Short-Term Health Insurance – Not for Everyone

November 1st to December 15th is Open Enrollment. This is the period of time each year when individuals and families who don’t have health insurance through an employer, Medicare, Medicaid, or other sources, can enroll in medical insurance plans for next year. Previously, under the Affordable Care Act (ACA) regulations, short-term plans could be offered for a maximum of 90 days, and only young people or those who could afford no other insurance could purchase them.

Last year the federal government changed the rules. Short-term medical insurance plans can now be used for up to 12 months with possible renewals up to a maximum of 36 months. People of any age can purchase them.

Key points to know:

Short-term plans are less expensive than ACA-compliant plans. Insurance companies can charge less because they can choose which health benefits they will provide, and they can deny people with pre-existing medical conditions. ACA-compliant plans are not allowed to deny coverage for pre-existing conditions.

Short-term plans are low-coverage plans. While they can provide some coverage for emergencies, they don’t cover basic care, and they are not required to cover the 10 essential health benefits which are mandatory in ACA-compliant plans: preventative and wellness services, emergency services, laboratory services, maternity and newborn care, prescription drugs, ambulatory patient services, rehabilitation services, hospitalization, mental health and substance abuse disorders, and pediatric services.

Short-term plans can cap the amount they will pay for your care each year, limit how much they will spend on specific services, and have lifetime limits. This means, if you unexpectedly need medical care and it costs more than the plan will pay, you will be responsible for the rest of the bill. If your plan doesn’t cover the specific care you need, you are on the hook for the entire bill.

Short-term plans are not available everywhere. They cannot be sold in certain states. Other states limit these plans to six months or less. Some states permit the initial one year coverage, but limit the total plan duration.

These plans are not recommended for people with chronic or pre-existing medical conditions, who are planning to start a family, or who want wellness visits and screenings such a mammograms and colonoscopies.

Know what you are buying. If you are considering a short-term health insurance plan, carefully read the fine print. Since short-term plans can pick and choose what services they cover, you will want to know exactly for what the plan will and will not pay.

Know in advance how you will pay the bills if you have unplanned medical expenses which your health plan won’t cover or caps how much it will pay. Unexpected medical events do happen, and the bill could be thousands of dollars.

When you buy a short-term plan, the insurance company is required to send you a disclosure which explains how short-term plans differ from regular health insurance.

Before signing up for a short-term plan, you may want to learn whether you can qualify for help to purchase an ACA-compliant health insurance plan, which would make such a plan more affordable. Information, instructions and applications are available at HealthCare.gov.

This is a general overview. For more information on short-term plans and individual state’s regulations, both HealthInsurance.org and Insure.com have good articles on this topic.

 

This blog is published to provide you with general information only, and is not intended to provide specific or comprehensive advice.  Money Care, LLC encourages individuals to seek advice from competent professionals when appropriate.

 

What’s New in Medicare for 2020?

Medicare’s annual open enrollment begins October 15th and ends on December 7th.  There are many changes that will go into effect on January 1, 2020. If you are enrolled in Medicare, it is important to review your current coverage and determine whether to make adjustments.

Open enrollment is the period of time each year when people currently enrolled in Medicare can:

  • Switch from traditional Medicare to Medicare Advantage plans, and vice versa.
  • Add, drop or switch their Part D prescription coverage.

 

When examining your options for 2020, you want to consider:

Cost of your medical plan

People enrolled in Traditional Medicare (Parts A & B) with a Medicare Supplemental policy (commonly called “Medigap”), can expect predictable costs for medical care including their annual deductibles and insurance premiums.

Those enrolled in Medicare Advantage Plans (Part C), however, will have variable costs depending on the plan they select, the premium, co-pays, and co-insurance. Medicare Advantage plans are regulated on the national level, but the benefits are determined county by county. Thus, the plans available to you could differ from the plans available to your friend living one county over.

(To understand how Medicare and all its parts work, see my blog posts Decoding the Language of Medicare and Medicare Advantage De-Mystified.

Coverages

You want to be certain the plan you choose covers both the healthcare you need and your preferred doctors.

