Cut and paste the link below into your browser to see a good article on how to compare Medicare Part D drug plans
www.tampabay.com/news/aging/lifetimes/article874088.ece
October 28, 2008
Its time to sign up for Medicare Part D again
Stephen Nohlgren explains how Medicare and Part D work
Defining Part D
By Stephen Nohlgren, Times Staff Writer
Published Monday, October 27, 2008 10:00 AM
——————————————————————————–
Like crisp mornings, harvest pumpkins and returning snowbirds, Medicare’s Part D shuffle has become a fall fixture.
Colorful posters pop up at pharmacies. Fliers clog mailboxes. Newspaper ads promise to take care of you — just sign on the dotted line.
Though Part D drug coverage now enters its fourth year, sorting through various options can be as time-consuming and demanding as ever.
Among other things, insurance companies keep changing their prices and drug formularies. A plan that worked well for you this year may leave you high and dry next year.
This go-around, for example, fewer plans are covering generic drugs in the so-called doughnut hole. Perennial favorites Humana and AARP have raised the price of their basic drug plans by 77 percent and 46 percent.
This special section of LifeTimes is designed to help you pick the arrangement that works best for your particular circumstances.
Do you want traditional Medicare or an HMO? Are you willing to switch to generics to save money?
Given the drugs you take, which plans cost the least?
A good place to start is by reading the rest of this story, which is an explanation of how Medicare works. That will help you understand the plan comparison charts that follow.
Lastly, take a look at the step-by-step guide to Medicare’s Web site, medicare.gov. This is the only thorough way to figure out which plans work best with the particular drugs you take. If you aren’t comfortable with computers, find a friend or family member who can help. Picking the wrong plan can cost you hundreds, if not thousands, of dollars.
There’s still plenty of time. Medicare’s signup window for 2009 begins Nov. 15 and ends Dec. 31.
Just don’t skip the research.
Understanding Medicare
Here’s how the Medicare puzzle fits together:
“Traditional” Medicare is managed by the government. Its premiums, copayments and deductibles can cost more than a private managed care plan, but you get to pick and switch doctors and hospitals at will.
Traditional Medicare has three parts:
• Part A mainly covers in-patient hospitalization. You pay no premium.
• Part B covers doctor bills and other services. You pay a $96.40 monthly premium to qualify, which is usually deducted from your Social Security check (higher-income people now have higher premiums).
• Part D stand-alone drug plans are administered by private insurance companies, which get payments from Medicare when you sign up. The plan negotiates discounts from pharmacies and pays for some of your drugs. You make copayments and pay a monthly Part D premium.
Medicare supplement policies are optional private insurance plans that pay some Part A and Part B deductibles and copayments. Supplement polices do not cover Part D drug copayments and are not used with private health plans.
“Medicare Advantage” plans are sold by private insurance companies as alternatives to traditional Medicare. Medicare pays these private plans a stipend to administer your care, including doctors, hospitals and other Medicare-covered services. Copayments and deductibles are often less expensive than with traditional Medicare, but the plans restrict the doctors and hospitals you can use.
Medicare Advantage plans often provide special benefits not covered under traditional Medicare. They may pay all or part of your Part B premium. They may cover hearing aids or eyeglasses. Many plans also cover prescription drugs.
There are several types of Advantage plans:
• HMOs, where treatment comes from the plan’s network of doctors, hospitals and other providers. Sometimes, your primary doctor must make a referral before you can see a specialist. Some HMOs allow out-of-network care for higher prices.
• PPOs also have networks of providers, but give you more flexibility in seeking care outside the network. The PPOs are usually more expensive than comparable HMOs.
• Special Needs Plans are HMOs or PPOs that serve people living in nursing homes, people with chronic illnesses and some poor people who qualify for Medicaid.
• Private Fee for Service plans try to negotiate rates from doctors and hospitals on your behalf. A sales agent might tell you that you get to pick your own doctors, but that’s only partly true. In practice, many providers refuse to treat PFFS patients. If choosing your doctors is important, make sure they accept payments from the plan before signing up.
Review your options
If you do not pick new coverage by Dec. 31, Medicare will continue your current arrangement. Remember, copayments, premiums and drug formularies change from year to year. Even if your plan seems to work well, it’s a good idea to review your options before signing up for 2009.
Explore outside drug coverage
If you qualify for drug coverage outside of Medicare, you probably don’t need a Part D stand-alone drug plan or a Medicare Advantage plan with drug coverage.
VA, Tricare and the Federal Employee Health Benefits program offer good drug coverage, for example, as do many retiree plans run by employers and unions.
Make sure your employer or union can certify that its coverage is “creditable” or you could face a penalty down the road. “Creditable” means that the plan is as generous as Medicare drug coverage.
Get drug coverage of some kind
If you do not have “creditable” drug coverage outside of Medicare, you should buy either a stand-alone drug plan or a Medicare Advantage plan with drug coverage as soon as you become eligible for Medicare or you will face a premium penalty if you need coverage in the future.
The penalty is an extra premium of 1 percent for each month you delay coverage after you become eligible for Medicare. This can be especially onerous because it is calculated against a “national standard” plan, not the cheapest plan or the plan you happen to choose.
For 2009, the premium penalty comes to an extra 30 cents for each month you have delayed coverage.
Say you were eligible for drug coverage when Part D began in 2006, but didn’t buy a plan. And now you want coverage for 2009. You can enroll in a stand-alone plan for as little as $16.70 a month. But because you delayed coverage for 36 months, your premium penalty adds up to $10.80, boosting the monthly cost of the cheapest plan to $27.50.
