Healthcare and Money

Women, Healthcare and Money: How To Improve Your Long-Term Care Insurability

How to Improve Your Long-Term Care Insurability

We originally published this article on July 28, 2009. In the spirit of ongoing financial wellness and the significant changes in healthcare legislation since this article was written, we thought we’d give it a refresh for 2021 and focus instead on how to improve your long-term care insurability.

When I originally wrote this article, the future of healthcare in the United States was unclear. Of course, we now know that the Obama administration successfully passed the Affordable Care Act (ACA), which radically overhauled the individual health insurance market. One of the most significant provisions of the ACA is that insurers can no longer deny health insurance to individuals because of preexisting conditions—a life-changing development for many people.

Still, long-term care insurance providers maintain discretion to deny individuals coverage due to a variety of preexisting health conditions. Since long-term care is often an important consideration for women planning for retirement, it’s helpful to be aware of what can prevent you from qualifying for long-term care insurance and ways you can improve your insurability.

Reasons You May Not Qualify for Long-Term Care Insurance

A number of preexisting conditions are likely to render women ineligible for long-term care insurance.  These include Alzheimer’s, Parkinson’s, multiple sclerosis, any dementia or progressive neurological condition, a history of stroke, and metastatic cancer, among others. Conditions like these may not come as a surprise. However, you can also be denied coverage for less obvious reasons, such as not drinking alcohol or being underweight. Health underwriting standards vary from provider to provider, so you’ll want to do your research before assuming you qualify.

In addition, insurability standards can change over time. For example, the coronavirus pandemic presents new potential risks to insurance providers. As a result, testing positive for COVID-19 may impact your eligibility for long-term care insurance. If you’re considering long-term care insurance, you should speak with an expert who can explain these nuances in insurability.

How To Improve Your Long-Term Care Insurability

Ask your doctor to review your medical records for accuracy.

Human errors, outdated information, and unnecessary notes in your medical records may cause issues for insurability.  For example, you may have been treated for a condition that’s now improved, or your records may include codes that no longer apply. You’ll want to get any discrepancies updated and corrected on your medical records before applying for long-term care insurance.

Order your Medical Insurance Bureau (MIB) report.

Your MIB report is the healthcare equivalent of a credit report.  However, instead of tracking your bill-paying ability, it tracks your medical history.  Since previous insurance carriers create the report, you’ll only have one if you’ve applied for individually underwritten life, health, disability income, long-term care, or critical illness insurance with a member insurer within the last 7 years (or less, depending on applicable law).

Insurance carriers use proprietary codes to report health conditions and lifestyle choices such as smoking or high-risk activities (e.g., sky diving). You can request a copy of your MIB report (if you have one) for free. Before seeking long-term care coverage, it’s a good idea to review yours and make sure any errors are corrected.

Work with a medical professional or wellness expert to improve potentially reversible conditions (or prevent them altogether).

Chronic conditions like hypertension, obesity, and type 2 diabetes can affect your long-term care insurability (and potentially lead to more serious problems). However, in some cases you can prevent and even reverse these conditions through proper diet, exercise, and lifestyle changes. Whether you need long-term care insurance or not, taking care of yourself now is one of the best ways to reduce your overall healthcare expenses over the course of your life.

Seek coverage sooner rather than later.

There’s no age requirement for long-term care insurance. However, premiums are based on your age when you apply. While the optimal age to purchase long-term care insurance varies depending on who you ask, most agree that mid-50s to early 60s is the best time to apply.

Research shows that 70% of adults who survive to age 65 eventually develop severe long-term care needs. This makes qualifying for long-term care insurance much more challenging the older you get. Plus, many insurers offer discounts to applicants who are in good health, which is good incentive to seek coverage before a triggering event.

What to Do Next If You’re Considering Long-Term Care Insurance

Long-term care insurance isn’t right for everyone. However, having the right coverage can protect you from depleting your retirement savings if you end up needing unexpected or extensive care in your lifetime. To learn more about why women in particular may want to consider long-term care insurance and the potential benefits and drawbacks, check out our recent blog post and podcast episode on the topic.

And if after reading this article, you’d like to speak with an independent financial planner about whether long-term care insurance makes sense for you, we invite you to schedule an introductory phone call. As a fiduciary, we can give you an objective opinion as to whether this type of insurance is appropriate within the context of your overall financial circumstances.

If you found this information interesting, please share it with a friend!

Women, Healthcare and Money: How To Improve Your Long-Term Care Insurability Read More »

Women and Long-Term Care Insurance: Preparing for Your Future Well-Being

Women and Long-Term Care Insurance

Long-term care insurance is important for a wide variety of individuals to have. But women face a unique set of challenges that often makes it even more important. For starters, women tend to live longer than men after retirement age, which often means women should be financially prepared for more years than the average.

