Retirement Health Insurance
Milos asked:
Health care is a priority at any given age. After retiring however, health care probably becomes the most important focus as one tries to stay in good health; this means more visits to the doctor for routine checkups and preventative tests. There’s also that chance of ones health declining as they grow older and the increasing need for expensive prescription drugs and medical treatments. This is the main importance of retirement health insurance.
Retirement health insurance allows for those aged sixty-five or older to be lessened with worries when it comes to paying health care when they retire. Most retirees presumably are eligible for certain health benefits from a federal health insurance program, Medicare, when they reach the age of sixty-five. But if one retires before this age, then they’ll need some other way to pay their health care until Medicare benefits take effect. Some generous employers may offer extensive retirement health insurance coverage to their retiring employees, but this is most of the time and exception rather than a rule. If employers do not extend health benefits, then there is a need to buy a private retirement health insurance policy, which will be expensive, or extend the employer sponsored coverage through COBRA.
But take note, Medicare will not pay for long-term care if one ever needs it. They’ll need to pay that out of their own pockets or depend on benefits from long-term care insurance (LTCI), or for those whose assets and/or income are low enough to allow them to be eligible for Medicaid.
Nearly all Americans automatically qualify or become entitled to Medicare when they reach the age of sixty-five. Factually, for those who have been receiving Social Security benefits does not need to apply for Medicare because they will be routinely enrolled. However, they will have to decide whether they need only Part A coverage, which is premium-free for the majority of retirees, or if they want to also buy Part B coverage. Part A, frequently referred to as the hospital insurance portion of Medicare, helps pay for hospice care, home health care, and inpatient hospital care. Part B assists in covering other medical care such as laboratory tests, physical therapy, and physician care. Persons who want to pay a fewer out-of-pocket health care costs may opt to enroll in a managed care plan or private fee-for-service plan under Part C of Medicare or Medicare Advantage.
The likelihood of prolonged stay in a nursing home ponders heavily on minds of many senior Americans and their families, so does the thought of health conditions that may need expensive treatments; however, with the aid of retirement health insurance, this burden is lightened.
Term Life Insurance Quotes
Health care is a priority at any given age. After retiring however, health care probably becomes the most important focus as one tries to stay in good health; this means more visits to the doctor for routine checkups and preventative tests. There’s also that chance of ones health declining as they grow older and the increasing need for expensive prescription drugs and medical treatments. This is the main importance of retirement health insurance.
Retirement health insurance allows for those aged sixty-five or older to be lessened with worries when it comes to paying health care when they retire. Most retirees presumably are eligible for certain health benefits from a federal health insurance program, Medicare, when they reach the age of sixty-five. But if one retires before this age, then they’ll need some other way to pay their health care until Medicare benefits take effect. Some generous employers may offer extensive retirement health insurance coverage to their retiring employees, but this is most of the time and exception rather than a rule. If employers do not extend health benefits, then there is a need to buy a private retirement health insurance policy, which will be expensive, or extend the employer sponsored coverage through COBRA.
But take note, Medicare will not pay for long-term care if one ever needs it. They’ll need to pay that out of their own pockets or depend on benefits from long-term care insurance (LTCI), or for those whose assets and/or income are low enough to allow them to be eligible for Medicaid.
Nearly all Americans automatically qualify or become entitled to Medicare when they reach the age of sixty-five. Factually, for those who have been receiving Social Security benefits does not need to apply for Medicare because they will be routinely enrolled. However, they will have to decide whether they need only Part A coverage, which is premium-free for the majority of retirees, or if they want to also buy Part B coverage. Part A, frequently referred to as the hospital insurance portion of Medicare, helps pay for hospice care, home health care, and inpatient hospital care. Part B assists in covering other medical care such as laboratory tests, physical therapy, and physician care. Persons who want to pay a fewer out-of-pocket health care costs may opt to enroll in a managed care plan or private fee-for-service plan under Part C of Medicare or Medicare Advantage.
The likelihood of prolonged stay in a nursing home ponders heavily on minds of many senior Americans and their families, so does the thought of health conditions that may need expensive treatments; however, with the aid of retirement health insurance, this burden is lightened.
Term Life Insurance Quotes
Most Arizonans happy with their insurance
Health Insurance asked:
Most Arizonans think the U.S. health-care system needs revamping even though the majority are satisfied with the health insurance they have, according to a Cronkite/Eight Poll.
Fifty percent of those surveyed said the health-care system needs major changes and 31 percent said minor changes would do, while 12 percent said the system is fine as is.
Bruce Merrill, a retired Arizona State University professor who directs the poll, said the response mirrors what people are saying about health-care reform across the country.
“Most people know the system is broken and needs changes,” he said.
State Rep. Kyrsten Sinema, D-Phoenix, said the results show that people want Congress to act.
“The biggest problem is we don’t have enough people with health care,” said Sinema, who serves on a group of state lawmakers advising the Obama administration on the issue.
Seventy-eight percent of respondents said they are very satisfied or generally satisfied with their health insurance, while 15 percent were somewhat dissatisfied or very dissatisfied. Seven percent had no opinion.
The president has made overhauling health care his administration’s chief focus. However, the Senate Finance Committee rejected a key part of that plan: having the government offer health insurance.
Asked about that proposal, often referred to as a public option, 57 percent of poll respondents said they don’t have enough information to form an opinion. Twenty-five percent said they favor a public option, and 18 percent said they oppose it.
Jon Ford, associate director of communication for St. Luke’s Health Initiatives, said many people feel disconnected from the health-care system and don’t understand it. Without a strong understanding of the issues, it’s difficult to have an informed discussion, he said.
“One of the major issues we deal with is how to engage people constructively without it turning into ‘pulling the plug on grandma,’” he said.
Fifty-three percent of respondents said they disapprove of Obama’s handling of health-care reform, while 38 percent said they approve. Nine percent didn’t have an opinion.
The poll, conducted by ASU’s Walter Cronkite School of Journalism and Mass Communication and Eight/KAET, involved 724 registered Arizona voters. It has a sampling error of plus or minus 3.6 percentage points.
The Cronkite School operates the Cronkite News Service.The poll also found that:
- Fewer Arizonans now support Gov. Jan Brewer’s push for a temporary sales tax increase to help bridge the state’s budget deficit. Fifty-one percent favored the plan and 41 percent opposed it, while 8 percent didn’t have an opinion. In April, the poll found 60 percent in favor and 35 percent opposed.
- Thirty-seven percent said they approve and 37 percent said they disapprove of the job Brewer is doing as governor. Twenty-six percent didn’t have an opinion.
Some results from the Cronkite/Eight Poll
Some questions and results from the Cronkite/Eight Poll:
Q. Which of these positions about our current health-care system comes closest to your own?
- I am basically happy with our current system and don’t think it needs to be changed: 12 percent
- I think we could make some minor changes to the system: 31 percent
- I think the health-care system needs major changes: 50 percent
- I don’t have an opinion at this time about what needs to be done: 7 percent
Q. (For those with insurance): How satisfied are you with the health insurance you have?
- Very satisfied: 45 percent
- Generally satisfied: 33 percent
- Somewhat dissatisfied: 10 percent
- Very dissatisfied: 5 percent
- Don’t know/no opinion: 7 percent
Q. Do you favor or oppose inwcluding a public option in a health-care reform bill?
- Favor: 25 percent
- Oppose: 18 percent
- Don’t have enough information to have an opinion: 57 percent
Auto Insurance Quotes
Most Arizonans think the U.S. health-care system needs revamping even though the majority are satisfied with the health insurance they have, according to a Cronkite/Eight Poll.