That’s a 65 percent penalty, and you will face a similar penalty for the rest of your life.
In recent years, Target, Kmart, Wal-Mart and other retail outlets have offered generic drugs and some brand drugs for $4 or less. Pharmaceutical companies sometimes give away free or low-cost drugs to people with low incomes.
Even so, it’s still a good idea to sign up for some kind of plan, even if you don’t use it right away. For less than $200 a year, you can protect yourself against penalties and also gain drug coverage in case you get sick.
Buying a Medicare Advantage plan with drug coverage also protects you against penalties.
Learn the specifics of coverage
Whether you buy a stand-alone plan or a Medicare Advantage plan, Medicare’s drug coverage formula follows a basic pattern:
• Medicare pays the plans a stipend to defray the cost of your drugs.
• The plan negotiates discounts from pharmacies and establishes a “formulary” of drugs it will cover, at what prices. You get your drugs through a retail pharmacy or through the mail.
• You pay a premium for coverage, though some Medicare Advantage plans waive that premium.
• You pay a $275 deductible before coverage kicks in, although many plans waive the deductible.
• After any deductible is met, you pay a portion of your drugs’ cost until you reach the “coverage gap,” which has been nicknamed the “doughnut hole.” These copayments might range from nothing for a generic medication to $50 or more for brand-name drugs.
• You reach the coverage gap when the total cost of the drugs reaches $2,700. Note that the total cost is what the drug plan pays the pharmacy, not what you pay the plan. If your plan buys your drugs for $500 a month, but charges you only $100, for example, you will hit the coverage gap after 5 1/2 months.
• In the coverage gap, you pay 100 percent of the cost of the drugs, though some plans still cover generic drugs and a few brand name drugs in the gap. The coverage gap continues until your out-of-pocket payments for drugs total $4,350.
• After your drug costs reach $4,350, you qualify for “catastrophic” coverage. In this phase, your copayments for both brand and generics are quite low.
Insurance premiums do not count toward out-of-pocket costs. People who take a lots of drugs and expect to reach catastrophic coverage should consider buying a lower premium plan with a deductible, instead of a higher premium plan with no deductible. The lower premium saves you money up front and paying the deductible helps get you into catastrophic coverage more quickly.
Look beyond premiums and deductibles
Many people simply pick plans with the lowest monthly premiums and plans with zero deductibles. But beware: That could cost you money — not save money — depending on your drug usage and how the plans cover those drugs. Make sure to consider each plan’s overall cost.
Compare plans online at medicare.gov
The only thorough way to compare plans is on Medicare’s Web site, medicare.gov. That’s because you can enter your particular drugs into the program, which then calculates how much each plan will cost. Prices of different plans can vary widely depending on which drugs you need.
The Web site also contains quality ratings from people who have used many of the plans.
Compare plans on paper here
The following pages contain a chart about stand-alone Part D drug plans that complement traditional Medicare and two charts about Medicare Advantage plans with drug coverage.
Note the low and high estimated costs for each plan, as calculated by Medicare. These costs include all your out-of-pocket expenses, including premiums, deductibles and copayments.
Plans that seem economical for a younger person in good health may not be best for someone who is older and needs more care. Plans that pay Part B premiums might seem like a bargain, but may cost more because they skimp on benefits.
Note that stand-alone drug plans are generally cheaper than Medicare Advantage plans. That’s because they only cover drugs, whereas Medicare Advantage plans cover a wide variety of services, like doctors and hospitals.
These estimated costs are general guidelines. Your actual costs could be thousands of dollars higher if a plan’s formulary fails to cover a few of your drugs. That’s why it’s so important to use Medicare’s Web site to calculate your true costs.
Check low-income subsidies
People with little income and minimal assets may qualify for special subsidies that can dramatically lower their out-of-pocket costs for a drug plan. The income limits are $15,600 for a single person and $21,000 for a married couple, including Social Security. Your liquid assets (stocks, cash, savings accounts, etc.) must be lower than $11,990 for a single person and $23,970 for a couple.
If you fall below these thresholds, call the Social Security Administration toll-free at 1-800-772-1213 to sign up for extra help or sign up online at www.socialsecurity.gov.
Enroll in a plan
Once you choose the plan, call its toll-free telephone number to enroll. Have your Medicare card ready when you call.
Getting help
Florida’s Department of Elder Affairs has excellent volunteers who help people 65 and older and disabled people with insurance issues. The program is known as SHINE.
You can call for an appointment, and a trained volunteer will call you back. The volunteers can use Medicare’s Web site to help you find a suitable plan. To contact a volunteer, call Florida’s Elder Hotline toll-free at 1-800-963-5337 between 8 a.m. and 5 p.m. They will refer you to the nearest SHINE office.
You can also call a Medicare office toll-free 1-800-633-4227 for help. This office has hundreds of employees trained to take calls but they usually don’t spend as much time with callers as SHINE volunteers do. If you have a formal complaint about an insurance company, you should call the Medicare number.
Stephen Nohlgren can be reached at nohlgren@sptimes.com or (727) 893-8442.
High cost of extended care
Although I wrote this almost two years ago, the cost of extended care continues to be a huge problem for those that need it,
“Cost of Extended Care a Shock”
The St. Petersburg Times ran this headline on the front page of the December 14, 2006 edition of the paper. The Times article reported the results of an AARP survey that found Americans unprepared to meet the financial challenges of long-term care. Some of the 1456 people surveyed thought $500 to $1000 per month would cover the cost of care in an assisted living facility or nursing home. The actual cost of long- term care currently averages $6,266 a month, or more than $75,000 per year.