Long-term care insurance can help you become more financially and emotionally prepared for the future. But that’s not the only reason you might consider it. Women are also more likely to suffer from Alzheimer’s disease or dementia, making it crucial that long-term care insurance is there to fall back on when you need it most. The same is true when your partner falls ill, since women often become caretakers for their husbands later in life.

But the truth is that long-term care insurance is complicated, and it isn’t necessary for everyone. So, let’s talk about who needs and qualifies for it, how it works, and the benefits and downsides.

How to Determine if You Need Long-Term Care Insurance

70% of people turning age 65 will need some type of long-term care services in their lifetime. Long-term care services include assistance with activities of daily living. Activities like bathing, eating, medication management, and dressing are some of the most common. There are many different reasons that someone might need this type of assistance. Often, it’s due to an injury, degenerative health condition, or a cognitive disorder like Alzheimer’s.

When you are working with a professional to determine what types of insurance coverage you need, their first question in terms of long-term care insurance might be: is there someone who will take care of you in the unfortunate circumstance that you may no longer be able to care for yourself? As a result, individuals without spouses or children often seek long-term care insurance earlier in life than others.

Who Qualifies for Long-Term Care Insurance?

This may come as a surprise, but not everyone is eligible for long-term care insurance. There are no age requirements for purchasing long-term care insurance. But getting the timing right is crucial because several pre-existing conditions will render you ineligible. A few of these include:

  • AIDS
  • Alzheimer’s
  • Parkinson’s
  • MS
  • Any dementia or progressive neurological condition
  • A stroke
  • Metastatic cancer

If you’re in good health and eligible, the optimal age range to shop for long-term care insurance is between 57 and 65.  Keep in mind that premiums go up as you get older.

How Does It Work?

The benefits and specifics of your long-term care insurance will vary depending on the policy. Some policies involve direct payments to care providers, while others offer reimbursement to the policyholder. Most policies require that a professional service take place to receive the benefit, regardless of the way it is paid out. This means that individuals can’t receive care from a family member and then request compensation. However, if this family member is part of a home care agency, that is a different story.

Benefits and Downsides

There are several benefits to obtaining long-term care insurance. Typically, these types of care plans are flexible, making it easy to structure them to meet a variety of unique needs. Long-term care can take place in a nursing home, assisted living facility, or in your home, depending on your comfort level and other individual factors.

And having long-term care insurance in place when you need it can help you avoid having your post-retirement budget derailed by exorbitant and unexpected nursing home bills. But there are downsides to consider here, too. Primarily, the health restrictions and cost-prohibitive long-term care policy options.

The best way to determine whether long-term care insurance is right for you is to speak with a professional. Everyone is different, and your needs are different, too. If you’d like to speak with a financial planner about how long-term care insurance may fit into your retirement plan, we’d love to chat.

Download your free guide: What Issues Should I Consider When Purchasing Long-Term Care Insurance?



For more information on women and long-term care insurance, check out our recent Financial Finesse podcast episode:

What Every Woman Needs To Know About Long-Term Care Insurance.


If you found this information interesting, please share it with a friend!

Women and Long-Term Care Insurance: Preparing for Your Future Well-Being Read More »

Estate Planning Documents Every Single Woman Needs

Estate planning documents for single women

Estate planning is an essential part of anyone’s financial plan. I’ll explain in this article why it’s critical for single women.

If you don’t have a proper plan in place, your state’s laws will dictate who receives the assets under your estate. State laws usually designate beneficiaries in this order: spouse, children, grandchildren, parents, grandparents, siblings, aunts, uncles, nieces, nephews, and cousins. If you have children and die without a will, the state will decide who the guardian will be. This is all true even if you’re in a relationship without being legally married. 

Suppose you’re hoping to designate your possessions to a significant other, extended relatives, close friends, or charitable organizations. In that case, it’s critical to put together an estate plan. And more importantly, to appoint a person for your children’s guardianship, creating a will is a crucial step. Thankfully, this is easier than it sounds. The following is a list of primary estate planning documents and their purpose: 

Will or living revocable trust

Although these titles are often used interchangeably, wills and living trusts are two different documents. The most significant difference: both transfer an estate to designated heirs, but only trusts skip over the probate court. Plus, a will lays out your wishes for after you die while a living revocable trust becomes effective immediately and can be revised anytime while you are living. 

Suppose you are a woman with significant assets. In that case, a revocable living trust will keep your assets away from court-supervised distribution. If you have a more modest estate, a will may suffice.

A living revocable trust also helps your beneficiaries avoid the hassle and expense of a lengthy probate process. Living revocable trusts have benefits, but they cost more to create and require management. The choice between a will and a living trust is a personal one. Whichever path you take, it’s always a good idea to seek the advice of professional advisors. 

