Articles

Recent Articles Of Interest To All

Following articles recently appeared in our Newsletter or derived from other articles of interest to retirees.  Click on the title of the article to link to it.

 You Are Not Too Old To Learn!!  by John Rudy

This article expands previously provided information regarding free on-line courses and other educational material, and free on-line books/articles.  There is also a lot of good video available and I’ll just provide the PBS info in this article. 

1. Courses and lectures

In my last article I referenced some free college courses that I have personally looked into.  I subsequently went to the web to see what else I could find.  There was a lot!!

1a.  Education Portal

The Education Portal has received a lot of publicity and is worth reviewing. http://education-portal.com/articles/Universities_with_the_Best_Free_Online_Courses.html

However, there is considerable variation in quality. It is worth noting that there is a considerable difference between having class notes and actually watching the course itself.  There is quite a mixture in the data below and before you get too excited by the quantity of courses you should review the site.  This is their view of Universities with the Best Free Online Courses.·                        

1a1.            Massachusetts Institute of Tech.  http://ocw.mit.edu/OcwWeb/web/courses/av

More than 1,800 “course” are offered through the school's OpenCourseWare project, supposedly all the courses at the Institute. Courses are in some combination of text, audio and video formats. The link above goes to the area specifically for courses (about 200) “with a high degree of video”.  I tried a few and it is a lot of work to get through the information.

·          1a2      Open University Courses Online  http://www.open.ac.uk/openlearn/home.php

The Open University is the UK's largest academic institution with about 600 courses, many of which are not free.  However, the url above goes to a sub-area in their website that contains free material. Clicking on “browse topics” appears to get you to text versions of the various courses

      1a3      Free Carnegie Mellon Courses Online   http://oli.web.cmu.edu/openlearning/

CMU offers a small number (about a dozen) of free online courses and materials through a program called Open Learning Initiative.

·         1a4      Free Tufts University Courses Online (http://ocw.tufts.edu/TuftsOER)

Courses are sorted by school (i.e., School of Arts and Sciences, School of Medicine, etc.) and include assignments, lecture notes and other supplementary materials. But, for example, Arts & Science had only 15 courses and the material within them is pretty sketchy.

      1a5            Stanford Courses on iTunes U  http://itunes.stanford.edu/

Stanford University has joined forces with iTunes U in providing access to 37 Stanford courses, plus misc other material. Using iTunes these courses can be downloaded and played on iPods, PCs, and Macs and can also be burned to CDs. If you don't have iTunes, you can download it for free. When I looked up astrobiology I found 18 lectures, each 1 hour or more.  Downloading was very slow and I had a lot of trouble with the video. 

      1a6      UC Berkeley  http://berkeley.edu/multimedia/index.php#courses

Hundreds of UC Berkeley courses, both current and archived, are now available as podcasts and webcasts. Courses cover a range of subjects, including astronomy, biology, chemistry, computer programming, engineering, psychology, legal studies and philosophy. Most are on YouTube or iTunes U.  Quality seems to be pretty good.·                                  

      1a7      Utah State University  http://ocw.usu.edu/

Study options include everything from anthropology to physics and theatre arts. These comprehensive text-based courses can be downloaded as zip files or viewed directly on the site. But there isn’t much material.  Electrical Engineering, for example, has only seven courses.  When I opened one of the courses I got a WinZIP folder with hundreds of files, mostly pictures, with no explanation of how to pull them together into a course.

      1a8            Kutztown University's of Pennsylvania http://kutztownsbdc.org/course_listing.asp

Kutztown University's Small Business Development Center offers 90 free business courses on the web topics include accounting, finance, government, business law, marketing and sales. Comprehensive text, interactive case studies, slides, graphics and streaming audio are avaailable. To utilize the material you must become a member, but that is free at their home page.  When I spoke with them I learned that each state in the union has something like this site, but there is no standardization.  Use www.asbdc-us.org to browse what is available.

     1a9            University of Southern Queensland  http://ocw.usq.edu.au/

Ten courses are offered including Introduction to Tourism, which I went through.  All is available as both text and audio, of course with an Australian accent.  They state that this is an “initial” offering so maybe more is coming..

     1a10            University of California, Irvine http://ocw.uci.edu/

The first thing I noticed on their www.uci.edu homepage is that they show the temperature and have a surf report for Newport Beach.  The currently have about 50 courses. I particularly liked Physics 21:Science from Superheroes to Global Warming which addresses, for example, could Superman fly? 

     1a11    Yale University (http://oyc.yale.edu/courselist)

There are a number of ways of acquiring the video on the 25 courses that they make available but by far the best is to use YouTube although their web-page just lists the various download options.  However, for example, when I searched for Yale, course, astronomy I found alll the lectures and they downloaded quickly with decent quality.

    1b            Downloading educational media from iTunes University

iTunes U is a part of the iTunes Store featuring free lectures, language lessons, audio books, and more, which you can download on your iPod, iPhone, or computer. iTunes U is available to everyone at no cost.  I had never heard of iTunes U despite having used iTunes for 3 years.  iTunes says that it can be used on MP3 players though I haven’t done it.

iTunes U has more than 100,000 educational audio and video files from top universities, famous museums, public media organizations, and other cultural institutions from around the world.

First, download iTunes.  To access iTunes U in the iTunes Store:

1.      In iTunes, click iTunes Store (below Store).

2.      Click iTunes U at the top of the iTunes Store window.

To go directly to a specific subject, click the arrow to the right of iTunes U and choose a subject from the menu.

To search iTunes U:

1.      Type your search terms in the Search iTunes Store text field, and then press Enter.

2.      To limit your search to items in iTunes U, choose iTunes U from the pop-up menu next to Power Search.

Your search results appear below.

3.      If there are too many results to list on a single page, click More Results to see additional pages.

To play items downloaded from iTunes U:

1.      In iTunes, click iTunes U (below Library).

2.      Select an item and then click Play.

1c        FEMA Courses  http://training.fema.gov/EMIWeb/edu/completeCourses.asp

FEMA offers a series of free courses so, for example, you could learn about Floodplain Management. Over the years the government has contracted a large amount of courseware, much of which is available and the quality is pretty good.   

2.         Free Books that can be downloaded. 

There is enormous variation in quality of the material depending on how the books were entered into the system.  Some apparently were scanned and then converted to text with poor resultant quality 

2a            http://www.ebooksread.com/ 

This site currently has 242,000 free ebooks from 92,000 authors.  A lot of the material is old as it has passed the copyright protection period and all is in the public domain.  I found it frustrating to skim the material as there is so much.  It is sorted alphabetically and you can search by title or author.  Like Amazon, if you search on an author they list other authors you might want, though their algorithm is peculiar; based on what the downloader also looked for.  When I searched for Agatha Christie (there were two entries) I also got Conan Doyle (which is reasonable) but also Freud and Shakespeare!  You seem to be able to download as .txt or PDF (at least on the titles I looked at).  

2a        Project Guttenberg  http://www.gutenberg.org/catalog/

This site includes “books previously published on paper by bona fide publishers and digitized by them with the help of thousands of volunteers.”  All of Guttenberg’s ebooks can be easily downloaded in a variety of ways: Choose between ePub, Mobipocket, HTML and simple text formats.  No fee or registration is required.  I was surprised at the large number of audio books that are available, including a large number that are computer-generated.  They are looking for proof-readers willing to do as little as 1 page/day, a worthy retirement assignment. 

There are also partners and affiliates to Project Guttenberg with another 100,000 titles (http://www.gutenberg.org/wiki/Gutenberg:Partners%2C_Affiliates_and_Resources)  I have no idea how the contents of these three sites overlap. 

