Medicare Open Enrollment

Medicare Open Enrollment: Time to pick a plan

Medicare Open Enrollment is here and runs until December 7! We know many people find and compare health plans at Medicare.gov during Open Enrollment. This year we’ve made some improvements to provide you with more personalized help with your plan choices.

We’ve added a simplified log in option through your MyMedicare.gov account, for a more personalized experience. You also can still log in with your Medicare number and a little more information or do a general search of Medicare plans by entering just a ZIP code. If you’re comparing plans through your MyMedicare account and need help or have a question, you can access our new web chat feature to connect with a customer service representative online and get answers right away. Watch a video about these improvements to help you find the right plan for you.

Picking a plan is an important and personal decision. Here are some things to think about as you compare Medicare plans to find one that meets your needs:

Does the plan cover the services you need?

Think about what services and benefits you’re likely to use in the coming year and find coverage that meets your needs. If you have other types of health or prescription drug coverage, make sure you understand how that coverage works with Medicare. And, if you travel a lot, check to make see if your plan covers you when you’re away from home.

What does the plan cost?

The lowest-cost health plan option might not be the best choice for you – consider things like the cost of premiums and deductibles, how much you pay for hospital stays and doctor visits, and whether it’s important for you to have expenses balanced throughout the year.

Are the plan’s providers and rules convenient?

Your time is valuable. Where are the doctors’ offices? What are their hours? Which pharmacies can you use? Can you get prescriptions by mail? Do the doctors use electronic health records or prescribe electronically? Answers to these questions may help you decide which plan is best for you.

What plans perform the best?

Not all health care is created equal, and the doctors, hospitals and facilities you choose can affect your health. Open Enrollment is also a good time to ask yourself whether you’re truly satisfied with your medical care. Look for plans with a 5‑star performance rating—the right expertise and care can make a difference.

Remember that even if you’re happy with your current plan, things change from year to year—so it’s important to take the time to compare.

Courtesy www.Medicare.Gov

What is Term Life Insurance?

Term life insurance is “pure” insurance. It offers protection only for a specific period of time. If you die within the time period defined in the policy, the insurance company will pay your beneficiaries the face value of your policy.

Term insurance differs from the permanent forms of life insurance, such as whole life, universal life, and variable universal life, which generally offer lifetime protection as long as premiums are kept current.  And unlike other types of life insurance, term insurance does not accumulate cash value. All the premiums paid are used to cover the cost of insurance protection, and you don’t receive a refund at the end of the policy period. The policy simply expires.

Term life insurance is often less expensive than permanent insurance, especially when you are younger. It may be appropriate if you want insurance only for a certain length of time, such as until your youngest child finishes college or you are able to afford a more permanent type of life insurance.

The main drawback associated with all types of term insurance is that premiums increase every time coverage is renewed. The reason is simple: As you grow older, your chances of dying increase. And as the likelihood of your death increases, the risk that the insurance company will have to pay a death benefit goes up. Unfortunately, term insurance can become too expensive right when you need it most — in your later years.

Several variations of term insurance do allow for level premiums throughout the duration of the contract. You may be able to obtain 5-, 10-, 20-, or even 30-year level term, or level term payable to age 65. An advantage of renewable term life insurance is that it is usually available without proof of insurability.

Life insurance can be used to achieve a variety of objectives. The cost and availability of the type of life insurance that is appropriate for you depend on factors such as age, health, and the type and amount of insurance purchased. Before implementing a strategy involving life insurance, it would be prudent to make sure that you are insurable. As with most financial decisions, there are expenses associated with the purchase of life insurance. Policies commonly have contract limitations, fees, and charges, which can include mortality and expense charges.

 

The information in this newsletter is not intended as tax, legal, investment, or retirement advice or recommendations, and it may not be relied on for the purpose of avoiding any federal tax penalties. You are encouraged to seek advice from an independent professional advisor. The content is derived from sources believed to be accurate. Neither the information presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. This material was written and prepared by Broadridge Advisor Solutions. © 2018 Broadridge Investor Communication Solutions, Inc.

