MONEY College

Good News: There’s a New Way to Get Out from Under Student Debt

Wells Fargo signage
Peter Foley—Bloomberg via Getty Images

Wells Fargo and Discover plan to offer new loan modification programs to help borrowers who are suffering temporary financial hardship.

Two of the biggest private student loan providers have welcome news for struggling grads: Soon, some distressed borrowers will be eligible for lower interest rates and lower monthly payments.

Wells Fargo announced on Wednesday that it would launch a private student loan modification program for customers who are experiencing financial distress, like a job loss.

“Through the program, Wells Fargo private student loan customers experiencing a hardship will have their financial situation reviewed on an individual case-by-case basis to determine eligibility for a short- or long-term loan modification, as appropriate,” Wells Fargo says. “If eligible, Wells Fargo will lower the customer’s interest rate to achieve a student loan payment that is determined to be affordable based on the customer’s income level.”

For eligible borrowers, Wells Fargo plans to decrease interest rates to as low as 1% and lower monthly payments to be about 10% to 15% of each borrower’s income, the Wall Street Journal reports.

Likewise, Discover plans to offer a “repayment assistance program” early next year, though the details have not been finalized, public relations manager Robert Weiss says.

Today, the average college student graduates with $28,400 in debt. Only about 20% of that debt is comprised of private loans, according to The Institute for College Access & Success. The rest is comprised of federal loans. But private student loans are a lot more expensive. The Department of Education found that private student loans have variable interest rates of up to 18%. And private loan providers aren’t required to offer the same relief as federal loans — so private loan borrowers and co-signers who face unexpected hardships are often out of luck.

“With federal loans, you have built-in insurance in case of job loss or disability or death,” says Justin Draeger, president of the National Association of Financial Aid Administrators. “These are protections provided to every borrower. Those protections don’t always exist in the private student loan market.”

That’s why these new initiatives are good news, Draeger says. “The fact that they’re willing to look at loan modification is a good thing,” Drager says. “You just have to see the whole picture before you see whether this is good news or if it’s great news.”

Deanne Loonin, director of the National Consumer Law Center’s Student Loan Borrower Assistance Project, says she is also cautiously optimistic. Other student loan providers, like Sallie Mae, have offered similar relief, and the devil is always in the details, Loonin says.

“It’s a good first step, but as with many things, I want to know more details,” Loonin says. “Which loan you have, how delinquent you are, what your income status is — those kinds of things can end up limiting who can benefit quite a bit.”

Wells Fargo’s head of education financial services, John Rasmussen, told the Washington Post that 600 to 1,000 borrowers should be able to get loan modifications by the end of this year. He said Wells Fargo will also offer help to people who are not yet late on their payments but foresee financial problems that may limit their ability to pay in the near future.

Struggling to repay private student loans? First, read your loan agreement. Private loan providers are not required by law to offer relief, but some do, Loonin says. Your loan agreement should explain if you have any recourse.

If not, call your loan provider, whether it’s Wells Fargo, Discover, or someone else. “It’s definitely worth contacting your creditor and finding out what they offer,” Loonin says. “It may not be totally obvious. Some make modifications on a case-by-case basis.”

Otherwise, consider bankruptcy. Borrowers have been told that it’s nearly impossible to discharge student loan debt in bankruptcy, but that’s not quite true. In fact, 39% of people who tried to get their student debt discharged in bankruptcy received at least partial relief, according to research by Jason Iuliano, Ph.D. candidate in the Politics Department at Princeton University.

But almost no one bothers: Only 0.1% of student loan borrowers in bankruptcy even tried to discharge their student debt. Iuliano estimates that an additional 69,000 debtors would have been eligible for student debt relief. At the very least, if you file bankruptcy, you can wipe out credit card, car loans, and other kinds of debt, which should free up money for you to pay off your student loans.

Finally, know that you’re not alone. “This is still a widespread problem,” Draeger says. “This is a lagging indicator from the recession. People are still having trouble making ends meet.”

Related stories

TIME Parenting

What Bill Gates’ Kids Do with their Allowance

How do you teach insanely wealthy kids how to manage money?

The rich are different from you and I, but they still want to give their kids an allowance. So what do the world’s richest man’s kids do with their money? Melinda Gates came to TIME’s offices to talk about her new focus on women and children and especially on contraceptives, but she spilled some secrets about how she tries to get her kids to be purposeful with their money.

First of all, she tries to be true to her values, to articulate them and live them out. Then, they do a lot of volunteering together, at “whatever tugs at their heartstrings” says Gates. And of course, they’ve traveled with her. “They have that connection I think to the developing world,” she says. “They see the difference a flock of chicks makes in a family’s life. It’s huge.”

