Don’t Ignore Medicare Open Enrollment
Every year those on Medicare have the opportunity to update their coverage during the open enrollment period that ranges from October 15 to December 7. This means you can change your provider for Medicare Part D, the prescription drug coverage, and for a Medicare Advantage Plan if you have or want to add this type of coverage. Why should you consider doing this?
Part D coverage- Medicare prescription drug coverage is provided by private insurers around the country. Many things can change from year-to-year. Certain drugs might not be covered or covered at a lesser reimbursement than in previous years. Your favorite drug store chain might cease to be on the plan’s list of approved providers. Or perhaps one of your prescriptions has gone from a name brand to generic, lowering the cost. Additionally, your health situation has changed and with that the prescription drugs that you require.
All of these factors plus the fact that premiums, deductibles and co-pays can also change year-to-year, are good reasons to review your Part D coverage and shop around for new coverage if needed.
Medicare Advantage plans- Medicare advantage plans generally cover Medicare Part A (hospital coverage) and Part B (medical insurance). In addition, many plans also include prescription drug coverage and may offer coverage for items typically not covered by original Medicare, such as eyeglasses and dental care. There are different types of Medicare Advantage plans that offer network options such as an HMO or a PPO. They each have different premiums, deductibles and co-pays. Additionally, the providers that are considered in-network will differ and can change from year-to-year.
Just as with Medicare Part D, all of these features, as well as your own personal situation, can evolve over time. Are your needs the same as they were when you signed up for Medicare? Does this Medicare Advantage plan still make sense? Does any Medicare Advantage plan still make sense?
During open enrollment it is relatively easy to go from traditional Medicare coverage to a Medicare Advantage plan. Should you decide to move back to traditional Medicare after more than 12 months in a Medicare Advantage plan, your ability to obtain Medigap coverage may be restricted. Medigap policies cover items not covered by traditional Medicare.
The annual open enrollment period for Medicare is an important time to review coverage and your current needs and to make adjustments. Please contact us with any questions about your coverage.
NOW Is the Time to Plan
Every year the Transamerica Center for Retirement Studies conducts studies in the US and 14 other countries regarding generational findings on retirement. The August 2016 report outlines the differences between three generations (Baby Boomers, Generation Xers, and Millennials) here in the US, and how each is dealing with, preparing for, or trying to live with their retirement savings.
Overall, the 2016 study found that people have ‘recovered’ in their feelings of being able to retire on time with enough assets to the level they indicated back during the 2007 study (Pre- Recession). What is interesting is that confidence level has plateaued ever since. Part of the confidence level plateau is related to personal savings, company retirement opportunities (people can elect to not participate), and the realization that Social Security will either not play a large part in retirement savings, or be non-existent.
Those that feel ‘more confident’ in their retirement savings (all three generations), are those that are actively planning and participating:
Baby Boomers- Born between 1946 and 1964
Are Active in annual or semi-annual financial planning meetings
Have a plan to ‘spend down’ assets
Readjust their monthly budget as needed
Keep financial and insurance information up to date with a financial advisor
Generation Xers- Born between 1965 and 1984
Participate in company retirement plan at 1 ½ times the company match
Contribute to tax deferred retirement savings
Are active in annual financial planning meetings
Have a monthly budget and work to minimize or eliminate personal debt
Invest in investments that are reserved for retirement savings
Establish savings for emergency purposes and have insurance coverages for protection
Millennials-Born between 1985 and 1997
Participate in company retirement plan to get company match
Work to eliminate debt and manage spending through budgeting
Establish savings for emergency purposes and have insurance for protection
Are active in yearly financial planning meetings
Contribute to a tax deferred retirement savings account at an amount they can afford
Regardless of your generation, having a retirement strategy will help you to prepare for, and enjoy your retirement. Contact our office to schedule a meeting to help review or develop your plan.
The Smallest 2017 Social Security Cost of Living (COLA) Increase…Ever
2017 will mark the lowest increase in US history with most retirees seeing a monthly increase of 0.3 percent (there was no increase in 2016). This will increase the average American’s monthly payment between $2.61 and $6.53 per month. What many Americans don’t understand is that Social Security and Medicare are connected. When monthly Social Security payments rise, Medicare’s monthly rate increases. There are perimeters in place to protect those who started receiving payments years ago; their monthly Medicare cost can never be more than their Medicare payment. For retirees starting to receive payments, this cap is to remain in place as well. The rate rise is reflected in Medicare Part B.
When COLA was put in place back in 1975, it was tied directly to the price of gas and other consumer items. This formula and policy has never been changed. When gas prices are low, there is a small (or no) increase; consequently when gas prices are high Social Security COLA is adjusted, taking into account inflation. In theory tying COLA to inflation is a good idea, but when it’s tied directly to the price of gas or electronics it becomes a bit flawed. Senior Citizens tend to drive less than someone who is still working and purchase less non-essential goods, but they typically pay more in medical expenses. This formula is not tied to consumer staples, such as food and personal care items.
Not every American receives the same Social Security monthly benefit; it is directly tied to your earnings record using a calculation formula. As a result, someone the same age with the same date of birth could be receiving different benefit payments, AND paying different Medicare rates. Because of this, people with a higher lifetime earnings (and Social Security Savings) record will be paying more for Medicare Part B than their counterparts.
Financial Planning Lessons from a Life Cut Short
Towards the end of the Major League Baseball season we learned of the tragic death of Miami Marlins pitcher José Fernández in a boating accident. He was just 24 and had a bright future in baseball ahead of him. He also left a young child behind. The untimely death of Fernández brings to light the need for young, successful professionals to engage in financial planning.Here are some things successful young professionals need to consider in order to protect their assets and ultimately their estate if something tragic should occur:
Life Insurance- If you are young and healthy, life insurance is very cheap. This is especially the case for term insurance. If you have dependents such as a spouse or children buying life insurance is a must. This is an inexpensive way to build an estate and to ensure that your loved one’s have financial choices in the event of your untimely death.
Disability insurance- Disability insurance is sometimes called “lifestyle” insurance. Disability policies kick in should you become disabled and unable to work. Typically, they will pay a percentage of your income, 60% is a common number.
For those who are employed, disability insurance is often a part of the employee benefits package offered by your employer. There may be both long-term and short-term coverage available. For those earning a lot or who earn a high percentage of their compensation from commissions or bonuses, check to be sure how much of this type of income is included. It might make sense to purchase private disability insurance if the coverage on the employer-offered plan is inadequate, or if you are self-employed. If you have a debilitating event and don’t have coverage, it can deplete your retirement assets early due to not being able to work.
Will and estate planning- It is critical for all of us to have a will and to do some basic estate planning. For young, successful professionals, athletes etc. this is critical. The more money you accumulate, the greater the chance that it won’t go to those to whom you intend unless you do some specific planning up front. A will is a must. If you have minor children this should include naming of a guardian in the event that both you and your spouse die. Beneficiary designations for retirement plans and insurance policies are also needed. These types of financial assets pass to heirs based on the beneficiary designation and not your will.
Financial planning is important even for those who are young and seemingly invincible. Feel free to contact our office for help with your financial planning needs.