TIME Budget

New Paul Ryan Budget Cuts Trillions in Spending, Faces Difficult Vote

Paul Ryan
House Budget Committee Chairman Rep. Paul Ryan, R-Wis., speaks at the Conservative Political Action Committee annual conference in National Harbor, Md., March 6, 2014. Susan Walsh—AP

House Budget Committee Chairman Paul Ryan has released his fiscal year 2015 budget that would cut $5.1 trillion in spending by repealing Obamacare, eliminating USAID and set aside less funding to fight climate change, among other big reductions

Updated at 4:50pm to include comment from Paul Ryan.

House Budget Committee Chairman Paul Ryan on Tuesday released his fiscal year 2015 budget, in which he cuts $5.1 trillion in spending, mostly from health care, to balance the budget by 2024.

The budget would repeal ObamaCare, including the money-saving Independent Payment Advisory Board, cutting $1.2 trillion in federal outlays. It turns Medicaid into a block grant program for states, which would save $732 billion over 10 years. It essentially aims to privatize Medicare, offering enrollees in 2024 the choice of a private plan, while raising the age of eligibility and means tests for high income seniors. All told, more than half of the $5.1 trillion would come from health care savings. The document, provided on an embargoed basis to reporters, did not provide detailed budgetary outlays, but rather an overview of the budget’s goals.

As in past budgets, Ryan leaves the Pentagon and the Veterans Affairs Department largely untouched, including only those cuts recommended by the Pentagon itself. In fact, he criticizes President Obama from cutting too much in military spending in his 2015 budget, calling the President funding level “irresponsible.”

While all of this may sound like a Republican, or at least Tea Party, dream, Ryan is expected to have a tough time getting his bill through the House. The measure assumes a 2015 spending baseline as prescribed in the deal he made with Senate Budget Committee Chair Patty Murray earlier this year. That baseline mitigates the sequester cuts and assumes a higher level of spending than House Republicans like. Sixty-two Republicans voted against that deal, which passed on Democratic support. There will be no Democratic votes for the Ryan budget as it includes drastic cuts to programs Democrats seek to protect, which means Ryan must convince those 62 nay votes to support his budget despite the short-term increase in spending.

“Members who may not have supproted the Ryan Murray deal will see this is a much bigger picture, balancing the budget and paying off the debt,” Ryan told reporters on a call Tuesday afternoon. “The good clearly outweighs any other concerns that they might have had.”

Of course, this budget is going nowhere in the Democratically-controlled Senate, which has already announced it would not pass a budget this year citing the two-year deal Murray and Ryan forged earlier this year. Democrats, meanwhile, were gleefully anticipating the Ryan budget, hoping to use some of its more extreme positions against GOP candidates in a midterm election where they are portraying Republicans as unsympathetic to the working class. “The Ryan budget wouldn’t do a thing to help the middle class, and simply attacking Obamacare won’t get them the political victory they seek,” Senator Chuck Schumer, a New York Democrat, said in response to Ryan’s budget on Tuesday. “We’ll put our agenda to give everyone a fair shot by creating jobs and raising wages, against a plan that guts the middle class and replaces Medicare’s guaranteed benefits any day of the week.”

The plan eliminates USAID, moving international aid to the Millennium Challenge Corporation. It also cuts international education exchanges and programs like the East-West Center. In a nod to Benghazi, it maintains increased spending on diplomatic security—8% over 2013 levels.

The budget drastically cuts clean energy and technology funds and funding to fight climate change, while expanding oil and gas drilling on and offshore. It also recommends approval of the controversial Keystone XL pipeline from Canada and drilling in the Arctic National Wildlife Refuge in Alaska.

It cuts $23 billion in agriculture subsidies and turns the food stamp program into a block grant program for the states. It trims funding to Low Income Home Energy Assistance Program, which Ryan says is being abused by the states. It would also slash federal pensions by $125 billion over 10 years. It would eliminate a program to repay federal employees’ student loans, and would encourage attrition in the federal workforce. It would cut welfare programs by $5 billion over 10 years. And it would bar people from receiving both unemployment and disability benefits at the same time, saving $5.4 billion over 10 years. It also eliminates printing costs by switching most records to electronic copies. And it would end election assistance.

The budget would cut funding to the Securities and Exchange Commission, restrict the FDIC’s authority to bail out bank creditors. It would privatize Fannie Mae and Freddie Mac, and slashes $19 billion from the struggling U.S. Postal Service.

Ryan did not include his “Road Map” recommendation from 2010 to essentially privatize Social Security. In this budget he simply notes the problem in long-term projected shortfalls and calls on Congress and the President to begin working on solutions.

It ends support for Amtrak, cuts some funding for the Transportation Security Administration, eliminates the Community Development Program, cuts funding to the Federal Emergency Management Program, noting that in the last three years 2,400 emergencies have been declared many of those decisions were “not made judiciously.” Ryan recommends reducing FEMA expenses by instilling per capita thresholds.

The budget would streamline job training by getting rid of nearly 50 duplicate and overlapping programs. It would cut funding to Pell Grants by imposing a maximum income eligibility cap, ending funding for less than half-time students and capping the maximum award to $5,730. It would streamline Education Department programs, particularly the 82 programs focusing on teacher quality and calls for major reform to elementary and secondary programs. It would end all federal funding to the National Endowment for the Arts, the National Endowment for the Humanities, Federal Institute of Museum and Library Services, and the Corporation for Public Broadcasting.

In a nod to Ryan’s anticipated move to become House Ways and Means Committee chairman, Congress’s top tax writing committee, Ryan included the bones of a tax reform plan he’s likely to push in the next session. That plan repeals the alternative minimum tax, cuts corporate tax rates to 25% and consolidates the seven personal income brackets to just three with a top rate of 25% and a bottom rate of 10%.

