It’s that time of year — W-2s are out, 1095-Cs are in the process of being filed, and consumers and businesses are checking off their tax related to-dos. Here are three healthcare tax tips for employees. It’s important to review your healthcare expenses when filing their taxes to ensure they are taking advantage of any savings opportunities.
It’s not too late to fund HSAs
Most people don’t know that you can actually fund your Health Savings Account all the way up to the tax-filing deadline for the prior year. In other words, contributions through April 15, 2019 apply toward 2018 limits. If employees haven’t maximized their contributions, it’s not too late. Individuals can contribute $3,450 for 2018, and families can contribute $6,900.
The medical expense deduction threshold jumps this year
Deducting medical expenses is difficult, but applicable consumers may want to itemize these costs. For qualifying expenses that occurred in 2018, consumers can deduct expenses exceeding 7.5 percent of their adjusted gross income, as long as deductions are itemized. Beginning this year, the threshold rises to 10 percent. Because health insurance premiums are most consumers’ biggest healthcare expense, and they are not eligible to be deducted, most consumers aren’t able to take advantage of this deduction. Further, most consumers do not itemize.
No penalty for lacking coverage in 2018
If employees didn’t have health insurance for any part of 2018, they won’t face a penalty for the first time since 2014. The Affordable Care Act requires most consumers to carry health insurance, and employees will still have to specify if they did when they file their taxes. However, the penalty has been set to $0.
More and more adult children are sending their parents overseas where they can afford the cost of senior care.
It sounds so strange on the surface, right? The Philippines is growing in increasing popularity because they are even marketing to elders with Alzheimer’s Disease. For someone with Alzheimer’s, the cost of senior care in California (specifically) can range from $4,000 to $9,000 a month, but in the Philippines $1,500 will do.
Similarly, Thailand is becoming a hot spot for affordable elderly housing, in addition to Mexico and even India.
- Is this going to be the new trend?
- If yes, will the cost of care rise?
- Is this solution a temporary fix for a bigger problem; i.e. How can we afford the cost of senior care at home?
In that regard, it becomes a question of “What level of care, will my elder receive?” Well, caregivers overseas are fairly skillful, to a point where immigrating caregivers have an easier time receiving work visas than those looking for work in other fields. In addition, there’s a cultural aspect that can’t be overlooked. On the eastern side of the world, there is much more emphasis placed on “respecting your elders,” so you know that they care and will continue to treat them with the kindness they deserve.
The nascent trend is unnerving to some experts who say uprooting people with Alzheimer’s will add to their sense of displacement and anxiety, though others say quality of care is more important than location. There’s also some general uneasiness over the idea of sending ailing elderly people abroad: The German media have branded it “gerontological colonialism.” Angela Lunde of the Mayo Clinic says that generally the afflicted do better in a familiar environment, but that over time, even those with advanced stages of the disease can adjust well.
The World Health Organization states that by 2050, the number of people who make it past their 80th birthday is expected to almost quadruple to 395 million – the age after which one in six people are estimated to have developed dementia. And more are opting for retirement in lower-cost countries.
“Medical tourism” has become a booming industry, with roughly 8 million people of all ages seeking treatment abroad annually, according to the group Patients Without Borders.
The U.K.-based Alzheimer’s disease International says there are more than 44 million Alzheimer’s patients globally, and the figure is projected to triple to 135 million by 2050. The Alzheimer’s Association estimates that in the U.S. alone, the disease will cost $203 billion this year and soar to $1.2 trillion by 2050.
Sending relatives to care homes abroad might be a choice that many more people find themselves considering, as the gulf between cost and quality continues to widen.The problem is partly fuelled by demand. People are simply living longer and to ages where chronic health problems are more likely.
Against Sending Seniors Overseas
The world is full of tropical paradises and other exotic places where a couple can live comfortably on $2,000 a month or less. Plus, good health care abroad can cost a fraction of what it does in the U.S.
If living more cheaply is the only reason you’d retire to another country, though, you’re likely to be unhappy. The United States is probably the most convenient country on the planet. You can get almost anything you want, almost any time you want with a phone call or the click of a mouse. The rest of the world is just not like that.
When it comes to moving an elder (especially one with Dementia or Alzheimer’s Disease), it’s going to be stressful and that stress is compounded when they realize they’re not in their own home anymore. This is most convincing argument against sending your elder overseas, it’s simply a matter of, “Is it the best thing for your loved one?”
