Retirement Matters

September 2021

INFRASTRUCTURE BILLS — Congress is considering two bills to improve the nation’s infrastructure. The first bipartisan infrastructure bill, costing $1 trillion dollars, provides for “hard” infrastructure or physical improvements to roads, bridges, rail, and rural broadband. It has already been approved by the U.S. Senate. The second bill costs about $3.5 trillion and provides funding for human infrastructure that also specifically helps the elderly. In late August, the U.S. House of Representatives approved a budget resolution that had already been passed by the U.S. Senate. Seniors will benefit from changes in the law that would reduce drug costs and include coverage of dental, hearing, and vision care. The price of prescription drugs could be lowered by permitting Medicare to negotiate drug prices with pharmaceutical companies. This savings will be passed on to taxpayers and the 46 million Americans in the Medicare Part D program.

Who Benefits — Defined Benefit retirees receiving State of Michigan retiree health care benefits already qualify for dental, hearing, and vision benefits. So, you may already have coverage for these benefits. Your extended family and friends, however, may not qualify for these benefits now. The proposed change could also help you as it will enhance the quality of life for the elderly community you depend on. In addition, these Medicare improvements would be invaluable to retirees that are also in the Defined Contribution Plan that do not have the State-provided retiree health care and must buy their health insurance privately.

Pressing Forward — Some lawmakers have opposed the total cost of the infrastructure package and want to scale back the overall funding needed to provide these new benefits. The level of benefits is likely to be reduced as negotiations continue to achieve enough votes to pass the measure. It may be easy to dismiss the need for this large increase and say it’s not a priority. Although this may seem like a lot all at once, remember this adjustment is making up for lost time. Medicare benefits have not been increased since 2003 with the inclusion of the Medicare Part D Prescription Drug plan.

Out-of-Pocket — In the meantime, senior’s buying these uncovered benefits have paid for them out of pocket. Individuals paying privately may pay a higher cost for that same expense because it is not subject to the price reductions that can be negotiated by insurers. They can only pay out of pocket if they have the discretionary income to do so, but we know many can’t afford it. This is evidenced by the fact that about 12 million people or nearly 20 percent of those receiving Medicare have incomes so low that they also receive Medicaid.

Eroding Benefits — The cost of health care has increased for decades as retirees have lost purchasing power when cost of living adjustments for out-of-pocket health expenses have not kept pace with inflation. (See the June/July 2021 and August, 2021 “Retirement Matters” columns to read more.) At the same time, seniors have borne the brunt of the pandemic while being infected by COVID-19 in greater numbers than other age groups and paying the associated health care cost while recovering.

Negotiations Continue — Over the upcoming fall months, this legislation will go through the budget reconciliation process, the advantage of which is that it simply requires a majority vote. As lawmakers strive to get the needed votes, proposals will be made to reduce the cost and benefits provided. For example, rather than covering dental, hearing, and vision, perhaps only one will be included. Or, the amount covered for each will be scaled back so that it doesn’t sufficiently cover enough of the cost. This could make the co-pay so high that few seniors will actually receive the care. Scaling back the plan means it covers too little too late to improve retirees’ lives.

MICHIGAN’S ECONOMIC JUMPSTART — Michigan’s Governor Whitmer released a $2.1 billion plan on August 23. The plan is a once-in-a-generation chance to leverage new federal funding from the federal American Rescue Plan Act (ARPA) and make long-term investments in families, communities, and small businesses. Federal funds were made available for states to address the COVID-19 crisis and its negative impact on the Michigan economy.

Three Pillars — These funds will help retirees who are paying the bills for their extended families during these tough times. You may have sons, daughters, or grandchildren who you regularly need to subsidize because they are not making enough. The allocation of these federal funds could help with job training and education to improve their skills. Better jobs may be created by small businesses as they receive incentives to boost wages, ramp up hiring, and provide childcare to families who want to return to work but can’t. In addition, federal funds could assist seniors and their families who need affordable housing. The three essential pillars of the plan include:

  • Growing the middle class and educating more workers — $722 million
  • Supporting small businesses and creating better jobs — $651 million
  • Building housing and investing in communities — $800 million.

State and Local Government — The Governor’s role is to make a recommendation on how to spend these federal funds administered by State government each year. However, the job isn’t done yet as the State House and Senate must also agree to these appropriations before State spending can begin. Billions of ARPA dollars are allocated for Michigan. This includes $6.6 billion in State fiscal relief, $4 billion in local fiscal relief, and more than $3.814 billion in relief for K-12 schools.

Direct Aid — Further aid will be provided directly to the people in Michigan such as the economic impact payments of up to $1,400 per person, support of up to $1,600 per child through the Child Tax Credit, funding of up to $1,000 through the Earned Income Tax Credit (EITC), and lowered Marketplace health insurance premiums. So, stay tuned for future developments on these important programs.

Editor’s note: Joanne Bump currently serves as feature columnist for “Retirement Matters.” Joanne can be contacted by phone at (517) 896-2729 or by e-mail at

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