Medicare Open Enrollment

Contributed by: Kali Hassinger, CFP®

As the weather changes and fall begins, there seems to be a general shift from the summer mindset to a more focused fall mentality.  Maybe it’s because, even well into adulthood, we’re accustomed to that “back-to-school” switch.  If you are currently enrolled in Medicare (not quite school, but significant nonetheless!), fall will continue to mark an important time of year because the Medicare open enrollment period begins on October 15th and lasts until December 7th.  This is the time when Medicare participants can update their health plans and prescription drug coverage for the following year. 

If you participate in a Medicare health and/or prescription plan, it’s important to be sure that your coverage will continue to meet your needs in the year to come.  Plans will send out notification materials if coverage is changing, but, even if it isn’t, it may be worth comparing your current coverage to other options.  If you are thinking of updating your coverage, there are several items that you should consider. 

Other coverage options:

If you are currently covered by or eligible for coverage through another provider, such as your former employer, you’ll want to understand how this plan works with Medicare.  Most retiree plans are designed to coincide with Medicare for those 65 and older, but you’ll want to be sure that the premiums and plan benefits are more advantageous than the open market Medicare options.

Cost:

This may seem like a given, but there are several cost factors to take into consideration.  Premiums, deductibles, and other costs can add up throughout the year, so it’s important to have a grasp of the plan’s monthly AND annual expenses.

Accessibility: 

Are the doctors and pharmacies who participate in this plan convenient for you?  If you have a current doctor or pharmacy that you want to continue using, be sure that they are in network.

Quality of Coverage:

Perhaps another seemingly obvious but important consideration, quality of coverage means how well does the plan actually cover the services you need.   Some plans require referrals and limit (or won’t provide) coverage if you go out of network.  If you have ongoing prescriptions, make sure the drugs are covered and that you understand any rules that may affect your prescription in the future.  

It’s important to understand and compare your Medicare options, but it’s easy to be overwhelmed by the process.  Raymond James partners with a group called Health Plan One to help clients strike the right balance between appropriate coverage and healthcare costs.  Our office has the opportunity to host a webinar with HPOne on October 23rd at 1:00 PM, and you can register for the webinar by clicking here.

Kali Hassinger, CFP® is an Associate Financial Planner at Center for Financial Planning, Inc.®

Planning for Health Insurance and Medical Expenses in Retirement

Contributed by: Matt Trujillo, CFP®

At any age, health care is a priority. However, when you retire, you will probably focus more on health care than ever before. Staying healthy is your goal, and this can mean more visits to the doctor for preventive tests and routine checkups. There's also a chance that your health will decline as you grow older, increasing your need for costly prescription drugs or medical treatments. That's why having the right health insurance for you is extremely important.

If you are 65 or older when you retire, your worries may lessen when it comes to paying for health care--you are most likely eligible for certain health benefits from Medicare, a federal health insurance program available upon your 65th birthday. But if you retire before age 65, you'll need some way to pay for your health care until Medicare kicks in. Generous employers may offer extensive health insurance coverage to their retiring employees, but this is the exception rather than the rule. If your employer doesn't extend health benefits to you, you may need to buy a private health insurance policy (which may be costly), extend your employer-sponsored coverage through COBRA, or purchase an individual health insurance policy through either a state-based or the federal health insurance Exchange Marketplace.

But remember, Medicare won't pay for long-term care if you ever need it. You'll need to pay for that out of pocket, rely on benefits from long-term care insurance (LTCI), or if your assets and/or income are low enough, you may qualify for Medicaid.

As mentioned, most Americans automatically become entitled to Medicare when they turn 65. In fact, if you're already receiving Social Security benefits, you won't even have to apply--you'll be automatically enrolled in Medicare. However, you will have to decide whether you need only Part A coverage (which is premium-free for most retirees) or if you want to also purchase Part B coverage. Part A, commonly referred to as the hospital insurance portion of Medicare, can help pay for your home health care, hospice care, and inpatient hospital care. Part B helps cover other medical care such as physician care, laboratory tests, and physical therapy. If you want to pay fewer out-of-pocket health-care costs, you may also choose to enroll in a managed care plan, or private fee-for-service plan under Medicare Part C (Medicare Advantage). If you don't already have adequate prescription drug coverage, you should also consider joining a Medicare prescription drug plan offered in your area by a private company or insurer that has been approved by Medicare.

