Financial Stocks – What They Are & Why Should You Invest in Them

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The financial sector is one of the darling sectors on Wall Street for good reasons. Financial stocks are known for steady, reliable growth that outpaces the rate of inflation. At the same time, the sector comes with some of the best dividends on the market.  

Perhaps that’s why two of the largest holdings in the legendary value investor Warren Buffett’s portfolio are in the financial sector. 

But what exactly are financial stocks, what are the pros and cons of investing in them, and how much of your investment dollars should you allocate to the sector? Read on to find out!


What Are Financial Stocks?

The financial sector is a broad category of companies that work in the financial services industry. The sector includes:


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  • Retail and Commercial Banks and Lenders. Banks and lenders offer deposit accounts like checking and savings accounts and loans like mortgages and auto loans. Two of the most popular companies in this subcategory include Bank of America (BAC) and Wells Fargo (WFC). 
  • Asset Managers and Investment Banking Services. Brokerages, investment banks, and other companies that provide services surrounding the management of assets fall into this subcategory. Some of the most popular players in this corner of the financial sector include JPMorgan (JPM) and Morgan Stanley (MS). 
  • Credit Card Companies. Credit card companies, also known as card issuers, offer revolving loans that can be accessed at the point of purchase using a credit card. Some of the most popular players in this space include Citi (C) and American Express (AXP). 
  • Fintech Companies. Fintech companies blend finances with technology to provide services that make managing your finances easier. Some of the most popular fintech players include Block (SQ) — previously Square — and PayPal (PYPL). 
  • Insurance Companies. Insurance companies that provide health, life, auto, home, and other forms of insurance fall into the financials category. Metlife (MET) and Humana (HUM) are some of the most popular insurance stocks. 

Pros & Cons of Financial Stocks

As with any other sector, there are advantages and disadvantages to investing in the financial sector. Although the sector is known for stable growth and dividends, it’s not the best option if you’re looking for market-leading price appreciation. Some of the most important pros and cons to consider before investing in the space are detailed below.

Pros

The financial sector offers a relatively low-risk way to access stable growth and dividends, but that’s not the only perk of investing in the sector. Some of the biggest advantages of financial stocks include:

  1. Lower Risk. The financial sector comes with lower risk than some other sectors like technology and health care. This stability has improved significantly in recent years. According to Davis Funds, the largest U.S. banks are now holding record volumes of cash on their balance sheets thanks to lessons learned during the financial crisis of 2008. Stock prices tend to be more stable in the sector as well. 
  2. Dividend Income. Financial stocks are known for providing strong dividend payments. As of mid-2022, the sector produced a 3.11% average dividend yield, according to Dividend.com. 
  3. Strong Growth When Interest Rates Rise. Banks make more money when the Federal Reserve increases the Fed funds rate. As inflation rises, the Federal Reserve has hinted at steady increases throughout the foreseeable future, which suggests bank stocks are worth your attention. 
  4. Outpace Inflation. Historically, financial sector investment returns have significantly outpaced the rate of inflation, making them a great inflation hedge.  

Cons

Although there are plenty of reasons to consider diving into financial stocks, there are also a few big drawbacks that you should consider before taking the plunge. 

  1. Financials Aren’t Strong Growers. Financial stocks are known for steady growth, not necessarily strong growth. If you’re looking for growth stocks, you may find a few in the fintech space, but growth investors will be better served by stocks in the tech sector.  
  2. Lower Earning Potential When the Fed Funds Rate Is Low. Although the Federal Reserve has hinted at increasing its rate ahead, the rate is currently below 1%. This low rate means companies in the sector, particularly lenders, have limited revenue potential.  
  3. Lack of Excitement. The best investments are educated investments, meaning you need to research opportunities to be successful in the market. Unfortunately, the financial sector isn’t sexy like technology and biotechnology is for most people. The research process to evaluate financial companies may be daunting for some investors.

Should You Invest in Financial Stocks?

Financial stocks fit well into most investment portfolios. Even aggressive investors who seek to beat the market find them useful as a means of diversification. Nonetheless, there are some investors who won’t find diversification with these assets beneficial. 

You might be a great candidate to invest in financial stocks if:

  • You’re an Income Investor. The financial sector is known for providing some of the strongest dividends on the market today. So, income investors benefit from the outsize dividend yields that come with investments in some of the most established companies in the industry. 
  • You’re Risk-Averse. If you have a low to moderate appetite for risk, financial stocks may be a great home for your investment dollars. These stocks are known for relatively low volatility when compared to stocks in other sectors, and most banks have beefed up their cash and cash equivalent holdings since 2008, making them a force to be reckoned with on the financial stage. 
  • You’re an Aggressive Investor Who Needs Balance. If you’re an aggressive investor who wants to beat the market, chances are you’ll want to invest most of your assets in other sectors. However, you can use financial stocks as a way to diversify your holdings and reduce the overall risk in your portfolio. 
  • You’re a Beginner. If you’re a beginner investor, it’s best to stick with large, safe companies that you know and do business with before venturing into other investments. Financial institutions often fit this bill. In fact, one of the best first investments you can make is often an investment in the stock of the bank you use. That is, as long as you work with a major financial institution. 

How Much of Your Portfolio Should You Allocate to Financial Stocks?

The amount of allocation you should direct to the financial sector is heavily dependent on your goals and risk tolerance. Here’s how you should decide how much to invest in financial stocks: 

  • Your Goals. Your goals play an important role in determining the best style of investing. If your goals include producing slow, yet meaningful and stable gains while generating income from your investments, the financial sector is a great place to start. Consider allocating a large portion of your stock portfolio to stocks in the sector. However, if you want to produce market-leading gains and you’re not so concerned about income, minimal allocation to financials is best. 
  • Your Risk Tolerance. Financial stocks experience less volatility than stocks in other sectors and are known for maintaining a hefty sum of cash on their balance sheets. As a result, they’re relatively low-risk plays. If you have a low-to-moderate risk tolerance, a large allocation to financials fits the bill. However, if you have a moderate-to-high risk tolerance, you may want to keep allocation to the sector to a minimum. 
  • Your Need for Investment Income. Financial stocks are a great option for retirees because they’re known for high dividend yields. Financial stocks are a great option if you depend on the income your investments generate. So, if you’re a retiree, a heavy allocation to this sector is warranted. 

