to the 6.2% (12.4% when including employer tax) but there are several proposals to increase the taxes on higher income earners.

• Modernizing Benefit Calculations: Current Social Security calculations discourage part time work in retirement.  They also provide inequitable outcomes when couples divorce and don't provide family caregivers with earnings credits.  

Why should credit unions care about Social Security?

99% of your members will enroll in Social Security and Medicare when they retire.  Social Security is your members largest retirement asset, their only source of lifetime and inflation protected income.  Its also a 25+ year direct deposit stream for the credit union.

What our data shows

Your female members are disadvantaged by these 1920s policies.  They have 20% lower Social Security benefits and 9 year lower retirement scores.. yet will live 5+ years longer than male partners.  If your female members age into poverty we have a multi-generational problem.

#2 Medicare

You might think that the Medicare tax in your paycheck covers your healthcare costs in retirement.  But the reality is that members are spending $500+ per month (per person) to get full Medicare coverage.  This adds up to over $300k over the course of retirement.  Reform is needed to cap the costs and ensure that members are guided to the right medicare policy for them.

• Prescription Drug Reforms: The restructuring of the Medicare Part D drug benefit is expected to lower drug costs for millions of Medicare recipients, and cap annual out-of-pocket costs at $2,000 per person in 2025 for those with Medicare Part D.
• Medicare Marketing Reforms: Members are aggressively sold Medicare policies.  Medicare has several proposals outstanding to reform Medicare marketing policies, including eliminating marketing subsidies from carriers to agents (which risk promoting policies that pay agents higher commissions).  Increased transparency and clear commission schedules is essential for members to get unbiased advice.

What our data shows:

Members are desperately seeking to be educated on Medicare. They want to be educated, not sold/. As one member recently shared with us:  “The Medicare component of retirement is even more confusing than Social Security. There are people willing to tell you their pitch on that, but they’re all salespeople. I don’t know that I’ve found any independent analysis of what’s best to look for."  - Tom, 63 y.o. credit union member

About Silvur

Silvur is the retirement engagement solution for Americans over 50–the demographic that holds over 80% of US household wealth and is the first generation to retire without the benefit of a pension. Silvur makes it easy to help them, with over 800 classes, powerful calculators and a proprietary Retirement Score to guide complex decisions along the 20-30 year Retirement journey.  Silvur’s always-on technology platform is designed to economically engage all your 50+ members, not just those served by wealth management.  Silvur helps capture and retain direct deposit relationships and uncovers hundreds of millions in new deposit and wealth opportunities.  Support your most valuable member segment, reduce asset flight, and help your members retire fearlessly with Silvur.