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Some Medicare plans drop prices: time to shop is now

If you’re a senior on Medicare – or if you help out aging parents with their money matters  – it’s time to get ready to shop. The annual enrollment period for Medicare prescription drug and Advantage managed care plans is about to begin, and it’s one of the best opportunities of the year for seniors to save money.

The new healthcare reform law is reshaping certain parts of the Medicare marketplace, for the most part in ways that benefit seniors. Although the law gradually reduced subsidies to Medicare Advantage — a change that critics derided as “slashing” Medicare– the Advantage and prescription drug markets are doing just fine. The number of plan offerings for 2012 are stable and average prices are steady or falling slightly.

Re-shopping your plan annually makes sense, especially Medicare Part D drug plans. Insurance companies often change their offerings year-to-year in ways that can increase drug costs by thousands of dollars, or make it more difficult to get certain drugs. At the same time, your drug needs may have changed since the last plan selection period in ways that make a plan less beneficial for you.

And this year, it’s important to get started on that process earlier than usual—because the enrollment period is earlier this year. The 2010 health reform law moved up the annual enrollment period by several weeks, starting this year. Enrollment will be open from Oct. 15 to Dec. 7—a sensible move intended to get this time-consuming chore away from the busy holiday season.

You’ve got two basic choices: traditional, fee-for-service Medicare alongside a stand-alone Part D prescription drug plan, or a privately managed Medicare Advantage all-in-one option (including hospitalization, outpatient services and prescription drugs).

You’re free to make as many changes as you want before Dec. 7; your changes take effect on Jan. 1. There’s also a so-called “dis-enrollment” period that runs from Jan. 1 to Feb. 14, that can be used by seniors who pick an Advantage plan but then change their minds. During that period, you can switch back to traditional Medicare but not to a different Advantage plan. And, if you do leave Advantage, you can add a stand-alone drug plan during that period.

Avalere Health, a health policy consulting firm, projects that average premiums for both prescription drug and Advantage plans will fall 4 percent for 2012. But the enhanced competition doesn’t mean prices are coming down across the board. Although some of the top 10 drug plans, which cover 77 percent of enrollees, are cutting premium prices, six are raising prices.

Workers regret their health benefit choices: survey

Within a few weeks, employees across the U.S. will start to see their healthcare benefit packages for 2012: They’ll find higher premium costs, more coverage restrictions and myriad choices on items like deductibles, flexible spending account contributions, vision and dental coverage and more. If this year is like others, almost half of those employees will make decisions they later regret.

That’s the findings of a new survey conducted by Harris Interactive and due to be released tomorrow as part of the Aflac WorkForces Report. Reuters received the findings early.

The study reports that 77 percent of workers say they’ve made mistakes in their benefit decisions in the past, with 42 percent saying they waste money every year. The most common mistakes, according to Aflac, include choosing the wrong deductible, not taking advantage of their flexible spending account and passing on coverage — such as vision and dental care — that they later wish they had taken.

Making those decisions could be even more difficult this year, as employers are putting more employees into plans that have high deductibles and linked savings and spending accounts, and also raising the cost of premiums, especially for family members.

Employer costs will go up roughly 5.9 percent, and the majority of employers will pass those increases on to workers, according to the most recent 2011 Towers Watson Health Care Trend Survey. Roughly two-thirds of employers (66 percent) will increase employees’ share-of-premium contributions for single-only coverage for 2012, and 73 percent will increase them for dependent coverage.  This “looks like a year when we will start to see costs go up primarily via increased premium contributions, with a higher proportion of the increase being borne by families,” says Randall Abbott, senior health care consultant at Towers Watson.

The takeaway for workers? If both spouses are working, it’s an especially good year to consider each spouse using his or her own healthcare plan and putting the kids on the one that’s best. “Employers are becoming increasingly focused on raising the cost for dependents to capture the added expense and to encourage working spouses to shift to their own employer’s plan,” says Abbott. “We also expect more use of spousal surcharges when they fail to do so.”

Workers also are usually better off if they use higher deductibles to keep their monthly premiums low, and take advantage of low-cost policies that cover regular care, such as dental or vision coverage.  It’s almost impossible to predict healthcare costs for the coming year; accidents and illnesses are, by their very nature, usually surprises. But Aflac says that of those people who do contribute to flexible spending accounts, only 34 percent said they contribute the right amount.  Some 43 percent said they didn’t contribute enough. Only 23 percent put too much in their flexible spending accounts.

