July 29, 2021
2.2 million Workers Left Out of Medicaid
The Affordable Care Act gives a carrot to states that expand Medicaid from a health insurance program mainly for poor people to one that also includes low-income workers.
Under the 2010 law, the federal government initially paid the full cost of adding more people to the Medicaid rolls, and a large majority of states have signed up. The federal funding for new expansions dropped a bit in 2020 to 90 percent and will remain there.
Yet 11 states are holdouts and haven’t expanded their programs, leaving nearly 2.2 million workers and family caregivers in what the Center for Budget and Policy Priorities calls the Medicaid coverage gap.
The workers falling in the gap, who would qualify for coverage if their states expanded Medicaid, do not have health insurance at their places of employment and can’t afford to buy subsidized insurance through the Affordable Care Act.
The bulk of the uncovered workers are in the South, with half in Texas and Florida. Missouri had been a holdout. But last week, the Missouri Supreme Court ordered the legislature to comply with a voter ballot initiative and fund expansion of the state’s Medicaid. Expansion was also controversial in Oklahoma, but it went into effect on July 1 after voters there approved the measure.
An analysis by the Center sketched a picture of who is in the gap, based on 2019 Medicaid data, the most recent available. People of color comprised about 40 percent of the working-age population but made up 60 percent of the people in the gap in the non-expansion states, the Center estimates.
Nationwide, one in four who lack access to Medicaid are lower-paid essential workers on the front lines during the pandemic. …Learn More
July 27, 2021
Opioid Use Higher for Disability Applicants
With the nation still in the midst of an opioid crisis, a new study provides the first estimate of opioid use among people who apply for disability.
One out of every four applicants used opioids in 2017 – below the peak in 2012 but still significantly more than in the general population, according to researchers at Mathematica and the U.S. Social Security Administration.
And the researchers may be underestimating the extent of opioid use. Their data come from Social Security’s disability application forms. The forms ask applicants to list their prescriptions, including opioids taken for musculoskeletal pain such as a bad back, as well as their non-prescription drug use, and the stigma around use and abuse may encourage underreporting.
To estimate opioid use required creating a database because none existed. The researchers mined the text fields in each disability application using machine learning to find information about opioid use and then entered the information into the database.
Some interesting demographic trends emerged from the study. Opioid use is most prevalent in middle age, at around 30 percent of disability applicants in their 40s and 50s. “This is notable,” the researchers said, because if Social Security grants their requests for benefits, they “may remain on the [disability rolls] for 25 years.”
In a breakdown by education levels, the biggest opioid users had attended college but didn’t get a degree. Women’s use exceeded men’s throughout the study’s 10-year period, mirroring the population as a whole. And a state-by-state breakdown shows that applicants’ opioid use fell across the nation during that time. But Alabama, Arkansas, Michigan, and Nevada still had particularly high rates in 2017. …Learn More
July 22, 2021
Retirement Researchers to Meet Aug. 5-6
The pandemic will be on the marquee at this year’s annual meeting of retirement and disability researchers.
COVID-19 has encroached on every aspect of older Americans’ lives, from their day-to-day work and home life to their retirement planning. Researchers will present studies on three impacts of the pandemic in presentations funded by the U.S. Social Security Administration.
The event will be held over two days, Thursday and Friday, Aug. 5 and 6, from noon to 4 p.m. The event will be virtual again this year and anyone can sign up to attend for free.
The first study on the agenda will explore the pandemic’s impact on older workers’ ability or willingness to work and on their retirement decisions. And for the adults who lost their jobs during COVID-19’s economic downturn, a second study will explain whether the slump will affect their future Social Security benefits. In the final study relating to the pandemic, researchers will assess whether the relief bills passed by Congress helped older people.
Other prominent topics of discussion include retirement planning and retirees’ financial security. These will include new findings on workers’ decisions about saving, retirees’ decisions about spending, and the financial adjustments couples make after their children leave home.
The final major topic is federal benefits for people with disabilities. The presentations here include the relationship between the benefits and two government programs: food stamps and workers compensation insurance.
Summaries of the working papers will be posted online for the meetings. …Learn More
July 20, 2021
State Auto-IRAs are Building Momentum
About half of the nation’s private-sector employees do not have a retirement savings plan at work, and that hasn’t changed in at least 40 years.
Some states are trying to fix this coverage gap in the absence of substantial progress by the federal government in solving the problem. And the state reforms are gaining momentum.
In the past year alone, Maine, Virginia, and Colorado have passed bills requiring private employers without a retirement plan to automatically enroll their workers in IRAs, with workers allowed to opt out. New York City, which is more populous than most states, approved its program in May. And other states are either starting to implement programs or looking at their options.
Auto-IRAs are already up and running in California, Illinois, and Oregon, where a total of nearly 360,000 workers have saved more than $270 million so far. The programs are run by a private sector administrator and investment manager.
These mandatory programs are the only practical way to close the coverage gap, because voluntary retirement saving initiatives have never done the trick. Numerous voluntary plans created by the federal government – such as the Simplified Employee Pension (SEP) – have failed to measurably increase coverage.