Many Americans erroneously believe their insurance will pay for a lengthy stay in an assisted living facility or nursing home. According to the insurance industry, less than 10% of people 55 or older have true long-term care insurance. Reliance on Medicare and Medicare supplement policies to pay for the cost of long-term care is misplaced, as Medicare and supplement policies typically pay only for short-term skilled nursing care, such as physical therapy.
Medicaid, a joint state and Federal program, will pay for long-term care but the patient is required to qualify for benefits. The government has established a two pronged test for determining Medicaid eligibility. The applicant must need significant assistance with the normal activities of daily living, and also meet the low income and asset caps set by the government.
A Medicaid applicant may take steps to reduce both income and assets in order to qualify. However, the untimely transfer of an asset for less than fair market value will result in an ineligibility period that will delay the receipt of Medicaid benefits. The Deficit Reduction Act of 2005 provides for a “look back” period of 5 years for uncompensated transfers, i.e. gifts, which greatly magnifies the problem of estate planning for Medicaid purposes.
Even though the cost of extended care is truly shocking, and most elders are without insurance to pay for that care, it has become increasingly difficult for persons facing a lengthy stay in a nursing home to qualify for Medicaid. The National Academy of Elder Law Attorneys (NAELA) recognizes the problem and is an active advocate for legislation that will ensure the availability of affordable long-term care for seniors. At the present time, however, there is no easy solution to the long-term care dilemma faced by many aging Americans.
Suzanne LaBerge
2719 First Ave. N.
St. Petersburg, FL 33713
727/321-1918
October 24, 2008
Beware of debt relief companies
This article tells of some of the problems involved in hiring debt relief companies. BE VERY CAUTIOUS ABOUT USING SUCH COMPANIES AND DO NOT PAY MONEY UP FRONT.
5 bay area firms targets of ‘debt-relief’ inquiry
By Alex Leary, Times Staff Writer
Published Wednesday, October 15, 2008 10:22 PM
TALLAHASSEE — Florida’s attorney general is targeting five Tampa Bay area companies in a statewide campaign against scams on people desperate for relief from debt and credit problems.
The effort against so-called debt-relief companies comes as Attorney General Bill McCollum’s office has seen consumer complaints increase more than 60 percent over last year, a stark reflection of the rapidly deteriorating economy.
The state has already settled with New Leaf Associates of Port Richey, which promised thousands of people nationwide that it could eliminate debt and improve credit scores through a secret “legal administrative process.”
No such process existed, McCollum said. New Leaf has agreed to pay $320,000 in fines and restitution to its victims.
“This was absolutely a total scam,” McCollum said, adding he was alarmed that there are “a lot” of similar companies that use Florida as a national headquarters.
This week, McCollum filed suit against Dunedin-based Enterprise Technology Group, which was operating as Ameritrust Financial Card. The state says the company charged $200 enrollment fees for a credit card that it claimed would perform like a normal card and could improve a person’s credit score.
But the “credit builder” card was good only with Ameritrust’s online catalog, the suit states, and the company never reported consumers’ accounts to a credit bureau.
A phone number for Enterprise Technology Group did not appear to be working Wednesday.
McCollum’s office has also subpoenaed records from three other bay area debt-relief companies: Financial Freedom Resources Inc. of Clearwater, Specialized Funding of Largo and United Debt Solutions, also known as American Debt Arbitration of Tampa.
McCollum said companies being looked at — there are 31 in Florida — are suspected of violating the state’s Deceptive and Unfair Trade Practices Act along with other laws regulating telephone solicitation and credit counseling services.
“I want to close these companies down,” McCollum said. “Most of these companies are bad, bad, bad.”
There are some reputable debt-management companies, he added, but those typically help people come up with a strategy to pay off their bills, not offer new products and services. He said consumers in need of relief should follow some simple guidelines: Be very wary of any company that contacts you by telephone or the Internet; make sure there are no up-front fees; and, most of all, “ask a lot of questions.”
Brad Ashwell, a consumer advocate for the Florida Public Interest Research Group, said people should first try to resolve problems themselves.
“Many times a collection agency will settle for a lower payment, and even eliminate late fees and penalties,” he said. “This may leave a blemish on a consumer’s credit report, but it’s one of several ways to stop the downward spiral into deep debt.
October 21, 2008
Nursing home guide
RANKINGS ARE A PIECE OF THE NURSING HOME PUZZLE
St. Petersburg Times – St. Petersburg, Fla.
Author: STEPHEN NOHLGREN
Date: Mar 25, 2008
Start Page: S.3
Section: LOCAL/REGIONAL (LCR)
Text Word Count: 777
Document Text
A guide offered by the state can supplement recommendations and information gathered during personal visits.
Picking a nursing home can be confusing and stressful. Often you, or someone you love, is coming out of a hospital and needs either short-term rehabilitation or long-term custodial care.
Nursing homes often change owners, or administrators, or directors of nursing, any one of which can have big impacts on quality of care. A home that gave spotty care three years ago may now be among the best, and vice versa.
To guide consumers, the state of Florida ranks nursing homes from 1 to 5 stars, based on inspections of quality of care, food, social activities and other factors.
Of the 131 skilled nursing homes in the Tampa Bay area, 52 receive either a 4 or 5 ranking, which indicates that they are among the best homes in the area.
No one should pick a nursing home based solely on these rankings. Personal visits and recommendations from people you can trust are also important. Homes should be close enough that key family members can visit frequently.
Still, the ranking system is a good starting point.
