October Is Retirement Planning Month

October 10, 2017
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Saving is a great start, but planning your retirement goals is even better.

Are you saving for retirement? Great. Are you planning for retirement? That is even better. Planning for your retirement and other long-range financial goals is an essential step – one that could make achieving those goals easier.

Saving without investing isn’t enough. Since interest rates are so low today, money in a typical savings account barely grows. It may not even grow enough to keep up with inflation, leaving the saver at a long-term financial disadvantage. As you may know, very few Americans retire on savings alone. Rather, they invest some of their savings and retire mostly on the accumulated earnings those invested dollars generate over time.

Investing without planning usually isn’t enough. Most people invest with a general idea of building wealth, particularly for retirement. The problem is that too many of them invest without a plan. They are guessing how much money they will need once they leave work, and that guess may be way off. Some have no idea at all.

Growing and retaining wealth takes more than just investing. Along the way, you must plan to manage risk and defer or reduce taxes. A good financial plan – created with the assistance of an experienced financial professional – addresses those priorities while defining your investment approach. It changes over time, to reflect changes in your life and your financial objectives.

With a plan, you can set short-term and long-term goals and benchmarks. You can estimate the amount of money you will likely need to meet retirement, college, and health care expenses. You can plot a way to wind down your business or exit your career with confidence. You can also get a good look at your present financial situation – where you stand in terms of your assets and liabilities, the distance between where you are financially and where you would like to be.

At HFG Wealth Management, we embrace a method of financial planning known as Financial Life Planning™. We believe this is a financially effective and personally rewarding approach to creating a practical, lasting financial plan. As financial professionals using the life planning approach, our purpose is to assist individuals and families in creating a long-term vision that is consistent with their core values. At HFG we recognize that life events and life transitions can impact your financial responsibilities and your vision of the future. We are here to provide you with tips and strategies to get you started and help you reach your financial and life goals at every stage. For more information, please visit www.hfgwm.com or call 832.585.0110.

 

 

Moving Into a Nursing Home Facility


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What you and your loved ones need to know.

At some point, someone you love may make the transition from living at home to residing at an assisted-living facility or nursing home. When should that transition occur, and what factors must be considered along the way? And what don’t these facilities tell you? 

When is it time? If an elder is a) safe and content at home, b) in reasonably stable health, c) can draw on personal or family resources for in-home care, d) has a sufficient “rotation” of family or professional caregivers available so as not to exhaust loved ones, then there may be no compelling reason for that elder to enter a nursing home or assisted-living facility.  If, on the other hand, an elder’s health notably worsens and caregiving strains your own health, relationships and/or resources, then the time may have arrived.

If it is time, is a nursing home really necessary? It may not be. Keep in mind that long-term care insurance will often pay for home health aides, adult day care, and forms of at-home nursing. This is called respite care, and perhaps 10-15 hours of these services per week will do. LTC insurance covers respite care. Even without LTC coverage, this level of care may fit into your budget.

Will an assisted-living facility suffice? If an elder is ambulatory and reasonably healthy, it might. Assisted-living (allowing an elder to have their own space plus quality care) costs much less than nursing home care, usually tens of thousands of dollars less annually. Most people pay for it using a combination of long-term care insurance and private funds. 

Is an assisted-living facility several steps above a nursing home? Its marketing will tell you so; truth be told, many assisted-living facilities are comparatively brighter, more comfortable and cheaper than nursing homes. Keep in mind, however: many assisted-living facilities do not offer their residents 24/7 medical attention, and costs may climb if your loved one needs or wants more than the basics in terms of care or comfort.

Are insurers raising premiums for LTC policies? Is long-term care insurance worth the cost, with the possibility that benefits may go unused? In some cases, it may not be.

Alternatives have surfaced to traditional LTC insurance coverage. Recently, “hybrid” life insurance policies (and other life insurance products) have emerged that offer an add-on LTC benefit to consumers, for a price. Short-term care policies, while long available through certain insurance companies, are getting a second look.

What isn’t said about eldercare? Nursing homes and assisted-living facilities are not predisposed to tell you about the downsides to their communities. So what isn’t usually expressed on the tour or in the brochure?

First, let’s talk about nursing homesAccording to the Centers for Disease Control and Prevention, an elder is twice as likely to suffer a fall in a nursing home as he or she is in the community.  If your parent or grandparent has known and trusted a family doctor for decades, there is a risk that the relationship may wane or end after a move to an eldercare facility. Nursing home residents are placed under the care of one or more staff physicians who more or less become their primary doctors. The rules and regulations governing care at assisted-living facilities can vary greatly among states and counties, and, while nursing home ratings are relatively easy to find online, reviews of assisted-living facilities are not.