It’s hard enough when the memory is fleeting, but if they’re living in another country with absolutely nothing familiar, that’s a recipe for disaster. In addition, not every adult child moves with their parents. So visiting can get expensive and if something dire happens, they may not be able to get their soon enough which is a doubly scary thought.
Now, that being said, a lot of adult children move with their parents to the foreign country… but even that shows it’s not for everyone, since that means uprooting your life as well. So, while the care may be cheaper, the visits to your elder can get expensive and if you’re leaving your life in America, that alone is a hefty sum.
We are also seeing more assisted living and care homes popping up in Latin America as the historic tradition of family taking care of their elderly becomes less viable in the modern age.
In Medellín, Colombia, for example, several development groups are building assisted living facilities that are of a very high standard but a fraction the cost of similar facilities in the United States.
Another option that can be very affordable in Latin America is to hire in-home nursing care. Qualified full-time nurses earn less than US $1,000 per month in many countries. Even if you need around-the-clock care, the cost of three full-time nurses working in shifts would be less than the cost of a nursing home facility in the United States.
The Philippines is offering Americans care for $1,500 to $3,500 a month — as compared with $6,900 the American Elder Care Research Organization says is the average monthly bill for a private room in a skilled nursing U.S. facility.
In Chiang Mai, a pleasant Thailand city ringed by mountains, lies Baan Kamlangchay “Home for Care from the Heart”, established by Martin Woodtli, a Swiss who spent four years in Thailand with the aid group Doctors Without Borders
Patients live in individual houses within a Thai community, are taken to local markets, temples and restaurants, each with three caretakers working in rotation to provide personal round-the-clock care. The monthly $3,800 cost is a third of what basic institutional care is in Switzerland. Those who end up staying at a facility being built in the outlying Chiang Mai district of Doi Saket will have amenities that would be tough for its European counterparts to match, including a clubhouse with a massage room and beauty parlor, a restaurant, Swiss bakery and pavilions with soaring ceilings and skylights.
Make A List
Now, find a comfortable chair, settle in, and make a list.
Write down everything that’s important to you. Consider all aspects of your life, big and small. What do you enjoy? What would you miss if it were gone from your life? What makes you crazy? And what would you like never to have to deal with again?
Think about the weather. Consider things related to infrastructure. Think about health care. Would you be comfortable being examined by a doctor who didn’t speak English? Do you have an existing health concern that could require emergency medical attention? In that case, it’s important to you to be within a, say, 20-minute drive of a First World hospital.
Will it bother you to have to pay attention to a fluctuating exchange rate between the currency of the place where you’re living and the currency your income or savings are denominated in? If so, maybe focus on places where they use the U.S. dollar (assuming that’s your home-base currency)… say, Panama or Ecuador, for example… or perhaps Belize, which pegs its dollar to the Greenback.
Would you be uncomfortable living among the locals? Would you prefer to minimize culture shock and avoid learning a new language if possible?
What would you like to see from your bedroom window every morning when you wake up? The beach? A wildflower-covered hillside? A cityscape?
And what would you like to hear outside your bedroom window each night as you fall asleep?
That’s how you get started at this. You make a list.
Have a purpose
We all need a reason to get out of bed in the morning. It can be challenging to find that purpose when you’re struggling with language and cultural differences.
Having purpose is key to a positive experience in a new place. The happy ones may take up a long-deferred hobby, learn a new language or start a business, but many expat retirees find their purpose by volunteering.
There are expat-retirees in different places who are volunteering as teachers, in orphanages, in single-mother facilities. This can be the best way to become a real part of your new community.
The decision as to whether you need a dental treatment is often in a gray area. One dentist will say one thing, one will say another. This is normal, and it’s to be expected. But it means that the usual signs of insurance fraud – a practitioner prescribing more procedures than his or her colleagues – are more difficult to detect, because there’s more variation, and it’s more difficult to really pin down a procedure as unnecessary.
You need medical insurance, if only to protect against the cost of an accident or illness so expensive that you could be ruined financially. But do you really need dental insurance? It’s an interesting question, because you can avoid the most likely causes and expenses of dental problems, decay and gum disease, by brushing and flossing your teeth diligently. Several studies have shown that visiting the dentist twice a year doesn’t deliver notable benefits compared with one exam a year. But some teeth are more prone to problems, and when they have a problem, the costs can mount quickly.