Don’t forget your safe-haven allocation. Fixed-income investments, gold, and other safe havens protect you from significant losses when stocks take a dive. So, always keep safe havens in mind when determining your portfolio’s asset allocation.  


Consider Financial ETFs

If you don’t know how to research and maintain a balanced portfolio of stocks or don’t have the time to do it, you have another option. You can invest in financial exchange-traded funds (ETFs).  

These funds collect investment dollars from a group of investors to purchase financial stocks and other securities. When the stocks rise in value, investors share in the price appreciation. Moreover, when the stocks held in the fund’s portfolio pay dividends, shareholders receive their share of dividends based on the number of ETF shares they own. 

The best part is that financial ETFs are managed by professionals yet very inexpensive to tap into. With a little research on the best performing funds in the financial sector, you can take a largely hands-off approach to financial sector exposure. 

The best financial ETF for you depends on your investment goals. Popular financial ETFs on the market today include the Financial Select SPDR Fund (XLF), the Vanguard Financials ETF (VFH), and the SPDR S&P Regional Banking ETF (KRE). 


Final Word

Financial stocks are a great addition to just about any investment portfolio. If you’re an income investor or a risk-averse investor, you’ll enjoy the relatively stable price appreciation and meaningful dividends in the financial sector. If you’re a more aggressive investor who’s interested in growth, financial stocks are a great way to bring balance to your portfolio through diversification. 

It’s no wonder that nearly every investing mogul from Warren Buffett to George Soros seems to have at least some allocation to the sector. 

Financial stocks tend to do best when economic conditions are positive and interest rates are on the rise. As of mid-2022, that seemed to be the case. Consumer prices are rising, and the Federal Reserve has hinted at coming interest rate hikes that will bode well for financial corporation profitability. This suggests financial stocks will head up moving forward.

However, not all stocks in the financial sector are created equal. Some grow while others fall. Some pay dividends while others don’t. Simply put, some are winners and some are losers. Always do your research and get a good understanding of what you’re investing in before risking your hard-earned money. 

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Joshua Rodriguez has worked in the finance and investing industry for more than a decade. In 2012, he decided he was ready to break free from the 9 to 5 rat race. By 2013, he became his own boss and hasn’t looked back since. Today, Joshua enjoys sharing his experience and expertise with up and comers to help enrich the financial lives of the masses rather than fuel the ongoing economic divide. When he’s not writing, helping up and comers in the freelance industry, and making his own investments and wise financial decisions, Joshua enjoys spending time with his wife, son, daughter, and eight large breed dogs. See what Joshua is up to by following his Twitter or contact him through his website, CNA Finance.

Source: moneycrashers.com

How to Qualify for Public Service Loan Forgiveness

While student loan forgiveness may be up in the air, the administration has taken steps to reform debt relief programs that already exist. The Department of Education revamped the Public Service Loan Forgiveness (PSLF) program, which was started under the Bush administration in 2007. The program is designed to reduce student debt for graduates who go on to work in a range of government, nonprofit and healthcare jobs; see below for a list and more details.

Announced last October, the new rules include a limited requirement-waiver that allows eligible borrowers to have payments that were previously excluded counted toward loan forgiveness. The waiver ends October 31 of this year. To see if you qualify, go to studentaid.gov/pslf/ to use the PSLF Help Tool, which will generate the form you need. And make sure to have your old W-2 forms on hand. To see if your employers—past and present—qualify as an eligible or ineligible employer you will have to enter the employer’s tax identification number which is in box b of your W-2. For more information on the tool and how to use it, go to studentaid.gov/articles/become-a-pslf-help-tool-ninja/.

The waiver seems to have worked as it’s supposed to for at least one now-former debtor. Ricardo Maldonado of New York City recently tweeted how roughly $139,000 worth of his federal student loans (connected to a graduate degree) was forgiven thanks to the PSLF waiver. Maldonado applied for forgiveness back in November 2021. After applying he got letters updating him about the process and received official notice of forgiveness on May 31, 2022.  

Maldonado says that the PSLF form was easy to manage for himself thanks to having one employer for the past 15 years, but more importantly “[It] was useful seeing folks say that [forgiveness] was possible,” he said via a direct message on Twitter.

What Went Wrong with Public Service Loan Forgiveness?

People with student loans who work in qualifying non-profit or government jobs may have their loans forgiven after ten years of qualifying payments to a qualifying loan program. These payments may be adjusted in consideration of the borrowers’ income level. 

The first borrowers would have been eligible for forgiveness in October 2017 (remember, the program was launched in 2007). But four months before that, the Consumer Financial Protection Bureau reported problems: “Borrowers report that servicers delay or deny access to loan forgiveness through wrong information about their loans, flawed payment processing, and bungled job certifications.”

One major complication involves how federal student loans originated. Prior to 2010, federally backed student loans were issued by financial institutions and not directly by the federal government. PSLF applies only to direct student loans, or those issued by the federal government. Earlier loans could be consolidated into direct loans, and payments made after that consolidation would apply toward PSLF.

Who Qualifies for Public Service Loan Forgiveness?

The PSLF program covers a wide range of jobs, including virtually all direct government employment (whether federal, state, local or tribal). Many jobs at nonprofits as well as public health work also qualify. Some exceptions include Labor unions or partisan political organizations. Members of Congress are also specifically excluded. The program also has provisions that work must be full time (at least 30 hours a week), though this can be through multiple jobs with qualified employers.

Positions include:

  • Emergency management
  • Military service: service on behalf of the U.S. armed forces or the National Guard
  • Public safety
  • Law enforcement: crime prevention, control or reduction of crime, or the enforcement of criminal law
  • Public interest law services: legal services provided by an organization that is funded in whole or in part by a local, state, federal, or tribal government
  • Early childhood education including licensed or regulated child care, Head Start, and state-funded prekindergarten
  • Public service for individuals with disabilities and the elderly
  • Public health including:
  • Nurses
  • Nurse practitioners
  • Nurses in a clinical setting
  • Full-time professionals engaged in health care practitioner occupations, health support occupations, and counselors, social workers, and other community and social service specialist occupations as such terms are defined by the Bureau of Labor Statistics
  • Public library services
  • School library or other school-based services

More detail is available at: https://studentaid.gov/manage-loans/forgiveness-cancellation/public-service/questions.