When considering an assisted-living facility, it is worth remembering that more than 80% of residential care facilities are for-profit businesses; roughly 40% of these facilities are outposts of national chains. In some cases, that can be a plus; in other cases, a minus.

When the time comes, stay involved. Our lives are often busier than we want them to be, but our elders count on us to be visible and engaged in their lives after they enter assisted-living facilities or nursing homes. Your vigilance and support can make a difference in the experience for the one you love.

At HFG Wealth Management, we embrace a method of financial planning known as Financial Life Planning™. We believe this is a financially effective and personally rewarding approach to creating a practical, lasting financial plan. As financial professionals using the life planning approach, our purpose is to assist individuals and families in creating a long-term vision that is consistent with their core values. At HFG we recognize that life events and life transitions can impact your financial responsibilities and your vision of the future. We are here to provide you with tips and strategies to get you started and help you reach your financial and life goals at every stage. For more information, please visit www.hfgwm.com or call 832.585.0110.

A Woman’s Financial Reality


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Your financial future is up to you … and no one else.

Will this be your future? Did you know that 30% of American women age 65 and older rely on Social Security for 90% or more of their incomes? Did you know that SSI represents virtually the only source of income for 36% of unmarried, divorced or widowed American women who are 65 and older?  With inflation and other economic pressures, a mature woman relying on Social Security income may have to choose between food or medicine, or rent or car repair, or contend with other stressful money dilemmas.

How much do you know about personal finance? The more knowledge you have, the more action you can take to define and pursue your financial goals and build retirement savings. You can also respond to a few financial realities common to women’s lives.

Can you keep saving & investing even when you’re not working? On average, women spend 12 fewer years in the workforce than their male counterparts to spend more time parenting and/or caregiving. This means the average woman misses 12 years to pour steady money into that 401(k), 403(b) or IRA. Even more importantly, it means 12 years without compounding interest for that money.

Women live longer. Department of Health & Human Services statistics show women living about six years longer than men on average. The reality unnoticed in these numbers is that many women will live on their own for a decade or more after being widowed.

At work, many women are worth more than the salaries they receive. Some women are reluctant to negotiate a better salary for themselves. Will it upset the equilibrium at the office? Will it be seen as too aggressive? The answers here are probably “no” and “no.” It takes confidence (and it may take a little research) to affirm your professional worth in front of your boss – and it should be done.

A rich spouse does not equal a retirement plan. It is nice to have a spouse whose wealth allows you freedom from financial worries. Yet even if you are blessed with a rich and attractive mate, there is no telling where that mate (and that money) might end up someday but for fate.

How do you plan to arrange a comfortable future for yourself? If you don’t want to end up dependent on Social Security, then see that you have the financial education that will let you make major money decisions with confidence. Study fundamentals of investing and read up on the basics of retirement and estate planning. Follow up by meeting with a financial consultant who can help you put a strategy into action.

At HFG Wealth Management, we embrace a method of financial planning known as Financial Life Planning™. We believe this is a financially effective and personally rewarding approach to creating a practical, lasting financial plan. As financial professionals using the life planning approach, our purpose is to assist individuals and families in creating a long-term vision that is consistent with their core values. At HFG we recognize that life events and life transitions can impact your financial responsibilities and your vision of the future. We are here to provide you with tips and strategies to get you started and help you reach your financial and life goals at every stage. For more information, please visit www.hfgwm.com or call 832.585.0110.

   

A Caregiver’s Financial Responsibilities

October 4, 2017
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Key questions for you & your family to consider. 

A labor of love may come to involve money issues. Providing eldercare to a parent, grandparent or relative is one of the noblest things you can do. It is a great responsibility, and over time it may also lead you and your family to reflect on some financial responsibilities. We have come up with a list of questions to consider:

Q: How will caregiving affect your own financial picture? Try to estimate a budget, either before you begin or after a representative interval of caregiving. How much of the elder’s finances will be devoted to care costs compared with your finances? If you are thinking about quitting a job to focus on eldercare, think about the resulting loss of income, the probable loss of your own health care coverage, and your prospects for reentering the workforce in the future.