Fifty percent of those surveyed said the health-care system needs major changes and 31 percent said minor changes would do, while 12 percent said the system is fine as is.
Bruce Merrill, a retired Arizona State University professor who directs the poll, said the response mirrors what people are saying about health-care reform across the country.
“Most people know the system is broken and needs changes,” he said.
State Rep. Kyrsten Sinema, D-Phoenix, said the results show that people want Congress to act.
“The biggest problem is we don’t have enough people with health care,” said Sinema, who serves on a group of state lawmakers advising the Obama administration on the issue.
Seventy-eight percent of respondents said they are very satisfied or generally satisfied with their health insurance, while 15 percent were somewhat dissatisfied or very dissatisfied. Seven percent had no opinion.
The president has made overhauling health care his administration’s chief focus. However, the Senate Finance Committee rejected a key part of that plan: having the government offer health insurance.
Asked about that proposal, often referred to as a public option, 57 percent of poll respondents said they don’t have enough information to form an opinion. Twenty-five percent said they favor a public option, and 18 percent said they oppose it.
Jon Ford, associate director of communication for St. Luke’s Health Initiatives, said many people feel disconnected from the health-care system and don’t understand it. Without a strong understanding of the issues, it’s difficult to have an informed discussion, he said.
“One of the major issues we deal with is how to engage people constructively without it turning into ‘pulling the plug on grandma,’” he said.
Fifty-three percent of respondents said they disapprove of Obama’s handling of health-care reform, while 38 percent said they approve. Nine percent didn’t have an opinion.
The poll, conducted by ASU’s Walter Cronkite School of Journalism and Mass Communication and Eight/KAET, involved 724 registered Arizona voters. It has a sampling error of plus or minus 3.6 percentage points.
The Cronkite School operates the Cronkite News Service.The poll also found that:
- Fewer Arizonans now support Gov. Jan Brewer’s push for a temporary sales tax increase to help bridge the state’s budget deficit. Fifty-one percent favored the plan and 41 percent opposed it, while 8 percent didn’t have an opinion. In April, the poll found 60 percent in favor and 35 percent opposed.
- Thirty-seven percent said they approve and 37 percent said they disapprove of the job Brewer is doing as governor. Twenty-six percent didn’t have an opinion.
Some results from the Cronkite/Eight Poll
Some questions and results from the Cronkite/Eight Poll:
Q. Which of these positions about our current health-care system comes closest to your own?
- I am basically happy with our current system and don’t think it needs to be changed: 12 percent
- I think we could make some minor changes to the system: 31 percent
- I think the health-care system needs major changes: 50 percent
- I don’t have an opinion at this time about what needs to be done: 7 percent
Q. (For those with insurance): How satisfied are you with the health insurance you have?
- Very satisfied: 45 percent
- Generally satisfied: 33 percent
- Somewhat dissatisfied: 10 percent
- Very dissatisfied: 5 percent
- Don’t know/no opinion: 7 percent
Q. Do you favor or oppose inwcluding a public option in a health-care reform bill?
- Favor: 25 percent
- Oppose: 18 percent
- Don’t have enough information to have an opinion: 57 percent
Auto Insurance Quotes
Health Insurance for Over 50
Jack Adams asked:
For anyone between 50 and 65 years who will be looking for some health insurance or is already looking, you could be in need of a lot of help. This age is crucial in that many of the body’s systems are just about ready to start failing plunging you into serious health challenges. Using statistics (a tool used extensively to create the product structures) insurance companies know that the expenditure on health for the 20 to 45 year-old group will be a lot less than for the 50 to 65 year-old group. Therefore, the premiums for older persons are higher.
Do not despair, as we are smart we will be sure to find a way. Let us look at some options available.
For those who are still working and may be looking at starting a business or going to retire, there are a few areas worthy of your investigating. Does the company you work for allow you to buy insurance through their plan? For early retirement, if the company allows, they may be able to subsidize a portion of the premiums. If there is no subsidy, you may still be entitled to group rates which are less than for individuals. If you spouse will remain in employment seriously look at joining their plan if this is possible.
Another option is COBRA or Consolidate Omnibus Budget Reconciliation ACT, for those still in employment that gives health insurance cover. Former employees and their families can continue the cover for up to a year and a half. COBRA is also guaranteed. You can not be turned down even for chronic illnesses. The downside is the cost. During your employment the employer normally meets 70% of the premium. Own your own you will cover the full premium and administration costs on top. A 1997 survey showed that on average a retired employee would pay $1,008 for family cover and $373 for the individual health cover.
Even if you are not in employment, there are some options open for you. For those with pre-existing conditions like high blood pressure or diabetes who fail to get insurance, coverage is still available through the states’ high-risk program especially set up to help this group of people. Like COBRA, the premiums are quite high.
You should also check professional organizations that you could join or already a member of or are affiliated to see if the membership offers health insurance cover. As this is a group cover, your premiums will be low.
Lastly, the health insurance scheme for individuals. There are now very good offerings in this area as providers believe the 50-65 age group has potential for growth. These individuals also have a fair income and are in good health. Companies believe that even when the oldies become eligible for Medicare, they will still opt for supplemental cover. Some of these options have monthly premiums as low as $200 for individuals in fair health, but carry high deductibles. Some advisors recommend combining opening health savings accounts (HSA) when taking out a cover with high deductibles. HSA contributions are not taxed, nor are any withdrawals made towards qualified medical expenses and the balance at year end can be rolled over to the next year.
Can You Help Me Get Cheaper Health Insurance?
Ian Wright asked:
Lately the price of health care has risen significantly. Because of this, the demand for less expensive health insurance plans increase everyday. Less expensive health plans are what people are looking for. However, these plans provide restricted services.
Cheaper health coverage plans involve the cost of doctors’ visit, medicines, hospital stay and other medical costs. Doctor visits and prescription costs are not covered by some health plans available. Therefore, individuals need to ensure that, they select the right policy that provides all the basic coverage.
Family health plans are a low cost health insurance program. This will cost you less than an individual’s health policy.
To receive inexpensive health insurance plans, people may have to sacrifice a few things they have always loved to do. The first step is to compare the quotes given by different insurance companies. The lowest price is often only a few clicks away via the internet.
Compared to the monthly premium option, yearly premium payments offers the best value in health coverage. Many insurers claim that monthly payment is more comfortable. However, a person has to pay more for this scheme. Under this plan, some transaction tax is needed when processing checks.
Twelve separate transactions are necessary for a schedule that allows you to pay each month. Only one check is required in an yearly payment scheme. There is only one payment per year. Certain administrative and service rates with monthly premiums increase the cost of this payment.
You never know if you are going to get a serious health condition in the years to come. Buying inexpensive health insurance is a good way to avoid potential problems in the future. Age and health of a person, are the two important factors that determine the rate of medical plans.
The selection of group health insurance is a long-term plan. It is a great choice if it is associated with an organization or club. A member of an organization gets affordable health insurance programs. A viable choice is an association or other group. Different credit card firms offer association group health insurance policies, which are of low cost.