3          Public Broadcasting Video  http://video.pbs.org/

The Public Broadcasting System (PBS) has made a fairly large collection of its videos available free.  For example, there are 46 recordings of the Julia Child cooking show.  But there are far more than that which are not available.  I was looking for I, Claudius and couldn’t find it.  But they do have 122 History videos available!!  However, when I went to the Minuteman Library system I found an 11-hour video disk of the TV show and also a reading from the original book by Robert Graves.  So, once again, perseverance pays off.

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Making The Most Of My New Found Time By John Rudy

Everyone I talked to had said “when you retire you won’t know how you found time to do stuff when you were working” and yet there is a difference in being “busy” and making your time personally productive.  I started off about a year before retirement and want to share what I did, how it worked, and how others can benefit from what I did. 

I quickly realized that I wanted to do a variety of things upon retirement and so set up a notebook to collect ideas.  Here was what I did, and of course everyone will have different lists but many of the categories will be the same.  And in addition to all this I’m actually sleeping later and my blood pressure has dropped. 

-         6 session course on the Civil War at the Bedford Library

-         Jack Beatty at the Winchester Library discussed his 1992 book The Rascal King about James Michael Curly, the corrupt mayor of Boston during the ‘40s and ‘50s.

-         Larry Tye, at the Lexington Historical Society, discussing his new best seller about Satchel Paige, which I’m still in the process of reading.

The home page for the Yale courses is http://oyc.yale.edu/, where you can see what each course is, who the professor is, etc.  Then you can search for it on YouTube.  The course list is at http://oyc.yale.edu/courselist

·        Barry Hass learned, through NPR, of Khan Academy.  They have an interesting site with approximately 1100 short videos (about 20 minutes each) mostly of math and science, but also a big chunk on Economics and Finance.  See  http://www.khanacademy.org/faq.jsp. I haven’t had a chance to look at more than one but this proves, in case anyone ever doubted it, that there is a lot out there for free. 

·        Osher LifeLong Learning is something I have not yet taken advantage of but in the Boston area they work with UMass (http://www.lets.umb.edu/ ), Tufts (www.ase.tufts.edu/lli) and Brandeis (http://www.brandeis.edu/bolli/) to provide reasonably-priced courses.  Osher provided funds to many universities across the country so just search on “Osher” for your area.

·        Luckily I’m not the only one who searches for interesting things to do.  Barry Hass told me about a program at The Boston Playwright’s Theater at Boston University (http://web.bu.edu/bpt/about/index.html ).  Each fall they receive about 500 10-minute plays, make 3 copies of each, and parcel them out in packets of 10 to anyone who wants to review them.  Through a multi-step judging process 50 are chosen for production in a 10-12 hour day in late May.  Three of the 10 were pretty good and unfortunately I’ll miss the 5/26 free production because I’ll be on a safari. 

·        Kim Komando, who styles herself as The Digital Goddess, has a web site with daily computer advice, videos, etc.  Much of the material is free and can be subscribed to.  There is also a subscriber service if one wants to contact her team directly.  The free videos are worth the price of admission and I have a list of my favorite dozen over the last year.  See http://www.komando.com/newsletters/ to view her material and to sign up.

·        I’ve discovered that there are coupons for everything!  Including most restaurants you go to.  Just takes a bit of searching.

·        Start asking for Senior Discounts on everything.  Lots of places (Dunkin Donut, my cleaners, movie theaters, …) have them but don’t advertise the fact.

5. Senior Centers.  I was originally very reluctant to participate in a Senior Center as I figured that everyone there is really old.  That turns out not to be the case.  The Lexington center has ping-pong three times a week and some of the folks are really good.  A few months ago, made aware by the Concord Senior Center Bulletin, we went to Cat on a Hot Tin Roof performed extremely well by The Concord Players.  The dress rehearsal was for seniors and tickets were $5.  I now get the monthly newsletters from 5 of the local senior centers, and they are all on-line
6. Trips. 

·        For years we have wanted to do a safari.  We finally have the time.  After an enormous amount of help from Barry Hantman, a Raytheon employee who has taken 6 safaris, we settled on going to Tanzania.  It is a private safari at an amazingly low cost through a firm from Kenya.  Everything has been done through email. 

·        For a lot of good travel ideas see the book 1,000 Places To See Before You Die by Patricia Schultz.  I have no idea what the list price is as almost everything can be purchased through Amazon or AbeBooks.

·        The National Parks has a $10 LIFETIME Entrance Pass that allows the holder and up to three others to get into the National Parks. See http://usparks.about.com/cs/parkpasses/ht/howtopasssenior.htm for the instructions on obtaining this pass if you are over 62.

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Beware of COBRA Fine Print by John Rudy (Added 12/22/09)

When I was getting ready to retire I was told to expect surprises.  One came my way just recently that is worth sharing with the community. 

    The Background: At the time of retirement Jan and I both took out COBRA to continue our United Healthcare coverage for up to 18 months.  I did this even though I knew that three months later Jan would go onto Medicare and that we would drop that portion of our COBRA.  All seemed to go well and in October Jan went onto Medicare and we started saving money. 

    The Surprise: In November I went to the doctor for a check-up, had the normal set of blood work and then went onto the MEDCO website to order the next three months of medication.  The costs were huge, as if I were back in January.

What happened?  I made about 6 hours of calls to the Pension group, Medco, United Healthcare, Ceridian and Raytheon's Human Resources.  Everyone said, "this doesn't make sense but I can't fix it".  Finally I got to the Resolution group at United Healthcare and they said they'd have it fixed in 48 hours. 

    Wrong: After a bunch more phone calls to United Healthcare and Raytheon Human Resources I learned that when a spouse leaves the medical plan it reverts from a "family" plan to an "individual" plan and that the deductible must be entirely met by the remaining member even though as a family we had met the deductible 6 months earlier.  Senior Human Resources management were helpful but that decision stands. 

The Lesson Learned: So the moral is that if you are going onto COBRA and one spouse will be getting off it before the other, check the fine print to see what the impact is.  It might not be what you anticipate. 

John Rudy

Lexington MA

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2010 Open Enrollment by Joe DeAmbrose

The materials on annual enrollment for 2010 have arrived in the mail. Quite a few members have reacted with dismay to the significant increase in premiums for some of the plans offered. And of course, a continuing deficiency in the annual enrollment process is the failure to provide a notice containing all of the plan options available to retiree groups. If you are not aware, the notification only provides information on the plan in which you were enrolled in the prior year. For example, a few members enrolled only in a dental plan in 2009. As a result, they only received information regarding the dental plan for 2010 even though they continue to be eligible to join one of the medical plans offered. The way it works is that you have to contact the Raytheon Benefit Center and request information on the other plans available to you. The enrollment period ends on November 20th so there is little time to react and it is unlikely that the materials will reach you before that date. You should be able to review the options on the phone and make a change if appropriate and you may want to do that because of the increase in premiums first noted. (The Benefit Center number is 800-358-1231)

As to the premiums, the Plus plan premium stays the same as last year which is somewhere between $51 and $59 a month. The premium apparently varies slightly from locality to locality or from one retiree to the next—not altogether clear why. In any case, the Plus plan premium is clearly much less than the premiums for the other plans made available. Except for the Plus plan, the premiums have skyrocketed compared to 2009. We understand that premiums for other medigap plans have also increased substantially over last year, but increases for Advantage plans seem to be the most pronounced. One Massachusetts member was enrolled in a Blue Cross HMO Advantage plan (not the Raytheon one) and the premium went from $119 to $179 along with increased deductibles and co-pays. By the way, the Raytheon sponsored medigap plans may have higher premiums than other medigap plans of the same insurer and the plans may be very similar. So, it is a good idea to compare the Raytheon sponsored plan with other medigap plans issued by the same insurer on the open market.

The cover letter on the annual enrollment material does note the premium increase in the Advantage plans offered and attributed the increase to a number of factors, including a decrease in Medicare reimbursements to the insurers. 

