MONEY College

Choosing a College Major by Age 16 Pays Off. Here’s Why

Forget the old thinking that kids could wait until college to decide a major. Today, they really ought to be making this decision before their junior year of high school.

I know what you’re thinking: How can I suggest such a thing? Why would we put that kind of pressure on high school students? Shouldn’t they be allowed to explore their interests in college first before having to declare a major?

But what’s the alternative?

By the time most students lock down their major, they’re be halfway through their college career or nearly out the door. By some estimates, 80% will change their course of study at least once before graduation. And, we’re telling them not to worry about it. Just take your time, explore your interests and get your diploma.

But with students’ future financial health on the line, discussions around major choice and career path are just happening too late.

Delaying these important decisions could leave a student needing more than four years to complete the class requirements necessary to get a degree, and additional semesters or years add to the already burdensome cost of an education. For bachelor’s degree grads in the class of 2013, average education debt was almost $38,000, according to a report by Edvisors.com.

Additionally, what if a student ultimately ends up choosing a major that leads them into a low-paying field after they’ve already decided on a high-cost school and taken on substantial amounts of student loan debt?

Income-driven repayment plans from the federal government may offer some help for those that choose less lucrative career paths, but these plans do extend the repayment period from the typical 10 years to 20 to 25 years. This could mean that in the years when your children should be thinking about saving for retirement or for their own kids’ education, they’ll still be paying off their student loans. And, these plans won’t apply to any private loans used to fund college.

Major choice, and ultimately career path, should help guide your child’s choices around where to attend college and how much education debt they can afford in the long run. These choices have far-reaching implications. Here at PayScale, we just released data on salary potential for 121 associate degree majors and 207 bachelor degree majors as part of our annual College Salary Report. Understanding earning potential should be a pre-requisite to signing any student loan documents.

Big life decisions are scary, but mountains of debt (and the prospect of your college grad moving into your basement) are much scarier. Twenty-eight percent of Millennials have had to move home with their parents after college due to financial hardship. You’re not doing your son or daughter any favors by advising him or her to delay the decision on a major.

It’s not all on you as the parent either. High school curriculum should be helping students understand real-world applications for what they’re learning and guiding them into career paths for which they’re well-suited. “Career day” doesn’t cut it anymore.

And, I bet if you asked the average 10th grader which careers will have to use algebra on a regular basis, they couldn’t tell you. We need to be showing them why the subjects they’re studying matter and how they apply to careers they may be interested in pursuing. We need to expose them to careers they might not even realize exist.

Even if your kid doesn’t definitively choose a major by the time they graduate high school, starting these conversations early can only benefit them.

Lydia Frank is editorial director at PayScale.com, a site that provides on-demand compensation data and software to employees and employers.

MONEY Impact Investing

How to Change the World—and Make Some Money Too

Young adults flock to investments that promote social good. This was a hot topic at a big ideas festival over the weekend and is front and center with financial firms.

Social investing has come of age, driven by a new generation that is redefining the notion of acceptable returns. These new investors still want to make money, of course. But they are also insisting on measurable social good.

Millennials make up a big portion of this new breed, and their influence will only grow as they age and accumulate wealth. The total market for social investments is now around $500 billion and growing at 20% a year. As millennials’ earning power grows and they inherit $30 trillion over the next 30 years, investing for social good stands to attract trillions more.

So what began in the 1980s as a passive movement to avoid the stocks of companies that sell things like tobacco and firearms has broadened into what is known as impact investing, a proactive campaign to funnel money into green technologies and social endeavors that produce measurable good. Clean energy and climate change are popular issues. But so is, say, reducing the recidivist rate of lawbreakers leaving prison.

Impact investing was a hot topic this weekend at The Nantucket Project, an annual ideas festival that aims to change the world. Jackie VanderBrug, an analyst at U.S. Trust, noted that 79% of millennials would be willing to take higher risks with their portfolio if they knew it would drive positive social change. Based on data from Merrill Lynch, that compares to about half of boomers with a social investing screen and even fewer of the oldest generation. VanderBrug also noted that women of all ages, an increasing economic force, tend to favor these strategies.

Speaking at the conference, Randy Komisar, a partner at the venture capital powerhouse Kleiner Perkins Caufield Byers and author of The Monk and the Riddle, said, “This generation is the most different of any since the 1960s.” He believes millennials are chipping away at previous generations’ affinity for growth and profits at any cost. Young people embrace the idea that you work not just for money but also for experience, satisfaction and joy.

Komisar noted the rise of B corporations like Patagonia and Ben and Jerry’s. These are for-profit enterprises that number 1,115 in 35 countries and 121 industries. Since 2007, the nonprofit B Lab has been certifying the formal mission of companies like these to place environment, community and employees on equal footing with profits. There are many more uncertified “Benefit” corporations. Since 2010, 41 states have passed or begun working on legislation giving socially conscious Benefit corporations special standing. Legally, they are held to a higher standard of community good, but they have cover from certain types of shareholder lawsuits.

Both types of B corporations acknowledge that their social mission gives them an important advantage hiring young adults, who in surveys show they place especially high value on the chance to make a social impact through work. “If your company offers something that’s more purposeful than just a job, younger generations are going to choose that every time,” Blake Jones, chief executive of Namasté Solar, a Boulder, Colo., solar-technology installer and B Corp. told The Wall Street Journal.

