June 2, 2016
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).
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
May 17, 2016
The Secret to Longer Life: Keep Working
If having an adequate income in retirement won’t persuade you to delay that retirement date by a year or two, try this argument: you’ll live longer.
A new study in the Journal of Epidemiology and Community Health found strong evidence that older workers who retire even one year later have lower mortality rates. This held true for both healthy and unhealthy people.
The researchers at Oregon State and Colorado State used a survey of older workers to follow some 3,000 people who were employed in 1992 but had retired by 2010. Since health drives mortality and is a factor in deciding when to retire, they separated their research subjects into two groups – healthy and unhealthy – to see if they had different results.
The healthy people were more likely to be physically active, non-smokers with a lower body mass index and fewer chronic medical conditions. Other research has shown that having meaningful work can also contribute to health at older ages.
Over the period of the study, one in four unhealthy retirees died, compared with just about one in 10 healthy people. But the survival odds improved for people in both groups who retired after age 65, reducing the risk of healthy people dying by 11 percent and unhealthy people by 9 percent for each year of delay.
These general results aren’t necessarily true of every individual worker: some people are in such stressful or physically demanding jobs that retirement might be good for their health. Further, the reasons behind the health benefits of a longer working life are not fully understood. …Learn More
January 21, 2016
Seniors Vulnerable to Drug Price Spikes
Total U.S. spending on prescription drugs by individuals, insurers and governments jumped 13 percent last year – the largest increase since 2001. One in four Americans report having difficulty paying for medications.
Older Americans are somewhat shielded from the full impact of rising drug prices by Medicare’s Part D program, which greatly expanded their coverage. Since Part D’s implementation in 2006, seniors’ average out-of-pocket spending on medications has actually declined, from $708 to $564 annually in 2012.
But a recent trend of price spikes for specialty drugs might be a snake in the grass for seniors on fixed incomes. Since most take multiple prescriptions, they face greater odds of needing at least one of these expensive medicines.
Drug cost stability for seniors “is starting to reverse as newer specialty drugs come into the marketplace,” said Juliette Cubanski, a senior Medicare policy researcher for the Kaiser Family Foundation. Part D plans “are covering these drugs and people are taking them, but the costs are going up.”
They include new breakthrough drugs that cure – rather than just treat – Hepatitis C, as well as medications for rheumatoid arthritis, multiple sclerosis, and cancer. Kaiser estimates that a senior who takes one of the 12 specialty drugs it analyzed can pay anywhere from $4,400 to $12,000 per year out of their own pockets, even after taking into account Part D’s subsidies. …Learn More
December 22, 2015
Readers’ Picks in 2015
Squared Away readers should know this ritual by now. We consult Google Analytics to determine the articles with the most reader traffic over the past year.
This blog covers everything from student loans to helping low-income people improve their lot. But this year’s Top 10 was dominated by one topic: retirement.
Readers’ favorites are listed in order of their popularity, with links to each individual blog:
- Navigating Retirement Taxes
- Medicare Primer: Advantage or Medigap?
- Why I Dropped My Financial Adviser
- The Future of Retirement is Now
- Annuities: Useful but Little Understood
- Winging it in Retirement?
- Fewer Need Long-Term Care
- Misconceptions about Social Security
- Late Career Job Changes Reduce Stress
- Mortgage Payoff: Freedom versus the Math
To stay current on our Squared Away blog in 2016, we invite you to join our free email list. You’ll receive just one email each week – with links to the two new posts for that week – when you sign up here. Learn More
December 10, 2015
How Couples Deplete Retirement Savings
Americans who save for retirement throughout their working lives often hold tight to that savings after they retire. A new study shows they eventually do spend much of this money and sheds light on where it goes.
The study focuses on the retirement spending patterns of couples, adding to similar past studies on single retirees. While both spouses are alive, the researchers found that a couple’s wealth remains relatively stable over time – until they start paying for medical care, nursing homes, and other major end-of-life expenses.
The researchers examined spending patterns for more than 4,600 households over a 15-year period using a subset of the Health and Retirement Study that collects data on the health and wealth of people over age 70. Wealth included savings and retirement accounts, investments, and home equity.
Couples in two different income groups were compared: the average couple at the 20th percentile has about $14,000 in post-retirement income and $70,000 in wealth at age 74; the 80th percentile couple has more than $30,000 in income and $330,000 in wealth.
Here are the study’s main findings:
November 17, 2015
Long-term Care Policyholders Who Lapse
In an upside-down aspect of long-term care insurance, about one in four older people with a policy who eventually go into a nursing home had let that policy lapse sometime in the previous four years, forfeiting coverage that would’ve paid for their care.
The questions are who does this and why.
New research by the Center for Retirement Research (CRR) finds two explanations for why: a scarcity of financial resources and cognitive impairment, which limits the elderly’s ability to properly manage their finances, including their long-term care policies.
The researchers found no support for what they call “strategic lapsing” – a deliberate decision to quit paying the premiums by healthy older individuals who, upon reconsideration, conclude that their risk of needing care in the future is low. …Learn More
October 27, 2015
Health Insurance Costs Squeeze 401ks?
U.S. workers’ wages, adjusted for inflation, are stagnating, but their share of health care costs keeps going up.
“Something has got to give, right? That something could very well be the 401(k) or 403(b) plan,” said Mark Zoril, a personal financial planner and benefits adviser to small companies.
Six in 10 workers agreed: the rising cost of their health insurance “directly affects” how much they set aside in their retirement savings plan at work, according to a new survey gauging the “financial stress” of more than 2,000 full-time employees with health coverage. The random survey was conducted by LIMRA, a financial services research organization.
Despite a slowdown in medical inflation, employees are paying a growing share of the tab for their health care. Average total premiums for family coverage under U.S. employer health plans rose 61 percent between 2005 and 2015, for example, but the employee’s share of the premium increased 83 percent to $4,995, according to the Kaiser Family Foundation’s annual report. Two out of three individual workers today pay deductibles of at least $1,000, up from 16 percent a decade ago.
Anita Potter, LIMRA’s senior vice president of research, said workplace benefits face increasing competition for workers’ limited resources. …Learn More