Health Care Reform May 28, 2010
Posted by debtdoctorus in Healthcare Reform, People with Special Needs.Tags: CLASS Plan, Community First Choice Program, healthcare reform law, pre-existing conditions, SSI
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We’ve come across a terrific article that we are running in the next issue of the “Senior Sunshine Times.” The following breaks down the new health care reform policy as it pertains to people with special needs, including seniors. The article and more information can be found at the Special Needs Answers website (www.SpecialNeedsAnswers.com)
Health Care Reform Offers Something Old, Something New for People With Special Needs
Although it took more than a year of back and forth, a comprehensive health care reform bill and an associated reconciliation bill finally passed both houses of Congress and were signed into law by President Obama. People from both sides of the aisle have complaints about various portions of the legislation, but it is clear that the new law will have far-reaching consequences for people with special needs. Since the size of the law is staggering, we have highlighted some of the most important features of health care reform as it pertains to people with special needs.
Funds to Move People from Institutions into the Community
The Community First Choice Program will offer states that develop community support programs for people with disabilities partial Medicaid reimbursement from the federal government. States that participate in the program would have to create specialized programs that specifically help people with special needs who require an institutional level of care move into the community. Most of the suggested programs will focus on providing in-home support and attendants. The program is funded for five years, but can be extended in the future if necessary.
Insurers Will Not Be Able to Refuse Coverage to People With Pre-Existing Conditions
One of the most talked-about provisions of the new law prevents health insurance companies from denying coverage to people with pre-existing medical conditions. People with special needs who do not receive comprehensive health insurance coverage through government programs or a relative’s health insurance have routinely been denied private coverage because of their special needs. The new law prevents insurance companies from denying coverage based on these pre-existing conditions. This portion of the law will not apply to coverage for adults until 2014, but children with pre-existing conditions should be covered under the new law this year.
No Lifetime Limits on Coverage
No matter the amount of care an insured receives, she will be able to keep her insurance coverage.
Children Can Remain on Parents Policies until Age 26
Parents will be able to keep children on their medical insurance until their children reach age 26, whether or not they are in school. Insurance policies differ considerably on coverage they provide the children of insured beneficiaries.
Extension of Mental Health Parity
The Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 recently took effect for group insurance plans covering more than 50 people. This law requires plans that include coverage for mental illness to provide that coverage on an equal footing with coverage for other medical conditions. For instance, insurers are no longer allowed to charge higher co-pays for visits to mental health professionals than they would for visits to medical doctors. The health care reform law eventually extends mental health parity to all plans, regardless of the number of participants, and it goes one step further by including mental health care as “essential” care that plans are required to cover.
CLASS Plan Allows Voluntary Purchase of Long-Term Care Insurance
Despite the best efforts of insurance industry lobbyists to kill it, the new health care reform law includes the CLASS (Community Living Assistance Services and Supports) Plan, a program that allows individuals to purchase long-term care insurance from the government. Those who wish to participate would pay a modest premium (yet to be determined, although originally estimated to be $65 a month). After they had contributed for at least five years, participants would be eligible for a benefit that would vary depending on functional ability but that would average at least $50 a day. While the benefit would be modest compared to the average cost of nursing home care, it could be used instead to pay for a range of services that would help people stay in their homes. The CLASS program could be of greatest use for those people with special needs who do not require full-time nursing home care, but who will need additional in-home care as they get older.
New Office Will Help Integrate Medicaid and Medicare Benefits
A sizable number of people with special needs, known as “dual eligible” beneficiaries, receive both Medicaid and Medicare. As anyone with a dual eligible family member knows all too well, coordinating the various benefits offered by Medicaid and Medicare is next to impossible. What makes matters worse is that some provisions of Medicare law, especially prescription drug coverage, can directly contradict and cancel out better coverage offered by Medicaid. The health care reform law will create the Federal Coordinated Health Care Office to coordinate between the two programs and encourage the states to provide a higher level of care to dual eligible beneficiaries.
Dramatic Expansion of Medicaid
Current federal regulations require states participating in the Medicaid program to provide coverage for children in families living under the federal poverty level, and to extend coverage to their parents in certain situations. Although people who qualify for Supplemental Security Income (SSI) often obtain Medicaid benefits, for the most part adults who do not have severe disabilities and who do not have children have a hard time getting Medicaid. Under the health care reform law, states must offer Medicaid to all adults making less than 133 percent of the poverty level by 2014. This dramatic expansion of Medicaid could provide benefits to many people with special needs who do not otherwise qualify for the program because they are able to work, albeit in low-paying jobs. States that want to begin offering these benefits immediately can apply for federal funding of Medicaid expansion beginning this week.
