A Little-Known Downside of Medicare Advantage Plans
Plans are limiting one type of coverage, and the federal government has taken notice.
Plans are limiting one type of coverage, and the federal government has taken notice.
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The post Discover Student Loans Review: Earn Cash Back for Good Grades appeared first on Money Under 30.
If youâve discovered while preparing your 2021 tax returns that you actually owe federal income taxes, your employerâs benefits program may help you reduce your taxable income and improve your quality of life. And if you have a side gig and find yourself owing FICA (Social Security and Medicare) taxes, we have a couple of tips for you, too.
Here are five tax-reducing options your company may offer.Â
Thereâs no better way to lower taxes today while saving for the future than by maximizing contributions to your employerâs retirement plan, whether itâs a 401(k), 403(b) or a 457 plan.
In 2022, you can contribute up to $20,500 to your account, or $27,000 if your 50 or older. Every penny you contribute on a pre-tax basis reduces your taxable income, year after year. And if your company matches some of your contributions, youâll get an added boost toward building the nest egg of your dreams.
If youâre enrolled in a high-deductible health plan (HDHP) at work, chances are your employer also offers a health savings account (HSA) option.
HSAs are funded with pre-tax contributions from your paycheck, up to a maximum of $3,650 per individual ($7,300 per family) with an additional $1,000 in âcatch-upâ contributions per person if youâre age 55 and older. Â
Your HSA grows tax free, and you can take tax-free distributions to pay for qualified healthcare expenses, including over-the-counter medications, medical equipment, dental expenses, physical therapy and even acupuncture and aromatherapy.Â
If you change jobs, you can take your HSA to your next company or transfer your balances into an HSA offered by a financial services company.Â
Companies that donât have HSAs often offer flexible savings accounts (FSAs) as an alternative.
You can fund your FSA with pre-tax contributions of up to $2,850 per year. As with HSAs, assets in your FSA grow tax free and you can take tax-free deductions to pay for qualified healthcare expenses.
The main difference between FSAs and HSAs is that you generally must spend all the money in your FSA by the end of the plan year. However, your employer may either give you up to 2½ months after your plan year ends to use the leftover money or allow you to carry over up to $570 to use in the new plan year.
Unlike HSAs, you canât transfer your FSA. If you change employers, you must either use the money in your FSA before you leave or forfeit the balance.
If you have children in daycare, or they attend preschool or summer day camp or participate in before- or after-school programs, a dependent care FSA (DCFSA) can help you pay for these expenses. You can also use it to pay for certain adult care expenses.
Like healthcare FSAs, your can fund your DCFSA with pre-tax contributions and take tax-free distributions to pay for dependent care. You can contribute up to $2,500 per year if you file an individual return or $5,000 if youâre married and file a joint return. Â
As with healthcare FSAs, you must use all of your DCFSA contributions by the end of the plan year unless your employer provides a grace period or rollover option. And, like FSAs, DCFSAs canât be transferred to another employer.
If youâre considering purchasing term life insurance to provide financial protection for your family, take a look at what your employer offers.
Many companies offer group-term life insurance that employees can pay for through pre-tax contributions.
But be careful. If you pay for more than $50,000 worth of life insurance coverage, the excess will be subject to FICA and federal income taxes. If you want more coverage, consider supplementing the insurance you pay for at work with another policy you purchase on your own.
If you earn additional income from your own business or you receive 1099 income as in independent contractor, youâll generally have to pay FICA and federal taxes on these earnings. Most people with this extra income make quarterly estimated tax payments. If you wait until you file your returns to pay these taxes you may get hit with late-payment penalties.
The good news is that you may be able to reduce your side-gig tax burden by deducting many of your own business-related expenses. These may include vehicle expenses, business-related cell phone and Internet services, meals with clients or prospects and some of your home office expenses.
Keep in mind that you must keep detailed records of all of these expenses in case youâre the unlucky recipient of an IRS audit.
In addition to helping you decide which tax breaks to take advantage of at work, your accountant or financial adviser can also help you identify other ways to help you reduce or maybe even zero out your annual federal and state tax bills.
Putting aside money for emergencies, like replacing a roof or a major car repair, is one of the age-old mantras of personal finance.
But today thereâs one major potential expense that, until relatively recently, few working people rarely thought about: Paying for out-of-pocket medical costs.
Why? Because until the past decade or so, most employer health care plans covered the majority of employeesâ medical costs.
Not anymore.
The spiraling cost of health care has resulted in many employers shifting more of these expenses to employees. Monthly premiums for traditional health care plans that used to be fairly reasonable now may cost $600 per month or more. And most of these plans have annual deductibles â money you must pay out of pocket for medical expenses before the plan takes over most of the costs.
