Squared Away – Center for Retirement Research https://crr.bc.edu Tue, 30 May 2023 13:27:14 +0000 en-US hourly 1 https://wordpress.org/?v=6.0.7 Did Borrowers Spend More During Student Loan Freeze? https://crr.bc.edu/did-borrowers-spend-more-during-student-loan-freeze/ Tue, 30 May 2023 13:26:46 +0000 https://crr.bc.edu/?p=38599 The pause in federal student loan payments during COVID has been a golden opportunity to chop down the debt.

In March 2020, Congress stopped charging interest on the loans when it suspended the monthly payments. The moratorium is slated to continue through June.

The zero-interest loan means inflation actually eroded the value of the debt, putting borrowers ahead of the game. And redirecting the payments toward the principal, rather than new interest accruals, reduces both the debt and future interest payments, since smaller loan balances mean less interest.

This was a smart strategy for the workers who held onto their jobs during COVID and could afford it. But it is not what they have done, according to a new study.

Instead, the researchers found that borrowers felt comfortable during the suspension using the extra money to spend more.

These households increased the balances on their car loans, credit cards, and mortgage debt by about 3 percent, or $1,200, in a comparison with borrowers who did not qualify for the payment moratorium because they have Federal Family Education Loans issued through banks.

“Despite having higher cash on hand,” the researchers concluded, “borrowers do not use their additional liquidity to pay down debt.”

However, Betsy Mayotte, president of the Institute of Student Loan Advisers (TISLA), is unconvinced by this study. She argues it is too early get an accurate picture of how borrowers reacted to the moratorium.

She believes many followed the counsel of her organization, which provides free advice on student loan issues. TISLA and other experts recommended borrowers put their monthly payments into a savings or investment account during the moratorium. When it is lifted, they will have more money to pay off the loans, cutting their loan balances and future costs.

“Until the COVID pause ends and we do another study,” Mayotte said, “I don’t think we can fairly say how many people have been paying and how many haven’t.” 

Continuing the monthly loan payments during the moratorium was another way to reduce the principal and avoid some interest. But that strategy has a couple problems. First, borrowers who kept paying gave up the income they could’ve earned by investing that money during the freeze.

And regardless of whether a borrower makes payments during the three-year suspension, this period will count in reducing the 120 payments required to qualify for public service forgiveness or the 20 to 25 years of payments required under income-driven repayment plans.

“Paying during COVID doesn’t mean you get double credit,” Mayotte said.

The payment deferrals and uncollected interest put billions of dollars in borrowers’ pockets. Time will tell in whether they capitalized on the windfall.

Squared Away writer Kim Blanton invites you to follow us on Twitter @SquaredAwayBC. To stay current on our blog, please 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. This blog is supported by the Center for Retirement Research at Boston College.

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Post-COVID, View of Nursing Homes Erodes https://crr.bc.edu/post-covid-view-of-nursing-homes-erodes/ https://crr.bc.edu/post-covid-view-of-nursing-homes-erodes/#comments Thu, 09 Mar 2023 17:13:00 +0000 https://crr2022admin.gnaritas.com/?p=37057 COVID has moved from a central place in our lives to a risk that, while still important to heed, has moved out of the foreground.

One thing we will not forget, however, is COVID’s toll on nursing homes and other long-term care facilities, where the virus has killed more than 200,000 older Americans and staff. The tragedy also played out in nursing homes in Canada, where the deaths received high-profile coverage in the news media, just as they did in this country.

A survey of Canadians at the end of 2020, while COVID was still raging, indicates that the pandemic caused major changes in their thinking about old age. The reaction of a majority of people in their 50s and 60s to what they saw happening was to say they intend to avoid ever spending time in a nursing home, according to a summary of the survey by Canadian researchers.

It’s not hard to understand why so many deaths left such a lasting impression. What may be more surprising is the potentially big shift in what Canadians now believe should be done to address the situation.

More than two out of three Canadians surveyed said government could increase taxes to fund more government support for someone to come into retirees’ homes and help them with daily activities such as cooking, shopping, showering, and dressing.

