by Sean Guldi, CFP®
It’s that time of year again – Open Enrollment Season. Many of you work for larger companies who provide cafeteria-style plans with a plethora of options. Some of you may be self-employed individuals finishing up your tax filings on extension and reviewing insurance options for the coming year. Those of you who are retired may be getting notices from different companies regarding your Medicare enrollment options. Regardless of where you are in life, the fall is a great time to do a checkup of all health insurance options.
Those of you who are not on Medicare are faced with a gauntlet of options for Health Insurance during enrollment season. You have Preferred Provider Organizations (PPO), Health Maintenance Organizations (HMO), and High-Deductible Health Plans. Be sure to understand the maximum deductible and out of pocket maximums for each plan. Your emergency fund should be large enough to cover a large portion of this deductible. If you elect a high-deductible plan, make sure you are combining it with a Health Savings Account (HSA), which is triple-tax-advantaged, meaning you can save money pre-tax, can invest the funds while deferring any gains, and can utilize those funds for qualified medical expenses tax-free. Be sure to let us know of any assets within HSAs so we can help advise you on investing strategies and incorporating these into your overall financial plan.
For those clients who are self-employed, this may be a good time of year to review your prior year’s taxes (assuming you filed an extension) and plan for the current year. Your medical coverage may be purchased on the exchange or via other avenues (member groups, religious organizations, etc.). The health insurance premiums (including any dental and long-term care premiums) for you, your spouse and your dependents are 100% deductible as business expenses. This offers you a greater tax advantage than the general working population. Be sure to review the high-deductible options you might have which may allow you to contribute to an HSA as well.
Clients over 65 have enrollment season for Medicare Part C & D from October 15 – December 7th. These types of plans are sometimes called “Advantage” plans and offer differing deductibles, co-insurance, and rules than the original Medicare Plans (A&B) and often cover prescription drug coverage. There are many more facets to the types of plans you can choose, and suffice to say you should take time to review options. One important item to note with Medicare premiums is certain individuals or couples may be forced to pay an Income Related Monthly Adjustment (IRMA) when their income from their tax return from two years ago (2015 for what you pay in 2017) exceeds $85,000 (single) or $170,000 (married filing jointly). Let us know how we can help you plan alongside your CPA to minimize the impact of IRMA on your premiums.
Decisions about insurance and any other benefits available to you can be daunting. Please be sure to reach out to us if you wish to review the impact of these decisions on your financial plan. Call us at (904) 273-9850 or email [email protected].