Higher Medicaid Payments to Doctors
It can often be difficult to find doctors who accept Medicaid because of the program’s low reimbursements, which average only 72 percent of rates paid by Medicare. In 2013 and 2014, Medicaid’s reimbursements to doctors will rise to the same level as Medicare, making it more likely that a doctor will participate in the program.
Additional Training For Workers Who Assist People With Disabilities and Funding for Research
The new law also designates funds for the training of behavioral health workers who assist people with special needs. Funds are also set aside for private research institutes devoted to researching mental illness.
What Seniors Should Know About Debt Buyers April 26, 2010
Posted by debtdoctorus in Abusive Debt Collectors, Financial Strife, Senior Debt Relief.add a comment
If you have ever considered why debt collectors continue to pursue debtors year after year, read the following:
FACT: Debt buying is a fast-growing business. According to an industry group, the Debt Buyers Association, “The face value of all such debt sold in 1993 was $1.3 billion. By 1997, that number had grown to $15 billion and sales reached approximately $25 billion in 2000. The Debt Buyers Association estimates that the amount of debt to be sold by the original debtors in 2002 will exceed $60 billion.” By 2007, the amount had risen to $110 billion per year.
FACT: Courts are aware of how the market for the sale of debt currently works, where large sums of defaulted debt are purchased by a small number of firms for between .04 and .06 cents on the dollar. The entire industry is a game of odds, and in the end, as long as enough awards are confirmed to make up for the initial sale and costs of operation, the purchase is deemed a successful business venture.
Why is this debt sold for such a cheap price? Certainly part of the reason is the poor prospects of payment these creditors expect from the defaulting individuals given their past delinquent payment history, while another part is undoubtedly to avoid additional costs associated with debt collection.
FACT: Debt buyers purchase old debts, generally for pennies on the dollar (in some cases, for less than a penny on the dollar). They then try to enforce them against the consumer. Some debt buyers do their own debt collection, some use third-party debt collectors, and some do both. Several of these firms (Arrow, NCO, Portfolio Recovery, etc.) are publicly traded companies, or subsidiaries of public companies.
FACT: Many debt buyers are abusive. In 2004, the Federal Trade Commission shut down a debt buyer called CAMCO headquartered in Illinois. The following is from a press release issued by the FTC in connection with that case:
In papers filed with the court, the agency charged that as much as 80 percent of the money CAMCO collects comes from consumers who never owed the original debt in the first place. Many consumers pay the money to get CAMCO to stop threatening and harassing them.
According to the FTC, CAMCO buys old debt lists that frequently contain no documentation about the original debt and, in many cases, no Social Security Number for the original debtor. CAMCO makes efforts to find people within the same geographic area and tries to collect the debt from them – whether or not they are the actual debtors. In papers filed with the court, the FTC alleged that CAMCO agents told consumers that they were legally obligated to pay. CAMCO told debtors they could have them arrested and jailed, seize their property, garnish their wages, and ruin their credit. All of these threats were false, according to the FTC.
Protect yourself from the illegal tactics of debt buyers.
Beware of Scams April 9, 2010
Posted by debtdoctorus in Financial Strife, Senior Debt Relief.Tags: credit reports, scam artists, senior citizens
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As the economy gets worse, the number of scams increase and our seniors and disabled are the most vulnerable communities to these scam artists. We offer these tips in order to help you increase your financial safety.
Free Annual Credit Report
By law, you are entitled to one free credit report per year. There is only one government-affiliated program where this is available for free: AnnualCreditReport.Com. Its phone number is 1-877-322-8228. Information is available at the Federal Trade Commission website: www.ftc.gov/freereports.
All other websites are commercial, for-profit, and/or out to get your financial information.
HR 5140 Economic Stimulus Act of 2008
This was a law designed to provide economic stimulus through debt relief. However, many private companies offer services and mention the Consumer Debt Relief Initiative (HR 5140 Economic Stimulus Act of 2008). Do not assume that any of these entities are affiliated with or endorsed by the government. For the most part they are advertisements using a government program to lure you into calling them. Don’t.
Calls Not Initiated By You
If someone calls you and asks for money, do not give them any information. Recently a client received a call that a relative was in jail and needed bail money. After emptying her bank account, the client found out that this was a scam. Beware; there are many other creative scams out there. When in doubt, get a phone number from the caller and then call someone and have them help you check out the information. If necessary, call the police.
If someone calls about a debt or scam, take their name and number and let them know you are represented by an attorney. If Debt Counsel for Seniors and the Disabled has sent out a Cease and Desist letter on your behalf, keep track of the phone calls and letters you get, and send them in to DCSD. You may be able to sue a debt collector and get money damages for violations of the Fair Debt Collection Practices Act. This would involve no out-of-pocket cost to you (attorneys do not recover unless you recover).
