August 28, 2018
Medigap Premiums Differ by Thousands
- A 65-year-old woman in Houston can pay $5,300 a year for Medigap’s Plan C policy or she can buy a policy with exactly the same coverage from another insurance company for $1,700 a year.
- A 65-year-old Hartford, Connecticut, man can spend anywhere from $2,900 to $7,400 annually for the most popular and comprehensive Medigap policy – Plan F.
- The price disparity for Plan A for a 75-year-old man in Manchester, New Hampshire, is also large: anywhere from $1,820 to $6,301.
These are fairly typical of the enormous differences in the premiums that consumers across the country are paying for their Medigap policies.
The price disparities are “extraordinary and unable to be justified purely by the coverage that they’re offering,” said Gavin Magor, director of ratings for Weiss Ratings Inc., a consumer-oriented company that assesses insurance companies’ financial stability.
A nationwide analysis by Weiss shows that the premiums vary widely within each group of plans – Medigap Plans A, B, C through N – despite the fact that the coverage in each group is dictated by the federal government and does not change from one insurer to the next. Every company selling a Plan F policy, for example, must offer exactly the same coverage. (The exceptions are Massachusetts, Wisconsin, and Minnesota, where the states regulate their Medigap plans.)
If two people are buying a Chevrolet Camaro in Houston, “you would not expect one person to pay two or three times more than the other one,” Magor said.
Medigap is an added layer of insurance to supplement Medicare for people over 65. The additional coverage helps them with the copayments, deductibles, skilled nursing, and other charges that Medicare does not pay for.
Weiss supplied the data for this article by comparing Medigap premiums sold in each zip code and separately for men and women and for different age groups. The company based the analysis on premiums at more than 170 insurance companies.
There are a few viable explanations for the disparity in premiums. Urban and rural zip codes in the same state may be priced differently, in part because medical costs tend to be higher in the cities. And some insurers might be able to offer lower premiums, either because they are more efficient or are trying to be more price competitive to gain market share.
But Magor said that none of these explanations can fully account for the enormous price differences within zip codes. Many insurers are overcharging for their Medigap policies, he said.
A spokeswoman for America’s Health Insurance Plans, which represents health insurers, said she could not comment on Weiss’ information without the organization doing its own analysis of the data.
Paying too much for a Medigap plan can have a material impact on a retiree’s life. …
August 23, 2018
Maybe You Can Slow Cognitive Decline
After decades of study devoted to describing the negative effects of dementia, a new generation of researchers is pursuing a more encouraging line of inquiry: finding ways that seniors can slow the inevitable decline.
One vein of this research, still in its infancy, considers whether seniors could reduce the risk of dementia if they engage in volunteer work. Several studies focus on volunteering, because most of the population with the greatest risk of dementia – people over age 65 – is no longer working.
There’s no suggestion that volunteering can prevent dementia. However, one new study, by Swedish and European researchers, found that Swedes between 65 and 69 who volunteer had a “significant decrease in cognitive complaints,” compared with the non-volunteers. The seniors answered a survey questionnaire at the beginning and end of the 5-year study that gauged whether they had experienced any changes in each of four complaints: “problems concentrating,” “difficulty making decisions,” “difficulty remembering,” and “difficulty thinking clearly.”
The study didn’t go so far as to claim that volunteering actually caused the improvements either. But it highlighted how volunteering might reduce the symptoms, possibly because it keeps older people more physically and mentally fit.
Collection of the Supreme Court of the United States
Indeed, the cognitive benefits of exercise have been understood for so long that they’ve become a perennial topic in the mainstream media. Supreme Court Justice Ruth Bader Ginsburg, 85, has become the poster child for elderly exercisers, with a personal trainer overseeing her push-ups and turns on an elliptical machine in a CNN Films documentary, “RBG.”
The research confirms that she’s doing what she needs to do to stay sharp for her beloved job: aerobic exercise in particular protects seniors’ brain matter from deterioration; weight training and stretching exercises do not.
A research team’s 2014 review of 73 prior studies on volunteer work found multiple benefits: “volunteering in later life is associated with significant psychosocial, physical, cognitive, and functional benefits for healthy older adults.” The paper, which appeared in the Psychological Bulletin of the American Psychological Association, defined psychosocial well-being as having greater life satisfaction, higher executive function, being happier and having a robust social network. …Learn More
August 21, 2018
2 in 5 Millennials Have Used Payday Loans
Millennials are big users of payday loans, which have steep interest rates that can really mess up their finances.
Remarkably, two out of five people in their mid-20s to mid-30s have used a payday loan, which is more than double the frequency for people in their late 30s, says Melody Harvey at the Pardee RAND public policy school. Generation-Xers and baby boomers use them even less, other surveys have shown.
Harvey’s new research has produced some evidence that something can be done to protect vulnerable young adults in the future: require them to take money management classes while they’re still in high school.
The use of payday loans is part of a broader trend among Millennials, she said. They also turn to desperation financing such as pawn shops to raise quick cash or rent-to-own schemes that, in the end, require them to pay much more for consumer products like furniture and computers.
