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YOUR BOTTOM LINE

Major Health Care Changes in 2010; Employers Cutting Insurance Costs and Benefits; Get Rid of Debt and Get Organized

Aired October 17, 2009 - 09:30   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


GERRI WILLIS, CNN HOST: Hello, I'm Gerri Willis and this is YOUR BOTTOM LINE, the show that saves you money. Today we'll introduce you to one family that wiped out $123,000 of debt in just four-and-a-half years and we'll tell you how they did it.

Major changes coming to your health care in 2010, a step-by-step guide to open enrollment season. And money etiquette from hostess gifts to birthday dinners, how to handle all of the sticky social situations. YOUR BOTTOM LINE starts right now.

A major move in the Senate this week on the future of your health care, let's get the latest on where this reform stands and what it means to your bottom line from White House correspondent Suzanne Malveaux.

Suzanne, good to see you. The Senate Finance Committee, as you know, passed a plan on Tuesday. Now, what does this mean for us?

SUZANNE MALVEAUX, CNN WHITE HOUSE CORRESPONDENT: Well, Gerri this means an overhaul of the health care system from top to bottom. Now, the cost would be about $829 billion over 10 years. It would provide health insurance for an additional 29 million Americans. It would make health insurance mandatory for most Americans but provide subsidies for low income folks to buy that coverage.

It would also force the insurance companies to accept all applicants regardless of a preexisting condition. The big difference here between the Finance Committee's plan and the Health Committee's plan, which was passed over the summer, is whether to allow the government to sell health insurance in direct competition with private companies that sell health insurance, whether to include this so- called public option. Now the Health Committee bill says yes, the Finance Committee bill says no.

WILLIS: All right, so you say a public option, not a part of this bill, but that's what president Obama has been pushing. What are they saying about that? Are they willing to endorse this or not?

MALVEAUX: Well, sure, Gerri. Right now the finance committee bill is offering this compromise; this idea that publicly owned privately run co-ops could compete with private insurance plans. Now that is an idea the administration also supports. The White House also believes in an idea that's pitched by the lone Republican Senator who voted for the finance committee bill, Olympia Snowe.

She suggested the public option could kick in later if health insurance companies fail to reform. The goal is to merge these two bills in a single one that can at least win at least 60 votes in the Senate. And the president's negotiating teams, they're taking a much more aggressive position in getting a compromise pushed through this time.

Now, among those who met behind closed doors on the Hill on Wednesday there were Senate majority leader Harry Reid, key players senators Max Baucus, Chris Dodd and the White House team involved here, chief of staff Rahm Emanuel, the OMB director and the secretary of Health and Human Services, all of them at the table, they're going to be back working hard trying to hammer out a compromise on Monday, they say, Gerri, this could take at least a couple of weeks.

WILLIS: Suzanne, thank you for that. We know you'll be following it. Appreciate your time.

MALVEAUX: Sure.

WILLIS: Well, from what your health care could look like to what it is right now. According to career builder, one in four workers say they don't pay attention to benefit changes when it comes to open enrollment, with employers looking to cut costs some are changing and even dropping many of the health benefits that they once offered. So, what should you look out for and how do you decide which plan is best for you?

Andrew Rubin, host of Sirius XM's Doctor Radio and vice president of clinical affairs at the NYU's Langone Medical Center.

Andrew, great to see you again.

ANDREW RUBIN, LANGONE MEDICAL CTR.: Great to be here.

WILLIS: All right, so we know our costs are going up, co-pays going up, if you have them, premiums, deductibles, everything going up by about 10 percent. And now I hear that if you don't participate in open enrollment some employer are going to cut your insurance. What is that all about?

RUBIN: Well, listen, health care costs going up and up, the economy is really tough, corporations are looking to keep their benefits for their employees, but one of the ways to save money is shift the cost from themselves over on to the employees and that's what you're seeing a lot with these (INAUDIBLE) plans. It hurts.

WILLIS: And they are telling some people, at least 10 percent of companies are saying, look if you don't get in a plan, if you don't make a decision, if you're just relying on us to figure out what you had last year and put you in that plan this year, forget about it.

RUBIN: And there could be a lot of reasons for that. One is, in particular, some of the plans have changed so it's not going from the same plan from year-to-year anymore to save money they've picked new plans, so they want to make sure the employee picks the right plan so that they're not on the hook for picking the wrong plan for you.

WILLIS: All right, let's do some basics, here. Define HMO, PPO. What are they and what are the differences?