Q: How much will “aging in place” cost? Growing old at home (rather than in a nursing home) has many advantages. Unfortunately, over time, the cost of care provided in the home can greatly exceed nursing home services. So you must weigh how long you can manage with home health aide services versus adult day care or nursing home care.

Q: How much do you know about your loved one’s financial life? Caring for a parent, grandparent or sibling may eventually mean making financial decisions on their behalf. So you may have a learning curve ahead of you. Specifically, you may have to learn, if you don’t already know:

  • Where your loved one’s income comes from (SSI, pensions, investments, etc.)
  • Where wills, deeds and trust documents are located
  • Who the beneficiaries are on various policies and accounts
  • Who has advised your loved one about financial matters in the past (financial consultants, CPAs, etc.)
  • Assorted PIN numbers for accounts and of course Social Security numbers

Q: Is it time for a power of attorney? If a loved one has been diagnosed with Alzheimer’s or any form of disease which will eventually impair judgment, a power of attorney will likely be needed in the future. In fact, if you try to handle money matters for another person without a valid power of attorney, the financial institution involved could reject your efforts. When a power of attorney is in effect, it authorizes an “agent” or “attorney-in-fact” to handle financial transactions for another person. A durable power of attorney lets you handle the financial matters of another person immediately. A springing power of attorney only lets you do this after a medical diagnosis confirms a person’s mental incompetence. (As no doctor wants a lawsuit, such diagnoses are harder to obtain than you might think.)   You may want to obtain a power of attorney before your loved one is unable to make financial decisions. Many investment firms will only permit a second party access to an account owner’s invested assets if the original account owner signs a form allowing it. Copies of the durable power of attorney should be sent to any financial institution at which your parents have accounts or policies. Whoever becomes the agent should be given a certified copy of the power of attorney and be told where the original document is located.

Q: Is it time for a conservatorship? A conservatorship gives a guardian the control to manage the assets and financial affairs of a “protected” person. If a loved one becomes incapacitated, a conservator can assume control of some or all of the protected party’s income and assets if a probate court allows.

To create a conservatorship, you must either request or petition a probate court, preferably with assistance from a family law attorney. A probate court may only grant conservatorship after interviews and background check on the proposed conservator and only after documentation is provided to the court showing financial and mental incompetence on the part of the individual to be protected.

A conservatorship implies more vigilance than a power of attorney. With a power of attorney, there is no ongoing accountability to a court of law. (The same goes for a living trust.) There is little to prevent an attorney-in-fact from abusing or neglecting the protected person. On the other hand, a conservator must report an ongoing accounting to the probate court.

Q: If a trust is created, who will serve as trustee? As some care receivers acknowledge their physical and mental decline, they decide to transfer ownership of certain assets from themselves to a revocable or irrevocable trust. A settlor (or grantor) creates a trust, a trustee manages it and the assets go to one or more beneficiaries. (The trustee can be a relative; it can also be a bank or an attorney, for that matter.) At the settlor’s death, the trustee distributes the settlor’s assets according to the instructions written in the trust document. Probate of the trust assets is avoided – so long as the assets have been transferred into the trust during the settlor’s lifetime.

A trustee has a fiduciary responsibility to watch over the financial legacy of the settlor. Practically speaking, a trustee needs to have sufficient financial literacy to understand tax law, the managing of investments and the long-range goals noted in the trust document. Some families consider all this and opt to manage trusts themselves; others seek the services of financial professionals.

If the care receiver has a living trust or another form of trust already, you may still need a power of attorney as percentages of his or her assets or income may not end up in the trust. (There is nothing from preventing a trustee from also being the agent in a power of attorney.) Additionally, while a living trust is essentially a will substitute, you will still need a pour-over will to supplement it. That is because in all probability, some of the settlor’s assets won’t be transferred into the trust during his or her lifetime. A pour-over will is the legal mechanism that “pours” those stray assets into the trust when the settlor passes away.

Q: Finally, do you understand the potential for liability? As a caregiver, you have a physical, psychological and legal duty to the care receiver. If you neglect that duty, you could be held liable as many states have laws demanding that caregiving meets certain standards.  These laws are basically similar: a caregiver must not abuse the care receiver in any conceivable way, and any incidents of such abuse must be reported (there are often state and local “hotlines” set up for this). The elder must have adequate nutrition, clothing and bedding, and the environment must be clean and not pose health hazards.

