Student Debt Plan Helps Black Retirees

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. …
Learn More

Medicare to Cover 3 New Dental Procedures

“Is it medically necessary for a person to be able to chew?” Dr. Lisa Simon, a physician and dentist at the Harvard School of Dental Medicine, asks.

This is a serious question for older Americans in fragile health. I know a 93-year-old man whose teeth problems make it extremely difficult for him to eat meat and many other foods on the dinner table.

Two-thirds of retirees do not have dental insurance, which means they may decide to forgo getting expensive dental care. The importance of dental care to nutrition and health is also an equity issue for older Blacks and low-income retirees, who are more likely to be missing all of their teeth.

Medicare has historically paid for very few dental procedures. But the Centers for Medicare and Medicaid Services has expanded its existing, limited coverage to include treating patients who have oral infections prior to an organ transplant and patients who need a cardiac procedure or treatment of head and neck cancers.

Simon, who advocates for integrating dental care into overall medical care, argues in the journal Health Affairs that Medicare’s expansion of coverage for medically necessary procedures does not go far enough.

“These provisions are an overly narrow interpretation of what makes a health care service          ‘necessary,’ ” Simon writes.

She lists several examples of medically necessary conditions that don’t seem to fit Medicare’s updated definition. They include cancer patients who have oral inflammation during chemotherapy, diabetes patients with periodontal disease, and elderly women being treated for osteoporosis with injections that put them at risk of painful jaw deterioration. …Learn More

Connect with a Senior During the Holidays

Hannah Boulton defies the stereotype of the lonely retiree longing for companionship during the holidays. But after two-plus years of a pandemic, even this dynamic former nurse who’s lived on three continents started feeling a little isolated.

Ally Brooks and Hannah Boulton

Ally Brooks and Hannah Boulton

Then she met Ally Brooks, a high school senior, through the Sages and Seekers program at the senior center in Duxbury, Massachusetts, in September. The program, modeled on a national nonprofit’s workshop, paired up seven retirees with seven high school seniors. It was such a success – the program was Boulton’s’ idea – that a second one is planned in January for a new crop of seniors.

The 76-year-old Boulton and Brooks bonded immediately over their love of travel. Boulton shared her adventures, having lived in Okinawa during the Vietnam War, where her first husband was stationed, and in Karlsruhe, Germany, where her second husband worked.

And she encouraged Brooks to follow through with a plan to apply to four colleges in England and Scotland, including, coincidentally, one that Boulton’s late husband had attended. “I was so excited for her, and of course I’ll visit her” in college, she said. “I just feel like we’re connected.”

Participants in the Sages and Seekers program

Participants in the Sages and Seekers program

Chris Coakley, who manages the volunteers for the Duxbury senior center, said the Sages and Seekers program fulfilled its goal of easing the isolation she saw was affecting the town’s older residents.

A significant minority of older Americans in various surveys have said they are lonely, and the pandemic only heightened that feeling, which already existed for reasons ranging from hearing loss to struggles with the death of a spouse or a chronic illness.

The pandemic, Coakley said, made the center’s staff realize “how important it was to have connections.”

So consider taking the initiative yourself to reach out to an older family member or neighbor. Invite someone for a meal during the holidays or drop in for a visit.

It takes a little work. But the effort will make a difference. …Learn More

Traditional Medicare or an Advantage Plan?

Medicare Advantage or traditional Medicare with supplemental insurance: which should you choose?

A compelling reason so many 65-year-olds are flocking to Medicare Advantage insurance policies is that they tend to have significantly lower premiums than enrolling directly in traditional Medicare. Retirees are also inundated with advertisements on television, online and in the mail urging them to sign up for the Advantage plans, which sometimes cover vision and dental care.

But the premium alone is a superficial test for such a consequential decision. Traditional Medicare plans combined with a Medigap or Part D drug plan might, in the end, be less costly. Differences in the quality of care and the out-of-pocket costs can weigh more heavily over the long haul as retirees get older and their health declines.

The federal government spent $321 more per person in 2019 on Medicare benefits in Advantage plans than on each person enrolled directly in traditional Medicare, according to Kaiser. “The growing role of Medicare Advantage and the relatively high spending on this program raise the question of how well private plans serve their enrollees,” Kaiser said.

To shed light on the advantages and disadvantages of each route, Kaiser’s researchers combed through more than five dozen academic studies and packaged them into a report comparing the care provided under Medicare Advantage policies and traditional Medicare.

Kaiser, a healthcare non-profit, found that both choices had some important things in common, including similar levels of patient satisfaction with care, wait times, care coordination, and the ability to find a doctor or specialist.

Medicare Advantage plans are separate insurance policies, and the federal government pays the insurance company for some of the care. Traditional Medicare in this report covers people who pay the federal Medicare premium for Part A and B coverage, and people who enroll in Medicare and also buy a Medigap supplement or Part D drug policy from an insurer.