Eldercare: How to hire your kids to take care of you

Long before the phrase “sandwich generation” took hold, seniors in declining health turned to children or other relatives for essential tasks such as cleaning, grocery shopping, doing laundry or driving to doctors’ appointments. Now, a growing number of families put a price on such devotion though caregiver contracts.

As the name implies, caregiver contracts outline in detail paid arrangements between a parent and child, relative or anyone else in the caregiving loop. Among other things, a formal agreement sets forth the length of time and rate of pay for caregiving services, and the tasks to be performed.

While children who care for elderly parents is nothing new, tough economic times and the rising cost of nursing home care add appeal to paying them for doing so under a contractual arrangement. “These days many people can’t afford to care for someone without getting paid, especially when they have to leave a job to do it,” says Ellen S. Morris, an attorney with Elder Law Associates in Boca Raton, Florida. “For parents, paying a child or other relative can help them stay at home and provide assurance that they are not being a burden.”

Caregiver contracts mushroomed with a 2006 change in the law that makes it more difficult for people to give away their assets to qualify for Medicaid. By spending down savings to pay for caregiving, elders can lay the foundation for Medicaid to pick up the tab should a nursing home stay be required. According to Morris, that’s an important goal for about half of her clients who use contracts with family members.

They can also make it easier for veterans to qualify for certain benefits, says James Mullen, an elder law attorney in Bristol, Rhode Island. Under one program, some disabled veterans who pay a relative or other person for care can include those amounts as medical expenses, which may qualify for government reimbursement.

While formal contracts pave the way for receiving government benefits by setting important details in stone, Mullen says that suggesting them to family members often evokes an emotional response.

“The kids don’t want to look like they are being greedy and some parents believe that children should care for them out of love, not money,” he says. “But when I point out that a son or daughter is providing a valuable service, and often suffering a financial loss by taking time away from a job to do so, that sometimes changes their minds.”

Medical tourism wins fans

Paul Hambleton didn’t know what to do. He was uninsured, hurting, and facing a $30,000 bill to fix his torn-up knee.

So after researching his options, the owner of a valet-parking firm in Henderson, Texas, came up with an inspired solution. He got treated at a luxury facility, by doctors trained at top institutions, and enjoyed a sunny getaway at the same time, all at a fraction of the cost.

Of course there was a hitch: He had to go abroad. After checking out a number of local hospitals in Texas, Hambleton ended up heading across the border, to a facility in Monterrey, Mexico. The entire cost, including airfare: under $6,000.

“I was treated like a billionaire,” says the 52-year-old, who even squeezed in a couple of rounds of golf during his trip. “I had a Baylor-trained surgeon, a personal nurse the entire time, stayed at a top hotel, and had the best chicken enchiladas I’ve ever had. If I had my choice, I’d never go to an American hospital again.”

More Americans than ever are following Hambleton’s logic, and forgoing their local General Hospital in order to travel to places like Thailand, India, or Costa Rica for medical tuneups. More than half a million Americans every year, in fact, who are seeking out everything from dental work to cosmetic surgery to heart stents and hip replacements. It’s called “medical tourism,” and it amounts to a $40-billion annual business.

People should be rightly wary about going under the knife in another country, of course. You never want to find yourself in some poorly-equipped clinic, with doctors who don’t even speak your language, thumbing through a phrasebook to describe your condition.

But with 46 million Americans uninsured, according to the Kaiser Family Foundation, seeking affordable treatment abroad has become a real option for many. And hospitals that cater to well-heeled foreigners, staffed with Western-trained surgeons, are only too happy to take your money.

Family finances for a fairytale romance

When the honeymoon’s over, the hard work begins. Talking about money isn’t romantic, but it’s a great ongoing topic that may ensure a long marriage.

While I don’t think Kate and Will will need any of my humble yeoman’s advice, discussing money issues on a regular basis is a good relationship builder. Here are five ways to steer clear of fiscal disharmony:

Put it all out on the table. The kitchen or dining room table is a great place to discuss expenses, bills, income and goals. Make a point of setting aside some time every month. Surveys show that money problems are among the leading cause of divorce. Is one or both partner a debtaholic? Get help and get a “debt score” to see if you have a problem. Clean the table first, both physically and metaphorically.

A home is where the heart is. But it’s often a bad investment, except for maybe Windsor Castle and Buckingham Palace, which are not only taxpayer-maintained but indirectly income producing. Most of us commoners, though, have to fix our own roofs, heat/cool our manor homes and suffer through one of the  worst housing recessions in history. Owning a home is an emotional experience, yet don’t forget to tally up what it will cost you over time in taxes, maintenance, insurance and financing. The math may not add up, even with tax breaks. Renting is no sin.