If you have obtained a power of attorney for finances, then appropriate amounts of the elder’s money must be spent on necessary health services and other services on behalf of his/her well-being. Failure to do so could be interpreted in court as a form of abuse or neglect.

When abuse and neglect occur, they may have roots in caregiver burnout – the caregiver is constantly cross and irritable with the care receiver, or stress defines the experience, or an overwhelming sense of duty or anxiety prevents the caregiver from having a life of his/her own. If you ever feel you are approaching this point, it is time to call for assistance or to assign caregiving to professionals.   

At HFG Wealth Management, we embrace a method of financial planning known as Financial Life Planning™. We believe this is a financially effective and personally rewarding approach to creating a practical, lasting financial plan. As financial professionals using the life planning approach, our purpose is to assist individuals and families in creating a long-term vision that is consistent with their core values. At HFG we recognize that life events and life transitions can impact your financial responsibilities and your vision of the future. We are here to provide you with tips and strategies to get you started and help you reach your financial and life goals at every stage. For more information, please visit www.hfgwm.com or call 832.585.0110.

HFG Wealth Management announces promotion of Kevin Bruce to Chief Investment Strategist

September 29, 2017
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I am pleased to announce Kevin Bruce, Chartered Financial Analyst, (CFA) has been promoted to Chief Investment Strategist and Chief Compliance Officer. Since joining HFG two years ago, Kevin has served as a Wealth Advisor and Investment Specialist, allowing him to build a relationships with our clients and to be an active member of the HFG Investment Committee. Kevin has over sixteen years of investment management, analysis and consulting experience. Kevin’s wealth of experience and industry knowledge positions him perfectly for these new roles. Kevin is well respected in the field and embodies strong industry and professional ethics. He will continue to play a strong role in providing and implementing high quality analysis to best serve and the firm as well as managing a strict adherence to compliance and ethics. Please join me in congratulating Kevin on his promotion with HFG Wealth Management or to learn more about Kevin or our team, click here.

Getting Your Financial Paperwork in Good Order

September 20, 2017
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Help make things easier for your loved ones when you leave this world.

Who wants to leave this world with their financial affairs in good order? We all do, right? None of us wants to leave a collection of financial mysteries for our spouse or our children to solve.  What we want and what we do can differ, however. Many heirs spend days, weeks, or months searching for a decedent’s financial and legal documents. They may even discover a savings bond, a certificate of deposit, or a life insurance policy years after their loved one passes.   Certainly, you want to spare your heirs from this predicament. One helpful step is to create a “final file.” Maybe it is an actual accordion or manila folder; maybe it is a file on a computer desktop; or maybe it is secured within an online vault. The form matters less than the function. The function this file will serve is to provide your heirs with the documentation and direction they need to help them settle your estate.

What should be in your “final file?” Definitely a copy of your will and copies of any trust documents. Place a durable power of attorney and a health care proxy in there too, as this folder’s contents may need to be accessed before you die.

  • Copies of insurance policies should go into the “final file” – not only your life insurance policy, but home and auto coverage. A list of all the financial accounts in your name should be kept in the file – and, to be complete, why not include sample account statements with account numbers, or, at least, usernames and passwords, so that these accounts can be easily accessed online.
  • Social Security benefit information should also be compiled. That information will be essential for your spouse (and, perhaps, for a former spouse). If you happen to receive a pension from a former employer, your heirs need to know the particulars about that.
  • Additionally, they should also be able to access documentation pertaining to real estate you own. If you have a safe deposit box, at least one of your heirs should know where the key is – otherwise, your heirs will have to pay a locksmith, directly or indirectly, to open it. Along those lines, the combination to a home safe should be disclosed. If you have trust issues with some of your heirs, you can only disclose such information to the trusted ones or to an attorney.
  • Contact information should be inside the “final file” as well. Your heirs will need to look up the email address or phone number of the financial professionals you have consulted, any attorneys you have turned to for estate planning or business advice, and any insurance professionals with whom you have maintained relationships.
  • Other documentation to include: credit card information, vehicle titles, and cemetery/burial information. Be sure to include your social media and e-commerce passwords for sites like Facebook, Twitter, LinkedIn, Pinterest, Amazon, and eBay. Some social media sites may require a copy of your death certificate or obituary notice before allowing any other party to access your profile.

Your heirs will want to supplement your “final file” with contributions of their own. Perhaps the most important supplement will be your death certificate. A funeral home may tell your heirs that they will need only a few copies. In reality, they may need several – or more – if your business or financial situation is particularly involved.