Some consumers might prefer looking into private health insurance, if money is a particular concern. For instance, a 30 year old man living in Texas who is in good health might spend just $37 monthly for a private plan. National employees with individual coverage pay $250 more each year.
But the thing is that you require a lot of time to buy cheaper private insurance.
Check for state run programs that offer cheaper health insurance. Women and children have better odds of obtaining coverage. For example, a pregnant woman in California, who makes up to $63,000 per year, can qualify for health care through Medicare.
More people are retiring before the age of 65. It is necessary to be 65 years of age to qualify for government health insurance US Medicare. Retired people,should check with their last employer to see if it includes health insurance. Higher premiums may apply to retired people. It is less expensive than buying health insurance yourself.
Online Insurance Quotes
Lately the price of health care has risen significantly. Because of this, the demand for less expensive health insurance plans increase everyday. Less expensive health plans are what people are looking for. However, these plans provide restricted services.
Cheaper health coverage plans involve the cost of doctors’ visit, medicines, hospital stay and other medical costs. Doctor visits and prescription costs are not covered by some health plans available. Therefore, individuals need to ensure that, they select the right policy that provides all the basic coverage.
Family health plans are a low cost health insurance program. This will cost you less than an individual’s health policy.
To receive inexpensive health insurance plans, people may have to sacrifice a few things they have always loved to do. The first step is to compare the quotes given by different insurance companies. The lowest price is often only a few clicks away via the internet.
Compared to the monthly premium option, yearly premium payments offers the best value in health coverage. Many insurers claim that monthly payment is more comfortable. However, a person has to pay more for this scheme. Under this plan, some transaction tax is needed when processing checks.
Twelve separate transactions are necessary for a schedule that allows you to pay each month. Only one check is required in an yearly payment scheme. There is only one payment per year. Certain administrative and service rates with monthly premiums increase the cost of this payment.
You never know if you are going to get a serious health condition in the years to come. Buying inexpensive health insurance is a good way to avoid potential problems in the future. Age and health of a person, are the two important factors that determine the rate of medical plans.
The selection of group health insurance is a long-term plan. It is a great choice if it is associated with an organization or club. A member of an organization gets affordable health insurance programs. A viable choice is an association or other group. Different credit card firms offer association group health insurance policies, which are of low cost.
Some consumers might prefer looking into private health insurance, if money is a particular concern. For instance, a 30 year old man living in Texas who is in good health might spend just $37 monthly for a private plan. National employees with individual coverage pay $250 more each year.
But the thing is that you require a lot of time to buy cheaper private insurance.
Check for state run programs that offer cheaper health insurance. Women and children have better odds of obtaining coverage. For example, a pregnant woman in California, who makes up to $63,000 per year, can qualify for health care through Medicare.
More people are retiring before the age of 65. It is necessary to be 65 years of age to qualify for government health insurance US Medicare. Retired people,should check with their last employer to see if it includes health insurance. Higher premiums may apply to retired people. It is less expensive than buying health insurance yourself.
Online Insurance Quotes
How you Can Save Up to 47% on your Health Insurance, Right Now
Dennis Alexander asked:
Do Not Read This Unless You are Making a lot of Money!:
If you would like to know how you can save up to 47% on your current Health Insurance Coverage read on… this is going to be one of the most informative messages you will ever read. After reading this message you will never going to have words; expensive and health insurance in the same sentence.
As you already know health insurance costs are at highest they have ever been and there is no sign of them slowing down. More and more Americans are forced to cancel their coverage simply just because they cannot afford it.
Who are the uninsured?
• Approximately 46 million Americans, or 15.7 percent of the population, were without health insurance in 2004 (the latest government data available).
• The number of uninsured rose 800,000 between 2003 and 2004 and has increased by 6 million since 2000.
• The increase in the number of uninsured in 2004 was focused among working age adults. The percentage of working adults (18 to 64) who had no health coverage climbed from 18.6 percent in 2003 to 19.0 percent in 2004. An increase of over 750,000 in 2004.
• Nearly 82 million people - about one-third of the population below the age of 65 spent a portion of either 2002 or 2003 without health coverage.
• The number of uninsured children in 2004 was 8.3 million - or 11.2 percent of all children in the U.S. (1).
You might say that I have great coverage that I am happy with… that’s totally fine.
For past sever years average rate increase for health insurance was 16.2% and what if it keeps on going? If you are right now paying $500 per month for your health insurance in three years from now you would expect to pay over $780 for the same plan. Wait… we all know that insurance companies consistently decrease their benefits and increase co-pays and deductible. Therefore you will pay more for less coverage. By the way if you keep same plan for over five years you will pay over $1000 a month just for your medical coverage. What if you use your Health Insurance?… Chances are if it is not for a regular doctor visits or a check ups it would be considered pre-existing condition. That means your chances of changing to a more affordable coverage in the future will be nearly impossible. That is one of the main reasons people cancel their health insurance because they were diagnosed with something or taking a prescription medication and the insurance company kept raising their rate until they could not qualify for any other coverage and could not afford the one they had.
Now you are saying I do not need coverage my spouse works for a company and I have group coverage… Great.
What would happen if your spouse left that job or the company stopped providing benefits? Probably the most obvious things that you can see how much that group coverage is really costing you. Next time check how much is deducted out of the paycheck for health coverage, especially for dependents. Group plans do cost more money because by law they are what are called “guaranteed issue”. That means you can have serious medical conditions and still get coverage. Insurance companies have to follow the law and they know they have to accept everyone who works for a large company, therefore they do charge more money for coverage. The biggest problem is not the cost of group health insurance it is what happens if some one, while on the group plan, is diagnosed with a condition or starts to take prescriptions medications. We get back to same issues as mentioned before, unable to qualify for health insurance in the future. There are people that want to leave their job but they cannot because they are going through treatment and cannot to pay for it on their own.
There is another solution… Some might save, so what is the point of even having health insurance. Once you diagnosed with something and insurance company is going to keep raising rates to the point where I am going to have to cancel it anyway. Especially if something does happen and I have to use my coverage I might not be working and I might not have income. Is my insurance company is still going to keep raising my rates? YES.
Before you think about cancelling your coverage consider this. Here are some statistics
• A recent study by Harvard University researchers found that the average out-of-pocket medical debt for those who filed for bankruptcy was $12,000. In addition, the study found that 50 percent of all bankruptcy filings were partly the result of medical expenses. Every 30 seconds in the United States someone files for bankruptcy in the aftermath of a serious health problem.
• Illness and medical bills caused half of the 1,458,000 personal bankruptcies in 2001, according to a study published by the journal Health Affairs.
• Average day in the hospital is $7500 per day.
How can you save up to 47% on your health insurance? Simple… You probably already heard of Health Saving Accounts. They are becoming more and more popular everyday. With the way health insurance prices are moving today Health Saving Accounts are the only way to keep your coverage, save hundreds per month on your health insurance and still have a peace of mind.
