And while Medicare provides valuable healthcare benefits, it's not necessarily free, nor does it cover everything.

What makes Medicare particularly challenging is that some decisions you make when first enrolling can affect your healthcare choices and costs for years to come. A seemingly inexpensive plan today might not provide the flexibility you want later in retirement.

The good news is that with a little advance planning, many of the most common Medicare mistakes can be avoided. Here are some important considerations to help you make informed decisions about your healthcare in retirement.

1. Start Planning Before You Turn 65

One of the biggest Medicare mistakes is waiting until the last minute.

Most Americans become eligible for Medicare at age 65. Your initial enrollment period generally begins three months before the month you turn 65 and continues for three months afterward.

If you're already receiving Social Security benefits, you'll generally be enrolled automatically in Medicare Parts A and B. Otherwise, you'll need to enroll yourself.

However, turning 65 doesn't necessarily mean you must leave your employer's health insurance.

If you or your spouse are still working and covered under an employer health plan, you may be able to delay Medicare without penalties. The rules depend largely on the size of the employer and the type of coverage.

For example, if the employer has 20 or more employees, you can generally delay Part B while covered through current employment. Different rules typically apply to smaller employers.

Key takeaway: Begin reviewing your Medicare options at least three to six months before turning 65. If you're planning to retire before 65, start even earlier—ideally six to eighteen months before retirement—to evaluate your health insurance options.

2. Don't Assume COBRA Allows You to Delay Medicare

This is a particularly costly mistake.

Suppose you retire at age 66 and your former employer offers to pay for 18 months of COBRA coverage. That sounds like a wonderful benefit, and you might reasonably assume you can postpone Medicare until COBRA ends.

Unfortunately, that's generally not how Medicare works.

COBRA coverage is not treated the same as health insurance through current employment. Once your employment ends, you generally have an eight-month special enrollment period to sign up for Medicare Part B without a late-enrollment penalty.

Waiting until COBRA expires could leave you facing penalties or a gap in coverage.

Key takeaway: If you're retiring after age 65, coordinate your Medicare enrollment with the end of your employment—not simply the expiration of COBRA benefits.

3. Understand the Two Main Medicare Coverage Options

Once enrolled in Medicare, you'll generally choose between two approaches to healthcare coverage.

Original Medicare with Supplemental Insurance

Original Medicare includes Part A (hospital insurance) and Part B (medical insurance). Many retirees add a Medicare Supplement policy, also called Medigap, and a separate Part D prescription drug plan.

The biggest advantage is flexibility.

You can generally visit any doctor or hospital nationwide that accepts Medicare, without needing referrals or worrying about a particular insurance company's provider network.

Supplemental insurance helps pay expenses that Original Medicare doesn't fully cover, including certain deductibles and coinsurance.

The trade-off is higher monthly premiums, particularly when you combine Medicare Part B, Medigap, and prescription drug coverage.

Medicare Advantage

Medicare Advantage, also called Part C, is an alternative offered through private insurance companies.

These plans generally combine hospital, medical, and often prescription drug coverage into one package. Some also include dental, vision, or hearing benefits.

Many Medicare Advantage plans advertise premiums as low as $0, although you must generally continue paying your Medicare Part B premium.

The trade-off is that these plans typically operate through provider networks and may require referrals or prior authorization for certain services.

You'll also have copayments and other out-of-pocket expenses, subject to the plan's applicable annual medical spending limit.

Key takeaway: Don't select a Medicare plan based solely on its monthly premium. Consider your preferred doctors, medical conditions, travel habits, and how much flexibility you want as you age.

4. Your Initial Medicare Decision Can Have Long-Term Consequences

Here's something many retirees don't realize: switching between Medicare Advantage and Original Medicare with a supplemental policy isn't always straightforward.

When you first enroll in Medicare Part B at age 65 or older, you generally have a six-month Medigap enrollment window during which insurers cannot deny coverage because of your health.

However, if you initially choose Medicare Advantage and later decide you want a Medigap policy, you may need to answer medical questions and qualify for coverage.

Depending on your health, an insurer could deny your application.

There are exceptions, including certain federal protections and state-specific enrollment rights. California, for example, has a Medicare Supplement birthday rule that allows qualifying policyholders to change to certain comparable or less comprehensive Medigap policies without medical underwriting.

