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Retirees, Medicare Enrollees Will Benefit From Spending Plan President Signs

New law features AARP-backed gains in financial security, Social Security funding and telehealth

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Kent Nishimura / Los Angeles Times / Getty Images

Older Americans willl be better able to save and plan for their retirement and have more options for getting Medicare services at home under a sweeping 2023 spending bill President Joe Biden signed into law on Dec. 29.

The bipartisan measure, which lawmakers had raced to pass ahead of a Dec. 23 deadline to avert a federal government shutdown, provides a road map for spending through September 2023. The legislation passed the U.S. House of Representatives on Dec. 23 by a vote of 225-201 with one member voting "present." The measure had passed the U. S. Senate on Dec. 22 by a 68 to 29 vote.

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“Older Americans, like Americans of all ages, want elected officials to work together to ensure their health and financial security,” Nancy LeaMond, AARP executive vice president and chief advocacy and engagement officer, says in a statement.

“AARP is pleased that the bipartisan government funding bill addresses important priorities for Americans age 50-plus, including increasing Social Security Administration funding, making it easier to save for retirement and extending critical Medicare benefits.”

Here’s a look at some elements of the law that address the financial and health needs of older adults:

Social Security

The spending law includes $14.1 billion for the Social Security Administration (SSA), an increase of $785 million, or 6 percent, from the previous fiscal year.

AARP had called on Congress to fully fund the administration’s $14.8 billion budget request, which the SSA says it needs to begin reversing a crisis in customer service that older Americans and people with disabilities are feeling after years of funding cuts and staff losses at the agency.

The average wait time for someone calling Social Security’s national phone line has more than doubled in the past year, reaching 34 minutes, and processing claims for disability benefits takes twice as long on average as it did a decade ago, according to SSA data.

“Funding for the Social Security Administration has steadily eroded over the past decade, while the number of people it serves has grown,” LeaMond says. “The higher funding included in this legislation is a needed step to begin to address this customer service crisis, but more must be done.”

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Retirement savings

The new law includes a package of provisions collectively called SECURE 2.0 that will expand workers’ access to retirement plans and older Americans’ ability to contribute to and maintain such accounts. AARP strongly backed the package, which builds on changes to retirement savings adopted in a 2019 bill called the SECURE Act (Setting Every Community Up for Retirement Enhancement).

“While Social Security is the bedrock of retirement income for American workers, individuals want and need additional retirement income,” LeaMond says. 

Among other things, SECURE 2.0 will:

  • Replace the Saver’s Credit, a tax break that can reduce tax bills for low- and moderate-income earners who contribute to qualified retirement plans, with a federal matching contribution of up to $1,000 and make it available to more taxpayers, starting in 2027.
  • Require most employers that offer new 401(k) or 403(b) plans to automatically enroll their employeees, and to annually increase their contribution level, unless the employee opts out. This will begin in 2025. Auto-enrollment more than triples participation in workplace retirement plans, a 2021 Vanguard study found.
  • Require employers to allow part-time workers to join a retirement plan within two years of being hired, rather than having to wait the current three, starting in 2025.
  • Increase from 72 to 75 the age at which individuals must start taking required minimum distributions (RMDs) from their retirement accounts. The change will be phased in from 2023 to 2033.
  • Raise limits on catch-up contributions to 401(k) and 403(b) accounts for people ages 60 to 63, starting in 2025.
  • Provide annual paper statements to workers enrolled in retirement plans, detailing the state of their account and prospective benefit. Companies will still be able to provide electronic statements.
  • Establish a national lost and found database for retirement accounts to help ensure people don’t lose track of money in plans tied to past employers.
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Health care

“The budget package extends several pandemic-era provisions for people on Medicare,” LeaMond says. “These provisions will help many older adults access medical care more easily.”

Telehealth: The spending package will extend for two years — until the end of 2024 — the expansions to telehealth medicine that were put in place in Medicare during the COVID-19 pandemic.

Before the coronavirus hit, Medicare coverage for telehealth was limited, available mainly to people in rural areas for whom getting to a doctor’s appointment was difficult. In March 2020, these virtual visits were made available to all Medicare beneficiaries. In addition, Medicare expanded the types of providers that could get paid for telehealth sessions, enabling nurse practitioners, clinical psychologists and licensed clinical social workers to “see” Medicare patients remotely.

The telehealth changes in the spending law will also allow Medicare enrollees to have remote visits either via video or telephone. Before the pandemic, telehealth visits had to include video, which made it difficult for some beneficiaries with limited or no broadband access.

Hospital at home: The bill would extend a decision by Medicare to allow hospitals to treat some patients — including some who would ordinarily be seen in emergency rooms — in their homes instead of admitting them to a hospital.

This effort began in November 2020, when COVID-19 cases were flooding the nation’s hospitals. It was designed to free up hospital bed space and protect older Americans from being exposed to the virus. Under the spending package, this hospital-at-home expansion will continue through the end of 2024.

Behavioral health: Beginning in 2024, Medicare will increase the number and types of providers the program covers to treat behavioral and mental health disorders. In addition to reimbursing marriage and family therapists and licensed professional counselors, the spending measure provides coverage for intensive outpatient behavioral health services.

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