July 14, 2020
College Debt Boosts Disability Requests
During the steel and coal busts of the 1980s, applications for federal disability benefits rose in areas where these industries had laid off workers. Now there’s a 21st century reason to apply: student loans.
College debt is extremely difficult to discharge in the bankruptcy courts. But the U.S. Department of Education in 2013 opened a new avenue for potentially eliminating federal student loan debt. Former college students whose disabilities are severe enough to qualify them for disability benefits can then apply to the Department of Education for loan forgiveness.
Since 2015, the typical person approved for the program has eliminated $17,500 in college loans.
The prospect of discharging the onerous debt created a powerful financial incentive. After the program began, the probability that an individual with student loans would apply for disability with the U.S. Social Security Administration was much higher than for individuals with no loans, a new study found. The increase in applications was largely from people who had not earned any money the previous year and may have had few options for paying their debt.
The older workers who took out student loans – sometimes on behalf of their children – may be “aching to retire” anyway, the researchers said, and receiving disability and loan forgiveness would accomplish that. But the younger people who applied may simply have been motivated by a desire to discharge their college debts.
However, seeking disability benefits as a strategy for eliminating the debt didn’t work very well. …Learn More
March 19, 2020
People on Disability Use Payday Loans
Taking out a high-cost payday loan is an act of desperation, and people on federal disability are some of the biggest users.
Nearly 6 percent of households under 66 and on disability use payday loans, compared with 4 percent of the general population, according to Haydar Kurban at Howard University, who did the analysis for the Retirement and Disability Research Consortium.
The financial vulnerability of disability recipients was starkest in the months after the 2008-2009 recession, when their use of payday loans spiked to 22 percent. The rate of borrowing also rose at the time for the general population but by much less.
Disability benefits under the federal Supplemental Security Income (SSI) program average about $900 a month. To eke out a living, people on disability try to supplement their income with food stamps, Medicaid, some work, or housing assistance from the government or a family member – and some use payday loans to raise quick cash. (A small share of people in this study are not disabled but receive SSI to supplement their Social Security benefits.)
Despite the very low incomes of the disability beneficiaries, they are attractive customers for payday lenders, Kurban said, because the benefit checks provide extra assurance the loans will be repaid. …
February 25, 2020
Have You Misplaced a Retirement Plan?
Wouldn’t it be nice to find some money sitting in a long-forgotten retirement account somewhere?
It’s not hard for workers to lose track of an old account as they move from employer to employer, often across state lines. Each state government keeps a repository of unclaimed property – most have been doing this since the 1980s – and residents and former residents can check online through a simple name search in the state’s unclaimed-accounts database.
But not everyone takes the trouble to search for the money or is even aware it exists. So billions of dollars have accumulated nationwide in various types of unclaimed accounts, including retirement plans, insurance policies, trusts, and brokerage and bank accounts – so much so that firms have sprung up that will do the legwork required for individuals to claim their money. But little has been known about how much sits idle in unclaimed retirement accounts.
A new study estimates conservatively that about $38 million, accumulated over many years in some 70,000 retirement savings plans nationwide, had not yet been claimed in the states’ property accounts as of 2016. Most of these are 401(k)-style plans but they also include IRAs and pension checks.
The average account value is only about $550. But the largest ones are anywhere from $5,000 to $13,000, which could be meaningful to retirees who are struggling financially. …Learn More
July 16, 2019
Spotlight on Our Research, Aug. 1-2
Topics for this year’s Retirement and Disability Research Consortium meeting include the opioid crisis, retirement wealth inequality over several decades, trends in Social Security’s disability program, and the impacts of payday loans, college debt, and mortgages on household finances.
Researchers from around the country will present their findings at the annual meeting in Washington, D.C. Anyone with an interest in retirement and disability policy is welcome. Registration will be open through Monday, July 29. For those unable to attend, the event will be live-streamed. The agenda lists all of the studies.
Here are a few:
- Why are 401(k)/IRA Balances Substantially Below Potential?
- The Impacts of Payday Loan Use on the Financial Well-being of OASDI and SSI Beneficiaries
- The Causes and Consequences of State Variation in Healthcare Spending for Individuals with Disabilities
- Forecasting Survival by Socioeconomic Status and Implications for Social Security Benefits
- What is the Extent of Opioid Use among Disability Applicants? …
March 14, 2019
Drug Discounts, Other Help Available
Consumers are powerless to control spiraling medication prices, but low-income, uninsured and under-insured individuals can often get help paying for their drugs.
The help, in the form of subsidies or prescription price reductions, comes from four sources. The first is exclusively for seniors on Medicare, but the rest are available to everyone.
Medicare’s Extra Help program provides up to $4,900 to subsidize retirees’ drug copayments and Medicare Part D premiums. Individuals are eligible for this assistance if their income is less than $18,210 and the value of their investments, bank accounts and other assets is under $14,390. The limits for couples are $24,690 in income and $28,720 in assets. Retirees who own their homes do not have to include the property’s value in this limit. Social Security’s website explains what does and does not count as assets.
Social Security takes the applications for this Medicare program. Applications can be submitted either online (SSA form 1020) or in person by making an appointment at a local Social Security office. Social Security also notifies seniors about whether they qualify.
Price discounts in an app
If your drug is not covered by your health insurance, Consumer Reports suggests trying two cell phone apps (or go online) to search for the lowest-cost prescriptions at various pharmacies in your area. On the apps – GoodRx and BlinkHealth – search your drug name and dose and enter your zip code to find the discounted prices, which can vary dramatically. These companies act as middlemen between consumers and Pharmacy Benefit Managers, which buy generic and brand-name medications in bulk from manufacturers and pass the volume discounts on to consumers. GoodRx provides a coupon that can be saved on a phone or printed out for the pharmacist. BlinkRx requires consumers to pay for the drug on its website and provides a voucher for the pharmacist. These cash prices will not be run through insurance – and won’t count against your deductible – said Lisa Gill, Consumer Reports deputy editor and a specialist in medication pricing.