Teach your kids about money. You can do this in so many fun ways. Give them piggy banks. Have them save their birthday and special-event money from grandparents. Give them an allowance. Set up a savings account and have them watch the balance grow. Assign them chores and pay them. Help them save at least half of what they earn. Charming guides for little ones include “Money Mama and the Three Pigs” by Lori Mackey and “The Great Piggy Bank Adventure“. Since kids get most of their ideas on money from their parents, start them off saving and realizing the fruits of their young labor.

Choose college prudently. Although I think the future heirs of England may just sneak into the Oxbridge system, for the rest of us, keeping our children out of debt after college is essential for a lower-stress adulthood. Spending the greatest amount of money on the biggest name-brand school isn’t always a wise choice. Community colleges are still the best bargain in higher education and save an average $3,000 a year (or more) over public universities. They offer virtually the same first- and second-year courses close to home. Before they even get into middle school, set up a 529 college saving plan for them. You can withdraw the money tax-free for education. Utilize the internet to find the best programs and available scholarships. Find the best cities for their higher education through the College Destinations Index.

Keep talking and saving. Life is an ocean that’s ever changing. There will be turbulent times of stress and illness. And old age is no parade with white horses. While the British mostly seem content now to take care of our fairytale couple well into their old age, the rest of us need to think about out-of-pocket medical expenses and long-term care. That ultimately means more savings. Do it automatically by auto-debiting money from your checking account into your money-market fund. Keep an emergency kitty. Consider long-term care insurance.

How to survive the “zombie economy”

What does the threat of a zombie attack and a financial meltdown have in common? For starters, you have to act fast, remain calm and fight back. That’s the premise of the off-beat new book, “Zombie Economics: How To Slay Your Bills, Decapitate Debt, and Fight the Apocalypse of Financial Doom,” a tongue-in-cheek guide to financial survival for the type of people who like a good chuckle when they’re slogging through a crisis.

As the title suggests, Zombie Economics takes a “survival-at-all-costs” mantra to fresh heights, introducing each chapter with a breathless scene straight out of a horror flick,  except the bad guy isn’t going to eat your brains — the real enemy is bankruptcy, financial predators and debt.

To put it plainly, the zombie economy is any situation that’s “attacking you,” explains 39-year-old Lisa Desjardins, who co-authored the book  with Rick Emerson. “It could be everything from the global economic meltdown to a personal crisis, and it makes you vulnerable, it makes you feel defenseless and you don’t know how to combat it.”

Desjardins, a correspondent for CNN, talked to Reuters about her own brush with the zombie economy, and how to avoid your own personal financial apocalypse.

You warn right up front that this books isn’t your typical personal finance guide — it’s not about getting rich or winning in the stock market. Tell me what you were aiming for.

This is a book for people who would never buy a Barron’s guide — a dusty, intimidating personal finance book. Those are great, but we wanted a book for people who like cable television: they aren’t going to be putting together an Excel spreadsheet to figure things out, but they have serious financial problems that they don’t know how to deal with.

Why the zombie theme?

Budget wars: The middle class loses big time

Now that federal government shutdown has been averted, it’s a good time to examine what’s at stake for most of America in the crucial next round of budget talks.

Not doing anything to reduce the size of government debt will be catastrophic. Not much quibble there. But acting hastily and cutting the wrong things can be even more costly to social and economic welfare.

Neither the Republican nor the Democrat’s budget plans for 2012 will meet the major challenge of sustaining social programs while cutting the most egregious waste.

Since the GOP budget proposal has been published, let’s eye that first. The 2012 budget template, released by Paul Ryan, Republican chairman of the House Budget Committee on April 5, cuts $6.2 trillion from government spending over the next decade. Some clarity is needed here in the semantics of this plan. Cutting is not the same thing as “improving” or “reforming.”

One of the hallmarks of the Ryan plan — a GOP campaign document for 2012 — is cutting top personal income-tax rates from 35 percent to 25 percent. As part of his “path to prosperity” theme, he estimates that along with other cuts and a lower corporate tax, this will create 2.5 million private-sector jobs, lower the unemployment rate to four percent by 2015 and add $1.5 trillion to real Gross Domestic Product over the next decade.

That claim is not only unrealistic, it’s never been supported by any sound economic science. During and after the George W. Bush era, when tax rates were cut on income, capital gains and dividends, unemployment rose and GDP eventually fell.

