medical costs

Ready for Medicare

By | 2018, Money Moxie | No Comments

Understanding the intricacies of Medicare can be tricky, and avoiding some of the common mistakes can save you a great deal of frustration and money. If you are getting close to age 65, here are some things to think about.

Medicare Part A
It’s easy to get confused about signing up for Medicare Part A, especially if you will be delaying Social Security to receive a higher benefit. When it comes to Medicare Part A, there is no delaying. At age 65 you must enroll in Part A. There is a 7-month window to enroll. It begins 3 months before your birth month and ends 3 months after your birth month. If you miss this window you are not eligible again until open enrollment, which is from October 15th to December 7th each year. Your coverage will not begin until January 1st of the following year. Failure to enroll in Part A coverage can put you on the hook financially if you have a hospital stay.

Medicare Part B
The enrollment dates for Medicare Part B hinge on whether you are working after age 65 and are covered by an employer plan. If so, you may be able to delay enrollment until you retire. If not, and you miss the enrollment window, you could be subject to a premium penalty of up to 10% for every 12-month period beyond when you should have signed up. And if that isn’t bad enough, the penalty never goes away. Let’s say you wait 3 years to sign up for Part B coverage, your penalty could be as much as 30%. In real dollars, the 30% penalty would increase your monthly premium from $134 to $174.20 based on 2018 rates. While that may not seem like a lot of money, it’s substantial if you are retired and living on a fixed income.

Income-Related Monthly Adjustment Amount (IRMAA)
Medicare Part B premiums can also be affected by high-income years. This could result if you sell a property or business or take large distributions from retirement accounts. If you are subject to IRMAA, your premiums will increase for two years. The trigger points for IRMAA are cliff thresholds, not marginal, and there are 5 in all. For married couples, the first threshold hits at $170,000. What we mean by cliff is if your income is $170,001, you hit the threshold and your premium increases from $134 monthly to $187.50. This increase continues for two years and is per person. For those who are single the first threshold hits at $85,000.

Nursing Care Coverage
There is very little coverage under Medicare for a stay in a nursing care facility – rehabilitation and other limited situations only. Medicare does not provide coverage for help with activities of daily living, which is the type of care most often needed by elderly individuals. Plus, to qualify for coverage under Medicare, you must go directly from the hospital, as an inpatient, to a care facility.

These are just a few of the hurdles you need to know when preparing for health care in retirement. Talk to one of our knowledgeable advisors; we can help determine the best options based on your specific needs and benefits.

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Open Enrollment is Now

By | 2018, Money Moxie | No Comments

Healthcare open enrollment is upon us. Here are some things to keep in mind.

1. Medicare Advantage Plans vs. Medigap Plans: Medicare Advantage plans wrap all of Medicare into one plan. Medigap, also known as Supplement Insurance, plans are separate from Medicare and help pay for medical care not covered under traditional Medicare. The premiums are charged in addition to Medicare Parts A, B, & D and are usually more expensive.

2. Take Advantage of a Health Savings Account (HSA) or Flexible Spending Account (FS). HSAs have higher contribution limits–$3,350/year for individuals and $6,750/year for families. The money in an HSA will roll over year after year; money not used in an FSA is forfeited. FSA contributions are limited to $2,650/year. To qualify for an HSA, you must be enrolled in a high-deductible health plan. Earnings and withdrawals are not taxed in either account as long they are used for qualified medical expenses.

Contributing to an HSA can be as advantageous as contributing to a retirement plan. Since the money in an HSA will roll over every year, you can use it in retirement to pay for eligible medical expenses.

3. Know the Dates of Open Enrollment! Affordable Care Act open enrollment is November 1st through December 15th. Employers often have their open enrollment around this time as well.

4. Take Advantage of Wellness Incentives. Health insurance providers often have incentives. They can be as simple as going to the doctor for a general health assessment. Incentives may include additional HSA contributions, lower premiums, or even gift cards.

5. Compare Costs: High-deductible plans have lower premiums, but out-of-pocket maximums increase with high medical expenses. Other plans with higher premiums may cover more expenses because of the lower deductible and maximums. Make sure you weigh the pros and cons of each plan.

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Medicare Open Enrollment

By | 2015, Money Moxie | No Comments

America hearbeat

Medicare open enrollment is right around the corner. If you are already using a Medigap plan or a Medicare advantage plan, now is your time to move if you don’t like your current carrier.

If you have a Medicare card that you give to your doctor, then you have traditional Medicare. If you only have a card from an insurance provider that you give to doctors, then you have Medicare Advantage.

When is the open enrollment period? October 15th through December 7th every year.

Who needs to pay attention?
Those that are currently using a Medigap plan, Medicare advantage plan, prescription drug plan, or if during your initial enrollment period you opted not to purchase additional coverage up and above traditional Medicare parts A & B.

What is traditional Medicare?
Traditional Medicare is composed of three parts: A, B, and D. Part A is coverage for hospitals and doesn’t have monthly costs. Part B is coverage for doctor visits, etc. and the base cost is $104 per month. This typically comes out of your Social Security check. Part D is prescription drug coverage, which is purchased through a third party.

What is the difference between a Medigap and Medicare advantage plan?
Medigap is a “gap” insurance that covers most of the holes that are not covered by traditional Medicare parts A & B. You can go to any doctor that accepts Medicare. Medicare Advantage plans combine parts, A, B, D, and Medigap into one nice package. They operate more like traditional insurance where you have a service provider and you are tied to their network.

What else should I know about Medigap?
Medigap plans are lettered from A to N with costs that vary depending on the benefits provided. The most popular plan is F as it is the most comprehensive and covers things like the Part B deductible and foreign travel emergency. Because it is the most comprehensive, it is also the most costly.