Medigap Policies:

Unfortunately, Medicare won't cover all of your health-care expenses. For some types of care, you'll have to satisfy a deductible and make co-payments. That's why many retirees purchase a Medigap policy.

Unless you can afford to pay for the things that Medicare doesn't cover, including the annual co-payments and deductibles that apply to certain types of care, you may want to buy some type of Medigap policy when you sign up for Medicare Part B. There are 10 standard Medigap policies available. Each of these policies offers certain basic core benefits, and all but the most basic policy (Plan A) offer various combinations of additional benefits designed to cover what Medicare does not. Although not all Medigap plans are available in every state, you should be able to find a plan that best meets your needs and your budget.

When you first enroll in Medicare Part B at age 65 or older, you have a six-month Medigap open enrollment period. During that time, you have a right to buy the Medigap policy of your choice from a private insurance company, regardless of any health problems you may have. The company cannot refuse you a policy or charge you more than other open enrollment applicants.

Long-term care insurance and Medicaid:

The possibility of a prolonged stay in a nursing home weighs heavily on the minds of many older Americans and their families. That's hardly surprising, especially considering the high cost of long-term care.

Many people in their 50s and 60s look into purchasing Long Term Care Insurance (LTCI). A good LTCI policy can cover the cost of care in a nursing home, an assisted-living facility, or even your own home. If you're interested, don't wait too long to buy it--you'll need to be in good health. In addition, the older you are, the higher the premium you'll pay.

You may also be able to rely on Medicaid to pay for long-term care if your assets and/or income are low enough to allow you to qualify. But check first with a financial professional or an attorney experienced in Medicaid planning. The rules surrounding this issue are numerous, complicated and can affect you, your spouse, and your beneficiaries and/or heirs.

The issue of how to properly plan for health insurance in retirement is complex and multi-faceted. As with many aspects of good financial health I recommend working with a qualified professional to address your evolving health care needs, and to ensure that you and your family have the proper coverage for your circumstances.

Matthew Trujillo, CFP®, is a Certified Financial Planner™ at Center for Financial Planning, Inc.® Matt currently assists Center planners and clients, and is a contributor to Money Centered.

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This information has been obtained from sources considered to be reliable, but we do not guarantee that it is accurate or complete. Long Term Care insurance policies have exclusions and/or limitations. The cost and availability of Long Term Care insurance depend on factors such as age, health, and the type and amount of insurance purchased. As with most financial decisions, there are expenses associated with the purchase of Long Term Care insurance. Guarantees are based on the claims paying ability of the insurance company.

Webinar in Review: A Beginners Guide for Those Just Starting Out

Contributed by: Emily Lucido

With a little bit of wit and a whole lot of information, Kali Hassinger, CFP® and Josh Bitel, Client Service Associate, recently presented a webinar that provided young folks with a broad guide for how to start their financial lives off on the right foot. As we found out during the presentation, making smart choices early can make life easier in the long run.

Although Millennials have an average debt of 50% in just student loans, they are doing better than most people might think. About 80% have a budget and 72% are saving for retirement. (Source: http://bit.ly/2bBC3vG). If you are a Millennial and are reading and thinking, “I’m not saving for retirement and I don’t have a budget,” that’s okay! Even by taking small steps now, you can make a huge difference rather than waiting. There are a lot of different factors to think about when tackling financials in the “real world.” The first step is to get organized.

Spending vs. Saving

You can spend smarter by following these tips below:

• Stay Organized - which can include setting up account notifications & alerts

  • These notifications can be set up for when you complete a transaction, or if your balance falls below a specific amount (you can set the minimum balance amount yourself)

  • The notifications can also be good for detecting fraud

• Applications & Technology

  • There are a ton of free apps out there that can help with any situation, just google your need and you can find something suitable for you

• Figuring out your Credit Score

  • Credit Karma gives you free access to your credit score and is highly secure

  • What determines your credit score?
    ~ Check out our blog that breaks down your credit score composition!