A “final file” may save both money & time. If documentation is scant or unavailable, settling an estate can be a prolonged affair.

Be sure to tell your heirs about your “final file.” They need to know that you have created it; they need to know where it is. It will do no good if you are the only one who knows those things when you die.  You can compile your “final file” gradually. The next account statement, income payment, or real estate or insurance newsletter than comes into your inbox or mailbox can be your cue to tackle and scratch off that particular item from the “final file” to-do list. Yes, it takes work to create a “final file” – but you could argue that it is necessary work, and your heirs will thank you for your effort.

At HFG Wealth Management, we embrace a method of financial planning known as Financial Life Planning™. We believe this is a financially effective and personally rewarding approach to creating a practical, lasting financial plan. As financial professionals using the life planning approach, our purpose is to assist individuals and families in creating a long-term vision that is consistent with their core values. At HFG we recognize that life events and life transitions can impact your financial responsibilities and your vision of the future. We are here to provide you with tips and strategies to get you started and help you reach your financial and life goals at every stage.

For more information, please visit www.hfgwm.com or call 832.585.0110.

How to Keep Health Care Costs Under Control in Retirement


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If you’ve been covered by a generous employer group health plan, you may be in for an awakening when you retire. Here are some tricks for keeping health care costs under control after you retire.  Although the government may subsidize some of your health care costs under the Medicare program, you will still be responsible for certain out-of-pocket costs. You will want to do everything in your power to prepare for these costs, as well as avoid unnecessary costs like late enrollment penalties, overpriced private plans, and superfluous trips to the doctor.

Avoiding late enrollment penalties. Did you know that there’s a penalty for not enrolling in Medicare on time? That’s because the only way the system can work is if everyone — the sick and the healthy, the young and the old — participate in the program. If you fail to enroll in Medicare when you are supposed to, you will be charged a penalty of the Part B premium for every 12 months you delayed signing up for Medicare. The penalty is permanent and must be paid for the rest of your life. To avoid it, find out when you need to enroll in Medicare and be sure to sign up during your enrollment period. If you are retired and covered by a retiree plan, or if you are working and covered by a plan that covers fewer than 20 employees, you must enroll in Medicare Part B no later than the third month after your 65th birthday. If you (or your spouse) are still working and covered by a group plan that covers 20 or more employees, you must enroll in Medicare no later than the 7th month after your group coverage ends. Practically speaking, you’ll want to avoid gaps in coverage by enrolling in Medicare before your employer coverage ends. But to avoid penalties, make sure you sign up no later than the end of your enrollment period.

Shop carefully for private insurance. Medicare does not cover everything. In order to avoid coverage gaps for prescription drugs and the portion of medical services that Medicare doesn’t pay for, you will need to have private insurance. Whether you buy a comprehensive Medigap policy plus a standalone prescription drug plan, or enroll in a Medicare Advantage plan, you will need to shop carefully to get the best plan for your needs. Comparing monthly premiums is just a starting point.

Be a cost-conscious consumer of healthcare. Of the factors underlying the meteoric rise in health care costs over the past two decades, the growing role of health insurance in our country has been held responsible in part because it tends to make consumers unaware of costs when they seek health care services. This is especially true for workers with comprehensive employer health insurance. Once you go onto Medicare you will need to be aware of health care costs. Otherwise you could be surprised by some rather large medical bills. Start by asking if your doctor accepts Medicare—some don’t. Ask if the doctor accepts assignment, which may mean you will be billed no more than the Medicare-approved amount, with you (or your Medigap insurer) being responsible only for the deductible and coinsurance amounts. Examine your insurer’s drug list and be aware of the copayments and coinsurance amounts for drugs you take. Do this annually, because drug plans change from year to year. Take into consideration all of your health care needs, including dental care and other services not covered by Medicare, and be aware of all of your out-of pocket costs — preferably before they are incurred.

Reduce the income-related monthly adjustment amount. These are cliff thresholds, which means if your income is just over the amount, you will be charged the higher amount. Talk to your advisors about ways you may be able to reduce your modified adjusted gross income in order to avoid these excess charges.

