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An Update Regarding HRA and HSA Contribution Limits

As part of a package of benefits, employers offer health reimbursement arrangements or health savings accounts to assist employees in managing their out-of-pocket healthcare expenses. But because the cost of living, and the cost of healthcare in particular can rise over time, contribution limits to those accounts also change. Due to inflation and changing costs, here’s what we know about contribution limits to HRAs and HSAs next year.

HRAs are designed to assist employees in managing their healthcare choices and expenses. Funds can be used to cover things like COBRA premiums, disability insurance, critical illness insurance, or dental and vision insurance. This provides a valuable benefit to workers who then use the money in a way that best suits their needs. For 2022, HRA contribution limits will remain at the current level of $1,800 for the year.

However, HSA contribution limits will be changing. Health savings accounts are designed to allow employees to set aside pre-tax dollars, to cover out-of-pocket expenses for their own healthcare. These plans are paired with high-deductible, lower-premium healthcare plans, and allow for greater responsibility over one’s own healthcare choices. Since the cost of healthcare is expected to rise next year, the contribution limit for HSAs will rise to keep pace with that inflation. However, deductibles for their healthcare plans will remain the same.

Check the chart below to see how contribution limits for HSAs will change next year:

If you are an employer looking to provide your employees with the benefits package that best suits their needs, give us a call and we’d be happy to explain how these programs work.  Or, if you need help with any other aspect of your group benefits plan, just let us know.  We’re here to provide assistance.

Protect Yourself from Medicare Fraud

It can be hard to believe that anyone would want to steal your Medicare information. What are they going to do, go to the doctor and charge your plan for the bill? Well, technically that could happen. But it’s more likely that accessing your Medicare information will give a con man all the data he needs to steal your identity. From there, he can get credit cards or even take out loans in your name. Your Medicare information was just his way into your personal life.

Your Medicare number could also be used to charge fraudulent services or products that you never actually receive, funneling the payment to a fake medical products company.

Medicare fraud is unfortunately quite common for this reason. Follow these tips to protect your personal information.

Don’t give out information over the phone. Medicare will not call to enroll you, and they never ask identifying information over the phone unless you call them. If anyone calls wanting your Medicare number or other personal information, hang up the phone.

Keep your card in a secure place. If lost or stolen, someone could commit fraud with your information.

Beware of coronavirus “cures” or tests sold over the phone or online. Anyone trying to sell you a coronavirus treatment or test over the phone is a con artist trying to access your Medicare information. The FDA has approved one mail-order coronavirus test, but it is only available through your doctor.

Check your Medicare Summary Notices regularly. Report any claims that you don’t recognize, as this can be an indication that someone is using your Medicare number.

Beware of manipulative tactics. Remember that con artists often prey on fear; of coronavirus, of chronic disease, of financial setbacks, or even just the fear of missing out on a good deal. If it seems like someone is trying to make you afraid, it might be because they’re trying to get you to act without thinking logically or investigating whether they are even legitimate.

And of course, if you have questions about your Medicare plan, call your plan’s customer service line. They can help you obtain the medical services you need, safely and while protecting your information.

 

Why Everyone Needs an Advance Medical Directive

It’s no fun to think about, but it’s a reality for all of us. At some point we will all need some form of medical care and/or end-of-life care. You probably have some idea of your preferences, but do your spouse and family know about them? And are you confident that they would follow those wishes under duress? What if the situation becomes uncertain, or family members begin to disagree?

For those reasons and more, an advance medical directive is necessary for everyone. This document will not only protect your interests; it also shields your family members from complicated emotions and disagreements.

So, what does an advance medical directive do, exactly? In the event that you’re ever incapacitated by injury or illness, the document will direct your chosen person as to what steps you wish to be taken. There are actually three different ways that you can do this:

A living will spells out your preferences for medical care in a life-threatening situation, to both your doctors and loved ones. You can use it to instruct them on issues such as resuscitation, artificial feeding, pain relief, and end-of-life care.

A healthcare proxy is a person that you have designated to handle your medical decisions for you. It is less specific than a living will, but could also be considered more flexible. You simple choose a person that you trust, and allow them to make all of your medical decisions for you. If you go this route, make sure to have regular conversations with this person regarding your wishes.

A durable power of attorney grants the person of your choosing with the ability to act on your behalf regarding business and financial matters. This person will be able to manage your money, pay bills, file insurance claims, file for disability benefits, and perform other, similar actions.

Keep in mind that you can appoint different people to each role, in the event that you want to avoid conflicts of interest or over-burdening one person. Consider the strengths of your loved ones carefully, and fill each role accordingly.