Healthcare proxy/durable medical power of attorney

As the name suggests, this type of power of attorney deals strictly with your health care decisions and medical treatments. With your healthcare proxy document, you’ll appoint an agent to make healthcare decisions on your behalf if you’re incapable of making them on your own. This is an important responsibility, and it’s essential to choose someone you trust and be transparent with them on the specifics of your wishes. 

The financial power of attorney

While the medical power of attorney or healthcare proxy deals with health specifics, the financial power of attorney deals with financial matters. Your financial power of attorney document grants another individual the power to make financial decisions for you while you are alive but not capable of handling things yourself.

Your power of attorney is your legal representative for financial matters. Should you be hospitalized or incapacitated, they’ll handle financial tasks, like managing your bank accounts and paying your bills from a designated account. You can choose to designate a power of attorney that is effective immediately or kicks in after a specific event occurs (ex. coma, Alzheimer’s, mental disability, or an inability to communicate your wishes directly). 

The Challenge Of Naming Representatives

It is one thing to get the will, living trust, financial and healthcare powers of attorney created. The other challenge is to decide who will be your legal representatives. Married couples usually name each other, but being single, you need to decide who will handle your affairs and find out if they are willing to do it. If you have a will, you will need an executor, and if you have a living trust, you will need a successor trustee. Then you will need to choose your powers of attorney for health and finances. Most people choose from personal relationships, but it’s also possible to hire professionals for these roles. As you are preparing to start your estate planning, besides organizing your financial assets, it’s just as important to decide who will represent you.

If you’re a single woman and want to talk about your estate plan with a trusted financial planner, please connect with us. We are here to help.

If you found this information interesting, please share it with a friend!

Estate Planning Documents Every Single Woman Needs Read More »

THE CARES ACT REVIEW PART V: Health Provisions

Photo by Ani Kolleshi on Unsplash

One of the objectives of the Coronavirus Aid, Relief and Economic Security Act (CARES) is to help people get the care they need with fewer obstacles and less-in-person contact. It adds to the health provisions in a bill passed in March – the Families First Coronavirus Response Act (FFCRA).

The CARES ACT health provisions will be most beneficial to families with High Deductible Health Insurance plans (HDHPs) and health savings accounts (HSAs) or flexible spending accounts (FSAs), which are pre-tax savings accounts for healthcare expenses. However, Medicare Part D participants and anyone who gets a test for COVID-19 will benefit too.

EXPANDED USE OF HSAs
Temporary provision:
-Telehealth services used to be subject a deductible, now they are covered before a patient has met the plan deductible. Usual cost-sharing, such a co-pay, is still allowed. This provision will sunset in December 2020.

Permanent and retroactive to January 1, 2020 provisions:
-It’s now ok to buy over-the-counter medical products, such as OTC drugs and surgical masks, without a prescription and get reimbursed by an HSA. With the prior rules, effective since January 2011, a prescription was necessary for reimbursement.
-Certain menstrual care products such as tampons and pads are now reimbursable medical expenses.

PLANNING TIP: For individuals and families experiencing cash flow issues some of the existing HSA rules can help. For example, there are no time restrictions or deadlines for when you can reimburse yourself from your HSA. You can claim reimbursement for eligible items if you have proof of purchase as far back as when you first opened the account.

PLANNING TIP: While HSA can’t be used to cover your share of employer-provided medical insurance, they can be used by unemployed people to pay premiums on an independent policy or coverage through COBRA.

COVID-19 TESTING WITHOUT COST SHARING
The FFCRA mandates that private insurance companies and Medicare cover COVID-19 testing and a vaccine for free. The CARES Act extends free testing to any services or items provided during a medical visit that results in coronavirus testing. Medical visits can be in-person, a telehealth visit, an urgent care or emergency room visit. This benefit remains in effect only while there is a declared public health emergency. It’s not certain if self-administered tests (if and when available) will be covered.

The CARES ACT also clarifies that Medicaid must cover such tests regardless of whether they are authorized for emergency use by the FDA.


PRESCRIPTION SUPPLY BENEFIT

Medicare PART D recipients can order up to a 90 day supply of medications. Prior to the CARES Act passing, a PART D insurance plan had the option to relax their “refill too soon” restrictions but now they are required to do so. The change is designed so that all Part D enrollees can get an extended supply of medications during the COVID-19 public health emergency.

PLANNING TIP: Place orders of your medications for 90-day supplies to save trips to the pharmacy and the hassle of having to reorder in less time.

SOME OTHER HEALTH PROVISIONS
-Reauthorization of programs to strengthen rural community health, the Healthy Start program, Temporary Assistance for Needy Families
-Dollars to support domestic food assistance programs (breakfast and school lunch, SNAP, emergency food assistance.
-Funding for the Defense Production Act, Pandemic Response Accountability Committee, Disaster Relief Fund, FEMA, Indian Health Service, CDC, Substance Abuse and Mental Health Services Administration, CMS, Public Health and Social Social Services Emergency Fund and others.

