Personal Finance

Medicare open enrollment ends Dec. 7. These last-minute tips can help

Published

4 months ago

December 3, 2024

Business Finance News

The Good Brigade | DigitalVision | Getty Images

Older Americans have just a few days left to evaluate their Medicare coverage for next year.

Medicare’s annual open enrollment period for health plans and prescription drug coverage runs until Dec. 7. Experts say it’s worthwhile for Medicare’s 67.8 million beneficiaries to make sure they have the best coverage for their needs.

“Now is as good a time as any,” said Juliette Cubanski, deputy director of the program on Medicare policy at KFF, a provider of health policy research.

While many beneficiaries are comfortable with their plans and may be reluctant to change, it’s still a good idea to look at all the options that are available, she said.

“It’s possible that you could save money,” Cubanski said. For example, you may find a plan that offers lower cost sharing for expensive medications or offers better coverage or extra benefits, she said.

Beneficiaries should start with Medicare.gov as they start to shop for plans, according to Philip Moeller, author of “Get What’s Yours for Medicare: Maximize Your Coverage, Minimize Your Costs.”

Medicare.gov’s online plan finder can help provide an overview of the plans available in a beneficiary’s geographic area and the monthly premiums and specific costs associated with services provided through those plans, Cubanski said.

Trained counselors are also available to provide free Medicare advice in every state through the State Health Insurance Assistance Program, also known as SHIP.

To effectively compare plans, there are some helpful tips that are good to keep in mind, experts say.

Make sure you have access to preferred providers

Beneficiaries may choose to go with original Medicare — Parts A and B with the option to add Part D prescription drug coverage — or private Medicare Advantage plans.

With original Medicare, you can see any doctor in the country who accepts Medicare, so access is not an issue, Moeller said.

But with Medicare Advantage plans, there are provider networks that limit the choice of doctors and hospitals from which a beneficiary may choose, he said.

It’s best to check — not assume — that the doctors you want to see will be covered by your plan, Moeller said.

Call Medicare Advantage plans or medical providers directly to find out if they are still covered, as brochures can sometimes be outdated, Cubanski said.

Check if your prescription drugs are covered

U.S. President Joe Biden delivers remarks, during an event on Medicare drug price negotiations, in Prince George’s County, Maryland, U.S., August 15, 2024.

Ken Cedeno | Reuters

Starting in 2025, there’s a $2,000 annual out-of-pocket cap on prescription drug costs through Medicare Part D.

That change is due to the Inflation Reduction Act, a federal law enacted in 2022.

Consequently, insurance will pay more for about 8% of people who take expensive prescription medications, but they may look for ways to get their money back for the remaining 92%, Moeller said.

That may come in the form of higher co-pays or deductibles or less generous plan benefits.

“The details really matter this year for Part D plans,” Moeller said. “People should do their homework and make sure that their Part D plan still does what they wanted it to do.”

Medicare Advantage plans, on average, will see deductibles for prescription drug coverage increase next year. Typically, those have been around $50 per month on average, though next year that will go up to just over $200, according to Cubanski.

“People in Medicare Advantage on average, will be facing a higher deductible for drug coverage in 2025,” Cubanski said.

Pay attention to your out-of-pocket costs

Open enrollment provides an opportunity for beneficiaries to manage how much their overall out-of-pocket costs — including premiums, deductibles and coinsurance — may increase in 2025.

“Make sure that you have manageable out-of-pocket expenses for the year,” Moeller said.

With original Medicare, beneficiaries typically pay no premiums for Medicare Part A. However, in 2025, the standard monthly Part B premium will go up to $185 per month — a $10.30 increase from $174.70 this year. Annual deductibles for Medicare Part B will go up to $257 in 2025 — a $17 increase from the $240 annual deductible for 2024.

Notably, Medicare Part B typically only covers 80% of expenses for doctors and outpatient costs, which can take a financial toll on beneficiaries, Moeller said. To help defray those costs Medicare doesn’t fully pay for, most people get a Medigap plan, he said.

Medigap, also known as Medicare supplement insurance, provides private insurance to help pay for out-of-pocket costs not covered under original Medicare plans. Average monthly Medigap premiums are $217, according to a recent KFF analysis, though those rates vary by state.

With Medicare Advantage, costs may vary from plan to plan, Moeller said, and you may pay more to see a doctor who is out of network.

Medicare Advantage enrollees face an average out-of-pocket limit of $4,882 for in-network services, according to KFF, or $8,707 for both in-network and out-of-network services.

Bottom line: “Details matter,” Moeller said.

Medicare original vs. Advantage: Choice is personal

Humana shares tumble on lower Medicare Advantage quality rating

Medicare Advantage has received its share of criticism, particularly for restricted access to care and unexpected costs some beneficiaries have encountered.

But experts say the choice between private Medicare Advantage plans and government Medicare original plans is largely personal.

“For some people, Medicare Advantage might be the right call,” Moeller said.

Medicare Advantage has certain upsides. It’s generally cheaper for consumers than traditional Medicare with a Medigap plan, Moeller said. It generally provides out of pocket protection against catastrophic health bills. It may also provide supplemental coverage for hearing, vision and dental, while traditional Medicare does not, he said.

