Errors in Medical Bills Are Rife

Chart: Medical Debt ComplaintsEver try to make sense of a medical bill, with its co-payments, cost-sharing, and government or insurance-company reimbursements that haven’t been paid yet?  Hospital stays with multiple doctors and lab tests make billing even messier.

These layers of complexity contribute to errors and confusion that can damage Americans’ credit ratings.  Consumers “incur medical debts in collection without certainty about what they owe, to whom, when, or for what,” the federal Consumer Financial Protection Bureau (CFPB) reports.

When a hospital or physician hasn’t been paid, they may, after trying to resolve the issue in-house, pass the unpaid bill to one or a series of collection agencies.  Yet nearly one in four of the complaints consumers have made to CFPB about medical bills in collection said the debt “is not mine.” One in five said they’ve paid the bill being reported as past due.

There’s new evidence that the number of people reporting medical debt issues is declining, and new federal rules are aimed at curbing aggressive collection practices for low-income patients. But medical debt still accounts for half of the collections posted on credit reports and is the largest source of complaints about credit reports, exceeding complaints about utility and cable bills and retail and financial transactions. …Learn More

The Psychology of Fraud

What makes this AARP video about fraud compelling is that a few brave seniors were willing to discuss how they were cheated out of a few thousand dollars, $20,000, even $300,000.

With the baby boom population aging at the same time that the Internet has become a haven for hackers, scammers, and invasions of privacy, experts predict that the incidence of online and other fraud against the elderly will continue to increase in coming years. Some researchers have begun to explore the topic of fraud and aging, with one recent study showing that people become more vulnerable to fraud as they age and experience natural cognitive decline.

The seniors’ testimonials in the video, produced by the AARP Fraud Watch Network, demonstrate how con artists’ strategies tap into our deepest emotional needs.  “These tactics are so powerful, and [scammers] use them with such intensity that it is difficult to say ‘no,’ ” said Anthony Pratkanis, a psychology professor at the University of California, Santa Cruz.

Pratkanis explains four psychological strategies that con artists use to lure people into surrendering their money: …Learn More

Americans Cope with Income Swings

A full-time job that delivers a steady paycheck, week in and week out, is a luxury for many working people.

Low- and middle-income adults are instead often whipsawed by wild swings in their incomes, finds a U.S. Financial Diaries project, based on detailed biweekly or monthly financial interviews with 235 urban and rural U.S. households nationwide. During the course of the year these interviews were conducted, the average household experienced four spikes or dips, defined as a change of at least 25 percent in their incomes.

The Bloomberg video above explains that even when workers’ annual incomes are sufficient to cover annual expenses, these month-to-month fluctuations complicate how – or whether – they can save for their future.

The income swings have many causes primarily stemming from the labor market, including unpredictable work schedules, unsteady part-time or self-employment, and a patchwork of multiple jobs, as well as a reliance on intermittent payments such as tax refunds.  More than half of the adults interviewed – retail and construction workers, waitresses, check cashers, hotel workers, taxi drivers – held down more than two jobs. …Learn More

Photo of a college campus quad

Many in Dark About Their College Debt

A recent Brookings Institution report confirms for the first time how severely uninformed many college freshman are about the impact of the debts they’re taking on to fund their education.

This isn’t entirely surprising. But with tuitions continually rising and students now often forced to borrow the equivalent of a house down payment by the time they graduate, the Brookings findings should serve as a wake-up call:

  • Half of the full-time freshmen surveyed “seriously underestimated” how much they were borrowing.
  • Among students known to have federal college loans, four out of 10 either said they didn’t have any federal loans or didn’t have any debt at all.

According to the report, “Students who do not have a good idea of their level of borrowing may make expensive mistakes that they will later come to regret.” …Learn More

Woman in nursing home

Fewer Need Long-term Care Insurance

Years of confinement to a nursing home is everyone’s worst fear for old age.

With a semi-private room now costing about $81,000 annually, the prospect of a lengthy stay is also a popular reason for buying a long-term care insurance policy to cover it.

Undercutting this rationale is a new study led by senior economist Anthony Webb of the Center for Retirement Research, which sponsors this blog. He finds that U.S. nursing home stays are relatively short: 11 months for the typical single man and 17 months for a single woman.  There’s some unpleasant news in the study, too, because the risk that an older person may one day need nursing home care is 44 percent for men and 58 percent for women.

The significance is that nursing home stays are higher-probability, lower-cost events than previously thought, which reduces the appeal of purchasing long-term care insurance.  This finding helps to explain why so few older Americans – 13 percent – buy the coverage to protect their financial assets from potentially being drained by nursing home bills. …Learn More

Like written on chalkboard

What Readers Liked in 2014

Since you are the best judges of what financial information is most useful, it’s a holiday tradition to feature readers’ favorite articles published during the year.

Please spread the word among family and friends about the most popular 2014 blogs, listed below, by “liking” Squared Away’s Facebook page.  Readers can also sign up for emails of each week’s headlines.

The  articles are ranked in the order of their total page views:

  • Retirees Live on Less. People who’ve already retired say adjustments are required to live on a smaller income.
  • Retirement Delayed to Pay the Mortgage. Paying off the house tilts many baby boomers’ decisions.
  • Retirement: a Good State of Mind. New research tries to resolve the conflicting evidence about whether retirement is good for you.
  • How Much For the 401(k)? Depends. Saving is critical in a 401(k) world.  The sooner Millennial workers start, the less painful saving will be.
  • Parents’ Longevity Sways Plans to Retire. If a parent dies suddenly, retirement becomes a higher priority. …
  • Learn More

Woman reaching for food

Hunger: Unspoken Among the Elderly

Retirees in one Orlando-area community sustain a lively conversation about every topic under the Florida sun, a conversation that threads through their rounds of horseshoes, dinner dances at the club house, and senior yoga.

But one subject must be handled with great discretion: hunger.

Judy Cipra knows this, because she and her late husband, Fran Cipra, started, and she continues to operate, Fran’s Pantry to collect money and buy groceries for 18 seniors who struggle financially in the Palm Valley retirement community, where my mother also lives.

“If you call me and you tell me that you need food, I don’t ask any questions,” Cipra said. “You just get it.”

Cipra said people reliant solely on Social Security are often embarrassed to be barely getting by.  Some fill their food gaps with soda crackers and peanut butter, she said.

But hunger among seniors is not uncommon.  About 15 percent of Americans age 60 and older were threatened with hunger in 2012, according to the National Foundation to End Senior Hunger.  And as the baby boom population ages, the number of these “food insecure” seniors is continuing to rise, exposing growing numbers of retirees to health problems and depression stemming from not having enough to eat. …Learn More

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