Reuters Money

Retirement confidence falls, especially in Social Security: Poll

Talk about a race to the bottom: Which institution do you think is losing the trust of Americans to provide future retirement benefits most quickly – government, or private employers?

The winner is . . . private employers, but not by much. A new national poll on retirement sentiment by Sun Life Financial Inc. finds worker confidence in the future value of employer-provided benefits plunged 32 percent in the past year. Meanwhile, confidence in the government’s ability to provide Social Security and Medicare benefits fell 22 percent.

Sun Life’s fourth annual Unretirement Index points to a sharp deterioration in Americans’ overall confidence about their ability to retire. The survey’s overall retirement confidence index fell nearly 20 percent to an all-time low compared with a year ago. Like several other surveys this year, the poll underscores the national mood of deep worry about financial security, especially in old age.

Along with worries about workplace and government benefits, only 23 percent of working Americans said they are very confident that they will be able to meet basic living expenses in retirement — plunging from double that number (42 percent) last year. And one in five workers said they will never retire.

The falling confidence in employers to provide benefits such as defined benefit pensions or health insurance “reflects a sense people have that an employee benefit is discretionary,” said Wes Thompson, president of Sun Life Financial.

“But the broader underlying trend is a shifting of responsibility to the individual – whether it’s from government or employers. That starts with the shift in recent years from defined-benefit to defined contribution plans, and much greater dependence over the last 10 or 15 years on employees to contribute more for their health care. Now it’s spreading to other areas of employer-paid benefits, such as life insurance and disability benefits.”

Thompson thinks falling confidence in Social Security and Medicare stems from the “public policy debate in Washington.” Indeed, we’ve seen repeated calls this year for a higher Social Security retirement age, reduced cost-of-living adjustments and a higher eligibility age for Medicare.

Shopping for health insurance? 5 tips on how to get it right

When Ronna Wisbrod, a real estate broker and personal organizer, returned to the Chicago area last year, she needed to figure out new health insurance. Now 57, she knew she had to have insurance, but as she set up her own business, Organization by Ronna, she also wanted to keep costs down.

“I’m at a rebuilding stage and in the process of rebuilding my budget, [which] is very tight,” Wisbrod says.

So, she looked around for insurance and spoke with an insurance broker and decided to go with a high-deductible plan that she figures will cover her in case of a medical emergency. That plan, from Assurant Health, has a $5,000 deductible, but costs a very reasonable $380 a month. “I had a $2,800 deductible before, and I didn’t satisfy it because I don’t go to the doctor that often,” she says. “So what does it matter if the deductible is $5,000? It lowers my premium.”

Shopping for insurance is all about figuring out those trade-offs of coverage and cost and finding the plan that works best for you. The variations in insurance plans are mindboggling and few people bother to read the fine print till they run into trouble. Making matters more complex, there are vast differences between states, some of which permit medical underwriting (which means the insurer can reject you from a policy or raise your premium based on your medical history) and those that do not (which means the premiums will typically be higher overall to cover the risk).

To make sense of what works for you, you’ll need to understand how your own medical spending patterns interact with the details of the different plans for which you qualify. Whatever you choose, if you’ve been covered by an employer group plan before, prepare for sticker shock. Here’s how to get through the process:

1. Understand your options If you’ve recently left your job or been laid off, COBRA is the simplest option. It allows you to stay on your employer’s plan. But because it requires you to pay the full cost, it may not be the least expensive. That’s because many employers subsidize the premiums for  employees who never see the full bill. If you’re healthy and see the doctor rarely, you may be able to find a high-deductible plan with less coverage at a lower cost.

On the other hand, if you have medical issues, COBRA may be a better deal overall. “The central issue of COBRA, which is critical for people to examine if they or their family have a pre-existing condition, is that you don’t have to worry about qualifying for it,” says Martin Rosen, co-founder of Health Advocate and co-author of The Healthcare Survival Guide.

Is a concierge doctor worth the cost?