Travel

Do you travel? Where and how often? Take this into consideration when choosing a plan. You want to be certain you are covered should you have a medical event away from home.

Prescription Drugs

Prescriptions are covered by Medicare Part D. As drug formularies change each year, you will want to check your current Part D insurance to verify it covers both your medications and your pharmacy. Compare your current plan to others to verify you have a plan that best meets your needs and your budget, especially as there are new Part D plans available for next year.

 

Out-of-pocket costs in Part D plans are increasing.

Once you reach $4,020 in out of pocket drug costs (including deductibles and co-pays), you enter the “Coverage Gap,” which is also called the “Donut Hole.” After you have paid $6,350, you enter “Catastrophic Coverage,” and co-pays are significantly reduced.

The out-of-pocket limit in the “Donut Hole” is increasing to $6,350 which is $1,250 more than 2019.

What is Part D is an article that explains how Medicare Part D works.

 

Medicare Considers the Donut Hole Closed.

When Medicare Part D plans began in 2006, many people had to pay 100% of their drug costs while in the Coverage Gap. Medicare now considers the gap closed: in 2020, Part D insurance will cover 75% of the cost of your medications, and you will pay 25%.

 

There are many changes in Medicare Advantage plans.

  • Medicare Advantage plans are rolling out new benefits and incentives, many of which are not traditionally associated with medical insurance. An insurance company in my state, for example, is promoting free meal delivery after an inpatient hospital admission, free telemedicine visits, free exercise classes, and up to a $100 reimbursement for completing health and wellness activities.
  • Medicare Advantage Plans have the flexibility to provide Value-Based Insurance Design (VBID). The VBID model customizes financial incentives to people who need certain types of health care. A person with a heart condition, for example, may have a 0% co-pay to encourage her to go to doctors’ appointments. Other patients in the same insurance plan who do not have a heart condition might not get this benefit.
  • Telemedicine may be an option eliminating the need, in some cases, to travel to your doctor’s office.
  • There have been many mergers as hospitals consolidate and insurance companies purchase medical practices. Sometimes, if you want to stay with your doctor, you need to switch to the insurance company which covers your provider.

If you enroll in a Medicare Advantage plan for next year and don’t like it, you have until March 31, 2020 to change to another Medicare Advantage plan or switch to Traditional Medicare.

 

Changes in Medicare Supplemental (Medigap) plan offerings

Medicare is discontinuing Medigap Plans C and F for new enrollees only. If you are eligible for Medicare before January 1, 2020, you have the option of choosing one of these plans. If you currently have a Plan C or Plan F policy, you can keep it. If you are eligible on or after January 1, 2020, you cannot select Plan C or F, but there are eight other plans from which to choose.

 

Resources

These are just some of the changes expected in Medicare plans for 2020. All of this can be extremely confusing. How do you choose? Medicare has information and tools on its website to help, including:

  • Publication 002110: “Choosing a Medigap Policy”
  • Publication 12026: “Understanding Medicare Advantage Plans”

To access these publications go to www.medicare.gov, click on “Forms, Help & Resources,” choose “Free Medicare publications” and enter the publication number.

 

Protect Yourself from Fraud

One thing that hasn’t changed: Open Enrollment is a time ripe for fraud. Medicare will never call you, threaten you, ask for your personal information over the phone, or demand payment or gift cards. Only give out your Medicare number and other personal information if you initiate the call.

 

This blog is published to provide you with general information only, and is not intended to provide specific or comprehensive advice.  Money Care, LLC encourages individuals to seek advice from competent professionals when appropriate.

Your Many Credit Scores

Did you know you have many credit scores?

When you obtain your credit score, you are getting a generic score. Your lender, however, will most likely receive a different number specific to its industry.

At the heart of the consumer credit reporting industry are the three major credit reporting bureaus: Experian, Equifax and Transunion. These three companies collect data on you. This information is then analyzed by other companies to calculate your credit scores, a measure of your credit risk. The formulas these companies use are complex and closely guarded industry secrets. These secret formulas are computer programs called “scoring models.”

FICO and VantageScore are two major companies that calculate credit scores.