Whatever the reason, premium costs are way up and the math strongly suggests taking another look at the Plus plan for those having opted to enroll in one of the other Raytheon sponsored plans or an open market plan. With the Plus plan at $50-$60 and a no donut hole coverage prescription drug plan with a premium somewhere around $35-$45, the annual premium cost would be less than $1,200. Keep in mind that the Plus plan provides some prescription drug coverage in the donut hole so a supplemental D plan need not have as many bells and whistles. The Plus plan has an out-of-pocket maximum (exclusive of prescription drug costs) of $1,750 ($145 monthly). The rough math suggests a worse case cost for the Plus plan together with a prescription drug plan of about $245 a month. There is no one size fits all in comparing costs and benefits in these health plans but given the premium increase in so many of the other plans available, the Plus plan may merit a visit.  Time is short so act quickly.             

President Obama Hosts Raytheon MATHCOUNTS

President Obama and Dr. John Holdren, Director of the White House Office of Science and Technology Policy, hosted the winners of the 2009 Raytheon MATHCOUNTS National Competition in the Oval Office last week. The honorary guests included MATHCOUNTS National Individual Champion Bobby Shen, the national championship team from Texas and the second place team from Missouri.

Praise From the President

President Obama praised the finalists for their outstanding achievements and commitment to academic excellence and recognized the volunteer coaches for their invaluable service to the MATHCOUNTS program. He also encouraged the students to continue to develop their special abilities in mathematics for both themselves and the good of the nation.

"Our MATHCOUNTS coaches and volunteers are committed to putting fun and excitement into the math learning experience and making it as challenging and competitive as any school sport,” said Lou DiGioia, MATHCOUNTS executive director. “We know the president is a big proponent of mathematics literacy, and we're honored by his administration's support."

Wickham: Math Can You Take You Anywhere

Pam Wickham, Raytheon vice president of Corporate Affairs and Communications and vice chair of the board of directors of MATHCOUNTS, was also in attendance.

“This visit to the White House is not only a tremendous honor but proof that success in math can take you anywhere, even to meet the President!,” said Wickham. ”MATHCOUNTS and programs such as Raytheon’s MathMovesU are constantly developing fun and innovative ways to encourage our nation’s students to pursue their passion for math.”

The 2009 Raytheon MATHCOUNTS National Competition took place May 8, 2009 at Walt Disney World’s Swan and Dolphin Resort in Lake Buena Vista, Fla. Raytheon Company will serve as the title sponsor of the competition through 2011.

Raytheon’s support of MATHCOUNTS is a component of its MathMovesU program, an initiative designed to engage U.S. middle school students in math and science through interactive learning programs, contests, events, scholarships, tutoring programs and more. Since its inception in 2005, MathMovesU has touched the lives of more than 900,000 students, teachers and parents.

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Answers to Your Health Reform Questions

By Anna Wilde Mathews; The Wall Street Journal ~ Jul 29, 2009

As Congress struggles to move forward with an overhaul of health care, people are focusing on what it might mean to them. Many are concerned and confused, judging by the flood of reader questions I got after last week’s Healthy Consumer column on the possible consumer impact. For an overview of the bills in Congress, you can take a look at that earlier column, as well as a helpful Q&A by Journal reporter Janet Adamy. 

Here’s a first batch of your queries, and some answers. As the debate moves forward, Healthy Consumer will keep addressing the questions you send to anna.mathews@wsj.com. 

How will the health-overhaul bills would affect my current coverage? What will the new requirement for everyone to carry health insurance mean? 

For one thing, your existing health plan will likely be grandfathered in. If you change plans, your new coverage will have to meet various minimum requirements set by the bills. One reader asked if he could keep his current plan, which excludes certain care related to some preexisting health conditions. The answer is probably yes, but he might want to look at switching because the bills would force insurers to sell him a plan that would cover those conditions and wouldn’t be priced based on his health status. 

A.R., in Pahrump, Nev., wondered who was exempt from the individual mandate. Other readers asked what happens if they can’t afford the health plans and don’t qualify for subsidies. In the House bill, people could apply for waivers in cases of “hardship,” though “we just don’t know what that means,” says Karen Pollitz, a professor at Georgetown. The bill leaves it to regulators to define. Other groups that are exempt include children, “nonresident aliens,” expats and people who obtain religious exemptions. 

The Senate health committee bill has more outs. They include an exemption for coverage gaps of as many as 90 days, and an affordability clause that says a consumer can’t be required to buy coverage if she isn’t able to find a plan with premiums that add up to less than 12.5% of her income. 

How will the health-overhaul bills impact retiree benefits from former employers? 

The broad answer is that these folks will be affected just like anyone else – they will be required to have health coverage that meets certain minimum requirements, whether from a former employer or some other source. The House bill actually has a provision that could temporarily help defray the cost of retiree coverage, with reinsurance for certain expensive claims. The Senate health committee bill has a similar provision. 

However, David Certner, legislative policy director for AARP, warns that any change in the law may give some employers a pretext to back away from retiree coverage, even if it doesn’t really affect them. “It could be an excuse,” he says. 

When will the health overhaul’s provisions go into effect? 

That depends on when – and whether – a final bill passes, and the timing of that is increasingly unclear. It now looks like both the House and Senate will vote on bills after Congress’ August recess. 

If President Obama does sign a bill this year, its effects are likely to phase in over time. The biggest provisions of the House bill and the version passed by the Senate’s health committee both kick in in 2013. Those provisions include the requirement that insurance companies issue policies to anyone who applies, regardless of preexisting health conditions, and the new mandates for the minimal benefits every insurance plan must include. The health-policy analysis firm Avalere Health has put together this table of implementation dates. 

Where are copies of bills and other relevant information? 

The latest versions may not always be online, but here are some places to start. 

For side-by-side summaries, you can try the Kaiser Family Foundation. 

The House bill, developed by three major committees and since passed by two of them, can be found on the Web site for the House Energy and Commerce Committee. That’s the panel that hasn’t yet passed it.

The Senate Health, Education, Labor and Pensions Committee has passed a bill, which is on posted on the committee’s Web site. 

The Senate Finance Committee hasn’t yet passed a bill, but the chairman did post a white paper with various policy options. 

How will the overhaul affect Medicare? 

The short answer is: too soon to tell, because the Senate Finance Committee has yet to release a final bill. President Obama addressed some issues related to Medicare in an event with AARP members (here’s the transcript). 

Broadly, there are likely to be trims to the reimbursement paid to hospitals, nursing homes and other health-care providers. Major cuts are also extremely likely to the private plans sold under the Medicare Advantage name. 

On the upside for Medicare beneficiaries, there are likely to be some new goodies. For instance, the drug industry has promised them a 50% discount on the cost of brand-name drugs during the non-covered “donut hole” in Part D benefits. And the House bill actually phases out the donut hole altogether, though it will take until 2023 for it to completely vanish. Coverage of preventive services is also likely to be boosted. But I’ll wait to address this more fully when we know what the Senate Finance bill looks like. 

Write to Anna Wilde Mathews at anna.mathews@wsj.com 

Copyright 2009 Dow Jones & Company, Inc. All Rights Reserved

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Very helpful  - Attorney's Advice - NO CHARGE

Read this an d make a copy for your files in case you need to refer to it someday. Maybe we should all take some of his advice!


A corporate Attorney sent the following out to the employees in his company.

1.  Do not sign the back of your credit cards. Instead, put "PHOTO ID REQUIRED."

2.  When you are writing checks to pay on your credit card Accounts, "DO  NOT" put the complete account number on the "For" line.

Instead, just put the last four numbers. The credit card company knows the rest of the number, and anyone who might be handling your check as it passes through all the check processing channels won't have access to it.

