A History of U.S. Consumer Finance

Source: Harvard Business School

A Brief Postwar History of US Consumer Finance 

by Andrea Ryan, Gunnar Trumbull and Peter Tufano

This article describes the consumer finance sector in the US since World War II.   We first define the sector in terms of the functions delivered by firms (payments, savings/investing, borrowing, managing risk, and providing advice.)  We provide time series evidence on major trends in consumption, savings, and borrowing.  Examining consumer decisions, changes in regulation, and business practices, we identify four major themes that characterize the sector: (a) innovation that increased the choices available to consumer; (b) enhanced access in the form of broadening participation of consumers in financial activities, (c) do-it-yourself consumer finance, which allowed and forced consumers to take greater responsibility for their own financial lives, and (d) the resultant increase in household risk taking

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Only 39 Percent Complete Undergraduate Degree in 4 Years

Source: National Center for Education Statistics

Tracking Students to 200 Percent of Normal Time: Effect on Institutional Graduation Rates

A majority of college graduates take longer to earn a degree than what is commonly thought to be the “normal” amount of time it should take—4 years for a bachelor’s degree and 2 years for an associate’s degree. For example, among college graduates who earned a bachelor’s degree in 1999–2000, about two-fifths (39 percent) had completed the degree in 4 years (Bradburn et al. 2003). A majority (72 percent) of this cohort, however, had completed a bachelor’s degree within 6 years, while 14 percent took 6–10 years and the remaining 14 percent took more than 10 years. Similarly, among a survey of students who started college in 1995–96 with the goal of completing an associate’s degree, less than one-fifth (17 percent) completed the degree in 2 years, 43 percent took 2–3 years, and another 40 percent took 3–6 years.

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Health Care Expenditures by Gender and Age

Source:  Health Affairs

Pronounced Gender And Age Differences Are Evident In Personal Health Care Spending Per Person

This paper examines differences in national health care spending by gender and age. Our research found significant variations in per person spending by gender across age groups, health services, and types of payers. For example, in 2004 per capita health care spending for females was 32 percent more than for males. Per capita differences were most pronounced among the working-age population, largely because of spending for maternity care. Except for children, total spending for and by females was greater than that for and by males, for most services and payers. The gender difference in total spending was most pronounced in the elderly, as a result of the longer life expectancy of women.

US Personal Health Care Spending, By Gender, Age, And Service, 2004

Service/age group (years)	Total spending (billions of dollars)		Per capita spending (dollars)
	Females	Males	Females	Males
All personal health care	$887.9	$662.0	$ 5,989	$ 4,541
0–18	99.5	108.8	2,620	2,736
19–64	464.9	345.5	5,202	3,797
65+	323.4	207.7	15,493	13,809

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How Much Can Baby Boomers Expect to Inherit

Source: MetLife Mature Market Institute

Inheritance and Wealth Transfer to Baby Boomers
The figures, drawn from national survey data, say the wealthiest Boomers will be given an average of $1.5 million, while those at the other end of the spectrum will be left $27,000, an amount that represents a larger percentage of the latter group’s overall wealth.  Two-thirds of all Boomers stand to receive some inheritance over their lifetimes.

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The Price of College

Source:  National Center for Education Statistics

What Is the Price of College? Total, Net, and Out-of-Pocket Prices in 2007–08

Source:  National Center for Education Statistics

This Statistics in Brief describes the annual price of education among undergraduates enrolled in U.S. postsecondary institutions in 2007–08. The most recent administration of the National Postsecondary Student Aid Study (NPSAS) supplied the data.

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Recent Likelihood of Identity Theft 1 in 20

Source:  Bureau of Justice Statistics

Victims of Identity Theft, 2008

Presents findings from the 2008 Identity Theft Supplement (ITS) to the National Crime Victimization Survey (NCVS). The NCVS/ITS used interviews from a nationally representative sample of about 56,500 U.S. household residents to collect the first BJS data on individual victims of identity theft. Identity theft is defined as the unauthorized use or attempted use of existing accounts, the unauthorized use or attempted use of personal information to open a new account, and the misuse or attempted use of personal information for a fraudulent purpose. The report details the number and percentage of persons who reported at least one incident of identity theft over the past two years, the amount of direct and indirect financial loss due to identity theft, victim reporting to credit bureaus and law enforcement agencies, and the impact of identity theft on victims' lives.

Highlights include the following:

• An estimated 11.7 million persons, representing 5% of all persons age 16 or older in the United States, experienced at least one type of identity theft in a 2-year period.
• Although the total financial cost of identity theft was nearly $17.3 billion over a 2-year period, less than a quarter (23%) of identity theft victims suffered an out-of-pocket financial loss from the victimization.
• About 42% of victims spent 1 day or less working to resolve the financial and credit problems associated with the identity theft; however, 3% continued to experience problems related to the theft more than 6 months after discovering it.

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Expected Inflation Risk Premium

Source: Federal Reserve Bank of Cleveland

News Release: November 17, 2010

The Federal Reserve Bank of Cleveland reports that its latest estimate of 10-year expected inflation is 1.50 percent. In other words, the public currently expects the inflation rate to be less than 2 percent on average over the next decade.

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IRS Announces 2011 Standard Mileage Rates

Source: IRS

IR-2010-119, Dec. 3, 2010

WASHINGTON — The Internal Revenue Service today issued the 2011 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.
Beginning on Jan. 1, 2011, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:

• 51 cents per mile for business miles driven
• 19 cents per mile driven for medical or moving purposes
• 14 cents per mile driven in service of charitable organizations

The standard mileage rate for business is based on an annual study of the fixed and variable costs of operating an automobile. The rate for medical and moving purposes is based on the variable costs as determined by the same study. Independent contractor Runzheimer International conducted the study.

A taxpayer may not use the business standard mileage rate for a vehicle after using any depreciation method under the Modified Accelerated Cost Recovery System (MACRS) or after claiming a Section 179 deduction for that vehicle. In addition, the business standard mileage rate cannot be used for any vehicle used for hire or for more than four vehicles used simultaneously.

Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates.

Revenue Procedure 2010-51 contains additional details regarding the standard mileage rates.

Where Does All The Time Go?

Source: Alfred P. Sloan Foundation/Focus on Workplace Flexibility

Family Change and Time Allocation in American Families

Suzanne M. Bianchi, UCLA
Abstract
In this paper, I briefly discuss family demographic changes. Then I use the American Time Use Survey (ATUS) and the historical time diary studies in the U.S. to document trends in parents’ time spent in paid work, housework and childcare. I also describe the activities parents forego in order to meet work and family demands. Finally, I discuss time devoted to adult care and help given to adult children, elderly parents, and friends later in the life course.