To this day I was not able to hear a good definition that everyone can understand. I will do everything I can to make it simple to understand. The easiest way to understand Health Saving Accounts is to think of them as Roth IRA or your Company’s 401k plan. Instead of giving your money away to insurance company you get to keep it more of it for yourself. The way HSA plans work is there health insurance combined with savings account which works in a similar way to your retirement account. There tremendous benefits to have HSA qualified health plan. First all the money that you put in to your HSA account is 100% tax deductible and it is your money that rolls over year after year. At the age of 65 and up if you have not used up all of your HSA money you can roll it over in to your retirement account. Second your health insurance costs are going to be cut almost in half. For example if you had Health Insurance plan with $2500 deductible now and it is costing you $300 per month the same plans with HSA qualified plan, now will cost you only about $160 per month. The reason you save so much money with HSA qualified health plan is because HSA qualified plans do not cover anything until the deductible is met. There are exceptions depending on the Health Insurance Company. Some insurance companies will pay for your once a year physical before you meet your deductible.
Let take an example of how HSA qualified plan could benefit you. Let take some actual numbers from actual health insurance company. In this example I am going to use HSA plans from company called Assurant Health. Assurant Health is leader in Health Saving Accounts and they one of the first companies to implement them. The main reason is that Assurant Health is part of the world’s largest financial company that sets up retirement accounts. In this example I am going to use a family of four, husband 46, wife 42, kids are 12 and 16. On a regular family plan with $2500 deductible, maximum out of pocket of $5500, co-insurance of 80% and doctor visits covered with $35 co-pay, they are going to pay $676.40. Something to keep in mind that all of the regular PPO plans that are available on the market today have family deductible which is double of individual deductible. That means that if you have a plan with $2500 deductible and $5500 maximum out of pocket that means that your family deductible is $5000 and your family maximum out of pocket is $11,000. When we are comparing HSA qualified health plans there is only one deductible, once you meet it you are covered at 100% on the most plans. There are some companies and plans that you still might be responsible for the percent age of the bill until you reach your maximum out of pocket. Most HSA plans do not have maximum out of pocket that meant once you met your deductible you are covered at 100%, it’s that simple. The same plan with $5700 deductible for the entire family with HSA qualified health plans will only be $491.64 per month. For the total monthly savings of 184.76 per month. Also your maximum out of pocket will decrease from $11,000 on a regular plan to $5700 with HSA health plan. That’s yearly savings of $2,217.12 and additional savings of $5300 on the maximum out of pocket. (that’s if you have had to use the plan for emergencies) The main reason for starting HSA health insurance is for Saving Account and being able to put money in to account, at your discretion, tax free. You can put money in to HSA qualified account up to your deductible and you do not have to put any money in to that account if you do not want to. Health Saving Accounts are as flexible as you would want them to be. TO get more information on HSA accounts and get quotes for HSA qualified health coverage see my bio.
Car Insurance Quotes
Do Not Read This Unless You are Making a lot of Money!:
If you would like to know how you can save up to 47% on your current Health Insurance Coverage read on… this is going to be one of the most informative messages you will ever read. After reading this message you will never going to have words; expensive and health insurance in the same sentence.
As you already know health insurance costs are at highest they have ever been and there is no sign of them slowing down. More and more Americans are forced to cancel their coverage simply just because they cannot afford it.
Who are the uninsured?
• Approximately 46 million Americans, or 15.7 percent of the population, were without health insurance in 2004 (the latest government data available).
• The number of uninsured rose 800,000 between 2003 and 2004 and has increased by 6 million since 2000.
• The increase in the number of uninsured in 2004 was focused among working age adults. The percentage of working adults (18 to 64) who had no health coverage climbed from 18.6 percent in 2003 to 19.0 percent in 2004. An increase of over 750,000 in 2004.
• Nearly 82 million people - about one-third of the population below the age of 65 spent a portion of either 2002 or 2003 without health coverage.
• The number of uninsured children in 2004 was 8.3 million - or 11.2 percent of all children in the U.S. (1).
You might say that I have great coverage that I am happy with… that’s totally fine.
For past sever years average rate increase for health insurance was 16.2% and what if it keeps on going? If you are right now paying $500 per month for your health insurance in three years from now you would expect to pay over $780 for the same plan. Wait… we all know that insurance companies consistently decrease their benefits and increase co-pays and deductible. Therefore you will pay more for less coverage. By the way if you keep same plan for over five years you will pay over $1000 a month just for your medical coverage. What if you use your Health Insurance?… Chances are if it is not for a regular doctor visits or a check ups it would be considered pre-existing condition. That means your chances of changing to a more affordable coverage in the future will be nearly impossible. That is one of the main reasons people cancel their health insurance because they were diagnosed with something or taking a prescription medication and the insurance company kept raising their rate until they could not qualify for any other coverage and could not afford the one they had.
Now you are saying I do not need coverage my spouse works for a company and I have group coverage… Great.
What would happen if your spouse left that job or the company stopped providing benefits? Probably the most obvious things that you can see how much that group coverage is really costing you. Next time check how much is deducted out of the paycheck for health coverage, especially for dependents. Group plans do cost more money because by law they are what are called “guaranteed issue”. That means you can have serious medical conditions and still get coverage. Insurance companies have to follow the law and they know they have to accept everyone who works for a large company, therefore they do charge more money for coverage. The biggest problem is not the cost of group health insurance it is what happens if some one, while on the group plan, is diagnosed with a condition or starts to take prescriptions medications. We get back to same issues as mentioned before, unable to qualify for health insurance in the future. There are people that want to leave their job but they cannot because they are going through treatment and cannot to pay for it on their own.
There is another solution… Some might save, so what is the point of even having health insurance. Once you diagnosed with something and insurance company is going to keep raising rates to the point where I am going to have to cancel it anyway. Especially if something does happen and I have to use my coverage I might not be working and I might not have income. Is my insurance company is still going to keep raising my rates? YES.
Before you think about cancelling your coverage consider this. Here are some statistics
• A recent study by Harvard University researchers found that the average out-of-pocket medical debt for those who filed for bankruptcy was $12,000. In addition, the study found that 50 percent of all bankruptcy filings were partly the result of medical expenses. Every 30 seconds in the United States someone files for bankruptcy in the aftermath of a serious health problem.
• Illness and medical bills caused half of the 1,458,000 personal bankruptcies in 2001, according to a study published by the journal Health Affairs.
• Average day in the hospital is $7500 per day.
How can you save up to 47% on your health insurance? Simple… You probably already heard of Health Saving Accounts. They are becoming more and more popular everyday. With the way health insurance prices are moving today Health Saving Accounts are the only way to keep your coverage, save hundreds per month on your health insurance and still have a peace of mind.
To this day I was not able to hear a good definition that everyone can understand. I will do everything I can to make it simple to understand. The easiest way to understand Health Saving Accounts is to think of them as Roth IRA or your Company’s 401k plan. Instead of giving your money away to insurance company you get to keep it more of it for yourself. The way HSA plans work is there health insurance combined with savings account which works in a similar way to your retirement account. There tremendous benefits to have HSA qualified health plan. First all the money that you put in to your HSA account is 100% tax deductible and it is your money that rolls over year after year. At the age of 65 and up if you have not used up all of your HSA money you can roll it over in to your retirement account. Second your health insurance costs are going to be cut almost in half. For example if you had Health Insurance plan with $2500 deductible now and it is costing you $300 per month the same plans with HSA qualified plan, now will cost you only about $160 per month. The reason you save so much money with HSA qualified health plan is because HSA qualified plans do not cover anything until the deductible is met. There are exceptions depending on the Health Insurance Company. Some insurance companies will pay for your once a year physical before you meet your deductible.