If you missed Part IV: Review of the Paycheck Protection Program (PPP) go here.
And, for a comprehensive article about HSAs, go here.

If you found this information interesting, please share it with a friend!

THE CARES ACT REVIEW PART V: Health Provisions Read More »

Updated for 2020: Triple Tax Savings For You: Health Savings Plan (HSAs) Explained

Photo by Micheile Henderson on Unsplash

If you don’t know about Health Savings Accounts (HSA’s) and are eligible to open one, you’re missing out on an excellent savings vehicle with fantastic tax benefits.

What is an HSA?

An HSA is a tax-exempt trust or custodial account established with a bank, insurance company or other IRS-approved entity. They are triple tax-advantaged – contributions are pre-tax/tax-deductible, earnings grow tax-free, and withdrawals are tax-free if used for qualified medical expenses. Hence, the triple tax savings.

These accounts are for medical expenses, but you don’t have to use up the balance during the year. Unused balances roll over from year to year, and you can invest the money for growth. For people who have adequate cash flow, low to average health care costs, and pay high taxes – the best way to use HSA’s is as a long-term savings account for medical expenses in retirement when healthcare costs tend to go up. In this case, you will benefit most from opening an HSA that has good investment options – low-cost ETF’s and mutual funds and take full advantage of compounding growth of your funds.

For those who are on a tighter budget, HSA’s are a great tool for lowering the cost of your medical costs through tax-saving. HSA funds can also be accessed when an emergency hits -such as with a sudden job loss or healthcare crisis as with COVID-19.

Eligibility

You must be an “eligible individual” to qualify for an HSA, which means that:

  • You must have a high-deductible health plan (HDHP). The IRS definition of a “high-deductible” plan in 2020 is a policy with a deductible of at least $1,400 per individual or $2,800 for a family, and whose out-of-pocket maximum is at most $6,900 per individual and or $13,800 per family.You can enroll in a high-deductible health plan through your employer, or on your own as an employee or a self-employed individual.There can be advantages to joining your employer’s plan: if the HSA is part of a Section 125 cafeteria plan and administered by a payroll deduction, the contributions will not only be Federal tax-free, they will be free of FICA taxes as well – an additional tax savings of 7.65%.Your employer may make contributions on your behalf that aren’t counted against your maximum contribution and are exempt from FICA taxes as well. Self-employed individuals do not avoid FICA taxes with their contributions to an HSA. Each State taxes HSA’s differently. For example, California prohibits a state tax deduction for an HSA contribution.
  • You cannot have other health-care coverage except what the IRS considers permissible coverage, for example, plans with limited coverage, such as dental or vision plans.
  • You can’t be a Medicare recipient. Some people who are still working at age 65 delay Medicare so they can continue contributing to an HSA -this could be a good strategy for certain individuals.
  • You can’t be a dependent on someone else’s income tax return.

Contribution Limits for 2020

If you qualify, you can contribute as much as $3,550 to an HSA in 2020 if you have individual health coverage, or $7,100 if you have a family health plan. Moreover, if you’re 55 or older, you can contribute an additional $1,000 as a catch-up contribution. Contribution amounts can be flexible and can be made any time during the year up to the tax-filing deadline in April of the next year. For, 2020 the deadline for contributions has been extended until July 15th.

The money in your HSA remains available for future qualified medical expenses even if you change health insurance plans, change employers or retire. Funds left in your account continue to grow tax-free.

What medical expenses are eligible?

You would use your HSA funds for health expenses that aren’t covered by your traditional health insurance, and many are eligible*, for example:

  • Acupuncture
  • Alcoholism treatment
  • Ambulance services
  • Chiropractors
  • Contact lens supplies
  • Dental treatments
  • Diagnostic services
  • Doctor’s fees
  • Eye exams, glasses, and surgery
  • Fertility services
  • Guide dogs
  • Hearing aids and batteries
  • Hospital services
  • Insulin
  • Lab fees
  • Prescription medications
  • Over the counter medicines and supplies*
  • Menstrual care products*
  • Nursing services
  • Surgery
  • Psychiatric care
  • Telephone equipment for the visually or hearing impaired
  • Therapy or counseling
  • Wheelchairs
  • X-rays

*New with the passage of the CARES Act in March 2020.

Whether you have a self-only or a family health insurance policy, HSA money may be spent on medical expenses for you, your spouse and current tax dependents.

You can’t pay medical insurance premiums out of your HSA. However, HSAs can pay for premiums for long-term care insurance (subject to certain limits); health-care continuation coverage (e.g. COBRA); health-care coverage while receiving federal or state unemployment compensation; and Medicare parts A, B, D, Medicare HMO, and Medicare Advantage Plan premiums, if you’re at least 65. HSA’s cannot be used to cover Medigap premiums.  