But these protections don't necessarily allow someone to move freely from Medicare Advantage into Medigap.

Key takeaway: Think beyond your healthcare needs today. Consider whether you'll want greater access to specialists, hospitals, or medical services ten or fifteen years into retirement.

5. Medicare Costs More Than Many People Expect

Many retirees are surprised to learn that Medicare isn't free.

Although Part A is premium-free for most people with sufficient work history, Part B requires a monthly premium.

In 2026, the standard Medicare Part B premium is $202.90 per person per month.

For a married couple, that's approximately $4,870 annually before adding supplemental insurance, prescription drug coverage, or other healthcare expenses.

Higher-income retirees may pay considerably more through a surcharge known as IRMA—Income-Related Monthly Adjustment Amount.

IRMA is generally based on your tax return from two years earlier.

For example, your 2026 Medicare premiums are generally determined using your 2024 income.

This becomes especially important for people approaching retirement who receive bonuses, exercise stock options, realize substantial capital gains, or make large Roth IRA conversions.

The good news is that if your income drops because of retirement or certain other qualifying life events, you may be able to request a reduction in your IRMA surcharge using Social Security Form SSA-44.

Key takeaway: Medicare premiums should be part of your retirement tax planning. Decisions made before retirement can influence your healthcare costs several years later.

6. Be Careful with Health Savings Accounts

If you're still working after age 65 and contributing to a Health Savings Account (HSA), Medicare enrollment requires special attention.

Once you're enrolled in Medicare, you generally can no longer contribute to an HSA, even if you're still covered by a qualifying high-deductible employer health plan.

An additional complication is that Medicare Part A coverage can sometimes be retroactive for up to six months when you enroll after age 65.

That means HSA contributions made during those retroactive months could become excess contributions, potentially creating tax consequences.

Key takeaway: If you plan to work beyond 65 and continue funding an HSA, coordinate your Medicare enrollment and HSA contributions carefully. Don't forget to account for contributions made by your employer.

7. Review Your Prescription Drug Coverage Every Year

Prescription drug coverage is another area where a little attention can save substantial money.

Under changes introduced by the Inflation Reduction Act, Medicare Part D now limits annual out-of-pocket spending on covered prescription drugs.

For 2026, that limit is $2,100.

This is particularly valuable for retirees who require expensive medications.

However, not every medication is necessarily covered by every plan. Each prescription drug plan maintains its own list of covered medications, known as a formulary.

Additionally, prescriptions purchased outside your Part D coverage—for example, using certain discount programs—generally don't count toward the annual Part D spending limit.

Plans can also change their premiums, deductibles, covered medications, and preferred pharmacies from year to year.

Key takeaway: Review your prescription drug plan during Medicare's annual Open Enrollment Period, October 15 through December 7. Even if your medications haven't changed, your plan's coverage and costs may have.

8. Plan for Healthcare Costs Medicare Doesn't Cover

Medicare provides substantial protection against medical expenses, but it doesn't cover everything.

Original Medicare generally doesn't cover routine dental care, eyeglasses, hearing aids, or most long-term custodial care.

That last point is particularly important.

If you eventually need assistance with everyday activities such as bathing, dressing, eating, or living safely at home, Medicare generally won't pay for ongoing custodial care.

These expenses can become significant, particularly for retirees who require extended home care, assisted living, or nursing home services.

Key takeaway: Your retirement financial plan should account for healthcare expenses beyond Medicare premiums, including the possibility of long-term care needs.

9. Make Medicare Part of Your Overall Retirement Plan

Medicare decisions shouldn't be made in isolation.

Your retirement date, investment withdrawals, tax strategy, Social Security benefits, and healthcare coverage are all interconnected.

For example, retiring before age 65 may require several years of private health insurance through an employer, COBRA, or the Affordable Care Act marketplace.

The cost of that coverage—and whether you qualify for premium assistance—can depend heavily on your retirement income.

Similarly, Roth conversions or large investment withdrawals may affect future Medicare premiums.

Even the timing of retirement can influence whether you're eligible to delay Medicare enrollment or qualify for a reduction in income-related surcharges.

These are good reasons to evaluate healthcare decisions alongside your broader financial plan rather than treating Medicare as a separate issue.

Final Thoughts: Plan Ahead and Keep Your Options Open

Medicare doesn't have to be overwhelming, but it does require thoughtful planning.

