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From the Union Plus Retirement Planning Center
The Health Insurance Crisis:
1. AFL-CIO takes the lead on universal coverage
2. Privatizing Medicare: would it help?
3. What to do if you need health insurance now
Also:
4. Don't get tangled in the mortgage mess
5. Helping a teen start a Roth IRA
6. Tell us what you think
Q. In 1988, 65% of large private firms that provided health benefits to employees also offered them to retirees. How many still did this in 2006?
A. 35%
(Kaiser Family Foundation, Health Research & Educational Trust)
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1) AFL-CIO TAKES THE LEAD ON UNIVERSAL COVERAGE
Fidelity Investments has calculated that a 65-year-old retiring in 2006 should plan on spending about $200,000 on future out-of-pocket medical costs. If any further evidence were needed that we face a health-care crisis in this country, that price tag would cinch it.
On August 29, the AFL-CIO stepped up to the plate with a campaign to turn the 2008 elections into a mandate on comprehensive, progressive national health care reform. Without endorsing a particular presidential candidate or legislation, the AFL-CIO announced that a viable plan must provide first-class universal care (including preventive care), protect the right to consult one's own doctor, and use government clout to promote fairness and efficiency, while controlling and reducing costs.
Allying with employers, the nationwide Health Care Campaign aims to mobilize a million union members by Election Day. Between now and then, you'll be urged to learn more about the issue, lend your voice to the debate, and cast your vote next November. To learn more about getting involved and encouraging friends, family, and co-workers to join in, visit: www.aflcio.org/issues/healthcare.
Q. During the 12 months ending in July 2007, the price of most goods and services rose an average of 2.4%. How much did health care premiums increase?
A. 6.1%
(U.S. Bureau of Labor Statistics, Kaiser Family Foundation)
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2) PRIVATIZING MEDICARE — WOULD IT HELP?
With the Medicare trust fund in danger of being cleaned out in 11 years, Congress and the Bush administration are looking for ways to stabilize the program. One of the most popular fixes being considered is privatization: having Medicare-eligible individuals contract separately with private insurance companies. The idea is that competition between companies will help keep costs down.
However, that hasn’t been true with Medicare Advantage, the Medicare managed-care program now offered as an alternative to traditional Medicare. On the contrary, the federal government pays private insurers 12% more to cover people on Advantage.
Legislation to cut this overpayment to private insurance companies has passed the House and is likely to come up in the Senate before the end of the year. If Medicare is important to you, call or email your Senators today. Tell them to stop the overpayments — and halt future attempts to privatize Medicare. For Senators’ phone numbers and email addresses, see: http://www.senate.gov/general/contact_information/senators_cfm.cfm
Q. Administrative costs constitute 2% of Medicare's spending. How much do private health insurance programs spend on administrative costs?
A. 14%
(Economic Policy Institute, U.S. General Accounting Office)
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3) WHAT TO DO IF YOU NEED HEALTH INSURANCE NOW
If you've just lost your job and don't qualify for Medicare yet, you still have options. Under federal COBRA law, companies with 20 or more employees must allow you to continue your old health coverage for 18 months. (However, you'll have to pay the full premium.) You may save money buying individual health coverage through an independent insurance agent, or joining an association whose members are eligible for group insurance. To review the possibilities, see: retirement.unionplus.org/home/health-insurance.cfm
What if you can't afford these choices, or can't get coverage? You may qualify for a low-cost State Health Insurance Assistance program in your state. To find out, visit the Foundation for Health Coverage Education at: www.coverageforall.org
When you enroll in the UnionPlus Health Savings Plan, your union membership can help stretch your health-care dollars. You'll receive discounts on medical, dental, vision, hearing, and drug services and supplies, all for as little as $14.95 per family per year. To find out more about the plan, go to: www.unionplus.org/benefits/health/savings.cfm
4) DON'T GET TANGLED IN THE MORTGAGE MESS
Rising monthly payments are clobbering millions of homeowners with adjustable-rate mortgages (ARMs). Foreclosure is likely to hit one of every 62 households this year - a rate approaching that of the Great Depression, according to The New York Times. If you're thinking of applying for a new mortgage or refinancing soon, here's how to avoid becoming a casualty later:
>> Don't assume your loan officer or broker knows best. Ultimately, you're the one who will pay the bills. You need to be sure you're making the right choices for your situation.
>> Beware of borrowing 100% of your home value. If the market declines, you could wind up owing more than a buyer would pay for your house.
>> When comparing different mortgages, initial monthly payments can be misleading. Be sure you also compare:
a. Total interest over the life of the mortgage
b. The Annual Percentage Rate (APR), which is the true rate you're being charged to borrow the money
c. (With an ARM) The maximum monthly payment you may have to pay during the life of the mortgage
>> Insist on reading your mortgage document before the closing. If it's confusing, ask the lender to explain. Don't sign unless you understand and agree with all the terms of the mortgage.
5) HELPING A TEEN START A ROTH IRA
Your teenage child or grandchild has worked hard over the summer. How about rewarding him or her with a $208,000 tax-free gift for retirement? Okay, maybe you don't have that kind of cash lying around, but what about $500? According to The Washington Post, if this modest amount is invested in a Roth IRA every year from age 15 to 21, by age 65 (assuming 8% growth), your giftee will be looking at a six-figure nest egg.
You can actually give a teen as much as he or she earned during the year to fund a 2007 Roth IRA, up to a maximum of $4,000. For more specifics, see: retirement.unionplus.org/money-for-retirement/ira.cfm
UPDATE: The Roth IRA contribution limit has increased to $5,000 for the 2008 tax year (or $6,000 if the IRA owner is 50 or older).
Copyright (C) 2007 Union Privilege. All rights reserved.
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