Industries that do not address the wider concerns of millennials will increasingly become marginalized. The financial analyst Meredith Whitney, who rose to prominence calling the subprime mortgage disaster, told the gathering in Nantucket that financial services firms have been among the slowest to consider sustainability issues—“and that’s why I think they are in trouble.”

Yet banks may be starting to come along. Bank of America clients have about $8 billion invested along sustainability lines, the bank says. And its Merrill Lynch arm has been a leading explorer of “green” bonds, which raise money for specific causes and pay investors a rate of return based on whether the funded programs hit certain measures of achievement.

Late last year, Merrill raised $13.5 million for New York State and Social Finance for a program to help formerly incarcerated individuals adjust to life outside prison. How well the bonds perform depends on employment and recidivism rates and other measures taken over five and a half years. The firm is now looking into a similar bond issue to fund programs for returning war veterans.

For now, green bonds are aimed at institutional investors, especially those charitable foundations willing to risk losses in their effort to change the world. The J.P.Morgan 2014 Impact Investor Survey found that about half of institutions investing this way are okay with below-average returns.

Young people saving for retirement and faced with a crumbling pension system can’t really afford the tradeoff, at least not on a large scale. That’s partly why they want their job or company to have a higher purpose. But ultimately some version of green bonds, perhaps with a more certain return, will be open to individuals for the simple reason that four out of five young adults want it that way.

MONEY Divorce

When Alimony is Forever

Man and wife handcuffed together
Marcus Lund—Getty Images/

A good place to start in the long, slow process of reforming alimony laws: payments that last a lifetime.

Want to provoke powerful emotions and painful stories? Write about alimony.

That’s what I learned after publishing “Alimony Is Broken —But Let’s Not Fix It.” My e-mail inbox was flooded with strong reactions and personal stories of deep pain, dredged up for a combination of reasons: outdated state laws, confusion concerning alimony’s purpose, and courts’ inconsistency in awarding it.

There’s a historical basis linking emotions and alimony. In earlier times, divorce could stem only from marital misconduct. As a result, the requirement to pay alimony became linked to the factor of guilt. Alimony was the right of the state to penalize publicly a guilty spouse who broke bonds of matrimony. No-fault divorce laws eliminated the right to alimony and replaced it with an entitlement system that better reflects socio-economic events and progress.

Alimony usually is the last piece of the financial puzzle to be finalized in divorce, following child support and division of assets. Because alimony closely follows the gamesmanship surrounding these other issues, alimony itself — the amount due annually and the length of time it’s paid — is unpredictable.

Alimony laws in many states are flawed and deserve reform; some states do not put a time limit on alimony, and others make alimony nearly impossible to attain. People sometimes shop for a favorable state in which to divorce, simply to gain financial advantage. Individuals who want to cheat or defeat the system will find a way to do so, no matter what the law or their divorce decree mandates. Alimony modification and enforcement are costly efforts subject to complications and errors, and they don’t guarantee compliance with either the intent of the original agreement or subsequent circumstances.

But the hottest hot button driving most alimony reform is lifetime alimony. Both parties, whether they’re receiving or paying, feel shackled by a legal obligation that fails often to produce financial remedy and finality for the long term. To paraphrase the opponents of lifetime alimony: It is welfare, it is goldbricking, it enslaves payors for the rest of their lives, and it unfairly impacts divorced spouses and their entire families.

It is vitally important that proposed reforms must not be a knee-jerk reaction that swings the pendulum from one extreme to the opposite extreme. Proposed reforms have to address many factors of alimony. This will take a long time to test, gain a consensus, and finally, be enacted into law.

A reform movement by its nature depends on social movement with people influencing judicial application to mirror public desires. The defenders of laws have a duty to deliberate all nuances relating to content and context of proposed changes in the law. This sets up the dynamic for lengthy debate and slow changes in law. This is how most states adopted eventually no-fault divorce and all states accepted uniform child support standards. “Smart” laws are meant to eliminate never-ending litigation and fear of the unknown.

Steve Hitner, a Massachusetts businessman who divorced and later remarried, led the Massachusetts Alimony Reform Act that went into effect in March 2012. The law abolished most lifetime alimony. It ended alimony when the payor reaches age of retirement or when the recipient begins sharing a common household with a partner. The law provides guidelines and structure, consistency and predictability for divorce. It also provides for judges’ discretion in exceptional cases as well as for modifications of prior lifetime alimony cases.

In my recent conversations with Steve, he described the eight-year process of getting the law passed as challenging for both lawyers and the public. Not everyone is happy with the Act. Judges want clarification, attorneys see more people avoiding litigation to negotiate settlements, and still others want to continue to appeal its meaning. I asked Steve why other states were not rushing to adopt comparable reform laws and his response was that this is a social policy change that they may feel uncomfortable with. “The Massachusetts legislation establishes the correct public policy of encouraging parties to terminate their relationships upon divorce and live independently as soon as is practical,” Rep. John Fernandes, a Milford Democrat and House Chairman of the Alimony Reform Task Force, said during the debate.

