• Debunking the Myths – February 2020 Newsletter

    “If I get this wrong, it could cost us everything – including decent health coverage.” I began conducting phone consultations with clients in December to provide information on retirement health care. Many of these calls center on the optimal time to transition from employer provided group health insurance onto Medicare as well as providing a clear understanding of Medicare coverage selections. A few common misconceptions or myths about Medicare consistently surface during these calls. Debunking these myths can have a significant, positive impact on managing retirement health care costs. Myth 1. “I thought everyone had to enroll in Medicare at age 65” In many situations, Medicare in its entirety can be…

  • Hat Trick – January 2020 Newsletter

    When you opened your year end Health Savings Account statement were you excited to see a balance of $344,000? HSAs became available in 2004. A married couple, age 50, who fully funded and fully invested (S&P500) their account each year would actually have accumulated $344,000! Hindsight is 20/20. Here are three (hat trick) resolutions for 2020:  New Year Resolution # 1. Make 2020 the year you identify which of your clients owns an HSA. Make sure they understand the importance of accumulating sources of tax-free wealth for retirement.  HSA contributions are pre-tax, earnings grow tax-free and distributions for qualified health care expenditures are tax-free. Stop spending the HSA and get the balance invested. For more information on the…

  • Fall 2019 Newsletter – Medicare 2020

    As we move into the fourth quarter it is important to track a few Medicare changes coming in 2020.  1. IRMAA brackets will be indexed for inflation. 2. Medigap plans C and F will no longer be available to new enrollees. 3. The Medicare Part D “donut hole” continues to phase out.  IRMAA (Income Related Monthly Adjustment Amount) brackets are used to determine the amount Medicare enrollees pay for Part B and Part D. As the name indicates, higher incomes trigger higher premiums. In 2020, the income thresholds will be indexed for inflation for the first time in 10 years. For the past decade, income growth plotted against the brackets pushed individuals into higher…

  • Summer 2019 Newsletter Right Place at the Right Time

    The timing of two events in life are almost always paired together:   Enrollment in Medicare and  The retirement plan rollover The two largest employee benefits are group health insurance and the retirement plan. As our clients retire and transition from the group health plan onto Medicare, it usually triggers consideration of a retirement plan rollover. If an advisor is disconnected from conversations about Medicare, retirement health care costs and the overall transition from the group plan onto Medicare, they run the risk of being disconnected from a client’s decision on how to best handle their largest financial asset. To put this in a positive frame, if your clients think of you as a resource regarding retirement…

  • March 2019 Newsletter

    Early Retirement   According to a recent Gallop Pole, as individuals grow older, plans for an early retirement tend to diminish. As we put pencil to paper to determine if financial resources will support expenses, the cost of living realities are striking. The largest expense in the center of this analysis is health care costs. For those pursuing early retirement, it is critical to get a realistic health care cost estimate. Medicare enrollment prior to age 65 is only available to those with end stage renal disease, Lou Gehrig’s disease or those on Social Security disability. This means that in the absence of employer provided health care, normally we turn to the private insurance market. These policies are usually purchased on the Affordable Care Act health care exchanges (federal or state). You can also shop them directly with insurance carriers.…

  • Be a Hero

    Looking back at 2018, one of the most popular and widely utilized ideas I discussed involves helping clients reduce their Medicare Premiums when transitioning to retirement. While speaking to consumers at client symposiums, I introduce them to IRMAA (pronounced Ehrma). It is not a pleasant introduction, as IRMAA stands for Income Related Monthly Adjustment Amount and is basically a tax on Medicare Parts B and D premiums. Those with higher incomes pay higher premiums. The charts below provide the 2019 income levels and corresponding premiums. Since Medicare B and often Medicare D premiums are taken directly from one’s Social Security benefit, landing in a higher income bracket creates a tangible reduction in one of the primary sources of retirement…

  • Pay Raise

    It has been years since retirees have seen a meaningful cost of living adjustment (COLA) to their Social Security retirement benefit. The two-pronged impact of minimal COLAs coupled with substantial Medicare premium increases has flattened the amount of this important source of retirement income. 2019 will offer a small break to this pattern. Social Security announced a 2.8% increase to 2019 retirement benefits. Medicare B premiums will increase by 1.1%. Part D premiums will slightly decline.For example, a retiree with an annual 2018 retirement benefit of $20,000 will see an annual increase of $560. This assumes a national average for Part D costs. Keep in mind, retirees with higher incomes (MAGI exceeding $85,000 single or $170,000 joint) have…

  • Summer 2018 Newsletter

    Urgent Conversations Do your clients have a plan for custodial care? Do they recognize the urgency? One of the foundations of a comprehensive financial plan is having a well thought through strategy to handle custodial care, the help many of us will require with normal activities of daily living. In short, our clients need assistance thinking through who will provide this care, the resulting consequences in this person’s life, and the costs associated with this care. If properly handled, this conversation should lead to modifications in the financial plan to support the care provider and handle costs. Demographic trends and technological innovation are creating both disturbing and encouraging developments. We…

  • May 2018 Newsletter

    4 HSA Facts Every Planner Should Know In previous newsletters I have covered the basic financial planning concepts surrounding Health Savings Accounts (HSAs). Most notable is the strategy of not using the HSA for current health care expenses and instead, investing the HSA for retirement. Click the video link at the bottom of the page for a review of this strategy. Moving beyond “HSA 101” concepts, consider of few other useful planning strategies with HSAs: 1. The HSA owner has control over the money in their HSA account. This may seem somewhat basic but consider the implication. If you do not like the saving and investment options in the HSA…

  • March 2018 Newsletter

    The reason I named my book Top of the First is that we are early in the process of integrating retirement health care issues into our financial plans. This is particularly evident with the use of the Health Savings Account (HSA). In previous newsletters, I described the basics of HSAs and their potential to accumulate substantial retirement income. In short: Deposits into an HSA account are pre-tax. Earnings accumulate tax-free. Withdrawals for qualified medical expenses are tax-free. The decision to fully fund an HSA, abstain from making any withdrawals and therefore fully invest the HSA for retirement is taking hold with financial advisors. This is especially true with advisors’ personal…