RUBIN: It's so funny, they've been around for so long, but so many still don't understand it. And HMO is essentially a plan that's tightly managed health care where you have to pick a primary care physician who manages your health care. So before you can go see any specialist and you certainly can't go out of network in an HMO, the primary care physician directs where you get the care and you have to stay in network.

A PPO gives you a little bit more flexibility, you can go out of your health care network, you don't need a primary caregiver to tell you if you are allowed to go to a specialist so you get a little more freedom. You can move around more. Still restrictive, though. I mean, the financial incentives are designed in a PPO to keep you in network.

WILLIS: I want to talk one of the big changes this time around. We're used to co-pays in HMOs, 15 bucks, 20 bucks to go see your primary care physician, easy peasy if you have a problem, but that's changing. And now they're introducing language called coinsurance. What's that?

RUBIN: Well, coinsurance has always existed, but now what's changing is like you said, co-pays are going away in some plans and they're applying coinsurance amounts. It's very simple to understand, 10, 20 percent of whatever the bill is, the individual is going to pay as opposed to $10, $20. $30 co-pays that used to apply. You're starting to see that more, it's not universal, but it's been introduced in a lot of places.

WILLIS: More out of my pocket, that's what I see. All right, I want you talk about the high deductible plans, because 75 percent of employers offer these. I'm not sure it's a great deal for most people.

RUBIN: You know, I always tell people, I get this question a lot. I'm not a big fan of high deductible plans for people who are working and have other insurance options available to them, but as I say all the time, if it's a matter of going with no insurance or a high deductible plan and you have that choice, you have that option go with the high deductible plan.

Because, at least, If something catastrophic happens or if you're a young American you have little -- at least you have that protection that you're not going to end up with $200,000 hospital bills. These are not easy decisions.

WILLIS: They're not easy, you really need to read those open enrollment docs. And one thing you mention, I just want to get in there quick, Pick the right primary care provider because it will be hard to go out of network.

RUBIN: It's so important. Before you picked a primary care provider, make sure, if you're going with an HMO or even a PPO that your existing doctors are in your network. So, if you like the doctor you have today, and you're in an open enrollment period make sure your doctor is still in that new benefit plan tomorrow.

WILLIS: Andrew, thank you so much for that.

RUBIN: Good to be here.

WILLIS: All right, digging out of debt, we'll introduce to you one family that's gotten themselves out of a horrible debt nightmare and show you how you can do it, too.

(COMMERCIAL BREAK)

WILLIS: Getting into debt isn't hard to do, but digging yourself out of six-figure debt in less than five years, well it is possible and this Wisconsin family proved it.

(BEGIN VIDEOTAPE)

WILLIS: Open that up for you.

KANDY HILDEBRANDT, PAID OFF $123K IN DEBT: Thank you.

WILLIS (voice-over): The family favorite at the Hildebrand's dinner table? Egg noodles, crackers.

(on camera): This is going to be good.

(voice-over): Cream of chicken soup.

K. HILDEBRANDT: This is mama's Cracker Casserole.

WILLIS: A meatless dish one small way the family of five dug themselves out of a mountain of debt more than twice their annual income, $123,000, the result of 16 years of overspending.

RUSSELL HILDEBRANDT, PAID OFF $123K IN DEBT: Doesn't happen overnight, it was a few thousand every year.

WILLIS: The tipping point?

K. HILDEBRANDT: We've been assessed about $1,544 in finance charges just for one month on 11 credit cards.

R. HILDEBRANDT: To be honest with you I was ashamed I let it get to that point. You know, we've always been big dreamers.

WILLIS (voice-over): But the dreamers didn't take the easy way out, ruling out bankruptcy, and opting instead to pay off their debt.

R. HILDEBRANDT: It was my debt. I made the mistakes and you know, I made the responsibility.

WILLIS: Kandy cut the budget so much that at the end of the month, she often had less than $5 to spare.

(on camera): Plenty of people have $1,200 worth of debt, lots of people have $12,000 worth of debt, but to have $120,000 worth of debt, how can you possibly pay that back?

K. HILDEBRANDT: We quit eating out and that was right away. We quit buying some of our favorite brand name things that were costlier, we would go down to the generics, and actually as I was kind of running out of my favorite brand name things I would add water to stretch it.

WILLIS: The Hildebrandt saved $70 a month doing car repairs, $250 stretching leftovers and eating dehydrated hashed browns. They saved $150 a month by buying at thrift stores, $200 by cutting their own hair. No more CDs and DVD purchases, only essentials. Russell got a second job working nights as a janitor in addition to his day job as a chemist, sleeping only a few hours a night.

