One of the most challenging aspects of planning for retirement is managing health care expenses. The way health insurance operates changes as you age, especially when it comes time to retire. Are you ready to manage those Medicare expenses when the time comes?
Whether you’ve started planning for the future or not, here are a few ways you can better manage health care expenses in your future.
Understand What Your Health Insurance Covers
Medicare benefit payments totaled $597.2 billion in 2014. While that’s a significant number, it doesn’t mean Medicare is free. Medicare Part A may come without a premium, but you’ll still be required to pay premiums for both Part B and Part D. The standard premium for Part B is $134 or higher, while the premium for Part D varies depending on the plan you’re enrolled in. Medicare may cover regular medical visits under these premiums, but other expenses such as co-pays and hearing, vision, and dental-related treatments may be out of your own pocket.
Why Invest in a Medicare Supplemental Plan?
Investing in Medicare supplement insurance is a smart move, no matter how much of a healthy lifestyle you live. Medical care costs money, and a traditional Medicare plan may not cover every expense related to your overall health. Also known as a Medigap plan, this investment can help you save money as a retiree. That being said, you’re required to have Medicare Parts A and B before you qualify for this option. Plan ahead!
Don’t Forget About Income-Based Surcharges
Medicare currently uses a two-year period to determine whether or not income-based surcharges apply to any one client. That means a client’s 2015 income can be used as a basis to determine whether income-based surcharges will be applied in 2017. A few things to remember about this include:
- This calculation draws on traditional wages, self-employment income, and a variety of other income sources
- Tax-free income during retirement is not included in this calculation
- Roth IRAs and Roth 401(k)s are excluded from income-based surcharges
- Annuity payments will not increase income-based surcharges
Once you understand and put these tips for managing health care expenses into play, creating a retirement budget and spending wisely as you grow older may be more feasible. If you have questions or concerns, don’t hesitate to contact Banker’s Fidelity.
Choosing a health care plan that fits your individual needs can be difficult at any age, but it becomes especially difficult for those approaching retirement or living on a fixed income. There are many different types of insurance policies to choose from, and it can be hard to find the right one from you. If you are eligible for Medicare, you may find yourself trying to choose between Medicare and a private health insurance plan. Both options have benefits and risks, and the purpose of this article is to help you understand the differences between the two.
In the first part of this series, we will take a closer look at some pros and cons of standard Medicare coverage.
Medicare is a government-funded health insurance program for individuals who are 65 and older, younger individuals with disabilities, and people with End-Stage Renal Disease. This group of people is extremely large. In fact, according to The State of Aging and Health in America, when the last baby boomers turn 65 in 2030, about 72 million people, or one out of every five Americans, will be an older adult.
This insurance program covers services such as hospital stays, doctor’s visits, and home health care. It is designed to serve individuals who may have costly or complex health care expenses and needs; however, it does not cover prescription drugs.
All taxpaying Americans pay into the insurance program and are able to enroll into it after they turn 65. This insurance program is designed to protect older and disabled Americans from financial instability in the event of an illness or injury. As such, this public program pays for necessary care for those who are eligible.
While this insurance program has benefitted millions of American seniors, there are a few things you should be mindful of when considering to make do with a Medicare only plan:
- This program does not cover everything you need. Depending on which part of the plan you have, there may be some out-of-pocket costs. Most notably, Original Medicare will not cover prescription drugs.
- You do have the option to also use private insurance to cover expenses Medicare does not. These plans are often called “Medigap”
- You don’t have to change doctors, as long as your physician accepts Medicare. Unfortunately, not all physicians and healthcare facilities do.
Generally, Medicare is more cost-effective than private health insurance for individuals on a limited, fixed income. Medicare has a much larger coverage pool, giving the program more bargaining power (in theory). Additionally, the insurance program’s per capita costs are expected to continue rising more slowly than private insurance in the years ahead.
To summarize, Medicare is an insurance plan designed to absorb and distribute risk, and it has benefited millions of Americans. Different plans under Medicare cover different needs, so be sure to carefully research whether Original Medicare is sufficient for your health needs.
In the next installment of this two-part series, we will take a closer look at some of the pros and cons of commercial health insurance plans.
Do you have health insurance and life insurance? Are the plans and coverage you receive up to par with what you think you deserve? Health insurance policies and life insurance policies can make all the difference for you, your family, and your loved ones. You should never take a shortcut when finding the right policy or the right company to work with. Your policies may cost more money than you hope for, but in the long run they could make all the difference if you ever need to make use of your health or life insurance.
