Extension Educator, Consumer Economics
Extension Specialist, Consumer Economics
Extension Educator, Consumer Economics
November 18, 2011
The U.S. Census Bureau and the National Institute on Aging have released a report this month titled "90+ in the United States: 2006-2008" that examines the rapidly growing "oldest old" segment of our population. The report describes the demographic, health and economic situation for America's oldest adults.
Some of the main findings of the report include:
What are some lessons from this report for people planning and investing for retirement? Three points come to mind. First, keep the longevity risk on your financial planning dashboard. Review your savings rate to see if it corresponds with the possibility of living into your 90s. In any withdrawal calculations review carefully the assumptions about how long your retirement funds might be expected to last. Secondly, carefully consider your timing of entry into Social Security given the chance of a longer life and the importance of Social Security benefits as a source of income over the retirement life-course. Third, check on your plans concerning how physical disability and the potential for long-term care services might impact your financial situation. U of I Extension's Long-Term Care: Talking, Deciding, Taking Action offers information and strategies for incorporating considerations about long-term care into your overall financial plan.
See: He, Wan and Mark N. Muenchrath, 90+ In the United States: 2006-2008. American Community Survey Reports, ACS-17, National Institute on Aging and U.S. Census Bureau. Issued November 2011.
April 6, 2011
University of Illinois Extension, through the efforts of its Consumer and Family Economics Team and Family Life Team, has launched a new website to help people learn about their long-term care options and be able to take concrete steps to prepare for the possibility of long-term care. The Long-Term Care: Talking, Deciding, Taking Action site is found at http://www.longtermcare.illinois.edu/ and it contains interactive learning modules, including videos and fact sheets and other resources.
The website emphasizes the need for communication in the process of planning for the possibility of long-term care. The website works to develop a person's ability to hold sometimes difficult discussions with spouses, family members, and professional service providers which is an important aspect in planning for long-term care. Many, if not most people, are uncomfortable expressing their intentions regarding their long-term care wishes and ability to pay for care, should they need services.
In addition to communication, the website provides practical web-based consumer education on four highlighted topics of housing, family dynamics, caregiving, and financing. Given the encompassing nature of long-term care with its social, emotional, physical, financial, medical, and housing dimensions, the site draws out the interconnections between the four highlighted areas.
A team of six University of Illinois Extension staff developed the website tool for use by consumers and also by educators and trainers working with community agencies. Additionally, some financial professionals may recommend the website to clients as an educational tool. Some companies or organizations may find the Long-Term Care: Talking, Deciding, Taking Action site complements their human resource offerings or other employee education programs.
October 15, 2010
There's so much to think about when a child reaches age 18 or goes off to college. You worry about your child having huge student loans, whether the roommate will make fun of the color of the comforter you chose, if they'll party instead of studying.
But did you ever give a second thought to having them do a Power of Attorney for Health Care? Or signing a HIPAA release, authorizing you to access your child's medical information? Maybe you should.
In today's world, many people are concerned about their personal privacy and the amount of information that others can access about them. So we have laws that help protect us. But there are inconveniences that come along with those rules.
Perhaps an even bigger issue is, Who will make healthcare decisions for your child if he is unable to speak for himself? A Healthcare Power of Attorney is the tool you need here. You can download state-specific healthcare POAs from Caring Connections.
Other than FERPA, any adult needs to think about these same questions. If your partner or spouse become seriously ill, will her doctor release medical information to you? Will her healthcare insurance talk to you about her medical claims? Particularly for single persons or those who don't have a marriage certificate, think about who would be able to make medical decisions for you or your partner.
Do yourself and your loved ones a favor. Take these steps now.
July 13, 2010
Working age people will have a new long-term care insurance option to consider beginning in fall of 2012, as a part of the health care reform law signed by President Obama in March 2010. The law includes a voluntary employment-based insurance program for the purchase of community living services (long-term care services) and for the payment of institutional long-term care services. The program is called the Community Living Assistance Services and Supports program (CLASS Act).
While many of the details (premium levels, benefit levels, and other details) are to be developed and announced by October of 2012, here are some of the main components of the program:
WHO? Working adults can participate in the program (or opt-out of the employment-based program), spouses of working people can participate if they meet the eligibility criteria, and self-employed people or people who work for an employer that does not offer the CLASS program can participate through an alternate sign-up method.