Special Message to Seniors and Disabled Whose Mortgages are Under Water February 26, 2010
Posted by debtdoctorus in Mortgage Default.Tags: home forclosures, loan default
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A recent article in “The New York Times” by Richard H. Thaler expresses a realistic view of the problems of mortgages on houses that are greater than the value of the house. The following excerpts of Thaler’s article should be considered in determining if it is worth continuing to rent a house from a mortgage company if you can’t afford the rent.
Much has been said about the high rate of home foreclosures, but the most interesting question may be this: Why is mortgage default rate so low?
After all, millions of American homeowners are “underwater,” meaning that they owe more on their mortgage than their home is worth. In Nevada, nearly two-thirds of homeowners are in this category. Yet most of them are dutifully continuing to pay their mortgages, despite substantial financial incentives for walking away from them.
A family that financed the entire purchase of a $600,000 home in 2006 could now find itself still owing most of that mortgage, even though the home is now worth only $300,000. The family could rent a similar home for much less than its monthly mortgage payment, saving thousands of dollars a year and hundreds of thousands over a decade.
Some homeowners may keep paying because they think it’s immoral to default. This view has been reinforced by government officials like former Treasury Secretary Henry M. Paulson, Jr., who while in office said that anyone who walked away from a mortgage would be “simply a speculator – and one who is not honoring his obligation.” (The irony of a former investment banker denouncing speculation seems to have been lost on him.)
But does this really come down to a question of morality?
A provocative paper by Brent White, a law professor at the University of Arizona, makes the case that borrowers are actually suffering from a “norm asymmetry.” In other words, they think they are obligated to repay their loans even if it is in their financial interest to do so, while their lenders are free to do whatever maximizes profits. It’s as if borrowers are playing in a poker game in which they are the only ones who think bluffing is unethical.
That norm might have been appropriate when the lender was the local banker. More commonly these days, however, the loan was initiated by an aggressive mortgage broker who maximized his fees at the expense of the borrower’s costs, while debt was packaged and sold to investors who bought mortgage-backed securities high returns, using models that predicted possible default rates.
The morality argument is especially weak in a state like California or Arizona, where mortgages are so-called “non-recourse loans.” That means the mortgage is secured by the home itself; in a default, the lender has no claim on a borrower’s other possessions. Non-recourse mortgages may be viewed as financial transactions in which the borrower has the explicit option of giving the lender the keys to the house and walking away. Under these circumstances, deciding whether to default might be no more controversial than deciding whether to claim insurance after your house burns down.
In fact, borrowers in nonrecourse states pay extra for the right to default without recourse. In a report prepared for the Department of Housing and Urban Development, economist Susan Woodward estimated that homebuyers in such states paid an extra $800 in closing costs for each $100,000 they borrowed. These fees are not made explicit to the borrower, but if they were, more people might be willing to default, figuring that they had paid for the right to do so.
Morality aside, there are other factors deterring “strategic defaults,” whether in recourse or non-recourse states. These include the economic and emotional costs of giving, the perceived social stigma of defaulting, and a serious hit to a borrower’s credit rating. Still, if they added up these costs, many households might find them to be far less than the cost of paying off an underwater mortgage.
An important implication is that we could be facing another wave of foreclosures, spurred less by spells of unemployment and more by strategic thinking. Research shows that bankruptcies and foreclosures are “contagious.” People are less likely to walk away from their home if they know others who have done so. And if enough people do it, the stigma begins to erode.
A spurt of strategic defaults in a neighborhood might also reduce some other psychic costs. For example, defaulting is more attractive if I can rent a nearby house that is much like mine (whose owner has also defaulted) without taking my children away from their friends and their schools.
So far, lenders have been reluctant to renegotiate mortgages, and government programs to stimulate renegotiation have not gained much traction.
If you wish to discuss the “Underwater Mortgages” problem with us please call us at (312) 939-2221 Ext 1005.
Sincerely,
Jerome S. Lamet
Supervising Attorney
Special Message on Bank Overdraft Charges February 2, 2010
Posted by debtdoctorus in Financial Strife.Tags: Debit cards, overdraft charges
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Congress is currently considering limiting bank overdraft charges, and while we hope that these charges are regulated, for the time being we need to deal with them. Here are some facts regarding bank overdraft charges to keep in mind.