TIME Congress

House Passes Medicare ‘Doc Fix’

The House passed legislation to avoid a nearly 24 percent cut to the reimbursement rates that Medicare pays to doctors, just days before an important April 1 deadline. The "Doc Fix" will cost approximately $20 billion

The House voted Thursday to avoid a nearly 24 percent cut to the reimbursement rates that Medicare pays to doctors, just days before a critical April 1 deadline.

The so-called “Doc Fix” will cost approximately $20 billion, but it’s just the latest in a long run of band-aids Congress has applied to the complex formula that is used to determine Medicare reimbursement rates. The cost is being covered through an accounting sleight-of-hand, by slightly moving up automatic cuts to Medicare that were part of so-called sequestration. The Senate is expected to take up the legislation soon, possibly the same day. Temporary patches to the reimbursement formula have now cost more than $150 billion over the last decade, the Washington Post reports.

Some Republicans, whose leaders pushed through the legislation by using an unusual procedure known as a voice vote, decried the accounting maneuvers used to offset the cost.

“It’s just another form of fake money we have around here,” Rep. John Fleming (R-La.) said of the vote. Fleming was off the House floor during the voice vote, but said he would have voted against the legislation. “Basically, the question was: do we let it lapse and have across-the-board cuts, or do we pass this one year patch?” Fleming said. “We didn’t want to vote for it, and we didn’t want to vote against it.”

A voice vote is one method the majority party can use to push through controversial legislation. It requires the acting Speaker to decide that verbal yes votes outnumber votes in opposition. Individual lawmakers’ votes aren’t tallied during a voice vote, making it easier to pass politically charged legislation. Democrats and Republicans agreed beforehand to not ask for a recorded vote, even though members of both parties have opposed a temporary Medicare fix. The decision to hold a voice vote appeared to be a closely kept secret until the last minute—one junior Republican member didn’t hear about the vote until after it already happened, and Fleming said there were less than 100 members on the floor.

“Oh, that was a voice [vote],” Rep. James Lankford (R-Okla.), a member of the GOP leadership team, said when asked how he voted. “I wasn’t even on the floor.”

MONEY Ask the Expert

When Do I Stop Paying Social Security Taxes?

Any earnings greater than $117,000 are not subject to Social Security taxes. Photo: Josh Randall/Shutterstock

Q: If you earn more than $117,000, do you keep paying Social Security taxes on wages above that amount? — Patrick, Houston

A: No, you don’t. The maximum amount of earnings subject to Social Security tax this year is $117,000, up from $113,700 in 2013.

Beyond the new limit, you’re done with the 6.2% Social Security tax (12.4% if you’re self-employed) for the year.

You’re not done with all wage taxes, though. You’ll owe a 1.45% Medicare tax (again, double that if you’re self-employed) on total earnings, no matter how much you make.

Quiz: Road to Wealth: Are you on track?

And there’s one more tax, points out Michael Eisenberg, a certified public accountant in Los Angeles. Starting with 2013, couples making more than $250,000 and singles earning at least $200,000 also owe a 0.9% Medicare tax on any earned income above those thresholds.

TIME Domestic Policy

Paul Ryan Critiques War on Poverty In New Report

Paul Ryan
House Budget Committee Chairman Rep. Paul Ryan, R-Wis. is seen on Capitol Hill on March 18, 2013 J. Scott Applewhite / AP

Wisconsin Republican Congressman Paul Ryan is taking aim at government programs he says haven't done enough to lower the United States' poverty rate

House Budget Committee Chairman Paul Ryan released Monday a Republican critique of the War on Poverty begun by President Lyndon B. Johnson 50 years ago, in an election-year counterpunch to the Democratic Party’s claim that it can better provide for the most vulnerable Americans.

Ryan’s report says that federal healthcare, nutrition and education programs have failed to adequately address the country’s poverty rate, which it states has only fallen 2.3 percentage points—from 17.3 percent to 15 percent—since 1965.

The report documents what it says are a multitude of overlapping federal programs on food aid, housing and education, with $799 billion spent on a total of 92 separate federal anti-poverty programs. It states that Medicaid, which was expanded under the President’s new healthcare law, has “little effect on patients’ health” and “increases use of the emergency room inappropriately.” The education program Head Start, an Obama Administration priority, “does not improve student outcomes,” it says, and is “vulnerable to fraud.”

The document also hits at food stamps, which are now claimed by over 47 million Americans at a cost of nearly $80 billion. The Ryan report states that food stamps administered by the Supplemental Nutrition Assistance Program have only a “modest effect on poverty” and “discourages work” among female-headed households and married men.

The document does not suggest concrete solutions, although it puts forward broad outlines for reform. On education, for example, the report cites an academic study suggesting a “consolidated, well-funded system would be better” than the current slate of early-care and education programs. The report also praised the Earned Income Tax Credit, a tax credit for lower income workers.

Ryan’s aides said the report was never intended to be a policy blueprint. “The purpose of this report is to inform the public debate,” says a Ryan aide. “It challenges critics of reform to defend the status quo—to go beyond mere intentions and focus on results. I would expect Paul Ryan to have more to say in this area in the year ahead.” Speaker of the House John Boehner said Thursday that he expects Ryan to produce a complete, balanced budget this year, which may include reforms to anti-poverty programs.

Democrats have had ample time to prepare for a Republican pivot towards poverty. Republican Senators Marco Rubio and Rand Paul, and House Majority Leader Eric Cantor have all given major addresses on the subject in the past few months. “If past is prologue, this report is simply laying the groundwork to slash social ­safety-net programs,” said Rep. Chris Van Hollen (D-Md.), the ranking Democratic member on the House Budget Committee, in a statement. “I hope this time is different, but I fear it won’t be—this one-sided report was put together without any effort to reach across the aisle.”

You can read the full report here.

MONEY Health Care

How Obamacare Affects Your Bottom Line

A patched-up insurance exchange is only one of the ways health care is changing with the Affordable Care Act. illustration: tiffany baker / cnnmoney

A patched-up insurance exchange is only one of the ways health care is changing. More and more of Obamacare is kicking in this year. Here's what it means to you.