Read the 10 Questions with Melinda Gates here

Gates has always made a point of getting into the streets and poorer neighborhoods when she travels for meetings and conferences. And sometimes she takes her kids. It’s there, she says, that she meets mothers who tell her that their biggest struggle is having so many children. Although Gates was raised Catholic, she is heading up an initiative to get family planning information, contraceptives and services to 120 million more women by the year 2020. That includes new technology, better delivery system and a lot of education, including for men.

She’s similarly rigorous about her home life. Her kids save a third of their allowance and designate a charity they’d like to give it to. (They can also list donations to charities on their Christmas wish list.) As further incentive, their parents double whatever money they’ve saved. Which means they may be the only children in the world to get a matching grant from the Gates Foundation.

MONEY Health Care

Why Obamacare Is Making Medicare Open Enrollment More Confusing

Tangle of Stethoscopes
Comstock Images—Getty Images

The time to sign up for an individual health insurance plan overlaps with the annual window for switching your Medicare plan. Here's how seniors can navigate this tangle of health care choices.

This is enrollment season for two huge public health insurance programs: Medicare and the Affordable Care Act health insurance exchanges. For older Americans, the overlapping sign-up periods can lead to confusion and enrollment errors.

Insurers offering Medicare and ACA policies have big money at stake, and consumers are subject to a blizzard of marketing messages. Annual enrollment for Medicare prescription drug (Part D) and Advantage (Part C) plans began Oct. 15 and runs until Dec. 7; shopping for healthcare policies in the marketplace exchanges created under the ACA began Nov. 15 and ends Feb. 15.

Consumer assistance groups report that some Medicare enrollees mistakenly think they must also enroll in the ACA exchanges. And for people with ACA plans who are turning 65, the transition to Medicare can be tricky. Here are some common questions about enrollment overlap, and answers aimed at helping older Americans keep things straight.

Q: What should I do about the ACA marketplaces if I’m already on Medicare?

Nothing. The policies sold on the exchanges are for Americans who don’t have coverage through an employer. And it is illegal for someone to sell you an exchange plan if the provider knows you are covered by Medicare. You can’t buy a Medicare Advantage, Medigap or Part D drug plan through the ACA marketplaces; to enroll in these plans, visit the federal government’s Medicare Plan Finder website.

Q: I bought health insurance this year on my state’s exchange, but I’m turning 65 in December. Do I need to shift to Medicare then?

It’s critical that you move to Medicare as soon as you are eligible. The enrollment window starts three months before your 65th birthday and ends three months afterward.

Failure to enroll will saddle you with expensive premium penalties. Monthly Part B premiums jump 10% for each 12-month period that you could have had coverage but didn’t—for life. That can add up: A senior who fails to enroll for five years ultimately would face a 50% Part B penalty—10% for each year. Penalties also are applied for late enrollment in Part D, under a different formula.

Q: When I shift into Medicare, can I just stick with the company that insures me in the ACA exchange?

You probably could do that; many of the nation’s biggest health insurers operate in both Medicare and the ACA exchanges. But brand loyalty isn’t advised here. Even if you’ve been satisfied with your provider, that company’s Medicare prescription drug plan may not offer the same coverage you had in the exchange. And the Medicare Advantage plan may not include the same network of providers or level of benefits.

Treat Medicare sign-up as a new shopping exercise. For starters, think about whether you want traditional fee-for-service Medicare or Advantage, a managed care alternative. Traditional Medicare allows you to see any health provider that participates in Medicare, but you’ll probably want to add a standalone prescription drug plan and a Medigap supplemental policy. With Advantage, you’ll be limited to in-network providers, but most plans have built-in prescription drug coverage and cap out-of-pocket spending.

Q: I qualified for tax subsidies in the ACA exchanges. Will those continue when I go into Medicare?

No. The ACA subsidies offset premium costs for households in a wide band of income, from 100% to 400% of the federal poverty level. This year that worked out to an annual income of between $11,490 and $45,960 for an individual, and $23,550 to $94,320 for a family of four.

Medicare enrollees can get assistance with premiums if they meet certain income and asset tests through the Medicare Savings Program. Another program, called Extra Help, can offset most or all prescription drug costs. The Medicare Rights Center’s website has a summary of these programs.

MONEY Financial Planning

How Families Can Talk About Money Over Thanksgiving

Family Thanksgiving dinner
Lisa Peardon—Getty Images

Holiday get-togethers are a great time for extended family members to discuss topics like estate planning and eldercare. Here's how to get started.

While most Americans are focused on turkey dinners and Black Friday sales, some financial advisers look to Thanksgiving as a good time for families to bond in an unlikely way: by talking about money.