Large corporations usually offer a 401(k) plan and match some of their workers’ savings. But millions of restaurants, shops, and other small businesses either can’t afford to set up their own 401(k)s or don’t see it as a priority. Without additional saving, half of U.S. workers are at risk of a drop in their standard of living when they retire.
State auto-IRA programs eliminate the administrative burden and expense to employers of a private plan and provide an easy way for workers to save. The money is taken out of their paychecks before they can spend it and is deposited in an account that grows over time. The state programs also permit workers to withdraw their contributions without a tax penalty for emergencies, like a medical problem or broken-down car, if they need the money they’ve saved. …Learn More
July 15, 2021
Retirees’ Home Equity: Useful but Unused
Many older Americans could benefit from using home equity for some much-needed income in retirement. But they have found many reasons not to.
Some want to preserve that housing wealth for their kids. Others don’t like the idea of cashing in on the equity if it means relocating to a smaller house or apartment or a less expensive neighborhood. They also have plenty of concerns about federally insured reverse mortgages, which are a way to extract equity but are complicated to understand.
These doubts, expressed in readers’ comments on recent articles, are persistent. But economists see things differently: home equity has great potential to ease retirees’ financial problems – after all, roughly $8 trillion of wealth is locked up in older people’s houses.
K. Friesen is a rare reader who agrees. She said a couple women in her family are proof of the benefits of deploying home equity. Thanks to a reverse mortgage, her aunt had “a roof over her head until she died at age 97,” Friesen wrote in a comment posted to “Tapping Home Equity – Retirees’ Relief Valve.” The article described a study demonstrating that using home equity is effective in reducing financial hardship.
Now Friesen’s mother has a reverse mortgage. “If she can squeeze every dime out of the little she has to have a better quality of life, I’m all for it.”
The advantage of reverse mortgages is that they don’t have to be paid back before the homeowner dies – the catch is that the borrower must continue to live in the house. A potential downside, as a reader noted, is that if a retiree has to sell the house and pay the loan back, the balance and accrued interest will have depleted equity.
But in fact, selling in retirement is an unlikely scenario. Nearly three out of four older workers either don’t move out of their current home or, when they retire, they sell their house, buy a new one, and stay put, according to research featured in “Most Older Americans Age in their Homes.”
Granted, these homeowners tend to be healthier than the older people who move around more. But Paul Brustowicz said even retirees who have health issues want the same thing as everyone else: to age in their own homes. …Learn More
July 13, 2021
Think of Saver’s Tax Credit as Free Money
Life’s unpleasant surprises – a new set of tires or a big vet bill – can get in the way of saving money for retirement. This is especially true for low-income workers.
But if they are able to save a little here and there, the federal government provides a very big assist through its Saver’s Credit. Unfortunately, low-income workers are also the least likely to be aware the tax credit exists.
Here’s how the Saver’s Credit works. The IRS returns half of the amount saved over the year – up to certain limits – by a head of household earning less than $29,626 or a couple earning less than $39,501.
So, the head of household with earnings under the income limit who saves $2,000 in a tax-exempt retirement plan like an IRA or an employer 401(k) would get back the IRS’ maximum credit of $1,000. And the couple that saves $4,000 would get back the $2,000 maximum.
Granted, these are very large sums for low-income workers. But if they can manage to save a little bit every week, the Saver’s Credit is effectively free money from the federal government.
Smaller tax credits are available to people with slightly higher incomes. Individuals and couples do not qualify if they earn more than $49,500 and $66,000, respectively.
Unfortunately, only about a third of households earning under $50,000 are aware of the credit, according to a Transamerica Institute survey.
Now that you know, start saving. You’ll get a big chunk of it back. …Learn More
July 8, 2021
ACA Proves Itself but Race Disparity Persists
The U.S. Supreme Court’s decision in June to reject another challenge to the Affordable Care Act was widely seen as the final word: the law is here to stay.
But it was COVID-19 that underscored how important it is.
The federal government said nearly 10 million people signed up for Medicaid health coverage during the pandemic year that ended in January 2021. A decade after passage of the Affordable Care Act (ACA), which expanded Medicaid to include more low-income Americans by increasing the income limit for eligibility, the new sign-ups pushed total Medicaid enrollment to a record high of 80 million.
The recent increase was largely due to the spike in sign-ups among the unemployed or workers who saw their hours reduced and lost some of their wages. The relief packages passed by Congress in March 2020 and this year encouraged Medicaid enrollment by giving states additional funding to pay medical costs and sign up more people.
Beyond Medicaid, sales of regular health insurance policies sold on the state insurance exchanges also rose last year, as COVID-19 raced through the population. A 5 percent increase in enrollment in the policies, which are often subsidized, pushed total enrollment to 12 million.
Earlier this year, the American Rescue Plan continued to shore up health coverage by reducing insurance premiums for people who buy the policies. Unfortunately, these and earlier federal supports were temporary measures put in place for the pandemic, and some progress will be reversed when the supports expire at the end of this year or next year.
Despite the recent coverage gains, it has been a bumpy ride. Prior to COVID-19, sales of ACA policies had been slowing after years of marked progress in reducing the U.S. uninsured rate. And in the states that have not expanded Medicaid to reach more residents, the uninsured rates are nearly double the rates in the expansion states – 15.5 percent vs 8.3 percent. …Learn More