 

FICO (Fair Isaac, and Company

FICO began providing credit scores in 1989. Consumer FICO scores range from 350 to 850. A perfect score is 850. A good credit score is 720 and above. FICO also produces industry-specific credit scores. These scores range from 250 to 900. Each score is customized for the type of credit you seek including auto loans, credit cards, mortgages, and retailer credit.

 

VantageScore

VantageScore was created by the three credit bureaus in 2006 to compete with FICO. Its credit scores are sold to banks, lenders and other credit issuers by VantageScore Solutions, LLC. While FICO has the majority of the credit score business, Vantage is gaining market share. Vantage scores range from 300 to 850.

Regardless of whether a lender or creditor uses FICO or VantageScore, the goal is the same: to predict the likelihood of you falling behind on paying a bill within the next 24 months.

 

You also have a credit score for insurance and a specialized report for mortgages.

Insurance scores

Credit-based insurance scores range from 200 to 997, and are only one of the many factors companies are allowed to use to determine your premiums.

Insurance scores differ from regular credit scores.

  • A regular credit score is used to determine the likelihood of you repaying a loan or other credit. These scoring models look at many different factors to determine your score.
  • A credit-based insurance score is used to predict the likelihood of you filing an insurance claim. Some, but not all, factors in your credit history are used to determine your score. Statistically, people with high scores are less likely to file claims.

Insurance scores are used to calculate premiums for automobile, homeowners, renters, motorcycle, boat, and RV insurance. Not all states permit the use of insurance scores, and not all insurance companies use them. FICO is one company that generates credit-based insurance scores.

 

Residential Mortgage Credit Report

When you apply for a mortgage, the lender wants your credit report from each of the three credit bureaus as well as your credit score. If you are applying jointly with one or more people, the mortgage lender wants the three credit reports and scores for each applicant. This results in a lot of redundant information which is time consuming to read and synthesize.

Enter mortgage reporting companies. Mortgage lenders subscribe to their services. When the lender needs your and your co-applicants’ credit information, the mortgage reporting company buys your credit reports from each of the three credit bureaus and your FICO scores. It then consolidates all the information into one credit report, called a “RMCR,” a Residential Mortgage Credit Report. Many lenders will give you a copy of your RMCR.

 

Improve or Maintain Your Credit Score

Regardless of the type of credit score used or which company produces it, the things you can do to improve your credit score or maintain a good score remain the same:

  • Pay your bills on time.
  • Maintain low credit-card balances.
  • Apply for credit only when you really need it.
  • Dispute any incorrect information in your credit reports.

 

Obtain Your Credit Reports and Scores

You can obtain your credit reports for free at annualcreditreport.com. While these reports do not include your credit score, they show your credit activity over the past several years.   You can also print a “Manual Request Form” to request your reports by mail.

You can get your FICO score at myfico.com. FICO sells generic scores to consumers. There is a fee. Industry specific scores are available only to the lender.

You can get your Vantage score for free from many services. Two that are frequently recommend are Credit Karma, and Credit Sesame. Other options are listed at your.vantagescore.com.

 

This blog is published to provide you with general information only, and is not intended to provide specific or comprehensive advice.  Money Care, LLC encourages individuals to seek advice from competent professionals when appropriate.

 

How Your Credit Score is Used

Most of us need access to credit. Loans provide the means to buy a house, purchase reliable transportation, and pay for higher education. When you apply for credit, lenders use your credit score to determine the potential risk in lending to you: they want their money back with interest – the price you pay for borrowing the money.

Many people don’t realize credit scores are used for more than applying for credit cards and loans. Your number can be used in other ways, too:

  • Landlords may check your credit to decide whether to rent to you, or whether to require a higher security deposit. 
  • Cellular companies may use your credit to determine your payment plan and whether to require a security deposit.
  • Insurance companies check credit to decide how much risk you present. They can use your scores to determine whether to cover you and, in many states, to determine your premium.
  • Utility companies are interested in your credit score. If you have no credit or a low credit score, these companies may require a higher security deposit.
  • Credit card companies review your current scores to determine your interest rate.
  • Employers may check your credit to protect their customers, their other employees and their businesses. When a potential hire or an employee shows sign of financial distress, this could lead to fraud or theft. Employers don’t receive your credit score, however. Instead they can obtain a modified version of your credit report. They need your permission to do so.