However, Medicare Advantage enrollees may need to get prior authorization before receiving certain types of care, Cubanski said. In contrast, traditional Medicare generally does not use prior authorization.

You may still be able to make changes after Dec. 7

A senior citizen holds a sign during a rally to protect federal health programs at the 8th Annual Healthy Living Festival on July 15, 2011 in Oakland, California.

Justin Sullivan | Getty Images

In some cases, beneficiaries may still be able to make changes after the official Dec. 7 end of Medicare open enrollment.

“Dec. 7 is important, but it’s not the end-all date, in case you need to make some changes,” Moeller said.

Medicare Advantage has its own special open enrollment period that will start on Jan. 1 and last through the first quarter. During that time, Medicare Advantage beneficiaries may switch to a different Medicare Advantage plan, opt for original Medicare or enroll in a standalone Part D drug plan.

Alternatively, if you have had a life-changing event, such as a move, you may qualify to take advantage of Medicare’s special enrollment periods.

Moreover, people who live in areas that were affected by hurricanes or wildfires in 2024 may have more time to sign up for their 2025 coverage, according to KFF.

Personal Finance

Trump administration loses appeal of DOGE Social Security restraining order

Published

9 hours ago

April 2, 2025

Business Finance News

A person holds a sign during a protest against cuts made by U.S. President Donald Trump’s administration to the Social Security Administration, in White Plains, New York, U.S., March 22, 2025.

Nathan Layne | Reuters

The Trump administration’s appeal of a temporary restraining order blocking the so-called Department of Government Efficiency from accessing sensitive personal Social Security Administration data has been dismissed.

The U.S. Court of Appeals for the 4th Circuit on Tuesday dismissed the government’s appeal for lack of jurisdiction. The case will proceed in the district court. A motion for a preliminary injunction will be filed later this week, according to national legal organization Democracy Forward.

The temporary restraining order was issued on March 20 by federal Judge Ellen Lipton Hollander and blocks DOGE and related agents and employees from accessing agency systems that contain personally identifiable information.

That includes information such as Social Security numbers, medical provider information and treatment records, employer and employee payment records, employee earnings, addresses, bank records, and tax information.

DOGE team members were also ordered to delete all nonanonymized personally identifiable information in their possession.

The plaintiffs include unions and retiree advocacy groups, namely the American Federation of State, County and Municipal Employees, the Alliance for Retired Americans and the American Federation of Teachers.

“We are pleased the 4th Circuit agreed to let this important case continue in district court,” Richard Fiesta, executive director of the Alliance for Retired Americans, said in a written statement. “Every American retiree must be able to trust that the Social Security Administration will protect their most sensitive and personal data from unwarranted disclosure.”

The Trump administration’s appeal ignored standard legal procedure, according to Democracy Forward. The administration’s efforts to halt the enforcement of the temporary restraining order have also been denied.

“The president will continue to seek all legal remedies available to ensure the will of the American people is executed,” Liz Huston, a White House spokesperson, said via email.

Fiserv CEO on the nomination to Social Security Commisioner role

The Social Security Administration did not respond to a request from CNBC for comment.

Immediately after the March 20 temporary restraining order was put in place, Social Security Administration Acting Commissioner Lee Dudek said in press interviews that he may have to shut down the agency since it “applies to almost all SSA employees.”

Dudek was admonished by Hollander, who called that assertion “inaccurate” and said the court order “expressly applies only to SSA employees working on the DOGE agenda.”

Dudek then said that the “clarifying guidance” issued by the court meant he would not shut down the agency. “SSA employees and their work will continue under the [temporary restraining order],” Dudek said in a March 21 statement.

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Personal Finance

Most credit card users carry debt, pay over 20% interest: Fed report

Published

10 hours ago

April 2, 2025

Business Finance News

Julpo | E+ | Getty Images

Many Americans are paying a hefty price for their credit card debt.

As a primary source of unsecured borrowing, 60% of credit cardholders carry debt from month to month, according to a new report by the Federal Reserve Bank of New York.

At the same time, credit card interest rates are “very high,” averaging 23% annually in 2023, the New York Fed found, also making credit cards one of the most expensive ways to borrow money.

“With the vast majority of the American public using credit cards for their purchases, the interest rate that is attached to these products is significant,” said Erica Sandberg, consumer finance expert at CardRates.com. “The more a debt costs, the more stress this puts on an already tight budget.”

Most credit cards have a variable rate, which means there’s a direct connection to the Federal Reserve’s benchmark. And yet, credit card lenders set annual percentage rates well above the central bank’s key borrowing rate, currently targeted in a range between 4.25% to 4.5%, where it has been since December.

Following the Federal Reserve’s rate hike in 2022 and 2023, the average credit card rate rose from 16.34% to more than 20% today — a significant increase fueled by the Fed’s actions to combat inflation.

“Card issuers have determined what the market will bear and are comfortable within this range of interest rates,” said Matt Schulz, chief credit analyst at LendingTree.