For some retirees, Medicare Advantage offers affordable, convenient coverage that fits their healthcare needs. Others may prefer the greater provider flexibility and more predictable medical cost-sharing available through Original Medicare and a supplemental policy.

Neither approach is universally better.

What matters is choosing coverage that fits your health, financial circumstances, and personal preferences—not just today, but throughout retirement.

The most important advice is simple: Start early, understand your choices, and avoid making Medicare decisions based solely on the lowest advertised premium.

As with most aspects of retirement planning, a little preparation today can help prevent expensive surprises tomorrow.

If you're approaching Medicare eligibility, considering retirement, or simply wondering whether your current coverage still makes sense, I'm happy to help you think through how these decisions fit into your overall financial plan.

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Source: This article draws on concepts discussed in the June 24, 2026, "Avoiding Medicare Mistakes in Retirement" educational presentation, along with additional financial planning insights from Attune Financial Planning.

Disclaimer: This article is provided for general educational and informational purposes and is not intended as individualized financial, insurance, tax, or legal advice. Medicare rules, premiums, coverage options, and enrollment rights may change and vary by individual circumstances and state. Consult Medicare, Social Security, a licensed Medicare insurance professional, or your financial and tax advisors before making decisions.

This article provides you with six ways to approach retirement healthcare with confidence. By understanding your habits, preparing realistically for expenses, and making informed decisions about insurance and long-term care, you can build a secure foundation for your next chapter.

1. Start With Your Personal Healthcare Mindset

One of the most overlooked aspects of healthcare planning is recognizing your own healthcare usage patterns. Some people naturally seek care more frequently—scheduling regular visits with specialists, therapists, chiropractors, or alternative providers. Others delay care until symptoms become pressing. Neither approach is right or wrong, but each approach leads to different financial expectations in retirement.

Questions to reflect on:

• Are you proactive about checkups and preventive care?
•  Do you regularly use specialty services like physical therapy, acupuncture, or mental-health counseling?
•  Have you historically postponed or avoided seeing the doctor?
• Do you manage chronic conditions requiring ongoing monitoring?

Understanding your patterns helps you forecast your true healthcare needs—and identify where additional coverage or budgeting may be necessary.

If you will be retiring in the very near future, be sure to complete any major dental or vision procedures before leaving an employer plan. Group coverage usually provides significantly better benefits than individual policies.

2. Plan Your Transition from Employer Coverage to Retirement Coverage

Most retirees move through several types of insurance coverage as they transition away from full-time work. Knowing what to expect at each step helps prevent coverage gaps, unnecessary expenses, and stressful surprises.

COBRA: A Valuable—but Expensive—Bridge

Consolidated Omnibus Budget Reconciliation Act (COBRA) allows you to keep your employer’s plan for up to 18 months after retirement. This option can be especially helpful if:

• You retire around age 63½ and need coverage until Medicare begins
•  You want to maintain access to specific providers or treatments
•  You have already met your deductible for the year
•  You expect high healthcare usage in the near term

Keep in mind: COBRA premiums are significantly higher than what you paid as an employee because the employer subsidy disappears. It is critical to budget for this major increase in cost.

Affordable Care Act (ACA) Marketplace Plans for Pre-Medicare Retirees

If you retire before age 65, the Affordable Care Act Marketplace becomes your primary option. Your premium depends on your Modified Adjusted Gross Income (MAGI), making tax planning essential for affordability.

Strategies include:

• Managing withdrawals and conversions to stay within subsidy-friendly income ranges
•  Comparing plans annually, as deductibles, networks, and out-of-pocket caps change
•  Evaluating whether a Bronze, Silver, or Gold plan aligns with your expected usage

Understanding Medicare at Age 65

At 65, Medicare becomes the foundation of your healthcare coverage. The most important decision you will make is choosing between Traditional Medicare + Medigap or Medicare Advantage.

Traditional Medicare paired with a Medigap supplement typically offers:

• Broad provider choice
•  Lower prior-authorization requirements
• Predictable and capped out-of-pocket costs

Medicare Advantage plans often appear more affordable upfront but may include:

• Narrower networks
•  Strict pre-authorization requirements
• Higher out-of-pocket expenses in serious health years

For retirees who prioritize the flexibility of choice and predictable costs, Traditional Medicare with Medigap is often the more reliable approach.

