America Saves Week – *Special Report*

Did you know that this week — February 21-25, 2022 — is America Saves Week? Do you even know what it is? America Saves Week or ASW is a call for Americans to commit to saving. Organizations sign up as partners to promote and facilitate programs that are occurring throughout the week.

This year’s theme is Building Financial Resilience. What an important topic as the price of goods has increased over the past months. Money you had last year, will not go as far today.

For ASW each day will have a theme:

  • Save Automatically – Monday
  • Save for the Unexpected – Tuesday
  • Save for Retirement – Wednesday
  • Save by Reducing Debt – Thursday
  • Save as a Family – Friday

Visit the website to find out what is being offered on each day.

Now that we have introduced the topic of savings, let’s talk details. You need a starting point and direction when it comes to savings. There are lots of financial tools out there, but I will share the Your Money Your Goals (YMYG) toolkit by the Consumer Financial Protection Bureau. You need to start with a financial assessment and goals. This is like driving a car. You need to know where you are at and where you are trying to go. Along the way you need to track your income, pay your bills, and deal with debt. The toolkit has worksheets on all of these topics.

So now you know about America Saves Week. The next step is to get involved in activities promoted. Then start your own financial journal using the tools in the YMYG toolkit. Along the way if you have questions, find your local Extension Educator that focuses on financial literacy. If you are not sure where to start, just reach out to me.

Using Health Insurance in the New Year

Now that we have settled into the New Year, I want you to think about health insurance. If you purchased your insurance from the MarketPlace, your plan year likely began on January 1, 2022. If you have private insurance through the workplace, check with your plan as it may start January 1.

This is important because it resets the clock for your annual deductible and out-of-pocket maximum. The deductible is the amount you owe for services your health insurance plan covers before your health insurance plan begins to pay. The out-of-pocket maximum is the amount you pay during a policy period before your health insurance plan pays 100% for covered services. Deductibles vary by plan and can be a few hundred dollars to thousands of dollars. The out-of-pocket maximum will also vary by plan.

Now that you have health insurance and are paying the premium, you should get the maximum benefit of your plan. Another way to look at it is that you paid for it, you should use it. Just by having health insurance you qualify for free preventive services. A list of preventive health services is available on the Healthcare.gov website.

Once you start using your health insurance you will have co-payments (a fixed amount often found on your insurance card). This is like the $20 (may vary depending on your plan) charge when you visit the health care provider. You may also be responsible for coinsurance (your share of costs calculated as a percentage) depending on the type of service rendered. For example, your plan may indicate you pay 20% and the insurance company pays 80%. Remember that your costs stop at the out-of-pocket maximum.

So let’s go back to the main point, now that you have insurance start using it.

Take full advantage of the health insurance plan and in doing so, it may save you money. Health insurance costs are often something we overlook in our financial planning. The Health Insurance Literacy Team developed a worksheet to help you understand and estimate health care expenses. On our website, you can find information on how to choose a doctor, flexible spending accounts, our workbook, and much more.

Small Savings Go a Long Way – Fighting Against Inflation

When I first thought about this blog, I was thinking about strategies to save. When I started typing, my mind went from strategies to save, to strategies to adjust for inflation.

Inflation is the price change of goods over a period of time. In other words, when you bought a gallon of milk a year ago, does it cost the same today? Compared to last year, the price of goods has increased 4.4%, a 30 year high. The typical inflation rate runs about 2%. This means that your salary needs to increase at the same rate to keep a balanced budget. Unfortunately, that usually does not happen which means we need to cut expenses or seek additional income.

Since my title is Small Savings, let’s focus on sharing some small ideas to cut expenses. Reflecting on your habits is a good place to start. Many of us buy coffee, so let’s start there. If your coffee cost between $2-$5 and you buy one every day, that will cost you between $730-$1,825 a year. How about eating out? If we spend $42 eating out every week, that totals $2,190. As you can see, small changes can save a lot of money over the course of a year. Reflect on your habits and make changes that lead to small savings.

High inflation is likely to continue for the coming months. This means we need to adjust our financial behaviors to insure the money we make (income) remains in line with the money that goes out (expenses). If you have a budget, great, but be sure to monitor it for changes. If you don’t have a budget, the Consumer Financial Projection Bureau has some great resources.

For additional ideas to save money visit Nerdwallet, The Semple Dollar or Ramsey Solutions for ideas.

Financial Influencers in Your Home

When we hear the word “influencer,” many of us think of people with large social media followings who use their prestige to sell products and services.

What do you think has the greatest influence on our money habits?

  1. TV and movies
  2. Friends
  3. Parents
  4. Social media

If you answered 3. parents, you are correct! While media and friends do influence our money choices, our parents have the most profound impact on the attitudes and values we hold concerning money. This influence begins early in childhood. 

