Money Matters: Financial Literacy for Healthcare

MoneyCounts: A Financial Literacy Series

Financial Literacy: Healthcare Cost

Dr. Daad A. RizkFinancial Literacy ManagerMoneyCounts: A Financial Literacy Series240D Outreach BuildingUniversity Park PA [email protected] 814-863-0214

mailto:[email protected]


Agenda

• Overview of Financial Literacy

• Overview of Health Care Cost in USA

• Challenges and Barriers to Cost

• Personal Finance Issues and Tips to reduce cost

– Planning

– Tax effect

– Options for the un-insured


Financial Literacy

• To explore strange new worlds

• To seek out new life and new civilizations

• To boldly go where no one has gone before

– Topic is personal

– Topic is emotional

– Mission:

• To provide financial knowledge and skills to make informed decisions and take effective actions regarding money management


Four Elements of Financial Well Being

• In summary, financial well-being can be defined as a state of being wherein a person can fully meet current and ongoing financial obligations, can feel secure in their financial future, and is able to make choices that allow enjoyment of life.

The four elements of financial well being (cfpb)

Present Future Security Control over day-to-day Capacity to absorb financial shock Month to month finances Freedom of Choice Financial freedom to make On track to meet financial goals Choices to enjoy life

Consumer Financial Protection Bureau (Jan 2015)

KnowledgeAction/Behavior

Gross versus net paycheck

Benefits and taxes

Education is important

Understand your paycheck Verify and adjust your

exemptions and deductions on your W4 (withholding)

Learn about potential benefits and taxes

Invest in your future, plan for your career through education – search the market


Saved money grows

Banking – saving and checking accounts

Long-term financial planning

Eliminate or reduce waste

Start saving early, pay yourself first

Comparison shopping for a financial institution – reconcile your accounts

Plan for retirement, child education, renting versus owning a home

Replace waste with saving


Difference between needs and wants

Develop a quantitative awareness of your spending habits

Get the most/best value for your money

Develop a spending plan

Track spending habits

Live within your means

Understand the social and environment impact of your spending decisions


Distinguish net income from loans

Cost of borrowing – Penalty, Interest, late fee, surcharge (PILS)

Amortization schedules

Credit Score - FICO (Fair Isaac &Company) Equifax, Experian, TransUnion

Credit cards

Borrow only what you need not want

Avoid high cost loans, avoid penalties, late fees, and surcharge

Minimize interest payments

Get your free annual credit report, check your financial grade, review and correct if necessary

Shop for low interest cards,

use only in emergencies, avoid paying (PILs)


Risk management and insurance coverage

Identity theft

Fraud and scam

Shop for insurance, review and update insurance, build up an emergency fund

Watch for your social security number and card, your date of birth and your banking information

If it is too good to be true, it

most certainly is


Healthcare Cost

• 31% of Americans have collection activities on their credit reports

• 50% of those are due to medical debt– Translates into 64 million consumer

– Total Population in the USA 320 million

• 19.4% of all Americans

with credit reports have medical debt collection

Highest rate of medical bankruptcy in the world

Highest healthcare cost among 34 nations

WE spend 18% of our GDP on Healthcare cost

http://managinghealthcarecosts.blogspot.com/


Healthcare spending in USA

• https://www.youtube.com/watch?v=mdoWhOiY8T0


Collections Tradeline Type


Bankruptcy – Medical

Age Range

% of Total Bankruptcies 2013, Estimated

US Medical-Related Bankruptcies 2013,Estimated

Size of Household

People Living in Households

with medical-Related Bankruptcy 2013, Estimated

18-24 2.3% 14,618 2.41 35,229

25-34 18.7% 120,708 2.86 344,622

35-44 28.9% 186,812 3.35 624,888

45-54 26.4% 170,875 2.81 480,159

55-64 15.8% 102,080 2.18 222,534

65+ 8.0% 51,719 1.76 90,767

Medical Bankruptcy by AgeSource: NerdWallet Health Analysis


Source: NerdWallet Health Analysis of EY’s 2014 report on third-party debt collection.