Source: kiplinger.com

7 Ways to Score Free Dental for Seniors on Medicare

Affording dental work can be tough if you’re an older American on Medicare.

That’s because Original Medicare — which covers a majority of beneficiaries — doesn’t include routine dental care.

Congress is considering whether to add dental coverage to Medicare as part of a $3.5 trillion social spending package — but progress has been slow.

For now, older adults are mostly on the hook when it comes to paying for their own oral health care.

Here are seven ways to get free or reduced dental care. We’ll also explain what limited dental benefits Medicare coverage provides, along with other options like private insurers and Medicaid.

7 Places to Get Cheap or Free Dental Care for Seniors

Medicare beneficiaries who use dental services spent an average of $874 a year out-of-pocket, according to an analysis by the Kaiser Family Foundation.

That’s a lot of money, especially if you’re on a fixed income.

Here are a few tips and tricks to save big on oral health.

1. The Dental Lifeline Network

This program by the American Dental Association offers free, comprehensive dental treatment to specific groups, including people ages 65 and older.

You can use this tool on the Dental Lifeline Network website to learn about the specific program details in your state.

Heads up: Due to long wait lists, several states and counties are no longer accepting new applications for the Dental Lifeline Network program. When we did a quick search, states like Texas, California and Kentucky weren’t accepting new applications.

2. Community Health Clinics

Federally funded community health clinics provide reduced-cost or free dental care services to people with low incomes.

Many operate on a sliding scale system while others offer flexible payment plans.

Wait lists can be long, so it’s important to reach out to your local clinic early.

Follow this link to find the nearest community health clinic near you.

3. Dental Schools

Some dental schools offer low-cost cleanings and other routine care to members of the community.

Most of these teaching facilities have clinics that give dentists-in-training an opportunity to practice their skills while providing care at a reduced cost.

You can search for a program in your area by visiting the American Dental Association website.

There’s no guarantee that a dental program in your area currently offers free or reduced dental care. You’ll need to contact each program individually to see what’s available.

When you call, make sure to ask about any fees up front.

4. NeedyMeds.com

This website offers a comprehensive list of dental offices with sliding scale payment options, community health center locations and dental school clinics.

It does a great job breaking down requirements and eligibility (if any) for services in your area, and provides contact information for each service.

Just enter your zip code into this search tool to get started.

5. Talk With Your Dentist

It might be difficult to ask for help, but being honest with your dentist about your financial situation can help.

Your dentist may be able to offer a less expensive treatment, help you set up a payment plan or provide a sliding scale payment option.

Ask if you can receive a discount for referring a friend. Or, see if it’s possible to knock off a few bucks in exchange for a positive online review of the dentist office.

6. Sign Up for a Dental Savings Plan

Dental savings plans aren’t dental insurance, but they may still be able to save you money.

Here’s how it works.

With a dental savings plan, you pay an annual fee, then get a 10% to 60% discount on most dental services such as exams, cleanings, fillings, root canals and crowns.

The plan contracts with dentists who agree to reduce their fees, then you pay the participating dentist directly using your discount.

You’ll still pay out of pocket for those services, but the idea is that you won’t pay as much as you would without the plan.

But let’s be clear: Dental discount plans aren’t free. The average cost for plans in Orlando, Florida, for example, ranged between $135 to $170 a year.

You can visit DentalPlans to find a plan in your area.

7. Shop Around

Dentists can charge widely different prices for the same exact procedure.

When you’re paying out of pocket, it pays to shop around.

You can find average prices in your area by using FAIR Health, a national nonprofit organization. The site lets you search by specific procedures, so you get the average cost for a root canal or teeth cleanings in your area.

Armed with knowledge, call around to different dentist offices for quotes. Ask about senior discounts.

You can also look for discounted dental care on sites like Groupon.

A quick search on Groupon for dental services in Houston, Texas, showed numerous x-ray, exam and cleaning packages for $25 to $50. One office even offered $700 toward dental implants for just $40!

If you live in a high cost-of-living area, driving to a less expensive area is another smart way to save money.

A senior citizen laughs as a dentist shows him dentures.
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Does Medicare Cover Dental Care?

Yes and no.

Original Medicare doesn’t provide coverage for routine dental, vision or hearing benefits.

Original Medicare will only cover dental work if it’s deemed medically necessary, i.e. you were hospitalized after a traumatic injury that also affected your jaw, teeth or mouth.

Here are the other dental services covered by Medicare Part B:

  • Dental services that are critical to a larger procedure like facial reconstruction after an accident.
  • Tooth extraction that is needed to prepare for radiation treatment.
  • Oral exams that are done to prepare for a kidney transplant or heart valve replacement.

So if you’re looking for standard dental care like teeth cleaning, X-rays, fillings, extractions, dentures and more — the cost comes out of your pocket.

Medicare Advantage

Medicare Advantage plans are administered by private insurance companies. They must provide the same basic coverage as Original Medicare, but plans may offer additional benefits, such as dental.

About 94% of private Medicare Advantage plans provide some dental coverage, but the amount of coverage varies by plan.

According to the Kaiser Family Foundation, nearly all Medicare Advantage plans that include dental offer coverage for oral exams, cleanings and x-rays.

But benefits for more advanced dental work like root canals, implants and dentures can carry substantial copays, depending on the plan.

Medicare Advantage plans almost always impose restrictions, including annual dollar caps and how often you can get certain benefits, such as dental implants.

The average annual limit on dental benefits among Medicare Advantage plans that offer more extensive benefits was about $1,300 in 2021, according to KFF.

If you’re in a Medicare Advantage plan, it’s important to check the plan’s summary of benefits or evidence of coverage to see exactly what dental work is covered. It can vary widely from plan to plan.

Other Dental Insurance for Seniors

About half of all Medicare beneficiaries — 47% — did not have any form of dental coverage in 2019, according to the Kaiser Family Foundation.

Besides Medicare Advantage plans, other sources of dental coverage for seniors include Medicaid and private plans, such as employer-sponsored retiree plans and individually purchased dental plans.