R. HILDEBRANDT: Some nights, I admit, I don't think I was going to make it, but I knew one thing, that whether I made it or not I was going to give it the best try that I could give.

WILLIS: To save on gas money, he slept in his car.

R. HILDEBRANDT: And I put my hood on and I would just, put my pillow over here, and snuggle in for the night.

WILLIS: Twin daughters, Holly and Heidi put together a newsletter and sold it to relatives.

K. HILDEBRANDT: That's what they like is the topping.

WILLIS: Dinnertime became family time.

R. HILDEBRANDT: We were sitting here for two hours and tell stories and laugh and just, I think that was our funniest time, and even though I'd be dog tired, I just enjoyed it because that was the time I had to spend with my family.

WILLIS: And having a common goal brought everyone together.

K. HILDEBRANDT: It isn't so much what's on the table as much as what took place while we were here.

(END VIDEOTAPE)

WILLIS: So the Hildebrandt's did it and you can do it, too. They used a credit counseling service to help them organize their debt and reduce interest charges, after just four-and-a-half years, they were debt free and they even bought their first house.

It's possible to get rid of this debt. Gail Cunningham is going to tell you how to do it. She's with the National Foundation for Credit Counseling.

Gail, I think for a lot of people out there, they want a credit counselor, they don't know how to find a legitimate one. How do you do that?

GAIL CUNNINGHAM, NATL. FOUNDATION OF CREDIT COUNSELING: Well, and that's a valid question because there are unscrupulous among us in our industry, but I think if you reach out to an agency that's affiliated with a national body, such as the National Foundation for Credit Counseling, and it adds another layer of security, along with being a non-profit, that's what I would seek.

WILLIS: All right, what are the red flags out there, because there are some people who say that some of these outfits collect your money and keep it. How do I not get involved with a group like that?

CUNNINGHAM: Oh, absolutely. It is critical that the consumer do his or her homework in advance of any financial decision, ask the right questions and make sure you get the right answers. Find out about fees. What fees are charged and get the answer in writing, make sure that you don't pay for a service prior to any service being delivered.

Make sure that the company is willing to work with you regardless of the amount of your debt, if they screen you in advance to find out if you have "X" amount of debt or "X" number of credit cards you hang up and keep calling.

WILLIS: All right, I think that's great advice. Let's talk a little bit about what exactly these counselors do. What do they do that I couldn't do myself?

CUNNINGHAM: Well, that's a great question. Sometimes people frankly just feel overwhelmed. The average consumer debt came to an NFCC member agency last year, had six credit cards and as a matter of fact, their credit card debt, unsecured debt accounted for 62 percent of their household income. They are overwhelmed. They say I can't tell my story to six different creditors, six different times and negotiate six different repayment plans. Help me.

And so the NFCC counselor is trained to step in, do a thorough intake, review that budget, make suggestions for changes where necessary and then negotiate with the creditors for a lower monthly payment, lower interest rate, and late fees and over limit fees stopped or lowered.

WILLIS: And of course, in the face of the Hildebrandt's, they actually got credit card interest rates reduced from 15, 20, 30 percent down to two in some cases and that went a long way helping them pay back their debt.

CUNNINGHAM: Oh absolutely. Unfortunately it's not uncommon for us to see interest rates in the 30 percent range, now. So, as you can imagine it's very difficult to make any headway paying that kind of interest each month. So, the NFCC counselors can help get that interest rate reduced to two percent or even 1.75 percent in true hardship cases.

WILLIS: That's excellent. Gail thank you for that.

CUNNINGHAM: You bet, thank you, Gerri.

WILLIS: Making the most of what you've got. We'll show you how to get organized and maximize your storage space. Plus, as we approach the holiday season how to avoid those sticky social situations.

(COMMERCIAL BREAK)

WILLIS: Who wouldn't like more space? Whether you live in a studio or you have square feet to spare, our next guest is here to show us all about maximizing your storage space without spending a ton of money. Danny Lipford is a home improvement expert and host of "Today's Homeowner with Danny Lipford."

You've got a lot of great ideas.

DANNY LIPFORD, HOME IMPROVEMENT EXPERT: Thank you.

WILLIS: And we're starting in a funny place, because I think the closet you've already got the space you need, no?

LIPFORD: Right?

WILLIS: You're going to help us maximize that space.