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Finding Day Care Services

Source: MetLife

The Essentials: Adult Day Services

Coping with a chronic illness or disability that impacts one’s independence, ability to manage daily activities, and opportunity to socialize with others can be overwhelming for an individual. Chronic illness and disability also significantly impact the family members that provide support and care to him or her. Family caregivers are often juggling caregiving with the many other demands in their lives, often both at home and at work.

Finding care resources to meet your needs or those of a loved one is not always easy and it can be very costly both at home, depending upon the level of care needed, or in a residential care setting such as an assisted living community or a nursing home. Most people want to remain at home if possible. One option to consider is Adult Day Services (ADS). These centers have two primary missions: 1) to provide individuals with needed care, socialization, and supervision in a community setting and 2) to provide caregivers respite from the demanding responsibilities of caregiving.

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PEW Report on Student Borrowing

Source: PEW Research Center

The Rise of College Student Borrowing

By Rebecca Hinze-Pifer and Richard Fry

Undergraduate college student borrowing has risen dramatically in recent years. Graduates who received a bachelor’s degree in 2008¹ borrowed 50% more (in inflation-adjusted dollars) than their counterparts who graduated in 1996, while graduates who earned an associate’s degree or undergraduate certificate in 2008 borrowed more than twice what their counterparts in 1996 had borrowed, according to a new analysis of National Center for Education Statistics data by the Pew Research Center’s Social & Demographic Trends project.

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Society of Actuaries on Retirement Needs of Mid-level Households.

Source: Society of Actuaries

Segmenting the Middle Market: Retirement Risks and Solutions–Phase 2 Report

The Society of Actuaries' Committee on Post Retirement Needs and Risks is pleased to make available the Phase 2 report of this two-phase effort. Phase 2 identifies basic issues and potential solutions that are important as mid-level net worth households in or near retirement address the financial risks they face in contemplating retirement. It includes 12 user-friendly reference profiles of the pre-retirees and retirees identified in Phase 1.

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Insurance Information Institute Report Examines High Risk Property Casualty Programs

Source: Insurance Information Institute

Residual Market Property Plans: From Markets of Last Resort to Markets of First Choice - 2010

BY DR. ROBERT P. HARTWIG, CPCU AND CLAIRE WILKINSON

NOVEMBER 17, 2010

A myriad of different programs in place across the United States provide insurance to high risk policyholders who may have difficulty obtaining coverage from the standard market. So called residual, shared or involuntary market programs make basic insurance coverage more readily available. An updated report by the Insurance Information Institute (I.I.I.) titled “Residual Market Property Plans: From Markets of Last Resort to Markets of First Choice” examines the property insurance coverage provided by Fair Access to Insurance Requirements (FAIR) Plans, Beach and Windstorm Plans, and two state-run insurance companies in Florida and Louisiana: Florida Citizens Property Insurance Company (CPIC) and Louisiana Citizens Property Insurance Corporation (Louisiana Citizens). Also discussed in detail are the plans in Alabama, Massachusetts, Mississippi, North Carolina, South Carolina and Texas. This year’s I.I.I. report, like the reports of the last two years, records the ongoing growth in the exposure base of the residual market property insurers along with the still precarious financial condition of some plans. The growth comes despite a collapse in the housing sector that has brought development in many catastrophe-prone areas to a near standstill.

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FTC Issues Final Rule Protecting Homeowners from Mortgage Scams

Source: Federal Trade Commission

Rule Outlaws Advance Fees and False Claims, Requires Clear Disclosures

Homeowners will be protected by a new Federal Trade Commission rule that bans providers of mortgage foreclosure rescue and loan modification services from collecting fees until homeowners have a written offer from their lender or servicer that they decide is acceptable.

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New Jersey Can’t Take Unused Gift Cards

Source: Law.Com

U.S. Judge Enjoins N.J. Law Allowing State To Swipe Unused Gift Cards

By Charles Toutant
New Jersey Law Journal
November 15, 2010

A federal judge has turned back New Jersey's attempt to help plug its budget gap by grabbing $79.5 million in unused gift card funds, finding merit in challengers' arguments that the law is on shaky constitutional ground.

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NPR Nursing Home Database

Source: National Public Radio

This interactive database, an NPR News exclusive, has information about the independence level of residents at nearly 16,000 individual nursing homes around the country. For each facility, see what percentage of residents can do various daily living tasks by themselves — an indication of their potential for community-based living.

Go to Database.

Going to College, Buy a Home

Source: Caldwell Banker

OLDWELL BANKER REAL ESTATE SURVEY FINDS NEW TREND IN COLLEGE TOWNS: “PARENT INVESTORS” BUYING HOMES VS. SPENDING ON RENT OR DORMS

Coldwell Banker Home Listing Report Released Ranking Affordability of College Towns; Muncie, Ind. Most Affordable College Town; Palo Alto, Calif. Most Expensive

PARSIPPANY, N.J. (Nov. 11, 2010) – Every fall, parents wave goodbye as their college-bound kids pack up their belongings, make the drive down university lane and prepare for football games, mid-terms and freedom. While college living is often associated with dorms and campus housing, Coldwell Banker Real Estate LLC discovered that many parents are opting to purchase a home rather than spend money on rent or dorm fees. According to a recent survey among the Coldwell Banker® network of real estate professionals in college towns, 64 percent see a significant number of “parent investors” buying homes for their kids to live in while attending the university.

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Survey Shows Long-term Care Costs Rising

Source: MetLife

The 2010 MetLife Market Survey of Nursing Home, Assisted Living, Adult Day Services, and Home Care Costs

This survey provides national, statewide, and, in certain states (based on population), area-specific costs, average private-pay, daily rates for private and semi-private rooms in a nursing home, monthly base rates in assisted living communities, hourly rates for home health aide and homemaker services, and daily rates for adult day services

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Interactive Tuition Over Time

Source: Chronicle of Higher Education

Tuition for individual institutions from 1999 to 2010 can be found in this interactive database from the Chronicle of Higher Education

Interactive search

Fed Posts Guide to Credit Reports and Credit Scores

Source: Board of Governors of the Federal Reserve

Your credit history is important to a lot of people: mortgage lenders, banks, utility companies, prospective employers, and more. So it's especially important that you understand your credit report, credit score, and the companies that compile that information, credit bureaus. This site--maintained by the Federal Reserve Board--provides answers to some of the most common, and most important, questions about credit.

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SEC Adopts New Rule Preventing Unfiltered Market Access

Source: SEC

Washington, D.C., Nov. 3, 2010 — The Securities and Exchange Commission today voted unanimously to adopt a new rule to require brokers and dealers to have risk controls in place before providing their customers with access to the market.

