Privately Funding Social Security and Medicare

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The vast majority of libertarians tend to bristle at the idea of state managed healthcare and retirement programs. A government entity is just not the best or most efficient way to carry out those things. Nevertheless, we do have them, not just in the US, but many places throughout the world. However, in the US, the federal government has raided the funds from these programs as well as unsurprisingly mismanaged them. Both Medicare and Social Security are due to dwindle away in short order. As to exactly when, answers vary, but the point remains that the government is not doing a good job of managing these things. Not to belabor the point, however, we do still have them. So, the question is how do we do the best we can with what we’ve got?

The ideal solution would be to privatize both programs entirely. However, that is not going to happen any time soon. Sentiment in favor of these plans are strong amongst the vast majority of the US population. To be fair, it would be incredibly disheartening to simply throw away what people have paid into all their lives only to receive nothing in return.

The program could also be slowly phased out in order to more minimize the impact on those who are already aging into the systems. We could simply accept that those of us under about age 45 or maybe even 50 would be better off just calling things good and moving to a private system while we allow older citizens to continue to receive what was promised to them. However, even that will take some doing in order to build up political capital to get everyone on board.

Until that point, what can be done without making use of the political system? Something can really get done right away outside the political system that could fully restore funding for both plans, without raising taxes, and without costing anyone anything. It can all be done completely by private means.

Enter a new business set to launch very soon. Premier has designed a plan that targets employee benefits for businesses. While the plan is designed to offer employee benefits more than it’s designed to right funding for Medicare and Social Security, if every US business that offers employee benefits to their employees were to adopt it, it could fund these programs without the government having to bail it out with taxpayer money.

Premier’s plan firstly makes amounts available to each participating employee to cover out of pocket expenses on their health plan. Each year, each employee receives up to $16,000 for a participant. So, if a major medical plan has a family out of pocket max of $10,000, then employees will only spend $2,500 out of pocket, and the plan reimburses $7,500 – leaving an additional $14,700 unused. This amount would then be contributed to the reserve fund for the business for Social Security and Medicare. Employees of the business then have these amounts (combined from all employees) to add to their Social Security and Medicare during retirement. Most employees will not hit their out of pocket max for their portion of medical bills, and so funds are actually much higher on average.

The really great part about this plan is that there are no net costs to either employer or employee. Each month, an amount is withdrawn pretax from the employee’s pay. The amount averages $1,600 per month before taxes that may cause an after tax shortfall in pay on average of around $1,325 per month. However, there is a loan made to each employee that restores their original take home pay (pay after taxes are taken out). So, the employee sees no change to the amount they receive on their pay check.

This means, too, that payroll taxes are not collected on these amounts. The employer contributes 5% of the amounts into the plan. However, because the employer is no longer having to pay payroll taxes on these amounts (approximately 7.6%), the employer is actually coming out ahead by 2.6%, actually saving payroll tax money from the plan rather than it costing money.

The loans that were made to employees come from another entity that is a non-profit company. The non-profit’s goal is to restore funding for state-sponsored retirement and retirement medical care. 100% of the money loaned to workers will be paid back when they die and will be contributed to these two social programs and the SS/Medicare benefits will nearly double (which makes it a very good investment). The NPO is also able to recoup their loan funds by various means it deploys such that it is made completely whole in how much is paid out in loans. This is a patent pending process that requires signing a non-non-disclosure agreement with Premier. Many libertarians bristle at the idea of patents, but in this case, we are using a part of the system in order to work outside the system without the help of politicians who aren’t doing anything. We can act more quickly without them.

So, now we have an employee who has received their retirement benefits and Medicare more fully funded, we have a happy employer that has a net positive financial gain from the plan, and because the nonprofit has recouped its costs, no one has really had to pay anything to fund any of this. For each company that adopts the plan, the employees are having funds restored via totally private means without the political system. No taxes were raised, and we don’t have to wait on politicians to act. Everything is entirely voluntary as well.

If you have an interest in representing Premier’s plan as someone who earns a very good living from setting up businesses with an employee benefit plan that has no net cost, or if you have a business and would like to know how to benefit from the plan, you can actually send an email to request details at [email protected]

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Danny Chabino

Danny Chabino has a background in operating small businesses. He has been involved in managing and/or owning the operations of multiple retail establishments, a sub-prime lending company, a small insurance company, a small telemarketing venture, and insurance consulting. In addition to these activities, he also has spent many years managing investments in stocks and stock options as a successful trader. He is the married parent of two adult children, living as a proud lifelong Oklahoman and a part-time redneck. Danny writes for the enjoyment and pleasure of sharing ideas and for the love of writing itself. His opinions skew libertarian, but he enjoys hearing open debate and listening to or reading of opposing ideas. As an odd confession, he personally detests politics, but enjoys writing about political ideals and philosophies.