3.  Put your Work Phone # on your checks instead of your Home Phone.

If you have a P O Box use that instead of your Home Address. If you do not have a P O Box, use your Work Address.

Never have your SS # printed on your checks.
You can add it if it is necessary. I dont think this would ever be necessary
- I would never do it. Why? If you have it printed, anyone can get it and use it.

4.  Duplicate the contents of your wallet on a photocopy machine.
Do both sides of each license, credit card, etc.

You will know what you had in your wallet and all of the account numbers and phone numbers to call and cancel.

Keep the photocopy in a safe place. I also carry a Photocopy of my passport when I tr avel either here or abroad.

We've all heard horror stories about fraud that's committed on us in stealing a Name, Address, Social Security Number, or Credit Cards.

Unfortunately, I, an attorney, have firsthand knowledge because my wallet was stolen recently.

Within a week, the thieve(S) ordered a monthly cell phone package,  applied for a VISA credit card, had a credit line approved to buy a Gateway Computer, received a PIN number from DMV to change my driving record information online, and more.

But, here's some critical information to limit the damage in case this happens to you or someone you know:

5.  We have been told we should cancel our credit cards immediately. But the key is having the toll free numbers and your card numbers handy so you know how to call.

Keep those where you can find them.

6.  File a police report immediately in the jurisdiction where your credit cards, etc., were stolen.

This proves to Credit Providers you were diligent, and this is the first step toward an Investigation (if there ever is one).

But here's what is perhaps most important of all:
(I never even thought to do this.)

7.  Call the 3 national credit reporting organizations immediately to place a fraud alert on your name. Also, call the Social Security Fraud line number. I had never heard of doing that until advised by my bank that called to tell me an application for credit was made over the Internet in my name.

The alert means any company that checks your Credit knows your information was stolen, and they have to contact you by Phone to authorize new credit.

By the time I was advised to do this, almost two weeks after the theft, all the damage had been done.

There are records of all the Credit Checks initiated by the thieve(S) purchases, none of which I knew about before placing the alert.

Since then, no additional damage has been done, and the thieve(S) threw my wallet  away this weekend (someone turned it in). It seems to have stopped them dead in their tracks.

Now, here are the numbers you always need to contact about your wallet or purse, etc., having been stolen:
(make all four calls)

    1.)  Equifax:  800-525-6285
     2.)  Experian (formerly TRW):  888-397-3742
     3.)  Trans Union:  800-680-7289
     4.)  Social Security Administration (fraud line): 800-269-0271
 

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To Roth or Not By Joe DEAmbrose

In preparing a client’s tax return recently, I was confronted with the dreaded question of whether to “Roth or not”. If “Roth” strikes a chord, read on—otherwise skip over to the obituaries. As someone interested, and even skilled in,  taxation as I was wont to tell my boss in performance reviews, the Roth question has always started this mind dancing but for a band that never stops playing. But here it was—the client had made a contribution to a Roth IRA in 2007 and my basic tax knowledge recognized that there was still time to change or reconvert the contribution to a contribution to a traditional IRA. There is a fundamental difference on the tax return; a taxpayer gets no deduction for a contribution made to a Roth IRA but does get a deduction for a contribution to a traditional IRA and the IRS rules allow a taxpayer to choose between the two type of IRA’s before the tax return is filed.

 Should I just go along with the taxpayer’s choice or actually try to analyze the alternatives and make a suggestion, maybe even a recommendation to make the change before April 15th. In the past, every time I have thought about the choice between a Roth and a Traditional IRA, I have frozen—I just could not get a grasp on the comparison, maybe to many moving parts or maybe just being tired. I had read many articles and pieces on the subject and it seemed to me that the Roth was the avenue recommended more often than not but the rationale offered always seemed to “iffy”, But here it was—it could not be ignored. 

The contribution to the Roth IRA was $5000, the maximum amount allowed for the client. The client was not “Raytheon” but had a profile which probably matched many Raytheon retirees; retired, age 63 with a modest pension, and some “earned” income from part-time employment. He was not a participant in a retirement plan, as the part time employment did not provide retirement benefits, and receiving a pension does not count as participation. If he had been a participant, he would only be able to make an IRA contribution if his income was below a certain level—that restriction did not become a problem. The employment income was key; an IRA contribution can only be made to the extent of the lesser of earned income or $5,000. All the stars were aligned—a $5000 contribution could be made to an IRA, either to a traditional IRA or to a Roth IRA, and it could be made on either a deductible or a non-deductible basis. 

The main distinction between a Roth and a Traditional IRA, aside from the deduction, is that distributions from the Roth are not subject to tax after a brief initial period while distributions from a Traditional will always be subject to tax a some point, either by the owner or the owner’s beneficiaries. One part of the comparison then is that while a tax deduction occurs when funds are contributed to an IRA, a distribution will cause taxable income, in short, the deduction will be reversed. If the owner’s tax rate at the date of contribution is the same as the tax rate at the time of distribution, the deduction and income will offset each other.

If the client takes a deduction for the contribution, at his 25% tax rate, he will have an additional $1,250 in his pocket compared to making a contribution to a Roth. When the $5,000 is distributed, the $1,250 will be paid back. A bird in hand impulse would be to take the deduction and have $5,000 in an IRA and $1,250 in a bank account rather than having just the $5,000 in the Roth. On the other hand, the $5000 would be subject to tax at some point in the Traditional but would not be in the Roth. Did the $1,250 initial advantage compensate for the disadvantage on distribution? 

How to analyze? It seemed as though an algerbraic approach might be helpful, putting the Roth on one side of an equal sign and the traditional on the other and making most assumptions equal such as tax rates, investment return, and the date of distribution. As I recalled from my high school algebra, the similar factors would cancel out leaving only the dissimilar factors which would present the nub of the difference. The 5th grader in the house refused to be interested so a spreadsheet was the only recourse.  

After a few hours at the helm of an Excel worksheet, it became apparent that my initial trepidation was well warranted; there was no clear answer or at least no clear and comforting answer. The clear answer was that on an objective, all things being equal (investment return, tax rate at contribution, tax rate at distribution), the Roth produced more after-tax benefit than the Traditional when the process was finally, finally over. When would it be finally over—when the investment was withdrawn from the IRA account and dissipated in some way, perhaps on a trip to Las Vegas, or given the owner’s more likely circumstance, to Lourdes. Strangely, the Traditional took the lead at the outset and held it for a long time based on a comparison of account balances from year to year. That was because my client picked up a tax savings of $1,250 on a deductible contribution of $5,000, money I assumed would be pocketed and invested in another, albeit taxable account.  The tax savings had to be paid back however, and began to be paid back when distributions had to be made from the Traditional beginning in the year after the year my client would reach age 70 ½. But, the required distributions could be spread out and the payback was slow; the Roth only pulled ahead when the client reached age 85. ( I also assumed that my client took the after-tax distribution amounts and placed them in another after-tax investment account awaiting the dissipation date). The problem with the Traditional was that the initial tax deduction and the tax on the investment income would have to be paid at some point in time so there was an annoying liability hanging over the Traditional account that was not hanging over the Roth account. In order to commit an act of dissipation, my client would incur a toll charge on the funds in a Traditional account. But if the dissipation took place earlier rather than later, the Roth still won (would always win) but by a smaller margin. Here I insert a box to summarize (dissipation becomes liquidation).

The best I could come up with is that the decision to deduct or not deduct was a relatively close call with the Roth having a sight numerical advantage at the outset and an increasing advantage over time; on a pure numbers, all things being equal basis, the Roth had an advantage which grew over time. The Traditional balances stayed ahead of the Roth balances for a  period beyond the horizon but fell behind as soon as a full distribution was made—and sooner or later a full distribution would have to be made. A different  tax rate at distribution compared to the date of contribution would change the outcome but the time period for measurement seemed too long to make a prediction in that area. The math said Roth. Why was I still uneasy? I could not get past a resistance to paying a tax today that I did not have to pay until tomorrow even if paying it today seemed to be the right thing to do.  