Penalties for Non-Compliance

The penalty for taking a non-qualified withdrawal from an HSA is high – you must pay taxes on it plus a 20% penalty if you are under age 65.  So the triple-tax benefit is broken. If you are over 65, there is no penalty on non-qualified withdrawals, but taxes apply in the year of the withdrawal. 

Mechanics of Opening An Account and Using It

You must have an HDHP before you can sign up for a Health Savings Account. Besides working with your employer’s option if you are an employee, many institutions offer HSA’s including insurance companies, banks, or credit unions. You can search the internet for HSA providers.

Depending on the HSA, reimbursements are made by check, ACH transfer, or ATM withdrawal. Good recordkeeping is critical because there are no time restrictions or deadlines for when you can reimburse yourself from the account. You have to keep your receipts to document the date of purchase and also as proof the expense is qualified.  Medical expenses you incurred before the HSA was open aren’t eligible.

Fees

Some HSAs charge monthly maintenance or per-transaction fees, which vary by institution. Some providers waive the fees if you maintain a certain minimum balance. So, it pays to shop around.

What happens to your HSA when you die?

If you designate someone other than a spouse as a beneficiary, the fair market value of the account on the date of death is taxable to the recipient in the year of your death.  If your beneficiary is your spouse, he/she can use the HSA are their own. If you die without a designated beneficiary, the value goes into your estate and is includable on your final tax return.

As you can see, there are many benefits to HSA’s, here are a few more that are unique to this savings vehicle:

  • There are no maximum income thresholds that you can disqualify you from opening an HSA.
  • There are no Required Minimum Distributions (RMD’s).
  • You can be unemployed and contribute to an HSA.

I think you can agree that if you can afford to pay your uncovered medical expenses out of pocket now, and can fully fund your HSA every year invested for growth, you will have a nice nest-egg for health expenses when you are no longer working.

If you found this information interesting, please share it with a friend!

Updated for 2020: Triple Tax Savings For You: Health Savings Plan (HSAs) Explained Read More »

The CARES Act Reviewed: Part III Expanded Unemployment Benefits

Photo Credit: Annie Spratt, Unsplash

MILLIONS OF PEOPLE ARE OUT OF WORK

With millions of people out of work due to the Coronavirus, the CARES Act provides much-needed relief in the form of expanded unemployment benefits. It covers workers previously ineligible for benefits, including self-employed, part-time workers, gig workers, freelancers, and independent contractors. It also helps those who have recently exhausted their weeks of benefits and those who haven’t earned enough to qualify for state unemployment. And, it offers benefits to those who are personally affected by the virus due to being ill themselves or being a caretaker to a family member who is sick and many more.

A new program of this size and scope will take a lot of time to get set up and it’s challenging to get the most up-to-date and accurate information. For people who are applying for benefits, the wait-times are long, and state websites are crashing. And there are stories that some workers won’t get the full benefit due to not being able to document their income fully. But it will help many people.

DETAILS
Here are details that I have been able to glean so far:

Federal Pandemic Unemployment Compensation

This is an addition to regular state unemployment checks.
Those who have lost their jobs will get whatever their state usually provides for unemployment, plus $600 per week for up to July 31.

Federal Pandemic Emergency Unemployment Compensation:

People who have exhausted their regular State benefits (which max-out at 26 weeks in California), could get up to 13 more weeks, for a total of 39 weeks.

Federal Pandemic Unemployment Assistance

For newly eligible workers.
The program will provide temporary unemployment assistance to the self-employed and people unable to work for many reasons due to the COVID-19 emergency, for example, people who have contracted the virus, caretakers, people who can’t work because of quarantines, or the person’s place of business has closed. This program does not require a person to actively seek work to receive benefits like most state programs. The benefits are available for the duration of the covered person’s inability to work, beginning retroactively to January 27, 2020, and ending on December 31, 2020, up to a maximum of 39 weeks. These benefits will be no less than $600 a week.

Federal Incentives to Create Short-Time Compensation Programs

The Federal Government will fund 100% of the costs for states that currently have an STC program (California has one) and 50% for those states that choose to implement one through December 2020. These programs are also known as work-sharing or shared-work programs and are an alternative to layoffs for employers experiencing a reduction in available work.

Note: This bill leaves out those workers who are able to work from home, and those receiving paid sick leave or paid family leave. New entrants to the workforce who cannot find jobs would also be ineligible.

Here are some additional resources:

If you missed Part II: Retirement Account Provisions, go here

Next up: The CARES ACT and Small-Business Provisions

If you found this information interesting, please share it with a friend!