Walmart also offers discounts on generic drugs, and Costco has very low retail drug prices. Which option is best for you? “It’s going to depend on which medication you take and probably where you live,” Gill said. Not everyone will have success in reducing their costs but, she added, “if the drug’s not covered by insurance, it’s worth trying.” …
October 18, 2018
How Retirees Can Negotiate Drug Prices
A Squared Away reader wrote recently that he and his wife saved $2,400 a year by paying cash for their medications.
When a pharmacy sells a prescription drug to a customer, the health insurer reimburses the pharmacy at a negotiated rate that covers its cost for the drug, its dispensing fees, and any additional markup. It’s often the case that a patient’s copayment exceeds the pharmacy’s reimbursement, resulting in an overcharge in the copayment. More than one in four copayments were overcharges in a March analysis in the Journal of the American Medical Association of some 4,000 outpatient drugs and
9 million insurance claims by people of all ages.
We asked Mohamed A. Jalloh in Napa, California, to guide consumers on how to reduce their costs. He is a pharmacist, assistant professor at the Touro University California College of Pharmacy, and a spokesman for the American Pharmacists Association.
Question: How can retirees access their option to pay a cash price for a prescription if it is lower than their Part D or Medicare Advantage plan copayment?
Jalloh: The big picture is that elderly patients should work with a pharmacist to see if they can get a better deal. If you process a prescription through your insurance – whether under an employer’s health insurance or Medicare drug coverage – the price may be higher than paying straight cash for the medication. Anyone can do this. But I imagine it helps seniors the most because they’re the ones taking the most medications.
The key is to ask the pharmacist to go over your medications with you. Do a medication check-up once a year. That’s the best time to see if a pharmacist can get a better deal for you.
Q. Is it common practice to negotiate a cash price?
Jalloh: I think that people do not know about this option and would really appreciate learning about it. It’s also important to remember that, in most cases, people are still going to get a better deal with insurance by paying, say, a $5 or $10 drug copay. …Learn More
October 9, 2018
Switching Medigap Plans is Tricky
When Thomas Uttormark turned 65 in 2010, he researched his Medigap options on the Medicare.gov website and chose a plan with a premium of around $100 a month.
As his premium inched up over the next two years, he decided to apply to another insurance company to see if he could reduce the cost of his policy. Since the federal government dictates the coverage amounts under each of the 10 Medigap plans, he reasoned, his existing insurer’s Plan N provided exactly the same coverage as any other insurer’s Plan N – and the new plan might be cheaper.
“I thought it was no big deal to switch,” said the 73-year-old Uttormark.
However, switching did prove to be a big deal. His application was denied. He suspects it was due to his pre-existing conditions, which included a routine gallbladder surgery before he retired, and his cholesterol, blood pressure and acid reflux conditions, which are fully controlled with medications. The insurer didn’t give him a reason for the denial.
Uttormark ran headlong into a maze of federal regulations that determine whether, when, and how a retiree can transfer from one insurer’s Medigap plan to another insurer’s Medigap. One in four people enrolled in traditional Medicare have Medigap supplemental insurance – about 10 million retirees – and are affected by these restrictive regulations.
They are “particularly confusing,” said Casey Schwarz, the senior counsel for education and federal policy for the Medicare Rights Center in New York and Washington.
She said that people who’ve just signed up for Medicare Parts A and B routinely call her organization because they are having trouble sorting out their options and what they will be permitted to do in the future if they choose either Medigap, which is supplemental coverage for traditional Medicare, or Medicare Advantage private insurance after initially signing up for Medicare Parts A and B.
A handful of states have looser regulations than the federal rules – California, Connecticut, Maine, Massachusetts, Missouri, New York, and Oregon – and allow retirees to move more freely among various Medigap plans, though the states also have their own restrictions.
Schwarz explained that the insurance company denied coverage to Uttormark because he did not qualify for what the federal government calls “guaranteed issue.”
Under guaranteed issue, there is only one time when every Medicare beneficiaries is assured access to a Medigap policy: when they first sign up for Medicare Part B. At this time, insurers can neither deny coverage based on a pre-existing condition nor charge a higher premium if an applicant has a specific health condition.
Another guaranteed issue period applies to limited numbers of retirees. It gives retirees the right to buy a Medigap policy – even people with pre-existing conditions – if they lose their previous coverage through no fault of their own. Perhaps their current Medigap or Medicare Advantage insurer went bankrupt or left the state, or their employer ended its Medicare supplement for retirees. When this occurs, however, the retiree must select a new policy within 63 days of losing their old coverage.
Uttormark didn’t qualify for guaranteed issue because he was choosing to drop his Medigap policy for a less expensive one. Insurers can rightly “refuse to sell him a policy, can charge him more for pre-existing conditions, or refuse to cover his pre-existing conditions,” Schwarz said.
The federal rules also provide an opportunity to switch plans if retirees selected Medicare Advantage as their first form of insurance when they enrolled in Medicare. In this case, they are permitted to move into any Medigap policy sold in their area but they, too, have a restriction: they must do so within the first year of their initial Medicare enrollment.
“Medicare beneficiaries who miss these windows of opportunity may unwittingly forgo the chance to purchase a Medigap policy later in life,” the Kaiser Family Foundation said in a recent policy brief detailing the federal and state regulations.
The Medicare.gov website describes the circumstances in which beneficiaries qualify for federal guaranteed issue. …Learn More