The map below lists nursing homes with either a 4 or 5 ranking. For information about homes rated with 1 to 3 stars, consult Florida’s Nursing Home Guide on the Internet at ahcaxnet.fdhc.state.fl.us/nhcguide.
If you would like a printed version of the Nursing Home Guide, call the Agency for Health Care Administration toll-free at 1-888-419-3456. When you get the automatic phone tree, press 4 to request an agency publication. You can then leave a voice message with your name and phone number and AHCA will mail you a guide, or you can press 2 and talk to a person, though you might have to wait on the line to do that.
For more information on how to pick a nursing home and which government programs help pay for care, check out a special St. Petersburg Times report at www.sptimes.com/2007/08/28/50plus/Get_in_the_know_about.shtml.
Stephen Nohlgren can be reached at (727) 893-8442 or nohlgren@sptimes.com.
Pasco No. Name Address City/Zip Phone Rank 1 Life Care Center of New Port Richey 7400 Trouble Creek Road New Port Richey
34653 (727) 375-2999 5 2 Madison Pointe Rehabilitation and Health Center 6020 Indiana Ave. New Port Richey
34653 (727) 843-0600 5 3 Orchard Ridge Rehabilitation and Nursing Center 4927 Voorhees Road New Port Richey
34653 (727) 848-3578 5 4 Southern Pines Healthcare Center 6140 S Congress St. New Port Richey
34653 (727) 842-8402 4 5 Heritage Park 37135 Coleman Ave. Dade City
33525 (352) 567-8615 4 6 Royal Oak Nursing Center 37300 Royal Oak Lane Dade City
33525 (352) 567-3122 5 7 Bear Creek Nursing Center 8041 State Road 52 E Hudson
34667 (727) 863-5488 5 8 Consulate Health Care of Bayonet Point 8132 Hudson Ave. Hudson
34667 (727) 863-3100 4 9 Heartland of Zephyrhills 38220 Henry Drive Zephyrhills
33540 (813) 788-7114 5 10 Zephyr Haven Health & Rehab Center Inc.< 38250 Avenue A Zephyrhills
33542 (813) 782-5508 4 11 Zephyrhills Health & Rehab Center Inc 7350 Dairy Road Zephyrhills
33540 (813) 788-4300 5 12 Baldomero Lopez Memorial Veterans Nursing 6919 Parkway Blvd. Land O’Lakes
Hillsborough
No. Name Address City/zip Phone Rank 1 Brighton Gardens of Tampa 16702 N Dale Mabry Highway Tampa
33618 (813) 908-2333 5 2 Canterbury Towers Inc 3501 Bayshore Blvd Tampa
33629 (813) 837-1083 5 3 John Knox Village Med Center 4100 E Fletcher Ave Tampa
33613 (813) 632-2455 5 4 Manor Care of Carrollwood 3030 Bearss Ave. Tampa
33618 (813) 968-8777 4 5 Nursing Center at University Village 12250 N 22nd St. Tampa
33612 (813) 975-5001 5 6 Palm Garden of Tampa 3612 E. 138th Avenue Tampa
33613 (813) 972-8775 4 7 Central Park Healthcare & Rehabilitation Center 702 S. Kings Avenue Brandon
33511 (813) 651-1818 4 8 Health Center of Plant City 701 N Wilder Road Plant City
Citrus
No. Name Address City/Zip Phone Rank
1
Cypress Cove Care Center 700 SE Eighth Ave. Crystal River 34429 (352) 795-8832 5
2
Woodland Terrace of Citrus County 124 W Norvell Bryant Cir. Hernando 34442 (352) 249-3100 5
3
Avante at Inverness Inc. 304 S Citrus Ave. Inverness 34452 (352) 726-3141 5
4
Citrus Health and Rehabilitation Center 701 Medical Court Inverness 34452 (352) 860-0200 5
5
Health Center at Brentwood 2333 N Brentwood Circle Lecanto 34461 (352) 746-6611 4
6 Life Care Center of Citrus County 3325 Jerwayne Lane Lecanto 34461 (352) 746-4434 4
Hernando No. Name Address City/Zip Phone Rank
1
Heron Pointe Health and Rehabilitation 1445 Howell Ave. Brooksville
34601 (352) 799-1451 4
Credit: Times Staff Writer
Will congress pass tougher credit card laws?
tampabay.com
Lending tales feed fire
By Robert Trigaux, Times Business Columnist
Published Wednesday, September 24, 2008 10:24 PM
Just when “bad debt” took on a new meaning and U.S. taxpayers got stiffed with a huge bailout bill, a rare insider’s glimpse was offered Wednesday into the nefarious ways one large credit card company used high-pressure sales tactics to ensnare customers with misleading loans.
Cate Colombo worked from 2001 to 2005 as a customer service rep in a call center where she was one of many dealing by phone with MBNA credit card holders. She tells how she was pressured by bosses to press customers, regardless of their personal situation, to buy more services and take cash advances at high interest rates.
“I thought I was hired to provide customer service, but I was hired to sell cash,” Colombo says. “The goal at the time was to sell $25,000 an hour for 10 hours a day in a 40-hour week.”
That’s $4-million a month. When she didn’t sell enough or suggested the caller was in no financial position to take on borrowed cash, she says she was considered “insubordinate” and eventually fired.
Jerry Young, a former middle school teacher, worked at MBNA’s marketing division handling incoming or outgoing calls to sell extra goodies as card and auto insurance and travel agency services.
“When customers said no, we would reposition and restate an offer three times before taking no as a definite answer,” Young says. “I thought that was wrong.” He quit after the bank’s policy required reps to make sales to at least 15 percent of the people reached by phone.