Well, it was time to act. I called my client and said ………..       

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Financial Crisis: Affect on Obligations of Raytheon Pension Plans  by Joe DeAmbrose

Raytheon retirees may well be concerned with the impact of the current financial turmoil on their pensions—a few have raised their concerns with the ARR. The ARR does not have specific information but it is very likely that the value of the assets set aside to provide pension benefits has taken a hit and  the size of the damage to asset values is likely to be substantial as the carnage in the financial markets is broad and deep as we all know too well.  As a result, retirees are certainly less secure than they were just a few short months ago when Raytheon’s pension plans were well funded and benefiting from what were really superior investment returns. Nonetheless, there should be no immediate problem with pension payments—the checks will keep on coming.

Pension payments from defined benefit plans such as the Raytheon Salaried, Hourly, and the plans for the former Hughes, E-Systems and other such employee groups are not directly affected by a decline in asset values. The promised payments must still be made and it would be expected that each of the plans has sufficient liquidity despite the downturn to make required payments for the foreseeable future. So, your pension payments are relatively safe. The right to a pension is a sight better than a stock market investment or even a bank account at the moment. Pension plans are required to be funded, that is, money has to be set aside to pay the pensions and the Raytheon plans were reasonably well funded by most accounts.

The employer is the one that will suffer the greatest from a precipitous decline in the value of the assets funding pension payments. The employer has to make up the shortfall with additional contributions or, we should all hope, with a reversal of the decline in values. To be sure there is risk for us retirees. An employer could try to terminate its pension plan or plans leaving the depleted plan assets to the plan beneficiaries but there are disincentives to a functioning business trying this approach. Another way fo an employer to reduce its obligation is to cut back on the pension plan benefits. Raytheon has already reduced its obligations by cutting new employees out of some defined benefit pension plans but retiree benefits are vested and unlikely to be affected by such cutbacks.  The main risk is that an employer goes bankrupt and is unable to handle its pension funding obligations. In such a case, the plan assets are turned over to a government creature called the Pension Benefit Guarantee Corporation (PBGC) which would split up the assets among all of the plan beneficiaries, active and retired, and make payments as they become due, but in much reduced amounts from the actual plan benefit. There have been many employers that have come to this end leaving many unhappy employees; the once proud Polaroid Corporation comes to mind. So, the bad news is that there is some risk but the good news is that there are layers of happenstance and, ultimately, a government sponsored safety net for pensioners—as long as the government can handle all the safety nets it is sponsoring.

Be aware of the difference between defined benefit pension plans as described above and another type of pension plan called a defined contribution plan. A 401K plan is a defined contribution plan as are most profit sharing plans. The employer has little responsibility for the ultimate benefit from such plans after it has made its contribution to the plan. In 401K plans, the employee almost always chooses the assets for investment and suffers the good and the bad and it has never been as bad as it is now. The same can be said for IRA’s, many of which hold assets that were rolled over from an employer 401K or profit sharing plan.

So, all in all, Raytheon pension payments are to be cherished. Relative to other assets you may own, your  pension payment is safe and secure. You cannot change what it is in any case so relax………                 

This note is in the nature of a “heads-up” for any retirees who are nearing age 70 ½ with a RAYSIP account balance which includes Raytheon stock. There is a tax savings opportunity available to such retirees which deserve more focus than provided in plan literature.

Here are the basics: The age 70 ½ date is important because at that date taxable distributions must be made by employer plans like RAYSIP and also by Individual Retirement Accounts (IRA’s). RAYSIP will also close out accounts around that date which could either be in the form of a distribution of the account balance or, more often than not, accomplished by way of a direct transfer of the account balance to an IRA of the retiree. The retiree can elect the method of close-out but however effected, a part of the account balance is taxable and cannot be rolled over to an IRA or made part of a direct transfer to an IRA. The taxable amount is called a Required Minimum Distribution or RMD and is calculated by dividing the account balance at December 31 of the year before the distribution year by life expectancy factors from published IRS Tables. The factor for the age 70 ½ year from the most commonly used Table (the Uniform Lifetime Table) is 27.4. The factor for the age 71 ½ year is 26.5 and on and on. The distribution for the age 70 ½ year must be distributed on or before April 1 of the age 71 ½ year. Thereafter, RMD distributions must be made before the end of each succeeding year.

To illustrate with an example: Retiree A will reach age 70 ½ in 2008, having a RAYSIP account balance of $250,000 on December 31, 2007, The RMD amount for 2008 is $9,124 ($250,000/27.4) which must be distributed by RAYSIP on or before April 1, 2009. A wants to have the balance of the account directly transferred to an IRA.

The practices followed by RAYSIP as to the timing of the distribution of RMD amounts and the close out of the account are not published but based on discussions with a Fidelity retirement specialist (Fidelity administers the distributions and account close-out) there appears to be some flexibility in arranging the timing of distributions and transfers, ranging from having the age 70 ½ RMD distribution and the IRA transfer made in 2008, or having RMD distributions and IRA transfer made in 2009, or having an RMD distribution in 2008, and the IRA transfer made in 2009. Note that unless the account is closed out in 2008, RAYSIP must make an RMD distribution for the age 71 ½ year in 2009.

The key to the tax savings is the Raytheon stock account in RAYSIP. The tax law provides favorable tax treatment if employer stock is distributed in kind from a plan like RAYSIP. Distributions from IRA accounts are not eligible so the tax savings opportunity is not available once RAYSIP accounts are closed-out. To expand on the illustration, assume A has Raytheon stock in RAYSIP with a value of $30,000 and a cost of $14,000. The built-in gain of $16,000 is technically called “net unrealized appreciation” or NUA. Having a Raytheon stock account is common as RAYSIP includes the former RAYSOP plan that held only Raytheon stock and for many years, the RAYSIP “match” was made in Raytheon stock. The cost amount is the value of the stock when it was acquired. The cost amount is not contained in RAYSIP statements but is available on the Fidelity NetBenefits website or can be obtained from a Fidelity retirement specialist. The NUA amount is not subject to tax when the stock is distributed and will only be subject to tax when the stock is sold or otherwise disposed of, and then, the NUA amount will be taxed at capital gain rates. So, a portion of a RAYSIP stock distribution is taxed at capital gain rates rather than ordinary income rates. The capital gain rate will always be lower than the ordinary income rate. Assuming A’s normal tax rate is 28%, A’s capital gain rate would be 15%. If A elects to take a distribution of all or a portion of the Raytheon stock in kind, the cost component of the distribution will be subject to tax at a 28% rate and the NUA amount will be subject to tax at a 15% rate. A tax of $8,400 would be imposed on a distribution of $30,000 at ordinary income rates ($30,000 X 28%). The tax would be only $6,320 ($14,000 X 28%) and ($16,000 X 15%) if stock with that value were distributed in kind and then sold, and payment of $2,400 of that tax could be delayed to another year if the stock were not sold.

But wait---most employer plan distributions can be transferred or rolled over to an IRA without incurring any tax. True, a tax on distributions from pre-tax accounts will have to be paid at some time at ordinary income rates because of the RMD requirements described above but that tax bill will be paid over dozens of years in the future. “Why pay it now”, A might think. Here’s why. A cannot postpone tax on RMD distributions. A is facing a taxable cash RMD distribution for 2008 of $9,124 on which an ordinary income tax of $2,555 will be imposed. If instead, he elects to take a distribution of Raytheon stock worth $9,124, the pro-rata NUA amount (53%) of $4,866 will be subject to tax at the 15% capital gain rate reducing the aggregate tax to $1,922. The stock distribution of $9,124 satisfies the RMD requirement for the year without regard to the favorable tax treatment. The tax savings are greater if A holds on to the stock as an investment because $730 of the $1,922 tax can be deferred until he sells the stock but that involves a separate investment decision.