Many young adults probably gravitate to high-cost forms of financing, because they’re strapped for cash after paying their rent and student loans every month. They also start their careers at relatively low wages and haven’t established the strong credit histories required to qualify for traditional, lower-cost debt.
But while poor people are often forced to use payday loans to solve an impossible financial problem, young adults could be using them partly to fund profligate spending. …Learn More
August 16, 2018
US Increasingly Polarized – by Geography
Rich or poor, old or young, white or black, red or blue – our differences cut many ways.
But a new divide has opened up, one based on geography. Stark new evidence shows that well-paid, highly educated people have moved to high-cost coastal cities over the past decade, while lower-income, less educated people have moved out.
American cities are “grow[ing] increasingly dissimilar along socioeconomic dimensions,” said Issi Romem, a fellow at the Terner Center for Housing Innovation at the University of California and economist for BuildZoom, a California website focused on development.
Gentrification is nothing new. But Romem’s analysis of U.S. intercity migration shows that gentrification occurs not just within city neighborhoods but also between cities. San Francisco is the most extreme example of what he calls “income sorting.” He estimates that the population moving into the Bay Area earns $13,000 more, on average, than the population that is moving out. People relocating to Seattle and Washington earn about $3,800 more than the people who leave.
A similar phenomenon is occurring in New York, Los Angeles, San Diego, and Boston, where restrictions on development, coupled with the strong demand for the limited housing stock, are pushing up house prices and driving people out, including renters who can no longer afford the steep increases in rents.
These movements exacerbate society’s already high level of inequality. As cities or regions of the country become less integrated in terms of their residents’ incomes, fewer low- and middle-income groups will enjoy the particular benefits to them of living in the midst of those who are better off.
Upward mobility is one such benefit. A famous study found that lower-income people are more likely to move up the income ladder, relative to their parents, if they live in coastal cities with higher education levels, better primary schools, and more family stability. Other research shows they will also live longer if they reside in cities with more socioeconomic diversity. …Learn More
August 14, 2018
Americans With Small 401ks Worry
This blog has spilled plenty of ink over the problem of so many workers having inadequate retirement savings.
One theory is that they don’t understand the urgency. But a new survey makes clear that they not only are fully aware of the problem but are very worried about it.
The vast majority of the 1,000-plus baby boomers and Generation-Xers who conceded to being behind on their saving wish they could save more – Allianz, which conducted the survey, calls them “chasers.”
These chasers recognize that if they don’t make adjustments, it’ll be too late to repair their finances. Two out of three fear the worst: they’ll run out of money at some point in old age and will be forced to eke out a living on their Social Security checks alone.
Their fears are warranted. The typical boomer household approaching retirement who has a 401(k) has saved just $135,000 in its 401(k) and any IRAs combined. At retirement, this amount equates to only about $600 in monthly income
Half of the workers put the blame on a single culprit: “too many other expenses right now.”
This sentiment dovetails with mounting evidence that many workers are overwhelmed by the increasing costs of health insurance, college, and housing, which are far outpacing their pay raises. Low-paid workers are especially hard hit, according to 2017 research. If they save at all, they set aside only 3 percent of their paychecks – half of what top-paid people are able to save. …Learn More
August 9, 2018
Divorce Very Bad for Retirement Finances
When a marriage ends in divorce, there are no fewer than seven ways that it could damage a person’s finances.
Divorce can rack up costly legal fees; force a house or stock sale in a down market; increase living expenses; increase tax rates; hamper the ability of the primary caregiver – mothers – to earn money; require fathers to pay alimony; and reduce each partner’s access to credit.
A new study looking at their impact on workers’ future finances concludes that divorce – the fate of four in 10 marriages – “substantially increases the likelihood” that their standard of living will decline after they retire. …Learn More
August 7, 2018
Game Show Pays Off Student Loans
The student loan problem has gotten under our collective skin – so much so that a new game show revolves around it.
“Paid Off,” on TruTV, promises to pay off a share of the winning contestant’s student debt – 20 percent, 50 percent, or 100 percent – depending on how many answers he or she gets right in the final round of questioning.
“Paid Off” is as inane as any television game show. The format is more “Family Feud” than “Jeopardy,” with softball questions designed to spark as much faux competition as possible among the former students who compete. One example: name the most romantic date costing under $10: picnic, walk, Netflix movie, etc.
The show’s host, Michael Torpey, who also plays a corrections officer in “Orange is the New Black,” explains in the first episode of “Paid Off” that he created it because he and his wife struggled with student loans. He was only able to pay them off because he landed a long-shot acting job for a television commercial.
Torpey says his goal is to help debt-laden students “achieve their dreams by paying off their student loans.” He’s right that college debt is, indeed, standing between many Millennials and the adult milestones of buying a house, saving some money, or getting married.
The average amount of debt owed by college graduates increased again last year, to more than $39,000, according to Student Loan Hero.
Unfortunately, the weekly show won’t make a dent in this growing problem. …