But home care is an expensive proposition: the cost of one month in a nursing facility in Canada would buy only about two hours of home care per day. However, about one in four individuals said they would also take more responsibility themselves for preventing a nursing home stay by saving money to pay for their future home care.

The researchers point out that since the Canadian and U.S. experiences with COVID were very similar, public opinion here is likely to be very similar too.

Given that, they said, “policies aimed at making home care more affordable might better meet the preferences of older Americans in the wake of the pandemic.”

Squared Away writer Kim Blanton invites you to follow us on Twitter @SquaredAwayBC. To stay current on our blog, please 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.  This blog is supported by the Center for Retirement Research at Boston College. 

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Social Security in Multigenerational Families https://crr.bc.edu/social-security-in-multigenerational-families/ https://crr.bc.edu/social-security-in-multigenerational-families/#comments Tue, 07 Mar 2023 17:11:00 +0000 https://crr2022admin.gnaritas.com/?p=37051 It’s not unusual for Black and Latino children to live with their grandparents, who are either the primary caregivers or members of a multigenerational family.

And just as the grandparent is integral to the family unit, so are the Social Security benefits the grandparent receives and contributes to the household. The poverty rates in families with children would be much higher without the income from Social Security, according to new research on Wisconsin families.

Nearly two-thirds of the study’s families in which a grandparent is a child’s primary caregiver rely on Social Security retirement benefits, disability benefits, or the Supplemental Security Income program (SSI), which makes small cash payments to low-income retirees and the disabled.

Just under half of the three-generation households that include a grandparent get some income from Social Security.

The University of Wisconsin researchers confined their study to low-income families who are participating in state-run safety net programs such as food stamps, Medicaid, child support, and a caretaker supplement. They used state government data to draw a detailed picture of the grandparent families, whose income in 2019 ranged from about $33,000 when the grandparents are caregivers to $40,000 in multigenerational families. The families are more likely to be Black, Latino, and, in the case of three-generation families, Asian. The vast majority of the heads of household are women and frequently urban dwellers.

But the reason for the grandparents’ involvement and the importance of their financial support are different in each situation. Grandparents tend to be caregivers when the child’s parents are incarcerated, have substance abuse or mental health issues, or have died. These grandparents are a crucial, or the sole, source of financial support.

In three-generation households, they support the child’s parent or parents financially. But the working adults’ earnings are by far the most important source of family income.

The grandparents’ financial support was significant enough to reduce the poverty rate among the study’s families. Without Social Security, the poverty rate among grandparent caregivers would jump from 48 percent to 66 percent. Poverty in the three-generation households would rise from 50 percent to 58 percent.

The combination of Social Security and state assistance is crucial for many of these families. But Social Security is important for another reason besides the direct financial support it provides. The federal program is “perhaps a more stable source of income,” the researchers said.

To read this study, authored by Lawrence Berger, J. Michael Collins, Molly Costanzo, Yonah Drazen, and Hilary Shager, see “Understanding Racial and Ethnic Differences in SSA and Means-tested Benefit Receipt and their Anti-poverty Effects for Children in Multigenerational Families.”

The research reported herein was derived in whole or in part from research activities performed pursuant to a grant from the U.S. Social Security Administration (SSA) funded as part of the Retirement and Disability Research Consortium.  The opinions and conclusions expressed are solely those of the authors and do not represent the opinions or policy of SSA, any agency of the federal government, or Boston College.  Neither the United States Government nor any agency thereof, nor any of their employees, make any warranty, express or implied, or assumes any legal liability or responsibility for the accuracy, completeness, or usefulness of the contents of this report.  Reference herein to any specific commercial product, process or service by trade name, trademark, manufacturer, or otherwise does not necessarily constitute or imply endorsement, recommendation or favoring by the United States Government or any agency thereof.

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Advantage Plans Deny 6% of Treatments https://crr.bc.edu/advantage-plans-deny-6-of-treatments/ https://crr.bc.edu/advantage-plans-deny-6-of-treatments/#comments Thu, 02 Mar 2023 17:09:00 +0000 https://crr2022admin.gnaritas.com/?p=37048 Here’s something you should know about Medicare Advantage plans: the vast majority of these insurance policies require prior approval before a person can receive some medical treatments and services.