One of my hopes is to incentivize adults to become fiscally responsible, knowledgeable and accountable for their own financial behaviors and decisions earlier in life. I want them to be full economic partners in their marriage. Men and women can be vulnerable to threats of the consequences of divorce; more often, they are prey for lawyers who extort significant fees from them by magnifying their hopes and fears. Alimony appears to be a lightning rod for all ailments related to these fundamental problems.

We have tools for targeting and measuring fiscal accountability. We also have a ripe teaching opportunity for spouses to embrace during divorce if they did not share financial experience, responsibilities, and decision-making during marriage.

And this is how a divorce financial planner brings critical expertise to supplement the legal process, in my opinion. Divorce financial planners help parties to determine if financial decisions are practical, achieve specific goals, and fit with spouses’ needs and ability to pay. Among their contributions:

  • Assessing current and future economic well-being
  • Ensuring that costly financial mistakes are not made
  • Performing projections of future cash flow and net worth
  • Validating the accuracy of parties’ lifestyle needs and ability to pay, so judges can apply their discretion in deviating from guidelines

This is the essence for creating and preserving a workable divorce agreement in which both spouses can return to their separate lives with dignity and security.

———-

Vasileff received the Association of Divorce Financial Planners’ 2013 Pioneering Award for her public advocacy and leadership in the field of divorce financial planning. Vasileff is president emeritus of the ADFP and is a member of NAPFA, FPA, and IACP. She is president and founder of Divorce and Money Matters, serving clients nationwide from Greenwich, Conn. Her website is www.divorcematters.com.

MONEY Medicare

What You Need to Know About Medicare Open Enrollment

Pharmacy
You can shop for a new drug plan starting October 15. Getty Images—Getty Images

Your once-a-year chance to change your drug coverage or switch plans begins in two weeks. Here's what to expect.

Medicare beneficiaries who want to make changes to their prescription drug plans or Medicare Advantage coverage can do so starting Oct. 15 during the Medicare’s program’s annual open enrollment period. There will be somewhat fewer plans to pick from this year, but in general people will have plenty of options, experts say.

And although premiums aren’t expected to rise markedly overall in 2015—and in some cases may actually decline—some individual plans have signaled significantly higher rates. Rather than rely on the sticker price of a plan alone, it’s critical that beneficiaries compare the available options in their area to make sure they’re in the plan that covers the drugs and doctors they need at the best price.

The annual open enrollment period is also a once-a-year opportunity to switch to a private Medicare Advantage plan from the traditional Medicare fee-for-service plan or vice versa. Open enrollment ends Dec. 7.

Although the Centers for Medicare and Medicaid Services has released some specifics about 2015 premiums and plans, many details about provider networks, drug formularies and the like won’t be available until later this fall. Here’s what we know so far:

Standalone Prescription Drug Plans

The number of Part D standalone prescription drug plans (PDPs) will drop 14%, to 1001 plans. This is the smallest number of offerings since the Medicare Part D program began in 2006.

Even so, “seniors across the country will still have a choice of at least two dozen plans in their area,” says Tricia Neuman, director of the Program on Medicare Policy at the Kaiser Family Foundation (KHN is an editorially independent program of the foundation.)

The drug plan consolidations that are driving the reductions in choices will likely shift many beneficiaries into lower cost plans, resulting in an average premium decline of 2%, to $38.95, according to an analysis by Avalere Health.

But that overall average premium obscures significant price hikes by some of the biggest plans. The average premium for the WellCare Classic plan, for example, will increase 52% in 2015, to $31.46, while the Humana Walmart RxPlan premium will rise 24%, to $15.67, according to Avalere.

Insurers are expected to continue to shift more costs to beneficiaries next year. The percentage of PDP plans with no deductible will decline to 42% from 47%, and, once again, about three quarters of plans won’t offer any coverage in the “donut hole”— the coverage gap in which beneficiaries are responsible for shouldering a greater share of their drug costs.

Underscoring the importance of evaluating plan options, 70% of standalone drug plan members will likely see their premiums increase if they stick with the same plans in 2015, says Ross Blair, senior vice president for eHealthMedicare.com, an online vendor.

Seniors, though, have historically not voluntarily switched plans in great numbers during annual enrollment. Between 2006 and 2010, on average only 13% did so, according to a 2013 analysis by researchers at Georgetown University, KFF and the University of Chicago.

Medicare Advantage

Enrollment in Medicare Advantage plans continues to grow: 30% of Medicare beneficiaries are now in the private plans, which typically are managed care plans that often provide additional benefits such as vision and dental coverage. Concerns that Medicare Advantage plans would disappear in large numbers as the health law gradually reduces their payments to bring them in line with the traditional Medicare program have proven unfounded to date. In 2015, the number of plans will drop by 3%, to 2,450, continuing a gradual decline.

“You still have lots of plans and robust selection,” says Caroline Pearson, vice president at Avalere Health, a research and consulting firm. Some parts of the country appear to be harder hit by plan reductions than others, including the Southeast and mid-Atlantic regions, Pearson says.

Medicare Advantage coverage has always been concentrated in health maintenance organizations, and this trend will continue in 2015. The number of HMOs will increase by 1.5%, to 1,747, while the number of preferred provider organizations will drop by nearly 9%, to 541, according to Avalere. About two-thirds of Medicare Advantage beneficiaries are currently in HMOs, while 31% are in PPOs.