LIPFORD: Exactly, you know, when you think about a house you don't need to think about it talking about storage as square feet, think of it as cubic feet and that's what you really have to grab.

WILLIS: You mean like the space up and down and sideways and everything.

LIPFORD: Exactly and like in a closet so many times there's areas in there, but when you look at a closet situation you'll see that there's a lot of ways that you can change it.

WILLIS: We're looking at it right now.

LIPFORD: Right, you can utilize different types of systems that are available or have a cabinet or a closet company come in and kind of customize the different cabinets for the individual that's using the closet and that'll make sure that you're using every single bit of it. You have a shoe rack you want to show us.

WILLIS: Now, you've got a shoe rack you want to show us.

LIPFORD: Right. Right. But, you can also do some very simple things. This is something that everybody's seen, it's just a canvas shoe rack that hangs on the back of the door. And again, that's space that's there, that's available, just think of all the number of shoes that you can put in this type of arrangement and it really saves a lot of space.

WILLIS: And it's inexpensive, yeah.

LIPFORD: Oh yeah, this is just a few dollars. And again, it gets all those shoes up off the floor behind the door where you can still see them, but it's not taking up a lot of space. WILLIS: Let's talk about something that drives me crazy, I have a pedestal sink in one of my bathrooms. It's pretty, but there's no storage. Are people taking those out?

LIPFORD: Quite a bit and people are putting in vanities. Vanities have gotten very reasonable at the home centers and different bathrooms, trying to remove lot of the different pieces of cabinetry and so forth. And you can install a lot of pullouts like this, even in existing cabinetry. And again, this used to be pedestals and these were replaced with these great Merillat cabinets.

WILLIS: That's a lot of storage.

LIPFORD: A toilet topper, also a great space, right above the toilet, you can get a lot of space. You can utilize a lot of that space that's just there not being used, right now.

WILLIS: All right, so neighbors of mine have this garage that is just packed full of stuff. They never park their car in it because there's no space. Could they use that space better?

LIPFORD: Oh yeah, without a doubt. I wonder really, in America how many people actually use their garage for parking cars. But the idea here is to get everything up off the floor as much as you possibly can. Develop some racks on the walls that you're able to hang things, and that will make a big difference so that you just free up that space. And there's so many ways of organizing it, so many different systems that are available now.

WILLIS: Do you have to buy a whole system? Because I've seen some of those that are really expensive.

LIPFORD: They are and you really can spend a lot of money in your garage, but just using a few things here and there, and the hooks like that on the ceiling to allow you to hang bikes or other things is such a simple way.

WILLIS: There you are, hanging it up right there.

LIPFORD: I can actually do some of this work. And then being able to display things to where you can see what you have, but, again, it's not taking up the space, it's a nice, neat way. And just, you know, the hooks here, these are things that are so inexpensive. You want to make sure you're screwing them into a stud or a rafter so that it holds up. But hang a lot of that stuff overhead and get it out of the way.

WILLIS: And I can tell you , by doing that, you can actually see what you have and you're not trying to find something and it's lost or...

LIPFORD: Right. And the main thing, go in there and throw stuff away that you don't need. If you're not using it, get rid of that stuff.

WILLIS: Now you sound like my husband. OK. Let's talk about the kitchen for a minute, because you can maximize space there. And sometimes the systems that people have, they're just not very well organized.

LIPFORD: No, not at all. And again, you have a lot of space inside the cabinet. If you step back and look at your kitchen cabinets, there's so much space in there. You can utilize different racks that pull out like this.

WILLIS: Oh, I like that.

LIPFORD: It's very, very simple. There are tons of them that are available. And just like this example, they're using every square inch of that cabinet instead of just having those pots and plans on the floor.

WILLIS: Can I tell you how much easier it is to like bend down and...

LIPFORD: Oh yeah, accessibility, it's a whole lot better, accessibility-wise. Here's something that you can have your cleaning supplies and they slide in and then you can carry it with.

Now, this is a project we did where we grabbed the one foot of space above existing cabinets, had a cabinet maker build this little cabinet right on top and grab that space. Even if it's a little out of the way, but it's perfect for some of the maybe seasonal holiday dishes and things like that.

WILLIS: And you've got to have a little step foot stool, there or something to get up there.

LIPFORD: Right, have a little stool there, somewhere, right.

WILLIS: But it's really great stuff. And as always fantastic information, Danny, great to have you.

LIPFORD: Always good to be here.

WILLIS: So, we've all been there. Who picks up the check and do you bring a gift? How to handle those sticky social situations, that's next.