Interested in learning more about all the different reasons why both health and life insurance are important for us as we age? Keep reading to find out how you can benefit from making sure you work with the right health insurance companies and life insurance companies.more »
How does insurance factor into your life? Have you had a recent accident that’s affected your finances? How about bad weather making you wonder how your home is going to fare in the coming weeks? Insurance is more than just an obligation. It’s the very definition of peace-of-mind as we go about our busy and hurried lives. When you start looking up car insurance rates or home owners insurance, you’re looking for ways to make things a little easier. Let’s talk insurance and all the different ways you can stay safe and happy this year.
American Car Insurance
Own a car? Thinking of buying? You need to look up car insurance rates. A study provided by the AAA’s more »
Medicare is a government health insurance program that covers the medical needs of seniors (people over the age of 65) and young people with disabilities or end-stage renal disease. In this article we will be going over the four different Parts that comprise Medicare.
Medicare Part A covers hospitalization, home health services, skilled nursing facility care, nursing home care, and hospice services.
Medicare Part B covers preventive care, outpatient care, doctor?s services, ambulance services, x-rays, lab work, and medical supplies like wheelchairs and walkers.
Medicare Part C, more »
For most American homeowners, the mortgage is the single largest bill to pay, and for the first few years anyway, consists of almost entirely interest on the loan, with very little of what you pay actually going toward offsetting the cost of the house. This is partly by design, so that banks can extract as much profit as possible out of you even if the costs turn out to be too much and you end up underwater or foreclosed on your loan – Wall Street gets your money AND the house, if that happens to you. After covering the down payment, closing cost, property tax lien and homeowners insurance policy, mortgage insurance is the last thing on your mind, and many new homeowners sign the dotted line without even realizing what they are paying for, or confusing it with the much more useful homeowners insurance.
Mortgage insurance, contrary to what you might believe, doesn’t help you in this situation (although it is possible to purchase yet another insurance policy that does cover for this, in limited circumstances such as loss of primary income, or a housing boom going bust badly enough that you owe more than the home is worth) nor does it protect against the mortgage lender going out of business in a bank run. Instead, it’s a fee, legally mandated in most states and on most loans due to the intense lobbying pressure applied by the mortgage industry, that insures the mortgage lender against you foreclosing on the house! Not what you had in mind, is it? Now that you know this, you probably realize that mortgage insurance premiums are a bill you would rather not pay, especially when you’re already paying off that high mortgage interest rate on your first dream home.
However, the United States federal government has a program that can help. While Congress has been reluctant to pass anything explicitly helping the middle class escape the ever-growing debt burden exacted by student loan financing, cost of medical treatment and subprime auto lending, just as there has been a relief program for student loan interest, there is now also a tax deduction for mortgage insurance payments.
The mortgage insurance premium deduction applies to any household with a mortgage on their first home, and adjusted gross income below $109,000 in the current tax year. Filing for it, like most income tax deductions, involves declaring it on Form 1040, in this case on Schedule A (unfortunately, this also means that you cannot use the abbreviated 1040-A or 1040-EZ to file this year), as well as turning in Form 1098, which should be provided by your mortgage insurance provider, usually your home mortgage lending company.
Another caveat in the mortgage insurance premium deduction is in prepaid mortgage insurance, which some banks have begun to demand as part of the mortgage closing cost, to provide (of course) the maximum benefit to themselves while raising an additional hurdle to the consumer. One might think, in this case, that it would be possible to deduct the entire cost of insurance, reducing the pain of having to pay as much as 7.5% of the value of the loan, but the IRS requires the home mortgage insurance deduction to be spread over a period of seven years or the term of the loan, whichever is shorter.
If you are eligible, though, and the total of your mortgage insurance premium and mortgage interest payments is over $600, you can deduct the entire amount against your taxable income, which for many homeowners is enough to provide a helpful February bonus when tax refund season comes along!
Sometimes the concept of commercial property insurance can seem a little out-there: why pay for an insurance plan just in case you may need it in the future? However, with vehicular accidents occurring on the road every day and homeowners dealing with the effects of the environment (and their own usage) on their means of shelter, affordable insurance is not only more relevant than you think, but also an available and accessible reality quite within reach. Here are several reasons why home and auto insurance is both important AND worth your attention:
- Property and Personal Injury are Both Very Expensive. In 2013, the average claim for property damage during v more »
Group health insurance rates can be high, but new programs in Canada are helping to reduce them so that employers can afford to provide better coverage for their employees. Generally, health care in Canada is handled by a publicly funded system, providing many services for free or minimal charge. This includes many surgeries, psychotherapy, visits to doctors’ offices, and dental work. However, not everything is covered by the public system, so some supplemental coverage is necessary for comprehensive service. Medications are often only covered in full for the elderly and indigent and around a third of the health care system’s expenses are still covered out of pocket by patients.
Employee benefit more »