Edition:
United States

Mark Miller

Column: U.S. probe shines light on Medicare Advantage claims denials

Oct 18 2018

CHICAGO A growing number of U.S. seniors are choosing Medicare Advantage, the popular private insurance alternative to traditional coverage. But a new report by federal investigators finds that Advantage plans have a pattern of inappropriately denying patient claims.

COLUMN-U.S. probe shines light on Medicare Advantage claims denials

Oct 18 2018

CHICAGO, Oct 18 A growing number of U.S. seniors are choosing Medicare Advantage, the popular private insurance alternative to traditional coverage. But a new report by federal investigators finds that Advantage plans have a pattern of inappropriately denying patient claims.

U.S. retirees to get welcome bump in Social Security benefits

Oct 11 2018

CHICAGO Come January, most U.S. retirees will get some welcome news when they check their bank accounts - the biggest inflation adjustment to Social Security benefits in eight years.

Fall season means it is time to tune up your Medicare coverage

Oct 04 2018

CHICAGO If you are not happy with your Medicare coverage, now is the time to make a change.

REFILE-COLUMN-Ten years after onset of Great Recession, how are U.S. retirees doing?

Sep 27 2018

(Removes duplicate '10' in final paragraph.) By Mark Miller CHICAGO, Sept 27 This month marks 10 years since one of the most dramatic events of the financial crisis - the collapse of the Lehman Brothers investment bank. In the financial crash and Great Recession that followed, millions of Americans lost their homes and jobs and saw their prospects for a secure retirement damaged. A decade later, the economy has recovered by most standard measures - the stock market is making record highs, unemployment is at a 50-year low point, gross domestic product is rising sharply and consumer confidence is at an 18-year high. But how are we doing on retirement security? The picture is very mixed, as you can see from a comparison of key numbers before the crash and today for retirees - and workers close to retirement. HOUSING The bubble in housing markets preceding the financial crisis was the main cause of the economic downturn. Housing remains a critical component of retirement security, since home equity is a more important component of net worth than financial assets for older households. The Joint Center for Housing Studies of Harvard University (JCHS) reports that 59 percent of households aged 55-64 owned retirement accounts in 2016, but 74 percent owned their primary homes. Among households aged 65-74, some 50 percent owned retirement accounts, and 79 percent owned their primary homes. In August, real housing prices (adjusted for non-housing inflation) were 9 percent below where they were in 2006, according to Jonathan Spader, senior research associate at the JCHS. “Real prices are the most relevant for retirement security,” he noted, “since it reflects how much housing a dollar actually buys, and what you have available to tap as home equity.” You might well expect housing values to remain lower than when the bubble burst - and some parts of the country have seen prices recover much more strongly than others. But home ownership data for pre-retirees points to a more worrisome trend. The foreclosure crisis following the bubble’s collapse had a relatively small impact on retired households (aged 65 or older) - home ownership fell at the smallest rate for any age group - down from 81 percent in 2004 to 79 percent in 2017, JCHS data shows. But among households aged 55 to 64, the homeownership rate fell from 82 percent in 2004 to 75 percent in 2017. “That’s a troubling figure, because it suggests a much larger group of people will hit retirement age without home equity,” Spader said. Seniors who do not own homes also will be subject to the volatility of rental costs, which have spiked in recent years and show no signs of slowing down. Nearly one-third of all households were cost-burdened in 2016, JCHS reports, meaning they paid more than 30 percent of their incomes for housing; among