On average, Americans pay about $360 a year, or between $15 and $50 a month, for dental insurance. Costs will vary depending on your state. Most plans come with a maximum annual benefit or coverage limit. This limit usually falls between $1,000 and $2,000 person (a figure which hasn’t changed since the 1970s). Adjusted for inflation, dental insurance plans should be paying out between $4,000-8,000 a year by now, according to MarketWatch.com.
Unlike medical insurance, which covers costs after your bills reach the amount of your deductible, dental insurance cuts off coverage after your bills reach the annual limit. With dental insurance you may have a deductible to pay before coverage kicks in. After you’ve met it, your insurance pays a percentage of your dental costs; you pay the remainder, called coinsurance. The coverage stops entirely when the insurance company’s payout reaches that maximum benefit amount. Beyond that, you’ll pay 100% of your costs out of pocket. And the two annual cleanings often “included” in a plan count toward your max. In addition to your benefit being limited to a maximum of about $1,000 to $2,000, you’ll be trading away the potential to pick your dentist of choice (and location) and perhaps negotiating a price, all for the benefit of saving a few hundred dollars.
If you plan to get insurance, your best bet is to purchase a policy before, not after, you need major work. Otherwise you could be waiting months (sometimes years) for coverage to begin a procedure.
What does a monthly dental premium cover?
The National Association of Dental Plans (NADP) describes these elements of coverage in a typical plan, which provides a level of coverage known as 100/80/50 coverage:
- Preventive care: periodic exams, X-rays and, for some age groups, sealants — 100 percent.
- Basic procedures:office visits, extractions, fillings, root canals (sometimes) and periodontal treatment — 70 percent to 80 percent.
- Major procedures: crowns, bridges, inlays, dentures and sometimes implants and root canals — 50 percent or less.
Orthodontics coverage usually can be purchased as a rider and cosmetic care isn’t covered. So, in deciding if an insurance plan is right for you, weigh:
- The annual premium
- The cost of the dental care you need
- Your policy’s limit on how much it pays out in benefits and whether you can roll over unused benefits from the previous year
- Policy coverage
While many dental policies focus on preventive measures by offering two annual visits, you’ll really start seeing the savings with more expensive treatments, like root canals and crowns.
What types of dental insurance plans can you choose from?
The typical dental plan falls into one of three categories.
- Indemnity or fee-for-service plans
- PPO or Preferred Provider Organization plans
- HMO or Health Maintenance Organization plans
Indemnity or fee-for-service plans
This plan allows you to pick a dental provider and your plan pays a percentage of the provider’s fee.
Pros: These plans let you choose from the widest variety of providers. The deductible (the amount you pay for procedures before insurance coverage kicks in) may be lower than other plans. The annual maximum coverage limit may be higher.
Cons: The premiums (what you pay monthly) tend to be higher than other plans. You’ll be paying your share of service costs up front.
This plan is best if: You have a certain dental provider you want to see, or you anticipate needing major, costly procedures.
PPO or Preferred Provider Organization plans
With a PPO, you pay lower fees to see certain in-network or “preferred” providers.
Pros: The insurance network pays more than they might with an indemnity plan or HMO plan. You aren’t required to see in-network providers, but you save money when you do.
Cons: You’ll pay more if you see a provider out of the network. PPO plans often come with a maximum amount they’ll reimburse in a calendar year. Some procedures may not be covered or have a waiting period before coverage starts.
This plan is best if: You don’t need major dental work right away, but want to be prepared in case you need it in the future. You’d like some flexibility in your choice of dental providers but don’t want to pay high premiums.
HMO or Health Maintenance Organization plans
With an HMO, you’re required to see dental providers in the insurance network.
Pros: Preventive services—cleanings and X-rays—will be 100 percent covered, while basic procedures come with a co-pay. You may not have a deductible or maximum annual limit and premium payments will likely be lower.
Cons: Major or restorative procedures may come with less than 50 percent coverage or no coverage at all. You won’t have a large choice of providers.
This plan is best if: You don’t anticipate needing any major dental procedures in the near future. You have no provider preferences as long as basic dental work is covered financially.
If you already have a dental provider you trust, see which plan their office recommends. Most plans won’t immediately cover pre-existing conditions or reimburse for major procedures completed before you got insurance. When in doubt, ask what’s covered and when. Keep in mind there’s always a possibility you may need a procedure you don’t anticipate—and it may not be covered by your policy. The higher your premium, the more likely you are to have coverage for more extensive work. Your dentist will often tell you (or you can ask) which procedures you’re likely to need down the line.