HOW? CLASS will be financed by voluntary premiums paid by payroll deductions or direct payments from individuals. Workers of a participating employer will be automatically enrolled in the program unless the employee opts out. A "Life Independence Account" for each participant will be established and administered by the Federal Department of Health and Human Services as a stand-alone insurance program. Taxpayer funds are not to be used in the payment of benefits. The CLASS program would be the first payer for individuals who also qualify for Medicaid program benefits. Persons interested in additional long-term care financing protection would be able to purchase insurance in the private long-term care insurance market. Premiums at this point are expected to be in the range of $120 per month on average.
WHAT? Benefits are planned to average about $75 per day, and the exact amount of benefit paid would depend on the degree of loss of physical or mental function. Benefits will be paid as cash benefits to the participant depending upon level of impairment. Participants will be required to pay-in the program for five years before becoming eligible for benefits, meaning that the first program benefits would be seen in 2017. Thus, this program will not benefit people who are currently retired or disabled and unable to work. The program is envisioned as a supplement to existing long-term care insurance coverage in order to allow people with physical and cognitive impairments remain independent.
More details on the program as it currently stands are available at the Kaiser Family Foundation website in their fact sheet titled "Health Care Reform and the CLASS Act."The key question for people planning for their retirements and for their future financial security is whether or not this program is worth it. Should a person remain in the program if their employer participates? Should a person join the program individually if their employer does not participate? How does this compare with other long-term care financing options, especially given that most people are not purchasing private long-term care insurance at this time? The answers to these questions will not be very clear until the program details are available. At the least this program offers a new long-term care financing option to help bear the financial risk of impairment in later life. Stay tuned for more discussion and analysis as the details of the program become clear and as workers need to make participation decisions.
March 16, 2010
Today we welcome guest blogger, Wes Sprague -- a University of Illinois student.
For retirees aged 65 and older, Medicare has been an enormous social success. It has helped to vastly reduce the level of senior poverty in America by providing most every retiree over the age of 65 with public health insurance, yet there are still many ways that it needs to be improved in order to meet the needs of post-retiree Americans that have paid into our social welfare system. As we move forward with heated health care reform in Washington, it's important to understand why these issues exist, especially in today's bi-partisan political environment, and how they will affect the health benefits of both current and future retirees.
Here is an outline of the major issues facing health care reform with regard to the special interests of retirees and what Washington needs to do in order to mend the system:
• Bridge the gap for Early Retirees.
According to the 2008 US Census, Medicare (public health insurance) covers 92.6% of people over the age of 65, making it the single largest primary health insurer of retirees (Turner, Boudreaux and Lynch). However, in 2007, more than 4 million people ages 55 – 64 (12.4% of the age cohort) were without health coverage (Jacobson, Schwartz and Neuman) suggesting that early retirees face a significant impetus to purchase health insurance between the years when employer health insurance stops and when eligibility for Medicare begins after age 65. With rising health care costs, people in this age group, especially those who are not eligible for Medicaid, want the ability to buy in to Medicare to receive preventive care when health risks are less significant and for major medical coverage.
• Fill the "Donut Hole".
During the Bush Administration, congress ruled on Medicare Part D, which created a gap of more than $3,200 in prescription drug coverage from $2,510 to $5,726 where no benefits would be paid if prescription expenses fell within that range (Hall). This created what has been dubbed the "donut hole". Approximately one in four seniors continues to pay premiums for Medicare Part D and the cost of their prescriptions (Hall). On one hand, seniors could stop paying the premium once they fall into the benefit gap; however this forfeits their right to be in the program during the next year, placing them at significant medical and financial risk (Hall). Closing the "donut hole" needs to be one of the significant talking points to Health Care Reform as it places seniors in a position to avoid prescription health treatments.
• Bring down the costs of Long-Term Care.
