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High-deductible Health Plans on the Rise

Health Plan Deductibles: ChartHealth insurance is really starting to hurt.

Premium increases and deductible creep, documented in the Kaiser Family Foundation’s comprehensive annual survey of employer health benefits, are eye-popping figures. Although there has been a slowdown in medical inflation and health care spending overall, the growing prominence of high-deductible plans is evidence that more of these costs are shifting to employees.

  • One in four workers today is enrolled in a health insurance plan with a high deductible – up from 4 percent a decade ago – exposing them to larger out-of-pocket expenses than traditional health plans if they become ill. [Kaiser’s definition of high-deductible plans is that they are accompanied by a tax-preferred savings plan to help workers pay their medical bills.]
  • These deductibles average around $2,000 for single coverage, but they exceed $3,000 for about 20 percent of single workers. Deductibles average $4,350 for a family plan, but nearly 20 percent face deductibles exceeding $6,000.
  • Average annual premiums for single workers in these plans range from $773 to $1,021, while family plan premiums are $3,660 to $4,407.
  • Everyone’s deductibles are rising much faster than premiums. For example, the share of the annual premium paid by all single workers with health coverage has increased 19 percent since 2010, to $1,071. But their deductibles have risen 67 percent, to $1,077.
  • Retiree health care trends, in contrast, might be stabilizing. Since 2009, the share of larger companies offering the coverage to retirees has bounced around between 23 percent and 28 percent.

Employers are also paying more for annual premiums, according to Kaiser – about $1,000 more per single worker than they paid in 2010 and about $2,800 more for a family plan.

But it’s clear from the data that this shared burden falls heavily on employees.

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Free Help Navigating the Medicare Maze

Table: the FactsHICAP, SHIP, SHINE – whatever your state calls the program, the mission is an urgent one.

With some 10,000 baby boomers turning 65 every day, these programs help new enrollees grapple with their Medicare options and make decisions, especially during open enrollment, which begins on Thursday and ends Dec. 7.

Medicare is “confusing” to boomers, because they “have more than one option, and most of us, when we were working, had only the PPO or the HMO” to choose between, said Christina Dimas-Kahn, program manager and a telephone counselor in San Mateo County, California’s Health Insurance Counseling and Advocacy Program (HICAP).

The top requests for assistance coming into her office are from new enrollees to Medicare, followed by the elderly who can’t afford their medications, messy billing problems between Medicare and health providers, and questions about long-term care and how to pay for it, she said.

The primary goal is “education and empowering you to enroll yourself,” said Joshua Hodges, who oversees the programs for the U.S. Administration for Community Living (ACL), which funds them. Their “beneficiary focus” has become even more crucial, he said, since the advent of Advantage managed-care plans, which complicate the choices faced by Medicare beneficiaries.

Click here or here for a state-by-state directory of State Health Insurance Assistance Programs (or SHIPs) – their official name. SHIPs are also available to residents of Puerto Rico, Guam, the Virgin Islands, and Washington DC. …Learn More

Blacks Invest Less Often

If two people – one black, one white – have good jobs with comparable incomes, the black person would still be less likely to have a taxable investment account, such as a mutual fund, a new study finds.

ChartNumerous reports have shown that black Americans have fewer retirement and other savings accounts, and less money in those accounts than white Americans. But the problem with many of these comparisons is that they lump people together, regardless of how much they earn.

A new study by the FINRA Investor Education Foundation looks at one type of account – taxable investment accounts – and controls for income as well as two other characteristics that influence wealth: education and age. The study, using data from a 2012 survey of more than 25,000 U.S. households, found that when everything else is equal, black American households were still 7 percentage points less likely to have taxable investment accounts than white households; and Hispanic households were 4 percentage points less likely to have such taxable accounts than white households.

FINRA also identifies other characteristics typical of the one-third of households with a taxable account. …Learn More

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Your Aging Parents or Clients: 7 Tips

When Bob Mauterstock asked how many financial advisers in the room had elderly clients showing signs of diminished mental capacity, a few hundred raised their hands.

Next, he asked, how many have a protocol for these clients? Fewer than 10 put up hands.

With the U.S. population over age 85 growing at a rapid clip, advisers increasingly are facing this issue, he explained last week at the Financial Planning Association meetings in Boston. A 2009 Fidelity survey backs him up: 84 percent of advisers said they had clients touched by Alzheimer’s disease.

Mauterstock, the author of “Passing the Torch, Critical Conversations With Your Adult Children,” shared seven tips to help advisers, clients, and their families. While many of his suggestions apply to wealthier people receiving comprehensive financial services, they’re also useful to people dealing with a parent experiencing cognitive decline.