When the Affordable Care Act, a.k.a. Obamacare, passed four years ago, Jan. 1, 2014, was the law’s D-day.

Some changes kicked in earlier—preventive care fully covered, the right to keep kids on your health plan until they turn 26. But most major provisions were scheduled to take effect by this date, including the law’s centerpiece requirement that nearly everyone must carry insurance or owe a fine, which will escalate in the coming years.

Since then, a few features have been postponed for 12 months, including the rollout of most small-business insurance exchanges and the rule that large employers must offer coverage or pay a penalty. But Jan. 1 remained a key turning point for health care in this country.

Of course, what’s gotten the lion’s share of attention in recent months is the flawed federal insurance exchange, not to mention canceled policies and premium shocks. What you may not realize, though, is that the law is prompting other significant shifts in the system.

Spurred on by the ACA, insurers, doctors, and government agencies are quietly embarking on a sweeping experiment, trying to change how care is delivered and paid for in hopes of controlling costs. “Individual insurance reform is one of 10 titles in the statute,” points out Timothy Jost, a law professor at Washington and Lee University. “There’s a lot more in there.”

No matter how you get your insurance, you could feel the effects of Obamacare in the months to come. Come tax filing time, for one, couples earning above $250,000 ($200,000 for singles) will see how much a surcharge that helps fund the law has cost them. That’s just one of five key ways reform could touch you and your family in 2014 and beyond.

1. No matter how you buy insurance, you now have a stronger safety net

One of the goals of health reform was to close the loopholes that could let costly care or a chronic illness devastate your finances, even if you had coverage. Since 2010 insurers have no longer been able to cap how much they paid out on your policy over your lifetime. In 2014 two more protections take effect, both for individual policies and group plans.

Insurers can no longer impose an annual coverage cap. Plus, once you spend $12,700 out-of-pocket with a family plan in 2014 ($6,350 for singles), your insurer must pick up every dollar of in-network medical care.

“For people with chronic conditions, this is one of the most important advances,” says Marc Boutin, chief operating officer of the National Health Council, which represents advocacy groups for patients with chronic conditions. Those with serious illnesses picked up another safeguard: You can no longer be turned down for coverage because of your health.

The government gave employers that use separate firms to administer medical and drug benefits an extra year to comply with the out-of-pocket max. But most companies set lower limits than the law mandates. So the delay will mainly affect people in plans that don’t cap prescription drug costs and who need a very costly drug, such as chemotherapy pills.

2. You may pay more for office visits, thanks to your doctor’s new job

In hopes of tamping down health care costs, the ACA aims to change how doctors and hospitals do business, and you could notice the fallout soon. One approach is to create so-called accountable care organizations, typically doctors and hospitals that team up to coordinate treatments with the goal of delivering quality care for less. If successful, the doctor and hospital may be eligible for a bonus from Medicare. Private insurers are turning to similar models.

This incentive to team up is one reason a big hospital may soon take over your local facility (if it hasn’t already) or scoop up physicians, particularly primary care doctors. Another catalyst behind consolidation: Starting in 2015, Medicare reimbursements drop for doctors who haven’t made inroads with electronic medical records, which can be expensive or onerous for standalone practices to install.

On the surface nothing may change when your doctor joins a larger system. You drive to the same office and see the same familiar faces. You may even encounter some improvements, like free access to a nutritionist or wellness coach. The difference may show up on the bill.

Health economists worry that mergers could end up increasing what you pay. Hospital systems can often negotiate higher rates with insurers for the same care.

“Small practices are price takers, but large groups and hospitals are price setters,” says Robert Berenson of the Urban Institute’s Health Policy Center. Health insurer Cigna has seen bills for cardio procedures done in a doctor’s office, such as stress echocardiograms, jump 300% to 500% after the office is acquired. You may notice a “facility fee” of $75 to $150 for a routine office visit. If so, check with your insurer. Some have negotiated no fees with certain providers.

3. You still have time to buy coverage, and doing so is easier

If you buy insurance on your own, you had until Dec. 23 to sign up on an exchange to ensure coverage by Jan. 1. Given the widespread glitches, confirm that your enrollment went through with your insurer. And pay promptly: Insurers can drop you if you fail to make a first payment.

If you’re not yet enrolled, do so by March 31 to avoid a penalty. Healthcare.gov, after undergoing serious repairs, is performing better. Window-shopping is easier too. Before you apply, you can now get an idea of the premiums, deductibles, and co-insurance rates you’ll pay, as well as an estimate of any subsidy you might qualify for.

You may have heard that you can hold on to your previous policy, even if it falls short of the law’s requirements. After hundreds of thousands of policies were canceled, President Obama announced in November that insurers can extend those plans. But state regulators must agree, and many, including officials in New York and Washington, did not; Texas and Florida officials did. Even then, insurers must sign on, and not all have.

4. Buying on your own, though, may involve some big tradeoffs

Now that health plans are for sale on the exchanges, one thing is clear: To accept everyone regardless of health, cover all the law’s essential benefits, and keep prices competitive, insurers have had to cut corners. One way is by setting high deductibles.

Another is limiting how many hospitals and doctors are considered in-network much more than a typical policy does. “There are only so many levers you can push, particularly in a short time frame,” says Sabrina Corlette of the Georgetown Health Policy Institute.

According to a recent McKinsey study of mid-priced exchange policies being sold in 20 urban areas, 70% of plans exclude at least a third of large hospitals in the area from their networks. Narrow networks are almost three times more common than they were among individual plans in 2013, the study found. The one insurer selling so far on the New Hampshire exchange has deemed more than a third of the state’s hospitals out of network. In Washington, Seattle Children’s Hospital has sued the state’s insurance commissioner because the facility is excluded from many exchange plans.

Before policies reached the exchanges, state or federal regulators had to agree that the networks were broad enough to cover necessary services. Still, you may not be able to find an in-network provider that you consider suitable. Or you may want to use a local children’s hospital or university cancer center that’s been left out. To have an out-of-network facility or doctor covered at in-network rates, you can appeal to your insurer. Enlist the doctor to help you make your case, says Boutin. You could ask for a letter, say, spelling out how often he or she does the procedure annually and the outcomes.