What does this mean? First of all, “parents” in this case does not only refer to biological mom and dad.  It means the people who are doing the parenting – those who have taken responsibility for raising the child. These are the biological parents, step parents, foster, or adoptive parents, grandparents, or other family members. 

Secondly, it means that there are many ways that children learn from their parents about money. The two primary ways are through our explicit actions and through our implicit example. The characterization of learning as implicit or explicit simply refers to the parent’s level of intentionality.

Implicit, sometimes called vicarious learning, occurs when a child’s attitudes and behaviors about money develop through observation. Some examples of how this might happen include when a child sees a parent’s charitable giving, watches a parent compare prices while grocery shopping, notices a parent’s stress while paying bills, or hears money related arguments between parents. More in general, a child may learn through these implicit scenarios by observing parents’ money management practices and absorbing the level financial of well-being expressed by the parent.

On the other hand, explicit learning occurs through direct experience with money. Perhaps this happens when a parent provides an allowance and guides the child in spending. An older child with a new job might learn budgeting by sitting down with a parent to discuss spending and saving priorities. Just like implicit learning, it could also happen during parent child grocery trips, if the parent actively demonstrates the process and skills needed to compare prices and provides opportunity for the child to try. Explicit learning also occurs when parents engage their children in discussion about money values or provide direct instruction about financial products. 

Lastly, for parents, this means that your actions are being noticed, and your lessons are being remembered. It is important to be purposeful in teaching children money skills so they can more successfully manage their money when they enter into adulthood. Take them shopping with you, show them how to make good decisions. Tell them about your successes and your mistakes. If you are unsure about your own money skills, University of Maryland offers personal finance workshops for both youth and adults. For additional workshop information and tips, contact your local Extension office, check out Extension’s Financial Wellness pages, and follow the financial Facebook and Instagram accounts. 

Medicare Enrollment – What do I need to know?

If you or someone close to you is nearing age 65, then you are probably trying to figure out Medicare.  Medicare is the national health insurance program in the United States administered by the Centers for Medicare and Medicaid Services. It is health insurance for Americans 65 years and older and younger people with some disability status as determined by the Social Security Administration.

Your initial enrollment period (unless you qualify based on a disability) for Medicare Part A occurs 3 months before you turn 65 and three months following. Each year following between October 15 and December 7 you can change plans for the following year. Signing up for Part B occurs from January-March of each year. There are also penalties if you don’t buy Medicare Part A when you are first eligible. For more information about enrollment, visit this page on the Medicare website.

Medicare Part A premiums are waived if you are 65 or older and a United States Citizen or have been a permanent legal resident for five continuous years, and you or your spouse has paid Medicare taxes for at least 10 years. If you paid Medicare taxes for less than 10 years or 40 quarters there are monthly premiums you need to pay. Medicare Part B costs $148.50 (2021) or higher depending on income. For more information on Medicare costs visit Medicare’s website. There are other costs such as deductibles and co-insurance as well. 

So if you are confused when I use terms like Medicare Part A or B, let me provide you with a brief explanation. 

  • Part A is known as hospital coverage. 
  • Part B is your medical coverage such as visiting your doctor. 
  • Part C is private insurance in place of Part A and B. 
  • Part D is prescription drug coverage. 

The plans are required to offer the same coverage as Medicare Part A & B, but often provide additional coverage. Premiums will vary depending on the coverage provided. Another decision you need to make is whether you want additional coverage if you have Medicare Part A and B. This is often referred to as Medigap coverage. For more information on the various parts visit the Medicare website.

If you are still confused, don’t worry. There are a lot of resources out there for help. Each state also runs a SHIP (State Health Insurance Assistance Program) program. To find a SHIP representative in your state, visit the State Health Insurance Assistance Programs National Network. You can also visit the Medicare website for information.  

University of Maryland Extension in partnership with University of Delaware Cooperative Extension will offer a workshop on October 25, 2021 and November 8, 2021. To register for either workshop, click on the date.

Your Credit Report – What is it used for?

We hear a lot about credit reports, but what are they used for?  In short, a credit report is a record of how you have used credit during a certain period of time. Credit is the money you have borrowed or have the potential to borrow from another, most often a bank or lender. The credit report shows who you have borrowed from, the amount borrowed, the type of credit, and your payments toward that credit over a period of time. This information can provide insight into one’s ability to pay debt over time. It can also be a reflection of someone’s character. 

Back to the question at hand, what is it used for? Anytime you borrow money from a bank or lending institution to do things like buy a car or a house, they want to know your likelihood of paying it back. To make that judgement, they will look at your credit report(s). Banks will also look at your credit report when you open an account. Similarly, credit card and mobile phone companies will do the same.

