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The sluggish economy continues to put financial strain on many of us. So it just makes sense to examine our budgets and look for ways to trim the fat from our monthly expenses and put more into savings, if possible.
That’s a great way to help stabilize your finances, but it’s also important that you have a financial safety net in place in case something were to happen to you. Life insurance is one of the few guarantees your family could rely on to maintain their quality of life if you were no longer there to provide for them.
There are 95 million adult Americans without life insurance, according to LIMRA, an insurance industry research group. The fact is, the vast majority of Americans need life insurance and, sadly, most people either have none or not enough. If someone depends on you financially, you need life insurance. It’s that simple.
September is Life Insurance Awareness Month, making it the perfect time to take stock of your life insurance needs. And there are three additional reasons why now is the best time to look into getting life insurance.
You’ll never be younger than you are now. While that may sound obvious, youth is on your side when it comes to life insurance. It makes good financial sense to get coverage when you’re young and healthy, as premiums are based on your age and health. For most policies, your premiums will be locked in at that rate over the life of the policy, and can’t be raised due to a change in your health status.
It’s affordable, with rates near historic lows. People overestimate the cost of life insurance by nearly three times, according to a recent study conducted by LIMRA and the LIFE Foundation, a nonprofit insurance education organization. In fact, life insurance rates remain near historic lows; the cost of basic term life insurance has fallen by nearly 50 percent over the past decade. For example, a healthy 30-year-old can buy a 20-year, $250,000 level-term policy for about $13 per month.
Life happens. One day life is going along smoothly, and the next, you’re thrown a curve ball. No one knows what the future holds. None of us expect to die prematurely, but the truth is roughly 600,000 people die each year in the prime of their lives. That’s why today is always the best day to take care of your life insurance needs.
Life Insurance Awareness Month is the ideal time for a life insurance review. I urge everyone to take a few minutes out of their busy schedules to make sure they have adequate life insurance protection.
Consumers can get a general sense of their life insurance needs by going to www.lifehappens.org/lifecalculator and using the online calculator offered by the LIFE Foundation. The next step should be to contact a local insurance professional, who can conduct a more comprehensive needs analysis and help you find the right products to fit your specific needs and budget.
Held each September, Life Insurance Awareness Month is an industry-wide effort that is coordinated by the nonprofit LIFE Foundation. The campaign was created in response to growing concern about the large number of Americans who lack adequate life insurance protection. Roughly 95 million adult Americans have no life insurance, and most with coverage have less than most insurance experts recommend. For more information on life insurance, visit LIFE’s website at www.lifehappens.org.
Call us at 800-560-4637 and we can help you through the entire life insurance process!
In addition to NFS celebrating Life Insurance Awareness Month in September, we have some exciting events lined up for this month. Here is our September Calendar of Events:
Wrentham Day – 34th Annual Community Event
Wrentham Town Common
Saturday, September 3rd, 2016
9:00 am to 3:00 pm
Join NFS as we take part in Wrentham Day – the town’s community day on the common! Raffle Prizes we have had in the past – FREE Income Tax Preparation, FREE Gift Certificates to local businesses such as restaurants, music studios, sporting good shops, wellness services & auto service stations. We always have FREE Wrentham T-Shirts (while they last) and activities for the kids! Here are some pictures from past years…
First Time Homebuyer Seminar
HarborOne U, Mansfield MA
Wednesday, September 21st, 2016
6:00 pm to 8:00 pm
Make a well-informed decision when you buy your first home. This seminar provides you the opportunity to get answers to your many questions from the professionals involved in the home buying process. Professionals include Mortgage Originator, Buyers Agent & Realtor, Real Estate Attorney, Insurance Agent, JEFFREY SCHWEITZER, Tax Advisor and Home Inspector.
College Financial Aid Seminar
Fiske Public Library, Wrentham MA
Thursday, September 22nd, 2016
7:00 pm to 8:00 pm
“How To Pay A Whole Lot Less For College” hosted by NFS and presented by local Author and College Expert Paul Hemphill. This exciting workshop will help you to reduce your stress about college planning including what to expect from colleges, how to afford college and how to minimize your costs. AND, as an added bonus, if you bring your high school Sophomore or Junior with you to the seminar, you will receive a take away valued at $95! Register for this great session HERE.