The holiday spirit and together-time can make it easier for families to discuss important financial matters such as parents’ wills, how family money is managed, retirement plans, charity and eldercare issues, advisers say.

While most parents and adult children believe these discussions are important, few actually have them, according to a study conducted last spring by Fidelity Investments. Family members may avoid broaching these sensitive subjects for fear of offending each other.

That is where advisers can shine.

“When you help different generations communicate and cooperate on topics that may keep them up at night, it bonds them as a family,” says Doug Liptak, an Atlanta-based adviser who facilitates family meetings for his clients. It can also help the adviser gain the next generation’s trust.

Advisers can encourage their clients to call family meetings. They can also offer to facilitate those meetings or suggest useful tips to families that would rather meet privately.

Talking Turkey

Family meetings should not be held over the holiday table after everyone has had a few drinks, but at another convenient time.

“That may mean in the living room the next afternoon, over dinner at a fun restaurant, or at a ski lodge,” says Morristown, N.J.-based adviser Stewart Massey, who has vacationed with clients’ families to help them hold such mini-summits.

It is critical to have an agenda “and be as transparent as possible,” he says. Discussion points should be written out and distributed to family members a few weeks ahead to avoid surprises. Massey also suggests asking clients which topics are taboo.

Liptak likes to meet one-on-one with family members before the meeting. If you can get to know the personalities and viewpoints of each family member and make everyone feel included and understood, you will be more effective, he says.

“You might have two siblings who are terrible with or ambivalent about money, while the youngest is financially savvy, but you can’t give one person more say,” says Liptak.

It also helps to get everyone motivated if the adviser brings in the client’s children or other family members ahead of time to teach them about money management topics, like how to invest, says Karen Ramsey, founder of RamseyInvesting.com, a Web-based advisory service.

Sometimes the clients are the adult children who are afraid to ask how the parents are set up financially or where documents are, she says.

Ramsey says advisers can help by letting clients and their families know that a little discomfort may come with the territory. She will say, and encourages her clients to say: “There’s something we need to talk about and we’ll all be a little uncomfortable, but it’s okay.”

The adviser can kick off a family meeting by asking leading questions, such as “What one thing would you like to accomplish as a family in 2015?” says Liptak. Then the adviser can take notes and continue to facilitate the discussion by making sure everyone gets heard and pulling out prepared charts and data when necessary.

Massey suggests families build some fun around the meetings. His clients often schedule them around the holidays and in the summer, often tucked into a vacation or weekend retreat. It is a good practice to have them regularly, like board meetings, he says.

And if the family has never had a meeting before?

“Don’t start with the heavy stuff,” says Liptak. “It’s a good time to focus on giving and generosity, like charities the family can contribute to.

“You can collaborate on an agenda for later for the bigger issues.”

MONEY energy

The High Cost of That Draft Under Your Door

Snow covers a street at daybreak Wednesday, Nov. 19, 2014, in south Buffalo, N.Y.
Carolyn Thompson—AP

As it gets colder outside it's time to break down heating costs by the numbers.

It may not be winter yet—the season doesn’t officially start until December 21, of course—but the weather doesn’t care. Temperatures across the country are plummeting, and a new “polar vortex,” otherwise known as a cold front, is already upon us. And the “lake effect” has hit Buffalo with a vengeance.

That frigid weather is bad news, and not just because many will soon be forced into a coat and hat. The change in season also means more heating expenses, and it can put a chill on your finances if you’re not careful about managing the thermostat. Here’s the costs of winter, by the numbers.

45% — The portion of your energy bill that goes to heating. According to the Department of Energy, heating is the largest expense in the average American home.

$649 — The average cost of heating a home with natural gas from October through March. Roughly half of Americans use natural gas to heat their homes.

$938 — The average cost of heating a home this winter with electricity. About one-third of American homes have electric heating.

$1,992 — The average cost of heating a home with heating oil. According to the Energy Information Administration, heating oil is used by about 6% of households, mostly in homes with older (and less efficient) heating systems.

$362 — How much heating oil households will save compared to last year because of lower prices. Natural-gas users will save just $11.

6 feet — The amount of snow that has fallen in Buffalo since Tuesday. Another 20 to 30 inches of snow is expected.

220,000 tons — The estimated weight of the snow that has fallen in Ralph Wilson Stadium, home of the NFL’s Buffalo Bills. The team is offering fans $10 an hour and free game tickets to help clear the field.

1% — The amount of money you can shave off your heating bill for every degree you turn your thermostat down during the winter, according to the Department of Energy. The DOE estimates turning your thermostat back 10 to 15 degrees for 8 hours can save you 5% to 15% on heating costs.

