“Coaching is unlocking a person’s potential to maximize their own performance. It’s helping them to learn rather than teaching them.” Tim Gallwey
I am honored by all the comments I received a few weeks ago regarding the Monday Morning Quarter-Buck and unexpected events in life.
In that article, I mentioned that I have been working with a couple of coaches myself this year, as well as interviewing a number of them on the podcast. In Episode 26, we interviewed a career coach - Carla Sessions. Carla is a “career changer” or what I like to call encore career, it’s worth a listen if you would like to enhance or change your career: Wine and Dime Episode 26 - Coaching with Carla Sessions
Why am I bringing this up now? Well, we are very excited to announce the addition of three “career changers” to our team.
This week we’d like to introduce Kim Anderson to you. Kim is a northern Minnesota native who has lived in the Fargo/Moorhead area since 1994. Kim graduated from MSU-Moorhead with a degree in Construction Management and obtained her CPA designation in 2012. Kim has been involved in both business accounting and personal finance for many years.
She served in the Air Force for 9+ years during Operation Desert Storm. She also joined the Navy Reserves and was deployed for 10 months during Operation Iraqi Freedom.
She started her own financial planning firm called Young Living Financial in 2017 and, desiring to work with a team of other advisors, she joined Irvine Wealth Planning Strategies in 2018.
In her spare time, Kim enjoys home remodeling, reading, and genealogy, discovering "lost" relatives through DNA.
Now that you know a little bit about Kim, here is a little bit from her….
Health Savings Accounts (HSAs) Should be Part of Everyone's Retirement Plan
by Kim Anderson
I love HSAs! Put money in 100% tax free, spend the money on qualifying medical, dental, and/or vision expenses, and the money is forever tax free.
What This Might Look Like
If you are under the age of 55 and single, in 2018 you can save up to $3,450 in your HSA and potentially never pay taxes on it (at a 25% tax rate, that's $862.50 in taxes that you didn't pay). If you are over the age of 55, you are eligible to save an extra $1,000 per year into your HSA. Doing some quick math: if you saved $287.50/month ($3,450/year) from the time you left college at age 22 until you went on Medicare at age 65 (43 years) and earned 8% annual interest compounded monthly, you would have approximately $1.284 million dollars - potentially tax free. What a sweet deal!
Unfortunately, many people who are eligible for HSAs don't take advantage of them. Additionally, many people who have high deductible health plans (HDHP) think they are eligible for an HSA, but are not. Let's look at some specifics.
With the advent of the Affordable Care Act, while many people who were not eligible for subsidies grumbled about the cost of the premiums, they saw a bright light embedded in the crevasse of high deductibles--the ability to contribute to an HSA. Then they found out that it may not actually be true. Why? Because not only does an HSA-eligible HDHP plan have a minimum deductible, but also a maximum out-of-pocket (OOP) expense limit. And because so few people understand the nuances of HSAs, people were caught off guard with the maximum OOP expense limits. Only after the open enrollment period closed did they discover that their HDHP had an OOP that was too high to qualify them for an HSA.
Another misconception about HSA-eligible HDHPs surrounds deductibles and copayments. Typically, an HSA-eligible HDHP requires you to pay the minimum deductible before your co-insurance benefits kick in. (Meanwhile, that doesn't mean you will pay full price--you still receive the negotiated rates that your insurance company worked out with the service provider just as you would under a "traditional" insurance plan.)
How To Quickly Determine If Your Plan Is HSA Eligible, Understanding OOP
When looking for an HSA-eligible HDHP, consumers should pay particular attention to the copayment/coinsurance amounts. If they pay $10 co-payments/co-insurance for generic drugs, $50 for a primary doctor visit or $50 for a specialist doctor, it's likely that the plan is not HSA eligible. However, if they pay the full negotiated cost of a primary doctor visit, they will keep paying until they reach their annual minimum deductible, then insurance will kick in to cost share the remaining amount up to the annual OOP expense limit.
For instance, if the plan has a $5,000 deductible and maximum OOP of $13,000 and the insurance company cost shares at 80/20, the consumer will pay 100% of the negotiated costs until they've spent $5,000. Then for the next $40,000 of covered services, the insurance company pays 80% ($32,000) and the consumer pays 20% ($8,000). Between the $5,000 deductible and $8,000 cost share, the consumer has met their $13,000 annual OOP limit. Finally, if qualifying medical costs put them over the insurance plan's "out of pocket (OOP) maximum" for the year, typically the insurance plan will cover 100% of eligible medical expenses beyond the OOP maximum. In this instance, however, it's important to understand what deductible and out-of-pocket costs apply to in-network providers and out-of-network providers.
For example, Medica's Out-of-Network-Care summary states: "If you visit an out-of-network provider, our discounts don’t apply. That means your out-of-pocket costs can be much higher. Plus, we usually pay out-of-network providers less than the amount they bill. When this happens, you’re responsible for paying the provider the balance." Knowing this ahead of time might greatly influence your decision-making process.
Become an Educated Consumer of Health Care & Related Costs
If you are as committed as I am to forever being able to have an HSA, take the time to understand your plan and all the costs thereof so that you are not caught off guard by idiosyncrasies that leave you unable to afford your health care, let alone fund your highly coveted Health Savings Account.