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4 Things to Consider About Healthcare in Retirement

As we all are painfully aware, the costs and complexity of healthcare are skyrocketing, and nothing seems to be slowing things down.  Granted, the incoming administration is making overtures to give attention to the problem, but… as we all know, paths to places we don’t want to go are often paved with good intentions.  At this point I would not hold my breath for the next great proposal on healthcare costs, the problem is enormous and not easily resolved. Recent information from Fidelity suggests that a 65-year-old couple who retired in 2016 can expect lifetime healthcare costs to top $260,000 over their remaining lifetimes.  And that doesn’t include long-term care (nursing home or assisted-living) costs. Four Things to Consider About Healthcare in Retirement It’s not solely Medicare. If you haven’t checked into it yet and you believe that Medicare could be your only insurance in retirement, you’re in for a surprise. With the […]

A Risk Management Checklist

Although many individuals have various risk management policies in place, sometimes those policies get brushed aside and every once in a while the dust needs to be wiped off of them and perhaps some updating needed. Here’s a checklist to consider the next time you review your risk management strategies. Auto Insurance – Review your coverage to make sure it’s still adequate. Liability limits of at least $250,000 should be the norm. Limits of $500,000 up to $1 million are better. If you drive an older car, consider raising your comp and collision deductibles or eliminating them altogether to save on premiums. Upside down on your car loan? Consider gap insurance. Better yet, don’t have a car loan. Home Insurance – Make sure your home is insured to its reconstruction cost. This is the cost to rebuild your home using today’s prices for materials, labor, etc. It is NOT the […]

Why You’re Getting Form 1095

Many taxpayers are receiving a new form in the mail this tax season – Form 1095, either A, B, or C. This is because of the Obamacare law which requires that taxpayers have healthcare coverage. Form 1095 provides documentation of the taxpayer’s coverage by healthcare insurance. Depending upon the type of coverage you have, you will receive a certain type of form. And what should you do with this form? Form 1095 A If you have coverage through the Health Insurance Marketplace (established as a result of Obamacare), you’ll receive Form 1095-A. This form is used when you fill out your income tax return for the year, so that your tax credit for the healthcare premium can be reconciled, especially if you received the premium credit in advance. Form 8962 is filled out and filed with your tax return, using the information in Form 1095 A. If your advance payments […]

New For 2014 Taxes: Health Premium Tax Credit

We knew when Obamacare went into place that there would be new requirements for income tax filing, and one of the first to deal with is the health premium tax credit. This will require the use of a new form, Form 8962. Health Premium Tax Credit For this tax credit you will need to reconcile your advance credits that you have received in the form of reduced subsidized healthcare premiums.

Who Will Be The Biggest Benefactors of Obamacare?

According to data cited in a recent WSJ article (The Health-Care Overhaul: What You Need to Know), there is a specific demographic that should benefit the most from the up-coming institution of the Affordable Care Act’s changes to the healthcare system.  If you’re wondering why this writing seems a bit smug, it’s because I’m one of these projected benefactors: folks between age 50 and 64. Why is this group deemed the most likely to benefit? It has to do with some current realities about our nation’s health and the way that the (current and proposed) health insurance marketplace works.  First of all, folks in this age group who are not covered by an employer plan, or are not covered by Medicaid, must find insurance in the private marketplace. And the reality is that folks who’ve seen half a century of life or more are typically in poorer health than younger […]

Medicare Part B

The next letter in our Medicare alphabet soup is Part B. Part B is essentially medical insurance that covers doctor’s services, outpatient care, home health services, and durable medical equipment. It will also cover some other services as well as well as many preventative services. As far as what doctors will and will not cover Part B depends on whether or not they have agreed to assignment. Assignment is simply your doctor or another health care provider agreeing to be paid directly by Medicare and be willing to accept the payment amount that Medicare decides is the value of the service. Agreement also means the doctor or health care provider cannot charge you any more than what the deductible and coinsurance amounts are. The basic cost for Medicare Part B for 2013 is $104.90 monthly. Individuals with higher AGI may end up paying more. The table below, courtesy of Medicare.gov shows […]

The ABC’s (and D’s) of Medicare

  With more and more baby boomers retiring, more and more people including the Boomers, and their children and families are going to have questions and concerns about Medicare. Questions can range from what Medicare is, what it does, what it doesn’t do, and the nuances that make up our nation’s health care for retirees. Medicare was created in 1965 by the Social Security Act and was signed into law by Lyndon Johnson. Currently, Medicare is funded via taxation and premiums paid by Medicare subscriber. Part A – which we will cover in a future article, is funded by a 2.9% tax on wages. Unlike Social Security tax that has a limit or cap on the amount of income that can be taxed ($110,100 in 2012 and $113,700 in 2013), Medicare has no such wage base. The 2.9% tax is on an unlimited amount of earnings. Eligibility for Medicare typically starts for […]

