• The More Things Change, the More They Stay The Same

    July 2017 Newsletter Do you have retired clients with $134,000 of income? Are they aware of the higher Medicare tax about to hit them? As the US Senate struggles to craft legislation to repeal and replace the Affordable Care Act, one piece of significant legislation remains unchanged. Higher income Medicare enrollees currently pay higher premiums for Medicare Parts B and D. These higher premiums are called Income Related Monthly Adjustment Amounts (IRMAA). The brackets determining the amount of these premiums will change in 2018. In 2015, when the Medicare Access and CHIP Reauthorization Act announced the new brackets, there was minimal press coverage or objection to this tax increase. After all, implementation was…

  • A Bit of Good News

    June 2017 Newsletter While speaking to consumers at client symposiums, at some point in the presentation I introduce them to the IRMAA (pronounced Ehrma). It’s not a pleasant introduction, as the 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 chart below provides the income levels and corresponding premiums. Medicare Part B Premiums Medicare Part D Premiums One important fact with the IRMAA is Social Security/Medicare use income from two years prior to determine current Medicare Premiums. For example, 2017 premiums are based on 2015 income. As individuals digest this information, recent retirees will realize that two years ago they were often in a…

  • Effective Conversations Lead To Effective Planning

    May 2017 Newsletter We know our clients are concerned about retirement health care costs. A couple of facts really stand out when you look at recent pre-retiree consumer polls: Retirement Health Care is now ranking as your clients’ top concern. This concern not only spans across income levels, but actually increases among the more affluent households. It is obvious that we need to connect with clients on this topic. How do we accomplish this in a way that will spur our clients to take action and as a result, alleviate some of the concern? Much of the popular press tells a 65-year-old retiree to plan on $130,000 for routine health care costs in retirement (this excludes any custodial care…

  • What’s the Big Advantage?

    April 2017 Newsletter In my February 2017 newsletter, I outlined and discussed the overall cost of retirement health care. The bottom line annual cost estimate for a 65-year-old who is retiring today is $6,772. This assumed the most common health care coverage plan for retirees: original Medicare with a prescription drug plan and Medigap policy.  This approach does offer the most comprehensive coverage, allowing medical treatment from any physician who accepts Medicare insurance. For clients looking to lower their health care costs and willing to accept a few tradeoffs, an alternative is to utilize a Medicare Advantage Plan. Advantage Plan participants are still enrolled in original Medicare but do not purchase a Medigap policy. Instead, supplemental…

  • Health Savings Accounts – Major Changes Ahead

    March 2017 Newsletter Over the last few years, the increased popularity of Health Savings Accounts has been one of the more encouraging trends in the financial services industry and one of the few bright spots in a challenging health care landscape. The concept of investing HSA dollars as a tax efficient means to accumulate funds for retirement health care costs has piqued the interest of the financial planning community (for more information watch my brief WealthWatch video on HSAs at the bottom of this letter). As a result, many planners are eager to see what changes are being proposed to HSAs with the American Health Care Reform Act (H.R. 277).…

  • Retirement Health Care Costs: What is the Number?

    February 2017 Newsletter There are numerous ways in which a financial advisor can connect with clients regarding retirement health care costs.  A great place to start is by providing a simple, annual cost estimate for routine health care that can be incorporated into the financial plan.  Too often, articles discussing retirement health care costs start by trying to estimate the hundreds of thousands of dollars that will be spent in this area by most couples over the course of their retirement.  The forecasts are accurate but for most clients, the magnitude of the numbers can be overwhelming. By starting with routine health care and tackling the costs on an annual…

  • COLA or No COLA Part II

    November 2016 Newsletter Each year in October Social Security recipients await the announcement of the Cost of Living Adjustment (COLA). This COLA states how much of a Social Security Retirement Benefit increase, if any, one will see next year. On the heels of the October COLA announcement, the Department of Medicare and Medicaid Services (CMS) announces the increase in Medicare costs for next year.  Since Social Security automatically deducts certain Medicare costs from Social Security Benefits, one must await both announcements to get a better idea of your Social Security Benefit next year. The bottom line, after the 2016 announcements, is that close to 70% of Social Security Retirement Benefit recipients will not see…

  • COLA or No COLA Part I

    October 2016 Newsletter The Social Security Administration (SSA) announced a .3% cost of living adjustment (COLA) for 2017 Social Security Retirement Benefits. Popular media is widely broadcasting this news while bemoaning the paltry increase. The headlines are missing the real story. According to the SSA, the current average annual Social Security Retirement Benefit is approximately $15,660.  A .3% increase equates to about $47 per year. Within the next month, the Centers for Medicare & Medicaid Services (CMMS) will announce the 2017 cost increase for Medicare Part B Premiums. Since most retirees have these Part B premiums deducted from their Social Security Benefit, a Part B cost increase of just 4%, would equate to $50 per year for most Part B enrollees, completely…