Seek preventive care and stay healthy.  Although staying healthy won’t help you reduce your premium costs, it will certainly help you avoid copayments and coinsurance amounts. Stay healthy by exercising and eating right.  Utilize Medicare’s free screenings, such as mammograms, prostate cancer screenings, colorectal cancer screenings and others. Certain conditions, if discovered early, can be treated quickly and easily and at a much lower cost than if hospitalization or expensive drugs are required. You should view staying healthy as a reward in and of itself.  When designing a healthcare budget, it pays to account for the possibility of a very long life. We’ve outlined here a few ways you can keep your healthcare expenses under control in retirement. Unfortunately, it is not an entirely predictable expense. In order to get a firmer grasp of your personal retirement health care situation, you should consult both your doctors and a trusted advisor.

At HFG Wealth Management, we embrace a method of financial planning known as Financial Life Planning™. We believe this is a financially effective and personally rewarding approach to creating a practical, lasting financial plan. As financial professionals using the life planning approach, our purpose is to assist individuals and families in creating a long-term vision that is consistent with their core values. At HFG we recognize that life events and life transitions can impact your financial responsibilities and your vision of the future. We are here to provide you with tips and strategies to get you started and help you reach your financial and life goals at every stage.

For more information, please visit www.hfgwm.com or call 832.585.0110.

Long-Term Care Insurance:  How does it work and is it right for your family?


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Whether you’ve had a long-term care insurance (LTCI) policy for years or you’re thinking of buying one, it’s critical to understand exactly what set of conditions will trigger coverage. Your chances of requiring some sort of long-term care increase as you age, and long-term care insurance (LTCI) can help you cover your long-term care expenses. Although tax issues are probably not foremost in your mind when you buy LTCI, it still pays to consider them. In particular, possibly consider whether your premiums will be deductible and your benefits taxable.

But who should buy the coverage and when? Many experts use net worth as a purchasing guideline. On one end of the spectrum, individuals with lower net worth will quickly exhaust their assets when funding long term care and qualify for Medicaid. At the other extreme, if you have assets of a certain amount, you may be able to pay for any potential long term care costs yourself. Keep in mind “self-insuring” requires investing a portion of your assets in a conservative fashion to cover possible long term care expenses.

If you fall in between these two categories, it’s worth weighing the trade-offs between the peace of mind a long term care policy might bring you and the premiums you will pay. Most experts suggest beginning this analysis around age 50. If you wait until your 70’s, it may be too late to purchase insurance as some long term care insurance companies place restrictions on the age and health status of buyers.

What typically determines if you’re entitled to benefits?
LTCI policies differ on how benefits are triggered, so it’s important to examine your individual policy. Here are some ways you can become eligible for benefits:

  • You’re unable to perform a certain number of activities of daily living (ADL’s) without assistance, such as eating, bathing, dressing, continence, toileting (moving on and off the toilet) and transferring (moving in and out of bed). Look in your policy to see what ADL’s are included, the number you must be unable to perform, and how your policy defines “unable to perform” for each ADL, as criteria can vary from one company to another (e.g., does the definition require someone to physically assist with the activity or simply to supervise the activity?).
  • Your doctor has ordered specific care.
  • Your mental or cognitive function is impaired.

The best policies let you qualify for benefits if your own physician orders specific care, rather than require that you be examined by an insurance company physician. Most LTCI policies have a waiting period, commonly known as an elimination period, before you can start receiving benefits after you’re judged medically eligible. Common waiting periods are 20, 30, 60, 90 or 100 days.

Though it’s true that premiums paid on a tax-qualified LTCI policy can reduce your tax burden, you must itemize deductions to be eligible.  LTCI premiums fall under the write-off for medical and dental expenses, which is limited to expenses that exceed 10 percent of your adjusted gross income. So, for example, if your adjusted gross income is $60,000, you may be able to deduct only that portion of your unreimbursed medical and dental expenses (including LTCI premiums) that exceeds $6,000. And there’s another caveat. Even if your LTCI premiums exceed 10 percent of your adjusted gross income, you can’t include all of the premiums in your deduction for medical and dental expenses

Remember, long -term care can be an emotional issue, but it’s best to evaluate the product as a risk management tool, like your homeowners, life, and auto insurance. Finally, because policy language can be ambiguous and insurance companies seem to introduce new riders on a daily basis, it’s beneficial to get input before purchasing long term care insurance.

At HFG Wealth Management, we embrace a method of financial planning known as Financial Life Planning™. We believe this is a financially effective and personally rewarding approach to creating a practical, lasting financial plan. As financial professionals using the life planning approach, our purpose is to assist individuals and families in creating a long-term vision that is consistent with their core values. At HFG we recognize that life events and life transitions can impact your financial responsibilities and your vision of the future. We are here to provide you with tips and strategies to get you started and help you reach your financial and life goals at every stage.