The CARES Act Reviewed: Part III Expanded Unemployment Benefits Read More »

Being Single, Wanting to Retire Early, and Medical Insurance Options

financial planning diversification

Recent surveys have indicated that a big worry for baby boomers is how they are going to handle healthcare costs in retirement. This concern is paramount for those who want to retire early. For singles who want to retire early, there is no spousal insurance fallback. Single people need to get insurance to bridge the gap between retirement and Medicare on their own.

A Brief Summary Of Medicare And Average Costs

For people who retire at age 65, Medicare (Part A, B, and D) will take over as the primary health insurance. Premiums are announced each year by the Federal government Center for Medicare and Medicaid (CMS). Most people will also need a supplemental policy to cover the roughly 20% of health care costs that Medicare does not cover. Alternatively, a person can opt for Medicare Advantage (Medicare Part C), an all-in-one solution that has less flexibility but is usually less expensive. 

Depending on income (MAGI) Medicare Part B premiums range from $1626 to $5,526 per year, Medicare Part D premiums average about $400 per year, and Medicare Supplemental (Medi-Gap) premiums average $1700 per year. Then there are out-of-pocket health care costs such as co-pays. The total average healthcare costs for a 65-year-old woman is $5200/year – this is not a small amount of money, but it is predictable and manageable and easy to plan around. Costs can be substantially higher for someone with chronic illnesses.

Health Insurance Options For An Individual Who Wants to Retire Early 

For a single person who wants to retire before age 65, there are a few options for health insurance overage. One option is COBRA (Consolidated Omnibus Budget Reconciliation Act) – a health insurance program that allows an eligible employee to continue their employer health insurance coverage for up to 18 months. Some states (such as California) have COBRA laws that allow up to an additional 18 months, for a total of 36 months. However, the premiums can be quite high. The advantage of choosing COBRA is a seamless continuation of coverage. Another option for some retirees, although not as common and can be expensive,  is to “convert” their group health insurance policy into their own individual health insurance plan. 

Besides the high cost, depending on what age a person retires, COBRA may not bridge the coverage gap completely. For example, a person who retires at age 60 and chooses COBRA, will have coverage for 3 years maximum up to age is 63, but will still have to buy health insurance for the next 2 years. 

A better option may be to purchase a health insurance policy on the health insurance marketplace in your state. These exchanges were instituted with the passage of the Affordable Care Act in 2010. Buying health insurance in this way is especially affordable for people whose income (AGI) qualifies for premium tax credits.  In general, individuals and families may be eligible for the premium tax credit if their household income for the year is at least 100 percent but no more than 400 percent of the federal poverty line for their family size. This amounts to $12,140 to $48,560 for a single individual in the continental U.S. during 2019.

These income levels may seem low, but many individuals income drops dramatically after retiring. Net worth isn’t considered for eligibility for premium tax credits. It’s quite possible for a person with a comfortable net worth to qualify for premium tax credits.

 An example:

Susan is 60 years old, lives in California and wants to retire in the next year. She has $1,000,000 saved in her 401(k) and another $800,000 in taxable savings accounts. Dividends and capital gains generated by her taxable investments average $30,000 per year. She has an inherited IRA and last year had to take a distribution of $5000.00. She earns a small amount of interest on her bank account, so her AGI is about $35,500.00. With this amount of income, she would qualify for premium tax credits.

Entering her details on the California State Health Insurance marketplace – Covered California website, Susan could qualify for a monthly discount of up to $809.00! She could opt for a Silver Plan with premiums ranging from $224 to $413 a month or choose a more expensive plan, for example, Gold plan options range from $264-$587 per month. (These premium levels include the discount).

Bottom Line

The cost of healthcare is a topic that causes a lot of anxiety and many times unnecessarily so. Just with any other financial decision, it pays to know your options and to do a detailed cost/benefit analysis. As you can see, with the above example, Susan’s healthcare costs will be manageable. If you are trying to decide whether to retire early and want to understand your healthcare costs, start by talking to your employer’s human resources department about options for extending your current insurance. At the same time, log into your state’s health insurance marketplace and compare costs. Armed with this information, you can make the right decision for your situation. 

 
[/av_textblock]

If you found this information interesting, please share it with a friend!

Being Single, Wanting to Retire Early, and Medical Insurance Options Read More »

Women and Wine: A Love-Hate Relationship

There has been a distinct shift in the way I and women I know feel about wine. Before it was considered sheer pleasure – enjoying a glass with a meal, wine-tasting with friends, and developing a palate. Then, somewhere along the line, it became more of a routine: come home from a day of work and pour a glass while making dinner. Then, maybe another one. Drinking wine became a little less “special occasion” and more of an everyday occurrence.