Finally, don’t rely on the exchange listings or even your insurer’s website to find out what’s in network. “Even before the ACA, provider directories were notorious for being unreliable,” says Corlette. Instead, pick up the phone and confirm that a doctor accepts your insurer as well as your specific plan.

5. You can find out a lot more about your doctor and your hospital

The ACA also sets out to collect more info on the quality of care Americans are getting, and those efforts are bearing fruit, giving you improved tools to judge a hospital, doctor, or Medicare plan — and the government more ammunition to push for improvements. In 2012, Medicare began tying reimbursement rates for private Advantage plans to the star ratings it earns.

You can visit the hospital compare tool on Medicare.gov and see how a facility stacks up against state or national averages for readmissions, complications, and patient satisfaction. In December, the site added outcome data for knee and hip replacements.

Last year for the first time, Medicare penalized more than 2,000 hospitals with excessive readmissions—a possible indicator of a poor discharge process. That move could make it less likely that you or a family member will be ushered out the door without a full explanation of your medications, says Jim Chase, president of Minnesota Community Measurement, a nonprofit that reports on quality of care.

A similar physician comparison tool, relaunched in 2013, is set to go live with its first quality measurements this year. Also on deck: metrics for psychiatric facilities and hospice providers. Private insurers are working on similar disclosures, using their own and Medicare data.

The ratings aren’t so solid that you should drop any doctor with a poor showing. But you can use them to tell whether a practice is staying on top of developments like electronic records and evidence-based treatment protocols, says Reid Blackwelder, president of the American Academy of Family Physicians.

And by looking at what the ratings deem important, such as whether heart-disease patients get certain services, you can know what to ask your doctor about your care, says Chase.

With ratings on the road to becoming the norm, health reform is poised to change how you shop for care—one more way that this 2010 law will play out for years to come.

MONEY health insurance

What’s Next for Retiree Health Care

Fewer companies are offering retiree health care benefits. Even if you get benefits from a former boss, you'll see some changes. Photo: Shutterstock

When it comes to getting health coverage from your old boss, the landscape is changing fast, and not just for early retirees.

Companies have been cutting back on retiree health benefits for years. Indeed, the latest survey by the Kaiser Family Foundation (KFF) found that among large firms with employee health coverage, just 28% offer some form of retiree benefits, down from 66% in 1988. Among smaller firms, help is even scarcer.

Disappearing corporate benefits is one reason the new public exchanges created by Obamacare will be such a boon to early retirees. But even for seniors who still get help from a former boss, change is afoot, no matter your age.

Here’s what to watch for:

Early retirees: If the public exchanges succeed, firms that offer pre-Medicare coverage may give those ex-workers funds to buy a policy on one, says Tricia Neuman, director of KFF’s Program on Medicare Policy. Employers are taking a wait-and-see approach, but that could change fast.

Retirees 65 and up: About a third of Medicare recipients have supplemental coverage from a former employer, says Neuman, and some of them are already seeing changes. Several major companies, recently IBM and Time Warner (MONEY’s parent company), are shifting retirees 65 and older from company-run plans to private exchanges operated by benefit consultants and insurance brokers.

On a private exchange, you’ll be able to pick supplemental Medicare coverage from a host of options, using funds your employer contributes to a tax-free health-reimbursement arrangement, or HRA.

For now, companies making this shift aren’t necessarily cutting back on how much they’re spending on your health care, says Paul Fronstin, a senior research associate at the Employee Benefit Research Institute (though IBM capped its contribution years ago). But how you’ll fare over time will depend on the employer subsidy keeping up with premium hikes, says John Grosso, health care actuary at Aon Hewitt. If not, you’ll pay more.

You or your parents may leap at the chance for more choices, or be overwhelmed by the sign-up process. It’s similar to open enrollment, but with potentially more options.

“Make use of all the tools out there,” says Sandy Ageloff, Southwest health and group benefits leader for Towers Watson, which owns Extend Health, the biggest private exchange. Tools include phone counseling at the exchange; the typical initial call runs about 80 minutes, Ageloff says.

MONEY retirement income

Immediate Annuities: When Guaranteed Income Is a Bad Bet

An immediate annuity, offering guaranteed income for life, sounds great -- until life throws you curve balls. Photo: Shutterstock

Guaranteed income for life sounds great—until life throws you a curve ball.

It’s long been a mystery to economists: As MONEY has often noted, an immediate annuity is a great way to ensure you never run out of money in retirement; for a fixed sum upfront, you collect a monthly check for as long as you live.

So why do few people buy one? This disconnect, dubbed the annuity puzzle, has led regulators to try to add annuities to 401(k)s to encourage savers to buy them.

Turns out, savers had it right all along, even if they didn’t know why (a fear of dying young is what deters most). Almost half of retirees are better off keeping their portfolios liquid, not locked up in annuities, according to new research by Felix Reichling of the Congressional Budget Office and Kent Smetters of the Wharton School of Business.

The chief reason: the potentially high cost of health care. “One of the largest risks facing most retirees is running up hefty medical or long-term-care expenses that aren’t covered by insurance,” says Smetters.

Tying up too much cash in an annuity can produce a double whammy. A health crisis may cut your lifespan, which reduces the future value of your remaining annuity payments. Meanwhile, you need cash to pay for your care.

“The risks of health care costs are something most planners and investors knew intuitively,” says Michael Kitces, director of research at Pinnacle Advisory Group.

Still, adds Kitces, as long as you have a savings cushion for health care, the guaranteed income from an annuity can pay off if you end up living beyond your life expectancy. But take these steps first:

Build a health care nest egg. With Medicare covering only about half of medical costs, Fidelity estimates that a 65-year-old couple will spend $220,000 on health care expenses during retirement. And that doesn’t include long-term care, which some 70% of Americans will eventually need in some form, according to U.S. Department of Health and Human Services data.

