As a kid, we learned our multiplication tables with flash cards. As you and I have been looking through different aspects of your financial life, we have been using a set of flashcards, as well. Today’s card is your medical insurance policy and more importantly, who you are working with that will put that policy together.
There are so many different ways that you can view this. The ‘who’ can be your employer because in many cases your employer has already dictated what your health insurance benefits will be. Your union may also play into this as well. If you are self-employed or don’t have coverage elsewhere, you may have to depend upon the Affordable Care Act. No matter what, you will have a policy ID card with proof of your medical coverage, and no matter where you get your coverage there is always some sort of plan that you have. As life goes on, plans change.
I was working with a client recently who was frustrated because she has only had to carry just one medical card that took care of every medical need she had. Now that she is Medicare-eligible, she has her Medicare card, a supplemental Medicare card, and a prescription card, all of which she had to apply for; and this does not include if you decide to take advantage of the ‘Medicare Advantage Plan’. Who knows whether that plan really is an advantage or not?
Before you are old enough to be Medicare-eligible, you may be dealing with the Affordable Care Act options. Do you want a higher or lower deductible? Do you want dental? Do you want a health spending account (HSA)? You may also have to decide what to do if you retire early and are not yet eligible for Medicare. How do you take advantage of any tax credits that may be available to you?
You can see that the medical insurance card is an important part of your financial life. Surprisingly, a very important advisor when it comes to your medical insurance is your tax preparer. A client of mine recently said, “Mark, you need to make certain that I am making and reporting income correctly.” Why? Because this person still wanted to make money, but they didn’t want to report that they made too much money above a certain limit, because they did not want to lose any of the tax credits that they would have otherwise received by the Affordable Care Act.
In addition, in the last few years, there has been a new form of taxation that has dealt a surprise to some who pay Medicare premiums. Since you and I know that we’ve been paying for our future Medicare coverage since our very first jobs, you would think that we would all pay the same Medicare premiums at the age 65. However, if you have reportable income above certain thresholds, you may pay double or triple what other people are paying. It’s important to know these ins-and-outs because that makes a difference in how much money is left over after you pay those premiums for you to actually enjoy your retirement.