Let take an example of how HSA qualified plan could benefit you. Let take some actual numbers from actual health insurance company. In this example I am going to use HSA plans from company called Assurant Health. Assurant Health is leader in Health Saving Accounts and they one of the first companies to implement them. The main reason is that Assurant Health is part of the world’s largest financial company that sets up retirement accounts. In this example I am going to use a family of four, husband 46, wife 42, kids are 12 and 16. On a regular family plan with $2500 deductible, maximum out of pocket of $5500, co-insurance of 80% and doctor visits covered with $35 co-pay, they are going to pay $676.40. Something to keep in mind that all of the regular PPO plans that are available on the market today have family deductible which is double of individual deductible. That means that if you have a plan with $2500 deductible and $5500 maximum out of pocket that means that your family deductible is $5000 and your family maximum out of pocket is $11,000. When we are comparing HSA qualified health plans there is only one deductible, once you meet it you are covered at 100% on the most plans. There are some companies and plans that you still might be responsible for the percent age of the bill until you reach your maximum out of pocket. Most HSA plans do not have maximum out of pocket that meant once you met your deductible you are covered at 100%, it’s that simple. The same plan with $5700 deductible for the entire family with HSA qualified health plans will only be $491.64 per month. For the total monthly savings of 184.76 per month. Also your maximum out of pocket will decrease from $11,000 on a regular plan to $5700 with HSA health plan. That’s yearly savings of $2,217.12 and additional savings of $5300 on the maximum out of pocket. (that’s if you have had to use the plan for emergencies) The main reason for starting HSA health insurance is for Saving Account and being able to put money in to account, at your discretion, tax free. You can put money in to HSA qualified account up to your deductible and you do not have to put any money in to that account if you do not want to. Health Saving Accounts are as flexible as you would want them to be. TO get more information on HSA accounts and get quotes for HSA qualified health coverage see my bio.
Car Insurance Quotes
Cobra Health Insurance Options For Small Business Owners
Quentin Moses asked:
The Bureau of Labor Statistics of the U.S. Department of Labor recently reported that employment continued to fall sharply in February (-651,000), and the unemployment rate rose from 7.6 to 8.1 percent. Payroll employment has declined by 2.6 million in the past 4 months. In February, job losses were large and widespread across nearly all-major industry sectors. Are you or your spouse one of the 8.1% Are you worried about joining this group? If you own a small business or are thinking about starting that small business then you need to understand how COBRA can have a dramatic impact on your financial future. Here are 7 things you need to know right now!
1. What is COBRA continuation health coverage? Congress passed the landmark Consolidated Omnibus Budget Reconciliation Act (COBRA) health benefit provisions in 1986. The law amends the Employee Retirement Income Security Act, the Internal Revenue Code and the Public Health Service Act to provide continuation of group health coverage that otherwise might be terminated.
2. What does COBRA do? COBRA provides certain former employees, retirees, spouses, former spouses, and dependent children the right to temporary continuation of health coverage at group rates. This coverage, however, is only available when coverage is lost due to certain specific events. Group health coverage for COBRA participants is usually more expensive than health coverage for active employees, since usually the employer pays a part of the premium for active employees while COBRA participants generally pay the entire premium themselves.
3. Who is entitled to benefits under COBRA? There are three elements to qualifying for COBRA benefits. COBRA establishes specific criteria for plans, qualified beneficiaries, and qualifying events:
Qualifying Events for Employees:
Voluntary or involuntary termination of employment for reasons other than gross misconduct
Reduction in the number of hours of employment
Qualifying Events for Spouses:
Voluntary or involuntary termination of the covered employee’s employment for any reason other than gross misconduct
Reduction in the hours worked by the covered employee
Covered employee’s becoming entitled to Medicare
Divorce or legal separation of the covered employee
Death of the covered employee
Qualifying Events for Dependent Children:
Loss of dependent child status under the plan rules
Voluntary or involuntary termination of the covered employee’s employment for any reason other than gross misconduct
Reduction in the hours worked by the covered employee
Covered employee’s becoming entitled to Medicare
Divorce or legal separation of the covered employee
Death of the covered employee
4. How does a person become eligible for COBRA continuation coverage?
To be eligible for COBRA coverage, you must have been enrolled in your employer’s health plan when you worked and the health plan must continue to be in effect for active employees. COBRA continuation coverage is available upon the occurrence of a qualifying event that would, except for the COBRA continuation coverage, cause an individual to lose his or her health care coverage.
5. What Do I do if I Don’t Want To Take COBRA? Group Health Plans are very benefit rich. This means that you probably have dental, vision, low co-pays for doctor visits etc. Things you take for granted. Your employer if often paying 80% or more of your premium and your portion of the premium is just 20% or less. You don’t realize the true cost of your health plan until you qualify for COBRA and get that letter from your HR Department that gives you STICKER SHOCK. Why? Because you see that your new monthly premium could be up to 400% more that what was being pulled out of your paycheck. What do you do? You get on the computer and start looking for Health Insurance quotes and see a lot of quotes that look appealing as an alternative but you are comparing apples and oranges.
Here are three main points that are not clear when you look at these computer quotes
First of all, Group Plans in Georgia are “guarantee issued” which means that everyone MUST be accepted. Individual plans go through an underwriting process, so you have to qualify and may not be accepted.
Most insurance carriers usually decline major pre-existing conditions like diabetes, cancer and heart disease. Minor pre-existing conditions like weight, high blood pressure and elevated cholesterol etc. are rated up which means you’re charged more. This underwriting process can take up to a month, if done properly.
Also many of the benefits you take for granted on your benefit rich group plan are extras or “riders” with individual policies that increase your premium.
So what are my alternatives if I just lost my job?
6. How Does The American Recovery and Reinvestment Tax Act of 2009 affect COBRA and save me more money? The Act provides a 65% government subsidy to employees who are involuntarily terminated between September 1, 2008 and December 31, 2009. The premium reduction relates only to premiums for the coverage period beginning after the new law was enacted on February 17, 2009. The law does not allow reimbursement of premiums for coverage periods beginning before February 17, 2009. Qualified individuals can, however, receive the premium subsidy going forward, for up to nine months. So if you are already on COBRA you can get this subsidy for up to nine months. Also if you declined COBRA during this period, you can now enroll in the subsidized coverage. This a great deal if you are planning on finding another job that will provide Group Health Insurance because you only have to pay 35% of the COBRA costs and can keep your benefit rich coverage for up to 18 months.
BUT……
What If you are planning to focus on your business full time now, rather than get another job? Then you really need to look much closer at individual plans.