Historically, that was not the case, and prior authorizations are still very unusual for people who are enrolled in original Medicare and a Medigap supplement.

But in the case of Medicare Advantage plans, physicians submitted more than 35 million requests for prior authorization to insurers in 2021, and more than 2 million of them – or about 6 percent – were fully or partially denied, according to the Kaiser Family Foundation’s new report on more than 500 Advantage plans.

Only about 11 percent of the denials were appealed, but the vast majority of those appeals succeeded in getting a full or partial reversal of the original denial.

“The high frequency of favorable outcomes upon appeal raises questions about whether a larger share of initial determinations should have been approved,” Kaiser said. The American Medical Association reports that a third of physicians say the lengthy and difficult process of seeking a prior authorization from an insurance company caused “a serious adverse [medical] event in a patient.”

Prior authorizations for medical care certainly serve a purpose. They can contain costs or prevent unnecessary care, especially when the treatments are very expensive, say in the case of chemotherapy or a stay in a skilled nursing facility.

Insurers are not required to give a reason when they deny treatment, so it would be difficult to understand the reasons behind 2 million denials of myriad treatments and procedures. Kaiser said one problem occurs when physicians don’t provide the required documentation for a treatment plan.

The question is when do prior authorizations cross the line and become a barrier to good medical care? The Centers for Medicare and Medicaid Services is trying to brighten that line and has proposed changes to prior authorizations to automate the system and make it more efficient and more transparent.

Choosing between a Medicare Advantage plan or regular Medicare and a Medigap supplemental plan is a big decision, especially when someone first signs up for Medicare – that is the only time Medigap insurers are required to underwrite a policy.

Be sure to do some homework and shop around so you know what you’re buying.

Kaiser’s report breaks down, for each insurance company, the percentages of all prior authorizations that are fully or partially denied and the percentage that are appealed.

And here are some past blogs that might help:

“Traditional Medicare or an Advantage Plan?”

“Need Help Picking Your Medicare Options?”

“Medicare’s Tricky if You’re Employed

“What’s Up with Medicare Advantage Ads?”

“Get Help with Medicare Coverage Denials

Squared Away writer Kim Blanton invites you to follow us on Twitter @SquaredAwayBC. To stay current on our blog, please 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.  This blog is supported by the Center for Retirement Research at Boston College. 

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Disability Job Programs Get Mixed Reviews https://crr.bc.edu/disability-job-programs-get-mixed-reviews/ Tue, 28 Feb 2023 17:06:00 +0000 https://crr2022admin.gnaritas.com/?p=37044 Nearly half of the people receiving federal disability benefits have a psychiatric impairment that interferes with working. And they tend to be younger and more willing to work than other disability beneficiaries.

This makes them good candidates for employment support programs that encourage working at least part-time and might even prevent them from applying for benefits at all.

According to a Mathematica review of research on three government jobs programs, the programs had some success in boosting participants’ employment and earnings. However, they didn’t prove effective over the long term in reducing their reliance on federal disability benefits.

One federal program in Texas was geared to people with disabilities who had not applied for benefits when they entered the program. The program offered services like help with job searches, case management, and access to medical care. A year after finishing the Texas program, the number of participants receiving benefits fell 27 percent in a comparison with people who hadn’t participated. But by the sixth year, that positive impact had largely waned.

While disability recipients with mental health impairments often want to work, about half of the people in a second study said they had felt discouraged by past jobs. They cited barriers to remaining employed – on top of their mental health challenges – such as perceptions by others that they weren’t capable, a lack of transportation, and a fear of losing their benefits if they get a job. Social Security suspends disability benefits when workers earn over a maximum amount, which is $1,470 per month in 2023.

But the researchers see the feelings of discouragement as “a window of opportunity” to prevent failed work attempts through job interventions or by educating beneficiaries about Social Security’s benefit rules.

A third program in the research review was for people with schizophrenia and affective disorders like depression and bipolar disorder. At the end of this two-year program, 60 percent of the participants were still employed, compared with 40 percent of the people who hadn’t received the support. The participants’ earnings were also about 50 percent higher. Five years later, they were still better off.