Private Dental Insurance for Seniors

A standalone dental policy for people 65 and older is typically $20 to $50 a month, according to AARP. These dental insurance policies usually come with an annual deductible of $50 to $100.

Dental insurance plans usually cover checkups and cleanings 100% but you will probably owe 20% to 50% for other services, such as tooth extractions or dentures.

The devil is in the details with private dental plans: It’s important to shop around and carefully compare benefits to make sure you’re getting the best deal.

Here are a few other things to keep in mind about private dental insurance plans:

  • You can’t enroll in a dental plan through the federal ACA Marketplace if you’re already enrolled in Medicare.
  • ​​Private dental policies usually don’t charge higher monthly premiums if you’re over 65 or in poor health.
  • An insurance company may require you to undergo a waiting period before you can get expensive procedures.
  • Some plans won’t cover pre-existing dental conditions you had before enrolling in coverage.
  • You may be restricted to an in-network dentist, so check to see if your dentist is on the list.

Medicaid

About one in five Medicare beneficiaries is also enrolled in Medicaid, sometimes referred to as being “dual enrolled.”

Medicare usually pays as your primary insurance when you’re dual enrolled. But if you need dental work done or even a yearly cleaning, consulting your Medicaid handbook is a smart move.

If you meet Medicaid low income requirements in your state, you may be able to receive free or low-cost dental care for certain procedures and services.

But it’s not a guarantee. While most states provide at least some emergency dental services, only 36 states and Washington, D.C. offer limited or comprehensive dental benefits for adults, according to the National Academy of State Health Policy (NASHP).

Even if your state Medicaid program includes dental, it may not pay out much. Of the 36 states with routine dental care coverage, only 23 states offer an annual expenditure cap of $1,000 or more.

Adult Medicaid recipients in Arkansas, for example, only receive up to $500 of dental services a year. So if you need a $3,000 root canal and you’re dual enrolled with Original Medicare, you can expect to pay $2,500 out of pocket in that state.

According to Medicaid’s national website, “States have flexibility to determine what dental benefits are provided…There are no minimum requirements for adult dental coverage.”

To find the Medicare office contact information for your state, click here.

Rachel Christian is a Certified Educator in Personal Finance and a senior writer for The Penny Hoarder.

Source: thepennyhoarder.com

Does Medicare Cover Hearing Aids? 6 Ways to Save Money

Affording hearing aids is challenging if you’re an older American on Medicare.

That’s because Original Medicare — which covers a majority of beneficiaries — doesn’t cover hearing aids, fittings or hearing exams.

That’s right — not a dime. And hearing aids are expensive: The average cost for one pair ranges from $3,000 to $6,000.

About 1 in 3 people between the ages of 65 and 74 have hearing loss, and nearly half of people 75 and older have difficulty hearing, according to the National Institute on Aging.

For now, older adults are mostly on the hook when it comes to paying for hearing care.

In this guide, we break down what hearing aid coverage is available to both Original Medicare and Medicare Advantage beneficiaries.

We also explore other ways to save money on hearing care, including Medicaid and nonprofit programs.

Does Medicare Cover Hearing Aids and Exams?

Original Medicare doesn’t cover hearing aids or exams for fitting hearing aids. Some Medicare Advantage plans have hearing aid coverage, but it varies by plan. Some other services are covered under both, however.

Original Medicare

In some situations, Original Medicare coverage may pay for cochlear implants or hearing tests in emergency situations.

Original Medicare covers 80% of the cost of cochlear implants for those who qualify. Cochlear implants are considered medically necessary for the treatment of a severe to profound hearing impairment.

Medicare Part B will generally cover a cochlear implant if you recognize sentences while wearing your hearing aids only 40% of the time or less.

Medicare Part B will also cover 80% of a diagnostic hearing test and balance exams, but only if it is ordered by your doctor or health care provider during an emergency.

For example, a doctor may run these tests to diagnose the cause of dizziness or vertigo.

Need a refresher on how Medicare works? Check out answers to seven frequently asked questions. 

Medicare Advantage

Original Medicare doesn’t provide hearing aid coverage, but many Medicare Advantage plans offer hearing health benefits.

Medicare Advantage plans are administered by private insurance companies. They must provide the same basic coverage as Original Medicare, but plans may offer additional benefits, such as hearing aids.

About 93% of Medicare Advantage plans provided some hearing aid coverage in 2021, according to the Kaiser Family Foundation.

But how much coverage each Medicare Advantage plan provides varies.

For example, the KFF analysis found that about 60% of enrollees are in plans that require cost sharing for hearing aids, which ranged from $5 up to $3,355 in 2021.

Most plans also include coverage limits and restrict you to a specific network of physicians.

Make sure you calculate your potential out-of-pocket costs when choosing a Medicare Advantage plan.

Remember: Even with a good Medicare Advantage plan, you may still face out-of-pocket costs, such as premiums and deductibles as well as copayments to see an audiologist for fittings.

6 Ways To Get Cheap Hearing Aids

Medicare beneficiaries who accessed hearing care services spent an average of $914 out-of-pocket in 2018, according to an analysis by the Kaiser Family Foundation. For many, that’s simply out of reach.

Some national organizations cover hearing aids for people with low incomes and limited resources. These programs often have strict eligibility criteria and may be difficult to qualify for.

There are other ways to get affordable hearing aids, including shopping around and asking your audiolist for sliding scale payment options.

1. Miracle-Ear Foundation’s Gift of Sound Program

The Miracle-Ear Foundation’s Gift of Sound program helps provide hearing aids for adults with hearing loss.

The program is available to individuals with significantly limited incomes under 200% of the federal poverty level who have exhausted all other financial resources.

You need to contact your local Miracle-Ear store before starting an application. Supporting documentation from a hearing care professional and an application fee of $150 is required.

You can find more information about the Gift of Sound program along with eligibility requirements here.

2. Help America Hear Program

The Help America Hear program provides hearing aids for adults with limited financial resources.

The program can provide both new ReSound behind-the-ear and receiver-in-canal digital hearing aids.

There are three qualifying tiers based on gross household income, personal assets and health insurance coverage.

Every applicant is required to pay a fee, which can range from $125 to $500 for one hearing aid, to $250 to $1,000 for two hearing aids.