The average premium will increase by $2.94 to $33.90, but nearly two-thirds of beneficiaries won’t see any premium increase, according to CMS. Like standalone drug plans, however, fewer Medicare Advantage drug plans will offer no deductibles and gap coverage, according to Avalere.

“It’s one example of how plans are tightening up coverage,” and pushing more costs onto consumers, says Pearson.

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.

MONEY College

5 Quick College Diplomas That Can Lead to Good-Paying Jobs

140929_FF_HighPayingDegrees
Blend Images—Getty Images

You don't have to spend four years on a bachelor's degree to get a job that pays at least $40,000 a year. New research from one state identifies several shorter college programs that can lead to lucrative jobs.

Over the long run, people with four-year college degrees and graduate educations earn more on average than workers who spend just a few years in school. But you don’t necessarily have to invest a lot of time and money in a four-year degree to get ahead. In some cases, new research confirms, a quicker education can lead to a good-paying job.

“There are many paths to the middle class, including two-year technical degrees from community colleges,” says Mark Schneider, president of College Measures, who authored a study of recent graduates of Tennessee colleges that was released today.

The findings are based on College Measures’ analysis of earnings data for millions of workers collected from state unemployment insurance offices. So far six states, Arkansas, Colorado, Florida, Tennessee, Texas and Virginia, have allowed researchers to track government-reported earnings after students leave school.

For the latest state report, College Measures tracked five years worth of earnings for all Tennessee workers who earned any kind of college certificate, diploma, or degree in 2006, drilling down to which majors, and which schools, produce the highest earners. The results, says Schneider, “confirms other findings from other states.”

Only a few types of two-year degrees consistently lead to high-paying jobs, however, and there is a wide variation in earnings by college, some of which may have to do with the local labor market. “You do have to be really careful about which degree you get,” Schneider says.

Those with associate’s degrees in electrical engineering earned annual salaries of about $42,000 within a year of leaving school. They typically progressed to more than $61,000 after five years. Those who earned certificates in heavy equipment maintenance made about $35,000 within a year on average and about $42,000 after five years.

Similarly, a 2011 report by Georgetown University’s Center for Education and the Workforce found that 28% of people with associate’s degrees earned more than the average salary reported by those with bachelor’s degrees.

This new data from states is helpful because it identifies exactly which community college and which majors produce students most likely to earn bigger paychecks, says Jeff Strohl, research director for the Georgetown center. “If you are going to roll the dice on a particular school or major,” says Strohl, “the new data will give you an idea of how people end up, earnings-wise.”

According to College Measures’s new report on Tennessee workers, these five programs that don’t take four years can lead to good-paying jobs.

Degree type Subject Avg. earnings in 1st year Avg. earnings in 5th year
1-2 year certificate Precision metal working $33,100 $41,900
1-2 year certificate Heavy equipment maintenance $34,800 $42,600
Associate’s Industrial production $41,400 $46,200
Associate’s Nursing $47,300 $54,300
Associate’s Electrical Engineering $42,000 $61,500

The earnings reports, however, are sobering for those who get associate’s degree in other fields. The average starting salary for Tennesseans with an associate’s in liberal arts was about $28,000. Five years out those folks were earning about $35,000, roughly equal to the pay of those who earned an associate’s in business but less than most workers with technical degrees.

What’s more, students shouldn’t assume they will earn the average earnings published in these kinds of reports, warns Thomas Bailey, director of the Community College Research Center at Columbia University. “A lot of this depends on other factors, such as the local labor market and the student.” In other words, your coursework and workplace performance matters too.

To find four-year colleges that are likely to help you find a good-paying job, you can search Money’s rankings of the best value colleges – colleges across the country with the best combination of net price and high-earning alumni. (College Measures advised Money on the development of the rankings, which used earnings estimates from a 2010 to 2013 national survey of 1.4 million Americans by Payscale.com.)

MONEY credit cards

The Easy Way to Get 5% Cash Back on Everything You Buy

Handing cash back
Jamie Grill—Getty Images

Maximizing credit card rewards requires you to be tactical, but the payoff is well worth the effort.

More than half of cash back credit cards return just 1%, according to CreditCards.com. But you can do better—a lot better, in fact.

Being strategic about which credit cards you choose and how you use them can have significant payoff, we discovered while making picks for Money’s 2014 Best Credit Cards.

No one card will give you back 5% on everything you buy, but you can earn about that much on average if you, ahem… play your cards right.

1. Start with the right base

Groceries are one of American consumers’ biggest expenses, and they’re the only category where you can get 6% cash back—with the right card. That card is the American Express Blue Cash Preferred, which comes with a $75 fee and a $150 sign-up bonus. The Preferred also offers 3% on gas, so it should be used at the pump unless you can do better with any of the cards in the next section.

2. Add some flair

The Discover It, Chase Freedom, and U.S. Bank Cash Plus all have two things in common: They pay 5% on select rotating categories and they have no an­nual fees. So collect all three, and deploy them on which­ ever categories are highlighted at any given time. You can see below the benefit of adding them to your rotation.