Choosing the Correct Survivor Annuity

Retirement and life insurance aren’t commonly thought of together, yet that is exactly what the survivor annuity is. The FERS survivor annuity (SA) is an option that FERS employees can elect on their retirement paperwork.

Why is a survivor annuity like life insurance?

The main purpose for a survivor annuity is for married FERS employees to have the option to leave an income stream to their surviving spouse. In other words, you can leave a benefit at your death (sound familiar?). The reason for the SA is quite simple – many spouses can’t afford to lose an income of $2,000 a month (I will repeatedly use the example of a $2,000 monthly FERS annuity in this article).

This is a VERY important subject (albeit not the most pleasant to discuss) and an important conversation to have.

There are actually three options on your retirement paperwork regarding your SA choice.

  • No survivor
  • Partial survivor
  • Full survivor

No survivor annuity

If you don’t choose a survivor annuity, your paperwork has to be signed and notarized by your spouse. The only thing your spouse would receive under this option is a refund of any unused FERS deposits (The total of the 0.8% you paid in minus the total of FERS benefits received). If you don’t choose a SA then your spouse cannot continue Federal Employee Health Benefits (FEHB) after your death.

Partial Survivor Annuity

The partial SA will reduce your annuity by 5% in return for a spousal benefit of 25% at your death. Using our example of a $2,000 annuity, the federal retiree’s FERS annuity would be $1,900 a month and guarantee that their spouse will receive $500 a month (if the spouse is still living after the federal employee’s death).

Your spouse’s signature and notarization are required for the partial annuity as well.

The partial SA does allow your spouse to continue FEHB after your death.

Full Survivor Annuity

The full SA will reduce your annuity by 10% in return for a spousal benefit of 50% at your death. Going back the example of $2,000, your FERS annuity would be $1,800 a month and your surviving spouse would receive $1,000 a month after your death.

A great deal of talk about death and dying here, but what happens if the federal employee outlives the spouse? First, the federal employee needs to notify OPM of the spouse’s death in order to get your annuity changed back to 100%.

You will not get the 5%, or 10% back that you paid in for the survivor annuity. Any past reduction in your FERS annuity will be lost.

COLA on the survivor annuity

Another important aspect of the survivor annuity is that there is a default COLA associated with it. Since FERS annuitants over age 62 receive a COLA on their annuity, that means that the survivor annuity will increase along with that COLA. As the FERS annuity increases, so does the survivor benefit.

This is both good and bad – yes, the survivor annuity will increase each time you receive a COLA but so does the cost. For example, a full survivor annuity costs a retiree 10% of their FERS annuity and 10% of $2,500 is less than 10% of $3,000.

Is life insurance a good replacement for the survivor annuity?

As is the case with many financial questions, it depends on a few factors.

The first question to answer is whether or not your spouse depends on your health insurance. I would guesstimate that this is the case with 90% of federal employees, and if so then you must elect a survivor annuity. In this scenario, the most you could do is look at getting life insurance to cover over and above the partial SA.

Something else to consider is taxes. The cost of the survivor annuity is not taxed, but the premiums for life insurance are made in after tax dollars. The opposite is true of the benefits of each. Survivor annuities are taxable income and life insurance proceeds are income tax free.

The age and health of each spouse needs to be considered as well. If your spouse is 10 years older and in bad health, life insurance may be a good fit versus the SA. If you are 10 years older than your spouse, then the SA sounds like a good deal because your insurance costs may be high and your spouse will likely outlive you and benefit from the guaranteed SA.

Is leaving money to your kids a priority? If so, then life insurance could be a good fit since it will pay out at your death regardless of who outlives who. This is not the case with the survivor annuity. The survivor annuity is only around for a maximum of your lifetime and your spouse’s lifetime.

If you are single at retirement and get married later, there are options for adding your spouse to your benefits and electing a SA for your new spouse. You must notify OPM and they will help you through the details.