The tax savings can be even greater. If A acts to delay payment of the 2008 RMD distribution to 2009, but before April 1 of 2009, and delay the close out of the account to 2009, RAYSIP will have to make another RMD distribution for 2009 (which would have to be made by A’s IRA if the RAYSIP close out took place in 2008). On A’s numbers, the 2009 distribution ( December 31, 2008 account balance/26.5) should be over $9,000. In total, A can elect a stock distribution of about $18,124 in 2009 which will cover the RMD requirements for 2008 and 2009. If the stock is sold in 2009, the tax will be $3,818 compared to $5,075 if there were a cash distribution. If the stock is held, the tax for 2009 would be reduced to $2,368. Substituting a stock distribution for two RMD distributions enhances the tax savings.

There is one important condition for success. The stock distribution must be part of a distribution of the entire RAYSIP account balance which takes place within one taxable year on account of certain events. This “lump-sum” distribution requirement is a little tricky but manageable. One way to satisfy this condition while maximizing tax savings is to arrange for a close out of the RAYSIP account in the age 71 ½ year (2009 in A’s example) with both RMD distributions in that year. This is something to be worked out with a Fidelity retirement specialist.

Taking an available employer stock distribution instead of a taxable cash distribution, such as an RMD distribution, should always be the right choice but individual circumstances have to be taken into account and may alter the size of the savings. This is not a simple subject. It involves overlapping tax principles and not-so-simple calculations; qualified tax advice should be obtained.

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TAX TOPICS

Obtain Your Share of the Economic Stimulus Tax Credit 

I am sure you have heard of the stimulus package recently approved by our government.  It will provide up to $600 per individual and $1200 per couple depending upon your income. 

Many seniors do not file income taxes as their income does not warrant it.  Even if you do not owe any taxes, you must file a federal Income Tax return in order to receive your share of the rebate.  Of course if your income is low enough you can file a very simple 1040A form.  If you need help completing the form you can ask at your local senior center.  The center may offer the service or know where you can obtain free or low cost help.  AARP provides such a volunteer service.  If you have a problem locating an AARP volunteer let our office know and we will try to locate a volunteer for you.

Raytheon ERISA Litigation

A retiree informed us that he recently received a Form W-2 relative to Raytheon ERISA Litigation and had several questions. If you received a similar Form W-2 and also have questions, you should call The Garden City Group at 866-881-7492.

Taxation of Pension Plan Distribution?

Question:

I just received my 1099-R for the Raytheon pension plan and am trying to determine how to handle the (after tax?) contributions that some of us made years ago before the plan became non-contributory. On retirement, I elected to leave the $7300 plus accrued interest in the pension plan. I assume the interest is taxable and the $7300 will be paid out linearly over the next 30-40 years and that the pro-rata contribution is tax free.

The 1099-R is silent on the subject.

Any idea on how to handle this?

You can recover your contribution amount tax free on a pro-rata basis as you receives pension payments. The data goes into line 16a and 16b on Form 1040. Line 16a is the total pension amount received and line 16b is the taxable amount. The taxable amount is the total less the amount of pro-rata basis recovery for the year.

There are a couple of acceptable methods for determining the non-taxable piece. One is called the simplified method and a worksheet can be found in the IRS instructions to Form 1040 for line 16.

For example, if the pension started in 2007 at age 65, the simplified method assumes that there will be 260 monthly payments and you divide your contributions by that number to get the monthly exclusion which would be $28.07 for $7,300 of contributions. If the payout is in the form of a Joint & Survivor a different number would be applied.

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I write to you as the President of the Association of Raytheon Retirees, Inc., (ARR) a Massachusetts non-profit corporation. The ARR is an organization of thousands of retirees of Raytheon Company and was formed and operates to monitor, preserve, and improve retirement benefit undertakings of the former employer of the membership. The primary benefits in this regard are pensions and retiree medical.

The Association is acutely aware of the economic difficulties faced by our membership and by other retirees similarly situated across our nation. Medical costs continue to rise while the purchasing power of fixed pension income erodes. Employers are eliminating defined benefit pensions and are deaf to pleas for modest cost-of-living increases in pension payouts. The lot of many retirees is increasingly precarious, especially those who retired many years ago.

The Congress is currently working on a stimulus package based largely on providing relief to taxpayers. The ARR has a proposal in this regard; one which would advance the goal of economic stimulation and would relieve some of the financial burden on retirees from escalating medical costs. There are many ways to deliver a tax benefit to needy retirees, including adjustments to the social security taxation thresholds and the medical deduction limits but the Association’s proposal is much simpler—extend a benefit that was accorded to retired public safety officers in the Pension Protection Act to a broader class of retirees.

The benefit provided to retired public safety officers is contained in section 402(l) of the Internal Revenue Code. Pursuant to that section, a limited amount ($3,000) of an otherwise taxable pension distribution from a governmental plan can be applied to the payment of health insurance premiums of a retired officer without tax consequence. A few simple amendments would make this tax benefit available to retirees in general or, if budgetary constraints are an impediment, to a defined subset of these retirees. For example, the subset could take into account age and/or income levels.

The broadening of the class eligible for this benefit also would level the playing field. A draft of the specific changes in statutory language to implement the proposal is attached for your assistance.

The Association encourages you to consider this proposal as you draft legislation to provide a needed stimulus to the economy. This proposal will target the benefits of the stimulus at one of the most needy and deserving citizen groups.

Sincerely,

Robert Hamilton

President

Association of Raytheon Retirees, Inc.

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MIT Completes a 6 Year Project To Put All Of Its Courses On-Line

MIT recently completed putting every one of their courses on- line.  That is over 1800 undergraduate and graduate courses.  The courses include video lectures, lecture notes, assignments and exams.  The courses include Algebra, Physics, Differential Equations, Technology and Culture in Japan, Literature and History.   Visit their website at http://ocw.mit.edu to take a look for yourself.  They are all available free of charge and over 1 million people a month are logging on.

Each year, around November 1, retirees over 65 are asked, by Raytheon, to enroll in a medical plan for the coming calendar year. Many retirees throughout the US have only the choice between Raytheon’s Medicare Plus Plan (PLUS plan) and “no coverage.” However, in some areas Medicare Advantage plans are also an alternative.  

This article is intended to provide a comparison of the highlights of the PLUS plan with a couple of Medicare HMO plans. As previously, we’ll use the current year (2007) benefits design and premiums for comparison-since we know the details. Please read carefully your 2008 enrollment package for any changes to the plans & premiums. 

We will use the Eastern Mass. Enrollment options which are available to this writer. Also, please note that the retiree individual premiums listed are for Raytheon retirees who retired after 1994. It is hoped that retirees living outside of E. Mass. can use this analysis in reviewing any Medicare Advantage plans offered in their area. 

At the outset, you should understand that the PLUS plan & Medicare HMO’s offered by Raytheon are all employer sponsored group plans. Please do not confuse the Medicare HMO Blue or Tufts Medicare Preferred plans with similar names that Blue Cross & Tufts offer to the general public as private plans. The benefits differ somewhat & the Rx coverage, if any, is less comprehensive in the private, non-group plans. 

This plan offers supplemental coverage after Medicare A & B or Medicare D (Rx plans) pay their benefits. Raytheon has designed this plan as a catastrophic coverage medical plan. You have to pay $1750 out-of pocket before the PLUS plan pays the 20% coinsurance not paid by Medicare. Similarly, the PLUS plan pays 80% for drug expenses only after your total drug costs reach $2400 with your Medicare D provider. 