Serious debate about Long-Term Care has been off the table since the Pepper Commission over a decade ago, however as baby boomers age, the US will see a shift in the population distribution towards an increasing proportion of senior citizens in America (Clark, Burkhauser and Moon 318). With this shift, Long-Term Care will become increasingly more important as seniors become too disabled to handle daily activities. The cost of Long-Term Care has increased over time due to the nature of its continuous care, so the cost of Long-Term Care insurance has followed suit. This has made Long-Term Care insurance unaffordable for most middle-class Americans, placing significant pressure on state funded Medicaid programs as a source to relieve the burden that Long-Term Care raises (Clark, Burkhauser and Moon 318-340). Current legislation that should be included in the health care bill includes the CLASS Act by the late Sen. Edward Kennedy (Democrat – Massachusetts) and Rep. Frank Pallone (Democrat – New Jersey) (Easterling). Such legislation can be used to assist middle-class families with the cost of Long-Term Care
• Continue Retiree Health Benefits.
Congress has been debating whether they should reduce or eliminate the tax exclusion of employer-sponsored health insurance (ESI) in order to generate the additional tax revenue to fund expansions in health care coverage (Clemans-Cope, Zuckerman and Williams). While the current exclusion reduces revenues generated by the government, it provides a significant benefit for covered employees and retirees as Medicare often does not cover the full cost of health coverage. Decreasing the ESI exclusion will place significant pressure on employers to reduce or eliminate health care benefits in an environment where health care is already expensive. This places early retirees at significant financial risk if they lose their employer sponsored health benefits; many of whom gave up wage increases over the course of their employment in place of such promised benefits. The bottom line is this: reduction in the ESI exclusion will reduce the availability of employer sponsored health benefits for all Americans. This is not in our nation's best interest.
• Create a Public Option.
There has been a lot of debate over whether a "public plan" option would place unfair pressure on private insurance companies to lower premiums and keep their business practices under control due to the low cost structure that a government plan could potentially provide. While nearly 49 million Americans are uninsured, nearly every insurance lobbyist argues that a "public plan" option would establish a monopoly in the marketplace. However, there is no evidence to support that opinion. One study, designed by the New America Foundation to measure the impact of government insurance plans offered by states nationwide, found that among 30 state governments offering both a public and private option, the private option attracted more customers than the public one (Levey). Since a government public option will most likely target the elderly and the poor, there is a high probability that there won't be a major shift to the "public plan" option as many anti-option proponents would lead Americans to believe due to the enhanced benefits of private health insurance. However, it would have the significant benefit of keeping health insurance premiums in check for the majority of Americans who have the option to give up the additional benefits of private insurance for the low costs of the "public plan" option. This will lower the cost of health care for both early retirees who cannot afford private insurance during Medicare ineligibility and retirees who require supplemental coverage over and above the cost of Medicare.
Clark, Robert L., et al. The Economics of an Aging Society. Malden: Blackwell Publishing, 2004.
Clemans-Cope, Lisa, Stephen Zuckerman and Roberton Williams. "Changes to the Tax Exclusion of Employer-Sponsored Health Insurance Premiums: A Potential Source of Financing for Health Reform." June 2009.
Easterling, Barbera. "What Is at Stake for Retirees in Health Care Debate?" 31 July 2009. Labor Union Bog. 8 November 2009 <http://www.4ibew.com/2009/07/31/what-is-at-stake-for-retirees-in-health-care-debate/>.
Hall, Mike. Prescription Drug Donut Hole: 'Sweetheart Deal' for Big Pharma. 14 July 2009. 8 November 2009 <http://blog.aflcio.org/2009/07/14/prescription-drug-donut-hole-sweetheart-deal-for-big-pharma/>.
Jacobson, Gretchen, Karen Schwartz and Tricia Neuman. Health Insurance Coverage for Older Adults: Implications of a Medicare Buy-In. Menlo Park, CA: Henry J. Kaiser Family Foundation, 2008.
Levey, Noam N. "Health care debate: Will public option be viable?" Chicago Tribune 26 July 2009.
Turner, Joanna, Michel Boudreaux and Victoria Lynch. "A Preliminary Evaluation of Health Insurance Coverage in the 2008 American Community Survey." Survey. U.S. Census Bureau, 2008.
October 9, 2009
Legal scholars Richard Kaplan, Nicholas Powers, and Jordan Zucker detail the "increasingly troubled state of employer-provided health benefits for retirees" in a recent analysis. Their paper, published in the Yale Journal of Health Policy, Law, and Ethics (Vol. 9, No. 2, 2009), is titled "Retirees at Risk: The Precarious Promise of Post-Employment Health Benefits." (A version of this paper is also available on the Social Sciences Research Network website for download.) They document the economic and financial pressures on private business firms that help explain the erosion of retiree health benefits, and they highlight the adoption of new accounting rules that force firms to recognize the financial cost of retiree health benefits on their books as a major factor in the decline of employer-provided retiree health benefits. They also turn their attention to public sector units claiming "another wave of broken promises may lie just ahead" since the state and local government employers also need to represent these obligations in their accounting.