It’s no coincidence Colombo and Young, both from Maine and MBNA employees before it was bought by Bank of America, told their stories this week. They were recruited and paraded on ABC News (and scheduled for ABC’s Nightline last night) by Americans for Fairness in Lending. The advocacy group unveiled the duo’s first-person confessions just as the House passed “The Credit Cardholder’s Bill of Rights,” legislation aimed at curtailing deceptive practices.
The Senate now looks at the bill. But it is overshadowed by the $700-billion Wall Street bailout sought by the U.S. Treasury and Federal Reserve.
The Fed also wants to toughen its own rules over deceptive credit card tactics.
“Credit card companies will continue to devise increasingly clever and poorly disclosed means to part consumers from their limited funds,” warns Rachel Giannini in Brandon.
“BofA checked my credit history 10 times in 12 months just to find some excuse to double, then triple, my original interest rate,” said Sarah Burton of Tampa. “Trying to communicate with them about this … over the past two years has been a wasted effort, and BofA absolutely intended it that way. You can tell when numerous people at the same (supposedly efficient and upstanding) company tell you different things, just to get you to give up.”
“These practices are not far from Mafia tricks,” said St. Petersburg’s Marsha Hite.
Political winds may be shifting to help. Between the bailout backlash and a new White House administration arriving in four months, consumers could get a deserved break on this one. Maybe.
Robert Trigaux can be reached at trigaux@sptimes.com.
Tough times for car dealers
WHEELS FALLING OFF FOR DEALERS
St. Petersburg Times – St. Petersburg, Fla.
Author: ROBERT TRIGAUX
Date: Oct 5, 2008
Start Page: D.1
Section: BUSINESS
Text Word Count: 1084
Document Text
In a can-you-top-this tone, AutoNation CEO Mike Jackson tells the story of a “good customer” at one of his 317 auto dealerships, a regular with a healthy 680 credit score who likes to lease his cars. Only this time, the bank said no.
“The guy says to the bank, ‘I’ll write you a check right now for the whole four years of the lease,’ but the bank still said no,” says a frustrated Jackson. His Fort Lauderdale company – the largest auto retailer nationwide – operates as AutoWay in a Tampa Bay market that’s been especially hard hit by weak sales. “Banks are looking for every excuse in the world to say no.”
Anecdotes – some might call them eulogies – like this one from stressing car dealers and auto executives are the coin of the gloomy auto realm these days. As someone roaming used car lots looking for a deal this past month, I can vouch firsthand: It’s very quiet out there.
Last month’s sudden shutdown of the so-called “Mr. Big Volume” Bill Heard Enterprises caught a lot of industry folks off-guard. The Chapter 11 bankruptcy of one of the nation’s largest Chevrolet dealers with 14 Chevy dealerships, including one in Plant City, sent a shiver through many auto dealers. The economic ice of making and selling vehicles just keeps getting thinner.
About 3,200 people were put out of work when the Heard dealerships, which at their peak generated $2.5-billion in revenue, closed. And used-car dealer CarMax last week added to the nervousness when it said weak demand was forcing it to trim 600 workers at its 99 locations, including 25 job cuts at its Tampa and Clearwater locations.
It’s just the start. “An increasing number of dealers are simply closing their doors because sales have plummeted, credit has dried up, the overall retail environment is increasingly challenging and potential investors are sitting on the sidelines,” said Paul Melville, a partner at Grant Thornton LLP.
Melville’s firm released a report last week indicating new-car dealerships will go out of business at a faster pace this fall and into 2009. About 3,800 dealerships need to close this year just to allow stores to maintain the same sales rate of a year ago, the study added. Yet the National Automobile Dealers Association said last week that the number of U.S. dealers will shrink by only 300 to 600 by the end of 2008.
At AutoNation, the credit crunch is slowing already hard-to-get sales. Creditworthy customer a year ago who got auto loans 90 percent of the time are now qualifying only 50 percent of the time. Subprime borrowers, half of whom got loans last year, are now down to 10 percent.
CEO Jackson’s worried it will get worse because of spiking short-term interest rates – represented by Libor, the London InterBank Offered Rate – that’s put a huge crimp in lending. He blames the squeeze on a widespread failure of confidence and trust in the nation’s economic leaders, who are only now busy figuring out how to put into play their new $700-billion federal bailout for Wall Street and the mortgage industry.
“We are something beyond the worst-case scenario,” Jackson told CNBC on Friday. This is no whiner. He’s the same guy who argued gas prices should be raised in order to motivate stuck-in-the-mud automakers to accelerate plans to build more fuel-efficient vehicles.
The auto crisis – shared hand in hand by manufacturers and dealers – is forcing a lot of old hands to try new things.
Last week, President Bush signed off on $25-billion in low-cost government loans that will let automakers borrow money to retool plants to build vehicles that are at least 25 percent more fuel efficient.
And tucked in Friday’s approval by the House of the Wall Street bailout package was a new measure: a new tax credit of $2,500 to $7,500 for future buyers of plug-in electric vehicles. That includes the Chevrolet Volt, a planned plug-in Toyota Prius and newly announced vehicles from Chrysler.
Toyota, unaccustomed to the need to lure customers, hopes to stem its steepest sales drop in 40 years by the unprecedented move of offering 0-percent financing on 11 models.
French carmaker Renault last week said it may be interested in returning to the U.S. auto market after a 20-year absence – if Chrysler’s principal owner, Cerberus Capital Management, can’t stop the automaker’s bleeding and is interested in selling.
In a recent interview, AutoNation president Mike Maroone said people are sitting on their wallets in these remarkably uncertain times. And that’s hurting everybody.
