. In Part 1 of this two-part article, we introduced the concept of the Health Savings Account. In this portion, we’ll talk about some more of the specifics with regard to implementation of the plan, including contribution limits, setting up the plan, and taking distributions. Contribution Limits on the HSA The amount that you can contribute to a HSA annually depends upon the type of HDHP coverage that you have, as well as your age. For 2021, if you only have coverage for yourself, you can contribute up to $3,600. If you have the family coverage, you can contribute up to $7,200. You are considered to be eligible for the maximum contribution if you were eligible to make a contribution to your HSA on the first day of the last month of the calendar year, regardless of whether you were eligible in prior months (this is known as the […]
health insurance
Health Savings Accounts – The Basics, Part 1
A Health Savings Account (HSA) is a tax-exempt trust or custodial account that you set up with a bank or other US financial institution which allows you to pay or be reimbursed for qualified medical expenses. The HSA must be used in conjunction with a High Deductible Health Plan (HDHP). The HSA can be established using a qualified trustee or custodian that is separate from the HDHP provider. Contributions to an HSA must be made in cash or through a cafeteria plan. Contributions of stock or property are not allowed. Benefits of an HSA There are quite a few benefits to an HSA: Contributions to an HSA are deductible from income – even if you don’t itemize deductions; If your employer makes contributions to an HSA on your behalf (such as via a cafeteria plan) the contributions can be excluded from your gross income; Your account contributions can remain in […]
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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. Oftentimes it is a foregone conclusion, once you understand the differences between itemizing and the standard deduction. Standard Deduction vs. Itemizing: Facts to Help You Choose Each year, millions of taxpayers choose whether to take the standard deduction or to itemize their deductions. The following seven […]
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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 […]
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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 […]
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HSA Funding
As many of our blog posts do, today’s post originates from a question from one of our readers regarding funding an HSA. The question had to do with the tax treatment of contributions to the HSA and whether said contributions are free from FICA tax. In order to have an HSA the employer/employee must be participating in a high deductible health plan (HDHP). HDHP plans must meet a minimum deductible of $1,300 for single individual plans and $2,600 for family plans. In addition, the maximum contribution for an HSA is $3,350 for an individual plan and $6,750 for a family plan. For those age 55 and older, the plans allow an additional $1,000 catch-up contribution. Generally, employers making contributions to the employees’ HSA avoid paying FICA and FUTA taxes and are also allowed a corresponding tax deduction for providing the employee benefit. Employees making contributions to their own HSA through […]
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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 […]
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A New-Hire Checklist
Starting a new job can be very overwhelming. Often, new-hires go through a barrage of training, information overload and multiple booklets covering procedures, processes and application. Somewhere in that mix is the benefit package. Here is where the new employee can sign up for important health insurance coverage, retirement savings plans, and other benefits such as life insurance and disability. In the stress and whirlwind of the on-boarding process, sometimes benefits can get pushed to the side, and then after time, forgotten about. Here’s a checklist of what a new employee can do to make sure they sign up for these precious benefits and some information on how to move forward. Select the appropriate health coverage. Some employers have one carrier that provides coverage with different options from that carrier. Options may include HMO, PPO or HSA plans. The premiums the employee pays will depend on the deductibles in the […]
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Lose Your Health Insurance? COBRA May Help
Former employees recently let go from their job may find themselves wondering what options they have to continue their employer provided health insurance. Generally, an employee is allowed to continue their coverage from loss of employment due to voluntary or involuntary termination, disability, reductions in hours, death, divorce, or becoming eligible for Medicare. The length of time an individual has to remain on COBRA depends on the reason why they lost coverage from their employer. For example, if an employee is terminated either voluntarily or involuntarily he or she will have up to 18 months of coverage. In the event of death, divorce or becoming eligible for Medicare, the length of time is 36 months. In the event an employee becomes disabled, the length of time is 29 months. The reason for such an odd number is that in order to become eligible for Medicare from disability the individual must […]
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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.
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A Consequence of the Affordable Care Act
As much as I wanted to put the word unintended before consequence in my title, I had a hard time believing that what I’m about to write about was unintended. As many of you are aware, the Affordable Care Act a.k.a. “Obamacare” is the law passed that requires, among other things, that everyone carry health insurance, subject to some specific exclusions. What I want to talk about is how this affected my insurance specifically and likely affected the insurance of many others. Before the Act was passed my family and I enjoyed health insurance through our HSA. A health savings account allows a person or family to have a high deductible health insurance plan while also making tax deductible contributions to an account that can amass funds for medical expenses. Funds from the account that pay for qualified medical expenses are tax free. Self-employed individuals can also deduct their health […]
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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 […]
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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 […]
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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 […]
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IRAs and Medicaid
When it comes to IRAs and Medicaid eligibility the question that gets asked is, “How does my IRA affect my eligibility for Medicaid?” Many states share similar guidelines when it comes to exempt and non-exempt assets in IRAs. Essentially, it boils down to this: if the IRA is not in payout status (the IRA owner is not taking required minimum distributions) then the assets in the IRA are included (non-exempt) in the determination of eligibility. However, if the IRA is in payout status and the owner is now taking required minimum distributions (RMDs) the total amount of the IRA is not included, but the annual income from the RMDs is.The same would be true regarding 401(k)s, 403(b), and other qualified plans that may require RMDs after age 70 ½. There are some states (Illinois for example) that treat IRAs, a 401(k), and pensions as exempt. Check your state’s laws to […]
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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 […]
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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 […]
Sterling Raskie, MSFS, CFP®, ChFC®
The latest in our Owner’s Manual series, A 401(k) Owner’s Manual, was published in January 2020 and is available on 
A Medicare Owner’s Manual, is updated with 2020 facts and figures. This manual is available on 
Social Security for the Suddenly Single can be found on Amazon at 
Sterling’s first book, Lose Weight Save Money, can be 
An IRA Owner’s Manual, 2nd Edition is available for purchase on Amazon. Click the link to choose the 
Jim’s book – A Social Security Owner’s Manual, is now available on Amazon. Click this link for the 
And if you’ve come here to learn about queuing waterfowl, I apologize for the confusion. You may want to discuss your question with Lester, my loyal watchduck and self-proclaimed “advisor’s advisor”.