Since most employees canât afford these plans, many companies now also offer high-deductible health plans (HDHPs). How pervasive are these plans? In 2019 51% of all U.S. employees were enrolled in HDHPs.
And for those who arenât covered at work and have to purchase their own health insurance, HDHPs generally offer the lowest premiums of plans available in state and Affordable Care Act insurance marketplaces.
However, someday â maybe a few years from now, maybe next week â you will need medical treatment for an injury or a major illness. If youâre not financially prepared, you may discover the hard way what âhigh-deductibleâ really means.
Your HDHP may state that it has a $4,000 annual deductible. That means youâll have to use $4,000 of your own money to pay for medical treatments before the plan starts covering some of the costs. If you donât believe youâll have to pay that much, think again. In 2018, the average cost for a knee replacement was $35,000. For spinal fusion, $110,000. Thinking of having a child? It could cost you $4,500 or more once all pre-natal care, delivery and post-partum expenses are tabulated.
As a participant in an HDHP, Iâve personally experienced the painful price of health care. Last year I was healthy for most of the year, but the costs for one visit to an out-of-state emergency room and follow-up appointments ate up my entire $2,800 deductible.
Thankfully, my deductible was relatively reasonable, considering that in 2020 the average deductible for individual subscribers was $4,364 and $8,439 for those with family coverage, according to research conducted by eHealth.
But your expenses may not end when you hit your deductible limit. Many HDHPs require to you to continue to pay partial costs through co-payments and co-insurance.
Co-payments are fixed amounts you pay out of pocket for health care expenses. How much you pay depends on whether youâve hit the deductible or not. For example, if a procedure costs $500 and your co-payment for such a procedure is $20, you’ll pay $20 only if youâve paid the maximum deductible. Otherwise, youâll pay the full $500 out of pocket.
If deductibles and co-pays werenât enough, co-insurance can add even more to your medical tab. Itâs a percentage of covered health care services you may still have to pay on your own even when youâve maxed out your deductible.
Letâs say your plan has a 25% co-insurance requirement. If youâve already hit your deductible and then have another procedure that costs $1,000, youâll still have to pay $250 out of pocket.
Fortunately, the IRS sets maximum annual limits for total out-of-pocket medical expenses for HDHPs. In 2022, this limit is $7,050 for individuals and $14,100 for families. Any expenses above that level will be fully covered by your HDHP.
But remember â these limits reset every plan year.
If thereâs one silver lining in this scenario, itâs that many employers that offer HDHPs also offer Health Savings Accounts (HSAs).
With an HSA, you make pre-tax contributions from your paycheck to an investment account that allows you to withdraw contributions and earnings tax-free to pay for qualified health care expenses.
In addition to medical treatments, you can use your HSA to pay for prescription and over-the-counter drugs, medical equipment, dental expenses, physical therapy and even acupuncture and aromatherapy. You can also use your HSA to help pay for long-term-care insurance premiums.
For 2022, the maximum amount you can contribute is $3,650 per individual ($7,300 per family) with an additional $1,000 in âcatch-upâ contributions per person for those 55 and older. Some employers also make periodic contributions to their employeesâ HSAs to help offset some of these out-of-pocket expenses.
The great thing about HSAs is that you never have to make withdrawals. For example, you may choose to pay your current medical bills from your savings and reserve your HSA money for health care costs during retirement. (Note that once you enroll in Medicare you can no longer contribute to an HSA.)
If you start a new job with an employer that has an HDHP and HSA, you can transfer the assets from your old HSA into the new HSA. If they donât offer an HSA, you can move assets from your old HSA into one offered by a financial services company. Keep in mind that if you donât enroll in your new employerâs HDHP (or they donât have one) you canât make additional contributions to your HSA.
Having an HSA can help take the sting out of out-of-pocket medical expenses when they occur â but only if you contribute to it.
This may be challenging if youâre also trying to save for retirement, your childrenâs higher education or a new home. But considering that the pre-tax contributions you make to your HSA have the same taxable-income-lowering benefits as contributing on a 401(k) account, there are advantages to contributing as much as you can to both accounts.
If youâre fortunate enough to receive a tax refund, consider contributing some of it to your HSA. Even though these contributions are after-tax, they may be deductible. If youâre planning on doing this, make sure that your combined pre-tax and after-tax contributions donât exceed the annual limit.
This may sound like a tough-love situation, but the fewer family members covered by your plan the lower your premiums and out-of-pocket expenses may be. If your adult children are covered by your HDHP but work for a company that offers its own health care plan, it might be time to encourage them to experience the âjoysâ of managing their own health care expenses. Theyâll have to do it anyway, since at some point theyâll be too old to be covered by your plan (generally age 26, but higher in a few states).
If you and your spouse both have HDHPs at work, compare the monthly premiums, deductibles, co-pays, co-insurance and maximum out-of-pocket expenses for each option. If both options let your use your current primary care physicians and specialists, you may both want to switch to the more potentially affordable option.