1/8-inch — Size of a gap under a 36-inch-wide door that will let in as much cold air as a 2.4-inch-diameter hole punched in the wall.

$1,000 — The amount one Utah home saves on winter energy costs by using a wood burning stove. Authorities are cracking down on this practice because of its negative impact on air quality.

Read Next:
Beat the Winter Chill Without Breaking the Bank
7 Easy Ways to Lower Winter Energy Costs

 

MONEY Debt

How to Protect Yourself From the “Epidemic” of Sleazy Debt Collectors

Sheriff badge
jvphoto—Alamy

Some debt collectors are using illegal means to get payments. Here's how to spot such sketchy behavior and outsmart them at their own game.

Unscrupulous debt collectors, some of whom pose as law enforcement and threaten arrests to collect payments, have “become something of an epidemic,” said U.S. Attorney for the Southern District of New York, Preet Bharara.

On Tuesday, Bharara announced that seven people who worked for an Atlanta-area company, Williams, Scott & Associates, were arrested for their “ruthlessly persistent” payment collecting methods.

He said the workers threatened people with arrest if they didn’t pay the debt; falsely claimed to work for the Justice Department, the U.S. Marshals Service, the FBI and sheriffs’ departments; sent people made up documents designed to look like the government had sanctioned them; and used bogus legal terminology, such as: “The statute of limitations on your civil legal rights has expired.”

These unlawful methods netted the debt collection agency more than $4 million from 6,000 victims.

If you’re one of the many Americans with delinquent credit-card, hospital, or other bills, don’t let a collection agency bully you into accepting its repayment terms. Here are 9 ways you can turn the tables on them and get the upper hand in negotiations.

1. Don’t Get Emotional

When a debt collector calls, he’s trying to assess your ability to pay and may attempt to get you to say or agree to things you shouldn’t. You’d be best served by keeping the initial call short and businesslike. Collection agencies are required by law to send you a written notice of how much you owe five days after initially contacting you. Wait to engage with them until after you receive this letter.

2. Make Sure the Debt Is Really Yours

If the debt sounds unfamiliar, check your credit reports. Request a report from each of the three credit bureaus for free from annualcreditreport.com and scan for any incorrect data. A study by the Federal Trade Commission found that one in 20 consumers could have errors in their reports, and 24% of the mistakes people reported were about a debt collection that wasn’t actually theirs. (Learn more about how to fix costly credit report errors.)

3. Ask for Proof

Once you get written notice, contact the debt collector. If you are disputing the debt because of an error or identity theft, send a letter to the collector by certified mail within 30 days of receiving your notice stating that you will not pay and why. Also notify each of the three credit bureaus by mail, explaining the error and including documentation so that the problem can be removed from your report. If you are unsure about whether you owe money or how much you owe, ask the collector by certified mail for verification of the debt. That should silence the calls for a while; collectors must suspend activity until they’ve sent you verification of the debt.

4. Resist the Scare Tactics

Some debt collectors may try a range of tricks to get you to pay up, but it’s important to know your rights. Under the Fair Debt Collection Practices Act, collectors cannot use abusive or obscene language, harass you with repeated calls, call before 8 a.m. or after 9 p.m., call you at work if you’ve asked them to stop, talk to a third party about your debt, claim to be an attorney or law enforcement, threaten to sue unless they intend to take legal action, or threaten to garnish wages or seize property unless they actually intend to. If the agency commits a violation, file a complaint with the FTC and your state Attorney General, and consider talking to an attorney about bringing your own private action against the collector for breaking the law.

5. Be Wary of Fees

Typically, the contract you agreed to when you took out the loan or signed up for the line of credit states how much interest a collector can charge on your debt. Most states have laws in place capping the amount of interest agencies can tack on. Check the balance the original creditor listed as “charged off” on your credit report. If there is a big increase in the amount the collector wants, consult your original contract. Your verification letter may also give you more info about how fees are calculated. If you believe the debt has been inflated, reach out to the Consumer Financial Protection Bureau, which might be able to resolve your issue with the collector.

6. Negotiate

Collection agencies will push you to pay the full debt at once, but if that is not an option for you, tell them how much you can afford to pay and ask if they will settle for that amount. If they accept these terms, get confirmation of the deal in writing before you pay. This way, you avoid any miscommunication about the total to be paid and time frame for the payments.

7. Call In Backup

If you and the debt collector can’t reach an agreement and it appears likely they will take you to court, consider hiring an attorney. While the fees and costs of doing so may be prohibitive, the collection agency is more likely to drop the case in favor of easier targets, a.k.a debtors without attorney representation.