renters, 47 percent were cost-burdened. The share of households over age 65 carrying mortgage debt into retirement also has been rising - 41 percent in 2016, compared with 35 percent in 2007, and up from 22 percent in 1995. RETIREMENT SAVING The stock market has rocketed ahead more than fourfold since March 9, 2009, when the S&P 500 bottomed out at 676.53. The dramatic gains are reflected in aggregate retirement account holdings - traditional IRA accounts held $6.9 trillion at the end of 2016, according to the Investment Company Institute (ICI), up from $4.2 trillion at the end of 2007. But the gains are concentrated in the top third of earners in the country, who held roughly 87 percent of all equities in 2016, according to the Center for Retirement Research at Boston College. Among the top 10 percent of U.S. households, the median value of their retirement holdings jumped 70 percent from 2007, to $403,000 in 2016, according to the most recent Federal Reserve Survey of Consumer Finance (SCF). For middle-income groups, account values were stagnant or slightly down - a staggering finding considering the strong market gains. A key culprit is unemployment during the downturn, when workers not only were unable to save for retirement but may have tapped savings to meet living expenses, noted Teresa Ghilarducci, an economist and director of the Schwartz Center for Economic Policy Analysis at the New School for Social Research. “People in the bottom half of income had a lot more shocks and they were much more prone to tap their retirement savings.” Very little progress has been made in making retirement accounts more available to workers since the recession. Fifty-two percent of families had access to retirement accounts in 2016 - down from 53 percent in 2007, according to the SCF. And the coverage story is worse among single people, minorities and less educated workers. For example, 35 percent of single workers without children had access to retirement accounts in 2016, unchanged from 2007. And 92 percent of families in the top 10 percent of income had access in 2016, compared with just 11 percent of the lowest-income families, SCF data shows. “When you disaggregate the data, you see that households who had more invested to start with have rebounded, but others are just trying to claw their way back,” said Monique Morrissey, an economist with the Economic Policy Institute. And surprisingly few retired households are relying on retirement savings for a significant portion of their income. The Employee Benefit Research Institute (EBRI) reported earlier this year that within the first 18 years of retirement, individuals who accumulated less than $200,000 in non-housing assets before retirement had spent down (at the median) about one-quarter of their assets. The drawdown pattern was similar for retirees with assets between $200,000 and $500,000, and only 12 percent for those with $500,000 or more. The study pointed to annuity income from pensions and Social Security as key reasons for this - people simply adjust their spending where they can to match what is coming in, and hang on to savings to meet emergency needs. Social Security is especially critical for lower- and middle-income households, since the program’s design replaces a higher percentage of pre-retirement income. “Social Security provides a great foundation," said Sarah Holden, senior director, retirement and investor research, at the Investment Company Institute. But that approach faces threats. Defined-benefit pensions are disappearing rapidly in the private sector and Social Security is becoming less valuable over time due to the gradual increase in the age when full retirement benefits are available, which was set in motion by reforms enacted in 1983. The big picture: ten years after the collapse of Lehman Brothers, retirement security in the United States is a tale of two realities. The affluent have recovered just fine, while lower- and middle-class households face a very uncertain retirement. (Reporting and writing by Mark Miller in Chicago; editing by Matthew Lewis)