The FICO® score, developed by Fair Isaac Corporation, is one commonly used credit scoring system. FICO scores range from 300 to 850. Many lenders consider a score in the 700s to be good. Your FICO score is comprised of five factors:

  • Payment history
  • Amounts owed
  • Length of credit history
  • New credit
  • Type of credit in use

It wasn’t that long ago when banks would review your full credit report and make an individual decision on whether to lend to you, how much, and at what interest rate. The use of credit scores makes extending credit quicker and easier. You can apply for a credit card online, and know within minutes whether you were approved.

Credit scores have automated the lending process and make it easier for companies to make decisions about you. They are used, not only by banks, but also by utility companies, cellular companies, insurers, and others who want to know the risk you present before offering you their service or product.

You can check your credit score for free at creditkarma.com.

This blog is published to provide you with general information only, and is not intended to provide specific or comprehensive advice.  Money Care, LLC encourages individuals to seek advice from competent professionals when appropriate.

Be Smart About Your Passwords

Recently, I went online to place a take-out order from a local restaurant. After I selected my dishes, I was prompted to set up an account with a user ID and password. Here it was again: a need to create and keep track of yet another password. There was no avoiding this step to place an online order.

As our lives revolve around computerized devices and the internet, we now need secure unique passwords for banks, online shopping, cell phones, social media, employee benefits, medical records, insurance, Social Security, phone apps, smart speakers, and the list goes on. Each of these accounts creates more online exposure, increasing our vulnerability to security breaches and identity theft. How do you protect yourself?

One line of defense is to be smart about your passwords.

Use a password manager.

Password managers store and organize your user IDs and passwords. You don’t need to remember each one! You memorize one password to access the manager. This password should be long and complex. LastPass, DashLane and KeePass are frequently recommended. Once you are using a password manager, you can shred the written list of passwords under your mouse pad or in the file folder next to your desk. If you can’t part with the paper, lock up the list away from the computer.

Use two-step verification. 

Whenever an online account offers two-step verification, set it up. With this, when you log into the account with a new device, a one-time code will be sent to you via text message or email. You have a few minutes to type in the code as part of the log-in process. Some financial institutions will send you a token or security key. You keep this small device in a secure place at home. When you log into that website, a one-time code will appear on the token. You enter that as you log in to your account.

Use Long, Complex Passwords. 

Let’s first consider what makes a weak, easy-to-crack password. It would be very convenient to use the same simple-to-remember password on every website. “Rover1,” for example, is short and easy to recall. Experts would point to this as an extremely weak password:

  • It has fewer than 10 characters.
  • It is predictable, meaning it is not complex. It has only one capital letter, one number, and no special characters.
  • It is the name of a pet. Passwords shouldn’t be our own names, or pet and family members’ names.

Passwords should also avoid information easily found on the internet such as birthdates, anniversaries, license plate numbers, street names, and schools we attended. Words from the dictionary don’t make good passwords. Passwords that use sequences of numbers, letters and keystrokes should also be avoided. A classic example of this is “qwerty1234.”

How do you create strong passwords? In the many articles I have read on this topic, all stress the importance of at least 10 characters that are complex, meaning they mix capital and lower case letters, numbers and symbols.

The common ideas I have found to create such passwords are:

  • Let your password manager generate passwords for you. 
  • Combine random words and turn them into a complex phrase: “frog city snore” can become “Fr0%S1t1snor5.”
  • Use a diceware website to generate a passphrase – string of random words. Human brains are not good at coming up with truly random words. Diceware websites will do this for you. You can find them with an internet search. The passphrase one such website generated for me is ReopenScramblerQuiltAmuckObligateSly.”
  • Make a phrase complex. “It was the best of times,” can become “1Twzth3b8stOFXs.”

The core advice for password safety is make them long, make them complex, store them safely, and use two-step verification where ever possible.

The night I tried to order my dinner online, I decided I didn’t need a password for a restaurant. I picked up the phone and called instead.