  • When building credit and using credit cards, you want to make sure to use only around or below 30% of your available credit

  • Watch for annual fees on credit cards; see if opening the card is worth the annual fee you will end up paying

  • Set up auto pay on all your bills with your credit card to benefit with cash back and rewards

  • To avoid ATM fees, go to the store and buy something small (like a pack of gum) and then get cash back on that purchase

• Student Loans

  • Student loans are something you want to start paying down right away – and if you can make more than just the minimum payment, try to do that

  • Make sure your payments are being allocated toward your highest interest loan

  • A good resource to show you every student loan you have, whether federal or private is, Annualcreditreport.com

Saving is so important, and to start sooner can make such a big difference in the long run. These tip s help with how to smartly save money:

• Cash Savings

  • In case of emergency it’s good to have six months of living expenses in a savings account

• Investing Early

  • The graph below demonstrations how investing your savings early can really benefit you in the long run

  • In the example below Chloe started investing from age 25 and almost reaches $2 million dollars by the age of 65, while we see Noah saves from age 25 (the same amount of money) and just let it sit in cash and only obtained about $653,000 by the age of 65.

• Retirement Savings

  • Although retirement might seem far away, it is important to be forward thinking and plan ahead

  • Employer plans are a great opportunity to save money if your company offers one - always remember to contribute at least the match if you can

• If your employer doesn’t offer a retirement plan you can still invest through a Roth IRA or Traditional IRA. Depending on your situation a Roth or an IRA could work for you.

• Taxes – some quick tips

  • The more money you make, the more you pay in taxes!

  • You can write off student loan interest of up to $2,500 per year

  • TurboTax® is a great online resource for doing your taxes with a 100% accurate calculation guarantee

• Insurance

  • Insurance is something that is so important – but something that can be overlooked when we are young

  • Staying on your parents health coverage until age of 26 is great – but don’t just assume it’s the best option because you aren’t paying anything

  • Remember to get renters insurance when living in an apartment – you never know when you might need it!

The last thing to remember is the 28/36 Rule. Your housing expenses should not exceed 28% of your gross monthly income while your total debt payments should not exceed 36%. Remember, the earlier you start saving the better – and any place you start at is good.

Take 30 minutes to view the webinar below and get the full details of Kali and Josh’s discussion. If you have any questions, please reach out to us -- we’re here to help!

Emily Lucido is a Client Service Associate at Center for Financial Planning, Inc.®

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The information contained in this blog does not purport to be a complete description of the securities, markets, or developments referred to in this material. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Any opinions are those of Emily Lucido and not necessarily those of Raymond James. There is no guarantee that these statements, opinions or forecasts provided herein will prove to be correct. You should discuss any tax or legal matters with the appropriate professional. Prior to making an investment decision, please consult with your financial advisor about your individual situation. Links are being provided for information purposes only. Raymond James is not affiliated with and does not endorse, authorize or sponsor any of the listed websites or their respective sponsors. Raymond James is not responsible for the content of any website or the collection or use of information regarding any website's users and/or members.

Financial Scams Target Social Security and Medicare

Contributed by: Sandra Adams, CFP®, CeFT™

According to the Federal Trade Commission, of the 65 and older population, over 33% are victims of financial frauds and scams on an annual basis. It is not surprising, then, that the latest scams to come out are related to Social Security and Medicare – two of the most widely used social support programs by the 65 and older population. Here is what you need to know about the newest scams:

Social Security:

There are two Social Security scams on the current watch list:

• The first one is where you will receive an official-looking e-mail from the Social Security Administration with an invitation to create a Social Security account so that you can receive your benefits. You land on a webpage where the scammers hope you will fill out your confidential information. DO NOT FALL FOR THIS. Never click on links in any of these e-mails. If you want to sign up for a Social Security Account, go directly to https://ssa.gov/myaccount/ (see our blog with detailed instructions about how to set up your Social Security account here).

• The second one is where the scammers actually create an account for someone and redirect their payments to a bank account controlled by them, not by the victim. To prevent this from happening, create your own MySSA account with a strong username and password. This is similar to filing your tax return early before the scammers file a fake return and steal your refund. In addition, a recommended and increased security measure is that when you create your MySSA account, go to the settings and choose the option that any changes to the bank account into which your check is electronically deposited can only be done in person at a Social Security brank office and not done using your online account.