7. How does buying your own portable individual health plan protect your financial future? Let me tell you a story about how one of the most financially savvy guys I know got the surprise of this life after riding his bike one day in Florida. I lived in South Florida and played tennis with a friend who retired from a Fortune 100 Company when he was 49 years old. After many years of hard work he took early retirement and built his dream home in Florida. After several years his wife became bored and wanted to move to Atlanta. They bought into one of the most prestigious new developments in metro Atlanta. Six months after construction began my friend was riding his bike and got shortness of breath. He called a tennis buddy and neighbor who was also a cardiologist and the doctor said, “Come to my office and let me check you out”. The cardiologist sent him straight to the hospital and discovered that one of my friend’s coronary arteries was narrowed and a “heart stent” was inserted to relieve the condition. Within a few days my friend was busy playing tennis and riding his bike. Thinking about his upcoming move to Georgia, my friend decides to call his Health Insurance Company to move his plan from Florida. Mind you this was not some fly-by-night company but one of the best-recognized names in the insurance industry today! You can imagine his surprise when this insurance company told him that he was “UNINSURABLE” in the state of Georgia. What happened? When he retired my friend elected COBRA and when he moved to Florida took an individual plan in Florida. He assumed that because the insurance company had such a big name that is was a national company but it WAS NOT so he could not get health insurance, at any price, in Georgia because he had this MAJOR pre-existing condition of heart disease.
You might be subject to similar consequences or worse if you get sick or have a major accident during the period you’re on COBRA. To avoid this type of situation or worse you need to work with a licensed Health Agent who specializes in Small Business Entrepreneurs.
Insurance Quotes
The Bureau of Labor Statistics of the U.S. Department of Labor recently reported that employment continued to fall sharply in February (-651,000), and the unemployment rate rose from 7.6 to 8.1 percent. Payroll employment has declined by 2.6 million in the past 4 months. In February, job losses were large and widespread across nearly all-major industry sectors. Are you or your spouse one of the 8.1% Are you worried about joining this group? If you own a small business or are thinking about starting that small business then you need to understand how COBRA can have a dramatic impact on your financial future. Here are 7 things you need to know right now!
1. What is COBRA continuation health coverage? Congress passed the landmark Consolidated Omnibus Budget Reconciliation Act (COBRA) health benefit provisions in 1986. The law amends the Employee Retirement Income Security Act, the Internal Revenue Code and the Public Health Service Act to provide continuation of group health coverage that otherwise might be terminated.
2. What does COBRA do? COBRA provides certain former employees, retirees, spouses, former spouses, and dependent children the right to temporary continuation of health coverage at group rates. This coverage, however, is only available when coverage is lost due to certain specific events. Group health coverage for COBRA participants is usually more expensive than health coverage for active employees, since usually the employer pays a part of the premium for active employees while COBRA participants generally pay the entire premium themselves.
3. Who is entitled to benefits under COBRA? There are three elements to qualifying for COBRA benefits. COBRA establishes specific criteria for plans, qualified beneficiaries, and qualifying events:
Qualifying Events for Employees:
Voluntary or involuntary termination of employment for reasons other than gross misconduct
Reduction in the number of hours of employment
Qualifying Events for Spouses:
Voluntary or involuntary termination of the covered employee’s employment for any reason other than gross misconduct
Reduction in the hours worked by the covered employee
Covered employee’s becoming entitled to Medicare
Divorce or legal separation of the covered employee
Death of the covered employee
Qualifying Events for Dependent Children:
Loss of dependent child status under the plan rules
Voluntary or involuntary termination of the covered employee’s employment for any reason other than gross misconduct
Reduction in the hours worked by the covered employee
Covered employee’s becoming entitled to Medicare
Divorce or legal separation of the covered employee
Death of the covered employee
4. How does a person become eligible for COBRA continuation coverage?
To be eligible for COBRA coverage, you must have been enrolled in your employer’s health plan when you worked and the health plan must continue to be in effect for active employees. COBRA continuation coverage is available upon the occurrence of a qualifying event that would, except for the COBRA continuation coverage, cause an individual to lose his or her health care coverage.
5. What Do I do if I Don’t Want To Take COBRA? Group Health Plans are very benefit rich. This means that you probably have dental, vision, low co-pays for doctor visits etc. Things you take for granted. Your employer if often paying 80% or more of your premium and your portion of the premium is just 20% or less. You don’t realize the true cost of your health plan until you qualify for COBRA and get that letter from your HR Department that gives you STICKER SHOCK. Why? Because you see that your new monthly premium could be up to 400% more that what was being pulled out of your paycheck. What do you do? You get on the computer and start looking for Health Insurance quotes and see a lot of quotes that look appealing as an alternative but you are comparing apples and oranges.
Here are three main points that are not clear when you look at these computer quotes
First of all, Group Plans in Georgia are “guarantee issued” which means that everyone MUST be accepted. Individual plans go through an underwriting process, so you have to qualify and may not be accepted.
Most insurance carriers usually decline major pre-existing conditions like diabetes, cancer and heart disease. Minor pre-existing conditions like weight, high blood pressure and elevated cholesterol etc. are rated up which means you’re charged more. This underwriting process can take up to a month, if done properly.
Also many of the benefits you take for granted on your benefit rich group plan are extras or “riders” with individual policies that increase your premium.
So what are my alternatives if I just lost my job?
6. How Does The American Recovery and Reinvestment Tax Act of 2009 affect COBRA and save me more money? The Act provides a 65% government subsidy to employees who are involuntarily terminated between September 1, 2008 and December 31, 2009. The premium reduction relates only to premiums for the coverage period beginning after the new law was enacted on February 17, 2009. The law does not allow reimbursement of premiums for coverage periods beginning before February 17, 2009. Qualified individuals can, however, receive the premium subsidy going forward, for up to nine months. So if you are already on COBRA you can get this subsidy for up to nine months. Also if you declined COBRA during this period, you can now enroll in the subsidized coverage. This a great deal if you are planning on finding another job that will provide Group Health Insurance because you only have to pay 35% of the COBRA costs and can keep your benefit rich coverage for up to 18 months.
BUT……
What If you are planning to focus on your business full time now, rather than get another job? Then you really need to look much closer at individual plans.
7. How does buying your own portable individual health plan protect your financial future? Let me tell you a story about how one of the most financially savvy guys I know got the surprise of this life after riding his bike one day in Florida. I lived in South Florida and played tennis with a friend who retired from a Fortune 100 Company when he was 49 years old. After many years of hard work he took early retirement and built his dream home in Florida. After several years his wife became bored and wanted to move to Atlanta. They bought into one of the most prestigious new developments in metro Atlanta. Six months after construction began my friend was riding his bike and got shortness of breath. He called a tennis buddy and neighbor who was also a cardiologist and the doctor said, “Come to my office and let me check you out”. The cardiologist sent him straight to the hospital and discovered that one of my friend’s coronary arteries was narrowed and a “heart stent” was inserted to relieve the condition. Within a few days my friend was busy playing tennis and riding his bike. Thinking about his upcoming move to Georgia, my friend decides to call his Health Insurance Company to move his plan from Florida. Mind you this was not some fly-by-night company but one of the best-recognized names in the insurance industry today! You can imagine his surprise when this insurance company told him that he was “UNINSURABLE” in the state of Georgia. What happened? When he retired my friend elected COBRA and when he moved to Florida took an individual plan in Florida. He assumed that because the insurance company had such a big name that is was a national company but it WAS NOT so he could not get health insurance, at any price, in Georgia because he had this MAJOR pre-existing condition of heart disease.
You might be subject to similar consequences or worse if you get sick or have a major accident during the period you’re on COBRA. To avoid this type of situation or worse you need to work with a licensed Health Agent who specializes in Small Business Entrepreneurs.