This blog is published to provide you with general information only, and is not intended to provide specific or comprehensive advice.  Money Care, LLC encourages individuals to seek advice from competent professionals when appropriate.

Sharpen Your Financial Acumen

Now is the time to sharpen your financial acumen. April is National Financial Literacy Month.

This month-long focus on money is an effort to help Americans of all ages understand the importance of handling money wisely and giving them the skills to do so.

Why is this important? Many Americans are heading towards financial crisis. About 40 percent of U.S. adults do not have the funds to cover an emergency expense of $400 or more. Many Americans do not have enough money to support themselves in retirement. For most of us, there will not be a generous company pension. Social Security benefits will not cover all our expenses. It is not designed to be our sole source of retirement income.

While there are plenty of Americans who can and do set money aside each month, there is a large percentage of adults at every age who have less than $1,000 in savings. A recent survey by GoBankingRates.com found a lack of money keeps people from saving. They are not making enough and are struggling to keep up with basic expenses.  

The adage says, to have more money you need to “either increase your income or decrease your expenses – or both.” Other than taking on second and third jobs, do people know how to do this?

This is where financial literacy comes in. When people understand the impact of the financial decisions they make, perhaps they would make educated choices that would help them be more financially secure.

Many people don’t understand:

  • The true cost of interest on auto loans, mortgages, and other loans. (Is it too easy see the shiny thing they want, and focus on monthly payment amounts or the maximum the lender is willing to loan – and not pay attention to what is realistically affordable?)
  • The impact an expensive mortgage has on monthly retirement income, including social security.
  • How much interest they really pay when they don’t pay their credit card bill in full each month.
  • How many years it will take to pay-off parent loans for their children’s education, and whether they will be able to make the payments once retired.
  • The impact of using money that could be designated for savings to support their adult children. (Are their children going to support them when they run out of money?)

It is never too late to improve money skills. One of the best resources is personal finance magazines. When hard copies arrive in your mail each month, it is an easy reminder to pay attention to your finances. Both Kiplinger’s Personal Finance and Money Magazine have easy-to-understand educational articles:

Online, you can find resources by searching on “Financial Literacy 2019.”  Pay attention to the source of the information. Two of my favorites are:

Meanwhile, you can test your financial literacy at the National Financial Capability Study (usfinancialcapability.org).

This blog is published to provide you with general information only, and is not intended to provide specific or comprehensive advice.  Money Care, LLC encourages individuals to seek advice from competent professionals when appropriate.

Know Your Rights When Planning a Funeral

When a loved one dies, grieving family and friends are often faced with having to make funeral decisions quickly. Not many of us have prior experience planning funerals. This, combined with the emotional duress of our loved one’s death, make it easy for consumers to purchase unnecessary or unwanted services, and pay more than necessary.

If you find yourself making funeral arrangements, keep in mind:

  • It is important to compare prices between funeral homes. The cost for the same items and services can vary significantly.
  • You have the right to know what the funeral home will charge before you agree to purchase any products or services.

In 1984, the Federal Trade Commission (FTC) published the Funeral Rule which regulates the information funeral providers must provide consumers.  Here are some basic provisions of the Funeral Rule:

Costs

  • You have the right to compare prices between funeral homes.
  • Many funeral homes sell funeral packages which combine several items in one price. You are not required to purchase a package. You can buy products and services separately.
  • You have the right to get prices over the telephone if you request them.
  • If you visit a funeral home in person, you must be given a “General Price List,” which lists everything the funeral home offers and the price of each item and service.
  • Some funeral homes may mail you a price list upon request or post them on line, but they are not required to do so.
  • You have the right to receive a written statement immediately after making arrangements. The statement should include a list of all the items and services you are purchasing, the cost of each, and the total cost.

Caskets

  • You can request a casket price list before you view caskets. This lets you know there may be less expensive models available in addition to what is on display.
  • You are not required to purchase a casket or urn from the funeral home. The funeral home cannot refuse or charge you a fee to handle a casket or urn you purchased elsewhere such as from a casket store or online.
  • Caskets are not required for cremation. Funeral providers offering cremation services are required to inform you about alternative containers made from materials such as card board or unfinished wood, and they must make the containers available.