3. Account for Realistic Healthcare Costs—Not Just Premiums

Healthcare spending in retirement is rarely limited to insurance premiums. Some of the largest expenses fall outside what Medicare covers.

Dental, Vision, and Hearing Are Not Covered

Retirees are often surprised to learn that Original Medicare (Parts A & B) does not cover routine dental, vision, or hearing services. These gaps can become expensive in retirement—crowns, hearing aids, and cataract-related eyewear for example, can amount to hundreds of dollars or more and must be paid out of pocket. Medicare Advantage (Part C), on the other hand, often advertises “extra benefits” that include these services—but there are limitations and the fine print matters.  As a result,  retirees can be better served by having an dedicated savings set aside for dental, vision, and hearing care rather than just relying on standalone policies.

Take Advantage of Health Savings Accounts (HSA)

HSAs allow you to set aside funds that can be used for Medicare premiums, long-term care expenses, and high medical bills later in life. If you have an HSA before retirement, it can serve as an important long-term tool because:

• Contributions are tax-deductible
•  Growth is tax-free
•  Withdrawals for qualified medical expenses are tax-free
•  After age 65, non-medical withdrawals are penalty-free (but taxable)

Use “Care Bunching” to Reduce Long-Term Costs

If you know you will meet your deductible during a particular year (perhaps due to surgery or a major procedure), it may be advantageous to complete other care that you may be considering putting off to the following year —such as physical therapy, dermatology visits, or evaluations—during that same year. This strategy can significantly reduce costs by concentrating services into one deductible period.

4. Include Housing and Long-Term Care in Your Healthcare Strategy

Healthcare decisions do not occur in isolation. Where and how you live can strongly influence your long-term health, independence, and overall expenses.

Evaluate Whether Your Home Is Aging-Friendly

Some questions to consider:

• Are bathrooms accessible and safe?
•  Are there stairs that could become challenging?
•  Would grab bars, better lighting, or flooring updates help prevent falls?
• Will your current layout support future mobility changes?

A home safety assessment conducted by an occupational therapist can identify potential improvements long before they are needed.

Explore Assisted Living or Continuing Care Communities Early

If you prefer a community-based environment later in life, begin exploring options now.  Many desirable communities have multi-year waitlists, and early planning allows you to secure a spot without pressure.

Do not Overlook Long-Term Care Needs

Long-term care refers to the ongoing support you may need when age, illness, or cognitive decline makes it difficult to manage everyday tasks independently. It can take place at home or in assisted-living and nursing facilities and is focused on helping you maintain safety, dignity, and quality of life as your needs increase.  Long-term care planning (whether through insurance, hybrid products, or self-funding) should consider:

• Family health history
•  Expected longevity
•  Housing preferences
•  Asset protection considerations
• Likelihood of needing memory care or extended support

Including long-term care in your retirement strategy now helps reduce the emotional and financial burden later.

5. Understand the Tax Impact of Retirement Healthcare

Taxes play a significant role in your healthcare costs, especially during the transition into Medicare.  Consider the following healthcare tax issues:

Before age 65: ACA Subsidies and Income Planning

ACA subsidies depend on your Modified Adjusted Gross Income (MAGI). Careful planning around Social Security timing, Roth conversions, IRA withdrawals, and Capital gains can help keep premiums lower.

After age 65: Medicare IRMAA

Higher-income retirees may pay surcharges on Medicare Part B and Part D premiums through the Income-Related Monthly Adjustment Amount (IRMAA).

Since IRMAA looks at income from two years prior, planning is crucial. If your income has recently decreased—due to retirement, divorce, or the loss of a spouse—you may qualify to request a lower IRMAA tier.

6. Revisit Your Plan Annually and Stay Engaged in Your Healthcare

Retirement healthcare planning is not a one-time exercise. Life, health status, and insurance landscapes all change over time.  Therefore, each year review your:

• Medicare Part D drug coverage
•  Medigap rates and coverage
•  ACA plans (if under 65)
•  Expected out-of-pocket expenses
•  Total income and its effect on premiums
• Your support system and decision-making preferences

Staying engaged with your providers, understanding your medications, and asking clear questions can dramatically improve both health outcomes and financial efficiency.