8. Know the Time Limits

Creditors may imply that court action can be taken against if you don’t pay up, and while that’s true, there is only a certain window of time—typically three to six years—in which a creditor can sue you over the debt. While you’ll still owe the money, and collectors may still call about it, creditors cannot take you to court over it once it’s past your state’s statute of limitations. Statutes vary widely by state and type of debt, so check your state’s specific rules if the collector is calling about older debts.

9. Don’t Get Tripped Up By Your Own Good Intentions

Collectors can’t legally “re-age” your debt by giving it a new delinquency date, but you can inadvertently extend the statute of limitations or restart the clock in some states by making a payment on old debt, agreeing to an extended repayment plan, or even acknowledging that the debts is yours.

More Help for Conquering Debt:

3 Simple Steps to Get Out of Debt

7 Ways to Improve Your Credit

Which Debts Should I Pay Off First?

 

MONEY Health Care

6 Questions to Ask Before You Sign Up for a Health Plan This Year

tweezers and pill
Geir Pettersen—Getty Images

Employers are changing your health insurance options more than ever. Rushing through your open enrollment paperwork could cost you.

You don’t get a pass this year on big health insurance decisions because you’re not shopping in an Affordable Care Act marketplace. Employer medical plans—where most working-age folks get coverage—are changing too.

Rising costs, a looming tax on rich benefit packages, and the idea that people should buy medical treatment the way they shop for cell phones have increased odds that workplace plans will be very different in 2015.

“If there’s any year employees should pay attention to their annual enrollment material, this is probably the year,” says Brian Marcotte, CEO of the National Business Group on Health, which represents large employers.

In other words, don’t blow off the human resources seminars. Ask these questions.

1. Is my doctor still in the network?

Some employers are shifting to plans that look like the HMOs of the 1990s, with limited networks of physicians and hospitals. Provider affiliations change even when companies don’t adopt a “narrow network.”

Insurers publish directories, but the surest way to see if docs or hospitals take your plan is to call and ask.

“People tend to find out the hard way how their health plan works,” says Karen Pollitz, a senior fellow with the Kaiser Family Foundation. “Don’t take for granted that everything will be the same as last year.” (Kaiser Health News is an editorially independent program of the foundation.)

2. Is my employer changing where I get labs and medications?

For expensive treatments—for diseases such as cancer or multiple sclerosis—some companies are hiring preferred vendors. Getting infusions or prescriptions outside this network could cost thousands extra, just as with doctors and hospitals.

3. How will my out-of-pocket costs go up?

It’s probably not a question of if. Shifting medical expense to workers benefits employers because it means they absorb less of a plan’s overall cost increases. By lowering the value of the insurance, it also shields companies from the “Cadillac tax” on high-end coverage that begins in 2018.

Having consumers pay more is also supposed to nudge them to buy thoughtfully—to consider whether procedures are necessary and to find good prices.

“It gets them more engaged in making decisions,” says Dave Osterndorf, a benefits consultant with Towers Watson.

How well this will control total costs is very unclear.

Your company is probably raising deductibles—the amount you pay for care before your insurance kicks in. The average deductible for a single worker rose to $1,217 this year, according to the Kaiser Family Foundation. One large employer in three surveyed by Marcotte’s group planned to offer only high-deductible plans (at least $2,600 for families) in 2015.

Employers are also scrapping co-payments—fixed charges collected during an office or pharmacy visit.

Once you might have made a $20 copay for a $100 prescription, with the insurance company picking up the other $80. Now you might pay the full $100, with the cost applied against your deductible, Marcotte says.

4. How do I compare medical prices and quality?

Companies concede they can’t push workers to shop around without giving information on prices and quality.

Tools to comparison shop are often primitive. But you should take advantage of whatever resources, usually an online app from the insurance company, are available.

5. Can I use tax-free money for out-of-pocket payments?

Workers are familiar with flexible spending accounts (which aren’t that flexible). You contribute pretax dollars and then have to spend them on medical costs before a certain time.

Employers increasingly offer health savings accounts, which have more options. Contribution limits for HSAs are higher. Employers often chip in. There is no deadline to spend the money, and you keep it if you quit the company. So you can let it build up if you stay healthy.

Don’t necessarily think of HSAs as money down the drain, says Osterndorf. Think of them as a different kind of retirement savings plan.

6. How is my prescription plan set up?

Drugs are one of the fastest-rising medical costs. To try to control them, employers are splitting pharma benefits into more layers than ever before. Cost-sharing is lowest for drugs listed in formulary’s bottom tiers–usually cheap generics—and highest for specialty drugs and biologics.

If you’re on a long-term prescription, check how it’s covered so you know how much to put in the savings account to pay for it. Also see if a less-expensive drug will deliver the same benefit.