Medicare:

This scam is related to Congress’ passage of the Medicare Access and CHIP Reauthorization ACT (MACRA) in 2015 which is requiring the Centers for Medicare and Medicaid Services to remove Social Security numbers from all Medicare cards. Thus, they will begin reissuing Medicare cards in 2018. The current scam has scammers calling Medicare beneficiaries claiming to be Medicare and saying that they must confirm their current Medicare numbers before sending them a new card. Others call saying there is a charge for the new card and are collecting beneficiaries’ personal information. Please note that there is no charge for your new card and Medicare will never call you for your information. They already have it. 

As an additional note, there are still tax scams continuing to occur. We wrote a blog about tax season scams earlier this year -- please take a moment to review this information to protect yourself and your loved ones.

Always Remember:

• A government agency will not contact you by phone or e-mail to request personal information or to demand money/payment from you.

• You will always be contacted by mail or registered letter by government agencies and if money is owed, you will be given an opportunity to dispute charges.

If you suspect fraud related to these examples or any other type of financial scams or fraud, please contact the U.S. Senate Special Committee on Aging Fraud Hotline at 1-855-303-9470 or contact your financial planner for assistance.

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Sandra Adams, CFP® , CeFT™ is a Partner and Financial Planner at Center for Financial Planning, Inc.® Sandy specializes in Elder Care Financial Planning and is a frequent speaker on related topics. In addition to her frequent contributions to Money Centered, she is regularly quoted in national media publications such as The Wall Street Journal, Research Magazine and Journal of Financial Planning.

Ford Buyout: Knowing your Options

Contributed by: Nick Defenthaler, CFP®

Over the past month, Ford has extended buyout offers to nearly 15,000 of its salaried employees. The offer, in most cases, contains two main components – a severance package or an enhancement of your retirement benefit from Ford.  Below is a high-level breakdown of some of the key points of the offer:

Special Incentive Program (SIP) and Select Retirement Program (SRP)

• Up to 18 months’ severance

• Retirement benefit enhancement

  • Credit for three additional years of age and three years of service for calculating benefits under the General Retirement Plan (GRP), Benefit Equalization Plan (BEP), and Supplemental Executive Retirement Plan (SERP)

  • This can translate into a nearly 15% increase over your normal benefit

• Must retire no later than September 30, 2017

  • This means up to 27 months of income received in 2017 which more than likely means higher tax brackets for those accepting the offer

• Access to reemployment assistance from Ford for six months

• Health insurance – type of coverage will depend on if you were hired before or after 6/1/2001

• Life insurance – eligible to maintain if you were hired on or after 1/1/2004, are age 55 or older with at least ten years of service, or are age 65 with at least five years of service upon termination

• Vacation

  • Regular – accrued through your last day on pay roll, unused accrued vacation is paid out if the last day on pay roll is prior to year-end

  • Purchased – unused days are forfeited

Buyouts from Ford or any of the “Big Three” are nothing new. As always, however, a thoughtful analysis should be completed when ultimately making a decision on whether to stay employed with Ford or to retire early. Many of the offers extended will be virtually the same, but everyone’s situation is different. If you’ve received an offer from Ford and would like our take on how that offer could impact your own long-term financial game plan, don’t hesitate to reach out to us for guidance. 

P.S. I did a webinar on this topic where I dug deep into the nuances of the offer and discussed some planning opportunities you might consider if you decide to retire early. Check out the replay below!

Nick Defenthaler, CFP® is a CERTIFIED FINANCIAL PLANNER™ at Center for Financial Planning, Inc.® Nick works closely with Center clients and is also the Director of The Center’s Financial Planning Department. He is also a frequent contributor to the firm’s blogs and educational webinars.

A Closer Look at Medicare Part D (Prescription Drug Coverage)

Contributed by: James Smiertka

Today, we will take a more in-depth look at an important aspect of Medicare coverage: Part D, which covers prescription medications. Each Medicare Prescription Drug Plan has a unique list of covered drugs which is called a formulary.

Here are some important notes regarding Medicare Part D coverage:

• Drugs may be placed into different cost “tiers” within the specific formulary

• More common, generic, drugs will often be in a lower tier that will cost you less

• You can choose your Part D plan based on your current list of medications to help you obtain the most appropriate plan for you

• Commercially available vaccines that are medically necessary to prevent illness must be covered by a Medicare drug plan (if not already covered under Medicare Part B)

• Formularies are unlikely to cover every existing drug and will often have drugs placed outside of tiers that require special approval to be covered

• You should receive an “Evidence of Coverage” (EOC) each September from your plan which explains what your Medicare drug plan covers, how much you pay, etc.

