As featured in The Wall Street Journal, Money Magazine, and more!

The pharmaceutical company Mylan recently came under major fire from traditional media outlets, bloggers, and lawmakers when it announced a major price increase for lifesaving EpiPens. These single-dose medications are the first crucial step in treating anaphylactic reactions for many children and adults with life-threatening allergies.

EpiPens are sold in packs of two, so that parents, caregivers, and allergy sufferers have a backup in case the first pen doesn’t work. Many families, especially those with young children, purchase multiple two-packs so that EpiPens are available at home, school, in the car, and elsewhere they may be needed.

In 2009, a two-pack cost about $100–an affordable price to pay for your child’s life. But Mylan recently increased the cost to about $600 per two-pack of EpiPens.

Mylan has a corner on the market for EpiPens, due at least in part to FDA regulations that have made it difficult for new companies to create similar products. Since the company acquired the patent for the EpiPen, which is simply the device that dispenses pre-measured doses of epinephrine to the body, the price has risen steadily. This in spite of the fact that epinephrine itself costs very little, and the EpiPen product hasn’t changed much.

Because having an EpiPen on hand can mean the difference between life and death in critical situations, consumers are outraged about these price increases.

What Increases Mean for Consumers

The price hikes will affect consumers differently, depending on their insurance plans. Those with now-disappearing traditional insurance plans may still have a low co-pay for their EpiPens. However, those on high-deductible plans could pay the full $600+ out of pocket, or have a co-pay of several hundred dollars.

To help mitigate the cost of the EpiPens for some consumers, Mylan announced last Thursday that it will roll out an EpiPen Savings Card. This allows families to purchase up to three EpiPen two-pack sets when they need a prescription refill through the end of this year. The cards are worth up to $300 per EpiPen pack.

To be eligible for the card, patients must be covered by certain health insurance programs–mainly those where high deductibles leave the cost of EpiPens prohibitive for families.

The bottom line, however, is that someone will pay the cost of the EpiPen price increases. Even if consumers pay less than the $600 list price, most insurance companies will pick up the rest of the tab. This will likely impact annual premiums for many Americans.

Possible Pushback from Government

Already, several senators and other public figures, including Hillary Clinton, have spoken out against Mylan’s price increase. It’s likely that the government will attempt to regulate the prices, though. Especially as EpiPen pricing also affects school districts where nurses keep a supply of the devices on hand for emergencies.

A petition to Congress is already working its way around social media. Of course, it remains to be seen what the federal government can or will do about the EpiPen pricing, and how long those actions will take.

In the meantime, Mylan’s CEO, Heather Bresch, says that she will continue to run Mylan as a “for-profit business.” While Bresch says that she will not apologize for going after profits, she did roll out the $300 savings option very soon after increasing the drug’s price.

The Bottom Line

The main point is that consumers who rely on EpiPens for potential anaphylactic reactions may see a huge price increase immediately. Those who can qualify for the $300 discount offer will be better off, but this won’t apply to all consumers. Those who cannot access the savings card will, for the time being, have to pony up the additional costs or take their chances by carrying fewer EpiPens.

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If you’re unhappy with your 401(k), rest easy… you’re not alone. In fact, on August 19, over 60,000 employees joined up and filed a class action lawsuit against their employer, Morgan Stanley. Their reason: questionably managed and poorly performing 401(k) plans.

It’s one thing to ask workers to stay late or forget to restock the break room. Messing with their retirement plans, though? That’s a whole different animal.

The filed suit alleges that Morgan Stanley, a company with over $8 billion in 401(k) assets, chose to invest employees’ money in its own funds in order to maximize profits and benefit itself. Using only in-house investment funds would have been a questionable practice on its own. The unfortunate and compounding fact, though, is that these funds have also been grossly underperforming.

In fact, its Morgan Stanley Institutional Small Cap Growth Fund IS Class was 99% less profitable than other small cap growth funds in 2014. It didn’t get much better in 2015, where the fund performed worse than 95% of the others.

So, why would the company continue to toss 401(k) funds into obviously poor choices such as these? Self-promotion and siphoning profits for themselves are two potential reasons. The class action suit last week alleges that these were indeed the motivating factors, but it gets better.

The lawsuit also claims that on top of these 401(k) plans earning less than they could have with 99% of the other options out there, the costs were also exorbitant in comparison. It accuses Morgan Stanley of charging its own employees higher mutual fund fees than it charged outside investors.