Kaiser Health News is an editorially independent program of the Henry J. Kaiser Family Foundation, a nonprofit, nonpartisan health policy research and communication organization not affiliated with Kaiser Permanente.

 

TIME Education

What California’s College Tuition Hike Says About the Future of Higher Education

CA: UC Berkeley Students Rally Against Tuition Fee Hikes
Students rallied to demonstrate against the university's plan to increase tuition fees over the next five years at the University of California, Berkeley campus on Nov. 18, 2014, in Berkeley, Calif. Alex Milan Tracy—Sipa USA

As state funding dwindles, students at public universities are being asked to pick up more of the tab

When does a public university system become one in name only? That’s the question facing California as officials in charge of the state’s prestigious, but financially-struggling university system clash over how to keep it afloat.

On Nov. 20, the regents that control the University of California system will vote on a proposal to increase tuition at its 10 campuses by as much as 5% a year for the next five years. This year’s tuition and fees for in-state students is $12,192, which could rise to $15,564 by the 2019-20 school year under the proposal. The plan was conceived and put forward by Janet Napolitano, who took over the UC system in 2013.

The fight over the tuition increase pits Napolitano, the former governor of Arizona and federal homeland security chief, against Governor Jerry Brown, a popular figure in the state who was just re-elected with a sizable mandate. Brown has said he opposes increasing tuition, and would restore some state funding cut during the recession only if it stays flat. Brown is a regent and is among a handful of those on the board who have already indicated they will reject Napolitano’s proposal.

“There is a game of chicken,” says Hans Johnson, a higher education expert at the non-partisan Public Policy Institute of California. “It’s not clear to me at all how it’s going to turn out.”

Underlying the clash of big personalities is a philosophical debate about the changing funding models for public universities. In 1960, California created a lofty master plan that said higher education should be free or very low-cost for residents. “We’ve moved away from that pretty dramatically,” says Johnson. “It’s almost traumatic for California to think about it.” In recent decades, the state has decreased the share of overall public higher education costs it pays for and the system has become increasingly dependent on student contributions, among other sources, for the difference. In the 2001-02 academic year, in-state tuition and fees for UC campuses was $3,429, about one-third of the cost today. Similar trends have played out in state university systems elsewhere as well.

The recession accelerated public schools’ reliance on private money. At UC, the system receives some $460 million less per year in state funds than it did in the 2007-08 school year.

“As a political matter, state officials have made the judgment they don’t want to pay for higher education for our citizens,” says David Plank, an economist at Policy Analysis for California Education, a non-partisan research center. “What were once public universities are now private universities that receive some subsidy from the states.”

Napolitano says that if UC is to remain a world-class educational and research institution, it needs more money, no matter the source. And she says students and families will need to fill the gap left by the state. The proposed tuition increase would affect only around half of the student body. Thanks to income-based federal and state grants, about 55% of UC students pay no tuition.

Gavin Newsom, California’s lieutenant governor, has said he and Brown were blind-sided by the tuition increase proposal. The governor’s office has said Napolitano’s plan could void a plan Brown has endorsed to increase state funding 4 percent per year if tuition stays flat. Napolitano has said she never made a deal and if was one was struck before she took charge, she hasn’t found any record of it. “It was unilateral. It wasn’t anything we agreed to,” says Steve Montiel, a spokesman for Napolitano.

On the eve of today’s meeting of the regents planning board, the speaker of the California state assembly reportedly proposed directing $50 million in additional state general funds to UC to stave off increased costs for students. The proposal followed student protests at at least two UC campuses this week.

MONEY Health Care

You Won’t Believe Your Employer Can Ask You These Personal Health Questions

Office lamps pointed at pill bottle interrogation-style
Sarina Finkelstein (photo illustration); OsakaWayne Studios (pill bottle); David Malan/Getty Images (office lamps)

When you sign up for health coverage this year, your employer might ask you for a lot of details about your health and your habits. The goal: Cut the cost of your care.

This year, one third of employers will ask workers who enroll in the company health plan to complete a questionnaire about their health, according to the Kaiser Family Foundation. That’s up from 24% of firms last year. The questionnaires, often called a “health risk assessment,” are even more common at big companies; more than half of employers with 200-plus employees offer them.

And as more companies look to control health-care costs with programs aimed at making workers healthier, the stakes for sharing personal details about your health are getting higher.

Last year, Penn State faced a backlash for a questionnaire that, among other things, asked female employees about their pregnancy plans. Workers who refused to fill it out had to pay an extra $100 a month. Penn State later suspended the program.

If you’ve never seen one of these assessments before, here’s what to expect, what happens to the information you provide, and what your rights are.

What kinds of questions can my employer ask?

