Spouse in Nursing Home Raises Poverty Risk

When nursing home care uses up a widow’s savings, the federal Medicaid program will kick in and cover her bills for care. But it’s more complicated for couples.

If one spouse moves into a nursing home and the bills start piling up, the person who is still living in their home can face serious financial hardship and even poverty.

This is a significant risk facing the one in three married people in their early 70s whose spouse will eventually wind up in a nursing home, researchers at RAND found in a study on the financial impact on couples rather than individuals.

It’s not unusual to pay roughly $90,000 for a year for a semi-private in a nursing home, though many people have relatively short stays. A common misconception about Medicare is that it covers all nursing home bills. It does not. The program pays for just 100 days of care in a skilled nursing facility and only after someone has been in the hospital and needs more time for recovery or rehabilitation.

High-income retirees pay directly for care that doesn’t follow a hospital stay, because in most states Medicaid kicks in only after couples deplete all but about $3,000 in savings to cover the cost of the nursing home. There is one significant protection for couples under Medicaid’s eligibility rules: their home does not count as an asset as long as a spouse continues to live there.

But if an unlucky couple has high out-of-pocket spending due to a long stay in a nursing home, the researchers found that it increases the chances they will run through virtually all of their savings and become impoverished. While poverty is far less likely for higher-income couples, they are not immune. …Learn More

Paid Sick Time Spreading in the COVID Era

The pandemic has done good things for paid sick time.

Today, 77 percent of all employees in the private sector get paid time off for short-term illnesses and preventive medical care. That’s a modest four points higher than in 2019 but at least it’s going in the right direction.

However, coverage remains low at the bottom of the wage scale where workers are much less likely to have any type of employer benefits. Just 55 percent of workers with earnings in the bottom 25 percent of all workers receive paid sick time, according to a 2022 report by the Economic Policy Institute.  Even their coverage has increased – from 47 percent prior to the pandemic – but they’re still trailing far behind everyone else.

The overwhelming majority of public-sector workers and the highest-income employees in the private sector already have paid sick time. Some of the lowest coverage rates are for workers at small private employers like restaurants and local retailers that argue the policies are too costly.

To protect Americans without sick leave from COVID, the Families First Coronavirus Response Act required employers with fewer than 500 workers to pay for it. After the federal mandate expired at the end of 2020, there have been a couple of reasons for the increase among private-sector workers, said Elise Gould, a senior economist at the Economic Policy Institute. …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

A New Link Between Opioids and Disability

Picture a worker who has an injury so traumatic that he or she is rushed to the emergency room. A doctor prescribes an opioid to ease the pain.

A new working paper adds to the growing evidence that taking opioids, even when necessary, can have serious long-term consequences for workers’ career paths.

Michael Dworsky at RAND found that workers who received prescription opioids after visiting Colorado emergency rooms were far more likely to enroll in Medicare before turning 65 than people who didn’t get a prescription to treat an injury. Starting Medicare before 65 almost always indicates that someone has left the labor force and is receiving benefits from Social Security Disability Insurance, the primary social program for workers with disabilities.

Dworsky reached similar findings in three different analyses, which used Medicare enrollment within four years of an emergency room visit as a rough proxy for whether workers are receiving the federal disability benefits.

People who had taken opioids prior to being injured were the most likely to leave the labor force. After an emergency room visit resulted in a new opioid prescription, more than 2 percent of the previous users wound up on Medicare and disability – a rate that is four times higher than for traumatic-injury patients who had never previously taken opioids.

Dworsky also examined the morphine-equivalent doses that were dispensed to patients over time. The probability of receiving prescription opioids spiked immediately after workers’ injuries and then stabilized at a higher level than before the injuries. …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

How Older Workers Adapt to New Disability

One in four workers who are still healthy in their mid-50s will experience a disability in the next few years that will make working more difficult.

Sometimes the disability stems from a sudden medical problem such as a heart attack, but many disabilities are just the accumulated wear and tear on aging bodies or chronic medical conditions that get worse.

Whatever the cause, a new study in the journal Research on Aging finds that late-life disabilities often force older workers into early retirement. Nearly three-fourths of the workers who experienced a new disability in their late 50s or early 60s had left the labor force before their full retirement age. Among the people who didn’t have a disability, only a third had stopped working.

The researchers also looked more closely at those with disabilities who did continue to work. Were they able to transition into a new job or occupation that might accommodate their condition? Do they earn less?

The answer to both questions seems to be yes.

Linking a long-running survey of older Americans with occupational data, the researchers checked in on the workers who did not have a disability at age 55 to see how they were faring at 59, 63 and 67. Occupational changes were fairly common when they remained in the labor force after developing a disability.

This might mean moving from a physically demanding construction job to Uber driver or from school teacher to editor of educational materials. Finding a job in a different occupation potentially creates a bridge that accommodates the older workers’ desire to keep working and delay retirement.

At age 59, for example, two-thirds of the people with disabilities who stayed in the labor force had switched occupations, compared with less than a third of the other workers. Once a disability sets in, “staying in the same occupation is difficult,” the researchers concluded.

The people who develop a disability sometime after their mid-50s also earn perhaps 15 percent less than those who are disability-free at 67. …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