(COMMERCIAL BREAK)

WILLIS: Do you send a gift? Do you not send a gift? Do you pay? Does he pay? We'll deal with life's little etiquette questions from time to time, and today fortunately, we have some help. Kristin Van Ogtrop is the managing editor of "Real Simple" and she's here to tell us the best way to handle those sticky situations.

Let's start with one, because I know you interviewed, polled your readers.

KRISTIN VAN OGTROP, REAL SIMPLE: Right, 7,000 readers.

WILLIS: Seven thousand readers. So, we've got a lot of answers, here. We're going to compare that to the experts.

VAN OGTROP: Right.

WILLIS: I hope I'm on the right side of the line. All right, let's start with the first question.

VAN OGTROP: You probably are.

WILLIS: So, let's say that you have someone coming to the house for dinner and you're one of the guests. Do you have to bring a gift?

VAN OGTROP: Do you have to bring a hostess gift? So, about 50 percent people said yes you do, 50 percent of our 7,000 respondents said yes. Now, experts are actually a little divided on this and feel like there's no hard and fast rule.

WILLIS: You know, I think you bring a bottle of wine.

VAN OGTROP: You do, although, don't expect it to be drunk. If you do bring things, there are kind of rules around it. If you bring flowers, make sure they're in a vase. If you bring food or drink, don't expect it to be consumed with the meal and if you don't know the hostess that well, bring something that they could re-gift like candles, but you know, 50 percent said yes and experts say you don't necessarily need to.

WILLIS: I always think it's about how well you know the person.

VAN OGTROP: Oh yeah, exactly.

WILLIS: All right, so let's talk about Birthday dinners. How many of us have been in this situation. You're invited to a birthday dinner, who's paying, we don't know. Oops, we're paying? I didn't know that. I've had that happen. So, what's the right course of events there?

VAN OGTROP: Well, it's according to our respondents, almost 80 percent thought that the person who does the inviting is not necessarily on the hook for paying for the dinner. What we did was when we talked to restaurateurs; they said they really see an age difference, here. You know, among 20 and 30-something's there's a lot more bill splitting, but when you -- when people are older and presumably they're a little more financially able to foot the whole bill, that they seem more older patrons paying for whole party. So, it really depends on the group.

WILLIS: All right. Let's get to a couple more of these, because we have some really sticky situations coming up. Baby or bridal showers. OK, if you can't go, you still have to gave gift, right?

VAN OGTROP: If you're Gerri, you still give a gift. If you're 50 percent of the population, you don't give a gift. Again, the reason we did this in the first place is because there's so little that's hard and fast about etiquette anymore and our research bore that out. So, 50 percent said yes and experts again are really divided, saying it depends on your relationship. WILLIS: All right. So, in New York, everybody talks about what they pay for their house, what they pay for rent. It's an open secret. But in some places it's not the same.

VAN OGTROP: Oh, yeah.

WILLIS: Do you ask for that information? Is it a faux pas to do that?

VAN OGTROP: According to experts, it is a faux pas. Now, strangely, 47 percent of our respondents said it's OK to ask. Experts say no, it's rude, but if you want to get around it, you say what do things go for in this area, you say what do things go for in this area and then you get a rough estimate without putting the person on the spot.

WILLIS: All right, this is my favorite one. OK, somebody comes to you, and this happens all the time, asks you to write a letter of recommendation from someone you don't really feel like you can recommend them.

VAN OGTROP: Right.

WILLIS: What do you do?

VAN OGTROP: So, the thing you don't want to do is write a mediocre recommendation, because that's worse than no recommendation at all. You don't want to lie, either. Although nine percent of our respondents said lie and say you're too busy. What you want to do is divert them and get them -- send them in the direction of someone who can write a better recommendation than you can and tell them it's to their advantage to use someone who works with them more closely or knows them better and then you're, you know, you're off the hook.

WILLIS: That is a very creative solution to a difficult problem. And that's what we come to expect of you. Kristin, thank you.

As always, we thank you for spending part of you Saturday with us. YOUR BOTTOM LINE will be back next week, right here on CNN. You can also catch us on HLN every Saturday and Sunday at 3:30 p.m. Eastern Time. And you can hear much more about the impact of this week's news on your money on "YOUR MONEY" with Christine Romans and Ali Velshi, Saturdays at 1:00 p.m. Eastern and Sundays at 3:00, right here on CNN.

Don't go anywhere, your top stories are next in the CNN NEWSROOM. Have a great weekend.

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