The categories that pay 5% are predetermined on the It and the Freedom. But the Cash Plus lets you choose your own from a list of 12; so just make sure on that card to select your biggest expenses after groceries that aren’t covered by the other two cards’ rotating categories.

3. Have a “plan B” card

The cards above pay 1% on most other purchases. So don’t use them for your et cetera shopping. For those purchases, use the Citi Double Cash or Fidelity Investment Rewards American Express, which earn 2% on everything.

4. Use online malls

To get you to use your cards for online shopping, many card companies have created portals that give you access to your favorite stores for additional rewards. For instance, ShopDiscover was recently offering 5% cash back at Enterprise Rent-A-Car, while you could receive 5% back from Bloomingdale’s on Chase Freedom’s Cash Back Boost. That’s in addition to whatever you’d earn for those purchases normally.

5. Hire an assistant

The It and Freedom’s 5% categories rotate every three months, and you have to opt in to enjoy the discounts. Signing up involves only a click, but you have to remember to do so. Plus, with the U.S. Bank Cash Plus, the 5% cash-back category options can change. All this requires you to stay vigilant. Download the Wallaby mobile app to help you remember which cards to use when, and set up a Google calendar alert every quarter so you remember to sign up for the rewards in the first place.

MONEY Student Loans

Why Refinancing Your Federal Student Loans Could Cost You

When you consolidate with a private lender, you can lower your interest rate. But in exchange you lose valuable consumer protections.

People with federal student loan debt now have a few options to lower their rates with private consolidation loans, but consumer advocates warn they could be giving up vital protections in doing so.

Royal Bank of Scotland Group Plc’s Citizens Financial Group recently expanded its student loan refinancing program to include federal as well as private student loans. The bank joins two much smaller, peer-to-peer lenders, SoFi and CommonBond.

All three lenders say they counsel potential customers about the consumer protections lost when federal debt is refinanced into private loans. Those protections include access to federal income-based repayment and forgiveness programs as well as generous forbearance and deferral options.

“Those are very important rights,” says Persis Yu, staff attorney for the Student Loan Borrowers Assistance site run by the National Consumer Law Center.

Yu questions whether the borrowers targeted by these lenders understand how vulnerable they are to financial setbacks such as job losses.

“A lot of people think they’re not ever going to default,” Yu says, “but there are very high delinquency rates on student loans.”

Who’s getting loans

So far the lenders are wooing the lowest-risk borrowers: graduates with steady jobs, good credit and enough income to pay down their loans.

CommonBond, which has refinanced about $100 million in student loans so far, restricts its prospective clients even further to those with business, law, medical, or engineering degrees, says Chief Executive Officer David Klein.

The lenders tout variable rates that start at less than 3%. Fixed rates can be as low as 3.6% at SoFi and Common Bond, while Citizens’ lowest is 4.74%.

By contrast, current interest rates for new fixed-rate federal Stafford loans are 4.66% for undergraduates and 6.21% for graduate and professional students. Borrowers with older federal debt may have rates as high as 8.5%.

While the best rates on consolidation loans are reserved for the most creditworthy borrowers, Citizens has been able to lower its typical customer’s rate by 1.5 percentage points when refinancing private loans, says Brendan Coughlin, the company’s president of auto and education lending.

A one-percentage-point decrease corresponds to annual savings of about $50 per year on each $10,000 of debt, says Mark Kantrowitz, publisher of Edvisors.com, a college finance education site. The savings generally are not enough to make it worth giving up income-based repayment and forgiveness options, he says.

Borrowers who struggle to pay their debt are typically locked out of refinancing due to lenders’ high underwriting standards.

“We’re approached by people who are having a really difficult time with their payments,” says Mike Cagney, CEO of SoFi, which so far has refinanced about $1 billion in federal and private loan debt. “We’re not a good option for them.”

Parents may benefit

Parents who have federal PLUS loans, however, might consider refinancing into a private loan if they can win a large-enough interest rate reduction, Kantrowitz says.

Parent PLUS loans are not eligible for income-based repayment options or forgiveness, although they still offer up to three years of forbearance and deferral options. Private consolidation loans typically offer up to one year of forbearance.

“Generally, refinancing federal parent PLUS loans into a private consolidation loan might be financially beneficial if the interest rate will decrease by at least two percentage points and the borrower has at least $20,000 in [such] loans,” Kantrowitz says.

“Students, on the other hand, should still not refinance their federal student loans into a private consolidation loan.”

Parents with the high credit scores and solid incomes necessary for a private loan consolidation presumably would be able to make informed decisions about the necessary trade-offs between a lower interest rate and the loss of federal education loan benefits, Kantrowitz says.

A proposal to lower rates on existing federal student loan debt died this summer when Senator Elizabeth Warren, a Massachusetts Democrat, failed to get the 60 votes needed to advance her bill. The legislation, which would have allowed people with federal and private loans issued before 2010 to refinance at 3.86 percent, received 56 votes for and 38 votes against it.

MONEY office etiquette

Germans Say “Nein!” to Late-Night Work Email. Here’s How You Can, Too

Mariella Ahrens attends the Dresscoded Hippie Wiesn 2014 at Golfclub Gut Thailing on August 28, 2014 in Steinhoering near Ebersberg, Germany.
Turns out Germans may have us beat when it comes to balancing work and play. Gisela Schober—Getty Images

Sick of your boss's 3 a.m. emails? Maybe you should move to Germany—where support is growing for a law banning late-night work communication.