The application process is extensive and requires medical documentation, proof of income and proof of health insurance (if any).

The entire application process can take two to six months, according to the organization’s website.

If you qualify, you are still responsible for the cost of the hearing evaluation, batteries, accessories as well as extended loss and damage warranties.

Click here to check out the Help America Hear program application.

3. Check Out Costco

Comparison shopping is important if you want to save money on hearing aids.

Wholesale clubs like Costco offer great deals on hearing exams, fittings and devices.

Costco’s private brand, Kirkland Signature, sells hearing aids for about $1,400 per pair — about half the price you’d pay elsewhere for a name-brand equivalent. They also offer free hearing tests.

Not every Costco location has on-site audiologists or hearing specialists and you’ll need an appointment. You’ll also need to sign up for a Costco membership, which starts at $60 a year.

4. Talk to Your Doctor

It never hurts to ask for a discount.

It may sound like a no-brainer, but simply asking your health care provider for a more affordable price can really help.

According to Consumer Reports, almost half of all hearing aid users in their survey who asked for a lower price on their hearing aids ultimately received a discount.

Most audiologists and hearing care professionals offer financing plans and some offer sliding scale payment options.

Wherever you go to purchase your device, try bargaining or asking for a lower-priced model.

The price of a hearing aid is sometimes “bundled” to include the device plus other costs, like the audiologist’s services for fittings, adjustments and follow-up care.

Asking your provider to unbundle their services and provide you with an itemized list of charges can help you save money because you’ll only pay for what you need.

5. Keep an Eye Out For Over-the-Counter Hearing Aids

Hearing aids may get much more affordable in the near future thanks to an FDA proposed rule issued in October 2021.

The rule would create a new class of over-the-counter (OTC) hearing aids available without an exam or fitting by an audiologist.

OTC hearing aids would be available from any seller — and at a fraction of the cost. Consumers could pay about $600 per pair instead of upward of $5,000 per pair, according to Harvard Health Review.

It would also cut the red tape many consumers face: Currently, patients must see a licensed hearing professional and obtain a prescription before they can buy hearing aids.

OTC hearing aids will be available to adults with mild to moderate hearing loss, and will be equipped with the same basic technology as traditional hearing aids.

The FDA is currently finalizing its proposed rule. OTC hearing aids are expected to hit the market by the end of 2022, according to The New York Times.

Local Organizations and Programs

Some local and regional nonprofit programs provide financial assistance or discounted hearing aids to those who qualify.

You can call United Way’s 2-1-1 social services number or contact your local Area Agency on Aging to see what’s available.

To find the contact information for your local Area Agency on Aging, enter your zip code into the Eldercare Locator tool operated by the U.S. government.

Other Hearing Care Insurance

Medicare coverage for hearing aids may be limited but Medicaid and VA benefits can help pick up the cost if you qualify.

Medicaid

About one in five Medicare beneficiaries is also enrolled in Medicaid, sometimes referred to as being “dual enrolled.”

Medicaid is a federally-funded health insurance program for people with low incomes. It’s administered at the state-level, so each state determines its own hearing benefits and limitations.

About half of states offer some hearing benefits and coverage for hearing aids.

What’s covered varies even among states with hearing aid benefits. In Florida, for example, you can receive a pair of hearing aids once every three years but in North Dakota, Medicaid recipients are entitled to hearing aids only once every five years.

In some states, like New Jersey and Massachusetts, hearing aids are only available with specific Medicaid plans.

You can see what benefits your state offers along with any limitations and requirements by visiting this comprehensive list from the Hearing Loss Association of America.

Or call and ask the Medicaid program in your state to see if you qualify.

Veterans’ Benefits

Veterans may qualify for hearing aids through the U.S. Department of Veterans Affairs (VA).

You must enroll in the VA Health Benefits program to qualify.

Once enrolled (or if already enrolled), you can schedule an appointment at an Audiology and Speech Pathology Clinic for a hearing evaluation.

If the doctor recommends hearing aids, you can receive the devices for free so long as you maintain VA eligibility for care.

The VA will also provide necessary maintenance of any hearing aids you receive, including replacement batteries, cleaning and adjustments.

If you live more than 40 miles from a VA clinic or if you can’t get an appointment for at least a month, you may qualify to see a private audiologist through the VA’s Choice Program.

The VA provides hearing aids to the following veterans:

  • Former Prisoners of War.
  • Purple Heart recipients.
  • Those rated permanently housebound or in need of routine care.
  • Those with any service-related disability.
  • Those with hearing loss resulting from a disease or medical condition for which they receive VA care or disability.
  • Those who have hearing loss severe enough that it hinders their ability to participate in their own medical treatment or daily living.

Even if you don’t use the VA for your other health care needs, it’s smart to use it for hearing aids. It’s one of the only programs that provides high-quality devices at no cost.

To apply, visit your local VA office, go online or call 877-222-VETS (8387).

Rachel Christian is a Certified Educator in Personal Finance and a senior writer for The Penny Hoarder.

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Source: thepennyhoarder.com

Medicare Vision Coverage: How to Save Money on Eyeglasses and Exams

These services are free to qualifying older Americans. It’s one of the only national programs that offers free eye exams for people on Original Medicare.
Members of AAA and AARP can get the following discounts at LensCrafters:
Like Walmart, Costco eye exam costs vary, but you can expect to pay anywhere from to 0 for an exam.
Medicare Advantage plans also restrict the vision benefits they offer, including:
Finally, numerous local nonprofits offer free eye exams throughout the year. Call United Way’s 211 service to see if a program exists near you. Or Google “free eye exams near me.”

How Medicare Covers Vision

Plans are generally inexpensive — usually to a month — and premiums usually don’t increase with age like other types of health insurance.
Medicare Part B covers 80% of the cost for: 
Ready to stop worrying about money?
You can see if you qualify and apply for the program by filling out this form.

Original Medicare

The OneSight Vision Voucher program helps people in need receive free eyewear if they’re not able to cover the cost of eyeglasses with insurance.
Both retailers also offer a wide selection of eyeglasses in the to range.
Some diseases and conditions — such as lupus and shingles — can affect your vision even though they aren’t traditional eye diseases. Medicare Part B covers treatment for your eyes if you have one of the many conditions on this list from the U.S. Centers for Medicare & Medicaid Services.

