June 7, 2016

Personal Finance Videos Hit the Basics

These personal finance videos are like sensible shoes: they won’t win any awards, but they can be useful.

Produced by the College of Financial Planning, the short videos demystify the fundamentals of personal finance that the planners who teach and take courses at the college rely on in their practices.

• “Free Money” (above) features Dirk Pantone, a vice president and certified financial planner, interviewing Kristen MacKenzie, who teaches there, about 401(k)s, 403(b)s, 457(b)s and the employer match.

• “Living on Borrowed Time,” has Pantone and MacKenzie discussing the difference between good debt and bad debt, both of which impact credit scores.

• “The Road to Investing Your Assets” explains why low fees and portfolio diversification are so important.

There are 13 videos.  Other topics covered include retirement, taxes, and financial literacy. To watch other videos, click here. …Learn More

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