A few cars – those with the most fuel-efficient reputations – are still in big demand, Maroone said. The Toyota Prius. The Mini? “They’re still hotter than hot and we can’t get enough of them.”
Smaller trucks are still selling, modestly, but heavy-duty trucks and diesels are struggling.
He also describes the sticker shock for those in the luxury leased-car market now that lenders are no longer subsidizing the leases.
Industry forecasts look rough. New-car sales for 2007 came in at 16.1-million. J.D. Power sees only 14.2-million sold in 2008, but if the sales numbers for 2008’s last three months are the same as September’s, the industry will barely sell 13-million cars.
Robert Trigaux can be reached at trigaux@sptimes.com.
Tough times in auto sales? It’s so bad that …
- U.S. auto sales cratered last month to their lowest level in 15 years.
- September sales were down a breathtaking 36.8 percent at Nissan, 34.5 percent at Ford, 32.8 percent at Chrysler LLC, 32.3 percent at Toyota and even 24 percent at fuel-efficient Honda.
- “We are beyond the worst-case scenario,” said Mike Jackson, CEO of AutoNation, the biggest U.S. auto retailer, on Friday.
- At the start of this year, there were 21,500 dealerships in the country. Two-thirds of them sell Detroit brands.
- CNW Marketing Research in Bandon, Ore., which studies traffic in showrooms, said the last 10 days of September was the worst showing since it began keeping track in 1986.
- In 2007, the average U.S. new-vehicle franchise reported 322 new-vehicle registrations. Toyota accounted for 1,628 units per franchise. Ford’s domestic brands reported 236 registrations, followed by GM’s domestic brands at 202 and Chrysler at 169.
Congressman’s car dealership accused of falsifying loan documents
LAWSUIT ACCUSES CONGRESSMAN’S DEALERSHIP OF SCAMS
St. Petersburg Times – St. Petersburg, Fla.
Author: JAMAL THALJI
Date: Aug 22, 2008
Start Page: B.3
Section: TAMPA BAY
Text Word Count: 248
Document Text
U.S. Rep. Vern Buchanan is one of the richest men in Congress thanks in part to his car dealerships.
But those businesses have also made the Sarasota Republican the target of lawsuits in his own county. Ex-employees allege that his dealerships fabricated tax returns, falsified incomes to get loan applications approved and “powerbooked” – faked options to pump up the sales price.
Now those same allegations have been made against Buchanan’s dealership in Pasco County: Suncoast Ford Mitsubishi on U.S. 19 in Port Richey.
According to the suit filed Aug. 13 in Pinellas-Pasco Circuit Court by Tallahassee attorney Douglas Lyons. He’s the attorney in the other six lawsuits against Buchanan dealerships and said he is planning to file five more similar suits, including one more in Pasco.
“There were just a lot of things that took place that were not legal and ethical,” said Scott Russ, 43, a former employee and the plaintiff in the Pasco suit. He’s seeking unspecified lost wages and damages.
Russ said he was the Port Richey dealership’s finance director for two years until August 2006. That’s when Russ said he was fired because he never took part in the alleged scheme.
Buchanan’s business partner Darrin Chrisman in Sarasota denied anything illicit took place at any of the dealerships.
Times researcher Shirl Kennedy contributed to this report. Jamal Thalji can be reached at thalji@sptimes.com or (727) 869-6236.
Repossessions on the upswing
REPO MAN’S RETURN A SIGN OF THE TIMES
Car repossession is one industry that’s thriving as most others tank and drivers miss their payments.
St. Petersburg Times – St. Petersburg, Fla.
Author: TOM ZUCCO
Date: Jun 22, 2008
Start Page: D.1
Section: BUSINESS
Text Word Count: 1124
Document Text
Jason Giddens throws his 5-ton Ford F-550 “snatch truck” into reverse and rumbles down the street near Chamberlain High. His target, spotted an hour earlier, is still there, under the oaks.
A group of adults and children are gathered on the porch and at the curb. “S—. This is the last thing I wanted,” Giddens grumbles. “We’ll know in the first 10 seconds if there’s going to be trouble.”
Without leaving the cab, Giddens lowers the tow bar and secures his catch: a smaller Ford pickup. Now there are more than a dozen people milling around the trucks.
“It’s the repo man,” someone yells from the porch. Giddens springs from the cab, just as Jorge Palencia, the owner of the suddenly disabled pickup, emerges from the house.
- – -
Delinquencies in dealer-arranged auto and truck loans in the United States reached a record high of 3.13 percent in the final quarter of last year. And when those loans go unpaid for several months, and the owner has not contacted the lender, the vehicles are usually repossessed.
Analysts predict vehicle repossessions this year will rise as much as 15 percent to about 1.6-million cases nationwide. That’s on top of a 10 percent increase last year – yet another sign of the growing economic stress on consumers.
And Florida is one of the states where the trend is most obvious. Although the state doesn’t track the number of vehicle repossessions, the number of people applying for licenses to either become a recovery agent or to start a recovery business has risen dramatically. Florida now has 390 interns seeking to become “recovery agents,” the most the state has ever had.
One of those agents is Jason Giddens.
He has a skeleton tattoo on his left arm, an earring in each ear and a knack for finding things. Things people sometimes go to great lengths to hide.
Giddens, 35, is the co-owner of S & G Towing & Recovery, one of a growing number of companies that prowl the streets of Tampa Bay looking for someone else’s vehicle. To get his license, Giddens had to undergo a background check, take a 40-hour course and serve an internship.