Women, Wine and Health
While we continued to enjoy wine, we followed the various studies that would come out about women, wine and health. Many concluded that moderate alcohol intake lowered the risk of heart disease because it acts as a mild blood thinner. Some studies touted the heart-healthy benefits of red wine because of an antioxidant compound, resveratrol, found in the skins and seeds of grapes. But there were also studies that showed a stronger link to women, alcohol and an increased risk of cancer, mostly driven by breast cancer.

Like many health studies, those about alcohol intake were often conflicting or inconclusive, but it did sew seeds of doubt as to whether that daily glass or two of wine was such a good thing for our health. We have begun to think that maybe we’d be better off without it. However, like many behaviors that become habits, we have found that wine drinking is not so easy to stop. In a recent gathering with a few women colleagues, discussing our goals for the coming year – 3 out of 5 said they’d like to curb their wine habit.

The Love-Hate Relationship 
Herein lies the love-hate relationship. We know that wine is probably not great for us – it may cause disease, it’s full of sugar, it makes us lazy, and it can be addictive. But, its pleasures are compelling: a glass of wine signals the end of a hard day of work and the start of a relaxing evening, it evokes a feeling of “la dolce vita,” and the alcohol takes the edge off whatever may be bothering us at the time.

My feelings about wine drinking have shifted. I have decided that I don’t want to drink wine as much as I used to. I don’t like the possibility that it might make me sick, is addictive, and I don’t want the extra calories. So I’ve taken steps to curb my habit: I’m not drinking wine on most weeknights, and I have substituted kombucha or mineral water with lemon in my wine glass.

Just out of curiosity and (because I’m a financial advisor!), I did a calculation to see how much money one could save by curbing a wine habit. To keep it simple, these are the broad assumptions:

– There are five glasses of wine to a bottle (5 ounce pours)
– Two glasses of wine consumed per night Monday-Thursday
– A bottle of weekday wine costs an average of $30.00
– Three glasses of wine consumed per night Friday-Sunday
– A bottle of weekend wine costs an average of $50.00.

Calculation:
2 glasses x $5.00 x 4 x 52 = $2080.00
3 glasses x $10.00 x 3 x 52 = $4680.00
Grand total: $6760.00 per year.

So another added benefit to reducing wine consumption is better cash flow!

If you found this information interesting, please share it with a friend!

Women and Wine: A Love-Hate Relationship Read More »

Will Wearables Save Healthcare?

20141120160900-intel-smart-bracelet-collaborative-process-creating-wearable-tech-wantable-by-women-1We all know that healthcare costs have risen at an alarming rate over the last 20 years. And this might be a reason for alarm. But, if you look at the percentage of the increase related to diagnostic tests and corrective instead of preventative treatments, there’s reason for hope. And that reason lies in the new world of wearable technology that will alert us to problems and motivate us to make lifestyle changes before we get sick.

What the economists are missing is the impact that wearable diagnostics are going to have on healthcare costs. You know about Fitbit, the app that helps you get in shape by tracking the number of steps you take, tracks your heart rate, calories burned, and stairs climbed. More recent innovations are the Sensoria Smart Sock, which diagnoses your running stride to avoid injury-prone running styles. And, the PerformTek heart-rate monitor which uses biometric sensor technology to measure your heart-rate while doing any exercise and in any environment.

Sleep troubles? The Withing’s Aura sleep pad diagnoses the quality of your REM cycle and helps you to wake up easily at the best time in your sleep cycle.  An app by Sleeprate assesses the quality of your sleep and provides you with a sleep improvement plan. And if you’ve failed at your attempts to meditate, you might try the Muse headband which has an EEG device that measures brainwaves, and coaches you into a calm state of mind.

Better yet, there may soon be a device that can monitor all these things and more. Ten different companies from around the world are competing for the Qualcomm Tricorder X Prize awarded to the first company to develop a Tricorder. The winning product design will be able to monitor vital bodily functions such as temperature and heart rate and accurately diagnosis 16 health conditions including diabetes, stroke, and anemia.

If you have ever been misdiagnosed, you will be happy to hear that IBM’s Watson Supercomputer may soon be the best doctor in the world.  At this moment, Watson is busy absorbing medical literature and is helping doctors make proper diagnoses and offer remedies.  IBM expects to put the program in the Cloud, where it will be accessible to, among other things, mobile devices.

When the next generation of wearable diagnostics uploads to Watson for instant analysis we will be able  to have our health monitored in real-time. These devices will be more affordable and will be much lighter on the global healthcare budget. They will be able to do tasks such as schedule a medical exam or call for an ambulance if you experience early symptoms of heart attack or stroke. Ultimately, healthcare diagnostics and  treatments will be cheaper, because of early detection.

How many billions of dollars will this save?  It’s probably too early to tell, but many industries are forever changed by disruptive technologies such as these – think music, cameras and phones. Sounds like a healthcare revolution to me.