That could be family help — what’s most common — or nursing care, at an average tab of $91,000 a year, reports MetLife. The average stay is three years.

Create a care plan. Thinking ahead can help reduce your long term-care expenses, says MIT AgeLab director Joseph Coughlin. For example, few baby boomers have made the kind of modifications to their homes — widening doorways or lowering countertops — that would allow them to stay put if they become disabled.

Preview your income. With enough set aside for health care, deploy the rest of your assets. Find out how much income your savings will produce with T. Rowe Price’s retirement income calculator. To see the benefits of putting a portion in an immediate annuity — perhaps enough to cover much of your fixed expenses — get quotes at immediateannuities.com, then head back to T. Rowe’s tool, entering the annuity as a pension.

“With a steady income, you’ll be better able to hang on to stocks, which can give you higher returns,” says Kitces. Given the spiraling cost of health care, every little bit helps.

MONEY Health Care

5 Things to Know About Finding a Doctor Online

Online reviews are a great place to start looking for a new doctor or specialist. But you should dig deeper.

1. More patients are web surfing for docs.

Nearly a third of consumers have read doctor reviews, PricewaterhouseCoopers reports, while Google searches for crowdsourced MD data have doubled since 2007.

The info is now found on dozens of sites, from medically focused Healthgrades and Vitals.com to general review sites like Angie’s List and Yelp.

What you’ll find: an overall rating based on patient reviews, info about training, plus metrics such as time spent per patient, office wait, and customer service.

2. The sites are great for bedside manner…

Look for patterns in the reviews to get a sense of a doctor’s patient style. That’s especially useful when choosing a family practitioner, less so for a specialist.

“The narrower the doctor’s expertise, the more you need their knowledge, not their personality,” says Pamela Gallin, author of How to Survive Your Doctor’s Care. Some site extras: ZocDoc lets you book appointments via its portal; Angie’s List offers a service to help detect billing errors.

3 …But less useful for assessing quality of care

Studies have found weak correlation between health ratings and other measures of how successfully a provider treats patients. And the sites offer little data on the outcomes of procedures by specific docs. That may change because of Obamacare, which ties Medicare financial incentives to performance; that should make more data available.

4. Choosing a hospital? Get a full lowdown

“There’s much more quality and safety information available for hospitals than for physicians,” says Matt Austin, a patient-safety expert at Johns Hopkins Medicine.

Use the Hospital Compare tool at Medicare.gov to see how readmission, complication, and death rates compare with the national averages, plus patient satisfaction data. Check LeapfrogGroup.org for safety ratings by hospital and procedure and InformedPatientInstitute.org for state-specific data.

5. For cost info, head to your insurer’s site

As part of their doctor search tools, most health plan websites will help estimate your out-of-pocket for a particular doctor or hospital.

For in-network care, large insurers such as Cigna and Aetna will factor in your plan design, deductible, and their pricing agreements with specific practices. Such tools have become more popular as patients shoulder more of their medical bills.

Says UnitedHealthcare’s Victoria Bogatyrenko: “Consumers are more price-sensitive.”

MONEY Health Care

Help Your Parents Get the Right Home Care

The right home care can make it possible for many seniors to age in place. Photo: Jason Hindley

Your parents probably want to age in place. The right home care is the key to making it happen.

The vast majority of Americans want to live at home for as long as possible: Nearly 90% of people over the age of 65 said so in a 2010 AARP survey.

And with assisted living costing more than $40,000 a year on average, staying put can also save money. But the physical and medical problems that go hand in hand with aging can make home life difficult.

That’s why seniors — and their adult children — are increasingly hiring help to extend their time at home. Demand for these services is so strong that the Labor Department expects the number of aides to rise by 70% through 2020, making it the fastest-growing job in America.

The cost of help, though, can add up fast, averaging $21,000 a year for a typical part-time schedule, says MetLife. And more often than not, the government or insurance won’t foot the bill. Take these steps to find the right care:

Identify the need

After a hospital stay or health crisis, it’s often obvious that a parent should have help. In those cases a doctor may prescribe short-term skilled nursing care or physical therapy visits, which should be covered by Medicare.

Other times, the need is tougher to spot: dirty dishes in the usually tidy kitchen, stubble on Dad’s typically clean-shaven face.

“When you see longtime habits changing, that could be a sign,” says Kathleen Gilmartin, chief executive officer of home health franchiser Interim Healthcare.

Your own heavy caregiving load could also be the trigger: “Home health aides give family caregivers a break from the stress and let them manage their own life,” says Denise Brown, founder of online support site Caregiving.com.

The type of care varies, from health aides and nursing assistants who can help with bathing, dressing, and medication reminders to workers who’ll do light housework and fix meals. In both cases you’ll pay about $20 an hour through a home health agency, says MetLife (for live-in care, the average tab is $250 a day). By hiring directly you can pay about a third less, says Steve Horen, CEO of the home agency Koved Care.

A geriatric-care manager ($150 to $200 an hour) can do an assessment of your parents’ needs. Locate one at caremanager.org.

Hire carefully

A geriatric-care manager or home health agency will screen candidates and conduct background checks. You can find an agency at homecareaoa.org. Advertise directly, and you’ll need to do the due diligence, including checking references and credentials. Health aides and nursing assistants are generally certified by the state.

No matter where you get the names, interview at least three potential hires. Look for a pro who has experience taking care of someone with your parents’ particular needs. “If your father is grumpy and doesn’t like to eat in the morning, ask the caregiver how she would handle that,” says Jody Gastfriend, vice president of senior-care services at Care.com.

When you hire through an agency, the company acts as the employer, withholding taxes and paying unemployment and workers’ comp insurance. While many people who hire direct pay cash, by law you must contribute to Social Security and Medicare on the caregiver’s behalf. A service like Breedlove.com or HomeWorkSolutions.net will handle taxes and insurance for $700 to $800 a year.