Final Thoughts

Healthcare is one of the most important—and most complex—areas of retirement planning.  But with the right mindset and proactive strategy, you can navigate the transition with clarity and confidence. Understanding your healthcare habits, comparing insurance options carefully, planning for long-term care, and reviewing your plan every year ensures you remain protected throughout retirement.

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This content is developed from sources believed to be providing accurate information, and provided by Attune Financial Planning. The opinions expressed and material provided are for general information only.  Please consult your financial, tax, and estate planning professional regarding your specific situation.

Social Security Benefits for a Non-Working Spouse

Even if you have never had a paying job, you can still receive Social Security retirement benefits through your spouse. Here is a brief summary of how it works:

Spousal Benefit Eligibility: You must be at least 62 years old and your spouse must be receiving Social Security retirement benefits.

 Benefit Amount: You can receive up to 50% of your spouse’s full retirement benefit (the amount they would receive at their full retirement age, which is between 66 and 67 depending on their birth year).

Timing Matters: If you claim benefits before your full retirement age (66 or 67 based on  your year of birth), your spousal benefit will be reduced. But if you wait until your full retirement age, you will get the full 50%.

No Increase Beyond 50%: If your spouse delays claiming their benefits past their full retirement age, their benefit increases, but your spousal benefit does not—it remains capped at 50%.

Working After Claiming: If you decide to work after claiming spousal benefits before your full retirement age, your benefits could be temporarily reduced if you earn above the Social Security earnings limit.

Delayed Retirement Credits Does not Apply: While a working spouse’s benefit grows if they delay claiming past full retirement age, the spousal benefit does not increase beyond 50%.

Medicare Benefits for a Non-Working Spouse

Medicare is separate from Social Security, but they are connected in many ways. As a non-working spouse, you can qualify for premium-free Medicare Part A (hospital insurance) based on your spouse’s work record.  Here are the important points to consider:

Eligibility: Once you turn 65, you can qualify for premium-free Part A if your spouse has worked and paid Medicare taxes for at least 10 years (40 quarters).

Marriage Requirement: You must have been married for at least one year before applying.

Early Medicare for Disabled Spouses: If you are disabled, you may qualify for Medicare earlier than 65 under your spouse’s work record.

Part B Enrollment: Even though Part A is free, Part B (which covers doctor visits and outpatient care) requires a monthly premium payment. You need to sign up during your Initial Enrollment Period (the 7-month window around your 65th birthday) to avoid late penalties.

Medicare Advantage and Medigap Options:  You may also want to consider a Medicare Advantage plan (Part C) or a Medigap policy to help with additional healthcare costs not covered by Medicare.

What If Your Spouse Passes Away?

If your spouse passes away, you may qualify for Social Security survivor benefits, which can be as much as 100% of their benefit if you wait until your full retirement age to claim.

Early Survivor Benefits:  You can claim survivor benefits as early as age 60 (or age 50 if disabled), but they will be reduced.

Remarriage Rules:  If you remarry before age 60 (or age 50 if disabled), you may lose your eligibility for survivor benefits. If you remarry after that age, you can still receive benefits.

Medicare for Widows/Widowers:  If you qualified for Medicare based on your spouse’s work record, you will continue to be eligible even if your spouse passes away.

What If You Are Divorced?

You can still qualify for spousal benefits and Medicare based on an ex-spouse’s work record if:

• Your marriage lasted at least 10 years
• You are currently unmarried
• Your ex-spouse is at least 62 years old (they don’t have to be claiming Social Security yet, but they must be eligible)
• If you remarry, you generally lose the ability to collect benefits based on your ex-spouse’s record unless your later marriage ends in divorce or death.

Steps to Take Before Turning 65

To ensure you get your benefits on time, follow these steps:

Check Your Eligibility – Call the Social Security Administration (SSA) or visit their website to confirm you qualify for spousal benefits and Medicare.

Enroll in Medicare on Time – Sign up during your Initial Enrollment Period to avoid penalties.

Apply for Spousal Benefits – Once your spouse applies for Social Security, you can apply for spousal benefits.

Set Up Direct Deposit – Social Security benefits are paid electronically, so have a bank account ready.

Compare Medicare Plans – Decide whether to stick with Original Medicare or explore Medicare Advantage or Medigap plans to enhance your coverage.