The overall message of this paper for retirees and for people planning for retirement (that includes nearly all of us!) is the significant erosion already in employer-provided retiree health benefits and the real chance of further declines in employer-provided health coverage for retirees. For the individual few good strategies exist to remedy the loss of coverage. Certainly, those of us in the planning years and period of our lives when we are saving and investing for our future financial security may need to bump up our saving rates to help cover the short-fall and be ready to have some flexibility in our retirement budgets to handle changes. A letter to your legislative representatives expressing concern about the week legal protections provided by ERISA may also be in order.
September 18, 2009
Every day brings interesting new twists and turns in the healthcare debate. From Rep. Joe Wilson's outburst to more talk of death panels, the debate continues on and public opinion has become more polarized than ever. In my last blog, I told you if you sent me an email, I may include your comments in my next blog. Boy, do you have opinions. I received a cross-section of responses from health professionals, concerned citizens, and outraged taxpayers. Here are some of the comments you posted to my Facebook page.
Tanyanika Conaway commented on how she has noticed that people without insurance receive "okay" service, but not the best because they don't have insurance. Karen Grove Hereford, another health professional, feels that if healthcare is free for everyone, services will be substandard. She sees the bigger picture of hospitals not being able to charge their normal rates, which would lead to salary cuts to employees. She stated "I pay a lot for my insurance and I feel I should get good service. I give excellent service to patients whether they have insurance or not."
Daryl Van Johnson feels a competitive public option would balance things. "There is no incentive for insurance companies to do anything for us. They deny claims that are expensive for them, they drop people who get too sick and all this while pushing the cost of premiums through the roof. A public option would cause the cost to be lower, which would force insurance companies to lower their prices to keep people from moving to the public option."
Tasha Thomas, an RN Supervisor said "I hear what everyone is saying and you all have good points. The health care system is big and there is not an easy fix to it...Research Canada universal insurance...you are put on a waiting list for surgery (if it is not emergent). The taxes in other countries for universal insurance are expensive. Remember that employers pay their share into benefits and they pick the packages for their employees...and they set limits to the benefits offered to their employees, not the insurance company. I always tell people to educate themselves regarding the health care system because what you don't know can hurt you."
To place this debate in perspective for you, please allow me to share my personal medical stories over the past month. In August, my mother-in-law passed away. She died of complications related to lung cancer. She had been in and out of the hospital for quite some time. She had Medicare and Medicaid. I'm sure her bills were in excess of $1 million. We have not seen a bill yet; my guess, it's all been paid. My son got food poisoning that same week. He went to the emergency room and was admitted for overnight observation. He was released by 12 noon. He didn't spend a full 24 hours in the hospital. His bill was almost $10,000 and we are expected to pay a little over $1,000 out of pocket.
In addition to all of this, my husband has been having the same tests done for about four years now. Our insurance normally paid the entire cost minus a $20 co pay. Last week, we received a bill for almost $300 for his routine tests. The tests were not considered "necessary" and we were responsible for the entire cost (which would have actually been $750 without insurance). Our health insurance was switched to a different carrier this year by my husband's company. We supposedly have "good insurance." The thing is we pay a higher premium and are responsible for more out of pocket costs than in the past. When I think back to what we paid three to five years ago, health insurance costs have skyrocketed. Left or right, I think we can all agree if something isn't done, we will all be in trouble.
As far as the death panel discussion goes, I believe as many of you do, these panels have existed all along. This won't be anything new. My father-in-law has been in the hospital for a couple of months. Talks of placing him in hospice care have escalated recently; his insurance is running out. When insurance companies and hospitals decide that it is medically unlikely that your condition will improve, financial considerations take priority.