Some employers and landlords will check your credit reports as well. In some cases, you will need to sign a release for the individual or institution to access your credit report. In addition, some insurance companies look at this information. As stated earlier, it is about gauging an individual’s character and history of paying money back. 

There are also a few other entities that may check your credit report. Utility companies may use this information to determine if a deposit is required. Student loans that are held by private companies (not federal student loans) and student loans taken out by parents (PLUS loans) also look at your credit report. Collection agencies will use them when determining your ability to pay balances and government agencies with a legitimate reason can also access your credit information. And finally, anyone with a court order. 

Credit reports provide a great deal of information. It includes four sections — personal information, account information, judgements, and inquiries. Personal information includes names used, addresses, social security number, and birth date. You may find your name listed several different ways to include maiden names or abbreviated names. It may also include multiple addresses you have had, usually tied to an account you opened at some point. Judgements typically only include bankruptcies, as most credit bureaus have moved away from civil judgements. Account information was discussed earlier, but inquiries are also included on a credit report. Inquiries occur when someone requests a copy of your credit report. There are soft inquiries and hard inquiries. We can explain that in another blog, but in the meantime, here is a recent article from Forbes on the subject.   

In closing, let me share a reliable resource for more information. The Consumer Financial Protection Bureau has a wealth of information about Credit Reports and Scores. In addition, if you are a victim of Identity Theft, you can visit IdentityTheft.gov by the Federal Trade Commission. 

Do I Need a Different Insurance Plan?

Health insurance can be confusing. We are often asked in a short period of time to commit to a plan for an entire year. We are confused with terms such as premium, deductible, and co-pay and plan types such as a PPO (Preferred Provider Organization) and HMO (Health Maintenance Organization). In most cases you only have once a year, during open enrollment, to change plans. It helps to start thinking about your current plan and future needs early to be prepared to make those changes during the open enrollment window. 

I will share a few reasons why you may consider changing plans. 

Health Care Providers/Doctors – Depending on the type of plan you have, health insurance companies enter into agreements with health care providers and doctors, which involves pre-determined prices for services. Health care providers/doctors in this agreement are referred to as “in-network.” If you see a provider that is not in-network, or “out-of-network,” you often pay higher prices. In some cases, you may have a provider that you like to use which is not in your network. If that is the case, you may decide to change plans during the next open enrollment.

Premiums/Deductibles – Some people choose a plan based on how much it costs them on a monthly basis. Those monthly payments are referred to as premiums. Deductibles are how much you need to pay before the insurance plan begins to pay. Deductibles vary in amount depending on the plan type. Typically, lower premium plans have a higher deductible, and higher premium plans have lower deductibles. Individuals that don’t use their plans often choose a low premium/high deductible plan. You may change a plan based on how you used the plan in the previous year or how you anticipate using a plan in the coming year.

Plan Type – There are four different plan types which offer various levels of flexibility in the healthcare providers you use. Information about the types of plans can be found here.  Some require that you stay within the plans network while others provide more flexibility. Some plans require a referral to see a specialist and others may not. The level of flexibility you want in your health insurance will determine which type of plan you select.

Change In Use – We typically select plans based on the information we have at the time. Over the course of a year, the reasons you chose that plan may change. Changes in your health or in needs for life like planning for a family, may affect when and how often you use your insurance plan. You may anticipate using the plan more often than the previous year and decide you want a plan with a lower deductible as a result. You may want to see a doctor that is not in-network and decide to change plans to ensure you visit your preferred doctors.  

It is not uncommon for someone to change plans. Just make sure you select a plan that best meets your needs. The Health Insurance Literacy Initiative at University of Maryland Extension developed resources to guide you through the process.  

National Insurance Awareness

Monday, June 28, 2021 is National Insurance Awareness Day. Insurance comes in many forms for our health, our cars, our homes and property, even our lives.

Insurance tends to be one of those things that we don’t think about until we need it, but knowing what your insurance covers and being aware of when and how you can use it is important.

Health insurance can be some of the most confusing for individuals and families to understand. In 2012, University of Maryland Extension and University of Delaware Cooperative Extension collaborated to launch the Health Insurance Literacy Initiative (HILI). HILI has produced evidence-based, empowerment programs intended to reduce confusion, increase capability, and increase the confidence of consumers to make a smart choice and use decisions about health insurance. HILI teaches folks how their insurance can work for them, helps people make good choices about their health insurance needs, and use their benefits wisely.

Take time this month to review your current insurance benefits, research different types of plans, and decide if you are using the right plan for your healthy lifestyle. Learn more and find more helpful tools at https://extension.umd.edu/programs/family-consumer-sciences/health-insurance-literacy.