  • You should review this notice each year to determine if your current plan will continue to meet your needs for the next calendar year or if you may need to consider another plan

  • If you do not receive this important document, contact your plan

    • Your plan’s contact information should be available via “Personalized Search” on the Medicare website.

    • You can also search by your plan name.

Common Coverage Rules:

• Prior Authorization: Your prescriber may be required to show that the drug is medically necessary for the plan to authorize coverage

• Quantity Limits: Different medications may have limits on quantity fillable at one time (ex: 10 days, 14 days, 30 days, 60 days, etc.)

• Step Therapy: You must attempt treatment with one or more similar, lower cost drugs before the plan will cover the prescribed drug

If you or your prescriber believe one these coverage rules should be waived, you can contact your plan for an exception. Your plan’s contact information should be available via “Personalized Search” on the Medicare website.

• You can ask your prescriber or other health care provider if your plan has special coverage rules and if there are alternatives to an uncovered drug

  • It is not uncommon to be required to attempt treatment with other similar drugs (often less expensive, lower tier) on your formulary first

• You can obtain a written explanation from your plan which should include the following:

  • Whether a specific drug is covered

  • Whether you have met any requirements to be covered

  • How much you will be required to pay

  • If an exception to a plan rule may be made if requested

• You can request an exception if:

  • You or your prescriber believes you need a specific drug that is absent from your plan’s formulary

  • You or your prescriber believes a coverage rule should be waived

  • You believe you should pay less for a more expensive, higher tier drug since your prescriber believes you cannot take any of the less expensive, lower tier options for your condition

• If you disagree with your plan’s denial of coverage there are five additional levels in the appeals process

Additional Considerations:

• Your Medicare Part D plan is allowed to make changes to its formulary during the year

  • These changes must be made within existing Medicare guidelines

  • If a change is made to your formulary:

    • You must be provided written notice at least 60 days prior to the effective date of the formulary change

    • OR your plan will be required to provide the current drug for 60 days under the previous plan rules

• Many Medicare Advantage Plans (Part C) cover prescription medication coverage, and you cannot have concurrent coverage of prescriptions through both a Medicare Advantage Plan and a Medicare prescription drug plan. You’ll be unenrolled from your Advantage Plan and returned to Original Medicare if you have an Advantage plan with prescription coverage in addition to a Part D Prescription Drug Plan.

• Even if a desired medication is covered, it is important to note that some plans may require fulfillment via mail order services in lieu of local retail pharmacy pickup

• This may be very inconvenient for some (ex: people that travel often) and may be avoidable when comparing plans

If you have any questions, please contact your financial advisor at The Center. We are more than happy to help you or refer you to one of our expert resources.

James Smiertka is a Client Service Associate at Center for Financial Planning, Inc.®

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Sources: www.medicare.gov
The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete.

American Health Care Act Pulled: Details and What to Expect Next

Contributed by: James Smiertka

Last week, the American Health Care Act (AHCA) was pulled from the House floor when it was clear that there would not be enough votes to pass it. President Trump conceded that they were about 10 to 15 votes short with no support from Democrats and even some moderate Republicans. The opposition came amid worries that the bill would take away medical insurance from millions of Americans. Some of the House’s most conservative members (members of the Freedom Caucus) were instrumental to the bill’s failure as they viewed parts as too similar to Obamacare, among other concerns.

Main Takeaways

• The AHCA would have rescinded a range of taxes created by Obamacare, ended the penalty on people who refuse to obtain health insurance, and ended Obamacare’s income-based subsidies while creating less-generous age-based tax credits.

• The AHCA would have ended Obamacare’s expansion of Medicaid, cut future Medicaid funding, and let states impose work requirements on some Medicaid recipients.

  • States would have been allowed to deny Medicaid coverage for able-bodied adults without children who did not work, study, train or seek work.

• The nonpartisan Congressional Budget Office (CBO) estimated the AHCA would:

  • Lower premiums by 10%.

  • Reduced the federal deficit by $337 billion.

  • Capped Medicaid spending for the first time (saving taxpayers $880 billion).

  • Increased choices for consumers.

  • Lowered taxes by $883 million (targeted toward middle-income Americans and small business owners).