I would like to close this blog with the comments Dr. Tonya Coats stated in her email to me. "I am very conflicted about this debate. It is mainly a matter of semantics. We call it a "healthcare" debate when it is actually a "health care coverage" debate. This is where people who are worried about the government's interference in our lives get it twisted. I believe everyone should have access to basic healthcare screening and emergent needs. It doesn't matter if the economy is good or bad because for some it is always bad. My big problem as a healthcare provider has been the lack of personal responsibility. Take cervical cancer, for instance, screening for it will prevent death. So everyone should be screened. But, it is a sexually transmitted disease. Are we willing to stop having inappropriate or unprotected intercourse? (Personal responsibility) Further, some of the most common and expensive disease processess (hypertension, diabetes, heart disease, and even some cancers) are strongly impacted by life choices. No one wants to put down the fork and get up and exercise to lose weight (Personal Responsibility). None of this is being discussed and all we seem to want to do is throw money at the problem - "The American Way." Finally, nobody wants to take the financial responsibility. Paying for health insurance has to come from taxes, get ready to pay. When this bill passes a lot of people are going to be very disappointed when they don't become magically healthier."
It's up to us. We have to take responsibility for our lives; no one can regulate our choices. But, as Christina Glover so profoundly stated "I understand about personal responsibility, but sometimes bad things happen to good people." If we have a choice, we should choose wisely. Until we talk again...
August 27, 2009
If you are like me, until recently, you have probably half-heartedly followed the news reports on healthcare reform. I thought I'd wait until the dust settled and a more finalized draft of the healthcare bill had been developed before I weighed in. Needless to say, I was very surprised to hear all the uproar about less than pleasant protests taking place all over the country. I decided maybe I'd better find out sooner than later what all the fuss was about. As most of you know, our country is in a healthcare crisis. President Obama and the 111th Congress want to overhaul our current healthcare system and develop a system that would provide healthcare coverage to every American. That sounds easy enough. However, there are various points that proponents on each side of the debate need further clarification on.
Because I wasn't following the reform closely, there are several things that I was unaware of. First of all, I didn't know the correct name of the legislation is America's Affordable Health Choices Act of 2009. You may not have known that as well. In the media, we have always heard terms like Obama-care, the Obama plan, healthcare reform and so on. Secondly, I didn't know that there were two versions of the healthcare bill, a house version and a senate version. Both bills are lengthy. Here's a summary of the house version.
Laurinda Dodgen, University of Illinois Extension Community Health Educator says "there are many myths about the new reform bill floating around." While preparing to write this blog, I found many online. Some points of contention include:
1. "Myth": Seniors will be euthanized.
"Truth": The house bill addresses estate planning issues.
2. "Myth": Private insurance costs will increase or private plans will be eliminated.
"Truth": A public insurance exchange will be created; the government plan will be one of many
3. "Myth": Medicare benefits will be cut to fund the healthcare reform.
"Truth": Medicare savings come from cutting billions of dollars in overpayments to insurance companies and the elimination of fraud and abuse, not from reductions in patient care.
4. "Myth": The quality of care and services will decrease.
"Truth": With more options available, quality of care is expected to increase. Services will remain the same, and won't be rationed out as critics have suggested.
5. "Myth": Employees will have to change plans and doctors.
"Truth": Employees can keep their same plans, doctors, etc. The public plan will be an available option, not the only option.
Both of these arguments have some validity. I cannot say that one has a better argument than the other. I believe the answer lies somewhere in the middle. The one person that everyone believes could have brought both sides together is the now deceased U.S. Senator Edward M. Kennedy. Sen. Kennedy has been a force to be reckoned with for many years. He has influenced a wide variety of legislation, including many that dealt with healthcare. It has been said that even from his sickbed he made calls and spoke to legislators about getting the healthcare reform passed. Now that he has passed away, strong recommendations have been made to name the reform bill after him. Will his death play a part in getting the bill passed? It's hard to say. If it does, it's too bad Sen. Kennedy won't be around to see his dream of universal healthcare become a reality. He has been advocating for universal healthcare for the past 30 years.
The question remains whether both sides will be able to come together and find common ground. I believe they will. As I looked at the bills, there are more things that are similar than different. I think a neutral party, without political or financial interests will be needed to mediate between the groups. Will the wrinkles get ironed out before the end of the year? Who knows? We will have to wait and see. In the meantime, send me an email with your reactions to the healthcare debate. I'd like to hear the thoughts of average Americans. Maybe I'll share your thoughts in my next blog.