For about $325, he’ll bring in a car. By the book. He’s also recovered a 43-foot motor home, a 30-foot powerboat from the owner’s dock, and a motorcycle from a member of a biker gang.
If nothing else, Giddens is careful. When a lender sends him a repossession assignment, he crosschecks it to make sure it’s correct, and then heads off into the night. He rarely makes a pickup during the day.
Recovery agents are not allowed to carry weapons. But Giddens has never been shot at, and at 5 feet 7 and 285 pounds, he rarely gets confronted. Still, after every job, he calls his wife to let her know he’s okay.
He knows people will often offer to pay him what is owed on the car. (He refuses.) He knows Ford Explorers and Expeditions are repossessed more than most other models, because there are so many of them.
And he knows that for $50, he can usually get a neighbor to call him when a car he’s hunting pulls in.
- – -
Keith Leggett, senior economist with the American Bankers Association, said reasons for the spike in repossessions include the economic slowdown, a shrinking job market and rising fuel costs. But generally, people are borrowing more money and taking longer to pay off the loan, all for cars that steadily decrease in value.
Through the first three months of this year, about a quarter of car owners who traded in their vehicle for a new one found themselves “upside down.” They owed more on their old car than it was worth.
“Then all you have to have is some kind of event – a job loss, a health issue – and that would trigger a rise in delinquencies,” Leggett said, adding that some buyers don’t intend to make more than a few payments.
“But most people do,” he said. “The problem is that people don’t factor in other forces like fuel costs, insurance, maintenance and upkeep.
“They look at the price and say, ‘I can make this payment.’ When they don’t, the lender wants its merchandise back.”
- – -
Palencia, the owner of the repossessed Ford pickup, asks Giddens if it’s okay to remove his belongings from the truck. Giddens nods, and out come the CDs, the letters, the lumber and the Virgin Mary picture hanging from the rear-view mirror.
“I always give people the chance to get their things,” Giddens said. If no one claims the possessions after 45 days, they belong to the repo man. Giddens sees a lot of child car seats, strollers and clothes. He gives car seats and strollers to Goodwill, and the clothes go to the homeless people who watch over his lot.
Palencia, 35, wants to know how to get his truck back.
“It’s up to the dealership,” Giddens said. “Not us.”
“It’s the only vehicle I have,” Palencia said, standing in the street surrounded by his family. “I only missed one month.”
Giddens didn’t linger to hear the rest. He dropped off the Ford at his lot, and took off again, this time to Clearwater for a 1999 Chrysler 300.
After making payments for more than a year, the owner still owed close to $3,000 on a car that was worth about $2,500.
“You’d think they’d learn,” Giddens said. “They never do.”
Tom Zucco can be reached at zucco@sptimes.com or (727) 893-8247.
FAST FACTS
A Florida boom in recovery agent licenses
Type of license 2006 2007 2008
Recovery Agent 720 750 788
Recovery Agent Intern 244 326 390
Recovery Agency 295 315 333
How to keep the repo man away
For those having trouble paying down debts, the American Bankers Association offers the following tips:
Talk with creditors. Hiding only makes the problem worse.
Don’t charge more purchases until your problems are solved.
Avoid bankruptcy. It’s a short-term fix with long-term effects.
Credit: Times Staff Writer
Buy here-pay here
The used-car blues
By Waveney Ann Moore, Times Staff Writer
Published Saturday, March 15, 2008 9:57 PM
It’s hard to escape life at the low end of the income scale, where there’s no such thing as minor money troubles.
Ruby Farrow says she was made to pay $85 to recover her purse and medications from the used-car dealership that repossessed her 1996 Ford Explorer.
Across town, Jennifer Joshua says the car she bought to take her to work at Target overheated and broke down a month after she drove it off a used-car lot. After having made more than $1,000 in payments, Joshua refused an offer requiring a second down payment to get another car, and is now using public transportation.
Public transportation doesn’t take some people where they need to go. And a lack of reliable personal transportation limits opportunities for jobs, housing, affordable groceries and education. It traps the poor in a cycle of poverty.
Consumer advocates say poor, minority and uneducated consumers are particularly vulnerable, sometimes victimized by used-car lots, where they must make weekly or biweekly payments at exorbitant interest rates.
The Florida Attorney General’s Office says complaints against car dealerships ranked fourth among those received in 2007, behind debt collectors, Internet-related scams and the travel industry.
Once in trouble, car buyers often are hamstrung by mandatory arbitration agreements that take away their right to pursue disagreements in court, consumer advocates say.
This month a House subcommittee held hearings on a bill that would limit such arbitration.
• • •
On Feb. 4, a day after she picked up her disability check, Ruby Farrow, 50, and her husband, Nathaniel, 65, drove to Suncoast Auto Brokers and Financing, at 3401 34th Ave. N in St. Petersburg, to make their car payment. It was a Monday and they were a day late, she said. Their payments were often made days early, she said.
As always, Nathaniel Farrow went into the dealership to make the payment while his wife, who has asthma, diabetes and high blood pressure, remained in the car. This time finance manager Darren Robertson said he wanted to speak with Ruby Farrow.
Robertson asked her how to reach a friend who had bought a car at the same time. Ruby Farrow said she told Robertson that the friend had left the state and that she had the information at home.
When the Farrows left his office, their car had disappeared. Back inside, she said, the manager told her she could not get the car unless she delivered the information about the friend and bought additional car insurance.
“I said, ‘Can I have my purse?’ I said, ‘Can I have my pump (inhaler)? My chest is tight.’ He said, ‘I can’t give you anything,’ ” she said.