• The CBO also estimated that the AHCA would have immediately stripped health insurance from millions of Americans.

  • The CBO stated that 14 million people would be uninsured by next year, rising to 21 million in 2020 and 24 million in 2026.

• The conservative House Freedom Caucus wanted to more aggressively lower insurance costs and to dismantle federal regulation of insurance products along with eliminating federal standards for minimum benefits that must be provided by health insurance products.

• The American Psychological Association (APA) voiced major concern that the AHCA would have reduced mental health and substance use coverage for millions of Medicaid enrollees and contributed to the loss of coverage for millions more.

What’s Next?

Based on Representative Paul Ryan’s comments immediately after the AHCA bill was pulled, there was no indication that another attempt at healthcare reform was imminent. Within a few days, there was news that House Republican leaders and the White House had restarted negotiations for healthcare legislation, but no timeline has been given. It seems likely that the Trump administration will look to focus on other priorities in the near future as well. Healthcare reform is still a top priority for the Trump administration, but it’s worth noting that a total repeal of the Affordable Care Act (ACA) may be difficult to pass through the Senate, so the failure of this bill also has the potential to be a catalyst for Congress to combine efforts to make changes to the existing ACA. The current administration believes that this will be a tough year for the ACA, and some Democrats are open to change so it’s likely not a question of if it will be revisited, but a question of when and how. If you have any questions about how changes created by the new administration may affect your financial situation and plan, reach out to us!

James Smiertka is a Client Service Associate at Center for Financial Planning, Inc.®

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This information does not purport to be a complete description of the developments referred to in this material; it has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Links are being provided for information purposes only. Raymond James is not affiliated with and does not endorse, authorize or sponsor any of the listed websites or their respective sponsors. Raymond James is not responsible for the content of any website or the collection or use of information regarding any website's users and/or members.

The Responsibility of Handling Other People’s Money

Contributed by: Sandra Adams, CFP®, CeFT™

More and more often as we meet with clients, a recurring topic of conversation is the responsibility of handling the financial affairs of others. Whether that’s for an older adult parent or relative, or whether it’s the handing off of that responsibility to a son, daughter, friend, or other trusted party that concerns our older adult client. As the population continues to age, there is a growing need for older adults to plan for the shift of the responsibility of handling their financial affairs, either now or in the future, to someone else for a variety of reasons—medical, dementia or other incapacity issue, or simply the desire not to have to handle one’s own day-to-day financial affairs.

It is important to be aware that there are a number of roles that you might be assigned to in order to handle the financial life of an older adult; and it is important that these be planned for in advance to avoid potential conflicts in the future:

• Social Security Representative Payee – The Social Security Administration allows for a representative payee to be assigned in the case that there is an incapacitated recipient of Social Security (family or friends of the recipient that must be 18 years or older).

• Long Term Care Insurance Lapse Provision Designee – Someone assigned to receive notices in the case that long term care insurance premiums are not paid on a long term care insurance policy. The designee has the responsibility of making sure the premiums get paid until the insured needs to go on claim.

• Agent for Funeral Decisions – Some states (now including Michigan) permit the appointment of an agent to manage the funeral arrangements for a person, which can be separate from the Executor of the Will.

• Power of Attorney – General Power of Attorney for General/Financial Decisions allows the power to handle bill paying, banking, investments, IRA and other distributions, and any other financial decisions on the person’s behalf, serving as their financial fiduciary (and making decisions based on their best interests).

As the Power of Attorney, use the resources you have available to you:

• The professional team – the client’s Financial Planner, CPA, attorney, physician, etc.

• The client’s Personal Record Keeping Document and Letter of Last Instruction, if they have one.

• The client’s Financial Plan and history with their planner – this will tell a story about how they have lived their financial life and their historical patterns (especially helpful if you are assisting someone who has developed dementia or cognitive impairment). It’s helpful to begin to attend meetings with the client and their financial adviser, if the client is comfortable, as soon as you know there is an issue and if you know you will be involved in assisting the client now or in the future.

Planning ahead for your involvement in handling money for an older adult is always suggested, so that you can get familiar with the client’s situation, the team members involved, and the resources available. Being a financial fiduciary is a big responsibility, one that you don’t want to take lightly or push off until the last minute to tackle. Contact your planner or myself, at Sandy.Adams@CenterFinPlan, if we can be of assistance in handling these or other Long Life Planning matters.