However, a common theme in the programs is that the participants, despite being employed, did not achieve financial self-sufficiency over the long term. The researchers said this could’ve reflected the short-term nature of the programs.

The participants did nevertheless get something out of them. They improved their “overall well-being in terms of the financial gain and the potential positive effects of employment on socialization and self-esteem,” the researchers said.

To read this study, authored by Rachel Miller and Gina Livermore, see “Long-term Impacts of Employment Interventions Targeted to People with Mental Health Conditions.”

The research reported herein was derived in whole or in part from research activities performed pursuant to a grant from the U.S. Social Security Administration (SSA) funded as part of the Retirement and Disability Research Consortium.  The opinions and conclusions expressed are solely those of the authors and do not represent the opinions or policy of SSA, any agency of the federal government, or Boston College.  Neither the United States Government nor any agency thereof, nor any of their employees, make any warranty, express or implied, or assumes any legal liability or responsibility for the accuracy, completeness, or usefulness of the contents of this report.  Reference herein to any specific commercial product, process or service by trade name, trademark, manufacturer, or otherwise does not necessarily constitute or imply endorsement, recommendation or favoring by the United States Government or any agency thereof.

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Broadband in High Disability Areas is Subpar https://crr.bc.edu/broadband-in-high-disability-areas-is-subpar/ https://crr.bc.edu/broadband-in-high-disability-areas-is-subpar/#comments Thu, 23 Feb 2023 17:03:00 +0000 https://crr2022admin.gnaritas.com/?p=37040 The Internet has become a necessity in our modern society. Yet 42 million Americans live in areas of the country where the connections to technology are subpar or, in extreme cases, nonexistent.

At the same time, federal and state governments are increasingly relying on people to interact with them online. This mismatch between a growing reliance on the Internet and a lack of easy access is a problem for one especially vulnerable population: people with disabilities.

Without access to a fast reliable Internet connection, it can be very difficult to apply online to Social Security for disability benefits or to file the periodic reports the agency requires of people who are receiving them.

In a recent report, the Urban Institute found that counties with high rates of residents getting Social Security Disability Insurance are less likely to have access to computers, the Internet, or high-speed broadband to get the government services they need. For example, millions of people living in 1,887 mostly rural counties do not have a Social Security field office where they can meet with agency staff and, at the same time, may lack a reliable broadband connection to go online.

Poor connectivity became an even bigger problem during COVID when Social Security closed its offices, forcing customers to use phone apps and computerized transactions in place of in-person contact. (Most of the offices have now reopened.)

Half of the residents in counties with a relatively large share of people with disabilities do not have broadband, the Urban Institute found, and 17 percent of the residents of these counties do not have a home computer. It is often the case that they do have a smart phone. But buying data for a phone can be expensive, and it is more difficult to submit complex forms and applications.

To be sure, Congress has taken big steps to improve Internet access. During COVID, lawmakers passed two bills – the American Rescue Plan Act and the Infrastructure Investment and Jobs Act – that together will provide more than $65 billion to expand the nation’s broadband infrastructure and subsidize Internet service to low-income households.

But for now, access is an issue, especially in rural areas in Maine, Kentucky, Michigan, New Mexico, and parts of Appalachia and the Southeast. These rural areas tend to simultaneously have high rates of disability and below-average Internet access, the researchers found.

Because residents in the cities and suburbs are more likely to own a computer and have better Internet coverage, the researchers did not expect to see a similar pattern there. However, more populated areas with a high incidence of disability – like the high-disability rural areas – also had less technology access than the population centers with low disability rates.

Improving access to the Internet, the researchers conclude, would unleash “greater flexibility, worker productivity, and financial freedom, in addition to greater access to health care and government programs and services, including the [disability] program.”

To read this study, authored by Barbara Butrica and Jonathan Schwabish, see “Technology and Disability: The Relationship Between Broadband Access and Disability Insurance Awards.”