Despite their reputation for industriousness, it turns out Germans have a thing or two to teach us about work-life balance.

The country has shaved nearly 1,000 hours from the annual schedule of its average worker (compared with 200 hours in the U.S.) in the last half-century. And now a movement is growing there to make after-hours work emails verboten.

A newly initiated study on worker stress led by the German labor minister is expected to lead to legislation preventing employers from reaching out to employees outside of normal office hours. (That might surprise those who’d expect such a thing only from the French.)

Though the law wouldn’t come to fruition until 2016, Germans—and Europeans in general—are still slightly better off than Americans in the meantime. While the average work week in major developed countries is 47 hours, that number balloons to about 90 hours per week for U.S. workers (vs. 80 for Europeans) if you include time that people are checking email and staying available outside of the office.

“We have become such an instantaneous society,” says Peggy Post, a director of The Emily Post Institute and expert on business etiquette. “We’re expected to be on call 24/7.”

And all this late-night work isn’t without consequences: Studies have found that staying up checking work emails on smartphones actually makes workers less productive the next day because of effects on sleep. Other downsides include more mistakes and miscommunications.

In lieu of practicing your Deutsch and moving your whole life overseas, take back your “offline” time by doing the following:

1. Become an email whiz while at work.

One major reason we’re forced to take to our phones late at night and on weekends? Because it’s so hard to get actual work done during work these days, due to smaller staffs, long meetings, floods of email, and noisy open floor plans.

At least in some jobs, the more you get done during regular hours, the less you’ll be penalized if you aren’t available during evenings or weekends. Some experts suggest giving yourself a specific window during the day to handle emails. See nine specific tips on more efficient emailing from former Google CEO Eric Schmidt here. With smart rules, like “last in, first out,” you can become a speed demon.

And if you just can’t pack it all in, you might also think about a quick end-of-day meeting (preferably at the scheduled end of day) to check in with whomever you’re most likely to get emails from later on.

2. Make sure you understand the expectations.

You assume your boss wants an immediate response to that late-night brainstorm, but are you sure? It’s worth finding out.

Alison Green, who blogs at AskaManager.org has suggested phrasing your question as follows: “Hey, I’m assuming that it’s fine for me to wait to reply to emails sent over the weekend until I’m back at work on Monday, unless it’s an emergency. Let me know if that’s not the case.”

But what if the boss says that you really are expected to be at the ready? You might need to communicate your dissatisfaction with these terms—rather than succumbing to burnout.

Again, the words you choose are important. Green suggested the following: “I don’t mind responding occasionally if it’s an emergency, but I wonder if there’s a way to save everything else for when I’m back at work. I use the weekends to recharge so that I’m refreshed on Monday, and I’m often somewhere where I can’t easily answer work emails.”

Post agrees that how you speak up goes a long way toward getting the result you want. “Without whining, try to share specific constructive solutions,” says Post. “For example, you could suggest having employees take on separate after-hours times to be on call for different days of the week.”

3. Stop the cycle.

Remember, you’re perpetuating the expectation when you engage in these email chains. Should you write back once at 10 p.m., those above you will likely begin to assume that you’ll be available at that time (even if they didn’t initially expect you to be).

Likewise, if your boss emails you, you might feel that you’re in the clear to contact those below you in their free time. But that’s a no-no, according to many experts.

While you may simply be trying to send something while you remember it, you are actually putting someone else in the same predicament you’re in. Some suggest limiting yourself to answering or writing emails to between 7 a.m. to 7 p.m., unless there’s a particularly urgent need or project—though the right window for you probably depends upon your company and office culture.

And if you do have your most brilliant thought at 2 a.m.? Go ahead and write it, but then use a tool like Boomerang that lets you schedule it for a more reasonable post-shower hour.

TIME

Are You Making as Much Money as Your Friends?

Use this calculator to find out

The latest Census data on American incomes drove home a troubling fact: people aren’t making as much as they once did. The median household income in the United States in 2013 was $51,939, down 8 percent from 2007 when adjusted for inflation. Though the recession technically ended several years ago, large numbers of people continue to suffer from flat wages and rising prices.

But while the middle class continues to suffer, many slices of the population are doing better. Using individual-level Census data for 2008 to 2012—15 million records in total—TIME crunched the numbers for every demographic by gender, age, education and marital status.

The following calculator will tell you how your salary stacks up and how that’s changed over time. (The information you enter is not recorded. In fact, it never leaves your computer.)

These charts show individual personal income—money respondents received from any source—and only include people who worked full-time in a given year. (While unemployment was a tremendous scourge during the recession and its aftermath, including it here would confound an analysis of how income has changed.)

Since 2008, incomes have increased by 5.1 percent among all surveyed, while inflation rate over that time was 6.6 percent, according to the Bureau of Labor Statistic figures. (In other words, if your income increased by less than 6.6 percent, you lost purchasing power over that period.) But not all groups are falling behind. Married women between ages 41-50 with professional degrees saw a 16.6 percent growth in income over the past five years, the largest gain of any subset of the population for which there were at least 1000 respondents in the data. At the opposite end of the spectrum, men between 22 and 25 with some college education but no degree saw their income fall by 16.7 percent.