Important decision

The survivor annuity is no different than any other retirement decision – it is going to take a little thought and analysis to make the best decision for you and your family. Survivor annuity elections are one point of analysis in our financial plans with federal employees. If you would like to discuss putting together your own plan you are welcome to set up an introductory call.

Why Purchase Life Insurance?

We’ve all heard about the importance of having life insurance, but is it really necessary? Usually, the answer is “yes,” but it depends on your specific situation. If you have a family who relies on your income, then it is imperative to have life insurance protection. If you’re single and have no major assets to protect, then you may not need coverage.

In the event of your untimely death, your beneficiaries can use funds from a life insurance policy for funeral and burial expenses, probate, estate taxes, day care, and any number of everyday expenses. Funds can be used to pay for your children’s education and take care of debts or a mortgage that hasn’t been paid off. Life insurance funds can also be added to your spouse’s retirement savings. If your dependents will not require the proceeds from a life insurance policy for these types of expenses, you may wish to name a favorite charity as the beneficiary of your policy.

If your dependents will not require the proceeds from a life insurance policy for these types of expenses, you may wish to name a favorite charity as the beneficiary of your policy.

Permanent life insurance can also be used as a source of cash in the event that you need to access the funds during your lifetime. Many types of permanent life insurance build cash value that can be borrowed from or withdrawn at the policyowner’s request. Of course, withdrawals or loans that are not repaid will reduce the policy’s cash value and death benefit.

There are expenses associated with life insurance. Generally, life insurance policies have contract limitations, fees, and charges, which can include mortality and expense charges, account fees, underlying investment management fees, administrative fees, and charges for optional benefits. Most policies have surrender charges that are assessed during the early years of the contract if the contract owner surrenders the policy. Any guarantees are contingent on the financial strength and claims-paying ability of the issuing company. Life insurance is not guaranteed by the FDIC or any other government agency; it is not a deposit of, nor is it guaranteed or endorsed by, any bank or savings association.

The cost and availability of life insurance depend on factors such as age, health, and the type and amount of insurance purchased.

If you are considering the purchase of life insurance, consult a professional to explore your options.

The information in this newsletter is not intended as tax, legal, investment, or retirement advice or recommendations, and it may not be relied on for the purpose of avoiding any federal tax penalties. You are encouraged to seek advice from an independent professional advisor. The content is derived from sources believed to be accurate. Neither the information presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. This material was written and prepared by Broadridge Advisor Solutions. © 2017 Broadridge Investor Communication Solutions, Inc.

Can You Avoid Identity Theft Scams?

If you purchase identity protection, you might think it will prevent you from being a victim of an identity theft scam. But as you’ll see, the reality is more complicated. Identity theft protection is often a wise investment—but don’t let it fool you into a false sense of security.

First, it helps to understand the scope of the problem. According to the 2017 Identity Fraud Study by Javelin Strategy & Research, identity fraud hit a record high in 2016, with 15 million U.S. victims. We’ve written about some of the most popular types of identity theft scams and how to avoid several of them, such as tax-related scams and fantasy football scams.

Given how common and damaging identity theft is, many people are turning to identity theft protection plans. These plans can be a terrific value, especially those that include monitoring and protection services to defend you against personal, financial, and medical identity theft.

Once you purchase the added protection, it’s easy to think you’ll never be a victim of identity theft—but that’s not the case. In fact, identity theft protection doesn’t prevent identity theft any more than car insurance prevents collisions. What it does is give you peace of mind and help you recover quickly if the worst happens.

An identity theft protection plan will typically feature credit and other monitoring services that can spot identity theft early—before significant harm occurs. Comprehensive plans will also include recovery support, so if you are victimized, you will get the professional help you need to quickly restore your identity. Some plans will also include identity theft insurance to reimburse you for your out-of-pocket expenses if you are a victim.

In sum, if you are worried about identity theft, consider investing in a comprehensive identity theft protection plan. It could help you spot identity theft sooner and recover faster, at less cost—just don’t assume it will prevent identity scams from happening in the first place.

Courtesy – MYIDCARE