June 12, 2009
It used to be that retirees from state and local government positions and union retirees could look forward to receiving generous health benefits in the form of subsidized health insurance premiums or fully covered health expenses in retirement. Those days seem to be moving into the past rather quickly. The mega-bankruptcy and restructuring of General Motors will likely see retirees losing significant health benefits as some previously covered services such as eye-care coverage and dental coverage are dropped and some co-pays get increased dramatically. At the same time the Medicare program may see out-of-pocket expenses increase for its participants, leading to a double-squeeze on the affected union retirees.
Similarly, state employees and state government retirees may face a similar sea change in their covered health benefits as retirees. States such as Illinois, California and West Virginia face budget gaps in the billions of dollars. Moreover, they confront significant gaps between the expected future cost of benefits promised by their pension systems and the assets controlled by the pension systems. While current state employees and retirees may retain their benefits, it is quite certain that future state employees face a distinct possibility of receiving less generous retirement health benefits.What are some action points for the average person who is saving and investing for his or her retirement? First, as some auto union retirees will say, some agreements for retiree benefits can unravel if the finances of your organization fall apart catastrophically. Second, the broad economic and demographic forces behind the pressure to change retirement health benefits for these groups of employees are massive economic pressures, which are not likely to diminish soon. I expect that the trend towards more individual risk-bearing and responsibility for retirement saving and investing, at least in the employer–employee context, to continue. For many of us, this means we should redo a retirement income projection to take into account the possibility of higher than expected future health care costs. It may mean that a person should bump up his or her savings rate to be ready to address the possibility of higher health care costs in retirement.
May 9, 2008
My youngest son (a pre-schooler) suffered a serious brain injury in January due to an underlying medical condition. This was a very difficult episode for our family, and it included a six-week hospital stay in St. Louis, and now we find ourselves getting used to having a very different little boy in our family. Thanks to a wonderful team of doctors and therapists, as well as the support of our family and friends from our church, the university, and our neighborhood, we are pulling through and have welcomed our son home. My wife and I (and our other children) work with him daily, along with his doctors and a team of therapists, to promote a recovery of functions. Nonetheless, at the present time the reality is that my son has suffered a loss of capacity to understand his environment and to process information, his vision has been affected, and his ability to eat and drink independently (of a feeding pump) have been reduced. Like a lot of families, we find ourselves with a child in our family that has the distinct possibility of never achieving financial independence. Families with children with special needs face unique issues from the perspective of saving and investing and planning for the future financial security of the entire family.
First off, families with children with special needs find themselves very busy with care-giving activities in the present. They often focus so much on getting through the day to day activities that they do not spend much time planning for the future, especially its financial dimensions. Secondly, they often face high out-of-pocket expenses to care for their children. These expenses might be drugs to help treat a chronic condition, co-pays on medical visits and equipment, and the cost of traveling to out-of-town specialists and health care providers. Third, many of these families have foregone work opportunities (say for the spouse that is the primary care-giver) that would bring additional income into the family. These factors all make it more difficult for these families to save and invest for their future, despite the fact that they likely will have higher financial needs in the future compared to families without a special-needs child.
What steps can families like ours take to improve their chances at providing a secure financial future for all their members, including their special-needs child? A number of things come to mind, starting with making sure that the current care-giving situation is viable and sustainable. Parents in this situation need to be aware of options (through their circle of friends and family, as well as community) for respite care and additional care-giving resources. Support groups organized by a local hospital for families with special needs children are a good place to start. Likewise, parents need to speak with their social worker contacts to ensure the family is aware of all applicable private and public programs that might help them. Additionally, parents need to update their wills and make clear their intentions for care-giving and the future of their special-needs child (a letter of intent), should something happen to them. Parents also should begin an education and financial planning process that explicitly takes into account the possibility that their special-needs child may not be able to live independently as an adult. This process includes learning about special needs trusts and talking with lawyers and financial planners familiar with these issues. The parents also should take time to re-evaluate both their savings and investment strategy (and amounts they save monthly) as well as their insurance coverage levels.Having a special needs child brings different responsibilities and experiences (including the joy of seeing your child grow and progress on their own terms, sometimes in spite of great challenges) from the parenting experience of most families. Taking the time to consider the long-term financial dimensions of this challenge can help families stay on track to a more secure financial future for all of their members.