Medicare HMO Blue & Tufts Medicare Preferred are paid by Medicare to provide all your medical & drug benefits in place of Medicare. The benefits pay for most medical care in full after a co-pay. These are managed care plans that have a limited network of MD’s and hospitals available for your care. You must have a primary care physician (PCP) & if you use services outside the network, or without PCP referral, you could end up paying 100% of the expenses. 

Advantages

·         Access to virtually all hospitals, MD’s, & Labs.

·         Lower monthly premium.

·         Pays inpatient Medicare deductible in full.

·         No annual or lifetime benefit limit.·          

Disadvantages

·         Most outpatient expenses not covered until you spend $1750 out-of-pocket.

·         You have to enroll in a Medicare D to get Rx benefits after $2400 total drug costs.

·         Reimbursement at 80% after the $2400 is an arduous process. 

Advantages

·         Most medical & Rx expenses are covered in full after a small copay, when care is received in-network.

·         All medical & Rx benefits are delivered by one provider-for example, Blue Cross or Tufts.

·         Prescription drugs are simple & straight forward to purchase-no need to keep records & file for reimbursement after $2400 is reached.

·         No annual or lifetime benefit limit. 

Disadvantages

·         Premiums are higher.

·         The networks have a limited group of MD’s & hospitals, & change annually.

·         No coverage is provided for services received outside the network or if not referred by your PCP. 

There is no one right answer. Each retiree’s medical needs are unique, so you should tailor your plan selection accordingly. It goes without saying that you should make sure that your primary care physician (PCP), specialists & hospitals used are in the HMO network before you enroll. 

Recently, I talked with an E. Mass. retiree who was about to turn 65. He explained that Raytheon sent to him a lot of information on the PLUS plan, but nothing on the plan details for Medicare HMO Blue or Tufts Medicare Pref. He contacted the HMO’s & received a one page summary of benefits. After much follow-up, he got more details about the HMO plans. He initially thought that since he was in the HMO Blue under 65 plan & was accustomed to the network and referral restrictions, he would enroll in the Medicare HMO Blue plan. To his surprise, his PCP & some Boston hospitals were not in the Medicare HMO Blue network. Author’s note: my wife and I experienced that same problem a few years ago. The retiree did find his PCP in the Tufts plan and will try that HMO for a year. 

For the past 3 years, I have been concluding the Raytheon PLUS plan was not a good value for retirees. But here is a case where the plan worked. A retiree in Florida sent an e-mail to me extolling the coverage under the PLUS plan when it is really needed. His wife had surgery for cancer & subsequently received chemo & radiation treatments on an outpatient basis. In addition, a $5000 injection was required after each chemo treatment to offset the ill effects from those treatments. Since the $1750 out-of-pocket was reached quite quickly, virtually all of these expensive outpatient treatments were covered in  full between Medicare & the PLUS plan. This is an example of the PLUS plan’s catastrophic feature working to provide coverage for unexpected major medical events.  

Finally, you should know that if you enroll in a Medicare HMO plan in 2008, and subsequently decide that you made a mistake, you can disenroll from the HMO & enroll in the Raytheon Medicare PLUS plan immediately. The Raytheon Benefits Center can help you on this procedure. 

Some retirees-mostly ones who retired after 1994-have turned to private medical plans offered in their State instead of enrolling in Raytheon’s offerings of Medicare PLUS or a Medicare HMO plan. These plans are becoming much more competitive with Raytheon’s group choices than in prior years. But tread carefully, there may be limitations in these private plans that are not in the Raytheon sponsored group plans.  

If you decide on a private medical plan instead of Raytheon’s plans, you would have to select “no coverage” on the Raytheon enrollment, & won’t be able to join a Raytheon plan again until January 1, 2009. However, you can get the real net cost of these private plan premiums by deducting the $ 77/month for the PLUS plan. Most of the private plans require a one year enrollment commitment when you sign up. 

We are not suggesting that retirees necessarily purchase these plans, but rather know of their availability in case the plan designs & premiums may fit better with your medical coverage needs. 

These plans are the traditional Medicare supplemental type plans that we have had around for the past 30+ years, & are offered by Blue Cross, AARP, etc. In essence, these plans pay the portion of your medical bill that Medicare doesn’t pay. These private plans fare well compared to the PLUS plans $1750 out-of-pocket before supplementing Medicare payments. But these private plans don’t have drug coverage. Therefore, you would have to buy a Medicare D plan for drug coverage. 

One such Medigap plan is Medex Bronze in Mass. This plan covers the 20% co-insurance in full for outpatient medical expenses, as well as the Medicare B deductible & in-patient deductible. This plan’s 2007 premium is $150/month. If you bought the least costly Medicare D plan from Humana, for example, it costs $17/month. The total cost would be $167 (less the $77 premium for Raytheon PLUS) nets at $90/month. But, unlike the PLUS plan, Humana drug plan does not pay anything in the gap-when total drug costs exceed $2400. 

This plan combination would probably be better for someone who has many outpatient medical expenses & substantially less than $2400/year Rx expenses. 

The private versions of the Raytheon group  Medicare HMO’s are essentially the same for the medical expenses but differ for Rx coverage- slightly in the co-pays but significantly in coverage in the gap where typically only generics covered; whereas the Raytheon version has no limitations after $2400 is reached. 

Like the Medicare HMO’s, Medicare pays the insurers to provide coverage in place of Medicare for these PFFS plans. The PFFS’s cover both medical & drug expenses as part of their design. But unlike HMO’s, PFFS plans do not have restrictive networks, PCP’s or referral requirements. These plans are quite new to the market, & we don’t have a lot of experience with their effectiveness. 

A typical plan of this type is the Tufts Medicare Preferred-PFFS. This plan allows you to use any MD or hospital & you pay co-pays like an HMO—typically $15 for an office visits. The prescription drug benefit co-pays are: 

Here are some monthly premiums for a couple of PFFS plans: 

·         Tufts Medicare Preferred PFFS:  $124 (2008) 

·         Harvard Pilgrim First Seniority Freedom PFFS:$78 (2007) 

If you consider this plan a replacement for Raytheon PLUS, you could reduce the above premiums by $77/month. 

Be Careful !  Even if your Rx annual costs are well below $2400, these PFFS plans are so new that the low premiums may be to attract retirees into these plans & increase the premiums in future years. Similarly,  because of their newness, not all MD’s or hospitals will accept these PFFS plans for payment.  

I think it would wise to wait a year before signing with a PFFS plan—to let the bugs work out. However, these plans have a design that, I believe, will be attractive for a lot of retirees. 

A PPO plan has a much bigger network of MD’s & hospitals than its cousin the HMO plan. Also, the PPO does not require a PCP or referrals, & out of network usage is subject to  higher co-pays (for example, $30 vs. $15 in-network) compared to no coverage out of network for the HMO’s. Again, Medicare pays the PPO to provide medical & dental benefits instead of Medicare. 

The medical coverage is with co-pays & is very comprehensive, & the prescription drug benefit is similar to the above PFFS benefits.  

Here is the Private Tufts Medicare Preferred PPO drug benefit:           

 These co-pays apply only during phase 1 (under $2400 total drugs); but only generics are covered in the gap (Phase 2) after $2400 is reached.

The Tufts Private PPO plan has a monthly premium of  $114. If you reduce this by the    $ 77 you would have paid for the Raytheon PLUS plan, you would be paying $37 extra for the PPO to get full outpatient benefits after a co-pay & co-pays for Rx’s on the first

$2400 of drug costs. The key, of course, is whether your MD’s & Hospitals are in the network or not—but you have a greater chance that they are in than does the Medicare HMO. 