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2010 Gift Card Comparison Table

Source: CreditCards.com

There are many reasons for not giving a gift card. However, if you plan to give them as presents, this handy table from CreditCard.com can help you engage in comparison shopping.

2010 gift card comparison table

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Federal Reserve announces final rule regarding effective dates for gift card rules
Source: Federal Reserve Board

The Federal Reserve Board on Tuesday announced a final rule implementing recent legislation modifying the effective date of certain disclosure requirements applicable to gift cards under the Credit Card Accountability Responsibility and Disclosure Act of 2009.

The rule finalizes an interim final rule published in the Federal Register on August 17, 2010. For gift certificates, store gift cards, and general-use prepaid cards produced prior to April 1, 2010, the legislation and interim final rule delay the August 22, 2010 effective date of these disclosures until January 31, 2011, provided that several specified conditions are met.

New Rules on Reimbursements from Health Savings Accounts

Source: Deloitte

Distributions from Health Savings Accounts (HSAs) to pay for a medicine or drug will not be qualified medical expenses unless the medicine or drug:

• can be obtained only with a prescription
• is available without a prescription (i.e., “over-the-counter”) but the individual obtains it with a prescription, or
• is insulin.

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FRB Issues Final Rules on Gift Cards

Source: Federal Reserve Board

The Federal Reserve Board on Tuesday announced a final rule implementing recent legislation modifying the effective date of certain disclosure requirements applicable to gift cards under the Credit Card Accountability Responsibility and Disclosure Act of 2009.

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KFF Puts Spotlight on Medicare Advantage Programs

Source: Kaiser Family Foundation

Medicare Advantage 2011 Data Spotlight: Plan Availability and Premiums

This Medicare Advantage Data Spotlight provides an overview of recent changes made to the Medicare Advantage program and examines trends in plan participation, premiums and certain benefits. About 12 million people, or nearly a quarter of the Medicare population, are enrolled in Medicare Advantage, the privately administered plans that are an alternative to the traditional fee-for-service Medicare program.

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Most Won’t Buy House Due to Economy

Source: FindLaw

In the current tough economic times, is the American dream changing, or fading away? A new survey says right now, most Americans are not interested in purchasing a home. In a demographically balanced national survey of over 1,000 people, FindLaw.comasked people if the current economic situation made them more likely, or less likely to buy a house. Most responded in the negative.

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Working in Retirement

Source: Families and Work Institute

Working in Retirement: A 21st Century Phenomenon

Until recently, most of us considered retirement to be a phase of life more or less devoted to a combination of unpaid activities, including volunteering, caring for family members, taking care of ourselves and enjoying leisure time. Working during retirement used to be considered to an oxymoron. Yet, as growing numbers of workers continue to work for pay during their socalled “retirement,” this is no longer the case.

Families and Work Institute (FWI) and the Sloan Center on Aging & Work at Boston College partnered to explore the implications of this growing phenomenon—for both employees and employers. Focusing on workers aged 50 and older, we examine what it means to be working in retirement and how employers might best meet the needs of older workers, to the advantage of workers and the employers themselves.
Key findings include:
• One in five workers aged 50 and older has a retirement job today; 75% of workers aged 50 and older expect to have retirement jobs in the future.
• People work in retirement for a variety of reasons, including the opportunity to earn more money for a comfortable retirement and because they would be bored if they weren’t working.
• Those working in retirement are highly satisfied and engaged in their work.
• Using a number of critical indicators of workplace effectiveness, those working in retirement rate their workplaces more positively than those not yet retired.
• A significant number of employees transition to self employment for their retirement job.
• While those working in retirement work fewer hours, on average, than those not yet retired, the majority of working retirees report working full time and wanting to work the same or more hours.

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CRS Warns Against Significant Risk of Deflation

Source: Congressional Research Service

Deflation: Economic Significance, Current Risk, and Policy Response

Despite the severity of the recent financial crisis and recession, the U.S. economy has so far avoided falling into a deflationary spiral. Since mid-2009, the economy has been on a path of economic recovery. However, the pace of economic growth during the recovery has been relatively slow, and major economic weaknesses persist. In this economic environment, the risk of deflation remains significant and could delay sustained economic recovery.

Deflation is a persistent decline in the overall level of prices. It is not unusual for prices to fall in a particular sector because of rising productivity, falling costs, or weak demand relative to the wider economy. In contrast, deflation occurs when price declines are so widespread and sustained that they cause a broad-based price index, such as the Consumer Price Index (CPI), to decline for several quarters. Such a continuous decline in the price level is more troublesome, because in a weak or contracting economy it can lead to a damaging self-reinforcing downward spiral of prices and economic activity.

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Health Insurance Consumer Guides for the Fifty States

Source: healthinsuranceinfo.net

healthinsuranceinfo.net carries Health Insurance Consumer Guides for all Fifty States and the District of Columbia, letting you know in a simple and straightforward format what protections you have, and lack, if you need to find individual health insurance coverage after a major life event like divorce, losing a job, or the company you work for going out of business

Go to Web Site

Google Plans Alternative Price Index

Source: CNBC

Google is using its vast database of web shopping data to construct the ‘Google Price Index’ – a daily measure of inflation that could one day provide an alternative to official statistics.

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Estimate Your 2011 Tax Burden

Source: The Tax Foundation

Tax Foundation Projects 2011 Tax Parameters Using New Inflation Numbers

Interactive 2011 Tax Calculator at www.mytaxburden.org Updated to Reflect Inflation Figures, Republican Plan for Expiring Bush-Era Tax Cuts

Washington, DC, September 17, 2010 - The Tax Foundation has updated its 2011 income tax calculator atwww.mytaxburden.org to reflect new inflation figures released by the Bureau of Labor Statistics today, which are used by the IRS to determine tax parameters such as brackets and amounts for the standard deduction and personal exemption.

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CONSUMER EXPENDITURES--2009

Source: Bureau of Labor Statistics

Average annual expenditures per consumer unit(1) fell 2.8 percent in 2009 following an increase of 1.7 percent in 2008, according to results from the Consumer Expenditure Survey (CE) released by the U.S. Bureau of Labor Statistics. The spending decrease was larger than the 0.4-percent decrease in prices from 2008 to 2009 as measured by the average annual change in the Consumer Price Index (CPI-U). This was the first time there has been a drop in spending from the previous year since the CE began publishing integrated data in 1984 from the Diary and Interview components of the CE.	

Spending on housing and transportation fell 1.3 percent and 11.0 percent,respectively, contributing to the overall drop in spending in 2009. Healthcare expenditures rose 5.0 percent, the only increase among the major components of spending. Among the other major components, food dropped 1.1 percent, apparel fell 4.2 percent, entertainment dropped 5.0 percent, and personal insurance and pensions fell 2.4 percent.