For more information, please visit www.hfgwm.com or call 832.585.0110.

The Advantages of HSAs

September 18, 2017
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Health Savings Accounts offer you tax breaks & more.

As health care planning remains a topic, why do people open up Health Savings Accounts in conjunction with high-deductible health insurance plans? Well, here are some of the compelling reasons why some employees decide to have HSA’s.

#1: Tax-deductible contributions. These accounts are funded with pre-tax income – that is, you receive a current-year tax deduction for the amount of money you put into the plan. Your annual contribution limit to an HSA depends on your age and the type of high-deductible health plan (HDHP) you have in conjunction with the account.

#2: Tax-free growth. In addition to the perk of being able to deduct HSA contributions from gross income, the interest on an HSA grows untaxed. (It is often possible to invest HSA assets.)

#3: Tax-free withdrawals (as long as they pay for health care costs). Under federal tax law, distributions from HSAs are tax-free as long as they are used to pay qualified medical expenses.

Add it up: an HSA lets you avoid taxes as you pay for health care. Additionally, these accounts have other merits.

  • You own your HSA. If you leave the company you work for, your HSA goes with you – your dollars aren’t lost.
  • Do HAS’s have underpublicized societal benefits? Since HSA’s impel people to spend their own dollars on health care, the theory goes that they spur their owners toward staying healthy and getting the best medical care for their money.

The HSA is sometimes called the “stealth IRA.” If points 1-3 mentioned above aren’t wonderful enough, consider this: after age 65, you may use distributions out of your HSA for any purpose; although, you will pay regular income tax on distributions that aren’t used to fund medical expenses. (If you use funds from your HSA for non-medical expenses before age 65, the federal government will typically issue a 20% withdrawal penalty in addition to income tax on the withdrawn amount.)  In fact, you can even transfer money from an IRA into an HSA – but you can only do this once, and the amount rolled over applies to your annual IRA contribution limit. (You can’t roll over HSA funds into an IRA.)

How about the downside? In the worst-case scenario, you get sick while you’re enrolled in an HDHP and lack sufficient funds to pay medical expenses. It is worth remembering that HSA funds don’t always pay for some forms of health care, such as non-prescription drugs. You also can’t use HSA funds to pay for health insurance coverage before age 65, in case you are wondering about such a move. After that age limit, things change: you can use HSA money to pay Medicare Part B premiums and long-term care insurance premiums. If you are already enrolled in Medicare, you can’t open an HSA; Medicare is not a high-deductible health plan.

Even with those caveats, younger and healthier workers see many tax perks and pluses in the HSA. If you have a dependent child covered by an HSA-qualified HDHP, you can use HSA funds to pay his or her medical bills if that child is younger than 19. (This also applies if the dependent child is a full-time student younger than 24 or is permanently and totally disabled.)

Your employer may provide a match for your HSA. If an HSA is a component of an employee benefits program at your workplace, your employer is permitted to make contributions to your account.  With the future of the Affordable Care Act in question, and more and more employers offering HSA’s to their employees, perhaps people will become more knowledgeable about the intriguing features of these accounts and the way they work.

At HFG Wealth Management, we embrace a holistic method of financial planning known as Financial Life Planning™. We believe this is a financially effective and personally rewarding approach to creating a practical, lasting financial plan. As financial professionals using the life planning approach, our purpose is to assist individuals and families in creating a long-term vision that is consistent with their core values. At HFG we recognize that life events and life transitions can impact your financial responsibilities and your vision of the future. We are here to provide you with tips and strategies to get you started and help you reach your financial and life goals at every stage.  For more information, please visit www.hfgwm.com or call 832.585.0110.

 

Travel Insurance: Necessary Or A Waste?

August 23, 2017
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Soon you’ll be on your way, taking that trip you’ve looked forward to for ages-but suppose something happens. If you get sick, lose your suitcase, or have to cut your trip short, will any of your existing insurance policies cover your expenses or reimburse you for your losses? If not, you might want to purchase travel insurance, which is available from insurance companies, travel agents, tour operators, and cruise lines.

If you can’t make it after all or have to cut it short-trip cancellation/interruption insurance
You’re ready to go, but the cruise line has gone under financially. Or perhaps you’ve arrived at your hotel only to be handed a telegram informing you that Uncle George is seriously ill and you must return home immediately. If your trip is canceled or cut short, will you be able to get any of your money back?

