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Preparing For the Cost of Healthcare in Retirement

For many people, a mortgage payment is our largest monthly expense. So it might surprise you to learn that in retirement, that can change dramatically. In many cases, healthcare is the number one expense faced by retirees. And since your health can change at any time, so can your budget.

That’s why retirement planning should always account for the cost of healthcare, and the various risks associated with medical bills. According to the Center for Retirement Research at Boston College, the average retiree spends $4,300 annually on out-of-pocket healthcare costs. That’s because, contrary to common belief, Medicare does not cover everything you might need. You’re still subject to co-pays, deductibles, the cost of some prescriptions and equipment, and so on. And, that figure does not include the cost of long-term nursing care, which can cost several thousand per month. 

Are you surprised by these facts? Most people are, and that’s why it’s important to prepare for the cost of healthcare before retirement, rather than risking an unpleasant surprise later.

Your Medicare options. Medicare is actually divided into different parts, and it’s important to understand them and their coverage limits. Medicare Part A covers hospital bills, whereas Part B is used for doctor visits and preventive care. Most people won’t pay for Part A (assuming they worked and paid Medicare taxes for at least ten years) but they will be subject to a deductible for hospital services. Right now that deductible is $1,364 per benefit period (from the time you enter the hospital to 60 days afterward).

Part B currently charges a standard premium of $135 per month, although it can be higher for those with higher incomes. You will be subject to a deductible of $185 per year.

Neither of these Medicare plans cover prescription drugs, so you might wish to enroll in Part D for that (for a premium, of course).

Want it all? Medicare Part C, also known as a Medicare Advantage Plan, includes Parts A and B. Many plans also include Part D coverage. You will pay one monthly premium for an Advantage plan, that is typically higher than you’d pay for those plans separately, but these plans are designed to lower other out-of-pocket costs.

Dental and vision coverage. But wait! Medicare doesn’t pay for routine dental and vision care, so you will need to plan for those expenses, too. Everyone needs dental, of course, and even those with perfect vision find that their situation changes past age 65 or so.

Long-term care. Finally, because Medicare pays for only a very limited amount of long-term nursing care, you will be responsible for that expense should you ever need it. Long-term care insurance is one option, or you can establish a retirement budget that accommodates that monthly bill.

For more information on the different Medicare options available to you, please give us a call. We can help you run the numbers and decide which Medicare plan is a good fit for your budget.

New Legislation Provides a Unique Way for Employers to Offer Health Insurance

Two Problems: Millions of workers in the United States lack health insurance coverage, often because their employers don’t offer it.

Hundreds of thousands of businesses, mostly smaller ones, would like to offer healthcare benefits to employees but can’t because of the high cost and/or lack of options.

What would you say if we told you that new legislation could provide an answers for both of these issues?

The Potential Solution: On June 13, 2019,  the departments of Labor, the Treasury, and Health and Human Services released news of a new rule, allowing employers of all sizes to offer ICRHA (Individual Coverage Health Reimbursement Arrangement). Under this type of plan, employers can contribute funds to a Health Reimbursement Arrangement, while enjoying certain tax benefits. Employees can then use the funds within these accounts to purchase their own health insurance plans, including those offered on state exchanges formed by the Affordable Care Act (or the federal exchange, where state exchanges are not available).

Benefits for employers. Once the new rules go into effect, it is estimated that 800,000 employers will offer this form of healthcare coverage to more than 11 millions workers and their families. Most of those employers will be those with 20 or fewer workers, allowing small companies to better compete in the labor market.

Benefits for employees. The ICRHA policy will allow employees to shop around and select their own health insurance plan. Workers and their families will attain greater control over their healthcare plan options, by selecting a provider and plan that suit their specific needs.

Tax benefits. With an HRA, employers contribute pre-tax dollars to a fund, which can then be used for healthcare expenses. Until now, those funds extended only to expenses uncovered by a health insurance plan. Now, under the new rule, those funds can be used to pay for health insurance premiums if the employee purchases their own plan.