Table A. Average annual expenditures and characteristics of all consumer units
and percent changes, Consumer Expenditure Survey, 2007-2009
_____________________________________________________________________________
                                                          Percent change
Item                         2007     2008     2009    2007-2008 2008-2009
-----------------------------------------------------------------------------
Number of consumer
 units (000’s)            120,171  120,770  120,847

Income before taxes       $63,091  $63,563  $62,857   	     0.7      -1.1

Average age of
 reference person            48.8     49.1     49.4

Average number in
 consumer unit:
  Persons                     2.5      2.5      2.5  
  Earners                     1.3      1.3      1.3
  Vehicles                    1.9      2.0      2.0
Percent homeowner              67	66       66

Average annual
 expenditures             $49,638  $50,486  $49,067          1.7      -2.8
  Food                      6,133    6,443    6,372          5.1      -1.1
    At home                 3,465    3,744    3,753          8.1       0.2
    Away from home          2,668    2,698    2,619          1.1      -2.9
  Housing                  16,920   17,109   16,895          1.1      -1.3
  Apparel and services      1,881    1,801    1,725         -4.3      -4.2
  Transportation            8,758    8,604    7,658         -1.8     -11.0
  Healthcare                2,853    2,976    3,126          4.3       5.0
  Entertainment             2,698    2,835    2,693          5.1      -5.0
  Personal insurance				     
   and pensions             5,336    5,605    5,471          5.0      -2.4
  All other expenditures    5,059    5,113    5,127          1.0       0.3
_____________________________________________________________________________

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HealthCare.gov Updates Pricing Data on Health Insurance Plans

Source: HealthCare.gov

HealthCare.gov now has a convenient search for pricing data on health insurance plans. It currently has data on 200 insurance providers and 4,400 insurance plans.

Go to HealthCare.gov

Interactive Map with Bank Failures

Source: WSJ

The Wall Street Journal has posted an interactive map that tracks bank failures by state and over time.

Interactive Map

New FHA Data on Home Mortgages

Source: FHA News Release (September 13, 2010)

FHFA Releases Key Data on Fannie Mae and Freddie Mac Single-Family Mortgages for 2001-2008

In an effort to inform the current discussion on the future of the housing finance system, the Federal Housing Finance Agency (FHFA) today released data on Fannie Mae and Freddie Mac (the Enterprises) that compare the credit quality and performance of the loans they acquired relative to loans financed with private-label mortgage-backed securities.

“Data on the Risk Characteristics and Performance of Single-Family Mortgages Originated from 2001-2008 and Financed in the Secondary Market” documents the differences in single-family, conventional mortgages acquired by the Enterprises versus those financed through the issuance of private-label mortgage-backed and asset-backed securities (private-label MBS) during the recent mortgage lending and house price boom and the ensuing bust.

Key Findings:

• Credit Scores. Eighty-four percent of single-family mortgages acquired by the Enterprises during 2001 to 2008 were made to borrowers with FICO credit scores above 660, while 5 percent were made to borrowers with FICO scores below 620. In contrast, 47 percent of mortgages financed with private-label MBS originated during this period were made to borrowers with FICO scores above 660, while 32 percent were made to borrowers with FICO scores lower than 620.
• Loan-to-Value (LTV) Ratios. Over 82 percent of Enterprise-acquired loans had LTV ratios at origination of 80 percent or less, while two-thirds of mortgages financed with private-label MBS had LTV ratios at or below 80 percent, with that share increasing from 54 percent of 2001 originations to 81 percent of 2008 originations. The pattern of decreasing LTV ratios over time, most pronounced for loans financed with private-label MBS, is consistent with the greater use of second liens to avoid mortgage insurance on low-down payment mortgages, a practice that was increasingly common into 2007 and that contributed to the unusually poor performance of loans with low LTV ratios relative to past experience.
• Loan Payment Type. Eighty-eight percent of Enterprise-acquired mortgages were fixed-rate loans originated between 2001 and 2008 and ranged from 79 percent for 2004 originations to 96 percent for 2001 originations. Mortgages financed with private-label MBS were predominantly adjustable-rate loans. These loans comprised 70 percent of mortgages financed with private-label MBS originated between 2001 and 2008 and ranged from 53 percent of 2008 originations to 75 percent of 2004 originations. Adjustable-rate loans offer borrowers lower initial payments in return for less certainty about future payments. In the data analyzed here, adjustable-rate loans perform worse than fixed-rate loans in part because some originators of adjustable-rate loans evaluated borrower repayment capacity using artificially low rates, called “teaser rates.”
• Performance. Roughly 5 percent of Enterprise-acquired, fixed-rate mortgages and 10 percent of Enterprise-acquired ARMs were over 90 days delinquent at some point before the end of 2009. Roughly 20 percent of fixed-rate mortgages and 30 percent of ARMs financed with private-label MBS were over 90-days delinquent at some point before year-end 2009.

Data on the Risk Characteristics and Performance of Single-Family Mortgages Originated in 2001 - 2008 and Financed in the Secondary Market

Household Debt Continues to Decline

Source: Federal Reserve Bank of New York

Household Debt and Credit Developments in 2010 Q2 (PDF)

Aggregate consumer debt continued to decline in the second quarter, continuing its trend of the previous six quarters. As of June 30, 2010, total consumer indebtedness was $11.7 trillion, a reduction of $812 billion (6.5%) from its peak level at the close of 2008Q3, and $178 billion (1.5%) below its March 31, 2010 level.

The number of open credit accounts continued to decline, although at a somewhat slower rate, during the quarter. About 272 million credit accounts were closed during the four quarters that ended June 30, while 161 million accounts were opened. The number of credit account inquiries within six months – an indicator of consumer credit demand –ticked up for the first time since 2007Q3. Credit cards have been the primary source of the reductions in accounts over the past two years, and during 2010Q2 the number of open credit card accounts fell from 385 to 381 million. Still, the number of open credit card accounts on June 30 was down 23.2% from their 2008Q2 peak.

Household mortgage indebtedness has declined 6.4%, and home equity lines of credit (HELOCs) have fallen 4.4% since their respective peaks in 2008Q3 and 2009Q1. Excluding mortgage and HELOC balances, consumer indebtedness fell 1.5% in the quarter and, after having fallen for six consecutive quarters, stands at $2.31 trillion, 8.4% below its 2008Q4 peak.