And if youâre thinking of having a procedure done, you may also want to estimate total costs in your area.Â
Itâs unfortunate that people may need to add âfuture health care costsâ to their list of savings goals, but this is a reality that many will have to plan for. If you need help figuring out how to balance these competing priorities, a qualified financial planner can provide guidance to help you make sure that staying healthy doesnât significantly harm your financial well-being.
They had not decided who will be on the teams as of early January, but Iâm preparing for the downhill and super-G races.
My family and I moved to Salt Lake City from Boston when I was 4 years old. I spent a lot of time skiing at Snowbird Mountain Resort. It was a really cool upbringing because I got to spend my time on a ski team that was like a big family. I went to high school in Salt Lake, and I was able to work it out with my teachers that I would leave for weeks at a time. They fully supported me; I just told them I had a dream that I would go to the Olympics someday. And then when I was 19, I made the U.S. ski team. At 22, I was the youngest member of the Sochi Olympics U.S. menâs alpine team.
Itâs a 6 a.m. to 10 p.m. job with a lot of traveling. Weâre on the road about five and a half months of the year, if not more. Itâs really cool because we get to see the world and ski on different mountains all over the world. Weâre working hard and strength training when weâre on the road. These days, itâs hard to work out in public gyms, so in Europe weâve been carrying around a whole set of weights and equipment. We have to constantly exercise and do physical therapy. We also watch video when weâre done with training.
Right now, weâre in our downhill team bubble. Weâre almost a bubble within a bubble, actually, because we also limit our contact with the other guys on the U.S. ski team. And when weâre out in public, weâre not able to do as many autograph signings, and family members arenât even allowed to stay with us at the races this year. That has been the protocol for basically the whole year. If weâre around other people, we have to wear a maskâsometimes even within our own meetings with our downhill team.
You need to be vaccinated to go, and on our team, you need to also have a booster. Thereâs going to be a lot of testing before we fly and when we get there. The workers are going to be wearing hazmat suits on the plane, Iâve been told.
I have sponsorships with Snowbird Mountain resorts, and I have equipment sponsors. My skis, my helmet, my goggles, my Spyder outerwear, those brands are my other source of income. Thereâs also prize money. You get paid for your position, and you get points for your positions as well. If youâre in the top 30, you get World Cup pointsâ100 points for first place all the way down to one point for 30th place. I make a little bit of money on Cameo, too. I do shoutouts, happy birthdays, give people advice and things like that.
I also dabble with cryptocurÂrencies for fun. I started investing in crypto about four years ago. A couple of buddies on the team and I started playing around with it, not with big numbers or anything. It has just been kind of fun fooling around and learning more about it.
I think that itâs a good call to not pull the athletes out of the competitions, because weâd give up a lot of medals. We donât want to make it easy for the other countries.
Joe O’Connor, 62, who lives near Worcester, Mass., was diagnosed with Parkinson’s disease six years ago. Exercise is one of the only things that slows the progress of the chronic disease, so he works out avidly — often in a virtual reality world. He dances. He plays tennis. He enjoys games that help him work on his short-term memory and hand-eye coordination. “VR has been a very big help with Parkinson’s, both in slowing the progression and in helping me calm down,” O’Connor says.
Virtual reality has been around for years to help treat physical ailments and improve mental health, but it took lighter, less expensive headsets that could be used without a computer for VR to really take off. The headsets can now cost hundreds instead of thousands of dollars. Primarily used in hospitals and clinics, virtual reality is quickly segueing into the home and senior center market where VR programs enhance physical therapy, help combat acute and chronic pain, and potentially address a variety of mental health challenges, including post-traumatic stress disorder. The programs consist of games and scenarios that headsetwearing patients manipulate either through hand-held controllers or eye tracking, and the technology has become more lifelike and interactive.
A patient’s progress or lack thereof can be tracked in real time and through data sent to a doctor or therapist’s computer. “This is by no means a substitute for humans, but 99% of your life is far away from the examination room,” says Brennan Spiegel, director of health services research at Cedars-Sinai Medical Center in Los Angeles and a leading expert in the use of VR to treat pain. “We’re trying to augment the 99% of your life spent away from therapists.”
Unlike simple video games, virtual reality immerses the player in a 3D world, nudging the brain in a way other audio-visual media can’t, Spiegel says. But unlike ordinary VR games, these specially tailored health programs are designed as treatments.
