How Medicare Surcharges Can Cost You Over $80,000 Annually

When saving for retirement, it is critically important to factor health care costs into projections and plans. Due to upcoming changes in Medicare, this will be even more important. Medicare’s coverage is separated into four Parts: A, B, C, and D. The changes will primarily affect Part B, which covers doctor appointments, emergency room visits, and tests, and is paid for by premiums based on the beneficiary’s income. The higher the earner, the greater the cost, according to what's known as Medicare Means Testing. Medicare Means Testing is broken down into brackets, which establish different income amounts as the thresholds for premium surcharges. However, only certain types of...
Retirement Health Care Costs And Income Replacement Ratios

Retirement Health Care Costs and Income Replacement Ratios Summary

Last week, we published a white paper that focuses on income replacement ratios (IRRs), health care inflation rates, and strategies to bridge the savings gap caused by unplanned retirement health care costs. Today, I will highlight some of the paper’s major points. First, readers must understand that financial advisors use IRRs – a percentage of an individual’s pre-retirement income – to project the amount of annual income a person will need to fund his/her retirement. The general rate for IRR calculations is usually between 75-85%, but over the past several years, 80% has evolved to become the favored industry standard. Our current research indicates that because of...
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New Rule From the DOL

By Rob Stables The past few weeks have been awash with the turmoil of changes to Social Security and Medicare, which were completely unexpected. It’s understandably been the main focus of many in the retirement planning industry, myself included. But there is another piece of legislation on the table that precedes the Bipartisan Budget Act, one that could be just as impactful. I am referring to the proposal made in April by the Department of Labor (DOL) that would implement a rule to control conflicts of interest between advisors working with retirement accounts and their clients. If passed, the rule would require advisors to legally act in the best interest of their clients...
Retirement Health Care Costs and Income Replacement Ratios

Retirement Health Care Costs and Income Replacement Ratios

Financial advisors, plan sponsors, and millions of investors rely on income replacement ratios (IRRs) – a percentage of pre-retirement income – to estimate how much will be needed to maintain desired lifestyles in retirement. IRRs have provided advisors with a streamlined, top-down approach for assessing a client’s retirement readiness without having to calculate and project individual line-item expenses: a bottom-up strategy that is more comprehensive, but also time-consuming. A key assumption underpinning the use of IRRs is that pre-retirement income is a good basis for calculating income needs in retirement. Unfortunately, when it comes to health care this is not the case. Read...
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Notice of Changes to Social Security and Medicare Benefits (Bipartisan Budget Act of 2015)

Social Security: It is important to note that anybody currently taking advantage of any or all of the strategies, File and Suspend, Claim Some Now; Claim More Later, or the Combined Strategy, will continue to be able to do so.   Within the six month period after November 2, 2015, applicants will be able to take advantage of the rules as they existed prior to the enactment of P.L. 114-74.   Under P.L. 114-74, requests for suspension submitted at least 180 days after November 2, 2015, will also suspend the benefits of anyone else who may be receiving benefits on the account, i.e. a spouse or eligible children.   Currently, beneficiaries who have...
Changes In Legislation Affecting

Changes in Legislation Affecting Social Security & Medicare

(PLEASE NOTE: The purpose of this Update is to provide notification that recent proposed legislation, which was passed by both Houses of Congress, could significantly impact Social Security and Medicare. When the legislation is signed into law, HealthView will distribute an official change notice.)   In the world of politics, legislative changes are often a slow, laborious process that require multiple debates and concessions on either side of the aisle. However, the new federal budget, which the President is expected to sign into law early this week, passed both Houses of Congress with surprising speed and decisiveness. This should be of great to concern to the majority of...
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No COLA and Hold Harmless

  The big retirement news this past month?  In 2016, Medicare Part B premiums are set to increase by 52%, and there will not be a Social Security Cost of Living Adjustment (COLA). The COLA decision should come as no surprise. For the third time in the past seven years seniors will have to make ends meet with no additional financial assistance from Uncle Sam.   Most of you may be thinking: So what? I’m not on Medicare and I don’t collect Social Security. Think again.   Whether a person retires next year or in 25 years, almost everyone is eventually going to get hit with the compounded annual growth in Medicare premiums. In order to understand why, let’s...
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The Impact of Retiring Healthy

Retirement. It shines like a beacon to the working world – a glimmering gem that we all seek to attain after decades of toiling, but there’s a lot more that goes into funding retirement than many people realize.  Household expenses may or may not be similar to what retirees are used to during working years, but there is no guarantee that will be less.  Outlays in retirement could actually increase quite drastically compared to those before retirement. One such example, and one of the largest savings obstacles facing retirees, is the cost of health care. Expenses related to medical services are projected to consume around 33% of income during retirement – a staggering amount...
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Annual Health Care Cost Trends Hearing

This past week, I was invited to participate in the Massachusetts Health Policy Commission’s Annual Health Care Cost Trends hearing. It is no secret that rising health care is a hot topic.  From personal, local, and state budgets to the national economy, paying for quality health care has emerged as one of the biggest conundrums of the 21st century.  Therefore, the Governor, Attorney General, Speaker of the House, and President of the Senate were all in attendance and spoke at length about how the Commonwealth can tackle this issue. Thirty-one industry representatives, including 23 presidents of insurance companies and health care providers, economists, and other experts...
Clear Water

I Like Transparency, Don’t You?

Transparency: the ability to transmit light through a substance so that bodies situated behind it can be seen. Or, in relation to health care, the practice of transmitting or disclosing all fees associated with a medical procedure. Is providing the cost of services truly that difficult in the medical field? Let’s ponder this for a moment. When someone has a medical procedure, it doesn’t take long for the provider to generate an invoice.  So the question becomes: if providers are able to fairly quickly process charges after a procedure, why can’t patients have the same information in advance? In order to help address the transparency issue, a number of states across the...
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