The perverse incentives by insurance companies
Insurance plans put perverse incentives in place for in-network dentists. When dentists become part of these networks, they agree to extremely low reimbursements for cleanings and exams, in exchange for a steady stream of patients. To make up for it, some dentists will perform procedures that have a significant patient portion or heavily promote cosmetic work as being necessary.
Often, it works like this: A dentist will agree to be “in-network” in exchange for a steady stream of patients from the insurance company. They get paid by the insurance company “by the head” instead of according to how much treatment they actually provide. If the insurance company agrees to send the dentist 12,000 patients per month, and the dentist gets $8 per head per month (this is called a capitation plan) then that’s $96,000 per month, regardless of what their costs are. See the problem?
So the incentive is to pocket as much of the cash as possible by reducing overhead. To reduce overhead, they’ll push off work that needs to be done in their patients and then promote treatments that aren’t covered by insurance.
With perverse incentives like these, how much is that in-network dentist or that free cleaning actually costing you and your family — both money-wise and health-wise?
What questions should you ask before picking a policy?
- Which dental procedures am I likely to need this year? How much would they cost out of pocket? How much would they cost with insurance?
- How much will I pay monthly and annually in premiums?
- How much will I pay for a regular cleaning without insurance? With insurance?
- What is the maximum annual payout for this insurance policy? Which procedures are covered?
How can you save money on dental care without insurance?
If you decide to skip dental insurance, you’ll still want to get your teeth cleaned once or twice a year. And you’ll want options if unexpected dental work comes up. Here’s where you can look for care outside of the typical insurance marketplace.
Visit a dental school
You’ll see students whose work is supervised by trained dentists. In exchange, you pay a low cost for appointments, even if you’re uninsured. The ADA lists dental schools across the country; find one near you.
Visit a dental clinic
Some clinics offer a sliding scale fee based on income, and diagnostic exams may be free. Find a local branch of a national clinic like America’s Dentists Care Foundation, or see what low-cost care options your state and local dental societies have to offer.
Dental school and clinic appointments are often in high demand. Be prepared to schedule far in advance or put your name on a waiting list. Even with walk-in clinics, it’s best to call ahead and find out their procedures before you go.
Look into a discount dental plan
It’s easy to confuse dental savings plans (also known as dental discount plans) with dental insurance, but they’re very different. Whether insurance or a discount plan — or some combination of the two — is right for you will depend on how much dental work you and your family get per year and how much you’re paying out of pocket.
Discount dental plans or dental savings plans can give you the security of coverage without the cost. You’ll pay an annual fee and get a discount, anywhere from 10 percent to 60 percent, on average dental care prices. Unlike insurance plans, there are no annual caps or waiting periods. With dental discount plans, you enjoy savings at participating dentists by paying the dentist directly for services at a lower price. This is not an insurance plan, so there are no copays or premiums, Before you buy into a plan, look over its list of covered procedures to see if they’re ones you are likely to use.
It may be a good option for people who don’t have access to dental insurance or who want services that aren’t covered by insurance. This might include senior citizens who don’t have dental insurance under Medicare or younger people who want discounts on something like teeth whitening, which traditional insurance typically doesn’t cover. You also might think about a dental savings plan if you need dental work that costs more than your dental insurance will pay. (Many dental insurance plans cap their total payout at less than $2,000 a year.) For example, savings of 50% on a couple of root canals that cost $1,000 each would add up quickly.
If you have a dentist you like, ask her if she takes part in one and how much you could save with it. If you’re open to new providers, call a few who are in the plan you’re thinking about to see if the savings would be worth it. Thousands of dentists take part in dental savings plans, and you can usually get a member list from the plan’s sponsor. While many reputable companies offer dental savings plans, the industry has attracted some fraudsters. Avoid scams by asking to be mailed information before you make a payment, and say no to high-pressure salespeople. You also can check with the Better Business Bureau or your state’s insurance regulator to see if a company has had complaints made against it.