For the first time since early 2006, total household delinquency rates declined in 2010Q2. As of June 30, 11.4% of outstanding debt was in some stage of delinquency, compared to 11.9% on March 31, and 11.2% a year ago. Currently about $1.3 trillion of consumer debt is delinquent and $986 billion is seriously delinquent (at least 90 days late or “severely derogatory”). Delinquent balances are now down 2.9% from a year ago, but serious delinquencies are up 3.1%.

About 496,000 individuals had a foreclosure notation added to their credit reports between March 31 and June 30, an 8.7% increase from the 2010Q1 level of new foreclosures. New bankruptcies noted on credit reports rose over 34% during the quarter, from 463,000 to 621,000. While we usually see jumps in the bankruptcy rate between the first and second quarter of each year, the current increase is higher than in the past few years, when it was around 20%.

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Federal Benefits for Veterans Dependents & Survivors: 2010 Edition

Source: Department of Veterans Affairs

This website describes the wide range of updated benefits that are available to U.S. military veterans.

Access website.

Student Loan Default Rate Increases

Source: U.S. Department of Education

U.S. Secretary of Education Arne Duncan today announced that the FY 2008 national cohort default rate is 7.0 percent, up from the FY 2007 rate of 6.7 percent. The default rates increased from 5.9 to 6 percent for public institutions, from 3.7 to 4 percent for private institutions, and from 11 to 11.6 percent for for-profit schools.

The default rate announced today -- the most recent data available -- is a snapshot in time, representing the cohort of borrowers whose first loan repayments came due between October 1, 2007 and September 30, 2008, and who defaulted before September 30, 2009. During this time, almost 3.4 million borrowers entered repayment, and more than 238,000 defaulted on their loans. They attended 5,860 participating institutions. Borrowers who default after their first two years of repayment are not measured as defaulters in today's data.

"This data confirms what we already know: that many students are struggling to pay back their student loans during very difficult economic times. That's why the Administration has expanded programs like income based repayment and Pell grants to help students in financial need," said U.S. Secretary of Education Arne Duncan.

Read more.

Your Guide to an IRS Audit

Source: IRS

The IRS has posted a series of lessons with video and audio that explain describe an IRS audit.

Your Guide to an IRS Audit

CBO -- How Does Obesity in Adults Affect Spending on Health Care?

Source: Congressional Budget Office

According to CBO’s analysis of survey data, health care spending per adult grew substantially in all weight categories between 1987 and 2007, but the rate of growth was much more rapid among the obese (defined as those with a body-mass index greater than or equal to 30). Spending per capita for obese adults exceeded spending for adults of normal weight by about 8 percent in 1987 and by about 38 percent in 2007. That increasing gap in spending between the two groups probably reflects a combination of factors, including changes in the average health status of the obese population and technological advances that offer new, costly treatments for conditions that are particularly common among obese individuals.

Review study.

Employer Health Benefits 2010 Annual Survey

Source: Kaiser Family Foundation

This annual survey of employers provides a detailed look at trends in employer-sponsored health coverage, including premiums, employee contributions, cost-sharing provisions, and other relevant information. The survey continued to document the prevalence of high-deductible health plans associated with a savings option and included questions on wellness benefits and health risk assessments. The 2010 survey included 3,143 randomly selected public and private firms with three or more employees (2,046 of which responded to the full survey and 1,097 of which responded to an additional question about offering coverage). Researchers at the Kaiser Family Foundation, the National Opinion Research Center at the University of Chicago, and Health Research & Educational Trust designed and analyzed the survey.

Review Survey

Does Money Buy Happiness?

Source: Proceedings of the National Academy of Sciences

High income improves evaluation of life but not emotional well-being

Daniel Kahneman and Angus Deaton

Recent research has begun to distinguish two aspects of subjective well-being. Emotional well-being refers to the emotional quality of an individual's everyday experience—the frequency and intensity of experiences of joy, stress, sadness, anger, and affection that make one's life pleasant or unpleasant. Life evaluation refers to the thoughts that people have about their life when they think about it. We raise the question of whether money buys happiness, separately for these two aspects of well-being. We report an analysis of more than 450,000 responses to the Gallup-Healthways Well-Being Index, a daily survey of 1,000 US residents conducted by the Gallup Organization. We find that emotional well-being (measured by questions about emotional experiences yesterday) and life evaluation (measured by Cantril's Self-Anchoring Scale) have different correlates. Income and education are more closely related to life evaluation, but health, care giving, loneliness, and smoking are relatively stronger predictors of daily emotions. When plotted against log income, life evaluation rises steadily. Emotional well-being also rises with log income, but there is no further progress beyond an annual income of ?$75,000. Low income exacerbates the emotional pain associated with such misfortunes as divorce, ill health, and being alone. We conclude that high income buys life satisfaction but not happiness, and that low income is associated both with low life evaluation and low emotional well-being.

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IRS Issues Guidance Explaining 2011 Changes to Flexible Spending Arrangements

Source: IRS Press Release

IR-2010-95, Sept. 3, 2010

WASHINGTON — The Internal Revenue Service today issued guidance reflecting statutory changes regarding the use of certain tax-favored arrangements, such as flexible spending arrangements (FSAs), to pay for over-the-counter medicines and drugs.
The Affordable Care Act, enacted in March, established a new uniform standard that, effective Jan. 1, 2011, applies to FSAs and health reimbursement arrangements (HRAs). Under the new standard, the cost of an over-the-counter medicine or drug cannot be reimbursed from the account unless a prescription is obtained. The change does not affect insulin, even if purchased without a prescription, or other health care expenses such as medical devices, eye glasses, contact lenses, co-pays and deductibles. The new standard applies only to purchases made on or after Jan. 1, 2011, so claims for medicines or drugs purchased without a prescription in 2010 can still be reimbursed in 2011, if allowed by the employer’s plan.

A similar rule goes into effect on Jan. 1, 2011 for Health Savings Accounts (HSAs), and Archer Medical Savings Accounts (Archer MSAs).

Employers and employees should take these changes into account as they make health benefit decisions for 2011.

For details on current rules, see Publication 969 , Health Savings Accounts and Other Tax-Favored Health Plans.

Updates on this and other health care reform provisions can be found on the Affordable Care Act page on IRS.gov. Notice 2010-59 andRevenue Ruling 2010-23, posted today, further explains this change.

Related Item: Questions and Answers on Over-the-Counter Medicines and Drugs

Early Retiree Health Reinsurance Plan

Source: Whitehouse

New Resources for Employers and Unions to Help Keep Health Coverage Accessible and Affordable

Posted by Secretary Gary Locke on August 31, 2010 at 10:58 AM EDT

If you are an employer, you know how difficult it can be to find – and provide– health insurance for your retired employees who are age 55 or older and not yet eligible for Medicare. 