 

How Do I Enroll in Medicare?

Most of us know that, at some point in the future, Medicare will provide for our health insurance needs. Typically we expect this coverage to begin around the time we retire. But if you’re like most people, you’re probably wondering, “When exactly do I enroll in Medicare? And how do I do that?” No worries; we have the answers you need.

In most cases, you will sign up for Medicare when you turn age 65. You can enroll at any point beginning three months prior to the month in which your birthday falls, during your birthday month, or for three months afterward. If you sign up before you turn 65, coverage begins on your birthday.

Don’t be late, because you can be charged a penalty in the form of higher premiums for the rest of your life.

There are some exceptions to this rule. If you’re still working, and your employer provides a group benefits plan that includes healthcare coverage, you might be able to delay your Medicare enrollment. Or, you can enroll in both, and utilize Medicare as supplementary insurance. It all depends upon the size of your employer, along with your personal preferences, so discuss this issue with your human resources department or an insurance agent familiar with Medicare.

The above rule also applies to those who are married, and whose spouse is still working and is covered by a group benefits plan.

There are two ways to enroll in Medicare. If you’ve already claimed your Social Security benefits, your enrollment in Medicare Parts A and B will be processed automatically when you turn 65. However, you still need to consult with an insurance agent if you’re interested in other forms of coverage, such as a MediGap plan, Medicare Advantage, or a prescription drug (Part D) plan.

If you’re not already drawing your Social Security benefits, you are responsible for enrolling Medicare. You can do this by visiting the Medicare website, but this isn’t always the best way to proceed. To learn more about all of the options available to you, and for personalized help in determining which plan(s) best fit your situation, work with a qualified insurance agent instead.

On that note, give us a call with your questions about Medicare. We can help you compare plans, learn the rules that apply to your situation, and select the options that work best for you.

What If You’re Still Working When You Turn 65?

Most of us expect that we will enroll in Medicare when we turn 65. After all, that’s what we’ve always been told as we pay our Medicare taxes from each paycheck. But more and more American adults are finding that they aren’t ready to retire at 65, and are still employed with a company that offers group health benefits. If you already have a healthcare plan, do you still need to enroll in Medicare? What if my spouse is still working and I’m covered under their plan? And if I don’t enroll in Medicare at 65, won’t I pay a penalty later?

It might surprise you to learn that, for the most part, the rules come down to the size of the employer.

If the employer has 20 or more employees… You can choose to delay your Medicare enrollment until your employer-provided coverage ends, and you won’t owe a penalty to Medicare when enrolling later. Take note that this rule applies to healthcare benefits based upon active employment only, and does not apply to those enrolled in retiree health benefits or COBRA.

On the other hand, you can choose to enroll in Medicare if you wish. You can do this while dropping your employer coverage entirely, or enroll in both plans. If you enroll in both plans, your group health benefits will pay out first, and Medicare will serve as a supplementary plan.

One drawback to enrolling in both your employer-provided plan and Medicare is that you might not be able to enroll in a Medigap plan later. Medigap providers cannot deny you coverage during your first six months of Medicare eligibility, but later on they are usually under no obligation to offer you coverage. However, when those with duel coverage lose their employer coverage, MediGap will allow you to enroll in a plan if you do so within 60 days.

If the employer has fewer than 20 employees… They get to decide whether to continue covering you under their group healthcare plan. If they require you to sign up for Medicare, it will become your primary plan and your group benefits will become secondary. With this option, you don’t lose the ability to enroll in Medigap later, as long as you do so within 63 days of your employment ending.

If you have further questions about Medicare coverage, give us a call. We can help you sort through your options and decide which route to take, based on your healthcare needs and financial priorities.

What is the Difference Between a Medicare Advantage Plan and a Medicare Supplement Plan?

Retirement is one of those times in life for which you cannot over-prepare. For many years you probably focused quite a bit on saving a nest egg and strategizing to receive the most Social Security benefits possible. But because the cost of healthcare is often the most significant cost faced by retirees, understanding your Medicare options is crucial to establishing a satisfactory budget in retirement.

Having said that, many people are not aware of all their different options with regard to Medicare. We tend to assume that we’ll turn 65, sign up for benefits, and then receive healthcare services. But that’s not exactly how it works. Medicare doesn’t actually cover 100 percent of your healthcare costs, and you can choose from many different plans to help manage those expenses.

For example, one of the first choices you will make involves Original Medicare (possibly with the addition of a Supplement Plan) versus Medicare Advantage.