Price check and do your research
Tooth pain is a great motivator. When you’re in pain, you’re often willing to fork over any sum to find relief. But take steps to make sure you’re paying market rate. First check the Healthcare Blue Book, a respected online tool that provides a fair price for thousands of medical and dental procedures in your ZIP code. And don’t be shy to call around to other dentists in your area to price shop. Ask friends and neighbors for recommendations, and check out any potential dentist with your state’s dental board to ensure he or she is licensed and to find out if any disciplinary action has been taken. Most offer an online search tool.
Just like it’s a good idea to have an annual check-up for your health, it’s smart to have a Medicare check-up to make sure the coverage will work when folks need it, and not break the bank. The best time of year for everyone in Medicare to have that check-up is in the fall during the Medicare Annual Enrollment Period, which is fast approaching. So if you or your parents are receiving Medicare its important you have this conversation with them. Healthcare cost are one of the largest retirement expenses and 90-95% of beneficiaries overspend on Medicare. Those are startling statistics!
The most common reason beneficiaries overspend; they purchase Medicare Part C (Advantage) and Part D (prescription drug) plans that do not meet their individual health care needs. People tend to buy based on premium and overlook the benefits they use. Couples often purchase the same plan when they would be better off with different plans. Individuals may not realize what the full cost to them is until the new plan year has started and then it is too late to make a change.
The Annual Enrollment Period cycle starts Saturday, Oct. 15 and ends Wednesday, Dec. 7. Coverage goes into effect Jan. 1. This is the time of year when everyone on Medicare can reevaluate features of their contracts to see if they’re getting the best coverage at the best price for their Medicare Part C and D plans. All plans announce new pricing and benefits every fall. Cost increases are more likely to be hidden in other out-of-pocket costs, such as increasing deductibles, medications in higher more expensive drug tiers and greater use of co-insurance as opposed to co-payments.
It’s particularly important for your clients to perform their annual Medicare check-up if any of the following have happened this past year:
• Prescription medications have changed
• Diagnosis of major health conditions
• Medicare premiums and out-of-pocket costs have crept up over time
• Customer service has been poor
• Carrier has discontinued the Medicare Part C or D plan
• Legal residence has changed
If any of these events have happened, then a Medicare check-up is in order. September is a perfect time for clients and caregivers to pull some information together to make the task easier when new plan information becomes available Saturday, Oct. 15.
Here is a helpful checklist to help people get organized.
• Put together a detailed list of medications. Use the exact spelling and dosage of the medication on the prescription container. Pictures can be surprisingly helpful.
• Collect an accurate list of health care providers’ names, addresses and phone numbers. Make sure to include all healthcare providers such as physical therapists, medical equipment suppliers, laboratories, etc.
• Read the new plan benefit summary the insurance company sends each beneficiary at the end of September. Look at more than just the premium. See if copayments, co-insurance, deductibles and other plan features will increase next year; call the company or go online to find if all of the medications will be covered this next year and at what costs. Plans are allowed to discontinue coverage of specific drugs as well as increasing the cost; do the same for doctors and other health care providers. Ask the health care providers if they expect to continue to participate in the plan.
• Don’t assume that a better plan is not available.
• Don’t wait until the last minute to shop: Enrollment systems tend to bog down; People who enroll near the end of the Annual Enrollment Period usually start the new year without their new insurance card in hand, making it hard for them to get the care they need.
Right about now you might be thinking that the Medicare check-up can be challenging and certainly time-consuming.
While both are true, just like holiday shopping it is easier if you get organized and start early. The good news is that there are several sources of free assistance available to consumers and their caregivers to assist as they sort and sift through options. That said, to assist.d, free support services become overwhelmed quickly. The earlier folks contact them, the more likely they will be available.
Eldercare.gov is a public service of the U.S. Administration on Aging that connects people to services for older adults and their families. This free information and referral assistance, including the State Health Insurance Assistance Programs (SHIP), is available all over the U.S. Visit the elder-care locator online or call 800-677-1116 Monday-Friday, 9 a.m.-8 p.m.
I also recommend cultivating a relationship with a well-established Medicare broker. That professional can be very helpful to your clients and assist them with shopping for Medicare coverages.
If your clients are on Medicare or help someone who is, I encourage them to shop for Medicare Advantage (Medicare C) and Medicare D (for drugs) plans this fall to make sure they are getting the best value for their money. Your clients do not want to be part of the 90% to 95% of folks who overspend on Medicare and waste their hard-earned savings. Once the Annual Enrollment Period window of opportunity closes on Dec. 7, most Medicare enrollees will have to wait until 2018 for new coverage.