These fees are also higher than those that other funds on the market currently carry. For instance, Morgan Stanley was apparently charging a fee of .98%, whereas a similar fund from Vanguard charged a mere .07%. The effects of this percent difference on a retirement account could be astronomical!

Of course, this would not only be shady business practice, but is potentially illegal. The federal Employee Retirement Income Security Act (ERISA) of 1974 places a fiduciary obligation on companies to act in the best interests of the plan participants. Managing funds in a way that primarily benefits the company, instead, is a potential violation.

Seeing how 401(k) plans play such a large role in the retirement savings of today’s working class, this sort of practice would have detrimental effects on the future financial security of each of their employees. Most of us pay into retirement plans and give blind faith that our employers are managing our money with our best interests in mind. Morgan Stanley, it would seem, has let a lot of people down.

It will be interesting to see how this suit plays out in court. It has the potential to be a harsh reminder of companies’ ethical and legal obligations to their workers. The class action suit is seeking damages of $150 million on behalf of its approximate 60,000 proposed participants. Morgan Stanley has not yet responded to requests for comments on the suit.

Have you worked for Morgan Stanley? Leave a comment to let us know your thoughts on their 401(k) plan and the class action lawsuit.

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This year has been a rough one for health insurance companies of all sizes. With the recent news of Aetna withdrawing from most of its Obamacare exchanges, many Americans are beginning to worry about their shrinking options, skyrocketing premiums, and where they’ll even find services.

Scarily enough, Aetna is not alone in its decision, and joins two other insurers in withdrawing from the program. What does this mean for Americans and their healthcare, and what does it mean for the marketplace?

What’s Happening?

No matter which side of the political spectrum you favor, healthcare has been a tinder pile of a topic over the last few years. With the implementation of the Affordable Care Act (ACA) – better known as Obamacare – in 2014, the United States became the last remaining developed country to institute universal healthcare. Previously, we were the lone wolf: 32 out of 33 developed nations had already adopted such programs.

Of course, as we have come to understand, “universal healthcare” does not mean free healthcare for many. The United States opted to implement an insurance mandate system, meaning that its citizens are required to either obtain private coverage, qualify for an exemption, obtain State Health coverage, or pay a tax (penalty) for not carrying health insurance. Depending on your income level and the marketplace options available to your area, this could potentially turn into an expensive venture for your family.

One of the selling points of the more comprehensive version of Obamacare that passed, at least in the eyes of the insurance companies, was that the mandate would force more healthy Americans to buy policies. The idea being that the average American would want (and need) to avoid paying the high penalty taxes for their family. This is especially true since the tax is increasing every single year.

In turn, this padding of healthy customers’ premiums (and their policies that would, ideally, go largely unused) would help the insurance companies offset costs… costs involved with providing care for the older and sickly customers that flocked to them for new coverage.

Unfortunately for the insurance giants, this doesn’t seem to be happening.

Why Isn’t It Working?

For many Americans, the reality is disturbingly ironic: paying the government fine for forgoing coverage is actually cheaper than, well, paying for coverage. The only caveat to their practice (and it’s a scary one)? It’s imperative that they stay healthy.

This is, of course, the exact opposite of the intent behind the penalty, and has brought the insurance companies’ fears to the table. They are now losing money in a system that should have guaranteed success. And many of them are pulling out in response.

Their scales are being tipped by the influx of “sickness care.” With decreased memberships from healthy families, insurance companies like Aetna, UnitedHealthcare, and Humana are now scrambling to find balance.

In fact, Aetna lost $430 million just in the first half of 2016 alone. This prompted them to announce last week that they will drop almost 70 percent of the counties in which they have previously offered coverage, beginning in 2017. Whereas they sold policies in 778 counties (within 15 states) this year, they will offer coverage in a mere 242 counties (in only four states) next year.

Of Course, They’re Not Alone…

Aetna is in good company following their pullout. They join giants Humana and UnitedHealthcare Group – the nation’s largest health insurer – who have both already withdrawn from the ACA in some capacity. More are likely to follow, too. In 2014, only 30% of insurers turned a profit in their individual divisions, which dropped to around 25% for 2015.

In April, UnitedHealthcare announced that it will drastically downsize participation for 2017. They are decreasing coverage from 34 states and nearly 800,000 people, to a measly three states. (Seeing as they lost almost $1 billion on Obamacare in 2015 and 2016, the move isn’t too surprising.) Humana has also decided to withdraw from nearly 1,200 counties throughout eight different states.