Once you’ve found someone you like, make him or her feel valued and comfortable. These jobs don’t pay great, so try to be flexible about scheduling. And, adds Gastfriend, “express thanks for the often challenging work they do.”

Investigate aid

Some 70% of home health bills are paid out of pocket, according to the market research firm Home Care Pulse. Still, don’t overlook any aid options.

Most long-term care insurance policies cover visits when a person cannot perform two to three “activities of daily living,” such as meal prep or bathing. Medicare pays only for doctor-ordered, skilled nursing care. If your parents have very little in assets, Medicaid usually covers part-time help. Check benefitscheckup.gov for eligibility and find local services at eldercarelocator.gov.

MONEY Health Care

Coping with the Financial Toll of Terminal Illness

Steve West spends mornings with his granddaughter, Gracie, 2, who has learned to hug him even though he can't hug back. ©Annabel Clark

Since he was diagnosed with a terminal illness almost four years ago, Steve West and his wife, Pam, have tried to live life to the fullest while coping with the physical, emotional, and financial drain of his condition. Their big money worry now: How will she manage once he is gone?

Steve West cheated death once. In the summer of 1969, when he was 17, Steve and a friend were camping in Tennessee when they wandered down a nearby path. The trail hugged the side of a cliff on one side, with a 100-foot drop on the other.

Steve lost his footing. The fall would have killed him if some branches hadn’t broken his descent. As it was, it took 10 hours for rescue workers to reach him. He fractured his arm and leg and suffered numerous internal injuries, resulting in a four-week hospital stay that ruined his plans to attend the Woodstock music festival.

Steve’s remarkable survival made the front pages of the Chattanooga newspapers, and soon became a footnote to a busy and productive life.

Death, however, was preparing to get even. It cast an unseen shadow as Steve earned a doctorate in sociology, taught at a small Virginia college, and switched careers to become a successful pharmaceutical market researcher in Philadelphia; it lay in wait as he married, had a child, divorced, and married again.

Then, in 2008, Steve began to feel that his left leg wasn’t quite right — he had “tingling sensations,” he recalls. In September of that year, he and his wife, Pamela Learned, were on a trip to Scotland when he noticed a weakness in his left leg. After a day of sightseeing in Edinburgh, he was walking with a limp.

Back home in the upscale Philadelphia neighborhood where they lived, Steve and Pam theorized that the problem was nerve damage from a fall he had sustained during a trip to Yellowstone National Park the year before. But not only was his leg getting worse, it was beginning to twitch. Steve had been a runner who could easily put in three to five miles several days a week. No longer.

“The distances kept getting shorter and shorter,” he says. Pam recalls, “It was so mild I said to him, ‘You’re just getting old. Start walking.'”

Related: Cutting the High Cost of End-of-Life Care

Steve’s work made him knowledgeable about medical subjects, so he did some research. Sitting in bed one morning with his wife, drinking coffee, Steve told her he thought he might have ALS, a progressive neuromuscular disorder also known as Lou Gehrig’s disease, after the baseball great who was stricken with it in the 1930s. A visit to a neurologist at Pennsylvania Hospital in March 2009 confirmed Steve’s self-diagnosis — and the devastating prognosis: ALS is always fatal, usually within five years.

Today, nearly four years later, Steve’s disease has progressed to the point where he has lost the use of his arms and legs, has trouble breathing, and can no longer feed or care for himself. Just when his death will come is unknown. It depends on when he will, literally, run out of breath — when his respiration will become too weak to sustain life.

Compared with the typical end-stage hospice patient, Steve, 60, is doing well. “I can whip their asses,” he says. He and Pam, 53, go out daily for walks, visit with friends, stop in for lunch at a local pub. Still, they are realists. Based on his condition now and the doctor’s most recent assessment, Pam’s response is swift and unequivocal when they are asked for their thoughts about how much longer Steve has to live: six to nine months.

Any patient and family facing terminal illness knows that the physical and emotional toll will be immense, of course. What’s often underestimated at first: the financial toll, as ongoing health care bills drain savings, even for couples like Steve and Pam, who earned a six-figure income and had built what they thought was an ample cushion.

When it’s the main breadwinner who is ill, the anxiety about money is heightened — especially if that spouse was also primarily responsible for handling the household’s finances. That’s the case for Steve and Pam.

Weighed down by uncertainty about what the future holds, Pam finds herself embracing worst-case scenarios that may never materialize and worrying about how she will support herself later at a time when every minute the couple have now is more precious than ever.

Steve West and Pam Learned found each other on Match.com in 2003 and were married four years later. Theirs was a very modern romance, a joining of two mature adults with three grown children from previous marriages between them.

He has a daughter, 31, who works in the financial industry in New York City; Pam has a son, 27, in Los Angeles and a daughter, 30, who lives nearby with her husband and daughter.

The couple’s combined income — Steve made over $200,000 a year; Pam, $60,000 to $70,000 — meant that they were able to enjoy a comfortable lifestyle. They set aside about $10,000 a year for twice-yearly vacations, mostly to national parks, where Steve would fly-fish.

Both owned businesses that allowed for frequent travel. Pam, a former journalist, owned a firm that provided marketing services to nonprofits and municipalities; Steve was a founding partner of a pharmaceutical market research firm.

They had taxable savings and investments of $500,000, retirement accounts totaling about $700,000, and no debt except for a mortgage on their $550,000 house (a far from onerous $2,100 a month). They felt as if they were set financially, or at least well on their way.

And they were — right up to the day Steve learned he had ALS, a disease so rare that only 5,600 people a year are diagnosed with it.

Amyotrophic lateral sclerosis, he discovered, is an equal-opportunity affliction, making no distinction for race, ethnicity, or gender. The disease slowly shuts down nerve cells throughout the body, leaving patients unable to walk, use their hands, eat, or speak, though their brains remain vibrant.