Some applications can lessen acute pain by distracting a patient and reducing the person’s perception of time. Patients who are transported virtually to glacial lakes, forests or outer space become calmer when their attention is diverted. Some games are custom-made for pain relief. For example, players of SnowWorld, which features a snowy scene, score points by throwing snowballs at snowmen, penguins and other animals. Studies of burn victims undergoing wound treatment found that these patients reported significantly less pain while playing the game. Even women in childbirth who were immersed in virtual reality reported a 20% reduction in the perceived length of time they had been in labor, Spiegel says. One study that allowed patients to reduce their own painkillers and sedation during colonoscopies found that those using VR needed substantially less sedation than those who didn’t, he adds.
Programs that distract the patient are good for acute pain. For chronic pain, “it’s about building skills,” including how people experience and perceive pain, he says. “We can’t cure arthritis or cancer, but we can profoundly change how you think about it.”
Because chronic pain often leads to depression and anxiety, VR treatments train patients to regulate discomfort through breathing exercises, mindfulness, relaxation and education about how pain is processed in the body, says Matthew Stoudt, CEO and founder of AppliedVR, a Los Angeles-based company that supplies therapeutic virtual reality. Stoudt anticipates that doctors will start prescribing the company’s eightweek program to address chronic lower-back pain by late next year for patients to use at home. His company is working with several health plans to get VR therapeutics covered by insurance. “For VR to be successful, it has to be easy for the patient to use, engaging and affordable,” Stoudt says.
The technology shows great promise, but unless insurance covers it, even middle-income patients will have little access, says Urmimala Sarkar, a professor of medicine at the University of California, San Francisco. VR content also has to work for different people, she says. “For example, the image of a crackling fire while camping in the woods is soothing to me,” she says, “but if someone had experienced war or violence, the sight and sound of fire might evoke very different emotions.”
VR games are also useful for getting players to move in beneficial ways while, for example, bursting balloons with a sword or tracking a dragon as it flies around a medieval city. Someone who needs help with gait training might explore a mountain town virtually. Although the patient is just walking in place, it feels as if they are going up and down, says Veena Somareddy, CEO of Neuro Rehab VR, a company in Fort Worth, Texas, that builds immersive software for physical and occupational therapy.
The idea is for the VR game or activity to be far more engrossing than ordinary physical therapy so that people are more likely to do it regularly at home. Plus, while playing, patients may reach up or twist in a way they were afraid to before because they are so intent on the activity that they forget their fear of pain.
Patients who have suffered a stroke or brain injury can use virtual reality to practice specific tasks, says Skip Rizzo, director of medical virtual reality at USC Institute for Creative Technologies in Los Angeles and a research professor in psychiatry and gerontology. Through VR, users can be placed in a restaurant-like scenario, where their cognition is tested based on their responses to orders for certain items.
Another scenario is “buying” at a virtual store, where users must find a certain brand or product. The activity tests the brain and gradually increases the person’s flexibility; as people get better, they’re asked to grab items from higher and lower shelves. “You have to do something functional, but it keeps it fun and engaging,” Rizzo says. “We’re doing what people have done forever with paper and pencil, but it’s gamified and it gives performance feedback.”
Although adults 65 and older may be reluctant to try VR, once they do, “they have the largest reduction in pain compared with younger individuals,” Spiegel says. One reason is that older people may have lower expectations of the technology than young adults and are more wowed when immersed in a virtual world.
Boston-based XRHealth is one of the few companies that currently provides VR occupational and physical therapy to patients at home. Initially, the company worked with AARP to design programs suitable for older participants, and now the average age of its customer is 72. Prospective patients meet remotely with a therapist first — the company employs a stable of them around the country — to ensure that the therapy is the right option. If so, the company sends the headset to the patient’s home, where in another remote session the therapist teaches the patient how to use the headset. Different programs, which are registered with the Food and Drug Administration, can be prescribed depending on the patient’s needs.
Health insurance now covers the cost of the therapy in XRHealth’s home state of Massachusetts, but Medicare also pays for a certain number of sessions nationwide, says Eran Orr, the company’s founder and CEO. The hope is that by the end of the year insurers in 10 states will cover it, he adds. Otherwise, the cost, including the rental of a headset, ranges from $69 to $119 weekly, depending on how frequently you see an online therapist. If you complete the prescribed number of sessions and want to continue on your own, you can rent the headset for $29 a month. “About 5% of users start and say, ‘It’s not for me,’ but for most it’s very successful,” Orr says. The company is also branching out into mental health programs for VR.
O’Connor, the VR user with Parkinson’s and a former XRHealth customer, says the programs helped him with balance and gait, but he was knowledgeable enough about virtual reality to work on his own.
Bringing VR therapy into senior centers, which is just beginning to happen, Somareddy says, could not only boost new types of therapy and pain relief but also new ways to stimulate the brain. Rizzo says his 89-year-old mother, who lives with him, used one of his VR headsets to visit a foreign city she remembers fondly. “It whisked her right back to when she and my stepdad went to Rome,” he says. “It pulled up all these positive memories.”