All three of these companies have cited a financial hemorrhage as their reason for pulling out. Too many young and healthy Americans are choosing the penalty tax over paying premiums. This means that insurers just don’t have enough padding to continue on the same path.

Add to it that many Americans who were previously uninsured – due to preexisting conditions, inability to afford plans, or lack of motivation to navigate coverage – are elderly, sick, or just taking full advantage of having healthcare for the first time in a while. They have flocked to their new in-network providers, requiring care for coughs and cancers alike. This sudden cost has shocked the system, it seems.

Even Blue Cross Blue Shield is thinking about jumping ship. The company has already said that it would consider withdrawing from Obamacare, dependent on future marketplace trends. One of its plans, Highmark, lost more than $773 million in its first two years with the exchange system. Their CEO deemed kind of loss “unsustainable.” And BCBS of Minnesota has already dropped individual plans.

In fact, a Blue Cross Blue Shield Association report studied new Obamacare enrollees – the first investigation of its kind – and the results were alarming. It found that new ACA members have considerably higher rates of serious illnesses like hypertention, HIV, diabetes, and Hepatitis. Most of these are lifelong illnesses, with medical care and costs following them over many decades.

This study also found that Obamacare members’ costs of care were 22% higher than those Americans in employer-based health plans. They had more ER visits, more prescriptions, and more inpatient hospital care.

Regardless of the ‘why’ involved, the fact remains:  the insurance giants just can’t plug holes fast enough to keep their fiscal ship from sinking.

How Does This Affect Americans?

You might be saying, “Well, I already have coverage. How does this affect me?” Maybe you’re not yet covered, but plan to just go with whichever remaining company offers service in your area. Okay, great.

Except, you’ll likely suffer the aftershocks, too.

For the counties retaining coverage from these three companies, your premiums are likely to increase in response. Sure, Humana, UnitedHealthcare, and Aetna have chosen to pull out of their least lucrative counties. That doesn’t mean that they aren’t still losing more money than they’d like on the bottom line.

If your coverage has been eliminated by one of these withdrawals, you’re guaranteed to feel the effects. You will, of course, need to find a new plan. This may or may not cost more than you have already been paying. You might be forced to change doctors, hospitals, and treatment facilities, too. Your new plan may not cover the providers with whom you’ve already established care.

For counties losing insurers, you’ve just been robbed of one more bargaining chip. Less providers in your area means less competition, and less incentive to decrease premiums. If you’re one of the unlucky areas that will be reduced to just one or two providers, you’ll likely see a noticeable jump in premiums. In fact, more than 650 counties across the country will experience this. Or, like Pinal County in Arizona, you could be left with NO providers. A state-mandated monopoly is rarely beneficial for the consumer: “Take it or leave it.”

In fact, many insurers were already planning to raise their rates by double-digit percentages in 2017. This is sure to put a pinch on everyone’s wallet. Even Anthem Inc., the second largest insurer in the country (behind UnitedHealthcare, of course), announced that it plans to implement “substantial premium increases” next year in order to offset its ACA losses – as high as 30 percent!

What the Future Holds

It will be interesting to see how Obamacare plays out over the coming years. A lot will depend on whether the government can work with the insurers to fix a system that is limping along. An influx of sick enrollees combined with less-than-desirable participation from healthy families has created a sinkhole for insurance companies.

The only companies happily in the black are those with very strict guidelines, higher premiums, and limited care provisions. The rest are bleeding out, it would seem. If something isn’t done quickly to help the system, it is sure to crack under the pressure.

Premiums will surely rise in 2017, and possibly beyond, as will the penalty tax. Whether or not healthy Americans will choose to enroll and balance the system, or opt out of its chaotic current state, is yet to be determined.

As for me, I’m going to go ahead and book some checkups now. Who knows what 2017 will bring…

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A few weeks ago, Rick Seany of FareCompare published an article about the upcoming Cheap Flight Day. This certainly piqued my interest. While I have heard of National PB&J Day (April 2) and Men Make Dinner Day (the 1st Thursday in November — mark your calendars, ladies), I hadn’t ever heard of an airfare discount day. This warranted another look.