 

 

Note: This blog post was inspired by Bob Veres Client letter

If you found this information interesting, please share it with a friend!

Will Wearables Save Healthcare? Read More »

Prepare to Care For Aging Parents

Mom and me

On my drives to visit my mom at her assisted living home in Petaluma, California, I reflect on how lucky my siblings and I are that she is comfortable and well cared for and that my parents were vigilant savers. Mom will be 91 in July. She voluntarily moved into an assisted living home in the fall of 2005 after a bad bout of pneumonia. She had a friend who lived there and we all thought this would be an opportunity to see if this type of living situation would work for mom.

At that time, she was living alone in our family home in the Sunset District of San Francisco. My parents bought the house in 1958 for a song and had paid off the mortgage years earlier. She probably caught pneumonia because she would fail to turn on the heat and also forget to eat. It was a combination of losing her short-term memory and frugality that did her in. She lost a lot of weight and we realized she probably couldn’t live on her own anymore.

My mom bought a long-term-care policy in late 2000 when she was 78 years old. This decision surprised us all because the annual premium was $5,150. But she did it, she says, because she didn’t want “you kids” to have to pay for her care in old age. She purchased a basic policy with a daily maximum payout of $100 and a lifetime maximum payment of $146,000 with no inflation protection and a 90 day deductible.  With the cost of healthcare as it is, this isn’t very much money, but she wanted some protection for her assets and she couldn’t afford a higher premium.

As it turns out, it wasn’t a bad decision. Mom qualified to use her policy in January 2006 right after moving into the long-term-care facility. She couldn’t independently perform several activities of daily living (ADL’s) and senility was starting to set in. She had paid premiums of $25,170, but over the course of the next 4½ years, the insurance company paid $146,000 costs not a bad deal. When the policy dollar limit was reached, she started to pay 100% out of her own assets again.

During that time, my mom experienced her share of senior mishaps: falling, breaking bones, more bouts with pneumonia, and one scary incident involving septic shock and months in a rehab facility.  In addition, she had a pace-maker installed. She also moved to a new assisted living home in Petaluma to be closer to three of my sisters and to enjoy a warmer climate.

My mom has thrived in the assisted living environment not because she loves the place – she often asks about “414 Rivera” (our old family home), but because she is getting really good care, is eating three balanced meals a day, can participate in activities, and has someone to make sure she takes her pills. She went from 100% mobility, to grudgingly using a cane, to a walker, and she now occasionally has to use a wheelchair as her body slows down. Since 2006, her costs of care have gone from $2,495 to $7,700 a month due to increases in levels of care and additional services.

Mom and meA couple of months ago, her doctor recommended she start hospice care and visits with her now are bitter-sweet.  My siblings and I are grateful for the hospice care with its goals of improving the quality of a patient’s last days by offering comfort and dignity. And indeed they do.

My mom’s story is not unusual. Many of us are dealing with aging parents and their needs. We can all learn from each other to make this part of our lives go as smoothly as possible for our parents and for ourselves.Here are some key things to think about and research as your parents age:

  • Do you know your parent’s financial situation and whether they’ll be able to pay for assisted living or nursing care themselves? If not, what are the options?
  • Do your parents have a long-term-care policy? If so, become familiar with the terms and conditions, since you may have to be an advocate for your parents when the time comes.
  • Find out about long-term-care insurance – there are more options now (such as hybrid policies) that combine the benefits of an annuity or life insurance agreement with long-term-care contract. The decision to buy long term care insurance depends on individual circumstances as it is expensive and the industry is less than stable. But it is worth looking into as your circumstances may warrant the expense. Here are some tips to think about as you do your research:
  • Like my mom, consider a short-term plan that limits coverage to three to five years. This will ease costs rather than cover them completely. Short-term policies are cheaper and can cover most long-term care situations.
  • It’s best to buy long-term care insurance way before you need it. Premiums are cheaper and you are less likely to be turned down due to health reasons.
  • Review your own financial situation. If necessary could you help support your parents if necessary? Could other family members?
  • Do your parents have a durable power of attorney for finances and for healthcare, and a living will? If not, you will want to make sure they they do. These documents dictate who handles the financial affairs after your parents can no longer do so themselves. They also clarify who will make healthcare decisions on behalf of your parents and the parameters for care at the end of life.

Give yourself some peace of mind with advance preparation and planning. You will be glad you did.

More tips and resources are in these articles:

Caregiving for Loved Ones the “New Normal” for Boomers. CNN Living

Should You Purchase Long-Term Care Insurance? Wall Street Journal

A New Way To Pay For Long-Term Care Insurance With Favorable Tax Treatment. Michael Kitces, A Nerd’s Eye View.

If you found this information interesting, please share it with a friend!

Prepare to Care For Aging Parents Read More »

Curtis Financial Planning