An HRA differs from an HSA (Health Savings Account), in that HSA funds stay with the employee when employment status changes. With an HRA, unused funds go back to the employer in the event the worker is fired, laid off, or quits.

This new provision is exciting, as it potentially allows for millions of uncovered Americans to gain health insurance. Meanwhile, it also benefits employers (particularly smaller companies). But of course, the new ICHRA rules are complex and require the guidance of an insurance professional. Give us a call to learn more, and we will show you the numerous ways in which ICHRA can benefit both your company and your employees.

 

 

Guiding Your Medicare-Eligible Employees

Because eligibility begins at age 65, we tend to think of Medicare as health insurance for retirees. But because plenty of people are still working when they reach their 65’th birthdays, that isn’t exactly true. Medicare also covers workers who have reached this milestone, even if they are already covered by a group health insurance plan. So, you might be wondering what exactly to tell your older workers about Medicare…

Yes, they do need to enroll. As long as they (or their spouse if married) have worked at least ten years and paid taxes into the system, all workers are eligible for premium-free Medicare Part A. Your employees might also be interested in Part B or D (prescription drug coverage) for a premium.

Yes, they can have Medicare along with another healthcare plan. For those who work for smaller companies, Medicare will become the primary plan and group health benefits will provide secondary coverage. Those workers will usually enroll in both Part A and Part B, since Medicare is their primary coverage.

For those employed by larger companies, their group healthcare plan remains primary with Medicare providing secondary coverage.

In most cases, having these two forms of insurance will mean lower out-of-pocket costs for the Medicare-eligible employee.

They can delay Parts B and D. For retirees, failing to enroll in Parts B or D at age 65 can result in higher premiums later if they change their minds. However, those who are still working at age 65, and covered by a group health insurance plan, can delay enrollment in Parts B and D without incurring a penalty. They just need to provide confirmation of coverage by an employer.

They must remember the deadline. Medicare will only remind your employees of the deadline if they are receiving Social Security or Railroad Retirement Board benefits, so in most cases this means the responsibility for remembering the deadline falls upon the individual. Remind older workers that they can enroll in Medicare beginning three months before their 65’th birthdays. That initial enrollment period lasts for three months afterward as well.

If you have questions about Medicare enrollment, and how those benefits work alongside a group health insurance plan, please give us a call. We can explain the rules in more detail, so that you can communicate accurate information to your employees.

 

Envisioning Greater Benefits for Your Employees

A quality health insurance plan is often cited as the most valuable benefit you can offer to your employees. But what happens if that healthcare plan doesn’t cover absolutely every service they want or need? Most employees appreciate the opportunity to choose from a menu of add-on benefits, to help close any gaps in coverage.

Since health insurance plans rarely cover eye exams, glasses, or contact lenses for adults, optional vision insurance can add value to your group health benefits plan. You can establish the plan as an add-on option, at no extra cost to you, while still allowing your employees to access a vision care plan at a desirable group rate.

The value of vision insurance. Health insurance plans do offer eye exams for minors under age 19, but this coverage doesn’t apply to your employee, their spouse, or children over age 19 who have decided to stay on their parents’ insurance plan. A vision care plan can close this gap, and make annual eye exams, glasses, and contact lenses more affordable for the family.

Eye exams are necessary for everyone. It is commonly believed that some people have eye troubles, while the rest of us don’t, and that this situation becomes permanent at some point during late childhood or early adulthood. That actually isn’t true! Adults can develop vision problems, particularly far sightedness or astigmatism, at any time. In fact, this is becoming more common as we all spend more time in front of computer and phone screens. Other eye health problems can develop over time, too, and affect anyone.