Health savings accounts help employees sock away money for health care costs. They’re used along with a high deductible health insurance plan, and they offer some great tax benefits.
Contributions made to HSAs lower one’s taxable income, and payments made from an HSA aren’t taxed. Plus, the funds can be invested and interest can accrue in an HSA — tax free.
Used with care, HSAs can be a smart financial tool. But they’re also potentially complex.
For better or for worse, the responsibility is on the employee to make sure he or she stays within the rules of the game. For some this is empowering. For others, it’s intimidating.
Whether someone already has an HSA or is considering one, keep reading to find out about 10 potentially weird, possibly little-known FAQs about HSAs.
10 HSA FAQs
Answer: No. This rule serves primarily to prevent children from opening and funding HSAs. The rule does create some interesting scenarios for adult children.
Answer: Yes. The majority of Americans will start Medicare at age 65 and therefor lose eligibility for an HSA. Losing eligibility for an HSA means that the HSA owner cannot contribute new money but does not stop a person with an HSA balance from continuing to use that balance for medical expenses.
Someone age 65 or older has a special opportunity to use that money to pay for Medicare premiums. This is an incredible feature of HSAs: the ability to pay for Medicare premiums with pre-tax dollars.
However, this feature is only available to Americans that have built up a balance in their HSAs prior to losing eligibility. The Social Security Administration will directly deduct the Medicare premiums from Social Security payments, so an HSA owner can write a check from their HSA payable to his or her self to reimburse for the Medicare premium paid directly by Social Security.
Answer: Yes, if the college student cannot be claimed as a dependent on their parent’s tax return. College students under age 24 are likely to be claimed as dependents of their parents and ineligible for an HSA.
A college student can open his or her own HSA and can contribute up to the family HDHP limit if covered under the parents’ family HDHP and not a dependent. The parents would also be able to contribute the family limit. The student and the parents would not need to coordinate family HSA limits such that combined they stayed under the maximum.
The down side to this is that the parents cannot use their HSAs to pay for the student’s qualified medical expenses because the student would not be a tax dependent (even though still on their insurance).
The Patient Protection and Affordable Care Act’s requirement that children can remain on the parents’ health plan until age 26 increases occurrences of this issue happening. A more logical approach would be to take away a nondependent child’s eligibility for an HSA but allow the parents to use their HSAs to fund the child’s medical expenses until age 26.
The IRS extended the ability of a parent to use FSA and HRA funds for a child who has not reached age 27 by the end of the taxable year, but this guidance did not extend to HSAs. Congress or the IRS may provide additional guidance on this issue in the future.
Answer: Yes. The most common reason to have multiple HSA is to allow for different investment choices and different account features.
Another common reason is that an employer requires an HSA to be opened at a specific HSA custodian in order to receive employer HSA contributions.
An HSA owner may not prefer that particular custodian but keeps the HSA open in order to receive the employer contributions. The HSA owner could then open a separate HSA at a more preferred HSA custodian and periodically transfer HSA funds from the non-preferred HSA custodian to the preferred HSA custodian.
Answer: No. All HSAs are individual accounts.
This answer confuses many HSA owners as they specifically enroll in a “family” health plan, review the HSA law to determine the “family” maximum HSA limit and use their HSA for their “family’s” medical expenses (spouse and dependents).
Answer: Yes. Any person may make an HSA contribution for any other person including family members, employers, even neighbors and strangers.
Whether or not the contributor or the HSA owner gets the tax break depends on the relationship. Employers generally do get a deduction for HSA contributions and spouses that file joint returns get the benefit of each other’s contributions.
If someone other than an employer or spouse makes an HSA contribution on behalf of the HSA owner, the HSA owner gets the HSA deduction, not the person who contributed.
