Thumbs up

Our Readers’ Favorite Blogs

It’s the time of year when we highlight blogs that attracted the most page views over the previous six months, according to Google analytics.

Today, we’re listing a “baker’s dozen” – 13 blogs – popular with our readers, instead of the usual top 10.  This allows us to highlight some interesting themes that were apparently on readers’ minds:

Many retirees weighed in with their comments on two blogs about how and why they’re taxed:

  • How Federal Taxation Drops for Retirees
  • Why Most Elderly Pay No Federal Tax

A new feature called “Boomers: Rewriting Retirement” that profiles people who are either approaching retirement or recently retired made the list:

  • A Familiar Dilemma: to Work or Retire

Squared Away tried something else new – two quizzes on financial topics – and many readers took them: …Learn More

Too Much Health Plan Choice is Costly

Technology, coffee, investments, beer – most consumers value choice in some aspect of their lives.  But what if having too many choices leads to bad decisions and costly mistakes?

Pie of optionsCarnegie Mellon University economists Saurabh Bhargava and George Loewenstein, and Justin Sydnor from the University of Wisconsin School of Business, found this to be the case at one company that required employees to select from a menu of options and build their personal health plans from the ground up. The researchers found that the employees typically designed health plans that would cost them more than other plans with similar coverage.

The cost of these choices was large for the average employee – about one-quarter of their annual premium payments in the coming year. An extreme example is the group that chose a plan with a $350 deductible. They paid about $1,100 more in premiums to save, at most, $650 in out-of-pocket spending throughout the next year.

There might be reasons that someone would choose a low-deductible plan – not having enough cash on hand in case of a medical emergency, for example. But in this particular setting, Bhargava explained in an email, “none of these explanations could reasonably account for people paying $2 to $4 in extra premiums to reduce $1 in expected out-of-pocket expenses.”

Further, lower-paid employees earning under $40,000 per year were much more likely to make these mistakes.

Bhargava said that the paradox of too many choices confronts the millions of Americans who sign up online for health insurance under the Affordable Care Act (ACA) – including his mother. In a recent presentation, he said she is “like a lot of consumers” and has “a strong aversion to a high deductible.” …
Learn More

Silhouette of Washington DC skyline

Retirement Researchers Meet in August

Reverse mortgages, health insurance, marital histories, social networks, and even student debt – any or all of these can play a role in the financial security and well-being of America’s retirees.

These are among the topics that will be explored during the 18th annual meeting of the Retirement Research Consortium, which features researchers from top universities around the country whose work is supported by the U.S. Social Security Administration.

The meeting will be held on Thursday, Aug. 4, and Friday, Aug. 5 in Washington, DC.

To learn more about the research papers being presented, click here to read the agenda.Learn More

Job satisfaction illustration

More Retirees Get Less Satisfaction

Figure: More Retirees Get Less SatisfactionIn the late 1990s, six out of ten retirees found retirement “very satisfying.” Today, not even half do, according to a recent analysis of a long-term survey of older Americans.

The news isn’t all bad, since the “moderately satisfied” share rose – and moderately satisfied is probably a more realistic goal for most people anyway.

But the question of why so few people are very satisfied with their retirement state of mind is difficult to pin down. The survey analysis by the Employee Benefit Research Institute (EBRI) and past academic research provide some clues.

Health.  It’s well-established that health and satisfaction are inextricably linked: healthier retirees are happier retirees, according to a 2005 study by the Center for Retirement Research, which supports this blog.  One reason health is important is that retirees who are healthy can remain active – bridge, golf, travel, volunteering, whatever – which brings satisfaction. …Learn More

Family holding hands

Medicare vs Medicaid in Nursing Homes

When a spouse or parent requires long-term care, quality is the top priority. But a report last year by the US Government Accountability Office (GAO) cited concerns about the quality of the federal data essential for monitoring the quality of care.  For example, three key indicators point to improvements: better nursing staff levels and clinical quality and fewer deficiencies in care that harm residents. Yet consumer complaints jumped 21 percent between 2005 and 2014, even though the number of nursing home beds has remained roughly flat in recent years.