Consider Delaying Benefits – If your spouse has not claimed Social Security yet and is still working, you might want to strategize when to claim for the best long-term benefit.

To Summarize

Even if you have never worked, you can still receive financial security in retirement through Social Security and Medicare based on your spouse’s record. Planning ahead and enrolling on time will help you get the benefits you deserve. If you have questions, contact Social Security (1-800-772-1213) or Medicare (1-800-MEDICARE).  You can also go to the Social Security website at https://www.ssa.gov/.  Make sure to review your options carefully to maximize your benefits and ensure you have the healthcare coverage you need throughout retirement.

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This content is developed from sources believed to be providing accurate information, and provided by Attune Financial Planning. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.

Like most things in life, Medicare Advantage plans have their good and bad sides. Let’s take a closer look so you can decide if Medicare Advantage or original Medicare is right for you.

When Should You Consider Switching Plans?

Making the decision to change Medicare Advantage Plans or switch from Medicare Advantage to original Medicare is not an easy one.  However, if you are experiencing one or more of the issues below, now might be the time to think about making a change.

1. Your Current Plan’s Costs Are Increasing

• If your premiums, copays, deductibles, or out-of-pocket maximums are going up, it’s a good time to compare other plans to see if you can get similar coverage for less money.

2. Your Doctors or Hospitals Leave the Network

• Medicare Advantage plans have network restrictions, and if your preferred doctors or hospitals are no longer covered, you may want to switch to a plan that includes them.

3. Your Prescription Drug Coverage Changes

• Medicare Advantage plans with Part D (drug coverage) update their formularies (covered drug lists) every year.
• If a medication you need is no longer covered or has moved to a higher pricing tier, another plan may offer better coverage.

4. You Develop a Serious Health Condition

• If you need specialist care, frequent treatments, or access to top-tier medical facilities, check whether another Medicare Advantage plan offers better coverage.
• Some plans require prior authorizations or limit out-of-network care, which can delay or restrict your access to treatment.

5. You Plan to Travel or Move

• If you’re moving to another state, your plan may not be available in your new location.
• If you travel frequently, a plan with better nationwide coverage may be a better fit.

6. Extra Benefits No Longer Meet Your Needs

• Many Medicare Advantage plans offer perks like dental, vision, hearing, and fitness benefits.
• If another plan offers better extras, it might be worth switching.

The Advantages of Medicare Advantage Plans

1. All-in-One Coverage

One of the biggest benefits of a Medicare Advantage plan is that it combines hospital, medical, and sometimes drug coverage into a single plan. Instead of juggling separate policies, you have everything in one place.

2. Extra Benefits Not Found in Original Medicare

Unlike Original Medicare, Medicare Advantage plans often come with extra perks like:

• Vision coverage (eyeglasses and eye exams)
• Dental coverage (cleanings, exams, and sometimes even dentures)
• Hearing aids and exams
• Fitness programs (like SilverSneakers)
• Over-the-counter medication allowances

These extras can save you money if you need them.

3. Potentially Lower Out-of-Pocket Costs

Many Medicare Advantage plans have lower monthly premiums than Original Medicare plus a separate drug plan. Some even have $0 premiums. They also have an annual out-of-pocket maximum, which Original Medicare doesn’t. Once you hit that limit, the plan covers 100% of your Medicare-covered services for the rest of the year.

4. Coordinated Care

Many Medicare Advantage plans work within a network, meaning your doctors and hospitals communicate with each other. This can lead to better, more efficient care, especially if you have ongoing health conditions.

5. Prescription Drug Coverage

Most Medicare Advantage plans include Part D prescription drug coverage, so you don’t need to buy a separate drug plan. This can be convenient and sometimes cheaper than standalone Part D plans.

The Disadvantages of Medicare Advantage Plans

1. Limited Provider Networks

Unlike Original Medicare, where you can see any doctor or specialist who accepts Medicare, Medicare Advantage plans usually have networks. This means:

• You might need to choose doctors and hospitals within the plan’s network.
• Out-of-network care can be expensive or not covered at all (except in emergencies).
• You may need referrals to see specialists in certain plans.

If you travel a lot or split time between different states, this could be a hassle.

2. Prior Authorization and Restrictions

Many Medicare Advantage plans require prior authorization before covering certain tests, procedures, or medications. This means:

• Your doctor might need to get approval before providing treatment.
• Some treatments might be denied or delayed by the insurance company.