Long Term Care Insurance – Protecting Your Nest Egg

Long term care is a topic few people know about and a topic even fewer people are prepared to deal with in the future. As the average life expectancy increases in the US, more and more people – from Baby Boomers to X and Y geners – are going to be confronted with the need for and planning for long term care. According to the Medicare website, about 9 million men and women over age 65 will need LTC this year – that number expanding to 12 million by 2020. According to the Department of Health and Human Services, people who reach age 65 will have a 40% chance of entering a nursing home and 10% of those will stay there for more than 5 years. This, of course, can get expensive. This is where an LTC policy can make sense. There are two types of LTC policies that a […]

Financial Planning Pyramid: Foundations

You can’t build a house from the top down, right? Like most solid structures, they start with solid base, a firm foundation. Some of the biggest skyscrapers are started below ground level, well beyond what’s in our view when we look at the behemoths of structures. Can you imagine a skyscraper built on just a foundation of concrete? The first strong wind or tremor would send it toppling. The same process can be applied to financial planning. You have to have a solid base, a firm foundation before you can think about building a portfolio, estate planning, etc. Generally, the financial planning pyramid starts with the base known as risk management. This includes such risks as auto and home insurance, an emergency fund, life and disability insurance, and a will. Having this solid base protects you from many risks in life, but also protects your plan and your money that […]

How a 401(k) Contribution Affects Your Paycheck

As you begin a new job, or if you are a longer-term employee who is just starting to make contributions to a 401(k) plan, you are confronted with a question:  How does a contribution to the 401(k) plan impact the final take home pay on my paycheck? Believe it or not, you could actually increase your bottom line assets by reducing your income through a 401(k) contribution. Let’s work through an example so that we can more completely understand what happens. Your New Job So, you’ve started a new job, with an annual pay of $30,000.  We won’t go into all of the details behind a W4 at this point, but for the sake of the example, we’ll say you filed your W4 to exactly match your tax expected of $2,603 for the year (and you started in January).  In addition to this, you have opted to take advantage of […]

Should I Itemize or Use The Standard Deduction?

Taxes (Photo credit: Tax Credits) As you prepare your tax return, you have a decision to make about your tax deductions – you can choose between itemizing and using the standard deduction.  But how do you choose? The Standard Deduction is just what it sounds like – a standardized deduction that you can choose to utilize by default, and you don’t have to do a lot of recordkeeping through the year in order to use the the standard deduction.  In order to itemize deductions, you need to save receipts from various deductible expenses through the year, and use those to prepare your itemized return. The IRS recently published their Tax Tip 2012-43, which has some good information to help you with this choice.  Oftentimes it is a foregone conclusion, once you understand the differences between itemizing and the standard deduction.  Below is the text of the Tax Tip. Standard Deduction […]

March 15 is the Deadline for FSA Claims

If you’re a participant in your employer’s Flex-Spending Account plan (FSA), whether for health-care or dependent care cost reimbursement, you have a limited amount of time to claim the monies that have been set aside in your plan. The way these plans work is that you voluntarily decrease your income by a certain amount, generally paycheck by paycheck, and that amount is placed in a separate account.  Over the course of the calendar year, you can request reimbursement from your FSA funds for qualified expenses that you’ve incurred. If it’s a health-care FSA account, you can request reimbursement for your healthcare deductibles, co-payments, and co-insurance costs – literally any health-care expense that is not covered (paid) by other insurance.  There are limits, though: beginning with 2011, you cannot be reimbursed for non-prescription (over the counter) medications. If the FSA account is for dependent-care expenses, you can request reimbursement for your […]

Over-The-Counter Drugs via Your Flex-Spending Account

In case you missed it when I wrote about Guidance from the IRS on Flex Spending Plans – one of the changes you’ll have to deal with beginning with 2011 is that you can no longer use your Flex-Spending Account (FSA) to reimburse yourself for over-the-counter drugs like you’ve been able to do in the past. However, there is a way to get the over-the-counter (OTC) drugs that your physician recommends and use your FSA funds to pay for it… if your physician gives you a prescription for it.  Even though the IRS has disallowed the use of FSA funds for OTC drugs, if your physician gives you a prescription for the OTC drug, your FSA can be used to pay for the drug. There are some rules though:  first, the prescription has to provided to the pharmacist prior to the purchase, and the pharmacist must dispense the drug just […]

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