Would cutting taxes again — actually reducing revenues further and creating a bigger structural deficit — make a difference this time around? This is not only wrongheaded, it makes no mathematical sense. You can’t reduce the deficit by eliminating a key and ready source of revenue.

4 ways to add inflation protection to your retirement plan

The consumer inflation rate hit an 18-month high in February, driven mainly by higher food and energy prices. But few economists think the longer-range inflation rate is heating up — there’s still too much slack in the labor and housing markets.

Over the long haul, inflation is a potential threat to retirement security, since a well-constructed plan looks out over a 25- to 30-year horizon. Yet inflation protection isn’t baked into nearly enough retirement plans, according to a new survey by the Society of Actuaries.

The study found that 72 percent of pre-retirees — and 55 percent of retirees — have a strategy to protect themselves against inflation in retirement. But the percentages probably are too optimistic, according to Steve Vernon, a prominent retirement educator and co-author of the report. “That’s higher than my experience talking with people at the seminars I teach. I think, there’s a say/do gap there, where people say they’re planning for inflation, but they’re not.”

“Other studies show that only half of pre-retirees have even calculated the amount of money they’ll need for retirement,” he adds. “So if that’s true, there’s no way 72 percent have thought about inflation.”

Vernon’s on the money there; the new 2011 Retirement Confidence Survey from the Employee Benefit Research Institute shows that just 42 percent have tried to calculate how much they’ll need to live comfortably in retirement.

Inflation poses several retirement challenges. Healthcare is a major area of expense and risk in retirement, and those costs are rising about four times faster than overall inflation. Meanwhile, sources of guaranteed income are faltering. Social Security is replacing a smaller percentage of income due to the increasing full retirement age implemented in 1983, rising Medicare Part B premium deductions and more Social Security income subject to income tax. The near-disappearance of traditional defined benefit (DB) pensions in the private sector also hurts retiree purchasing power.

Here are four ways to add inflation protection to your retirement plan:

We’ve come a long way, baby — but we have far to go

Lara Pingue is a Personal Finance producer for Reuters.com. The opinions expressed here are her own.

A coworker recently sent me a YouTube video of a 5-year-old girl declaring to the world her intention to get a job before she gets married. It’s a funny clip, filled with the kind of urgency and drama only a pre-teen girl can muster. But something about it made me uneasy: Isn’t getting a job before marriage a given? Since when is this decision worth broadcasting on the Internet?

It seemed fitting that this video would go viral in time for International Women’s Day, a time to look back on just how far we women have come. Fifty years ago, would it surprise anyone if a little girl talked about landing a husband – not a job – right out of high school or college?

I’m grateful times have changed for most of us, but we can’t be smug. Yes, women are making impressive strides in the workplace. And yes, we’re juggling it all: marriage, kids, career and dazzling social lives. But a recent White House report on the state of women in America is a wake-up call for anyone who thinks the struggle is over.

Consider this: after all the fighting for gender equality, women are still earning 75 percent as much as their male counterparts in 2009, the White House report finds. And women’s career choices are partly to blame: we’re still working as secretaries, nurses, teachers and cashiers more than men, who are busy launching careers in science, technology and financial services – careers that pay serious cash.

And guess what else? When times get tough, women – not men — are more likely to bear the brunt of it.  In 2009, 28 percent of working women who were unmarried with children had incomes below the poverty level, compared to only six percent of male workers.

Women’s health is another cause for concern. While it’s true that women outlive men, the gap is narrowing. More alarming, women are more likely to suffer chronic conditions such as asthma, depression, arthritis and emphysema.

Watch your tax deductions: Outliers get audited

The Internal Revenue Service has some tried and true techniques for finding tax cheats.  Sometimes the agency auditors look at the lifestyles of taxpayers. If you’ve got an upscale Beverly Hills zip code and a really low income, you might be hiding money. Or, you might be between films — not every suspicious return is masking fraud.

The tax agency also looks at all of the reports it receives about you. It matches those 1099 forms and makes sure you’re declaring all the income it knows you are receiving.

And it scrutinizes your deductions. The IRS knows, to the dollar, how much people at your income level typically write off for medical bills, charitable deductions and taxes. If you’re way above average, that doesn’t mean you are cheating; you might have had a bad year, healthwise, or you might be more generous than your cohort. But being an outlier means your return could get pulled out of the pile for closer inspection, so make sure you have your documentation in order.

Check the chart below to see how much taxpayers in your bracket have been deducting in those key categories.