The research reported herein was derived in whole or in part from research activities performed pursuant to a grant from the U.S. Social Security Administration (SSA) funded as part of the Retirement and Disability Research Consortium.  The opinions and conclusions expressed are solely those of the authors and do not represent the opinions or policy of SSA, any agency of the federal government, or Boston College.  Neither the United States Government nor any agency thereof, nor any of their employees, make any warranty, express or implied, or assumes any legal liability or responsibility for the accuracy, completeness, or usefulness of the contents of this report.  Reference herein to any specific commercial product, process or service by trade name, trademark, manufacturer, or otherwise does not necessarily constitute or imply endorsement, recommendation or favoring by the United States Government or any agency thereof.

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Burden of High Rents Surged during COVID https://crr.bc.edu/burden-of-high-rents-surged-during-covid/ Tue, 21 Feb 2023 17:01:00 +0000 https://crr2022admin.gnaritas.com/?p=37036 As the bad first two years of the pandemic recede in the rear-view mirror, a new report reminds us how tough things got for renters.

In 2021, a record 21.6 million U.S. families were paying more than 30 percent of their income on rent, which is the real estate industry’s benchmark for people whose housing costs have become a financial burden. That amounts to just under half of all renter households who were struggling during COVID – very close to the high reached during the Great Recession.

And the vast majority of the 1.2 million increase from 2020’s level was in the group that struggles the most: families who pay more than 50 percent of their income to rent a house or apartment.

Two things were going on that have increased the burden on renters, according to a rent report by Harvard’s Joint Center for Housing Studies. First, rents rose unabated throughout the pandemic and are 25 percent higher than they were at the end of 2019.

But the housing center points to a second factor that added to the burden: renters, who tend to have lower earnings, lost income during the pandemic. The downward shift in their earnings illustrates that. The number of renter households earning less than $30,000 increased by 223,000 in 2021, while the number earning more than $75,000 dropped by 280,000.

The change in the renter population marked “a shift towards households that are much more likely to experience cost burdens,” the report said.

There’s a chance the report for 2022 will show modest improvement. Average hourly wages rose somewhat last year, and realtor.com says the torrid pace of rent increases is starting to ease.

But how much the economy slows down and whether people are laid off will determine how the next couple of years go.

Squared Away writer Kim Blanton invites you to follow us on Twitter @SquaredAwayBC. To stay current on our blog, please 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.  This blog is supported by the Center for Retirement Research at Boston College. 

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The Case for Signing a Power of Attorney https://crr.bc.edu/the-case-for-signing-a-power-of-attorney/ https://crr.bc.edu/the-case-for-signing-a-power-of-attorney/#comments Thu, 16 Feb 2023 16:58:00 +0000 https://crr2022admin.gnaritas.com/?p=37032 The best reason to set up a power of attorney for yourself or an elderly family member is to avoid a far more contentious and expensive alternative later: guardianship.

Jonathan Williams

A power of attorney becomes urgent if an elderly family member is showing early signs of dementia. “You want to run, not walk, to get that done because capacity tends not to get better,” said Jonathan Williams, an attorney with the Clarity Legal Group in the Raleigh-Durham, N.C., area.

“Having good legal documents in place, if the person has the ability to execute them, can be helpful later on,” he said.

In a power of attorney, the person signing the document agrees to name an agent, usually a trusted family member or caregiver, who can take care of legal and financial matters in the event she can no longer do so herself. A power of attorney does not put any constraints on what the signer is currently able to do. She can continue to write checks, enter into real estate transactions, and make investment decisions.

During a recent webinar sponsored by the Duke Dementia Family Support Program, Williams explained some of the legal “gray areas” that can crop up around powers of attorney.

Even if someone is showing cognitive decline, a power of attorney may still be possible if an attorney “can be convinced in a conversation that the person we’re working with has an adequate understanding of the consequences of their signing it, even if that understanding is later lost or forgotten,” he said.

“Just because someone has been diagnosed with a cognitive impairment doesn’t mean they lack the legal capacity to act for themselves.” In this case, the attorney might have to consult with the person’s medical provider or review medical records before deciding what to do about a power of attorney.

But convincing an attorney in these situations isn’t a sure bet, and time is of the essence. Once someone becomes fully incapacitated, the only option may be guardianship, which Williams called a “blunt force tool with a lot of collateral effects.”