Gender

Women are recovering from the recession slightly faster than men, though men make considerably more overall.

2008 2012 Change
Women $31,000 $32,500 4.8%
Men $43,000 $46,000 4.7%

Age

Americans in their 20s saw the highest cut to their salaries since 2008.

2008 2012 Change
18-21 $12,200 $12,000 -1.6%
22-25 $23,000 $21,000 -8.7%
26-30 $32,000 $32,000 0%
30-35 $38,000 $39,500 3.9%
36-40 $41,000 $42,100 2.7%
41-50 $43,000 $45,000 4.7%
51-64 $45,000 $46,000 2.2%
65+ $41,400 $46,000 11.1%

Education

Those with less education have recovered the slowest, if at all.

2008 2012 Change
Less than high school $23,000 $22,300 -3%
High school or equivalent $30,000 $30,000 0%
Some college, no degree $33,200 $33,000 -0.6%
Associates $40,000 $40,000 0%
Bachelors $50,000 $53,000 6%
Masters $65,000 $69,000 6.2%
Professional degree $100,000 $102,100 2.1%
Doctorate $88,000 $90,000 2.3%

Marital Status

Single Americans are generally younger than other demographics shown here. This is consistent with median income changes by age.

2008 2012 Change
Single (never Married) $26,400 $26,200 -0.8%
Married $43,000 $45,000 4.7%
Separated or Divorced $37,000 $38,300 3.5%
Widowed $34,000 $36,400 7.1%

Methodology

The inputs for the calculator are determined by Census categories for gender, age, educational attainment, and marital status. The data was extracted from the Integrated Public Use Microdata Series project (full citation below). IPUMS aggregates individual-level responses from the Census Bureau’s American Community Survey, an annual sampling of 1 percent of the population. The complete codebook for the extract, which can be used to recreate the complete dataset, is available here.

The analysis is limited to those who were at least 18 years old and coded as a “5” or a “6” in the WKSWORK2 column, meaning they worked at least 48 weeks of the previous 12 months. To allow for a sufficient sample size, individual years of age were bucketed into the ranges displayed in the interactive. Some similar educational levels and marital statuses were also combined.

Once the data was bucketed and grouped by unique combinations of demographic traits—married women from 51-64 with an associate’s degree, for example—we took the median of all of their incomes. This involved first accounting for the fact that not every person has equal weight in the sample. IPUMS provides a PERWT variable. After adding each person to the pool a number of times equal to his or her statistical weight, we took the median of the pooled values. In almost all cases, this “weighted median” was very similar to a naïve median calculated by considering each respondent to have equal weight.

Figures were then spot checked by replicating this process from the raw data in two different computational platforms, R and Mathematica. Any subpopulation with fewer than 50 respondents is not included.

Citation

Miriam King, Steven Ruggles, J. Trent Alexander, Sarah Flood, Katie Genadek, Matthew B. Schroeder, Brandon Trampe, and Rebecca Vick. Integrated Public Use Microdata Series, Current Population Survey: Version 3.0. [Machine-readable database]. Minneapolis: University of Minnesota, 2010.

MONEY Health Care

Why Your New Health Plan Might Not Cover Hospital Stays

Person in hospital bed
Companies that haven't offered health coverage before are the most likely candidates to roll out hospital-free plans now. Blend Images—Alamy

A debate is growing over whether an Obamacare calculator really lets some employers offer health insurance without hospital coverage. Is this a software glitch, or a giant loophole in the law?

Lance Shnider is confident Obamacare regulators knew exactly what they were doing when they created an online calculator that gives a green light to new employer coverage without hospital benefits.

“There’s not a glitch in this system,” said Shnider, president of Voluntary Benefits Agency, an Ohio firm working with some 100 employers to implement such plans. “This is the way the calculator was designed.”

Timothy Jost is pretty sure the whole thing was a mistake.

“There’s got to be a problem with the calculator,” said Jost, a law professor at Washington and Lee University and health-benefits authority. Letting employers avoid health-law penalties by offering plans without hospital benefits “is certainly not what Congress intended,” he said.

As companies prepare to offer medical coverage for 2015, debate has grown over government software that critics say can trap workers in inadequate plans while barring them from subsidies to buy fuller coverage on their own.

At the center of contention is the calculator — an online spreadsheet to certify whether plans meet the Affordable Care Act’s toughest standard for large employers, the “minimum value” test for adequate benefits.

The software is used by large, self-insured employers that pay their own medical claims but often outsource the plan design and administration. Offering a calculator-certified plan shields employers from penalties of up to $3,120 per worker next year.

Many insurance professionals were surprised to learn from a recent Kaiser Health News story that the calculator approves plans lacking hospital benefits and that numerous large, low-wage employers are considering them.

Although insurance sold to individuals and small businesses through the health law’s marketplaces is required to include expensive hospital benefits, plans from large, self-insured employers are not.

Many policy experts, however, believed it would be impossible for coverage without hospitalization to pass the minimum-value standard, which requires insurance to pay for at least 60% of the expected costs of a typical plan.

And because calculator-approved coverage at work bars people from buying subsidized policies in the marketplaces that do offer hospital benefits, consumer advocates see such plans as doubly flawed.

