Tax-deductible contributions to Health Savings Accounts can really have an impact on lowering your tax bill and it’s for a good cause, your healthcare. 2019 contribution limits for a single contributor is $3,500, for a family $6,900 and for those over age 55 an additional catch up contribution of $1,000. Health Savings Accounts allow for tax-free withdrawals at anytime for legitimate medical expenses or medical, Medicare or long-term care insurance premiums. The odds are extremely high that you will use every dollar in your HSA account during your lifetime. Everyone has medical necessities and related premiums to pay, so its economic value is considerable. And during retirement HSA distributions are not includible in the provisional income test for Social Security taxation. One-time rollovers from IRAs to HSA accounts: This provision allows for a once-in-a-lifetime distribution of amounts from an IRA (either a Traditional IRA or a Roth IRA), in a direct trustee-to- trustee transfer. Unless the only money available is in your Roth IRA, you shouldn’t use it. The best use of the exchange is with an IRA. Amounts distributed under this provision are not includible in income to the extent that they would otherwise be includible in income, and   Read more…

If you start receiving Social Security before you’re 65, you’ll get your Medicare enrollment card in the mail. And if you apply to begin Social Security benefits when you turn 65, you can apply for Medicare at the same time. But if you’re still working or want to post- pone collecting Social Security because you don’t yet qualify for your full retirement benefit, you’ve got to apply for Medicare on your own. If you apply after your initially eligible, you risk delays in coverage. More seriously, if you apply late for Part B or Part D coverage, you risk a permanent surcharge on your premium for each year that you were eligible but didn’t enroll You can apply up to three months before your 65th birthday. If you do, your coverage begins the first day of the month you turn 65. If you enroll in the month you turn 65, coverage begins on the first of the following month. If you enroll within the next three months, there is a waiting period for coverage. Medicare doesn’t cover any of your Part B bills incurred before you’re enrolled. If you enroll within the next three months, there is a waiting period   Read more…

Medicare payroll deductions are 1.45%, double that if you’re self-employed and there’s no cap on earnings, i.e. no limitation thresholds. All Americans pay the same per dollar earned into the Medicare program. Some view this as a tax, others view it as a contribution into their medical coverage when they become age 65 and throughout their retirement. But that’s where the equality or fairness ends. The U.S. tax code is a marginal-progressive tax bracket system that increases as certain income thresholds are achieved, a system has been around for over a century. But few understand that Medicare premiums are means tested. Most eligible Medicare recipients are paying the minimum of $135.50 a month, married couples double that at $271 assessed for 2019. But affluent seniors may be paying up to $460.50 a month, wealthy married couples $921.00 a month for the same benefits. And the real revelation is that the calculations for earnings go back two years! A fact that few financial advisers are aware of and not to mention the public at large. Over the last 15 years, retirement planning has embraced strategies to maximize Social Security, but little to no planning regarding Medicare. Most affluent seniors experience sticker   Read more…

Medicare, the federal health insurance plan for people 65 and over and those with certain disabilities, has made an enormous difference in the healthcare of an entire generation of Americans. If you qualify for Social Security either because you made FICA contributions while you were working or you’re married to someone who did, you automatically qualify for Medicare. And even if you weren’t part of the Social Security system, you may be eligible to purchase Medicare coverage for a monthly fee. If you’re collecting Social Security benefits, you’re automatically enrolled in Medicare Parts A and B, though you have a choice of whether to keep Part B. If you enroll for Medicare before you apply for Social Security benefits, you must decide whether to sign up for Part B. The second round of choices may be more complicated. Provided you’ve taken Part B coverage, you may be able to choose how you want to receive Medicare services, through Original Medicare or what is known as Medicare Advantage. Many seniors also purchase Medigap polices to cover what Part B doesn’t. If you’re collecting Social Security benefits, you’re automatically enrolled in Medicare Parts A and B, though you have a choice of   Read more…