Entries in Benefits (4)


States Slow to Recoup Billions in Improper Unemployment Payments

Adam Gault/Thinkstock(NEW YORK) -- Billions in taxpayer dollars were improperly paid out in the form of unemployment insurance benefits last year and, as ABC News has learned, many states have been slow in trying to get that money back.

In 2011 alone, the government paid out $11 billion to people who either were intentionally cheating the system or accidentally violated the rules, according to the U.S. Department of Labor.  In other words, some people who no longer qualify for benefits are still collecting.

The Labor Department says there is a tool to help states recoup the funds but ABC News has learned that only a few state governments are actually using it.

So far only New York, Wisconsin, Pennsylvania and Michigan are actively working with the Treasury Department to collect improperly distributed payments, with more than 20 other states planning to join in the future.  That means that half of the country is not yet using this tool to help regain billions in wrongly disbursed unemployment funds.

The Labor Department says that over the last three years, Texas has paid out more than $1 billion improperly.  In California, unemployment recipients were paid more than $1.7 billion in error or under fraudulent circumstances.  What's more, the government agency says more than 40 percent of unemployment payments paid out in Louisiana and Indiana were improper funds.

Still, none of these states are utilizing programs and resources that would help directly collect improper payments, such as the Treasury Offset Program (TOP).

Under the TOP program, the IRS allows states to withhold the tax refunds of people who have received improper compensation to recoup the lost funds.

Assistant Secretary of Labor Jane Oates told ABC News that outdated computer software at the state level is a major reason why so few states have been taking part in the program since it was started in January 2011.

"Our states have really let their infrastructure systems become obsolete," Oates said.  "So therefore, when new programs become available, their systems aren't able to handle them.  So it does require an investment on the range of millions of dollars."

At a time when cash-strapped states are slashing budgets because of deficits, it's an investment few states have been willing to make.

Copyright 2012 ABC News Radio


Social Security: When Is the Best Time for Retirees to Collect Benefits?

Comstock/Thinkstock(WACO, Texas) -- Retirees will see a 3.6-percent increase in their Social Security checks next year, but choosing when to receive benefits remains a complicated question where missteps can be costly, especially for two-income couples.

Over 60 million people will gain from the "cost of living adjustment," or COLA Social Security increase. The increase, designed to offset rises in the cost of living, was based on the Consumer Price index from the third quarter of 2008 through the third quarter of 2011, the Social Security Administration announced Wednesday.

Raising the Social Security full retirement age has been debated by lawmakers for years. For now, people can start receiving benefits as early as age 62 or as late as age 70, but the full retirement age -- when benefits are at their maximum -- ranges from 65 to 67, depending on when you were born.

All current retirees will get increases of about $39 a month and in December those who receive supplementary Security Income, a disability program for the poor, will receive an average increase of $18 a month. The increase also applies to those who are at least 60 years old by Jan. 1.

Bill Reichenstein, a finance professor at Baylor University, said the increase will not affect people who are younger than 60 at end of year. Rather, their benefits will be based on a formula that translates their pay in their 35 highest-earning years into a "primary insurance amount." Earnings for years before they turn 60 are adjusted for the average wage level in the country.

"If someone born in 1952 earned $40,000 in 1980 and the average U.S. wage level doubled between 1980 and 2012 -- the year he or she turns 60 -- then the $40,000 would be doubled in the formula," Reichenstein said.

Those who must choose when to receive their Social Security benefits, which increase the later you receive them, face a complicated decision. For married people, the question is even more vexing.

Ted Schwartz, president and chief investment officer of Capstone Investment Financial Group and personal finance columnist, said the most difficult aspect of choosing when to receive Social Security benefits is estimating your longevity.

"That's what makes it a hard decision," Schwartz said. "If a person has great genetics and great health maybe putting it off is a better decision."

Reichenstein, 59, launched a paid tool on the website six months ago that advises users on the best time to start receiving benefits.

He said he found a need for the tool because most Social Security Administration staff are not trained to offer the kind of advice that many people need -- mainly the timing of your benefits.

His tool can provide a report to a user in a "matter of minutes," and has a three-tier pricing system of about $20, $50 and $125 depending on how detailed of a report you choose and whether you want to speak to a "live expert."

Reichenstein said he used the tool and decided to delay his benefits until age 70, in consideration of his wife, who is six years younger. Because he is the higher-income earner, her benefits will cease when he dies.