In the mid-1990s, two doctors working with members of the Seattle Supersonics designed the plan for concierge medicine. Their idea was to charge as much as six figures per year to provide “highly attentive medicine,” as one doctor put it, to a few ultra-rich patients at a time.

Concierge medicine has evolved since then. Today, concierge doctors often charge patients more reasonable annual fees in place of billing health insurance companies. Incentives include same-day appointments and 24-hour access. Concierge care can cost as little as $600 annually, and studies show it is popularizing: Last year, MedPAC, a Congress-created commission, found that the number of concierge practices had increased fivefold since 2005.

Is concierge care worth the money?

“If you don’t have health insurance and you’re someone who sees a doctor frequently, [concierge prices are] not that bad,” says Christie Hazlet, 28, who works for a film production company outside Los Angeles.

Hazlet’s primary care doctor transitioned to a concierge model in 2009. That transition, Hazlet says, was abrupt. She received a letter in the mail one day from her doctor saying she could either pay a $2,000 annual membership fee or find a new doctor. She considered joining but decided against it.

“With my health insurance, doctor visits are $40,” Hazlet says, noting that she generally sees a primary care doctor twice annually. “It wasn’t cost effective.”

But some concierge medicine advocates say she should reconsider.

Don’t count on your employer for accurate pension info

A U.S. Supreme Court ruling sent an important reminder to retirees this week: you can’t necessarily rely on your employer for an accurate description of your pension benefits.

The court issued a ruling in Cigna v. Amara, a closely-watched case dealing with the health insurance company’s defined benefit (DB) pension plan for its own workers. Cigna had converted its DB plan into a hybrid cash balance plan, but provided incorrect information about benefits owed to employees when the conversion took place.

Central to the case is the company’s Summary Plan Document (SPD) — a short-form description of plan benefits that employers distribute to beneficiaries when they first become covered, and when material changes are made to the plan. Cigna admitted in court that its SPD was misleading, but disputed the contention that all 27,000 members of the class action lawsuit suffered “likely harm.”

Two lower courts had backed the plaintiffs’ contention that they should receive the benefits as described in the SPD. The Supreme Court ruled that nothing in the Employee Retirement Income Security Act (ERISA) permits a court to alter the terms of a pension plan, but the high court also sent the case back to the district court to determine how to remedy the problem.

Legal experts differed yesterday on whether the ruling was a win for Cigna and other plan sponsors, or for the beneficiaries — although pension advocates were confident the decision ultimately will produce a victory for employees when the lower court ultimately rules.

“This ruling says that if you are a plan trustee and deliberately mislead beneficiaries, they can sue you for monetary damages,” says Karen Ferguson, director of the Pension Rights Center. “The standards laid down by the Supreme Court in this decision make it likely that the Cigna employees and retirees will get the pensions that they had been led to believe that they would get.“

But no matter how the case turns out, the legal battle serves up a clear cautionary reminder to private sector workers participating in DB plans — namely, that you can’t take your SPD to the bank.

Six ways to cut your tax bill now

Tax deadline day, April 18, is quickly approaching.

Before you file, make sure you’re grabbing all of the deductions due to you. Robert Spielman, a certified public accountant and partner in the tax and business services practice at Marcum LLP, sat down with Prism Money and shared several ways to navigate the muddy waters of tax season. Here is his advice.

What are the best ways to reduce taxable income?

Use all the credits you can. This one is a no-brainer. There are a million credits for individuals and not everyone knows about them.  There’s the new home buyer credit and the energy credit for installing new windows, energy efficient appliances, solar energy or anything like that. There’s one set of college credits.

What advice do you have for Roth conversions?

In 2010, you convert your otherwise taxable IRA account into a Roth IRA account and pay all the tax equally in 2011 and 2012. If  you want to change your mind, you have to do that before October 17, 2011. If, for whatever reason, you don’t want to take money from the Roth and you don’t want to pay the tax, you could convert the account back into a regular IRA account. That’s not to diminish the great idea of doing a Roth conversion, but one of the reasons that you might convert back is the account went down in value and you want to do it again in 2012.