Posts Tagged "low income"

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Reducing Poverty for Our Oldest Retirees

With more Americans today living into their 80s and beyond, the elderly are becoming more vulnerable to slipping into poverty.

To reduce the poverty risk facing the oldest retirees, some policy experts have proposed increasing Social Security benefits for everyone at age 85. Under one common proposal analyzed by the Center for Retirement Research in a new report, the current benefit at this age would increase by
5 percent.

The poverty rate for people over 85 is 12 percent, compared with 8 percent for new retirees. But more elderly people may actually be living on the edge, because the income levels that define poverty for them are so low: less than $11,757 for a single person and less than $14,817 for couples.

age and poverty chartOne reason the oldest retirees are especially vulnerable is that their medical expenses are rising as their health is deteriorating, yet they’re too old to defray the expense by working. This is occurring at the same time that the value of their employer pensions – if they have one – has been severely eroded by inflation after many years of retirement.

Further, elderly women are more likely to be poor than men, because wives usually outlive their husbands, which triggers a big drop in income that is generally not fully offset by a drop in their expenses.

Limiting the 5 percent benefit increase to the oldest retirees would ease poverty while containing the cost. …Learn More

Medicaid Expansion Reduces Unpaid Debt

One in five Americans is burdened by unpaid medical bills that have been sent to a collection agency. Medical debt is the most common type of debt in collections.

This burden falls hardest on lower-paid people, who have little money to spare between paychecks.  These are the same people the 2014 Medicaid expansion under the Affordable Care Act (ACA) was designed to help.  Some 6.5 million additional low-income workers were getting insurance coverage just two years after Medicaid’s expansion, which increased the program’s income ceiling for eligibility in the states that chose to adopt the expansion.

mapThe evidence mounts that this major policy has improved the precarious finances of vulnerable households.

A new study of the regions of the country with the largest percentage of low-income residents found that putting more people on Medicaid has reduced the number of unpaid bills of all kinds that go to collection agencies and cut by $1,000 the amounts that individuals had in collections.

The impact in states that did not expand Medicaid is apparent in Urban Institute data. Five of the 10 states with the highest share of residents owing money for medical bills – North Carolina, South Carolina, Oklahoma, Tennessee and Texas – decided against expanding their Medicaid-covered populations under the ACA option. About one in four of their residents have medical debt in collections.

That’s in contrast to Minnesota, which has one of the most generous Medicaid programs in the country and the lowest rate of medical debt collection of any state (3 percent of residents), said Urban Institute economist Signe-Mary McKernan.

“Past due medical debt is a big problem,” she said.  “When [people] have high-quality health care, it makes a difference not only in their physical health but in their financial health.” …
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Despite Medicare, Medical Expenses Bite

Medicare pays for the bulk of the medical care for Americans over 65, but a lot of their income is still eaten up by medical expenses.

The list of expenses is long. The lion’s share goes toward various insurance premiums – for Medicare Part B coverage, Part D prescription drug coverage, and supplemental insurance, whether Medigap, a Medicare Advantage plan, or employer health insurance for retirees. The remaining costs, for copayments and deductibles, are also significant.

These out-of-pocket costs, when added together, averaged about $4,300 annually per person, finds a new study by researchers Melissa McInerney, Matthew Rutledge, and Sara Ellen King of the Center for Retirement Research.

Out-of-pocket costs consume a third of the amount that retirees receive from Social Security, which is the most significant source of retirement income for a wide swath of the nation’s seniors, including many people in the middle-class. Half of seniors get at least half of all their income from the federal program.

The Medicare Part D prescription drug program has given some relief to retirees. After it became effective in 2006, the share of seniors’ income consumed by out-of-pocket costs declined slightly and then declined again after a follow-up reform of Part D began to close a big gap in drug coverage – known as the donut hole – in 2010. …Learn More

Luck – or a Deliberate Path to Wealth

wealth by education chartIt’s usually not talent or street smarts or brains that make people wealthy and comfortable. It’s the luck of having rich parents.

But there is another way to get there, one that is within reach: becoming the first generation in the family to earn a college degree.

A new study by the Federal Reserve Bank of St. Louis, using the latest federal data on household finances, measures the impact of having that degree – or not having one – on wealth and income.

Although the ranks of college-educated Americans have grown over the past quarter century, people lacking a degree still make up a substantial majority – two out of three Americans. …Learn More

First-Generation ‘Imposter Syndrome’

Education is the fastest ticket to a higher income, more opportunities, and a better quality of life. But four-year college is often a tough road for the pioneering first in their families to attend.

They have at least two big disadvantages – apart from the well-known financial one.  Unlike the teenagers of the highly educated professionals who usually take for granted that their children will go to college, first-generation students might not have the benefit of high expectations at home. College is outside their comfort zone, which creates psychological barriers to attending and succeeding.

A second disadvantage is that they aren’t always going to learn, through a sort of parental osmosis, to cope with higher education’s mores and attitudes or be as resilient to its challenges.

UCLA student Violet Salazar says in this video that she used to feel she didn’t fully belong, “because I am first generation or because I am Latina, and also coming from a low socioeconomic background.” She went on to organize an entire dormitory floor specifically for first-generation students to make them feel more at home. …Learn More

Medicaid Now Critical to Aging Workers

For decades, the Medicaid program has subsidized health care for the poor, including retirees.

Yet, until recently, it largely excluded most working-age adults without disabilities due to a strict monthly income limit.

medicaid logoAll that changed in the 32 states and the District of Columbia that accepted the Affordable Care Act’s (ACA) option to expand their Medicaid coverage to low-income working people.

In 2010, the ACA increased Medicaid’s income limits for people to qualify for the insurance. Today, working baby boomers, as well as younger workers, can qualify if their income is below 138% of federal poverty levels – or $1,396 per month for a single person and $1,892 for couples.

This joint federal-state program now completely or partially insures about one in six people approaching retirement age, according to a new report citing U.S. Census Bureau data.

The expansion is at least partly responsible for a striking improvement in one statistic: the uninsured rate for adults between ages 50 and 64 fell from 15.5 percent in 2012 to 9.1 percent in 2016. …Learn More

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Timing of Social Security Checks is Key

It’s a simple concept. Deposit retirees’ Social Security checks right before their big-ticket bills come, especially rent.

The U.S. Social Security Administration’s current schedule for depositing pension checks in bank accounts is based on each retiree’s birth date– it can be the second, third, or fourth Wednesday of each month.

The problem is that cash-strapped, low-income seniors receiving the earlier checks, on the second or third Wednesdays, can fall into a common behavioral trap: they spend the money soon after it comes in and then can’t cover the rent, mortgages or credit cards due at the beginning of the following month.

According to a clever new study, people who get these early monthly checks are at greater risk of resorting to desperate measures like payday loans than are seniors receiving them on the fourth Wednesday.

Such measures of financial distress are occurring “even though the pay schedule is known in advance,” write researchers Brian Baugh and Jialan Wang.

The advantage of Social Security deposits made on the fourth Wednesday is that retirees can get the big expenses out of the way first, forcing them to make do for the rest of the month with the money they have left. Indeed, people with fourth-Wednesday deposits had fewer bounced checks, account overdrafts, and payday loans, the researchers found. …Learn More

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