Added “insurance” for health. As for those other health problems, conditions like glaucoma and macular degeneration can impact adults regardless of a lifetime of perfect vision. Therefore, we all need to attend regular vision screenings, particularly as we get older, so that we can seek early treatment. And believe it or not, optometrists and ophthalmologists are often the first to notice signs of health conditions such as diabetes, high cholesterol, high blood pressure, and even brain tumors. Attending annual vision screenings is yet another way to detect potential health problems early.

Safety matters. Since vision impacts workplace safety, offering optional vision insurance to your employees can benefit you, too. Fewer workplace accidents means greater productivity and possibly even savings on various liabilities.

To learn more about vision insurance, give us a call. We will discuss how you can add this valuable benefit to your menu of options, at a great rate for your employees.

 

 

Keeping an Eye on the Measles Outbreak

Lately, it might seem as though everywhere you turn, news outlets and social media posts remind you of the recent measles outbreak. If you’re feeling concerned about the illness, or your chances of catching it, hopefully we can offer some reassurance.

Why is this year’s measles outbreak such a big deal? Contrary to common belief, measles has never been completely eradicated in this country. Even in the year 2000, the year measles was declared “eradicated” in the United States, the CDC recorded 86 cases. Every year since, outbreaks of the virus have ranged from 37 cases (in 2004) to 667 cases (in 2014).

According to the CDC, more than 700 measles cases have been reported in the United States in 2019.

This year’s outbreak seems like a big deal because it is the largest we’ve seen in 25 years. However, keeping in mind that our population totals more than 327 million, your odds of contracting measles are still quite low.

Protecting yourself from measles. It’s important to remember that in developed nations, measles patients require hospitalization in about 7 of 1,000 cases. Due to proper nutrition and access to healthcare, only rarely does measles contribute to death (about 1 in 10,000 cases in the United States). But because even mild viral illnesses can cause inconvenience, and occasionally more serious symptoms (mostly in the immunocompromised), you probably want to avoid contracting the measles.

Take care to wash your hands regularly, especially in public places, and boost your immune system by eating a healthy diet. In fact, because the majority of more serious measles cases result from depleted vitamin A in the body, consuming foods high in vitamin A can confer a protective effect.

How would you know if you contract measles? About 10 to 14 days after exposure, you might notice symptoms such as:

  • Fever
  • Runny nose
  • Dry cough
  • Sore throat
  • Conjunctivitis (inflammation in the eyes)
  • A flat, blotchy red rash that begins on the face and gradually spreads to the rest of the body

Avoid spreading measles to others. Given the overall low prevalence of measles in the United States, symptoms such as a fever, runny nose, and sore throat are much more likely to signal a run-of-the-mill sinus infection. But if you know or suspect that you were recently exposed to measles, then you should see your doctor for testing. Wearing a surgical mask in the waiting room can help protect those around you.

If you do test positive for measles, your doctor will advise you on your next steps. In most cases, treatment with vitamin A and plenty of rest will have you feeling better in about a week.

In the meantime, since you might be contagious, stay away from crowded places and avoid contact with young children or anyone who has a compromised immune system.

Sources:

www.CDC.gov
https://www.mayoclinic.org/diseases-conditions/measles/symptoms-causes/syc-20374857
https://physiciansforinformedconsent.org/measles/dis/

Helping Your Employees Navigate Their Benefits

We all know that employee benefits packages help business owners to recruit the best workers, while also contributing to worker satisfaction and retention. But there is a big difference between offering valuable benefits, and employee usage and appreciation of them. If your workers aren’t well versed in the options available to them, and aren’t selecting the benefit options that are best suited for their situations, then they aren’t reaping the full value of those benefits… And neither are you.

That’s why communication between HR departments and employees can be so critical. In order to help your employees understand their group benefits and select the best options for their situations, take the following steps.

Provide expertise. Does your HR department or provider give employees access to the information they need, in order to make informed decisions? Are they accessible by phone, email, or appointment? Are written materials, pamphlets, etc clear, and do they accurately give necessary information on benefits without added clutter?