The questionnaires are crafted to identify current behaviors that may cause costly health problems in the future, says Jillian Fagan of Wellsource, a technology company that creates health risk assessments. Wellsource’s questionnaires cover a long list of topics, including weight and height, chronic illnesses, treatments you’re getting, your willingness to make lifestyle changes, tobacco use, physical activity, diet, alcohol consumption, cancer screenings, hearing and vision impairment, flu vaccinations, stress levels, and depressive symptoms.

Questionnaire writers have leeway about how to pose the questions. For example, Fagan says employers usually don’t want to explicitly ask if you’re depressed. Instead, you might be asked questions like, do you have a social group? Are you married? Do you feel like you’re getting the support you need? How many alcoholic drinks do you consume every week?

You may also be asked about your outlook for the future, how much time you have to relax, your energy level, and whether you’re satisfied with your work-life balance, Fagan says. Wellsource develops its questions based on scientific research and includes links its the underlying medical literature.

Is there anything my employer can’t ask?

Inquiring about your parents’ health would probably violate the Genetic Information Nondiscrimination Act, which prohibits employers from collecting genetic information, says Maureen Maly, employee benefits and executive compensation attorney at Faegre Baker Daniels. A family history of breast cancer, say, could indicate a genetic predisposition.

“Once upon a time, it would get into some questions about family medical history,” says Maly. “Most of these questionnaires will not ask that—and they will usually have a warning saying, ‘Don’t volunteer any information.’”

Can my boss see my answers?

Generally, no. Under HIPAA, the Americans with Disabilities Act, and state privacy laws, employers are prohibited from using health risk assessments for any reason other than for wellness programs, says employee benefits attorney Todd Martin.

Keep in mind that often your employer already has information on your health. If your health plan is self-funded and self-administered—meaning your employer pays the claims directly rather than contracting with an insurer or third party—someone in your office gets your health claims. Your employer is legally bound to maintain a firewall, secure your private information, segregate it from other employment files, and limit staff access, Martin says. Health risk assessments aren’t much different.

And besides, seeing that information could expose the company to a lawsuit if you’re fired or disciplined. “Most employers don’t want to see that information as much as employees don’t want to give it to them,” says Fagan of Wellsource.

So employers usually hire a third party to administer the questionnaires. If that’s a medical provider, that firm is subject to additional privacy rules, says Martin.

That’s really personal! Why is my employer asking me all that?

The goal is to give you a picture of your health and suggest how to do better, Fagan says. “Health risk assessments show you where you’re going to be in five years,” Fagan says. “If we notice that you don’t work out, you’re eating lots of sugar, and your diet is not so great, if you continue down this road, you’re going to have tons of health problems in the years to come.”

Of course, there’s something in it for your employer too—potential cost savings if you stay healthy.

How can knowing more about my health save my boss money?

More than half of large firms surveyed say that they see wellness initiatives as one of the most effective tactics for controlling health-care costs, according to the National Business Group on Health. Such programs can include weight-loss and smoking cessation classes, nutritional counseling, gym discounts, and lifestyle coaching.

With a summary of the answers employees gave on the questionnaires in hand, a company can see, for example, that a lot of workers are struggling to quit smoking (but not who those employees are), which can help it decide whether or not to offer a smoking cessation class (a common perk). To date, however, the research on the effectiveness of wellness programs is mixed.

What’s more, Jennifer Bard, professor at the Texas Tech University School of Law, says she has serious concerns about the privacy risks associated with wellness initiatives.

“It’s not clear how those risks translate into future health,” Bard says. “There isn’t enough information to say that somebody with a particular blood pressure or cholesterol reading or weight is going to have a specific problem. It’s one thing to diagnose someone who is sick, but the science of risk is not as well-developed.”

What else can come of sharing health information?

Your employer can set health-related goals for you. For example, if you’re overweight, your employer can offer a financial incentive for you to lower your BMI. As part of the Affordable Care Act, those financial incentives can be worth 30% of the total cost of plan costs, up from 20% before health reform.

That kind of outcomes-based wellness program is subject to a strict set of rules, Martin says. If your doctor says that you are unable to achieve the goal, your employer has to offer another way for you to earn the incentive.

Outcomes-based wellness programs are growing but not yet widespread. And only 7% of employers say that employees with health risks must complete some kind of wellness program or face a penalty, according to Kaiser.

“The restrictions have made a number of employers want to stay away from outcomes-based programs and focus on the participation-based programs like the health risk assessment,” says Martin.

Can my employer force me to fill out a questionnaire?

Probably not. Only 3% of large firms that offer questionnaires require employees to fill them out, according to Kaiser.

But health assessments, medical screenings, and wellness programs are still a legal gray area.