Insurance Quotes
Getting More Out of your Retirement Assets
David Chazin asked:
Getting More Out of Your Retirement Assets
By David N. Chazin
In conjunction with Sagemark Consulting, a division of Lincoln Financial Advisors, a registered investment advisor. Mr. Chazin is a regular contributor to PlannerConnect.
For years, you’ve been investing in an IRA or employer-sponsored retirement plan, and, thanks to the benefits of tax-deferred growth, you now have a considerable nest egg enough to enjoy a comfortable retirement and pass a tidy sum on to children and grandchildren. Or so you think. Unfortunately, after taxes, only a small percentage of your retirement savings may be left.
The Tax Toll
Your retirement assets alone may be enough to trigger federal estate tax at your death. Every estate is entitled to an exemption that, in 2005, allows the first $1,500,000 of your assets to pass tax-free to anyone you choose. However any estate assets in excess of this exclusion amount that you give to anyone other than your spouse can be hit with an estate tax of up to 47%. And, while an unlimited federal estate-tax marital deduction lets any amount of assets pass to your surviving spouse tax free, retirement assets you give to your surviving spouse may be taxed later in his or her estate. You haven’t avoided the estate tax; you’ve only postponed it.
In addition to estate taxes, your beneficiaries will have to pay federal income tax on any distributions of tax-deferred retirement assets they receive from your estate. These amounts are taxed at ordinary income tax rates, which currently range from 10% to 35%. State income taxes, where applicable, would claim even more. If your retirement assets pass directly to your grandchildren, a 47% generation-skipping transfer tax may also apply in addition to any estate tax paid.
The bottom line is that, without financial planning, most of your retirement assets could end up going to the federal government. What can you do?
Give to Charity
If you plan to leave gifts to charity when you die, consider using some or all of your retirement plan assets to make those gifts. One simple and safe way to do so is to name a charity as the beneficiary of your IRA or retirement plan account. The value of the retirement assets will be included in your estate for estate-tax purposes. However, your estate can claim an estate-tax charitable deduction for the full fair market value of the assets the charity receives.
Naming a charity as beneficiary of your retirement plan also can eliminate any income-tax liability on the assets. While individuals who receive distributions of previously tax-deferred amounts from retirement plans must pay income tax on the distributions, many charities are tax-exempt and, thus, don’t have to pay income tax on distributions received from a donor’s retirement plan.
Alternatively, you can give retirement assets to charity now and receive the added benefit of watching your money at work. To make your gift, you withdraw assets from your retirement account and donate them to charity. Any previously tax-deferred amounts you withdraw will be included in your income for the year, but there is an available income tax charitable contribution deduction (within tax law limits) that will reduce or eliminate the income tax on the withdrawal. The value of the assets, and of any future appreciation in those assets, is removed from your estate for estate- and generation-skipping transfer tax purposes.
Consider a Charitable Trust
While the assets you own outside of your retirement plan may seem sufficient to provide you and your spouse with a comfortable retirement, you still might be hesitant to give away your retirement assets. What if unexpected financial demands arise, and you or your spouse needs the income from your retirement plan? A charitable remainder trust may be the answer.
With a charitable remainder trust, you transfer your retirement assets to a trust set up for a charity of your choice. The trust pays you and your spouse, or someone else you’ve chosen, an annual income for life or for a set term. The trust ends with the death of the last income beneficiary or when the trust term expires. The charity receives any remaining assets.
As with an outright gift, a current income-tax deduction is available for the charitable gift you make through the trust. This deduction will offset some of the income tax that may be due on the transfer of any previously tax-deferred retirement assets to the trust. Your deduction is based on the present value of the assets the charity will eventually receive. The trust assets and any appreciation in those assets are removed from your taxable estate. You and the trust’s other income beneficiaries will have to pay income tax on the annual payments you receive from the trust.
Another strategy is to name a charitable remainder trust as the beneficiary of your IRA or other retirement plan account, with your spouse as the income beneficiary of the trust. Your estate will not have to pay any estate tax on the retirement assets because of the potential marital and charitable deductions.
Protect Your Wealth
Many forward-thinking people like the idea of transferring a portion of their estate to charity at full value, rather than transferring a much smaller after-tax value to family members who may already have been provided for through other planning. However, if you are concerned that family members could need your retirement assets in the future, you might want to use an irrevocable life insurance trust as a wealth-replacement strategy.
You can arrange for a trustee to purchase insurance on your life that will replace the inheritance your family is giving up because of your charitable donation. As long as you have no incidents of ownership in the insurance policy, the proceeds won’t be included in your taxable estate. Nor will your children have to pay income tax on the insurance proceeds. Essentially, your children or grandchildren receive an inheritance they can use instead of your retirement assets.
Use a QTIP Trust
Another popular planning strategy is to name a qualified terminable interest property (QTIP) trust as your retirement plan beneficiary. With a QTIP trust, you can give your surviving spouse a life income from your retirement assets and choose who will receive those assets after your spouse’s death your children or grandchildren, for instance. In that way, you can be sure your assets will pass to your children, even if your spouse should remarry after your death.
A QTIP trust can save taxes, as well. Assets in a properly structured QTIP trust qualify for the marital deduction. Thus, the retirement assets to be distributed to the QTIP trust will not be subject to federal estate tax when you die. Assets remaining in the trust will be included in your spouse’s estate, and your spouse’s estate may have to pay estate tax on them. However, your spouse’s exemption amount will be available to offset tax on some or all of the assets that will later pass to your children or grandchildren.
Everyone’s situation is different. The strategies discussed here may or may not fit your situation. Please consult a professional advisor before implementing any of the strategies we have discussed. Retirement plan distributions are subject to complicated tax rules. You don’t want to make a planning error that could jeopardize your family’s future financial security.
David N. Chazin is part of a network of qualified financial planners affiliated with PlannerConnect. You can reach him at David.Chazin@LFG.com, or to connect with a financial planner in your area please call (800) 318-7848, or visit the PlannerConnect website.
David N. Chazin, is a registered representative of Lincoln Financial Advisors, a broker/dealer, and offers investment advisory service through Sagemark Consulting, a division of Lincoln Financial Advisors Corp., a registered investment advisor,3000 Executive Parkway, Suite 400, San Ramon, CA 94583, (925) 275-0300. Insurance offered through Lincoln affiliates and other fine companies. This information should not be construed as legal or tax advice. You may want to consult a tax advisor regarding this information as it relates to your personal circumstances.
Online Insurance Quotes
Getting More Out of Your Retirement Assets
By David N. Chazin
In conjunction with Sagemark Consulting, a division of Lincoln Financial Advisors, a registered investment advisor. Mr. Chazin is a regular contributor to PlannerConnect.
For years, you’ve been investing in an IRA or employer-sponsored retirement plan, and, thanks to the benefits of tax-deferred growth, you now have a considerable nest egg enough to enjoy a comfortable retirement and pass a tidy sum on to children and grandchildren. Or so you think. Unfortunately, after taxes, only a small percentage of your retirement savings may be left.