Kaiser Health News asked the Obama administration multiple times to respond to criticism that the calculator is inaccurate, but no one would comment.

Calculator-tested plans lacking hospital benefits can cost half the price of similar coverage that includes them.

While they don’t include inpatient care, the plans offer rich coverage of doctor visits, drugs and even emergency-room treatment with low out-of-pocket costs.

Who will offer such insurance? Large, well-paying employers that have traditionally covered hospitalization are likely to keep doing so, said industry representatives.

“My members all had high-quality plans before the ACA came into existence, and they have these plans for a reason, which is recruitment and retention,” said Gretchen Young, a senior vice president at the ERISA Industry Committee, which represents very large employers such as those in the Fortune 200. “And you’re not going to get very far with employees if you don’t cover hospitalization.”

But companies that haven’t offered substantial medical coverage in the past — and that will be penalized next year for the first time if they don’t meet health-law standards — are very interested, benefits advisors say.

They include retailers, hoteliers, restaurants and other businesses with high worker turnover and lower pay. Temporary staffing agencies are especially keen on calculator-tested plans with no hospital coverage.

“We’ve got many dozens of staffing-firm clients,” said Alden Bianchi, a benefits lawyer with Mintz Levin in Boston. “All of them are using these things.”

Advisors and brokers declined to identify employers sponsoring the plans, citing client confidentiality.

Benefits administrators offering the insurance say it makes sense not only for employers trying to comply with the law at low cost but for workers who typically have had little if any job-based health insurance.

“This is a stepping-stone to bring in employers who have never [offered] coverage and now they’re willing to come forward and do something,” said Bruce Flunker, president of Wisconsin-based EBSO, a benefits firm.

The plans are an upgrade for many workers at retailers, staffing agencies and similar companies, he said.

“OK, if I go to the hospital I don’t have coverage,” he said. “But I don’t have [hospital] coverage now. And what I get is a doctor. I can go to a specialist. I get a script filled at the pharmacy. I get real-life coverage.”

Companies considering such plans include a restaurant chain with 1,000 workers, a trucking firm with 500 employees and dependents, a delicatessen, a fur farm and firms working the oil boom in upper Midwest, Flunker said.

Employer interest in the plans “is definitely picking up pretty quickly,” said Kevin Schlotman, director of benefits at Benovation, an Ohio firm that designs and administers health coverage. “These are organizations that are facing a significant increase in expenses. They’re trying to do their best.”

Because hospital admissions are rare, plans paying for routine care are more valuable to low-wage workers than coverage of expensive surgery and other inpatient costs, say consultants offering them.

Such plans come with deductibles as low as zero for doctor visits and prescriptions and co-pays of only a few dollars, they say. Emergency-room visits cost members in the $250 or $400 range, depending on the plan.

By contrast, health-law-approved insurance with inpatient benefits often includes deductibles — what members pay for all kinds of care before the insurance kicks in — of $6,000 or more.

Generous coverage of routine care is “what these people want,” said Shnider. “They want to be able to go to the doctor. Take care of their kids, go to the emergency room.”

In some cases, employers sponsoring calculator-approved plans without hospital coverage also offer “fixed indemnity” coverage that does pay some hospital reimbursement, advisors say. But the benefits are typically a small fraction of hospital costs, leaving members with the likelihood of large bills if they are admitted.

Concerned for their reputations, larger administrators are wary of managing benefits without hospitalization, even if they do pass the calculator.

“Our self-funded customers hand out insurance cards to their employees with Blue Cross all over it,” said Michael Bertaut, health care economist at BlueCross BlueShield of Louisiana, which has no plans to handle such coverage. “Do we really want someone to present that card at a hospital and get turned away?”

There are two health-law coverage standards that large employers must meet to avoid paying a penalty.

One, for “minimum essential coverage,” merely requires some kind of employer medical plan, no matter how thin, with a potential penalty next year of up to $2,080 per worker. Many low-wage employers are meeting that target with “skinny” plans that cover preventive care and not much else, say brokers and consultants.

The calculator tests the health law’s second, more exacting standard — to offer a “minimum value” plan at affordable cost to workers. Failure to do so triggers the second penalty, of up to $3,120 per worker.

The argument over the calculator is whether plans carving out such a large chunk of benefits — hospitalization — can mathematically cover 60% of expected costs of a standard plan.

They probably can’t, Jost said. The fact that the calculator gives similar, passing scores to plans with hospital benefits and plans costing half as much without hospital benefits suggests that it’s flawed, he said. Plans with similar scores should have similar costs, he said.

On the other hand, others ask, why did the administration make a calculator that allows designers to leave out inpatient coverage? Why didn’t the law and regulations require hospital coverage for self-insured employers — as they do for commercial plans sold through online marketplaces?

“The law and calculator were purposely designed as they are!” Fred Hunt, past president of the Society of Professional Benefit Administrators, said in an email widely circulated among insurance pros. “No ‘glitch’ or unintended loophole.”

“That’s baloney,” said Robert Laszewski, a consultant to large insurers and a critic of the health law. “Nobody said we’re going to have health plans out there that don’t cover hospitalization. That was never the intention… I think they just screwed up.”

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.

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