While it’s been more than 70 years since Lou Gehrig’s emotional “Luckiest Man” farewell speech at Yankee Stadium raised the profile of ALS, there is still no known cause or cure, only treatments to forestall the steady decay.

Steve’s body began to act in strange ways almost immediately after he was diagnosed. “I would wrap my arms around him, and I could feel these little chi-chi-chi-chi-chi-chi movements in his muscles,” says Pam. “It was like holding twinkling stars.”

Those movements are formally called fasciculations, a kind of muscle twitching in ALS patients caused by the steady degeneration of the nerves.

As Steve and Pam struggled to come to terms with the severity of his disease, a second shock wave followed: ALS, they were learning, was going to be very expensive.

“There were hundreds of decisions to make,” Steve recalls. Would they have to move? Quit their jobs? How would they manage their money so that Steve could be cared for, while still leaving enough to support the household?

The questions loomed even larger when they looked beyond Steve’s death. Would their retirement savings be enough to support Pam for the rest of her life? And if she had to go back to work after a long period of time off, what could she reasonably expect to earn, if she could even find a decent job?

Steve is reflective, not somber, talking about that initial period of coming to terms with ALS. “There was sadness early on, in recognizing what it meant, but it didn’t really last that long,” he says. “There was also anxiety, not so much over the prospect of dying, as getting things situated for the rest of our lives.”

The first question they tackled was whether to move. Their three-story, six-bedroom Tudor Revival house was hardly ideal, but they decided to stay, making necessary renovations to adjust to the rapid deterioration of Steve’s body.

Their home was just a few minutes’ walk from the regional rail line, and they were blessed with neighbors who were willing to pitch in and help at short notice. That would become increasingly important as Steve’s condition worsened.

So they began essential renovations late in 2009. First they spent $500 to put railings on stairwells and in the bathroom. An elevator was installed for about $24,000. More work followed in February 2010. The bathroom was revamped, with a new toilet and wheelchair access to the shower, while the bedroom was enlarged to make room for medical equipment by breaking through the wall of an adjoining room to create a single, bigger space, for $28,000. A ramp to the front door ran them another $2,000. Total price tag: $54,500, which they paid for out of savings.

The necessity of the changes soon became apparent, as Steve’s leg muscles began to deteriorate. For the first year of his illness, he was able to get around with a cane. Then, after another five months, he needed a walker. When his legs could no longer support him, he switched to a foldable wheelchair, the kind that anyone might need after a bad leg fracture or a hip replacement.

By the fall of 2010, as he grew weaker, he could no longer operate a chair under his own power. He moved into an electric wheelchair. The first ones were loaned to him by the ALS Association, but then they bought a pricey custom-made model that required upgrades as his condition worsened. To transport Steve in the chair, he and Pam bought a specially designed Braun Entervan for $36,000.

Fortunately, as the expenses mounted, they still had Steve’s salary to rely on. For the first couple of years, he was able to work full-time, initially in the office and later from home. Skype was a great help, as was voice-recognition software that allowed him to operate a computer by verbal commands. (He still can navigate a computer, using voice software and the one finger he can get to move.)

Pam, however, found maintaining a full work schedule tough, as helping Steve required more and more of her time. She tried moving her marketing business close to home, but in late 2010 decided it would be better if she stopped working altogether and devoted herself to helping Steve.

Being a full-time caregiver, Pam soon learned, was physically draining and at times “a real whack on the identity.” (She found herself feeling resentful a few months back when a hospital intake person listed her occupation as “homemaker.”)

More trying was dealing with people who refused to accept the truth of Steve’s situation. Pam describes how a local storekeeper kept asking, “How is Steve? Is he cured yet?” Pam would respond, “There is no cure.” Finally, she took her business elsewhere: “How many times do you have to say, ‘Incurable’?”

With less income but expenses rising, Steve and Pam found money getting tight. Contributing to the strain: His private health insurance policy proved inadequate when dealing with ALS.

Decisions on coverage for equipment, such as the power wheelchair and a lift to help Steve in and out of bed, took two to four months at times, impractical for an illness in which patients deteriorate so quickly. (Pam remembers one insurance company person she spoke to on the telephone who admitted he didn’t realize ALS was a fatal disease.)

Even when approval came through, Pam says, the benefits sometimes felt stingy. Case in point: The specialized power wheelchair that Steve needed once he lost use of his arms would have cost them $22,000 in co-payments. After researching, Pam found out that if she bypassed the insurance company and bought the chair directly from the dealer, they’d instead pay $17,000.

“Doing battle with insurance was the biggest nightmare until we got into Medicare,” says Pam. (As an ALS patient, Steve qualified for Medicare earlier this year, once he stopped working and began collecting Social Security disability benefits.)

By contrast, the ALS Association provided valuable assistance from the start. Early on, Pam and Steve would pack a lunch and spend hours at a clinic affiliated with the association, meeting with seven or eight specialists. They saw an occupational therapist, a social worker, a counselor, an MD, a respiratory therapist, and whatever other medical experts he needed. All were covered by insurance. In addition, the association lent them medical equipment such as a folding wheelchair and walker at no charge, saving Steve and Pam thousands of dollars.

The rest of their family also pitched in. Pam’s son, Mark, lived with them for a year and helped take care of Steve, getting him in and out of bed.

When Mark moved to Los Angeles in May 2011, Pam hired a home health care aide for four hours a day, first two, then seven days a week. Steve’s daughter helps out with the costs, contributing to the $2,400 monthly fee to the aide’s agency.

Neighbors in their community of Chestnut Hill have provided a constant stream of assistance as well. They drop in frequently, offering food and companionship. When Pam pinched a nerve earlier this year, her neighbors took over the task of getting Steve into bed every night. It was difficult to ask for help at first. But as time went on, Pam realized that folks weren’t just being polite — they really wanted to help. And Pam realized she needed it.

Early in 2012, the muscles in Steve’s torso became weaker, affecting his breathing and eroding his energy. He was forced to quit work for good.