Without asking for their consent, banks and credit unions unilaterally permit most customers to borrow money from the bank by writing a check, withdrawing funds at an ATM, using a debit card at the point of sale or preauthorizing electronic payments that exceed the funds available in a checking account. Instead of rejecting the debit card purchase or ATM withdrawal at no cost to the consumer, or returning the check unpaid with a bounced check fee, most institutions will now cover the overdraft and impose an expensive fee for each transaction.
Consumers do not apply for this form of credit, do not receive information on the cost to borrow bank funds via overdrafts, are not warned when a transaction is about to initiate an overdraft, and are not given the choice of whether to borrow the funds at an exorbitant price or simply cancel the transaction. Banks are permitted by the Federal Reserve to make cash advances through overdraft loans without complying with Truth in Lending cost disclosure rules, denying consumers the ability to make informed decisions about whether to access credit, as well as comparison shop for the lowest cost overdraft program.
Overdraft loans are the bank equivalent of payday lending. Just as payday lenders use the borrower’s personal check or debit authorization to insure priority payment, banks use their contractual right of set-off to collect the amount of the overdraft loan and the fee by taking money out of the next deposit into the borrower’s checking account, even when the funds are Social Security or other exempt funds. Overdrafts are typically repaid within days, and the flat overdraft fees for very short-term extensions of credit result in outrageous interest rates.
Common banking practices, as confirmed by the FDIC’s 2008 study of overdraft programs, now increase the number of overdrafts rather than minimize them – and can cost the account holder hundreds of dollars in a matter of hours when they otherwise may have been overdrawn by just a few dollars for a few days or less. Debit card overdrafts are now the single largest source of overdraft fees and are especially costly for account holders because they carry the same high flat fee but for much smaller loans. As recently as 2004, about 80 percent of banks rejected unfunded debit transactions without charging a fee. As consumers have switched to payment by debit instead of paper checks, banks have expanded overdraft programs that cover debits to make up for disappearing bounced check fees.
Abusive overdraft loans are costly for everyone, but are most destructive to people who are struggling to meet their financial obligations. The FDIC’s study found that consumers most likely to be charged repeated overdraft fees are younger consumers and lower-income consumers. In a system hugely out of balance, our big financial institutions are collecting enormous fees from people who have nothing to spare, making them even less able to meet their obligations.
Banks continue to increase the dollar amount of fees, even as the recession makes consumers less able to pay even higher fees for inadvertently overdrawing their accounts. Banks that received Troubled Asset Relief Program (or TARP) funds from the public have not returned the favor. Indeed, the most recent Consumer Federation of America (CFA) survey of the nation’s sixteen largest banks found that overdraft fees continue their upward spiral, with the largest fee charged by big banks ranging from $34 at Citibank (up from $30 in the last year) to a maximum $39 charged by Citizens Bank. The median maximum overdraft fee for the largest banks is now $35. While major banks have announced changes to their overdraft programs in recent weeks, none of the largest banks have lowered the price for an overdraft.
Thank you.
Jerome S. Lamet, Supervising Attorney, DCSC http://www.debtdoctor.us.com
Debt Collectors on the Offensive, Clogging the Courts January 15, 2010
Posted by debtdoctorus in Consolidating Debt, Debt Relief for Unemployed, Financial Strife, Senior Debt Relief.Tags: Debt collectors, Federal Fair Debt Collection Practices Act
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Debt collecting is anything but small claims. In 2006, industry revenues were about $15.5 billion, according to Kaulkin Ginsberg Co., a collections-industry strategic-advice company.
A new breed of collector has transformed the debt collection industry in the last decade, purchasing defaulted credit card debt from banks, retailers and other consumer lenders. Debt buyers usually pay only pennies on the dollar for packages of unpaid bills that have limited information about both the lender and borrower. Before filing lawsuits, debt buyers attempt to recoup money via letters and phone calls.
Collectors cannot misrepresent the amount of a debt and aren’t allowed to harass consumers or falsely threaten legal action under the federal Fair Debt Collection Practices Act. However, last year, the Federal Trade Commission received 70,951 complaints against third-party debt collectors, a fivefold increase from 2000.
Complaints have soared because debt buyers more aggressively pursue accounts that have gone unpaid for several months. These firms are more likely to sue. Publicly traded Asset Acceptance Capital Corp., for example, said that in 2007, 39.9 percent of collections came via the courts, up from 28.5 percent in 2003.
The increase in litigation also has come about because of easy credit – too easy, sometimes – that has left consumers falling behind on payments. U.S. credit card debt has grown 75 percent in the past 10 years to more than $940 billion, according to the Federal Reserve.
To learn more, seniors should call 1-800-992-3275 x 1304 or visit www.debtdoctor.us.com or the DCSD website at www.debtcounsel.net
Thank you.
Jerome S. Lamet, Supervising Attorney, DCSD