This can be frustrating, especially if you need immediate care.

3. Costs Can Add Up

While Medicare Advantage plans often have lower monthly premiums, you’ll still have copayments, deductibles, and other costs. Depending on how much healthcare you need, your out-of-pocket costs could end up being more than Original Medicare.

4. Less Flexibility

Original Medicare lets you add Medigap (Medicare Supplement Insurance) to help cover extra costs like deductibles and coinsurance. Medicare Advantage plans don’t allow Medigap. This means you’re responsible for copays and other costs as you go.

5. Plan Choices Can Change Every Year

Medicare Advantage plans are run by private insurance companies, and they can change their benefits, provider networks, and costs each year. This means you need to review your plan annually during Medicare Open Enrollment (October 15 – December 7) to make sure it still meets your needs.

Who Might Like a Medicare Advantage Plan?

• Someone who wants one simple plan that covers everything.
• Someone who values extra benefits like dental, vision, or gym memberships.
• Someone who doesn’t travel much and is comfortable with network restrictions.
• Someone looking for potentially lower monthly premiums.

Who Might Be Better Off with Original Medicare?

• Someone who wants the freedom to see any doctor who accepts Medicare.
• Someone who travels often and needs coverage in different states.
• Someone with significant health needs (or family history of certain illnesses like cancer) who wants Medigap for extra cost protection.
• Someone who doesn’t want to deal with prior authorizations and network restrictions.

Final Thoughts

Medicare Advantage plans can be a great option for many people, but they are not one-size-fits-all. It’s important to weigh the pros and cons based on your healthcare needs, budget, and lifestyle. If you’re considering switching to another Medicare Advantage plan, take the time to compare plans, check provider networks, and understand the costs involved.  If you think switching from Medicare Advantage to original Medicare makes the most sense for you, be sure you can qualify and afford a Medigap policy before make the switch.

Still unsure? It might be a good idea to talk to a Medicare advisor like the Health Insurance Counseling and Advocacy Program (HICAP) who can help you navigate the choices. After all, the goal is to get the coverage that gives you peace of mind and meets your health needs without straining your financial resources.

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This content is developed from sources believed to be providing accurate information, and provided by Attune Financial Planning. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.

The combination of heating systems, fireplaces, and holiday decorations can create potential fire hazards if not managed carefully. To ensure you and your loved ones stay safe this winter, here are some essential fire safety tips to follow.

Properly Use and Maintain Heating Equipment

The National Fire Protection Association (NFPA) reports that heating equipment is one of the leading causes of home fires during the winter months.² Whether you use a furnace, space heater, or fireplace, operating and maintaining these devices properly is crucial.

Furnaces
Before the cold season begins, have your furnace inspected and serviced by a professional. This can prevent potential malfunctions that might lead to a fire. Ensure that the area around your furnace is clear of flammable materials such as paper, clothing, or cardboard.

Space Heaters
If you use space heaters, make sure they are placed on a flat, non-flammable surface and kept at least three feet away from anything that can burn, such as curtains, bedding, or furniture. Never leave a space heater unattended; always turn it off before bed or leaving the house.

Fireplaces
Have your chimney inspected and cleaned annually to remove any buildup that can ignite and cause a chimney fire. Use sturdy screens or glass doors to prevent sparks from flying into the room, and always ensure the fire is completely out before going to bed.

When It Comes to Holiday Decorations, Safety First

The holiday season is often accompanied by various decorations, including lights, candles, and Christmas trees, which can pose fire risks if not used safely.

Christmas Trees
If you have a real tree, ensure it’s well-watered to prevent it from drying out and becoming highly flammable. Place the tree at least three feet away from heat sources such as radiators, fireplaces, or heat vents. If you’re using an artificial tree, make sure it’s flame-resistant.

Lights
Inspect holiday lights before use for frayed wires or broken sockets. Avoid overloading electrical outlets, and use surge protectors if necessary. Always turn off the holiday lights before leaving or going to bed.

Candles
Candle fires peak in December and January, with 11% of fires occurring each month.³ Keep candles at least 12 inches away from anything that can burn, and never leave them unattended. Consider using flameless LED candles as a safer alternative.