Guardianship, a legal process that effectively strips a person of her right to act on her own behalf, must be approved by a court. In cases of dementia, a guardianship may be required when the loved one in your care is unable to act, is acting recklessly, is undermining your ability to act in their best interest under the power of attorney or has appointed “a bad actor” to represent them, possibly under duress, he said.

And guardianship is filled with legal landmines. A sibling might object in court, perhaps for the wrong reasons, to your application to be your parent’s guardian. The legal process can become contentious if the family members involved have a toxic relationship.

It’s also up to the court to select the guardian, which means risking uncertainty about who that person will be, Williams said. And hiring an attorney to establish guardianship is much more expensive than having someone willingly sign a power of attorney, a relatively straightforward legal document.

Williams raised an important issue for people who decide to relocate an aging parent, who has signed a power of attorney, to another state. The issue is more practical than legal. While states ultimately will honor a power of attorney signed in a different state, he said, it might take time and effort to persuade a financial institution such as a bank or brokerage firm to honor a document they are unfamiliar with because it’s drafted under a different state’s laws.

To take another example, a problem could arise for a parent who signed a Health Care Power of Attorney for medical decisions if the parent goes into the hospital, and the doctor isn’t familiar with the other state’s document.

“The doctor’s going to look at it and they’ll say, ‘I don’t know what this is,’ ” Williams said. “They’ll have to send it to the legal department. But if you have a locally drafted health care power of attorney that looks like all the other ones that the doctor has seen that week, he’ll say, ‘let’s go.’ ”

Squared Away writer Kim Blanton invites you to follow us on Twitter @SquaredAwayBC. To stay current on our blog, please 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.  This blog is supported by the Center for Retirement Research at Boston College. 

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Mental Health Care is Crucial Disability Need https://crr.bc.edu/mental-health-care-is-crucial-disability-need/ Tue, 14 Feb 2023 16:55:00 +0000 https://crr2022admin.gnaritas.com/?p=37028 During the pandemic, calls to mental health hotlines soared. People in emotional distress learned that psychologists were booked months in advance or were completely unavailable.

While COVID dramatized the need for mental health treatment generally, new research reveals how important being treated is to people with disabilities.

Isaac Swensen and Carly Urban at Montana State University found that ready access to outpatient care slightly increases applications for disability benefits by working-age people under Social Security’s insurance program and by poor and marginally employed workers under the companion program, Supplemental Security Income (SSI).

Mental illness in its severest forms can interfere with the ability to work, making some individuals eligible for federal disability assistance.  But to qualify, the Social Security Administration requires that applicants submit a diagnosis from a medical professional. Applicants with mental illness living in areas with more treatment options, the researchers explained, are potentially able to obtain a proper diagnosis.

Getting people the help they need can increase their reliance on social safety nets. But access to successful treatment – whether the individual has a cognitive or physical disability – might also arguably prevent some severe conditions that make people eligible for disability benefits in the first place.

The researchers’ analysis used U.S. Census data on the location of outpatient mental health clinics in more than 1,800 counties to compare application rates in places where the number of clinics increased or decreased with places that saw no change in treatment access. The researchers controlled for factors known to affect the number of applications being filed, such as the local unemployment rate and income levels.

An increase in applications in areas with better treatment access doesn’t necessarily translate to more disability beneficiaries. But the researchers did find some evidence that more SSI benefits are awarded in poorer counties where access to treatment is high and people have a stronger financial incentive to apply for the benefits.

Mental health resources, particularly in less-affluent counties, “can be a pathway through which people suffering from severe mental illness can become properly diagnosed and access the social safety net,” the researchers conclude.

To read this studyauthored by Isaac Swensen and Carly Urban, see “The Effects of Expanding Access to Mental Health Services on SS(D)I Applications and Awards.”