Medicare Advantage

Original Medicare does not cover routine vision exams, eyeglasses or contact lenses. Lasik surgery isn’t covered either.
Retailers like Costco and Walmart offer optical centers with affordable pricing on eye exams and glasses.
Veterans can also qualify for free eyeglasses or contact lenses by meeting one of the following criteria:

  • how often you can replace glasses and/or contact lenses.
  • how often the plan will pay for eye exams.

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Older people with low incomes may also qualify for free or reduced eye exams at their local county health department.

Need a refresher on how Medicare works? Check out answers to seven frequently asked questions. 

Medicare Coverage for Other Eye Treatments and Conditions

There is also a program that provides free eyeglasses to those who qualify — but be prepared to jump through some hoops first.
In states that do provide vision benefits, basic eye exams are covered. Prescription glasses with basic frames are also usually covered, but each state has specific caps.
Rachel Christian is a Certified Educator in Personal Finance and a senior writer for The Penny Hoarder.
Students at optometry schools sometimes provide free or discounted eye exams during clinics.

  • Certain treatments for serious eye conditions, including micro-invasive glaucoma surgery.
  • Cataract surgery. Medicare will pay to implant a conventional intraocular lens. It will also cover one pair of standard-frame eyeglasses or a set of contact lenses after cataract surgery.
  • Detached retina treatment.
  • Treatment for certain dry eye conditions.
  • Eye exam for people with diabetes to detect glaucoma and diabetic retinopathy.
  • Annual glaucoma test for people at high-risk of developing the disease or with a family history of glaucoma.
  • Some tests and treatments for age-related macular degeneration.
  • An eye prosthesis (artificial eye) for patients with absence or shrinkage of an eye due to birth defect, injury or surgical removal.
Pro Tip
If you have an eye disease that causes low vision, such as macular degeneration or glaucoma, Medicare Part B will cover screening tests and standard treatment.

Here’s how it breaks down.

How to Save Money on Vision Care Costs

If you are also enrolled in Medicaid or Veterans Affairs health benefits, you may qualify for free or low-cost vision care.
Original Medicare does cover eye care related to illness or injury, including cataract surgery and glaucoma screenings. More on that shortly.
Many of these sites offer virtual “try on” features and come with convenient return policies so you can find frames and lenses that work for you.

How to Save Money on Eye Exams

If you have a serious eye disease like cataracts or glaucoma, Medicare Part B will generally pay for treatment.
You can use this tool to search for schools in your area — although the eye exams and care provided vary from school to school.

Discounts for AAA and AARP Members

To receive your AAA or AARP member discount, make sure to present your membership card at participating locations. 
Buying eyeglasses online is a cheap alternative to paying hundreds of dollars for a fancy pair at your optometrist’s office.

  • 30% off comprehensive eye exams.
  • 50% off a complete pair of eyeglasses (frame and lenses) and prescription sunglasses. Valid in-store and online.
  • 10% off disposable contact lenses.
  • 30% off non-prescription sunglasses.

According to a recent survey from Consumer Reports, people who bought glasses online paid a median of , while those who shopped in-store spent 4.

  • $55 comprehensive eye exam at participating independent eye doctors (Use this tool to find a location near you).
  • $10 off best in-store offer on a complete eyewear purchase at Target Optical.
  • 10% off contact lenses at Target Optical.
  • $10 off non-prescription sunglasses at Target Optical.
  • 30% off a complete pair of glasses at Glasses.com (Use code RP_30OFF_GL at check out).
Pro Tip
Source: thepennyhoarder.com

Costco and Walmart

Medicaid will cover eye exams for adults ages 21 and older in most states — but not all.
Talk to your VA primary care provider or contact your nearest VA medical center or clinic for more information.
Here are the steps you need to take:
So how do you know, in your own case, what’s covered and what’s not?

EyeCare America

Its Seniors Program provides comprehensive eye exams and up to one year of followup care for any eye condition diagnosed during the initial exam.
The services above are covered whether you have Original Medicare or a Medicare Advantage plan. 
Fortunately, several programs and organizations offer free or discounted eyeglasses and exams for older adults.
EyeCare America is the public service arm of the American Academy of Ophthalmology.

  • Be age 65 or older.
  • Be a U.S. citizen or legal resident.
  • Not belong to an HMO or have eye care benefits through the VA.
  • Not have seen an ophthalmologist in three or more years.

Medicaid is a federally funded health insurance program for people with low incomes. It’s administered at the state-level, so each state determines its own vision benefits and limitations.
By law, both Original Medicare and Medicare Advantage must cover the same basic vision services for eye diseases and chronic conditions.

Lions Club International

Check out OneSight’s website to learn more about its vision voucher program.
Research your specific state’s Medicaid vision coverage or contact your local Medicaid office for more information. Speaking with a local Medicaid office and your individual plan provider is the best way to understand your specific vision benefits.

Optometry Schools and Senior Discounts

If you’re enrolled in Medicare, routine vision care isn’t guaranteed.
Finally, to get these vision benefits, you will need to use certain eye care professionals and services within your specific Medicare Advantage plan network.
If you have VA health care benefits, the program will cover your routine eye exams and preventive vision testing.
At Walmart, eye exams average about , but prices vary by location.
Copays for eye exams with Medicaid are affordable, usually or less.
Here are some of the best ways to reduce your out-of-pocket costs on routine vision care when you’re enrolled in Medicare.

A man tries on eyeglasses.
Getty Images

Where to Get Free or Cheap Eyeglasses

For more information, reach out to your local Lions Club chapter.
Just a heads up: This program does not cover the cost of eyeglasses.

OneSight Vision Voucher Program

Medicare may not be your only form of insurance.
Here are a few ways to keep more money in your pocket without forgoing important eye care.

  1. Get a referral letter from a nonprofit organization verifying your visual and financial need for glasses. The letter must be written on company letterhead and include the Tax ID# of the nonprofit organization. Recommended nonprofits include churches, the Lions Club, Prevent Blindness, Red Cross and United Way.
  2. You’ll need a valid prescription from an eye doctor. If you don’t have a prescription that is less than two years old, you can ask the onsite doctors at a Luxottica Retail location if they can donate a free eye exam.
  3. Take your referral letter and prescription from an eye doctor to a participating Luxottica Retail location — which includes LensCrafters, Target Optical and Pearle Vision corporate stores — to get your free pair of eyeglasses.