Some Americans who retire before they are eligible for Medicare see their life savings disappear because of medical bills and exorbitant rates in the individual health insurance market.  And the cost of insurance can be out of reach for individuals looking to buy health coverage on their own.

Many employers would like to help their employees make this transition comfortably and provide access to health insurance past retirement. But in these tough economic times, it is difficult for employers to keep up with skyrocketing health care costs for employees and retirees.

The Affordable Care Act’s Early Retiree Reinsurance Program will make it a little easier for employers to provide high-quality health benefits to their retirees.

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Prepare for Hurricane Season by Reviewing Tax Rules on Casualty Losses

Source: IRS

Topic 515 - Casualty, Disaster, and Theft Losses

A casualty loss can result from the damage, destruction or loss of your property from any sudden, unexpected, or unusual event such as a flood, hurricane, tornado, fire, earthquake or even volcanic eruption.

A theft is the taking and removing of money or property with the intent to deprive the owner of it. The taking must be illegal under the law of the state where it occurred and it must have been done with criminal intent.

If your property is not completely destroyed, or if it is personal-use property, the amount of your casualty or theft loss is the lesser of the adjusted basis of your property or the decrease in fair market value of your property as a result of the casualty or theft. The adjusted basis of your property is usually your cost, increased or decreased by certain events such as improvements or depreciation. For more information about the basis of property, refer to Topic 703, or Publication 547, Casualties, Disasters, and Thefts. You may determine the decrease in fair market value by appraisal or, if certain conditions are met, by the cost of repairing the property. For more information, refer to Publication 547. Keep in mind the general definition of fair market value is the price at which property would change hands between a buyer and seller, neither having to buy or sell, and both having reasonable knowledge of all necessary facts.

If the property was held by you for personal-use, you must further reduce your loss by $100. This $100 reduction for losses of personal-use property applies to each casualty or theft event that occurred during the year. The total of all your casualty and theft losses of personal-use property must be further reduced by 10% of your adjusted gross income. In addition, individuals are required to claim their casualty and theft losses as an itemized deduction.

The National Disaster Relief Act of 2008 changed some of the tax rules pertaining to losses resulting from federally declared disasters. The new law, which is effective for losses attributable to disasters federally declared in taxable years beginning after December 31, 2007, and before January 1, 2010, provides the following:

• Allows all taxpayers, not just those who itemize, to claim the net disaster loss deduction regardless of the taxpayer's adjusted gross income
• Removes the 10 percent of adjusted gross income limitation for net disaster losses
• Provides a 5-year net operating loss (NOL) carryback for qualified disaster losses
• Changes the amount by which all individual taxpayers must reduce their personal casualty or theft losses for each casualty or theft event from $100 to $500. This applies to deductions claimed in 2009. The reduction amount returns to $100 for taxable years beginning after December 31, 2009

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Growing Number of Households Have No Life Insurance

Source: LIMRA

Ownership of Individual Life Insurance Falls to 50-Year Low, LIMRA Reports

Four in 10 U.S. Households with Children Would Have Immediate Trouble Paying Bills if
the Primary Breadwinner Died Today

ARLINGTON, Va., and WINDSOR, Conn., Aug. 30, 2010 — Despite the fact that most American families have less to fall back on financially than when the economic downturn began , ownership of individual life insurance has hit a 50-year low, according to a new LIMRA study.

The Trends in Life Insurance Ownership study, conducted every six years by LIMRA, found that only 44 percent of U.S. households have individual life insurance. The number of U.S. households that have no life insurance whatsoever is growing. Today, 30 percent of households (35 million) have no life insurance coverage, compared to 22 percent of households in 2004. Among households with children under age 18, which arguably have the greatest need for life insurance, 11 million have no coverage.

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New Health Insurance Search Tool

Source: HHS.gov

New insurance finder web tool simplifies the process of searching for health coverage

WASHINGTON, DC- The U.S. Department of Health and Human Services (HHS) today announced the release of  a new HealthCare.gov web tool available for download that makes searching for coverage options even easier than before.

“HealthCare.gov is a valuable resource for small businesses, consumers, and their families to search for coverage options and understand the new benefits under the Affordable Care Act,” HHS Secretary Kathleen Sebelius said.  “By putting the power of information at your fingertips, HealthCare.gov is helping American families everywhere to take control over their health care and make the choices that are right for them.”

The Insurance Finder “widget” enables anyone with a website or blog to embed a tool on their site allowing users to begin the process of searching for coverage options. The tool asks users two initial questions: “select a state” and “which best describes you.” Users then click on “next steps,” and are redirected to a page on HealthCare.gov that continues with the insurance finder process based on answers to their specific questions.

To view the widget and the embed code, visit this page: http://www.healthcare.gov/stay_connected.html

HealthCare.gov allows consumers to search for both public and private health coverage options through an easy to use health insurance finder tool. Based on answers to a series of questions, the coverage finder produces a menu of potential coverage choices personalized for the user.

 

Housing Affordability Remains High

Source: U.S. Department of Treasury

WASHINGTON - The U.S. Department of Housing and Urban Development (HUD) and the U.S. Department of the Treasury today released the second edition of the Administration's Housing Scorecard (www.hud.gov/scorecard) showing that, thanks in part to interest rates continuing at all-time lows, home affordability in the U.S. remains near the most attractive levels in 10 years. In addition, for the first time, the report now tracks the impact of HUD's Neighborhood Stabilization Program (NSP), which has spurred local investment and is beginning to make affordably-priced homes available to consumers. The Housing Scorecard is the Administration's comprehensive report on the nation's housing market.

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Monthly Housing Costs Reach $1,000 for Homeowners

Source: BLS

The nation's homeowners paid a median of $1,000 in monthly housing costs in 2009, compared with $808 for renters, according to data released today by the U.S. Census Bureau and the U.S. Department of Housing and Urban Development. However, renters usually paid a higher percentage of their household income on these costs than did owners (31 percent compared with 20 percent).

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MetLife Study on the American Dream

Source: MetLife

A few key findings in the study:

• 40% have become more focused on establishing a financial plan as a result of the current economic situation
• 55% could not take care of expenses for more than two months
• 58% of Americans still believe that the bar is constantly rising in terms of the basic necessities in life
• 64% of Americans have given or received help from family members
• 93%  have, or plan to, save more and spend less
• 45% of Americans say that concerns about how they are going to “make ends meet” is keeping them up at night
• only 34% of Americans consider themselves to have an adequate safety net

Read study.

Morningstar Finds Mutual Fund Expense Ratio Good Predictor of Success

Source: Morningstar

How Expense Ratios and Star Ratings Predict Success

We test the ability of expense ratios and star ratings to predict funds that will survive and beat their peers. We've run some fresh data on expense ratios and the Morningstar Rating for funds.