Embalming

  • According to the FTC, “no state law requires routine embalming for every death.” State laws vary on whether embalming or refrigeration is required when a body won’t be buried or cremated within a certain amount of time.
  • If the body needs to be preserved for practical reasons, ask the funeral home whether refrigeration is an option.

Outer Burial Containers

  • According to the FTC, outer burial containers “are not required by state law anywhere in the U.S., but many cemeteries require them to prevent the grave from caving in.”
  • If you need to purchase an outer burial container, you have the right to see a price list before you view them.

Required Purchases

  • If you are told you must purchase certain items or services to meet any legal cemetery or crematory requirements, you can get an explanation of that requirement included in the funeral home’s written price statement.

Funerals can quickly become expensive. It is easy to spend more than we intend. You do not need to buy the most expensive things to honor a loved one.  Contact at least two funeral homes to learn what they offer and their prices. Give yourself some time to think through the options and to research any required purchases.

Consider planning your own funeral and remove this burden from your loved ones. You can take the time you need to compare prices and make decisions.

For more detailed information on your rights under the FTC Funeral Rule, click here.  Another great resource is the Funeral Consumer Alliance which has a wealth of information for consumers and links to its state chapters.

This blog is published to provide you with general information only, and is not intended to provide specific or comprehensive advice.  Money Care, LLC encourages individuals to seek advice from competent professionals when appropriate. 

Three types of Fraud 2

The following article is from the American Association of Daily Money Managers (AADMM)

Fraud takes an enormous financial, as well as emotional, toll on victims. It can destroy businesses and ruin financial lives.

According to the Insurance Information Institute,following the introduction of microchip equipped credit cards in 2015 in the United States, which make the cards difficult to counterfeit, criminals focused on new account fraud. New account fraud occurs when a thief opens a credit card or other financial account using a victim’s name and other stolen personal information. According to the Javelin study, account takeovers tripled in 2017 from 2016, and losses totaled $5.1 billion.

To assist with recognizing and avoiding fraud, the American Association of Daily Money Managers (AADMM) has developed a list of common scams that are becoming more prevalent each year. Three of these scams were discussed in my January post, How to Protect Yourself and Your Loved Ones from Three Common Types of Scams. Click here to read this post.  Following is information on three additional types of scams.

STOLEN MAIL

That box in front of your home, your mailbox – is it safe enough to protect you from identity theft or other possible financial violations? Thieves are looking for items in that box that can provide them with information to steal your identity or monies that belong to you. This information can be found on most types of mail we all receive each day – bank statements, utility bills, credit card offers, checks or tax documents. Checks can be cashed or washed and rewritten for larger amounts.

The information found inside your mailbox is enough for a criminal to open a new credit card in your name or gain access to an existing one. Filling in any missing information is not difficult for these individuals who make a living at identity theft. Click here to learn more ways you can protect yourself.

INTERNET FRAUD

There are several popular methods by which scam artists take advantage of internet users. Here are some common examples of internet fraud:

  • Malware: software designed to disable computers and computer systems once downloaded. Often, they are disguised with familiar names.
  • Internet auctions: advertised products are misrepresented, or merchandise is never delivered.
  • Data breaches: sensitive personal or financial information is leaked from a secure location.
  • Ransomware: A form of malware that targets network weaknesses to access the critical data and/or systems and hold it hostage. Ransomware is frequently delivered through phishing emails. In order to gain access to your files/systems, the cyber-criminal demands a “ransom” payment or order for you to regain access to your data.

There is good news! We can take steps to protect ourselves by paying close attention to how we install and use software applications and online services. For more information Click here .

 EMAIL/PHISHING SCAMS

Phishing is defined as an attempt to obtain financial or other confidential information from Internet users, typically by sending an email that looks as if it is from a legitimate organization, often a financial institution, but the email contains a link to a fake website that replicates the real one. Once the user has entered their information on the fake website, the scammer has the user’s information and can use it as they desire. Click here to see more strategies to keep your information safe.

Here are some additional tips and resources to prevent fraud and identity theft. Click here to download a full copy of this article.