Help employees ask the right questions. Sometimes employees are so unfamiliar with their own benefits, that they don’t even know which questions to ask! Then they make benefit selections based on what appears the easiest, or they simply continue with last year’s choices.  Encourage them to ask the right questions, such as:

  • Are my favorite doctors and facilities in-network?
  • Has the benefit plan administrator, or insurance carrier, changed?
  • Are alternative medical practitioners covered?
  • Has prescription drug coverage changed?
  • Are there any new benefit options that weren’t available last year?
  • Are there any voluntary benefits I should know about?
  • Do we have a wellness program or incentives?
  • How can I learn more about my benefit options?

Streamline the enrollment process. If you haven’t already, elect an online benefits software program that employees can access at their leisure. This will allow them full access to benefits information, and make the enrollment period more convenient for everyone.

Continue to reach out to employees throughout the year. The conversation regarding benefits should be an ongoing one, throughout the year. Regularly issue reminders about topics such as:

  • Using flex spending account funds before the year ends
  • Formulary changes (for prescription drug changes) and the opportunity to save money by using generic drugs
  • Information on voluntary benefits programs, like wellness programs and additional insurance options
  • Updates on retirement savings options, such as updates on employer matching funds, all required notices, the summary annual report, or information on taking advantage of income tax benefits

These ideas should get you started, but give us a call for more information on communicating employee benefits. We can help you ensure that your employees (and you) reap the maximum amount of satisfaction from your group benefits package.

 

How to Get Life Insurance with No Premiums For a Year

We all know that protecting our loved ones should be high on our financial priorities list. But with so many day-to-day expenses, many of you might be procrastinating on choosing a life insurance policy. That’s understandable, but what if you found a creative way to sign up for a life insurance policy, with no premiums for the next few months or even year?

That is entirely possible at this time of year, because many of you will soon be receiving your tax refund check. It’s tempting to put that money toward something a bit more “fun”, yes, but ultimately there’s nothing more rewarding than peace of mind.

Overcoming life insurance obstacles. If you’ve been putting off selecting a life insurance policy, it’s probably for one of these common reasons:

  • Rearranging your monthly budget to cover the premiums feels challenging
  • You don’t want yet another monthly payment to remember (or risk losing coverage if you forget to pay)
  • You already have a life insurance policy, and you suspect it’s not enough or the right type of coverage, but you just haven’t confronted that problem yet

A simple solution. Whether it’s your budget, remembering payments, or not knowing how much life insurance you really need, we can help.

First, schedule a meeting with us to perform a needs analysis. This tells us more about your family’s needs, and how much money they would need to survive without you. You need to do this whether you’re investigating life insurance for the first time, or you’re simply reevaluating your current coverage. As life changes and families grow, so do our insurance needs.

Then, we can match you with a policy that fits your coverage needs. When you put your tax refund toward the payments, you could be paid up for months or even an entire year. Now you won’t have to rearrange your budget to accommodate the premiums, and you won’t have to worry about forgetting a payment. You rest easy for the next year, knowing that your family is protected in the event of an unforeseen event.

Changing Healthcare Plans Outside of Open Enrollment

Each fall, Open Enrollment allows us the opportunity to sign up for a new healthcare plan, or change from our existing plan into a new one. But what if you missed the deadline and find yourself without healthcare, or needing to make changes, at some other time during the year?

In certain cases, you might qualify for a Special Enrollment Period. If you experience one of these Qualifying Life Events, you should get in touch with us right away to review your options.

You lose your health insurance coverage. Coverage can be lost when you change jobs, you lose access to a student healthcare plan, you turn 26 and age out of your parents’ plan, or you become ineligible for Medi-Cal due to an income increase. Some other circumstances might also apply.

Your household dynamics change. You get married or divorced, or you add a child to the household through birth or adoption. A death in the family might also be a Qualifying Life Event.