Farrow called her godmother to give her a ride home. “I took my light bill money and water money and took it straight to the insurance company,” she said.
Back at the car dealer, she again asked for her purse and inhaler, but was told she would have to pay $85 for their return.
“So I begged him and begged him. I gave him the $85. He had taken everything in the car and thrown it in one big, black garbage bag, all my medicine, my sugar medicine, my blood pressure medicine, my nerve pills,” Farrow said.
In a Feb. 14 lawsuit, the Farrows, who are black, said employees at Suncoast Auto Brokers “laughed and ‘high-fived’ each other” and used racial slurs.
Robertson disputes the Farrows’ account. “They are wonderful people. … We’ve dealt with them for a very long time, but unfortunately, nice people become in default. Repossession is not a fun thing.
“Personal property out of a vehicle is usually inventoried. Customers are not supposed to keep valuables in the vehicle. No repossession company will keep a person from getting their medicine.”
• • •
A reliable car to take her to and from her 4 a.m. to 2 p.m. job at Target in Pinellas Park was all she wanted, Jennifer Joshua said. Instead, she got a vehicle that overheated after a month, a pay cut because she changed her shift to coincide with the bus schedule, and a bill for a car that she no longer owns.
As Joshua tells it, on Jan. 3 she bought a 1995 Oldsmobile Achieva from Pinellas Auto Brokers, at 4590 66th St. N in St. Petersburg, for $5,400. The car started overheating a month later, she said. When she called the car lot, she said she was told they’d send a tow truck, but for a fee she couldn’t afford.
“They told me it was $98,” she said. Her solution was “to cool it off a bit and try to make it over there.” By the time she got to the dealer, the car was steaming again, she said.
Ben Rogers, 41, who owns Pinellas Auto Brokers, blames Joshua for letting the car overheat and said she should have waited for the tow truck. He said the cost was $35.
“She blew the car up, because it overheated. So I have a useless car. Legally, I could pursue her for the balance, but I’m choosing not to,” he said.
Joshua, 26, said she was prom-ised a replacement if something happened to the vehicle she bought. The company will not give her another car without an additional $600 down payment. She declined the offer, left the car at the lot and has since received a letter saying her vehicle was repossessed and full payment was required.
Joshua is now taking the bus to work and has taken a $1.75 an hour pay cut because of her shift change. “I wasn’t expecting to ride around the world in this car. It was just something to get me to work,” she said. “Poor people don’t have a chance in this world.”
But Rogers, of Pinellas Auto Brokers, says it is used-car dealers who are unfairly maligned.
“What we do is secondary financing. If you don’t have credit and you go and rent to own a washer and dryer, you are going to pay a higher price,” he said. “It’s unfortunate, but that’s the name of the game. It’s a very risky business, because you probably lose about 25 percent of the deals you make. They leave the state and you never find them.”
• • •
The buy-here-pay-here car business is a $5-billion-a-year market, according to the Annie E. Casey Foundation, a private charitable organization that works to improve the lives of disadvantaged children.
Jack Gillis, director of public affairs for the Consumer Federation of America, said: “Generally the people who tend to use the buy-here-pay-here lots are those people who can least afford to be ripped off by the exorbitant interest rates charged and the overpriced cars, but unfortunately, they get lured in by artificially low weekly, biweekly and monthly payments.”
How high are the interest rates? “Usually … in excess of 30 percent for used vehicles,” said Deborah Berry, operations manager for Pinellas County’s Justice and Consumer Services.
“A car can be in any condition for sale on a lot. We receive complaints where people may have bought a car and they have mechanical problems, so they are in a bind because of repairing the car and making payments. And then the car is repossessed and the dealer can easily put the car back on the lot and sell it to the next person that comes along.”
There are about 8- to 16-million people of low and moderate income with poor credit subjected to the subprime lending market, according to the Casey Foundation. Many have incomes under $14,000 a year.
Rosemary Shahan, president of Consumers for Auto Reliability and Safety, says buy-here-pay-here car lots are “bad news.”
“If the deal doesn’t go well, it can have a huge impact on your life,” she said. “It’s not like a toaster. You can get another toaster. If your car doesn’t work, you can lose your job.”
• • •
“Buying a used car, as a rule of thumb, is a great way to save money, because the initial car owner has absorbed one of the most expensive aspects of car ownership and that’s depreciation,” Gillis said.
“Secondly, because the quality of cars has improved, there are plenty of good choices in the used-car market. The bad news is that it is very hard for most of us to pick out the peaches from lemons.”
Consumer advocates say car buyers also should be aware of arbitration agreements tucked into the sheaf of documents they are asked to sign. After the Farrows filed their lawsuit, Suncoast Auto Brokers sent them a copy of a document they signed saying that any disagreement would be settled in arbitration rather than in court.
“They gave us all those papers to sign when we got the car, but we didn’t know what we were signing,” Nathaniel Farrow said.
David Gruskin, a St. Petersburg lawyer who practices consumer law, said such agreements are common. “You’re giving up your key to the courthouse,” he said.
Waveney Ann Moore can be reached at wmoore@sptimes.com or (727) 892-2283. Times researcher Caryn Baird contributed to this article.
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For help
Opportunity Cars, a network of more than 150 nonprofit organizations, helps low- wage working families. Its car ownership program distributes cars directly to families, making low-interest loans for car purchases and facilitating matched savings for car down payments and purchases. (301) 772-1971 or opportunitycars.com.
Attorney general fraud
hotline: 1-866-966-7226.
Pinellas County Justice and Consumer Services:
pinellascounty.org/
consumer/default.htm
or (727) 464-6200.