Daily Money Managers (DMMs) can help protect their clients by acting as a first line of defense against fraud. Using their experience in financial matters to monitor and recognize suspicious activity, they help prevent their clients from falling victim to various scams. In the event that fraud is detected, DMMs can also work with clients toward resolving the issue. To find a DMM, please visit AADMM.com.

 

The American Association of Daily Money Managers (AADMM) is a national membership organization representing individuals and businesses in the growing profession of daily money management. These professionals provide financial services to seniors and older adults, people with disabilities, busy professionals, high net worth individuals, small businesses and others. AADMM’s mission is to support daily money management services in an ethical manner, to provide information and education to members and the public, and to develop a network of dedicated professionals. Click here to learn more about AADMM.

 

This blog is published to provide you with general information only, and is not intended to provide specific or comprehensive advice.  Money Care, LLC encourages individuals to seek advice from competent professionals when appropriate.

Two Ways to Express your Love

Valentine’s Day is a time when we express our love with flowers, chocolate, dinner, and cards. We continue to express our love every day through many ordinary tasks: making and sharing meals, offering to run an errand, shoveling the front walk, listening when someone needs to talk. The list is endless. When it comes to money, here are two ways you can express your love. 

Prepare your loved one for when you can no longer manage your finances.

In many families, one person manages the day-to-day financial tasks: paying the bills, pricing insurance, storing online account logins and passwords, understanding all sources of income, knowing where the life insurance policy is stored, etc.

  • Perhaps your spouse or partner handles all these details.
  • Perhaps you have adult children or other family members who will need to take over these tasks if you are no longer able.
  • Perhaps you are in your twenties just starting your career. What happens if you become ill or have an accident and can’t manage on your own?

When our spouses, partners or other key family members don’t have access to vital information when they need it, they face an extremely challenging task to recreate it. The task is more daunting when much of this information is stored in your password protected computer or in the cloud. Eventually they will figure out all or most of the pieces of your financial picture, but it could take months. Why send your loved ones on a frustrating treasure hunt? This hunt is especially painful if your loved one is grieving your death.

If you can, show the key person or people in your life the details of your finances. If they resist or are likely to forget the details, write it down and store it in a safe place. It may take you several weeks to record all the information, but your loved ones will someday thank you.

If you don’t know where to start or are concerned you will miss something important, you can purchase a workbook which serves as a guide and provides space to record information. One guide I like is MemoryBanc: Your Workbook for Organizing Life by Kay H. Bransford. MemoryBanc is available in both paper and electronic editions.

Teach Your Child How to Be Financially Independent

In my practice as a daily money manager, I have seen many young adults struggle financially. Many have never learned solid money skills and don’t know how to live within their means.  Without these core proficiencies, they may have a hard time with all types of financial matters. Consider:

  • When your children don’t understand how loans work, can they find the best financing when buying a car?
  • If they hope to purchase a house someday, will they be able to postpone unnecessary expenses and purchases to save enough for a down payment?
  • If your child faces a time of hardship such as job loss or an illness, will he have enough money saved to carry him through that hard time?
  • Does your child understand what impacts her credit score, and how that score influences the interest rates she receives on credit cards and other loans?

When we see our adult children struggling, parents want to help. It is our natural instinct. Handing over money, however, is not always the best solution. Financially enabling our children can lead to adult children becoming dependent on their parents and being less motivated to become independent. Not all parents can afford to give money without putting their own financial security at risk.

Whether your child is six or sixty, it is never too late to teach money skills. It may be emotionally difficult, and there may be hurt feelings. Overall, however, teaching another person life-long financial skills is a wonderful gift.

There are many resources avaible for you and your children: books, online resources and articles, banks and credit unions, financial coaches, financial therapists, even the Federal Trade Commission.

For ideas and resources to teach financial skills to minor children, see my blog: Teach Your Kids About Money

The US News and World Report article, “How to Help Adult Children Become Financially Independent”, offers strategies to help grown children.

When you think of ways to show your love this Valentines’ season, I encourage you to think beyond traditional gifts. Taking steps to prepare your loved ones for both their own and your financial future is a priceless gift.