In the months since, ALS has steadily robbed him of more and more. Steve can no longer feed or bathe himself. His breathing capacity is less than 20% of normal, and speech is a chore, as he struggles to gather the lung capacity needed to utter more than a few sentences.

Pam and Steve still go out almost daily, strolling through the neighborhood, visiting local parks, stopping at coffee shops and stores. Friends, neighbors, and family drop by frequently to help out and spend time with Steve. Adjustments are subtly made. Steve can no longer embrace Pam’s granddaughter, Gracie, when she stops by each day for a visit, so instead the 2-year-old climbs into his lap, burrowing against his chest. Their black-and-white cat, Oreo, set in its ways at 16, was at first miffed at Steve’s inability to pet him but has learned to rub against his inert hands.

The daily jaunts and visits from well-wishers, though welcome, are becoming more difficult as time goes on. Steve tires easily and needs to nap. Both Steve and Pam know the day is fast approaching when Steve will not be able to swallow.

“With a ventilator and a feeding tube, your life can be significantly prolonged,” says Steve. “But it’s not very pleasant for anybody, family or patient.” It’s not an option Steve plans to take.”

NEXT: How she will manage once he is gone

As Pam looks ahead to a life without Steve, her consuming worry is how much money she will need to earn to support herself. The dream of growing old with her husband is gone, and she has a long future of her own to pay for.

The couple are fortunate that they have considerable resources to work with. In addition to their retirement accounts, they have $108,000 left in their taxable accounts. Pam will also be the beneficiary of Steve’s life insurance policies, totaling $375,000.

Since his departure from his company earlier this year, Steve has been getting buyout payments of about $37,000 a year, and those payments will continue after his death — assuming the company is profitable. The Social Security disability benefits he’s been collecting since his retirement in January, along with private disability payments, bring in an additional $7,800 a month, but that income will end with his death.

Pam has always depended on Steve to manage their finances. Even now she leans on him for advice, and he continues to oversee the household books. And Pam is struggling to make the math work.

As best as she can determine, she’d have to go to work right after Steve dies and make perhaps $100,000 a year, to avoid drawing down the retirement accounts soon afterward — worrisome considering that’s far more than she made before he became ill. And that anxiety about money is eating into the time she has left with Steve.


To help Pam and Steve sort through their options and separate fact from fears, Money turned to Priscilla Gilbert, a financial planner with J. Cole Financial Advisers in Philadelphia.

Gilbert examined various scenarios for the years ahead, working with Pam on her job and lifestyle expectations following Steve’s death and over the long term. Here are the planner’s recommendations:

Deal with the immediate challenges. Over the next several months Steve and Pam face high and rising expenses as his condition worsens.

In addition to his medical bills, the couple will need to hire extra home help, which isn’t covered by Medicare. Combined with their current spending on other household items, Gilbert estimates that they’ll need about $145,000 to get by.

With Steve’s current life expectancy they can probably cover most of that from Steve’s buyout and disability payments. The planner also urges them to review the titles on their nonretirement accounts to make sure they are held jointly or in Pam’s name alone. That will help avoid probate and ensure she has access to that money.

Create a livable income stream. After Steve’s death, Pam will no longer be contending with a $45,000 annual bill for medical and home health care costs. Gilbert suggests Pam look for other ways to save money — for instance, aiming to pare food and household incidentals, which now run the couple nearly $1,500 a month, to $700.

Even with these cutbacks, however, Gilbert estimates that Pam faces expenses of about $100,000 a year, since she plans to keep living in the house. Yet her only income will be from Steve’s buyout payments of $37,000 a year.

Where will the rest of the money she needs come from? Gilbert suggests that Pam ease back into the workforce starting in 2014, with a goal of making $25,000 in after-tax earnings that year and $55,000 in 2015 — levels that Pam thinks are realistic.

After setting aside $40,000 for an emergency fund, Pam can then tap non retirement savings to make up the shortfall — first bank accounts and mutual funds, and later relying on the proceeds of Steve’s life insurance policies.

When the buyout payments end in 2019, Pam will be 60 and can replace part of that money by taking Social Security survivor benefits on Steve’s earning record. That would bring in nearly $1,200 a month.

Keep retirement savings options open. Gilbert recommends keeping the retirement accounts in Steve’s name for maximum flexibility. If for some reason the couple need to use the funds while Steve is alive, they’ll be able to withdraw money without penalty since he is already over the required minimum age of 59½ (he turns 61 this month); Pam would then be able to withdraw from the accounts after his death without penalty, if needed.

Ideally, they’ll be able to leave the retirement accounts alone so that they can continue to grow tax-free for as long as possible. (Tax rules require that once IRA withdrawals begin, they must continue.) If the accounts remain in Steve’s name, Pam will not have to take distributions until 2022, the year Steve would have turned 70½.

As 2022 approaches, Pam can elect to roll the IRAs into her name if she doesn’t need the cash right away. That will enable her to further defer withdrawals until she reaches 70½ in 2029.

Fix the investment mix. The retirement portfolios are currently invested mostly in midcap U.S. stocks, an asset mix that Gilbert feels is too aggressive for their circumstances. She suggests that they keep nearly half their assets in fixed-income investments (mostly investment-grade bonds), 35% in larger U.S. stocks and developed-nation foreign equities, and most of the rest in smaller domestic and emerging-market securities. They can follow the same asset allocation for the life insurance proceeds.

With her financial picture clarified, Pam says that she can focus on the time she has left with Steve. She is trying to remain upbeat about everything, including the demands of caring for a husband with ALS.

“When I met him, I wanted to get 30 years out of him,” she says. “I may get only 10, but I have him 24/7, so that adds up to 30.”

Stoic about what lies ahead, the couple occasionally take time for reflection. Years ago, when Pam was a reporter, she recalls, she would write obituaries noting that somebody “lost a battle” with cancer or another disease. “I know people who have battled, but I don’t think we’re battling. We accept death,” she says. Steve chimes in softly, “When I die, the disease dies with me, so that’s at least a draw.”

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