Ever wonder why we want to hear your voice when you are requesting money? We have had this “double authentication” practice since Blue Spark Financial began, for the safety of our clients, and we understand that sometimes it’s a pain to take the extra step to pick up the phone after an email. But it’s in place to protect against hackers – and they are getting more sophisticated. We know all our clients’ voices, and you can’t fake that.

We urge you to take the same care with all your transactions, not just Blue Spark. If you are asked to send money by anyone, double-check all the details by phone before you send. Even if you are expecting to send money to a person, make sure it’s the right account.

New email hacks

Just this week we heard about a spike in fraud related to money requests. Here are a few recent situations: People were working with a lawyer or real estate agent by email. They were given instructions on where to send funds for a closing or other transaction – only to find out later that the lawyer or real estate agent’s email was hacked and the email didn’t really come from them. There was no verbal confirmation, and people just sent the funds through the links provided in the email, which appeared to come from the people they were working with but were in fact fraudulent. Their funds were compromised and sent to an unknown third party. In another case, it was a fraudulent fax request to disburse funds.

Make sure you call as well as verify exact details before sending any money – by wire, Venmo, or any other electronic means – even if you know the person well.

Typo Fraud: Edit yourself online

We’ve heard that scammers love typos. Why is that so? Think about typing in a website (because you’ve heard that is better than clicking a link in an email, which is true!) but you mistype .com with .cm, or instead of .org it’s .ogg.

Scammers know that people make mistakes, and they are waiting. They have bought addresses with just one letter away from real websites to hijack unwitting Internet users. It’s a new hack called “typosquatting” intended to trick users, according to the National Consumers League.

The unintended website could ask you for personal information that you believe is secure. It could look just like the correct website and lures people to give Social Security numbers, account numbers, names and passwords.

The fake sites could also be selling knock-off imitation products, as well as gathering sensitive data, the National Consumers League said in an alert issued this month. This is just another reason to be very careful when using the Internet.

New Medicare Card Scam

Hang up on anyone who calls saying they are with Medicare. Scammers are phoning Medicare recipients and pretending to be representatives of the government healthcare program, AARP reports. The caller then tells the victim that they need personal identifiers are required to make the switch to the new Medicare card – including Social Security numbers and bank account information.
None of these are true, but the scammers are telling seniors that:

• You must pay for your new Medicare card or you’ll lose your Medicare benefits
• Medicare is updating its files and needs your bank and credit card numbers
• Medicare is confirming your Social Security number before you can receive your new card
• Medicare needs your bank information to send you a refund on your old card

Representatives of Medicare do not call consumers. Just hang up on anyone claiming to be from Medicare on the phone.

Medicare is indeed replacing its old cards – which had recipients’ Social Security numbers listed on them. It is doing this to try to reduce the opportunity for fraud and identity theft. It’s ironic that scammers are using that positive action for their own gain.

Once your new card arrives, destroy your old one. Shred it, don’t just put it in the trash!

Why are they facing financial challenges?

Social Security and Medicare are funded primarily through the collection of payroll taxes. Because of demographic and economic factors, fewer workers are paying into Social Security and Medicare than in the past, resulting in decreasing income from the payroll tax. The strain on the trust funds is also worsening as large numbers reach retirement age and live longer, and as health-care costs rise.

How to address these challenges?

Both urge Congress to address the financial challenges facing these programs soon, so that solutions will be less drastic and may be implemented gradually, lessening the impact on the public. Combining solutions may also lessen the impact of any one effort.
Some long-term Social Security proposals on the table are:

• Raising the current Social Security payroll tax rate. According to this year’s report, an immediate and permanent payroll tax increase of 2.76 percentage points would be necessary to address the long-range revenue shortfall (3.98 percentage points if the increase started in 2034).
• Raising the ceiling on wages subject to Social Security payroll taxes (which was $127,200 in 2017).
• Raising the full retirement age beyond the current 67 (for anyone born in 1960 or later).
• Reducing future benefits. Scheduled benefits would have to be reduced by about 17% for all current and future beneficiaries, or by about 20% if reductions were applied only to those who initially become eligible for benefits in 2017 or later, the report said.
• Changing the benefit formula to calculate benefits.
• Calculating the annual cost-of-living adjustment for benefits differently.

According to the Medicare Trustees Report, to keep the HI Trust Fund solvent for the long-term (75 years), the current 2.90% payroll tax would need to be increased immediately to 3.54% or expenditures reduced immediately by 14%. Alternatively, other tax or benefit changes could be implemented gradually and might be even more drastic.

What are the Social Security and Medicare Trust Funds?

Social Security: The Social Security program consists of two parts. Retired workers, their families, and survivors of workers receive monthly benefits under the Old-Age and Survivors Insurance (OASI) program; disabled workers and their families receive monthly benefits under the Disability Insurance (DI) program. The combined programs are referred to as OASDI. Each program has a trust fund that holds Social Security payroll taxes collected to pay benefits. Other income (reimbursements from the General Fund of the U.S. Treasury and income tax revenue from benefit taxation) is also deposited in these accounts. Money that is not needed in the current year to pay benefits and administrative costs is invested (by law) in special Treasury bonds that are guaranteed by the U.S. government and earn interest. As a result, the Social Security Trust Funds have reserves that could be used to cover benefit obligations if payroll tax income was insufficient to pay full benefits.
Medicare: There are two Medicare trust funds. The Hospital Insurance (HI) Trust Fund pays for inpatient and hospital care (Medicare Part A costs). The Supplementary Medical Insurance (SMI) Trust Fund has two separate accounts, one covering Medicare Part B (which helps pay for physician and outpatient costs) and one covering Medicare Part D (which helps cover the prescription drug benefit).

Trustees Report highlights: Social Security

• The combined trust fund reserves (OASDI) are still increasing, but are growing more slowly than costs. The U.S. Treasury will need to start withdrawing from reserves to help pay benefits in 2022, when annual program costs are projected to exceed total income. The Trustees project that the combined trust fund reserves will be depleted in 2034, the same year projected in last year’s report, unless Congress acts.
  Once the combined trust fund reserves are depleted, payroll tax revenue alone should still be sufficient to pay about 77% of scheduled benefits for 2034, with the percentage falling gradually to 73% by 2091.
• The OASI Trust Fund, considered separately, is projected to be depleted in 2035, the same year projected in last year’s report. Payroll tax revenue alone would then be sufficient to pay 75% of scheduled OASI benefits.
• The DI Trust Fund is expected to be depleted in 2028, five years later than projected in last year’s report. Both benefit applications and the total number of disabled workers currently receiving benefits have been declining. Once the DI Trust Fund is depleted, payroll tax revenue alone would be sufficient to pay 93% of scheduled benefits.
• Based on the assumptions in this year’s report, the Social Security Administration is projecting that beneficiaries will receive a cost-of-living adjustment (COLA) of 2.2% for 2018.

Trustees Report highlights: Medicare

• Annual costs for the Medicare program exceeded tax income annually from 2008 to 2015. The Trustees project surpluses in 2016 through 2022 and a return to deficits thereafter.
• The HI Trust Fund is projected to be depleted in 2029, one year later than projected last year. Once the HI Trust Fund is depleted, tax and premium income would still cover 88% of estimated program costs, declining to 81% by 2050, and then gradually increasing to 88% by 2091. The Trustees note that long-range projections of Medicare costs are highly uncertain.

You can read a combined summary of the 2017 Social Security and Medicare Trustees Reports and a full copy of the Social Security report at ssa.gov. You can find the full Medicare report at cms.gov.