By law, all Medigap plans have the same benefits regardless of the service provider. The only difference will be the level of service. Price then is a major driving factor, but you should use a provider that is reputable. People that have comprehensive Medigap plans typically pay more on a monthly basis but feel like they don’t have to pay very much out of pocket.

What else should I know about Medicare Advantage?
Medicare advantage plans, also called Part C, will often cost less than Medigap plans and will have deductibles and co-insurance like traditional insurance through an employer. It works by Medicare giving an insurance provider a certain amount per year to manage your expenses. If the insurance provider manages your expenses for less, then they make money. Because of that, monthly costs vary significantly with some plans as low as $0 per month. People that use Medicare Advantage Plans usually pay less on a monthly basis but feel like they have more out of pocket expenses.

What are some small facts that have big impacts?
When you originally sign up for Medicare, you can choose either Medigap or Medicare Advantage without being denied. If you are on a Medicare Advantage plan and then try to go back to a Medigap plan, you could be denied based on health. You will never be denied access to a Medicare Advantage plan.

Are there differences between prescription providers?
Yes, costs can vary significantly based on the provider and the types of medications you are taking. Shop around to find out who will give you the best deal for your specific medication regimen. You can also go to Medicare.gov and enter the prescriptions you take, and it will screen for the best providers. Visit Medicare.gov and click on Drug Coverage (Part D), then click on Find Health & Drug Plans.

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Long-Term Care

By | 2015, Newsletter | No Comments

Higher premiums for long-term care policies have retirees wondering how they’ll protect their nest egg.

Wealthy couples may be in a position to easily cover $10,000 a month or more for private care. But what about the couples who have diligently saved and accumulated just enough to cover their monthly living expenses? They could be wiped out financially if either spouse needs long-term care. An even greater concern: what will happen to a surviving spouse, financially speaking, if the liquid assets are used up providing care for an ailing spouse?

Options exist to help protect the nest eggs of those with limited resources. Learning about these options and understanding the rules that apply is best done when conditions are calm. Unfortunately, becoming Medicaid eligible rarely crosses the minds of retirees until a crisis arises.

One option is a Medicare compliant single-premium immediate annuity (SPIA). This option, if allowed in your state, will help the spouse living at home preserve assets to provide for his or her monthly living expenses.

Here’s the basic concept. Mr. and Mrs. Jones find out that Mr. Jones needs long-term care. Under Medicaid rules, Mrs. Jones is only allowed a certain amount of assets, not including the family home. Everything over the allowed limit is transferred to a Medicaid compliant SPIA thus converting the asset to an income over her life expectancy, usually a five- or six-year period.

By the time the SPIA has paid out in full, Mrs. Jones will have sheltered the assets to create a much needed income. Should Mrs. Jones die before her husband, the proceeds from the SPIA will go to cover his care.

This option is not designed to shelter assets for beneficiaries, but rather to maintain the standard of living for a healthy spouse.

For more information contact one of Smedley Financial’s wealth advisors who can answer any questions you may have and help determine if this option is something you should consider.

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Obamacare Medical Costs on the Rise

By | 2013, Money Moxie | No Comments

There is no shortage of controversy surrounding Obamacare. Apparently there is also much confusion around its name. Jimmy Kimmel, the late night comedian, proved that people don’t have their facts straight. He had a camera crew ask people on Hollywood Boulevard which they liked better: Obamacare or the Affordable Care Act. One woman explained that Obamacare has “a lot of holes in it, and I think it needs to be revamped.” The same woman felt that “the Affordable Care Act is better.” She wasn’t the only one. Most people had similar opinions. Just to clear up any misconception, they are one in the same.

One thing that is certain is many Americans will have their medical insurance costs increase this next year. This is largely due to medical carriers revamping their plans to be in compliance with the new law.

Forbes reports that 41 states will experience premium hikes. In Utah, individual-market premiums are expected to increase by 24%.1


In one case, a single mother with 5 children had the cost of insurance increase from $827 per month to $1045. That is a 26% increase for one year.2

Seniors may also be indirectly impacted by the new law, which imposes spending cuts by reducing payments to hospitals and doctors, while increasing incentives for more efficient care. Supporters say this will strengthen the Medicare program in the long-term. Opponents say that seniors in Medicare will find it harder to access their benefits because more doctors are refusing to treat Medicare patients.3

The silver lining to all of this is that 30 million Americans will now have access to health care, and
many of those will be eligible for subsidies.

To see if you may be eligible for a subsidy, go to the calculator at http://kff.org/interactive/subsidy-calculator/.

If you are eligible for a subsidy, you will need to apply for insurance through an exchange. When an exchange determines that a person is eligible for a tax credit based on expected income, subsidies will be paid directly to insurers to lower the cost of premiums.

Consumers purchasing insurance through an exchange “can pick from four levels of coverage, from bronze to platinum, with the greatest differences appearing in cost sharing features such as annual deductibles and copayments. Bronze covers 60 percent of expected costs; silver covers 70 percent; gold covers 80 percent; and platinum covers 90 percent.”4

After subtracting subsidies, a 27-year old in Salt Lake City earning $25,000 per year would expect to pay $95 a month if he chooses the bronze plan. A family of four in Salt Lake City with an income of $50,000 per year would expect to pay $122 per month for the bronze plan.5

The bottom line is that health care subsidies will be beneficial for low-wage and middle-income families. If you make too much to qualify for subsidies or if you are covered by an employer plan, most likely your premiums are going to increase. As the Supreme Court said, this increase is a “tax.” Make sure to plan those increased “tax” expenses in your monthly budget.

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