Sandra Adams, CFP® , CeFT™ is a Partner and Financial Planner at Center for Financial Planning, Inc.® Sandy specializes in Elder Care Financial Planning and is a frequent speaker on related topics. In addition to her frequent contributions to Money Centered, she is regularly quoted in national media publications such as The Wall Street Journal, Research Magazine and Journal of Financial Planning.

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Raymond James Financial Services, Inc. and its advisors do not provide advice on tax or legal issues, these matters should be discussed with the appropriate professional.

Year-End Financial Checklist: Tips to End the Year on a High Note (UPDATED)

Contributed by: Jaclyn Jackson

This post was written in December 2015 as a helpful reminder of things you can do to strengthen your finances and get things in order for the upcoming year. Many of the tips are still useful, but I’ve updated to reflect potential policy changes in 2017.   

1. Harvest your losses – Tax-loss harvesting generates losses that can be used to reduce current taxes while maintaining your asset allocation. Take advantage of this method by selling the investments that are trading at a significant loss and replacing it with a similar investment. In light of potential 2017 tax cuts, it is also important to consider whether you may land in a lower tax bracket. If that is the case, postpone realizing capital gains and losses until next year.

2. Taking Advantage of Deductions – If marginal tax rates decrease significantly in 2017, now is a great time to get the most “bang for your buck” from deductions. In other words, consider paying medical expenses, real property taxes, fourth quarter state income taxes, or your January mortgage this month instead.

3. Max out contributions – While you have until you file your tax return, it may be easier to take some of your end-of-year bonus to max out your annual retirement contribution.  Traditional and Roth IRAs allow you to contribute $5,500 each year (with an additional $1,000 for people over age 50). You can contribute up to $18,000 for 401(k)s, 403(b)s, and 457 plans.

4. Take RMDs – Don’t forget to take the required minimum distribution (RMD) from your IRA.  The penalty for not taking your RMD on time is a 50% tax on what should have been distributed. RMDs should be taken annually starting the year following the year you reach 70 ½ years of age.

5. Rebalance your portfolio – It is important to rebalance your portfolio periodically to make sure you are not overweight an asset class that has outperformed over the course of the year. This helps maintain the investment objective best suited for you.

6. Use up FSA money - If you haven’t depleted the money in your flexible spending account (FSA) for healthcare expenses, now is the time to squeeze in those annual check-ups. Some plan sponsors allow employees to roll over up to $500 of unused amounts, but that is not always the case (check with your employer to see if that option is available to you).

7. Donate to a charity – Instead of cash, consider donating highly appreciated securities to avoid paying capital gains tax. Typically, there is no tax to you once the security is transferred and there is no tax to the charity once they sell the security. If you’re not sure where you want to donate, a Donor Advised Fund is a great option. By gifting to a Donor Advised Fund, you could get a tax deduction this year and distribute the funds to a charity later. Again, considering the possibility of decreased marginal tax rates in 2017, you may be better off moving your 2017 contributions into 2016.

8. Review your credit score – With all of the money transactions done during the holiday season, it makes sense to review your credit score at the end of the year. You can go to annualcreditreport.com to request a free credit report from the three nationwide credit reporting agencies: Equifax, Experian, and TransUnion. Requesting one of the reports every four months will help you keep a pulse on your credit status throughout the year.

Bonus:  If there have been changes to your family (new baby, marriage, divorce, or death), consider these bonus tips:

• Adjust your tax withholds

• Review insurance coverage

• Update financial goals, emergency funds, and budget

• Review beneficiaries on estate planning documents, retirement accounts, and insurance policies.

• Start a 529 plan

Jaclyn Jackson is a Portfolio Administrator and Financial Associate at Center for Financial Planning, Inc.®

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This material is being provided for information purposes only and is not a complete description, nor is it a recommendation. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Any opinions are those of Jaclyn Jackson and not necessarily those of Raymond James. Investing involves risk and you may incur a profit or loss regardless of strategy selected. RMD's are generally subject to federal income tax and may be subject to state taxes. Consult your tax advisor to assess your situation. Links are being provided for information purposes only. Raymond James is not affiliated with and does not endorse, authorize or sponsor any of the listed websites or their respective sponsors. Raymond James is not responsible for the content of any website or the collection or use of information regarding any website's users and/or members. Raymond James and its advisors do not offer tax or legal advice. You should discuss any tax or legal matters with the appropriate professional. Rebalancing a non-retirement account could be a taxable event that may increase your tax liability.