Trip cancellation/interruption insurance protects you if you must cancel your travel plans before you leave or cut your trip short due to an unforeseen event. Covered contingencies can include bad weather, the financial failure of a service provider such as a cruise line or a travel agency, your illness or that of a family member while on the trip, or an illness or death at home. But coverage varies widely from policy to policy, so check the exclusion section carefully. Your definition of an unforeseen event may differ from that of the insurance provider. For example, some companies don’t recognize a recurrence of your pre-existing medical condition as unforeseeable.

Under the policy, you’ll be reimbursed for your nonrefundable prepaid expenses, such as tour deposits, airline tickets, or hotel rooms. To determine what the insurance covers, you may need to check the terms of your travel agreements and find out what guarantees are offered by the carrier, travel agent, or tour operator. Cruise lines, for instance, may refund most of your money if you cancel several weeks before your scheduled departure, but they’ll give you less or none back if you cancel a few days before you’re supposed to leave. In that case, you’d get nothing back unless you purchased trip cancellation/interruption insurance.

Trip cancellation/interruption insurance is different from cancellation waivers offered by cruise lines and tour operators. These waivers are not insurance; they’re simply company guarantees that your money will be refunded under certain circumstances. They usually won’t cover your last-minute cancellation and they won’t protect you if the company goes out of business.

If that fever isn’t just excitement-short-term supplemental health insurance
Your individual or group health insurance policy typically covers you if you’re traveling within the United States. Still, it’s a good idea to check with your insurance provider before you travel so that you fully understand the coverage conditions. If you’re traveling overseas, beware-your health insurance policy may not cover you at all. Even if it does, it may not provide the same benefits overseas that it does in the United States. Check the limitations of your policy carefully, and call your insurer’s customer service department if you have questions. If your health insurance doesn’t provide you with adequate coverage while you’re traveling, consider purchasing a short-term supplemental health insurance policy from an insurance company, travel agent, tour operator, or cruise line. These policies often combine accident and/or sickness coverage with medical evacuation coverage, which pays all or part of the cost of getting you back to the United States if you’re traveling overseas (something most basic health insurance polices won’t cover). The terms of supplemental health policies vary widely, so before purchasing this insurance, ask to see a copy of the policy and get the answers to the following questions:

  • Does the plan pay the cost of medical care needed for sickness, accidents, or both?
  • What procedures must you follow to see a doctor or go to the hospital?
  • Will you have to get approval before you receive care?
  • Does the policy pay for care upfront, or will you have to pay and wait to be reimbursed?
  • What are the deductible, co-payments, and/or coinsurance costs?
  • What exclusions and restrictions apply?
  • What is the maximum amount of coverage under the policy?
  • Are translator services available?

If you lose your shirt-baggage insurance
Baggage insurance reimburses you if your personal belongings are lost, stolen, or damaged while you’re traveling. Before you purchase it, however, find out if you already have adequate protection. For instance, airlines may be liable for damage caused by their negligence, and they’re liable for lost or stolen baggage after check-in, up to their stated limit per passenger. Some credit card companies and travel agents also provide supplemental baggage insurance at no charge to you. Your homeowners or renters policy may protect your personal belongings against theft when you travel, as well.

Purchasing baggage insurance may be appropriate when you want 24-hour protection, not just protection after your bags are checked in with an airline. Baggage insurance may also offer higher liability limits than those offered by an airline. However, check the policy’s fine print. If you carry expensive items, you may not be fully reimbursed if they’re lost or stolen, and benefit limits may apply to certain items like electronics (e.g., laptop computers) or jewelry. You also may not be reimbursed for anything covered under another policy; if your bags are lost or damaged by an airline, you may need to seek reimbursement from the airline first.

If you lose more than that-accidental death and dismemberment insurance
Accidental death and dismemberment insurance (AD & D) is inexpensive coverage that compensates you if you lose a limb or an eye, or that compensates your beneficiary if you die in an accident. You can purchase this coverage as a separate policy, as a rider to an existing policy, or as part of a travel insurance policy. You may also receive this coverage as a “free” benefit when you purchase airline, train, or bus tickets using your credit card. AD & D policies usually cover, up to certain limits, medical expenses associated with an accident.

Before you purchase this coverage, make sure you don’t have duplicate coverage elsewhere. You may already have AD & D coverage if you have adequate life insurance, or through a group insurance plan sponsored by your employer or credit card company.