 

This blog is published to provide you with general information only, and is not intended to provide specific or comprehensive advice.  Money Care, LLC encourages individuals to seek advice from competent professionals when appropriate.

 

How to Protect Yourself and Your Loved Ones from Three Common Types of Scams

The following article is from the American Association of Daily Money Managers (AADMM).

Fraud takes an enormous financial, as well as emotional, toll on victims. It can destroy businesses and ruin financial lives. Many individuals, businesses, and organizations are affected by scams and other fraudulent activity on a daily basis. A report in the American Journal of Public Health estimates that 1 in every 18 older adults experience some form of fraud or scam each year. Often, they are too embarrassed to report it or don’t know where to go to do so. With the complexity of ongoing identity schemes, the number of victims impacted are on the rise. According to the Insurance Information Institute , the amount stolen was $16.8 billion last year alone, an increase of 12 percent from 2016.

To assist with recognizing and avoiding fraud, the American Association of Daily Money Managers (AADMM) has developed a list of common scams that are becoming more prevalent each year. Here is information on three of these scams.

FUNERAL/CEMETERY SCAMS

Some funeral homes may try to take advantage of a grieving family by trying to sell them products they do not need or by adding fees for additional services that they don’t really want. Examples may be attempts to sell them an expensive fancy casket, convincing them to get embalming prior to cremation (almost never required) or selling a rubber gasket to preserve a body (they do not work).

The “Funeral Rule,” passed in 1984 and which is overseen by the Federal Trade Commission, sets forth certain guidelines that funeral homes must abide by. These include rules that the funeral home must itemize their prices, offer products individually (although they may offer package deals), and allow a family to bring in caskets from third party vendors (such as Walmart or Costco). Even with these rules, some funeral homes are unscrupulous and violate them. Read more.

TELEMARKETING/PHONE SCAMS

Many older adults enjoy talking on the phone. It’s a great opportunity to communicate with family members, friends and acquaintances. However, the telephone is also widely used by scammers to prey on unsuspecting individuals, especially seniors, who are often the victim of these fake telemarketing calls.

Scammers will say anything to cheat people out of their money. Some may appear to be very friendly — using your first name, making small talk, or asking about your family. If you receive a call from someone saying that you’ve won money in a sweepstakes or contest you haven’t entered, but you just need to send money to claim your prize, be aware this is probably a scam. Contests and prize scams are on the rise. These fraudsters are difficult to catch because there is no paper trail and the calls cannot be traced. Read More.

INVESTMENT/PONZI SCHEMES

Seniors and other vulnerable populations are often targeted by investment fraudsters. Common scams include:

  • Ponzi schemes in which early investors are paid with the assets of later investors
  • Bogus promissory notes
  • Offshore market instruments
  • Oil and gas investments
  • “Risk free” investments

If you encounter any of these situations, first and foremost, talk with trusted advisors or family members before making any investment decisions. Take time making investment decisions and verify that sellers are licensed and registered to sell products by visiting investor.gov or your state securities regulator. If you do not know the state securities regulator, visit nasaa.org or call 202-737-0900. Read more. 

Here are some additional tips and resources to prevent fraud and identity theft. Click here to download a full copy of this article.

Daily Money Managers (DMMs) can help protect their clients by acting as a first line of defense against fraud. Using their experience in financial matters to monitor and recognize suspicious activity, they help prevent their clients from falling victim to various scams. In the event that fraud is detected, DMMs can also work with clients toward resolving the issue. To find a DMM, please visit AADMM.com.

 

The American Association of Daily Money Managers (AADMM) is a national membership organization representing individuals and businesses in the growing profession of daily money management. These professionals provide financial services to seniors and older adults, people with disabilities, busy professionals, high net worth individuals, small businesses and others. AADMM’s mission is to support daily money management services in an ethical manner, to provide information and education to members and the public, and to develop a network of dedicated professionals. Click here to learn more about AADMM.

This blog is published to provide you with general information only, and is not intended to provide specific or comprehensive advice.  Money Care, LLC encourages individuals to seek advice from competent professionals when appropriate.