 This is a little risky, but I have only Medicare A & B for medical coverage. I have about 6 MD visits a year, some outpatient tests & X-rays & pay the 20% myself as I would have under the PLUS plan. My Rx’s are 2 generic & 1 pref. brand which I pay in full since I have no Medicare D drug plan. If I joined the least expensive Medicare D plan, it would cost an extra  $500 to buy the same prescriptions through the Medicare D plan. There is a penalty if I join a Medicare D plan  in the future. My calculation is that the penalty would be $3.35/ month for each year that I’m not enrolled—that is if they enforce a penalty at all. My savings in premiums is $94/month ($77 for PLUS & $17 for Humana Rx plan) for an annual savings of $1128. So, in effect if my out-of-pocket payments are less than $1128, I have made the right choice. The risk, of course, is that I’ll have a major medical event requiring hospitalization & expensive follow on outpatient treatment. This approach is not for everyone, & should be used with great caution.

Editor's Note:  There was a recent article in the Boston Globe describing these fee for service (PFFS) plans offered in New England.  The great caution was MDs that accept regular Medicare payments are not required to accept the coverage of these PFFS plans and you have no regular Medicare coverage to fall back upon. 

(There is a link to the complete Globe article on our website.) 

An interesting observation: The Humana Rx standard plan will cost $24/month & the Humana Rx enhanced plan will cost $25/month in 2008. For the extra dollar, it might be worth it for retirees to enroll in the enhanced plan next year. The enhanced has no deductible ($275 for Standard) & co-pays that are generally favorable vs. standard's 25%-- except if you have tier 3(non-preferred brand). I took my wife's payments for 2007 & compared the 2 plans for 2008. It came out to a wash--only because my wife had a tier 3 drug. Retirees should calculate their '08 costs under the enhanced vs. the standard to see which provides the better outcome.

Bruce Nogueira

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RETIREMENT PLANNING

WARNING NOTE: The Raytheon Human Resources and the Raytheon Retirement Benefit Center are the official sites for retirement related questions. All items mentioned here should be verified with Raytheon by the potential retiree before taking any action.

The Association of Raytheon Retirees does not guarantee that this information is current or correct. The Planning Guide is presented here as lessons learned to identify areas of possible follow-up. These lessons learned have been assembled over the years by many non-union Raytheon employees to help future retirees.

This particular guide is applicable to a large, but limited group of employees; those from Massachusetts or other legacy Raytheon organizations. If you are aware of changes, corrections or similar guides in use elsewhere, the ARR would appreciate a copy to help other fellow potential retirees.

RETIREING BEFORE (60) IS NOT A GOOD OPTION

SUBMITTING YOUR RETIREMENT PAPERS

BENEFITS CALCULATION PACKAGE

RAYTHEON RETIREMENT GUIDE

The Raytheon Retirement Guide is a booklet that contains the following information:

This is the new policy:

You no longer receive a "Verification of Retirement Form" in your Raytheon Retirement Guideline booklet. You now have to notify your supervisor (however you feel best- in person, e-mail, letter, etc) one month prior to your retirement date. He then notifies HR, who in turn will (may as it is very dependent on the individual that you are working with in HR) start the ball rolling for payroll. Your supervisor is supposed to provide you with the latest Checkout form, but it seems no one really knows which is the latest form. When I was checking out half the people I had to get to sign my form stated that this was a new form that they had never seen before and where were they to sign- as if I should know!! Go to http://docushare1.app.ray.com/dscgi/ds.py/View/Collection-38297 to get the latest form. There is a long list, but I found the correct one at or near the top of the list shown.

Check with both the library and document control a month or so before you retire to find out if there are any old books or documents that they may believe that you have.

Checkout was much easier than I thought. It only took me about 1 hour to check out. You will need your cell phone, pager, credit card, etc to turn it during check out. You will also need the ID Tag numbers (L7xxxxxx) from each item so that IS can log you out. They will impound your computer, so do not check out too soon before you actually want to leave. I uploaded all of my hard drive to a server for others to retrieve if necessary. Otherwise it will all be lost!!

This whole retirement process is pretty much open loop. You get zero feedback unless you call and ask questions.

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Authorizing A Medical Representative

With the new medical privacy laws, even your spouse cannot discuss claims matters with Medicare, Fiserv, or your Medicare D Prescription Drug Provider (PDP).

One way to ease this problem is to authorize a medical representative. This year, I completed forms for Medicare, Fiserv, and Humana to name my wife and daughter as my authorized representatives to whom my personal health information may be disclosed. Similarly, my wife completed those forms naming me and our daughter as authorized representatives on her behalf.

You can obtain the privacy forms by calling Medicare, Fiserv, and your Medicare D PDP. The forms are mostly straight-forward, but the Medicare form will require care when answering the questions.

On question 2, check the box: “Other personal health information”, and write the explanation: “All my personal health information. “

On question number 3, check the box that has a start and stop date for disclosing my health information. I put start 01/01/2007 and a stop date of 12/31/2012.

This is 6 years and I hope I remember to renew the document at the end of 2012. In retrospect, I probably should have put the stop date way out—such as 12/31/2027.

Health Care Proxies are used primarily in situations where you are unable to make medical decisions on your own. This Medical Representative approach is a useful tool for claims issues before you need a Health Care Proxy.

I have already used this authorization to help my wife on her Rx claims with Humana this year.

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Coordination Of Benefits

For those retirees whose total Rx costs are likely to exceed $2400 the coordination of benefits with the Raytheon Medicare Plus Rx plan could result in the same problems our retirees experienced in 2006. Raytheon has contacted most of the major Medicare D PDP carriers to get cooperation in processing Rx claims when your PDP stops paying toward your prescriptions, because your total Rx costs exceeded $2,400.00

Unfortunately some pharmacies and mail order vendors might not follow the Coordination of Benefits process as set up by the PDP’s.

To help your chances of getting the Raytheon 80% benefit when $2,400.00 is exceeded, here are a couple of suggestions: contact your    PDP and ask for the coordination of benefits office (for example, the Humana # is 800-999-1118), and request a coordination of benefits form. Complete this form with the requested ID information from your Raytheon Medicare Plus card, and mail the form to your PDP. after your drug costs total about $500.00, call Innoviant(1-877-559-2955) to see if they are receiving your Rx claims information from your PDP. If not, request Innoviant to follow-up with your PDP to set up a proper electronic exchange of your claims data in the future.

Raytheon believes that the coordination of benefits with the PDP’s should be better in 2007 than the problems many experienced last year trying to get payment from the Raytheon plan. But you can help yourself by using the above approaches early in the year to get your Rx claims data onto the Innoviant system before your drug costs exceed $2,400.00.

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Tax Opportunity

There have been recent changes in the tax laws aimed at encouraging charitable contributions. It allows individuals over age 70 ½ receiving payments from an individual retirement account (IRA) in 2007 to have all or part of the payment made directly to a charity. The result is that the payment is not subject to tax as it would normally be. On the other hand, no deduction is allowed for the directed payment. Some individuals could gain a tax benefit by making a directed payment from an IRA rather than receiving a payment from the IRA and making a separate charitable contribution. The potential beneficiaries are a narrow group to start with, i.e., age 70 ½ with an IRA. Tax savings only arise for a relatively small subset of that group such as non-itemisers and those with tax features affected by the amount of their income. Some possible beneficiaries are:

1.  Individuals that  make contributions but do not itemize.

2.  Itemisers claiming a medical or a miscellaneous deduction.

3.  Moderate income individuals receiving social security.

4. Individuals losing a portion of their personal exemptions and itemized deductions because of high income.

Many retirees receive mandatory distributions from IRA’s. They also may be making recurring contributions to their church or other charities. The new law allows such individuals to minimize income taxes when there is such a combination. If you think you may qualify, ask your tax preparer if changing how you contribute in 2008 can save some tax dollars.

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View Slide Show of May 15, 2008 Annual Special Meeting

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Last modified: 08/11/09