The Tax Toll
Your retirement assets alone may be enough to trigger federal estate tax at your death. Every estate is entitled to an exemption that, in 2005, allows the first $1,500,000 of your assets to pass tax-free to anyone you choose. However any estate assets in excess of this exclusion amount that you give to anyone other than your spouse can be hit with an estate tax of up to 47%. And, while an unlimited federal estate-tax marital deduction lets any amount of assets pass to your surviving spouse tax free, retirement assets you give to your surviving spouse may be taxed later in his or her estate. You haven’t avoided the estate tax; you’ve only postponed it.
In addition to estate taxes, your beneficiaries will have to pay federal income tax on any distributions of tax-deferred retirement assets they receive from your estate. These amounts are taxed at ordinary income tax rates, which currently range from 10% to 35%. State income taxes, where applicable, would claim even more. If your retirement assets pass directly to your grandchildren, a 47% generation-skipping transfer tax may also apply in addition to any estate tax paid.
The bottom line is that, without financial planning, most of your retirement assets could end up going to the federal government. What can you do?
Give to Charity
If you plan to leave gifts to charity when you die, consider using some or all of your retirement plan assets to make those gifts. One simple and safe way to do so is to name a charity as the beneficiary of your IRA or retirement plan account. The value of the retirement assets will be included in your estate for estate-tax purposes. However, your estate can claim an estate-tax charitable deduction for the full fair market value of the assets the charity receives.
Naming a charity as beneficiary of your retirement plan also can eliminate any income-tax liability on the assets. While individuals who receive distributions of previously tax-deferred amounts from retirement plans must pay income tax on the distributions, many charities are tax-exempt and, thus, don’t have to pay income tax on distributions received from a donor’s retirement plan.
Alternatively, you can give retirement assets to charity now and receive the added benefit of watching your money at work. To make your gift, you withdraw assets from your retirement account and donate them to charity. Any previously tax-deferred amounts you withdraw will be included in your income for the year, but there is an available income tax charitable contribution deduction (within tax law limits) that will reduce or eliminate the income tax on the withdrawal. The value of the assets, and of any future appreciation in those assets, is removed from your estate for estate- and generation-skipping transfer tax purposes.
Consider a Charitable Trust
While the assets you own outside of your retirement plan may seem sufficient to provide you and your spouse with a comfortable retirement, you still might be hesitant to give away your retirement assets. What if unexpected financial demands arise, and you or your spouse needs the income from your retirement plan? A charitable remainder trust may be the answer.
With a charitable remainder trust, you transfer your retirement assets to a trust set up for a charity of your choice. The trust pays you and your spouse, or someone else you’ve chosen, an annual income for life or for a set term. The trust ends with the death of the last income beneficiary or when the trust term expires. The charity receives any remaining assets.
As with an outright gift, a current income-tax deduction is available for the charitable gift you make through the trust. This deduction will offset some of the income tax that may be due on the transfer of any previously tax-deferred retirement assets to the trust. Your deduction is based on the present value of the assets the charity will eventually receive. The trust assets and any appreciation in those assets are removed from your taxable estate. You and the trust’s other income beneficiaries will have to pay income tax on the annual payments you receive from the trust.
Another strategy is to name a charitable remainder trust as the beneficiary of your IRA or other retirement plan account, with your spouse as the income beneficiary of the trust. Your estate will not have to pay any estate tax on the retirement assets because of the potential marital and charitable deductions.
Protect Your Wealth
Many forward-thinking people like the idea of transferring a portion of their estate to charity at full value, rather than transferring a much smaller after-tax value to family members who may already have been provided for through other planning. However, if you are concerned that family members could need your retirement assets in the future, you might want to use an irrevocable life insurance trust as a wealth-replacement strategy.
You can arrange for a trustee to purchase insurance on your life that will replace the inheritance your family is giving up because of your charitable donation. As long as you have no incidents of ownership in the insurance policy, the proceeds won’t be included in your taxable estate. Nor will your children have to pay income tax on the insurance proceeds. Essentially, your children or grandchildren receive an inheritance they can use instead of your retirement assets.
Use a QTIP Trust
Another popular planning strategy is to name a qualified terminable interest property (QTIP) trust as your retirement plan beneficiary. With a QTIP trust, you can give your surviving spouse a life income from your retirement assets and choose who will receive those assets after your spouse’s death your children or grandchildren, for instance. In that way, you can be sure your assets will pass to your children, even if your spouse should remarry after your death.
A QTIP trust can save taxes, as well. Assets in a properly structured QTIP trust qualify for the marital deduction. Thus, the retirement assets to be distributed to the QTIP trust will not be subject to federal estate tax when you die. Assets remaining in the trust will be included in your spouse’s estate, and your spouse’s estate may have to pay estate tax on them. However, your spouse’s exemption amount will be available to offset tax on some or all of the assets that will later pass to your children or grandchildren.
Everyone’s situation is different. The strategies discussed here may or may not fit your situation. Please consult a professional advisor before implementing any of the strategies we have discussed. Retirement plan distributions are subject to complicated tax rules. You don’t want to make a planning error that could jeopardize your family’s future financial security.
David N. Chazin is part of a network of qualified financial planners affiliated with PlannerConnect. You can reach him at David.Chazin@LFG.com, or to connect with a financial planner in your area please call (800) 318-7848, or visit the PlannerConnect website.
David N. Chazin, is a registered representative of Lincoln Financial Advisors, a broker/dealer, and offers investment advisory service through Sagemark Consulting, a division of Lincoln Financial Advisors Corp., a registered investment advisor,3000 Executive Parkway, Suite 400, San Ramon, CA 94583, (925) 275-0300. Insurance offered through Lincoln affiliates and other fine companies. This information should not be construed as legal or tax advice. You may want to consult a tax advisor regarding this information as it relates to your personal circumstances.
Online Insurance Quotes
Moved from Virginia prior to final federal retirement effective date - is last pay subject ot VA tax?
Rob W asked:
I moved from VA a few days prior to my official retirement effective date. I receive a final pay, including substantial leave cashed out after I moved. Is this subject to Virginia tax? All preretirement pay, including this shows up on my W2 with VA as the state reflected on it.
Home Insurance Quotes
I moved from VA a few days prior to my official retirement effective date. I receive a final pay, including substantial leave cashed out after I moved. Is this subject to Virginia tax? All preretirement pay, including this shows up on my W2 with VA as the state reflected on it.
Home Insurance Quotes
What will the effect of the boomer retirement have on the stock market?
poet1b asked:
Right now, boomers are preparing for retirement. Most are earning in their peak years or near their peak income levels. They are pumping more money than ever into the market to pay for their retirements.
Right now, boomers are preparing for retirement. Most are earning in their peak years or near their peak income levels. They are pumping more money than ever into the market to pay for their retirements.
The ratio of people pulling money out of the market to fund their retirements in comparison with the people putting money into the market to save for their future retirements is better than it will be for at least the next three generations, most likely more.
In the next five to fifteen years, the ratio of people paying into the market to save for their retirements in comparison to the people taking out of the market to pay for their retirements is going to change drastically. The draw on the market will increases drastically over the savings rate to finance retirement. This will be a historical first for the stock market.
Health Insurance Quotes
What states do not tax federal retirement income?
ronfurg asked:
I receive a retirement annuity from my service in the federal government and would like possibly to move to a state which does not tax the annuity income.
Health Insurance Quotes
I receive a retirement annuity from my service in the federal government and would like possibly to move to a state which does not tax the annuity income.
Health Insurance Quotes