The research reported herein was derived in whole or in part from research activities performed pursuant to a grant from the U.S. Social Security Administration (SSA) funded as part of the Retirement and Disability Research Consortium.  The opinions and conclusions expressed are solely those of the authors and do not represent the opinions or policy of SSA, any agency of the federal government, or Boston College.  Neither the United States Government nor any agency thereof, nor any of their employees, make any warranty, express or implied, or assumes any legal liability or responsibility for the accuracy, completeness, or usefulness of the contents of this report.  Reference herein to any specific commercial product, process or service by trade name, trademark, manufacturer, or otherwise does not necessarily constitute or imply endorsement, recommendation or favoring by the United States Government or any agency thereof.

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Health Insurance Increases Latinx Wealth https://crr.bc.edu/health-insurance-increases-latinx-wealth/ Thu, 09 Feb 2023 16:53:00 +0000 https://crr2022admin.gnaritas.com/?p=37025 About one out of every five Latinx workers in this country lacks health insurance. The uninsured ratio rises to one in four in the states that have chosen not to expand their Medicaid programs to more low-income workers under the Affordable Care Act.

The motivation for Josefina Flores Morales’ new research is that there’s more to health insurance than just medical care. It is also critical to individuals’ financial health, she argues, and broader insurance coverage in the Latinx community is an underappreciated way that the vast wealth gap between them and non-Latinx White workers could be reduced.

Having insurance keeps people healthy so they can continue to work and is important for other financial reasons. Insurance reduces the size of medical bills through caps on out-of-pocket costs and limits on how much doctors and hospitals can charge for their services.

In cases of severe illness, insurance can prevent a cascade of financial problems resulting in bankruptcy, a car repossession, or home foreclosure.

Flores Morales, a postdoctoral scholar at Stanford University’s School of Medicine, attempts to put a dollar value on the health insurance disparity by measuring the gap between Latinx and non-Latinx White household wealth – and then estimating whether broadening coverage under the 2014 Medicaid expansion reduced that gap. Her analysis takes advantage of the key difference – each group’s uninsured rates in each state – after Congress expanded the joint federal-state Medicaid program as part of the Affordable Care Act.

In the states that agreed to expand their programs, the Affordable Care Act began covering millions more low-income workers by increasing the income limit for people who qualify.

Based on the known impact that broader insurance coverage and the Medicaid expansion have had so far on the wealth gap between Latinx and White households, the researcher found that if both groups had the same, lower uninsured rate, the gap would shrink by about 8 percent. Flores Morales limited her analysis to the households that have positive net worth, meaning their assets exceeded their debts.

This increase may seem small, compared with, say, the equity that people hold in their homes. For the typical American, home equity is the largest part of their net worth.

Still, Flores Morales concluded, “health insurance shapes the financial security of households known to be in socially vulnerable positions.”

To read this study, authored by Josefina Flores Morales, see “The Role of Health Insurance in the Latinx Whiter Wealth Gap in the United States.”

The research reported herein was derived in whole or in part from research activities performed pursuant to a grant from the U.S. Social Security Administration (SSA) funded as part of the Retirement and Disability Research Consortium.  The opinions and conclusions expressed are solely those of the authors and do not represent the opinions or policy of SSA, any agency of the federal government, or Boston College.  Neither the United States Government nor any agency thereof, nor any of their employees, make any warranty, express or implied, or assumes any legal liability or responsibility for the accuracy, completeness, or usefulness of the contents of this report.  Reference herein to any specific commercial product, process or service by trade name, trademark, manufacturer, or otherwise does not necessarily constitute or imply endorsement, recommendation or favoring by the United States Government or any agency thereof. 

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Boomerang Kids Don’t Derail Their Parents https://crr.bc.edu/boomerang-kids-dont-derail-their-parents/ Tue, 07 Feb 2023 16:50:00 +0000 https://crr2022admin.gnaritas.com/?p=37022 A popularized image of parents who struggle when adult children move back home is not shaping up as an accurate picture of the arrangements.

Unemployment, divorce, college graduation – adult children in their 20s and 30s move back into a parent’s home for many reasons. And the parents can have all sorts of reactions, good and bad, to their boomeranging kids.

Some parents get stressed out by young adults who return home because they need financial support. Others welcome having the kids back to pad the empty nest, help with household chores, or help pay the bills.