Here’s what I found: if you’re contemplating air travel between late August and mid-November, this is the time to start looking. While August 23 has been dubbed Cheap Flight Day, it’s actually more of a marker for the week or two at the end of summer when airlines traditionally drop their prices.

Tell Me More

With most summer trips in the rearview and families preparing for back-to-school, flight demand decreases near Labor Day weekend. In response, the airlines adjust fares downward. While this cost-shift often falls on August 23 (as it will for United this year), it’s not the Black Friday of airfare… merely a threshold for when prices begin to fall. Think of it as the first day in late summer that you should plan to travel, if you want to save a bunch.

For example, say you’re headed from Washington, DC to Orlando for a last-minute beach hoorah before autumn. On Southwest, prices begin their decrease on August 22 and drop further on the 26th. It’s not August 23, but close enough.

Southwest

However, wait a few more days until after Labor Day weekend, and you’ll save hundreds of dollars more!

Southwest Sept

How Else to Save on Flights

Not looking to fly just yet? No worries — there are tons of ways to save on air travel year-round. Here are a few of our favorites:

Use Miles

The easiest way to earn free miles is to snag a travel rewards credit card. Many of these cards, such as the Barclaycard Arrival Plus™ World Elite MasterCard®, earn you 2x miles on all purchases you make.

With this card, you’ll also get 40k bonus miles for spending $3,000 in your first 90 days with the card, which is enough for a $400 credit towards travel. Since you can take your miles in the form of a statement credit, you’re not limited by a booking portal or specific airline.

Spend your money as usual and rack up the cash back rewards. Choose when and how you want to fly, then redeem your earned points and save.

Don’t Pay for Baggage

Unless you’ve flown exclusively on Southwest, you’ve probably paid a baggage fee once or twice. You know that if you don’t travel light, your fees can end up costing as much as your fare!

Some companies, like Southwest, include up to two bags free. This can save you a pretty penny, considering most airlines charge $25-35 per bag!

Alternately, you could pick an airlines credit card like the Citi® Platinum Select / AAdvantage® Mastercard®. This is a great choice for people who fly American Airlines. Not only will you earn 30k bonus miles after spending $1,000 in the first 3 months, but you’ll also enjoy your first checked bag free. Oh, and it’s not just for you —  this free bag offer extends to up to four travel companions, so your whole family saves.

If you end up finding a Cheap Flight Day deal on a different airline that you can’t pass up, you can still save on baggage fees. All you have to do is travel lighter. Most airlines allow one carry-on bag and one personal item (such as a briefcase, purse, or backpack) on board, free of charge. If you can fit everything for your last-minute getaway in a smaller suitcase, you will save a nice chunk of change… and avoid waiting at baggage claim after you arrive.

Book Early

Cheap Flight Day may be a great option if you’re looking for a quick getaway, but this isn’t the best practice to use throughout the year. Previously believed to be a strict “54 days out,” the magical number for booking in advance isn’t so cut and dry. Most experts agree, though: booking last-minute isn’t the deal it once was.

According to CheapAir.com, the prime booking window actually lies somewhere between 21-120 days out from the flight. Quite the range, yes, but it varies according to time of year and even airline.

cheapair

Your best bet is to use a flexible date search, if your plans allow, and try to fly mid-week. Friday and Saturday flights are traditionally more pricey than Tuesday and Wednesday options. Try to book somewhere between 2-3 months before your flight to save the most.

Sign Up for Emails

Want to be the first to know about sales throughout the year? Sign up for your favorite airlines’ email newsletters. Often, these will be for travel 2-4 months out, so you have time to plan that trip to see your parents and even coordinate time off from work.

In Summary

Airlines may not view August 23 as a strict fare-slashing deadline, but this day historically marks the beginning of discount travel. Cheap Flight Day should still be marked in your calendar, if you have the interest and flexibility in late summer or  impromptu travel.

While you can expect to save at least 10-20% on airfare by booking travel on (or near) August 23, you can see above that I found price cuts of up to 66%. Be sure to check out your airline’s “flexible travel date” calendar when searching flights, to ensure that you get the best deal. Sites like Fly.com and FareCompare are also good aggregate resources, if you’re not picky about the airline.

Don’t forget to use your travel rewards credit cards and/or frequent flyer programs, to save even more on fares and baggage. Happy travels!

Have you taken advantage of late August-October flight deals? Have these fare cuts prompted you to plan a trip you might not have otherwise taken?

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Best Time to Buy a House

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