Medicare Changes in 2017

Contributed by: James Smiertka

We all know Medicare can be complicated, and the cost of benefits change each year. In recent years, you may have heard that you should expect rising premiums and higher out-of-pocket deductibles. These Medicare costs are tied to the COLA (cost-of-living adjustment) that increases the benefit of Social Security recipients each year. The Social Security Administration decides the year’s COLA based on the inflation rate from the prior year.

Most recipients of Medicare pay premiums for Part B coverage whether they pay for Part A coverage. Generally, Medicare recipients with 40 quarters of Medicare-covered employment receive Part A coverage while not paying a premium. Part A covers hospital stays, skilled nursing facilities, and home health and hospice care. Part B covers other things like doctor visits, outpatient procedures, and medical equipment. Premiums are also required for Part D prescription drug coverage.

So how exactly does this year’s 0.3% Social Security COLA tie in with Medicare costs?

In 2016, there was no COLA for Social Security, and with the increase in Medicare Part B premiums about 70% of Social Security recipients did not have to pay the higher premiums do to the “hold harmless” provision which prevents them from having their Social Security incomes drained by the rising Medicare premiums. With this year’s 0.3% Social Security COLA recipients can expect to pay just a few dollars more per month. The average increase will be about 4%.

Medicare announced increases of about 10% for 2017 part B premiums & deductibles. There are modest increases for Part A premiums, and Part D plans have already been set and are not affected by the Part A or Part B changes. This year’s 0.3% Social Security COLA will be too small to fully fund higher Part B premiums so many recipients will once again be saved from increases by the “hold harmless” provision.

Here are Medicare numbers for 2017 from Raymond James.

• Premiums are higher for those with higher taxable incomes ($85,000 for individuals and $170,000 for couples filing jointly).

• The average Medicare Part B premium in 2017 will be about $109 (compared to $104.90 for the past 4 years).

• Standard premium is increasing from $121.90 in 2016 to $134 in 2017.

• The Medicare Part B deductible is increasing from $106 in 2016 to $183 in 2017.

• The monthly Medicare Part A premium for those needing to buy coverage is increasing from $411 in 2016 to $413 in 2017.

• The Medicare Part A deductible for inpatient hospitalization is increasing from $1,288 in 2016 to $1,316 in 2017, with additional increases to daily co-insurance amounts for stays that exceed 61 days.

• The co-insurance cost for beneficiaries in skilled nursing facilities will increase from $161 in 2016 to $164.50 in 2017 for days 21 through 100.

For the 5 to 6 percent of enrollees that earn enough to trigger the high-income surcharges, here are the numbers:

If you’re not enrolled in Medicare, remember to enroll in the 7-month period around your 65th birthday, and contact your financial planner with any questions.

Additional Links

• For more in-depth information on the Medicare changes and how to choose coverage, you can view the recording of our recent blog from Sandy Adams, CFP® here.

• A recent blog from Kali Hassinger, CFP®, on this year’s Social Security COLA.

• More information on the “hold harmless” Medicare provision from this 2016 blog from Nick Defenthaler, CFP®.

• For the official U.S. government Medicare handbook visit the following link: https://www.medicare.gov/pubs/pdf/10050-Medicare-and-You.pdf

James Smiertka is a Client Service Associate at Center for Financial Planning, Inc.®

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Any opinions are those of James Smiertka and not necessarily those of RJFS or Raymond James. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete."
Sources: http://www.hhs.gov/about/budget/fy2017/budget-in-brief/cms/medicare/index.html
https://www.thestreet.com/story/13747734/1/how-to-prepare-your-finances-for-medicare-changes-coming-in-2017.html
https://www.medicare.gov/pubs/pdf/10050-Medicare-and-You.pdf
http://www.pbs.org/newshour/making-sense/2017-medicare-premiums-and-deductibles/
https://www.medicare.gov/pubs/pdf/10050-Medicare-and-You.pdf
http://www.raymondjames.com/pointofview/medicare-updates-for-2017