"The key principle is the higher-earning spouse," he said. "My benefits will last until the last of us die. Her benefits will last until the first spouse dies and it doesn't matter which."

Reichenstein said he is healthy but has a family history of cancer and expects to live until he is about 82, based on his heredity. To maximize Social Security's payout, he said he needs to wait until he is 70 until he starts to receive benefits.

That is, if Social Security benefits will last.

Based on the current promises, Reichenstein said the reserves in the Social Security trust fund are expected to be depleted in the 2030s. If no other change occurs, then recipient benefits would fall to about 75 percent of promised levels. However, there have been proposals in Washington to adjust the method of calculating the COLA to relative inflation, which would decrease the COLA percentage increases.

Reichenstein said he agrees that the full retirement age should be raised for people born after 1960 because life expectancy has increased.

In the early 1980s, the full retirement age was raised to 66 from 65 for people born between Jan. 2, 1943 and Jan. 1, 1955 and to 66 for people born on or after Jan 2, 1960.

"I think me and my fellow generation should bear a small part of the cost of ensuring the solvency of the Social Security program," he said. "In my opinion, the responsible thing to do is for my generation to bear a small part of the burden. After all, we refused to force our elected officials to make adjustments earlier even though we knew the system had to be reformed."

Copyright 2011 ABC News Radio


Seniors Will See a Little More in Their Social Security Checks

Comstock/Thinkstock(WASHINGTON) -- The Social Security Administration announced Tuesday that benefits would be boosted starting in January for the first time since 2009.

It's expected that the increase will be around 3.5 percent.

At present, the average is $1,175 a month. With the increase, recipients will see about an extra $38. The current maximum is $2,346 a month, or $541 a week.

Senior citizens who receive federal benefits did not get cost-of-living adjustments (COLA) during the past couple of years because inflation was so low.  But due to a sharp jump in consumer prices, the government is adjusting retirees’ paychecks to help offset rising inflation.

There's just one problem: Medicare premiums will also rise next year meaning that the small bump in Social Security checks will have to go toward paying increased healthcare costs.

Copyright 2011 ABC News Radio


Health Insurance Premiums Rise Sharply in 2011

Creatas Images/Thinkstock(WASHINGTON) -- Health insurance premiums shot up 9 percent this year, nearly three times the rate of inflation and the most since 2005, a new study shows.

This year, the annual premiums paid out for employer-sponsored programs topped $15,000, according to Kaiser Family Foundation/Health Research & Educational Trust, which conducts an annual health benefits survey.

Average health care premiums rose to $10,944 for employers and $4,129 for workers for a total of $15,073.

At a time when economic news is gloomy, the rate of payment may seem troublesome. “This year’s 9 percent increase in premiums is especially painful for workers and employers struggling through a weak recovery,” Kaiser President Drew Altman said in a statement.

The rate of increase is faster than wage hikes and general inflation, which rose 2.1 percent and 3.2 percent, respectively. The figure has risen a whopping 113 percent in the last 10 years, according to Kaiser.

“The 9-percent increase in health insurance costs will make it harder for many families and employers to afford insurance, which may lead higher increases in the number of uninsured next year,”  Leighton Ku, director of the Center for Health Policy Research at The George Washington University.

“The survey found that insurance premiums rose just about the same amount for single people — 8 percent – as the 9 percent increase for families, which suggests that this change required by the health reform law may not have played much of a role in the rising costs of insurance,” Ku continued in a statement to ABC News.

Some good news in the survey: Thanks to health care provisions, more than 2 million young adults were added to family health insurance plans.

“The law is helping millions of young adults to obtain health coverage. In the past, many of these young adults would have lost coverage when they left home or graduated college,” Gary Claxton, a Kaister VP, said in a statement.

Additional findings from the Kaiser Study:

Workers-only coverage increased by 8 percent to $5,429 annually, or $452 a month.

Some 60 percent of companies offer health insurance to workers.

The average co-payment for in-network physician visits is $22 for primary care and $32 for specialty care.

The average co-payment for three- and four-tier dug plans is $10 for generic drugs, $29 for preferred brand-name drugs, $49 for non-preferred brand-name drugs, and $91 for specialty drugs.

One in four large firms offer retiree health benefits in 2011. The figure is down from 32 percent in 2007.

Copyright 2011 ABC News Radio

ABC News Radio