Answer: Yes, provided that the HSA owner has opened the HSA (to set the establishment date), remains eligible for an HSA (necessary to put more money into an HSA), and has not yet contributed the maximum limit for the year.
Some HSA owners prefer to keep their HSA balance low and only fund the HSA when they know they will need the money. This approach may result in lost tax benefits as individuals have a limited period of time to contribute to an HSA for a particular tax year.
Also this approach will not result in the building of a balance in the HSA over time to cover larger expenses. However, for individuals tight on funds, this approach will allow for minimizing the HSA cost while still getting the tax benefits.
Answer: Yes. HSA administrative fees may be deducted directly from the HSA and the HSA owner does not have to pay taxes or penalities on the amount of the fee.
Paying fees by directly debiting the HSA allows HSA owners to pay the fees with tax-free dollars, a welcome approach for most HSA owners.
Answer: The law allows individuals a one-time transfer of IRA assets to fund an HSA provided: 1) they are eligible for an HSA, 2) they have a permitted IRA with sufficient funds, 3) they have not already completed an IRA to HSA funding distribution, and 4) the names and Social security numbers are the same on the IRA and HSA.
The amount transferred may not exceed the amount of one year’s HSA contribution limit. The technical term for this transaction is a “qualified HSA funding distribution,” not “transfer.”
Answer: Yes. Some HSA owners make a logical but potentially expensive error in not using their medical insurance cards for HSA purchases.
Even though HSA owners have to pay for the full medical expense when they are still below their deductible, they should show their insurance card to benefit from any discount the insurance carrier may have negotiated with the provider. Also, if an HSA owner shows an insurance card, the insurance carrier can track the expense against the deductible.
Neither of these reasons may apply in a particular circumstance, but it’s relative easy to show the card and the worst case scenario in showing the card is that the providers says it does not need it or want it.
– BY WHITNEY RICHARD JOHNSON, ESQ., BENEFITSPRO STAFF
Every year, June marks the beginning of two busy seasons: summer and “wedding season.” With joyful expectation, many of us have already marked our calendars and started wrapping up our plans for the vacations, ceremonies, and honeymoons. While the betrothed work out the details, Social Security wants to remind them about one detail that’s extremely important: the “record” Social Security keeps of your life’s earnings.
For many people, a wedding often means a name change is in order. If you are legally changing your name, you need to apply for a replacement Social Security card reflecting your new name. If you’re working, also tell your employer. That way, Social Security can keep track of your earnings history as you go about living your wonderful new life.
If you have reported income under your former or maiden name, and didn’t inform SSA of a change, they might not have received an accurate W-2 and your earnings may have been recorded incorrectly. This is easier to fix now — when you first change your name — than years from now when you retire, when it may cause delays in receiving your benefits. This is important because they base your future benefits on your earnings record. So, visit their website at www.socialsecurity.gov/ssnumber, or call them at 1-800-772-1213 (TTY 1-800-325-0778), to find out what specific documents you need to change your name and to apply for a replacement card.
Last year, the Supreme Court issued a decision in Obergefell v. Hodges, holding that same-sex couples have a constitutional right to marry regardless of where they live within the United States. As a result, Social Security recognizes more same-sex couples as married for purposes of determining entitlement to Social Security benefits or eligibility for Supplemental Security Income (SSI) payments. They recently updated instructions for employees to process claims and appeals when a determination of marital status is necessary.
With these changing rules, SSA encourages anyone who believes they may be eligible for benefits to apply now. You can learn more about their policies for same-sex couples at www.ssa.gov/people/same-sexcouples.
After the honeymoon, you can focus on your career or starting a family, moving to a new home, and securing a well-deserved retirement. Now, you’re all set. Let the celebrations begin!
If you need any help navigating the Social Security website or need help in getting things in order, please do not hesitate to contact us here at Northeast Financial Strategies Inc at 1-800-560-4637. Also, if you would like a complimentary Life Guide “Marriage and Money”, please click here to request one from our office.
Posted on June 2, 2016 on SocialSecurity.Gov by Jim Borland, Assistant Deputy Commissioner, Communications