Some privately administered Medicare Advantage plans cover eyeglasses and eye exams.

Cheap Online Eyeglass Retailers

Medicare beneficiaries can purchase private vision insurance to help offset the cost of eyeglasses and routine eye exams. According to KFF, medicare patients spent an average of 0 out of pocket on vision care in 2018.
The following groups can also qualify for free eyeglasses through the VA:
But that’s not the case for routine exams and eyeglasses.
You should carefully examine any private vision insurance plan benefits and costs before signing up. Make sure the plan actually saves you money on eyeglasses and routine exams.

Does It Make Sense to Buy Private Vision Insurance on Medicare?

But Original Medicare — which provides health insurance to about 37.7 million Americans — doesn’t pay for your new eyeglass frames or an annual vision exam.
Privacy Policy
Another option is asking local vision care providers if they offer any senior discounts or in-house financing plans. Make sure to call ahead and ask before scheduling an appointment.
To qualify for the EyeCare America Senior Program, you must:

Does the VA or Medicaid Cover Eyeglasses and Eye Exams?

You’ll pay 20% of the Medicare-approved amount for these covered treatments and services after meeting your Part B deductible.
The national average cost of a comprehensive eye exam is , according to All About Vision and other sources, but the figure can vary from to 0.

Medicaid Vision Coverage

However, vision benefits are pretty modest — plans offer about 0 worth of eyewear and eye exam coverage a year on average, according to an analysis by the Kaiser Family Foundation (KFF).
AARP members also receive these discounts through other providers:
These undergraduates are closely supervised by faculty members, so it can be a cheap way to score a routine vision test.

  • At least 42 states offer some coverage for optometrist services.
  • At least 33 states offer some coverage for eyeglasses.

Some online retailers, like Zenni Optical, offer single prescription glasses starting at just . You’ll pay more for special coatings, progressive lenses and other add-ons.
For example, 47% of Medicare Advantage plans limit beneficiaries to one pair of eyeglasses every two years, according to the KFF analysis.
However, private insurance monthly premiums, copayments and deductibles may not make it worthwhile.
Once you’re clear on your coverage, make sure your eye doctor accepts Medicaid before scheduling an eye exam.

VA Vision Coverage

AAA and AARP members can receive discounts at participating LensCrafters and other retail locations nationwide.
Affordable eyeglass lenses and frames are easy to find online or at large retail stores like Walmart and Costco.
You’re on the hook for the full cost unless you have a separate private vision care policy or secondary insurance like Medicaid.

  • Have a disability linked to your military service for which you’re receiving VA disability payments.
  • Are a former prisoner of war,
  • Were awarded a Purple Heart.
  • Receive benefits under Title 38 United States Code (U.S.C.) 1151.
  • Receive an increased pension because you’re permanently housebound and in need of regular aid.
  • Experience vision problems caused by another  illness — such as stroke or diabetes — for which you’re receiving VA care.
  • Suffer from geriatric chronic illnesses (long-lasting illnesses that affect the elderly).

Eyeglasses and routine vision exams are pricey for Original Medicare beneficiaries.

  • Veterans with significant functional or cognitive impairments.
  • Veterans with a vision impairment severe enough that it interferes with their ability to participate in their own medical treatment.
  • Veterans who have service-connected vision disabilities rated 0%.

Whether you’re new to Medicare and wondering what to expect at your next eye exam, or you’re a long-time beneficiary trying to save money on glasses, our guide to Medicare vision coverage and affordable eye care is here to help.
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Nearly all Medicare Advantage plans — which are administered by private insurance companies like United Healthcare and Cigna — include some routine vision coverage.

Rising Health Care Costs and the Impact on Soon-to-Be Retirees

Over the past few months, Americans’ concern over inflation has steadily increased. A Gallup poll coordinated in March noted that 17% of Americans believe the high cost of living and inflation is a significant problem, up from just 8% in January. For individuals who may be nearing retirement, there are planning considerations to be mindful of as prices continue to rise – most notable, given the significant cost to retirees, is health care.  

While inflation may result in higher prescription and medical supply prices in the short term, health care costs typically outpace inflation over the long term, regardless of market conditions. This means soon-to-be retirees need to be forward-thinking and include health care costs in their broader financial plan.

Estimate costs

According to a model Vanguard developed with Mercer Health, even with Medicare, average health care costs can reach over $5,000 per year. In my work with clients, I typically focus on health care planning when an individual or couple is five to 10 years outside of expected retirement. This advanced planning can enable someone to develop a thoughtful approach to preparing for — and ultimately paying for, future health care costs.

A few years before retirement, start thinking about retirement timeline logistics. For example, if an individual is planning to retire at 62 but won’t be eligible for Medicare until 65, they’ll need to determine how they’ll cover health expenses for three years. For some, they might consider joining their partner’s health insurance plan (if the partner is not retiring at the same time), going with COBRA or finding a short-term insurance plan to cover the gap. Otherwise, it might mean tapping liquid assets or an HSA to pay for health care expenses before Medicare coverage kicks in.

Next, map out anticipated expenses early on and develop a corresponding savings plan to meet future objectives. Medicare.gov provides helpful information on eligibility and premium estimates. Vanguard also provides Personal Advisor Services clients, for example, with a Health Care Cost Estimator that forecasts health care and long-term care expenses.  

Evaluate family history

Of equal importance to timeline logistics is health considerations, such as family medical history, longevity expectations, and current health status, as those factors could influence your Medicare coverage choice. Of course, the concept of planning for a potential health scenario can be emotional. However, a forward-looking approach, and one that is guided with a financial adviser, can limit the need to make abrupt and challenging decisions amid a health crisis.

An additional possible expense — not covered by Medicare — is the need for long-term care. The leading conditions that often spur the need for long-term care include dementia, stroke, Parkinson’s disease and osteoarthritis. Assess family history well before retirement and determine whether long-term care may be an expense worth accounting for.