The return home isn’t necessarily a one-time thing either. “As they attempt to gain financial independence, adult children may alternate between living on their own and living with parents,” according to a new study of parents in their 50s and 60s.

But young adults who move back home do not seem to affect their parents’ health, wealth levels, hours worked, or general well-being when compared with other parents. One reason these events have minimal impact is that they tend to be temporary and are being driven by real-world issues like the child’s divorce or loss of income, the researchers said.

The one way that parents in the study do seem to be affected by boomerang children is that they are more likely than other parents to say they plan to work past age 65. Even so, this is mainly true for parents under 62 – and for fathers more than mothers.

The fact that they’re thinking so far in the future about delaying retirement may say more about anticipating the potential for a negative financial impact rather than the reality of how their children’s decisions will affect them years later.

Squared Away writer Kim Blanton invites you to follow us on Twitter @SquaredAwayBC. To stay current on our blog, please 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.  This blog is supported by the Center for Retirement Research at Boston College. 

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Student Debt Plan Helps Black Retirees https://crr.bc.edu/student-debt-plan-helps-black-retirees/ https://crr.bc.edu/student-debt-plan-helps-black-retirees/#comments Thu, 02 Feb 2023 16:48:00 +0000 https://crr2022admin.gnaritas.com/?p=37018 For the sliver of retirees who are far behind in paying their own or their children’s student loans, Social Security can withhold part of their benefits to pay the loans back.

But college has gotten much more expensive since the baby boomers attended, and loan delinquencies are higher among working people and especially Black Americans. When today’s Black workers retire, their estimated household delinquency rate will be 5.4 percent – well more than double the rate for White and Hispanic retirees.

The question is how withholding Social Security benefits will impact the financial security of these future retirees. In cases where the federal government withholds some benefits, it garnishees the lesser of 15 percent of a delinquent borrower’s monthly retirement benefit or the amount of the benefit that exceeds $750 per month. Social Security’s average monthly benefit is currently $1,827.

The withholding practice would reduce working households’ retirement income in the future by an estimated average of 4 percent, according to the Center for Retirement Research.

Even this seemingly small decline in income can have a big impact on people who are struggling. The loss of retirement income will fall hardest on Black Americans, who are more likely to borrow for college but who earn less and will have more difficulty repaying their loans.

Whether the burden on retirees will be lightened could be determined by two lawsuits the U.S. Supreme Court is scheduled to hear later this month challenging the Biden administration’s plan for student debt relief. If the court allows the administration to proceed, the government would extend up to $10,000 in student debt forgiveness to borrowers. Lower-income students who received Pell grants to subsidize college could receive an additional $10,000.

This financial relief would wipe out the debt for a significant share of borrowers and sharply reduce the delinquencies that trigger the withholding of Social Security benefits and can undermine retirement security, especially for minority borrowers who are more likely to receive Pell grants.

Black workers’ future delinquencies are expected to decline the most – from 5.4 percent to 3.6 percent of retirees under debt forgiveness. Hispanic delinquencies are much lower but would drop in half, from 1.5 percent to 0.8 percent. White borrowers’ rate would fall from 1.8 percent to 1.1 percent.

However, if the court fails to uphold the debt relief and it’s not made available in future legislation, the higher delinquency rate in store for future Black and Hispanic retirees “suggests that student loan debt may become a source of racial inequality.”

To read this brief, authored by Gal Wettstein and Siyan Liu, see “How Do Unpaid Student Loans Impact Social Security Benefits?”

The research reported herein was derived in whole or in part from research activities performed pursuant to a grant from the U.S. Social Security Administration (SSA) funded as part of the Retirement and Disability Research Consortium.  The opinions and conclusions expressed are solely those of the authors and do not represent the opinions or policy of SSA, any agency of the federal government, or Boston College.  Neither the United States Government nor any agency thereof, nor any of their employees, make any warranty, express or implied, or assumes any legal liability or responsibility for the accuracy, completeness, or usefulness of the contents of this report.  Reference herein to any specific commercial product, process or service by trade name, trademark, manufacturer, or otherwise does not necessarily constitute or imply endorsement, recommendation or favoring by the United States Government or any agency thereof.

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