Original Medicare plus a Supplement Plan. Original Medicare, or parts A and B, provide for much of your healthcare needs but certainly not everything. That’s why many enrollees also elect a Supplement Plan. A Supplement Plan, often called Medigap, simply covers some of the costs that are not covered by Original Medicare.

For example, your Supplement Plan might kick in to cover co-payments, deductibles, Medicare Part B excess charges, or emergency services when traveling outside the country. In exchange for one monthly premium, you can reduce unexpected expenses and usually keep your budget more predictable. Supplement Plans can be used only with Original Medicare, and if you need a prescription plan (Part D) you must enroll in that separately.

Medicare Advantage. Medicare Advantage plans are provided by private health insurance companies as an alternative to Original Medicare, but these plans must meet certain minimum standards (and you’re technically still enrolled in Medicare). These plans combine Parts A and B, and sometimes offer additional coverage such as a prescription drug plan. You will still be subject to certain premium amounts, along with co-payments and deductibles according to the plan. Some prefer Medicare Advantage because they find it easier to understand the benefits offered under on plan, and feel that their budgets are more manageable this way.

With Medicare, there is no single plan that is best for everyone. Your decision will depend upon your budget, healthcare needs, and personal preferences. If you need help comparing plans and understanding the differences between them, contact us and we’ll be happy to help.

What Employers Need to Know About COBRA Subsidies

The economy has provided a bit of a roller coaster over the past year, with many Americans losing their health insurance along the way. In many of these cases, job loss and other circumstances have opened up COBRA coverage for these individuals.

COBRA coverage allows those who have lost their jobs, and therefore their group benefits plans,to continue their health insurance coverage. However, because the individual is now responsible for paying the premiums, rather than the employer pitching in for some or all of that cost, COBRA has not always been utilized by many. A job loss typically meant that the suddenly-uninsured could not afford COBRA premiums.

The American Rescue Act, recently passed by Congress and signed into law, seeks to change those circumstances. Now, group health plans subject to COBRA must offer a 100 percent subsidy to anyone eligible for coverage (plus their dependents). This requirement began April 1 and will continue through September 30. This means the plan owner, not the eligible individuals, will cover premiums.  ARP regulations clarify that the subsidy provisions apply to all group health plans sponsored by employers, subject to federal COBRA rules under ERISA and/or state mini-COBRA (Cal-COBRA).

This rule change applies to healthcare plans, along with dental and vision coverage, but does not include health flexible spending accounts.

Who is eligible for COBRA subsidies?

The law defines “assistance eligible” individuals (and their families) as those who would qualify for COBRA due to involuntary unemployment or a reduction in work hours. This includes people who would have been eligible for COBRA during the past 18 months, but chose not to elect coverage at that time. They can now enroll and obtain a subsidy to help with premiums.

Former employees who voluntarily terminated employment, or those eligible for COBRA for other reasons, cannot claim the subsidy.

How are premiums paid?

Premiums will be paid upfront by the employer or the insurer, and then reimbursed via federal payroll tax credits. Employers should prepare for this expense now, because some time will pass between paying the premiums and receiving reimbursement. Please call our office immediately if you have questions about COBRA subsidies or how these rules apply to your situation.

Turning 65 Soon? Here’s What You Need to Know

If you’re set to turn 65 this year, you might already know that you will be reaching the age of Medicare eligibility. Here’s what you need to know right now…

Your signup window is seven months long. It begins three months before the month in which you turn 65, includes that entire month, and then extends for three months afterward. You can enroll in Medicare at any point during this seven-month window.

You can choose from many different plans. You won’t simply sign up for Medicare and then forget about it. You can enroll in Original Medicare (Parts A and B) which are administered by the federal government. Or, you can opt for a Medicare Advantage plan. These plans are run by private insurance companies and must meet certain standards set forth by the Medicare program. Advantage plans roll Parts A and B into one policy that some feel is easier to understand and manage.

Medicare doesn’t cover everything you might need. Medicare does not include dental, vision, and hearing services, or prescription drugs. But because this type of medical care is important to your overall health, as well as costly, you might want to consider supplemental insurance plans to help you manage these costs. Medicare Part D plans were created to cover prescription drugs, and many Medicare Advantage plans include Part D. Some also include coverage for dental, vision, hearing, and other important services.

You might not be required to enroll. If you’re still covered by another healthcare plan, such as a group policy provided by an employer, you might not be required to enroll in Medicare just yet. However, you might wish to do so, to obtain more coverage.