A decision made at 65 isn’t irreversible. But most retirees tend to stay put once they choose between an Advantage insurance policy and traditional Medicare. It’s also important to remember that migrating from a Medicare Advantage policy to a Medigap supplement is more difficult than going from Medigap to Medicare Advantage.

Here’s a rundown of the most salient differences in cost and care in Kaiser’s summary. But this is a complicated decision, and many of the findings are subtle. So read the full report to understand the nuances. …Learn More

Banks Could be More Retiree Friendly

Anyone who has lived paycheck to paycheck is familiar with the headache of overdraft charges.

Due to a slight miscalculation at the end of a tough month, there isn’t enough money in the account to cover a check. The bank pays the check but charges an overdraft fee that drains money out of the account. A negative balance would trigger an overdraft fee on a different check or cause it to bounce.

Of course people should manage their finances responsibly. But the federal Consumer Financial Protection Bureau (CFPB) argues that older people in particular are at a disadvantage, and perhaps banks should put practices in place that protect them from overdrafts, which the CFPB said produce billions in revenue every year. The agency has also clarified existing regulations to prevent what it calls surprise overdraft fees, including fees charged to customers who write a check that bounces because they deposited someone else’s check that then bounced.

Banks “should promote financial health for older adults rather than erode it,” the agency said. Some institutions have made changes but more could be done. One suggestion: alerting an account holder’s trusted relative or caregiver when a bank balance is dangerously low.

Overdraft fees range from $15 at smaller banks to $35-$37 at major institutions. Some banks limit the fees they charge in a single day to one, but some will charge as many as six a day. “Social Security and a small pension,” a retired steelworker complained to the CFPB, “do not provide extra funds sufficient to pay for any of the cited ‘junk’ fees.”

Retirees’ checking accounts could be handled more carefully for a few different reasons. If they rely heavily on Social Security, they don’t have a big cushion in their checking accounts and must navigate an irregular deposit date for their Social Security checks. …Learn More

A Start on Estimating Retiree Medical Costs

New Medicare enrollees can expect their uncertain medical expenses to take roughly $67,000 out of the household budget, on average, over the rest of their lives.

Since this estimate is only an average, some retirees will pay less and some will pay much more. And the estimate, revealed in a new brief by Karolos Arapakis at the Center for Retirement Research and based on a larger study, includes only the copayments and cost-sharing charges paid by retired households over 65. It excludes their single largest medical expense – monthly insurance premiums.

The estimate is, nevertheless, a useful benchmark for older workers and retirees who want to get a better handle on their health care spending, which is very difficult to plan for. The study takes into account the unexpected cost of things like a broken arm, as well as the cost of managing chronic medical conditions, which accumulate over the years.

To estimate total medical costs, the researchers linked a periodic survey of retirees that includes out-of-pocket spending to their Medicare insurance records – for Parts A, B and D, and Medicaid  – and to a separate data source that tracks private insurance policies such as Medicare Advantage plans and other smaller public and private sources.

The various government and private insurers pay around 78 percent of older households’ total lifetime health care costs, excluding premiums, the researchers found. The retirees pay the remaining 22 percent, or about $67,300 for an older household with average spending for medical care.

However, retirees with the most serious medical problems will spend two times more out-of-pocket during their lives, and relatively healthy people will pay less. …Learn More

Beware: a New Government Imposter Scam

It is a cruel farce. Scammers use the names of federal agencies charged with protecting citizens’ financial security to rip them off.

The Consumer Financial Protection Bureau (CFPB) has confirmed the existence of a new scam in which someone purporting to be from the agency contacts individuals and tells them they are eligible for a payout in a class-action lawsuit. On one condition: to collect the money, the scammer says the taxes owed must be paid upfront.

This is known as an imposter scam. Imposter scams involving other federal agencies – the IRS or the Social Security Administration – are common.

The CFPB imposter scam sounds vaguely credible since the story the victim is told is similar to the agency’s actual mission. The mission of the CFPB, established after the collapse of the subprime mortgage market, is to uncover chicanery by financial companies and get restitution to compensate victims for their losses.

The agency said the recently disclosed scam often targets older people, who are more vulnerable to falling victim if they are experiencing cognitive decline. “We can’t say it enough. The CFPB will NEVER call you to confirm that you have won a lottery, sweepstakes, class-action lawsuit, or about any other fees or taxes,” CFPB said.

A different imposter scam involving the agency occurred a few years ago. Someone used the name of a former top CFPB official to convince older victims they’d won a lottery or sweepstakes they had never entered.

“An imposter scam happens,” the official said, “when a criminal tricks you by claiming to be someone you trust.” …Learn More