I'll share the details on who, what, and when, but first a few grabbers. How often did it pay to heed expense ratios? Every time. How often did it pay to heed the star rating? Most of the time, with a few exceptions. How often did the star rating beat expenses as a predictor? Slightly less than half the time, taking into account funds that expired during the time period.

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IRS Posts Draft Tax Forms

The IRS posts drafts of the current year tax forms before they are finalized. If you would like a peek at what your next tax return might look like, you can inspect the likely forms at the IRS website. 

Draft Federal Tax Forms

Draft Form 1040

Kaiser Health News on End of COBRA Subsidy

Source: Kaiser Health News

Jennifer Richards of Park Ridge, Ill., is angry that her family’s monthly health insurance bill tripled in August to $1,250 after her husband lost his job and health benefits. But as bad as that is, what really upsets her is the inaction of Congress.

Deficit-conscious lawmakers have not renewed a subsidy that helped many jobless Americans afford health benefits. A longstanding federal law called COBRA requires employers to continue insurance for former employees, typically for 18 more months, if they pay the entire premium plus a two percent administrative fee. Last year, Congress approved a 65% COBRA premium subsidy, but it ended May 31.

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$250,000 Federal Deposit Insurance Amount Now Permanent

Source: FDIC

New consumer protection bureau also part of major reform law

The far-reaching financial reform law approved by Congress and signed by President Obama in July includes a variety of new protections for bank customers, including a permanent increase in the basic federal deposit insurance limit from at least $100,000 to at least $250,000 per depositor. Under prior law, the basic federal deposit insurance limit was set to revert back to $100,000 on January 1, 2014.

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Review the New Rules on Bank Accounts

Source: FDIC

Bank Accounts Are Changing: What You Need to Know Costs may go up for checking and savings, but here are ways to pay less by going back to the basics

New rules limit the fees banks and other financial institutions can charge on some services, so it's possible that the costs of other services could go up. In the Spring 2010 issue of FDIC Consumer News, we discussed how to avoid potential interest rate and fee increases for credit cards. And here, with expectations that banks will be adding new fees or requirements on bank accounts — such as by discontinuing or limiting free checking services — we focus on ways that careful consumers can avoid unnecessary costs on their deposit accounts.

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SEC Publishes Best Practices for Senior Investors

Source: SEC

Washington, D.C., Aug. 13, 2010 — The Securities and Exchange Commission, Financial Industry Regulatory Authority (FINRA) and North American Securities Administrators Association (NASAA) today updated a joint report that outlines practices being used by financial services firms to strengthen their policies and procedures for serving senior investors as they approach and begin retirement.

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BLS Examines Trend in Health Care Spending

Source: Bureau of Labor Statistics

Health Care Spending: 1998, 2003, and 2008

How have rising health care costs affected household budgets? That question was raised many times before the passage of the Affordable Care Act, whose goal—as the act’s name implies—is to make health care more affordable for American families.^[1] This analysis of Consumer Expenditure Survey (CE) data from the 1998, 2003, and 2008 Interview Surveys provides a picture of nominal out-of-pocket health care spending among households categorized by the age of the reference person.^[2] The expenses analyzed were total health care and its components: health insurance, medical services, prescription drugs, and medical supplies. Among the findings are the following:

• Among households nationwide with medical expenses, the mean share of a household’s total budget spent on health care was higher in 2003 than in 1998 and was virtually unchanged in 2008 compared with 2003.
• Households’ spending changed over the decade. In 2008, the mean share of medical expenses that was spent on health insurance was higher than in 1998, and the share spent on medical services was lower.
• Households whose reference person was 65 or older spent about twice as much of their budget on health care compared with the national average in all years studied.

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Updated American Housing Survey Released

Source: US Census

U.S. Census Bureau Releases Detailed Information on Nation's Housing; Monthly Housing Costs Reach $1,000 for Homeowners

     The nation's homeowners paid a median of $1,000 in monthly housing costs in 2009, compared with $808 for renters, according to data released today by the U.S. Census Bureau and the U.S. Department of Housing and Urban Development. However, renters usually paid a higher percentage of their household income on these costs than did owners (31 percent compared with 20 percent).

Read more

Housing Affordability Continues to Increase

Source: US Department of Treasurey

WASHINGTON - The U.S. Department of Housing and Urban Development (HUD) and the U.S. Department of the Treasury today released the second edition of the Administration's Housing Scorecard (www.hud.gov/scorecard) showing that, thanks in part to interest rates continuing at all-time lows, home affordability in the U.S. remains near the most attractive levels in 10 years. In addition, for the first time, the report now tracks the impact of HUD's Neighborhood Stabilization Program (NSP), which has spurred local investment and is beginning to make affordably-priced homes available to consumers. The Housing Scorecard is the Administration's comprehensive report on the nation's housing market.

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Bankruptcy Filings Up 20 Percent in June

Source: US Courts

Bankruptcy filings rose 20 percent in the 12-month period ending June 30, 2010, according to statistics released today by the Administrative Office of the U.S. Courts. A total of 1,572,597 bankruptcy cases were filed in federal courts in that period, compared to 1,306,315 bankruptcy cases filed in the 12-month period ending June 30, 2009. This is the highest number of bankruptcy filings for any period since many of the provisions of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 took effect.

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Bankrate Updates Closing Cost Survey

Source: Bankrate

In last year's closing costs survey, Texas was most expensive and New York was second. This year, the order was reversed. In four of the past five years, the two states have occupied the two top spots.Utah, California and Alaska round off the top five most expensive states.

Arkansas was the least expensive state in this year's closing costs survey, followed by North Carolina, Iowa, Montana and Wisconsin. There was no consistency at the bottom of the rankings; in 2009, five completely different states occupied the least-expensive rungs.

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Fed Proposes New Rules for Home Mortgage Lending

Source: Federal Reserve Board of Governors

The Federal Reserve Board on Monday proposed enhanced consumer protections and disclosures for home mortgage transactions.  The proposal includes significant changes to Regulation Z (Truth in Lending) and represents the second phase of the Board's comprehensive review and update of the mortgage lending rules in the regulation.  The proposed changes reflect the results of consumer testing by the Board, which will begin accepting public comment.  The latest proposal would:

• Improve the disclosures consumers receive for reverse mortgages and impose rules for reverse mortgage advertising to ensure advertisements contain accurate and balanced information;
• Prohibit certain unfair practices in the sale of financial products with reverse mortgages; 
• Improve the disclosures that explain a consumer's right to rescind certain mortgage transactions and clarify the responsibilities of the creditor if a consumer exercises the right; and
• Ensure that consumers receive new disclosures when the parties agree to modify the key terms of an existing closed-end mortgage loan.