APRs will come down as the central bank reduces rates, but they will still only ease off extremely high levels. With just a few potential quarter-point cuts on deck, APRs aren’t likely to fall much, according to Schulz.

Despite the steep cost, consumers often turn to credit cards, in part because they are more accessible than other types of loans, Schulz said.

In fact, credit cards are the No. 1 source of unsecured borrowing and Americans’ credit card tab continues to creep higher. In the last year, credit card debt rose to a record $1.21 trillion.

Because credit card lending is unsecured, it is also banks’ riskiest type of lending.

“Lenders adjust interest rates for two primary reasons: cost and risk,” CardRates’ Sandberg said.

The Federal Reserve Bank of New York’s research shows that credit card charge-offs averaged 3.96% of total balances between 2010 and 2023. That compares to only 0.46% and 0.43% for business loans and residential mortgages, respectively.

As a result, roughly 53% of banks’ annual default losses were due to credit card lending, according to the NY Fed research.

“When you offer a product to everyone you are assuming an awful lot of risk,” Schulz said.

Further, “when times get tough they get tough for most everybody,” he added. “That makes it much more challenging for card issuers.”

The best way to pay off debt

The best move for those struggling to pay down revolving credit card debt is to consolidate with a 0% balance transfer card, experts suggest.

“There is enormous competition in the credit card market,” Sandberg said. Because lenders are constantly trying to capture new cardholders, those 0% balance transfer credit card offers are still widely available.

Cards offering 12, 15 or even 24 months with no interest on transferred balances “are basically the best tool in your toolbelt when it comes to knocking down credit card debt,” Schulz said. “Not accruing interest for two years on a balance is pretty hard to argue with.”

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Personal Finance

The 60/40 portfolio may no longer represent ‘true diversification’: Fink

Published

12 hours ago

April 2, 2025

Business Finance News

Andrew Ross Sorkin speaks with BlackRock CEO Larry Fink during the New York Times DealBook Summit in the Appel Room at the Jazz at Lincoln Center in New York City on Nov. 30, 2022.

Michael M. Santiago | Getty Images

It may be time to rethink the traditional 60/40 investment portfolio, according to BlackRock CEO Larry Fink.

In a new letter to investors, Fink writes the traditional allocation comprised of 60% stocks and 40% bonds that dates back to the 1950s “may no longer fully represent true diversification.”

“The future standard portfolio may look more like 50/30/20 — stocks, bonds and private assets like real estate, infrastructure and private credit.” Fink writes.

Most professional investors love to talk their book, and Fink is no exception. BlackRock has pursued several recent acquisitions — Global Infrastructure Partners, Preqin and HPS Investment Partners — with the goal of helping to increase investors’ access to private markets.

The effort to make it easier to incorporate both public and private investments in a portfolio is analogous to index versus active investments in 2009, Fink said.

Those investment strategies that were then considered separately can now be blended easily at a low cost.

Fink hopes the same will eventually be said for public and private markets.

Yet shopping for private investments now can feel “a bit like buying a house in an unfamiliar neighborhood before Zillow existed, where finding accurate prices was difficult or impossible,” Fink writes.

60/40 portfolio still a ‘great starting point’

After both stocks and bonds saw declines in 2022, some analysts declared the 60/40 portfolio strategy dead. In 2024, however, such a balanced portfolio would have provided a return of about 14%.

“If you want to keep things very simple, the 60/40 portfolio or a target date fund is a great starting point,” said Amy Arnott, portfolio strategist at Morningstar.

If you’re willing to add more complexity, you could consider smaller positions in other asset classes like commodities, private equity or private debt, she said.

However, a 20% allocation in private assets is on the aggressive side, Arnott said.

The total value of private assets globally is about $14.3 trillion, while the public markets are worth about $247 trillion, she said.

For investors who want to keep their asset allocations in line with the market value of various asset classes, that would imply a weighting of about 6% instead of 20%, Arnott said.

Yet a 50/30/20 portfolio is a lot closer to how institutional investors have been allocating their portfolios for years, said Michael Rosen, chief investment officer at Angeles Investments.

BlackRock CEO Larry Fink: Infrastructure will be the largest growing sector in private capital

The 60/40 portfolio, which Rosen previously said reached its “expiration date,” hasn’t been used by his firm’s endowment and foundation clients for decades.

There’s a key reason why. Institutional investors need to guarantee a specific return, also while paying for expenses and beating inflation, Rosen said.

While a 50/30/20 allocation may help deliver “truly outsized returns” to the mass retail market, there’s also a “lot of baggage” that comes with that strategy, Rosen said.

There’s a lack of liquidity, which means those holdings aren’t as easily converted to cash, Rosen said.

What’s more, there’s generally a lack of transparency and significantly higher fees, he said.

Prospective investors should be prepared to commit for 10 years to private investments, Arnott said.

And they also need to be aware that measurement issues with asset classes like private equity means past performance data may not be as reliable, she said.

For the average person, the most likely path toward tapping into private equity will be part of a 401(k) plan, Arnott said. So far, not a lot of companies have added private equity to their 401(k) offerings, but that could change, she said.

“We will probably see more plan sponsors adding private equity options to their lineups going forward,” Arnott said.