You don’t want to be late. If you don’t enroll during your original enrollment window, Parts A, B, and D will impose a late enrollment premium later. This means your premiums are permanently higher than they would have been, if you had signed up on time. This late “penalty” does not apply to those who were not required to enroll.

As you can see, enrolling in Medicare involves some pretty complex rules. As your enrollment window approaches, call us to discuss your situation so that we can help guide you through these important decisions.

Apply Now: Covered California Plans Just Became Even More Affordable

For those of you not yet participating in a Covered California healthcare plan, we have some good news: Under the American Rescue Plan, an increase in subsidies will make marketplace plans more affordable than ever!

How much more affordable? While the American Rescue Plan directs more funding to healthcare needs, you’re probably most interest in the end result for consumers. Here are some basic facts on how these new policies affect most people:

  • One in four enrollees will be able to upgrade their healthcare plan to a higher tier, with lower out of pocket costs, for the same or even a lower premium than what they’ve been paying
  • Four out of five people will be able to locate a plan costing $10 or less per month after tax credits
  • 50 percent will be able to enroll in a silver-tier plan for $10 or less per month
  • Those making over 400 percent of the federal poverty level will save an average of over 600 dollars per month
  • 14.9 million Americans who currently lack health insurance coverage will now be able to access an affordable plan, including many Californians

What should you do now? If you are not already enrolled in a Covered-California healthcare plan, now is the time to apply. The American Rescue Plan created a Special Enrollment Period, which will open April 12 in California and will run through the rest of 2021.

About 590,000 Californians are currently enrolled in “off-exchange” plans, meaning they chose healthcare plans offered directly through health insurance providers rather than those offered through Covered California. About 68 percent of these enrollees of off-exchange plans would be eligible for a premium reduction if they apply through Covered California instead. If you fall into this category, you should apply with Covered California to locate a plan commensurate with your current policy (or even upgrade to one that suits you better). At the same time, you will be able to access subsidies that can significantly reduce the cost of your premiums.

Those already enrolled in Covered California plans can also receive new or larger subsidies. This Special Enrollment Period will allow you to log into the system and update your information.

Yes, you technically have all year to apply, but it’s important to get started now. You can access savings sooner, with your plan taking effect on the first day of the month following the month in which you apply.

To learn more, call our office to discuss your situation and how this Special Enrollment Period can benefit you.

 

 

 

Which Medical Expenses Are Tax Deductible?

During a pandemic year, you might be especially concerned with the cost of healthcare and your out-of-pocket expenses. Luckily, certain provisions in the income tax code do allow you to claim a deduction for these expenses, according to certain limits.  Read on to learn which of your expenses might be deductible on your 2020 tax return, and how these changes can benefit you.

Unreimbursed medical expenses. You are normally allowed to deduct any medical expenses not reimbursed by your healthcare plan, such as dental and vision care, mental health care, preventive care, and any other medical expenses that are not covered and therefore paid out of pocket. Glasses, contact lenses, hearing aids, and dentures can also be claimed. You can even deduct mileage when you must travel to receive healthcare, and other travel expenses such as parking fees, tolls, or bus fare.

If those expenses total more than 7.5 percent of your adjusted gross income, you will receive a deduction on your taxes. However, many people do not itemize deductions because their total deductions do not exceed the standard deduction. As you can see, the unreimbursed medical expenses deduction can be a bit complicated.

Covid-related medical expenses. Many healthcare plan administrators announced that they would be covering 100 percent of Covid-related care, regardless of each patient’s deductible. But if your plan wasn’t one of those, or if you experienced other medical expenses related to Covid treatment, you can claim these as a deduction on your tax return. Covid-related expenses are subject to the same rules listed above.

Some expenses are not deductible. While they appear to be healthcare-related, some unreimbursed medical expenses cannot be counted toward your tax deduction. These include, but are not limited to,

  • Cosmetic surgery
  • Nonprescription drugs (except insulin)
  • Vitamins and other supplements
  • Diet food
  • Nonprescription nicotine products

Also, if you pay for medical expenses out of a flexible spending account or health savings account, you can’t claim those as a deduction because those accounts are already tax advantaged.

How to claim medical expenses on your taxes. If your unreimbursed medical expenses exceed 7.5 percent of your adjusted gross income, and your total deductions exceed your standard deduction, you will probably want to file an itemized return. Use IRS Form 1040 and attach Schedule A. Talk to your tax professional about these procedures if you have any more questions about this tax deduction, and to ensure that you’re calculating your deduction correctly.

 

 

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