Your residence changes. You move into a new area (county or even zip code, if your healthcare plan doesn’t offer service there), you’re a migrant worker who moves for work, or you’re a student who moves to or away from school. Those who are leaving transitional housing (such as a shelter) can also qualify.

Some other events. Although they’re less common, these events can also qualify you for a Special Enrollment Period:

  • You leave jail or prison
  • You become a US citizen
  • You become a member of a recognized Native American tribe
  • Your income changes to the extent that your coverage qualifications also change
  • You are an Americorps member, starting or ending your service

Please keep in mind that your Special Enrollment Period will last for only 60 days, from the time of one of these Qualifying Life Events. So, you still need to avoid procrastination and give yourself time to make an informed decision. Give us a call if you think you qualify for a Special Enrollment Period at any point during this year, and we can help guide you through your healthcare plan options.

How to Know If You Need Short-Term Disability Insurance

If you were ever temporarily disabled and unable to work, would you have a plan in place to cover your living expenses? Some employers provide short-term disability insurance, which covers part of your income in the event that you can’t work for three to six months. If your employer does not provide this type of insurance, you might be interested in locating your own policy.

So, who needs short-term disability insurance?

Those whose employers don’t provide a policy. Investigate your employer’s offerings, because this benefit is often not widely advertised. Check on the exact benefits, as well, to be sure they will be sufficient to meet your needs.

Those who have long-term disability insurance, but not short-term. Many employers offer both types of disability insurance, but not all. Since long-term disability insurance often requires a six-month waiting period, you could exhaust your savings before reaching the end of that term.

Those who are self-employed. Obviously, you won’t have employer-provided benefits in this case. Carefully evaluate your insurance needs, and consider short-term disability insurance to provide much-needed income in the event of an accident or illness that prevents you from working. This rule also applies to independent contractors.

Those who can’t wait on SSDI. Approval for Social Security Disability Insurance often requires a wait of six months or more, and your disability must fall under certain rules. In the meantime, you could use up any liquid assets available to you. A short-term disability insurance policy can help to close that gap and ease the financial burden.

Keep in mind that most short-term disability insurance plans will provide about 60 percent of your lost wages, up to a specified dollar amount. The exact payout amount, and the length of payments, will depend upon the policy you select and the premiums you pay. Generally speaking, short-term disability insurance can provide vital income during a difficult period of your life, but you might need to supplement this income with other planning measures, depending upon your financial needs.

Why You Should Always Review Medical Bills

We all know that healthcare isn’t cheap, but how often do you scrutinize your bills for errors?

As it turns out, you definitely should be reviewing those bills when they arrive. About 80 percent of all medical bills contain errors. On bills totaling $10,000 or more, the average mistake can cost you more than $1,300.

And of course, it’s not just you who who gets stuck with the bill. Bills that contain errors are more likely to be rejected by health insurance companies, but even if your policy does pay the bill, the higher costs are essentially passed on to all consumers.

What causes medical billing errors? Often these errors originate from simple mistakes during the data entry process. Names or policy numbers can be entered incorrectly, for example. Other times, a poor explanation of an insurance company’s coverage can result in overcharges.

Another common culprit is errors in diagnostic code. If the wrong code for a procedure is entered, either due to misunderstanding or a simple typo, this can result in charges for more expensive procedures or medications that were not actually performed.

The end result. The end result, of course, is that you could be paying more out-of-pocket than you should be, for services that weren’t actually performed. When insurance companies are overcharged, the price of healthcare increases for everyone. If your health insurance company does catch the overcharge, they could reject the bill.

This is why you should always check every medical bill, as soon as it arrives, to be sure the bill matches all services, procedures, and medications that you received. Notify the physician’s office of any potential discrepancies, or call your insurance company to share your concern.

Sources:

http://www.hapusa.com/6-proactive-medical-billing-tips/
Equifax

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