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Help for Unemployed Homeowners

Source: Findlaw

More Mortgage Aid for Unemployed Homeowners

Homeowners who are unemployed and facing foreclosure have one small reason to be a bit less worried. On August 11, the Obama Administration announced a $3 billion package to aid struggling homeowners. This aid is meant to supplement the "Hardest Hit Fund" originally set into motion last February by the President.

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The Most Stolen Cars

Source: Insurance Institute for Highway Safety

Cadillac Escalade, Ford F-250 pickup, and Infiniti G37 top list of highest insurance claims for theft

ARLINGTON, VA — The rate at which people file insurance claims for theft is highest for versions of the 2007-09 Cadillac Escalade, a luxury SUV, followed by the Ford F-250 crew pickup, Infiniti G37 luxury car, and Dodge Charger with a HEMI engine. Theft rates for these vehicles are 3 to 5 times as high as the average for all vehicles. These are the latest theft loss results for passenger vehicles 1 to 3 years old published by the Highway Loss Data Institute (HLDI), an affiliate of the Insurance Institute for Highway Safety.

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The High Cost of Child Care

Source: NACCRRA

Parents and The High Cost of Child Care: 2010 Update

Parents and the High Cost of Child Care: 2010 Update provides average costs of child care for infants, 4-year-olds, and school-age children in centers and family child care homes in every state. The average cost that parents paid for full-time care for a 4-year-old child in a center ranged from more than $4,050 in Mississippi to more than $13,150 a year in Massachusetts.

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Updated Data on the Cost of Employer Supported Health Insurance

Source: Kaiser Family Foundation

The Kaiser Family Foundation has listed survey data on the cost of employer supported health insurance for 2009.

Link

EBRI Updates Retirement Readiness Rating

Source: EBRI

The EBRI Retirement Readiness Rating™ was developed in 2003 to provide assessment of national retirement income prospects. The 2010 update uses the most recent data and considers retirement plan changes (e.g., automatic enrollment, auto escalation of contributions, and diversified default investments resulting from the Pension Protection Act of 2006) as well as updates for financial market performance and employee behavior (based on a database of 24 million 401(k) participants).

The baseline 2010 Retirement Readiness Rating™ finds that nearly one-half (47.2 percent) of the oldest cohort (Early Baby Boomers) are simulated to be “at risk” of not having sufficient retirement resources to pay for “basic” retirement expenditures and uninsured health care costs. The percentage “at risk” drops for the Late Boomers (to 43.7 percent) but then increases slightly for Generation Xers to 44.5 percent. Households in the lowest one-third when ranked by preretirement income are simulated to be “at risk” 70.3 percent of the time, while the middle-income group has an “at-risk” level of 41.6 percent. This figure drops to 23.3 percent for the highest-income group. These numbers are generally much more optimistic than those simulated for the same groups seven years earlier. In 2003, 59.2 percent of the Early Boomers were simulated to be “at risk,” as well as 54.7 percent of the Late Boomers and 57.4 percent of the Generation Xers. When analyzed by preretirement income in 2003, households were simulated to be “at risk” 79.5 percent of the time for the lowest one-third, 57.3 percent for the middle-income group, and 39.6 percent for the highest-income group.

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FTC Issues Final Rule to Protect Consumers in Credit Card Debt

Source: Federal Trade Commission

Amendments to Telemarketing Sales Rule Prohibiting Debt Relief Companies From Collecting Advance Fees Will Take Effect in October 2010

Starting on October 27, 2010, for-profit companies that sell debt relief services over the telephone may no longer charge a fee before they settle or reduce a customer’s credit card or other unsecured debt.

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United Policyholders Offers Consumer Resources on Insurance

Source: United Policyholders

United Policyholders was founded in 1991 as non-profit tax-exempt organization dedicated to educating the public on insurance issues and consumer rights. Our first major project was working with over a thousand victims of a devastating October, 1991 firestorm in the Oakland/Berkeley, California hills to help them understand their policies and receive prompt, fair insurance claim settlements.

Link.

A Primer on Calculating Social Security Pension Benefits

Source: Social Science Research Network

Social Security Benefits Formula 101: A Practical Primer

Francine J. Lipman
Chapman University - School of Law
James E. Williamson
San Diego State University - College of Business Administration
American Bar Association - Section of Taxation News Quarterly, Vol. 29, No. 4, Summer 2010

Abstract:
Despite the broad and deep reliance on Social Security benefits, very few of the hundreds of millions of current and future beneficiaries understand how the program works. This article presents through a hypothetical couple some of the basic concepts of the Social Security benefits formula.

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Premiums Rise 20% on Non-group Health Insurance

Source: Kaiser Family Foundation

Recent Premium Increases Imposed by Insurers Averaged 20% for People Who Buy Their Own Health Insurance, Kaiser Survey Finds

People who buy their own insurance report that their insurers most recently requested premium increases averaging 20 percent, according to a new Kaiser survey examining the experiences and views of people who buy health coverage in the non-group or individual market.

Overall roughly three in four people (77 percent) with non-group coverage report facing a premium increase with a current or previous insurer. Most say they paid the increase, but 16 percent of all policyholders say they switched plans, either buying a less expensive policy from their current insurer or switching companies altogether. After these so-called “buy downs” are taken into account, people who faced a premium increase ended up paying 13 percent more than before.

Many of those facing a premium increase who switched to a cheaper policy are now getting less comprehensive coverage than they were before. The survey found that those who switched are more than four times as likely to say their new plan offers worse benefits than their previous plan (49 percent) as they are to say their new plan’s benefits are better (11 percent).

+ Survey of People Who Purchase Their Own Insurance

Survey of Non-group Health Insurance Market

Source: Kaiser Family Foundation

Survey of People Who Purchase Their Own Insurance

While most people in the U.S. get health insurance through their employer, about 14 million people under age 65 have coverage through the non-group or individual market, which has faced scrutiny recently in news reports about some insurers’ steep rate increases and in the market reforms in the new health reform law that will take effect in 2014.

This survey provides insight into the current state of the non-group market and finds policyholders report that their insurers most recently requested premium increases averaging 20 percent. Most say they paid the increase, but some say they switched plans, either buying a less expensive policy from their current insurer or switching companies altogether.

The survey also provides national data on the average premiums and deductibles reported by people who buy their own coverage in the non-group market. It examines policyholders’ views and experiences with non-group coverage and a focused look at the issues facing policyholders with pre-existing conditions.

The survey involved a nationally representative random sample of 1,038 people ages 18-64 who purchase their own health coverage, conducted between March 19 and April 2, 2010.

+ Full Report (PDF)