Life on the Edge


Health Insurance

– Assess Health and health needs

– Review Health Insurance

– Premium, deductible, network provider

– Co-payment, co-insurance

– Out of pocket

– Plan for the “unexpected”

– Risk tolerance


Prevention Care


Stay “Healthy”

– Participate in Wellness Programs

– Sign up for special health programs

– Practice preventive care• Get free preventive care


Stay in “Network”

–Stay in network

–Assess super-preferred providers

–Ask Doctor about cheaper facilities

–Avoid the Emergency Room if possible

–Compare prices


Price range – Test or Treatment

Test or treatment Low Fair High

Brain MRI $ 504 $ 560 $ 2,520

Chest X-ray 40 44 255

Colonoscopy 800 1,110 3,160

Complete blood count 15 23 105

Hip replacement 19,500 21,148 43,875

Hysterectomy 8,000 8,546 16,480

Knee replacement 17,800 19,791 42,750

Knee arthroscopy 3,000 3,675 7,350

Laminectomy (spine surgery) 8,150 11,744 25,760

Laparoscopic gallbladder removal 5,000 6,459 12,480

Tubal ligation 2,865 3,183 5,729

Transurethral prostate removal 4,000 4,409 8,875

Ultrasound, fetal 120 169 480

Vasectomy 700 1,003 2,100


Source: Office of Inspector General, Office of Audit Service Hospital Medicare Compliance reviews released in 2013 (n=34).


Save on Meds

– Switch to generic drugs

– Keep an eye on new drugs and new generic

– Get to know your pharmacist

– Compare drugs prices (Walmart versus Costco)

– Get a prescription for over the counter drug.


Generics Save - Facts

• Total U.S. health care spending in 2011 reached $2.7 trillion in 2011, or $8,680 per person

• Health spending continues to make up nearly 18 percent of the Gross Domestic Product (GDP)

• In 2012, generics saved the U.S. health system $217 billion, up from $188 billion in 2011

• Over the 10-year period 2003 through 2012, generic drug use has generated more than $1.2 trillion in savings to the health care system


How to budget for healthcare cost

• https://www.youtube.com/watch?v=LxqCqahq98g


FSA

– Pre-tax Money

– Flexible spending accounts – FSA• Include doctor visits, prescription drugs, hospital stay, eye exam,

glasses or contact

• Limited to $2,500 (2013)

• Amounts forfeited if not spent


HSA

– Pre-tax Money

– Health savings accounts – HSA• High deductible

• Amounts not spent will roll over year to next


Educate yourself

Patient Protection and Affordable Care ActKnown as Obamacare

-Sign up for coverage through exchanges

-Affect Federal Income Tax (credit/penalty)

-7.3 million people signed up for it


Use Technology

– HealthCare.gov• https://www.healthcare.gov/

– Healthpocket.com• http://www.healthpocket.com/• https://www.youtube.com/watch?v=FH2k7_P29es

– Healthcare Blue Book • https://healthcarebluebook.com/

– GoodRX.com• http://www.goodrx.com/


Use Reliable Sources

• HealthFinder.gov– www.healthfinder.gov (Market place)

• Mayo Clinic– www.mayoclinic.com (Index of Diseases)

• Medical Library Association– www.mlanet.org (trusted med websites by librarians)

• Consumer Action Handbook (PDF or hard copy)– www.USA.gov/consumer


Bank Sick Hours

– Save enough paid sick time • At least 6-8 weeks

– Save paid vacation time• carry over year to next


Save before you Spend

– Pay Yourself First• Make Saving automatic

• Set SMART goals and work toward them

• Get the family involved

– Establish an emergency fund• Expect the unexpected – EXIT Strategy

• 3 – 6 months


Save Medical Records

• Clean Medical file – No clutter– Insurance Policy, cards– Protect against identity theft– Tax Saving Receipts


Career Planning

• Consider health benefits in career planning • Pre-tax insurance premium = savings

• Coverage and Matching

• Sick days allowed – Family sick days

• FMLA

• Donated vacation for sick time


Credit Cards

– Get copies of your credit reports

– www.annualcreditreport.com• Equifax

• Experian

• TransUnion

– Watch for Insurance fraud

– Watch for medical identity theft


Budgeting guide

• Earning 100%– Saving 10%– Housing 30%– Meals 20%– Loans 10%– Car 10%– All other 20%


Tax Forms

– http://www.irs.gov/pub/irs-pdf/f1040.pdf– http://www.irs.gov/pub/irs-pdf/f1040sa.pdf


The Affordable Care Act

– http://extension.psu.edu/health/insurance/affordable-care-act

• Overview

– On March 23, 2010, President Obama signed comprehensive health reform, the Patient Protection and Affordable Care Act, into law. The following summary of the law, and changes made to the law by subsequent legislation, focuses on provisions to expand coverage, control health care costs, and improve health care delivery system

• What's Happening in PA?

– In December 2012, Gov. Tom Corbett announced that Pennsylvania would use the federal health insurance exchange rather than implement a state-run exchange.


Thank You!

Comments and Questions

Dr. Daad A. RizkFinancial Literacy Manager MoneyCounts: A Financial Literacy Series240D Outreach BuildingUniversity Park PA [email protected] 814-863-0214