The Department of Labor says employers can require workers complete a health risk assessment before enrolling in a company health plan, so long as the employer doesn’t deny benefits or change premiums based on the information.

But the Equal Employment Opportunity Commission recently sued three employers on the grounds that their mandatory wellness programs violated anti-discrimination statutes. The EEOC has sued Honeywell over its wellness program, even though the company says it’s voluntary. But employees and spouses who refuse to participate in health screenings face up to $4,000 in financial penalties, which, the EEOC contends, effectively makes the program mandatory.

“It’s helpful for people to know that this is unresolved,” says Bard, the Texas Tech University law professor. “These kinds of wellness programs with a bite, with a financial consequence, are relatively new. Everyone is watching the EEOC lawsuits very carefully.”

That said, if the wellness program is mandatory, you might have little choice. “In my opinion, anyone who chooses not to comply puts themselves at risk for being a test case,” Bard says.

My employer says it’s voluntary. Why should I fill it out?

Health risk assessments are a benefit, says Fiona Gathright, president of Wellness Corporate Solutions, a third-party vendor that administers wellness programs for employers. “We’re trying to help people manage their health, and we’re trying to help people live longer,” Gathright says. “Answer the questions as honestly as you can. If we uncover that you have a risk, we’re going to you help you a manage that risk.”

Still not convinced? More than half of large firms sweeten the deal with some kind of financial incentive, according to Kaiser; 36% of those firms offer a financial incentive worth more than $500.

I’m still uncomfortable with this. What should I do?

Carefully read the disclosures, which usually contain information about who will see your answers and in what form, says Fagan. And ask your own questions

First, who is doing the assessment? An outside vendor, especially one that’s also a medical provider, is best. How is sensitive personal information protected from data breaches?

Second, what information gets back to the employer? Only you should see your individual results. If your employer will see aggregated responses, how big is the sample size? Is there any way you could be identified—say, if you’re the only obese employee at a small firm? There may be rules against reporting results from small groups.

Finally, ask how your employer intends to use the questionnaire. Know ahead of time if you’re just getting information about your health risks—or if you’re laying the groundwork for an outcomes-based wellness program that will ask you to make big changes.

Related

MONEY Health Care

The Hidden Financial Benefits of Keeping Yourself Fit

running shoes hovering over a scale
Geir Pettersen—Getty Images

Investing in fitness can generate financial rewards as well as health benefits.

You know exercise is good for you. What you may not know is that working out can have financial benefits too.

Plenty of research suggests that overweight people spend more on health care, but it’s not just the thin who stand to save. Fact is, regardless of your weight, if you’re a couch potato you’re likely missing out on earning and saving opportunities.

The Payoff in Your Paycheck

Health care costs aren’t the only way physical activity is a benefit. People who work out regularly, as in at least three times per week, are more productive at work than those who don’t, according to research published in the Journal of Occupational and Environmental Medicine. Those who get sufficient exercise also miss fewer workdays, according to the same study. Those absences can translate to lost income and lost opportunities for advancement.

Another study published in the Journal of Labor Research found that men who work out regularly can expect to make 6% more than their sedentary counterparts, on average. For women, the pay boost is higher: Fitness-savvy females make 10% more, on average.

A Nudge From the Boss

If you’re not already working out, it doesn’t have to cost an arm and a leg to start.

For starters, some employers just flat-out pay their employees to work out as part of workplace wellness initiatives. For example, IBM offers cash to employees who meet certain fitness goals. Employees at Google and Zappos can use on-site fitness classes and facilities, enabling them to skip membership fees at traditional gyms. Even if your company doesn’t currently offer wellness benefits, it might soon: Under the Affordable Care Act, employers can receive grants to get one started.

Your employer may have a deal worked out with a local gym where employees can get discounted rates. Even if your company doesn’t offer such an incentive, chances are that your health insurance provider does. UnitedHealthcare offers reimbursements of $20 per month to members who use one of many participating gyms, while Blue Cross Blue Shield has worked out a $25 membership fee for their members at over 8,000 gyms nationwide. These insurance giants aren’t the only ones in on the game—most health care insurers offer some type of fitness benefit for members.

Just Do It

On the other hand, skipping the gym altogether may be your biggest money saver. If a participating fitness center isn’t available near you, or you’re just not the gym-going type, there are plenty of ways to get in shape for free. You can use the myriad online videos in the comfort and privacy of your own home, such as those offered on Bodyrock.TV or YouTube’s workout channel. If you like mobile apps, try Daily Workouts free app, or iPump. If you’re close with your co-workers you can start a lunchtime walking group. Your boss may just end up rewarding you for it.

Read more from NerdWallet Health, a website that empowers consumers to find high quality, affordable health care and lower their medical bills.

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