Anthony Chicotel, an attorney with the San Francisco non-profit California Advocates for Nursing Home Reform, said care quality is intertwined with affordability, payment sources, and dramatic changes under way in nursing home economics.  For his views on this important topic, Squared Away interviewed Chicotel, who is also part of a national coalition of attorneys advocating for patient rights.

Question: Recent Boston Globe articles have highlighted substandard care at nursing home companies that allegedly sacrificed resident care quality for profits.  Are these a few bad actors or is this a larger problem?  

Problems exist in the traditional buyer-seller marketplace for nursing homes and long-term care services. Providers all get paid pretty much the same rate regardless of whether the care they provide is good or bad. It’s usually the government who’s paying, and they’ve got an imperfect monitoring system to make sure the rules are followed.

The bottom line is that dollars can be extracted from a for-profit facility that don’t go into patient care. What you sometimes see is a nursing home affiliated with a number of other companies that provide services to the nursing home at above-market rates. The same web of companies running the nursing home might be in charge of the linen supplies, medical equipment, therapy, and the above-market rents for the facilities. If they’re paying, say, $12,000 a month for linens instead of sending it to a non-affiliated company, and it costs only $7,000 per month to supply the linens, they’re making a $5,000 profit. I don’t think the government’s going to catch that or account for that money.

Q: Long-term care is so expensive – more than $6,000 per month, on average.  What are the top three financial issues that face nursing home patients and families? … Learn More

Personal Finance Videos Hit the Basics

These personal finance videos are like sensible shoes: they won’t win any awards, but they can be useful.

Produced by the College of Financial Planning, the short videos demystify the fundamentals of personal finance that the planners who teach and take courses at the college rely on in their practices.

  • “Free Money” (above) features Dirk Pantone, a vice president and certified financial planner, interviewing Kristen MacKenzie, who teaches there, about 401(k)s, 403(b)s, 457(b)s and the employer match.
  • “Living on Borrowed Time,” has Pantone and MacKenzie discussing the difference between good debt and bad debt, both of which impact credit scores.
  • “The Road to Investing Your Assets” explains why low fees and portfolio diversification are so important.

There are 13 videos.  Other topics covered include retirement, taxes, and financial literacy. To watch other videos, click here. …Learn More

Medicaid Expansion: Winners vs Losers

Low-income residents are in better financial shape in the 31 states that have expanded their Medicaid health coverage under the Affordable Care Act (ACA).

Medicaid expansion

That’s the bottom line in a new study finding that they have fewer unpaid bills being sent to collection agencies and their collection balances are $600 to $1,000 lower than their counterparts in non-expansion states. This contrasts with the years prior to the 2014 Medicaid reform, when residents of would-be expansion and non-expansion states had very similar financial profiles.

State decisions about whether or not to expand their Medicaid rolls are having “unambiguous” and “important financial impacts,” concluded researchers at the University of Michigan, the University of Illinois, and the Federal Reserve Bank of Chicago.

Medical crises are expensive for most workers but are virtually insurmountable for low-income Americans. The annual cost of care for someone hospitalized at some time during 2012, for example, was $25,000 – more than many low-wage workers earn in a year.

To address this risk, the ACA expanded Medicaid health coverage to more people and established a new income threshold to qualify at 138 percent of the federal poverty level – or about $16,000 for an individual. A U.S. Supreme Court decision later gave states the option of expanding their Medicaid programs.

The researchers’ findings were based on credit reporting data on 1.8 million individuals between 19 and 64 years old who are living below 138 percent of the federal poverty.  They analyzed the impact of Medicaid availability on non-medical debt, such as credit cards, in zip codes with the highest percentage of people under the threshold during 2014 and 2015.  [Mortgage debt was excluded.]

The purpose of health insurance is to provide a financial cushion by limiting the spike in out-of-pocket expenditures when a medical crisis strikes. For low-wage workers, this cushion takes the form of Medicaid.Learn More

12345...102030...