Recognize the symptoms. “Diminished mental capacity is a slow, gradual thing,” he explained. Don’t wait until the signs become crystal clear before taking action. He used the example of his own client – a Harvard-educated anesthesiologist – who started calling repeatedly and asking to speak with his accountant. Mauterstock’s staff gave him the accountant’s phone number – only to get the same call over and over again. Better to recognize the signs early, contact the client’s family, and devise a plan.

Do the Homework. Advisers should have a complete checklist of things to discuss with clients before they experience cognitive issues, from a durable power of attorney to the handling of trusts held in their name. He also recommended documenting client meetings once cognitive decline sets in. Having another adviser in these meetings is in the client’s interest – as well as the adviser’s – and helps ensure that good decisions are being made. An advocate for the client should also sit in, to help with decisions as they become increasingly difficult to work through.

Hold Family Meetings. The most important thing an adviser can do when cognitive decline starts setting in is to ask the client to call a family meeting. …Learn More

The Common Struggles of Working People

Brandi and Frank, the hypothetical couple in the above video, are drawn from extensive nationwide interviews with real Americans who work extremely hard, live modestly, and carry their financial anxiety through the day.

Ten of these families were also featured in written profiles by the U.S. Financial Diaries project. Like millions of working Americans, these families are buffeted by economic forces ranging from stagnating paychecks to a scarcity of employer benefits in low-wage jobs. The project identified common traits running through their financial lives.

They are continually trying to improve their lot, with education or by taking on extra jobs and by saving. Retirement saving, however, is a luxury – their saving is done to pay the unanticipated emergency or surprise expenses that inevitably crop up, according to the Diaries, a joint project of New York University’s Financial Access Initiative and the Center for Financial Services Innovation.

Saving for the short-term is also necessary because their sources of income can be erratic, requiring tricky rearrangements of their household resources. When they incur on-the-job expenses, employers’ reimbursements are often slow to arrive. Their monthly expenses often exceed monthly income, which can lead to late payments of utility bills or delays in medical treatment.

The following are short descriptions of some of the families profiled in the Diaries’ worthwhile project …Learn More

Photo of happy teens

Don’t Worry About Money. Just Be Happy

The adage that money won’t buy happiness has been proved wrong – at least up to a point. One famous study found that one’s well-being increases as income rises, though the benefits subside around $75,000 per year.

But what about the reverse? Do people who are happy earn more money? Yes, say two British economists.

Their study in the Proceedings of the National Academy of Sciences concluded this after following American teenagers for a more than decade through the National Longitudinal Study of Adolescent Health. In 1994 and 1996, this survey asked high school students to react to statements like “You were happy” and “You felt hopeful about the future.” In a 2008 follow-up survey, when most of them were around age 30, they were asked how much money they were making.

People who reported having a happy adolescence earned about $3,400 more than the average gross income of all the survey respondents; the average was $34,642. However, the opposite effect was more consequential: young adults who had a “profoundly unhappy adolescence” were earning 30 percent less – equivalent to a $10,000 hit to their earning power. …Learn More

House on a stack of money

Changes to Reverse Mortgages Continue

The federal government continues to work out the kinks in its reverse mortgage program. The latest change allows a non-borrower to remain in her home after her spouse, who signed the reverse mortgage, has died.

The federal government established its reverse mortgage program in the 1990s to provide an alternative source of income for retirees over age 62. These Home Equity Conversion Mortgages (or HECMs) are secured by the equity in borrowers’ houses, and the loans are repaid only when they move or die. The loans are federally insured to ensure that borrowers get all the funds they’re promised, even if the lender fails, and that lenders are repaid, even if the value of the property securing the loan declines.

A June 2015 regulation effectively allows lenders to permit a surviving, non-borrowing spouse to remain in the home, postponing loan repayment until she moves or dies. To qualify, the original reverse mortgage must have been approved by the Federal Housing Administration prior to August 4, 2014, and the property tax and insurance payments must be up to date and other conditions met.

The spousal provision adds to earlier changes, detailed in a 2014 report by the Center for Retirement Research, aimed at improving the HECM program’s fiscal viability while protecting borrowers and lenders. These regulations were a response to riskier homeowners who had tapped their home equity to cope with the Great Recession. The regulations reduced the amount of equity that borrowers could extract upfront and also introduced financial assessments of homeowners to ensure they’re able to pay their taxes and insurance. …Learn More

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