The need for long-term care can be a financial “wild card” since some clients may not require it in their lifetime. I work with clients to think through hypothetical situations as it can determine proper health care objectives tied to a financial plan:

  • “Are you planning to relocate in retirement?” Some locations (such as the West Coast and Northeast) can have higher health care costs.
  • “Will someone care for you as you age?” If the answer is yes, that will offset costs. However, without a spouse or child’s support, it likely means the need for outside resources, which can be costly.
  • Where will I feel most comfortable as I age?” That could be the difference between in-home nursing, a shared room at a nursing home or private resources at a more expensive facility.  

Remember financial ‘trade-offs’

In addition to assessing family history and calculating potential future health care costs, it’s important to understand the financial trade-offs that will come into play throughout different decades. For example, many retirees in their 60s see a portion of their retirement income funding travel or newfound hobbies. As retirees age and this activity decreases, there is a natural trade-off in expenses – the money that was once funding a golf habit may now be allocated toward prescription costs. This financial give-and-take is important to keep in mind, as retirement income will naturally fluctuate through different seasons of life.

Health care is just one piece of the retirement planning puzzle. And, as prices continue to rise in this space, it’s critical to develop plans years before retirement to ensure long-term financial security.

Senior Financial Adviser, Vanguard

Julie Virta, CFP®, CFA, CTFA is a senior financial adviser with Vanguard Personal Advisor Services. She specializes in creating customized investment and financial planning solutions for her clients and is particularly well-versed on comprehensive wealth management and legacy planning for multi-generational families. A Boston College graduate, Virta has over 25 years of industry experience and is a member of the CFA Society of Philadelphia and Boston College Alumni Association.

Source: kiplinger.com

Don’t Want to Leave Money to Your Kids? You’ll Probably Change Your Mind.

Some parents fear leaving their children too much money. They talk about their friend’s child, who ended up doing little with their lives and abusing drugs and alcohol. Or they have an image of “trust fund babies” who sleep all day and party all night.

The good news is that the vast majority of children with inherited wealth do lead productive lives and would not fall into any of the above descriptions. Their parents set expectations, provided guidance and encouragement, and set limits when the children were growing up. No surprise their children turned out just fine.

Parents also fear leaving their children a significant part of their wealth because it could ruin their drive to live a productive life, fearing they simply might not feel the need to work. Or that the children will feel that any financial success they achieve will not be meaningful compared to their inheritance. So, they choose to leave a relatively small inheritance, enough to help but not eliminate the need to work. But parents often greatly underestimate the amount their children may need simply as a safety net, let alone to enhance their lives. Further, parents may not be aware there are certain controls they can put on the money they leave to their children that can assuage fears about misuse.

As parents grow older, learn about these controls, and start to realize economic conditions are different, many end up changing their minds about how much money they want to leave their grown children. Coming to this conclusion earlier rather than later can have its benefits.

Here’s how to re-think leaving money to your children.

Determine your goals

If a parent’s concern is that they will harm their child by leaving them too much money, they need to determine what dollar amount will cause that harm. The answer depends on what they want their children to achieve with the money. Then consider the what-ifs. For example, assume a parent wants to leave their child $500,000.

  • What if the adult child has a health crisis or they have a baby with a disability, incurring significant costs to the adult child and/or preventing them from being able to work?
  • What if the market sinks and the $500,000 becomes $250,000?
  • What if despite working hard, they or their employer are put out of business by a competitor, regulations or shifts in consumer taste?

While $500,000 may seem like a lot, if you take into consideration all the possibilities, it can be dissipated quickly on non-frivolous expenses. On the other end of the spectrum, some parents ask where the limit is. When is the line crossed from “enough” to “too much”? They want to help their kids, but they don’t want to give them beyond what they could possibly need.

These goals may change as the child ages and grandchildren are born. Once their adult child starts working, parents may want to help with rent so they can have a nicer place to live or groceries so they eat a healthier diet. When grandchildren enter the picture, the parents may want to help their adult children buy a big enough house in a safe neighborhood with good schools. Grandparents may want to help pay for the grandkids’ higher education (or even private school for K-12) or want to ensure they will be able to afford good health care.

Parents’ goals and perspectives change over time, and financial plans change along with them.

Learn about controls and family conflict

Parents can put controls on the wealth they leave their adult children by using trusts. Parents can choose a trustee to manage the trust so the kids don’t have full access or control. The trust can help them get an education, buy a place to live and start a business, but they can’t just live off the trust and sit around doing nothing. These controls can be different for each child. If parents know one child won’t lose their drive no matter how much money they have but another child will spend it all in a week, the children can be given different, access, controls and rights over their trusts.

These differences could cause conflict in the family, so parents need to keep an open line of communication with their children to explain their concerns and why they set the trusts up the way they did.

Teach your children about money

It’s up to parents to teach their children how fortunate they are to inherit anything, and that responsibility comes along with having money. Used properly, wealth can provide a safety net for unforeseen circumstances (which always arise) and provide a better lifestyle than a child might otherwise attain with his or her own income. Used wisely, having wealth can impact the children’s own communities if used to create jobs by starting or growing a business. Parents can teach their children that while they have a comfortable lifestyle, they can also use their money to benefit the world around them.

Parents may fear that leaving their children money will end up doing more harm than good, but if parents teach their children from a young age how to properly use their wealth and set expectations, it’s less likely the children will use it irresponsibly. And if parents are still fearful their kids won’t use their money properly, they can place controls on what they give. But parents’ goals will inevitably change as they get older and situations change, so leave room for flexibility.

Partner in Trusts & Estates, Kirkland & Ellis

David A. Handler is a partner in the Trusts and Estates Practice Group of Kirkland & Ellis LLP. He concentrates his practice on trust and estate planning and administration, representing owners of closely held businesses, family offices, principals of private equity and venture capital funds, individuals and families of significant wealth, and establishing and administering private foundations and other charitable organizations.

Senior Managing Director, NFP Insurance Solutions

Howard Sharfman, Senior Managing Director of NFP Insurance Solutions, is a leader in the insurance business, managing one of the premier and largest wealth transfer consulting and planning firms in the country. Mr. Sharfman’s practice is highly focused on servicing families with multigenerational wealth.

Source: kiplinger.com