Ten years after onset of Great Recession, how are U.S. retirees doing?

Sep 27 2018

CHICAGO This month marks 10 years since one of the most dramatic events of the financial crisis - the collapse of the Lehman Brothers investment bank. In the financial crash and Great Recession that followed, millions of Americans lost their homes and jobs and saw their prospects for a secure retirement damaged.

New U.S. tax law could create underpayment headaches for retirees

Sep 21 2018

CHICAGO The U.S. Internal Revenue Service hoisted a big red-flag warning to retirees earlier this month: take a look at how much income tax you are paying throughout 2018, because the amount could need an adjustment in the wake of the new federal tax law.

COLUMN-New U.S. tax law could create underpayment headaches for retirees

Sep 21 2018

(The opinions expressed here are those of the author, a columnist for Reuters.) By Mark Miller CHICAGO, Sept 21 The U.S. Internal Revenue Service hoisted a big red-flag warning to retirees earlier this month: take a look at how much income tax you are paying throughout 2018, because the amount could need an adjustment in the wake of the new federal tax law. The Tax Cuts and Jobs Act of 2017 (TCJA), signed into law by President Donald Trump last December, made important changes to tax rates, brackets, deductions and exemptions that affect all taxpayers. Retirees need to pay special attention to income coming from tax-deferred retirement accounts, pensions and annuities. Higher-income retirees may also owe taxes on Social Security benefits. The amount of total income tax you owe could be going up or down, depending on your personal circumstances. Failing to pay the right amount through the year could subject you to a penalty next April when your federal income tax return is filed. The penalty is determined by multiplying an interest rate, determined by the IRS, by your underpaid amount; the current interest rate is 5 percent. Taxation of retirement income by states is all over the map (https://bit.ly/2MPajDB), but your state tax return also could be impacted. The IRS issued a bulletin earlier this month urging retirees to do a check-up on amounts that are being paid in quarterly installments or withheld (https://bit.ly/2oWUbX4). Taxes are due throughout the year, either through quarterly estimated payments, or through withholding by pension plan sponsors or annuity providers. Taxes also are owed on Social Security. The TCJA marks the first major revision of the tax code since 1986. It reduced tax rates and expanded income tax brackets. The standard deduction nearly doubled from $12,700 to $24,000 for married couples filing jointly, and from $6,350 to $12,000 for single filers. But the standard deduction actually is higher for most retirees, because taxpayers older than 65 can deduct an additional $1,300. In addition, the TCJA caps deductions for state and local income and property taxes at $10,000 for both married couples and single individuals, and personal exemptions were eliminated. You may need to increase or reduce the amount of tax being paid during the year - and there is still time to make an adjustment before the year ends. “There are enough moving parts here that the only way to get the right answer is to run a projection,” said Greg Rosica, partner in EY's private client services practice in New York City. HOW TO AVOID A PENALTY One way to avoid a penalty, Rosica notes, is to base your payments on the prior-year taxes and pay “at least 100 or 110 percent of that amount.” Another way is to project the amount you owe for the current year and pay at least 90 percent in four quarterly installments. (The final quarterly payment for 2018 is due on Jan. 15, 2019.) The third method is annualized income installment. This is used by taxpayers who receive uneven levels of income throughout the year; this approach smoothes the amount owed quarterly using a reasonable estimate of your income for the year. For more on this, see Chapter Two of IRS Publication 505. (https://bit.ly/2xsEWsU) For retirees who receive a monthly pension or annuity check, this may mean changing the amount of federal income tax they have withheld. If you are underpaying on income that requires quarterly payments, send in the unpaid amount as soon as possible to stop underpayment penalties from accruing. If additional payments are due on income that is withheld, contact your former employer to make a change. The IRS cautions that due to the limited amount of time remaining this year, you might need to cover this type of expected tax liability through an additional direct tax payment, as you would a quarterly payment. Higher-income retirees also pay taxes on Social Security benefits. The TCJA does not change the formulas for taxation of benefits, but Social Security income does figure in to your total income tax liability as determined by the federal tax rates. Social Security beneficiaries receive a form from the IRS during tax season (Form SSA-1099) that reports net benefit subject to tax after Part B Medicare premiums have been subtracted. No taxes are paid by beneficiaries with combined income equal to or below $25,000 for single filers and $32,000 for married filers; above those levels, tax is determined according to two income tiers. (https://bit.ly/2PUcyHL) The IRS notes it is possible to ask the Social Security Administration to withhold tax on benefits at one of four flat rates as part of an overall withholding plan; you can initiate withholding by filing IRS Form W-4v. Unsure of whether your withholding or quarterly payments should be adjusted? Rosica advises consulting an accountant, or using an online tool to analyze your situation. The IRS website offers a withholding calculator that offers a good start (https://bit.ly/2aLxK0A). You will want to have last year’s tax return handy, and records of how much you have withheld or paid so far this year. (Reporting and writing by Mark Miller in Chicago Editing by Matthew Lewis)

COLUMN: U.S. government seeks to help small-business workers save for retirement

Sep 12 2018

Both approaches have advocates when it comes to a critical retirement security goal: getting more workers at small businesses to save for retirement.

U.S. court cases aim to rein in age-discrimination hiring practices

Sep 05 2018

CHICAGO Dale Kleber is an experienced attorney, but when he spotted an ad back in 2014 for a corporate law position at a medical device and services company that specified “no more than seven years of experience,” he applied anyway.

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