Ensure That Smoke Alarms and Carbon Monoxide Detectors Are Working Properly

Smoke alarms and carbon monoxide detectors are essential for detecting fire and dangerous gasses early, giving you and your family time to escape safely.

Ensure that smoke alarms are installed on every level of your home, inside bedrooms, and outside sleeping areas. Carbon monoxide detectors should be placed in central locations on every floor and near sleeping areas.

Test your smoke alarms and carbon monoxide detectors monthly to ensure they work properly. Replace the batteries at least once a year, and consider upgrading to alarms with a 10-year sealed battery for added peace of mind.

Be Prepared In Case of an Emergency

In a fire, every second counts, and having a solid fire escape plan can save lives.

• Develop a fire escape plan that includes two ways out of every room in your home. Ensure that all windows and doors can be easily opened and that escape routes are clear of obstructions.
• Regularly practice your fire escape plan with all household members, including children and pets. Make sure everyone knows where to meet outside the home after escaping.
• Keep a fire extinguisher in key areas of your home, such as the kitchen and near the fireplace. Learn how to use it properly, and ensure it’s easily accessible in case of an emergency.

Winter should be a time for comfort, not concern. By following these essential fire safety tips, you can enjoy the season while keeping your home and loved ones safe. Regular maintenance of heating equipment, careful use of holiday decorations, and ensuring your smoke detectors are working are all steps to take to protect yourself and your family this holiday season.

What is an Annuity?

An annuity is not an investment that you own like a stock or a bond. It is a financial product offered primarily by insurance companies. In essence, you are buying certainty and financial security.  It involves a contract between the purchaser (the annuitant) and the insurer, where the annuitant purchases an annuity by making a one-time lump sum payment or series of payments to the insurance company. In return, the insurer agrees to provide regular payments to the annuitant, either immediately or at some point in the future. The goal of an annuity is to provide a steady flow of income, often for the remainder of the annuitant's life.  

Types of Annuities

There are several forms of annuities, each catering to different financial needs and investment risk tolerances:

Fixed Annuities: These provide regular, guaranteed payments with a fixed interest rate. They offer stability and predictability, making them an ideal choice if you are a conservative investor.

 Variable Annuities: Payments from these annuities vary based on the performance of investments chosen by the annuitant. This type offers potential for higher investment returns but comes with increased risk of loss.

Indexed Annuities: These products offer investment returns based on the performance of a specific financial index, such as the S&P 500. They provide a middle ground between fixed and variable annuities, offering some level of guaranteed minimum return while allowing for higher potential earnings linked to market performance.

Immediate Annuities: These begin payments almost immediately after a one-time lump sum is paid to the insurance company. They are often used by retirees to convert a portion of their savings into a reliable income stream.

Deferred Annuities: Payments from these annuities begin at a future date, allowing the investment to grow tax-deferred until withdrawals begin. They are suitable for individuals who are still in employed, saving money, and do not need the income immediately.

Advantages of Owning an Annuity

Annuities offer several benefits that make them a suitable option for people planning for retirement:

Guaranteed Income:  Annuities provide a reliable and predictable source of income, which can be particularly beneficial during retirement when managing expenses is crucial.

Tax-Deferred Growth:  The money invested in an annuity grows tax-deferred, meaning you do not pay taxes on the investment gains until you start receiving payments. This can enhance the growth potential of your investments.

Customizable Options:  Annuities come with various options and riders, such as inflation protection, death benefits, and long-term care provisions, allowing you to tailor the product to meet your specific needs.

Protection Against Market Volatility:  Fixed and indexed annuities offer protection against market downturns. Fixed annuities provide guaranteed returns, while indexed annuities offer potential for higher returns linked to market indices with some level of protection against losses.

Protection Against Running Out of Money:  Annuities can help mitigate longevity risk—the risk of outliving your assets. Lifetime annuities provide payments for as long as you live, ensuring you have a continuous income stream regardless of how long you live.

Disadvantages of Owning an Annuity

While annuities offer numerous advantages, there are also potentially significant disadvantages as well:

Complexity:  Annuities can be complex financial products with numerous terms, conditions, and options. Understanding all the features and implications requires careful study.

Fees and Charges:  Annuities are expensive and often come with high fees, including administrative fees, mortality and expense risk charges, surrender charges, and fees for optional riders. These fees can significantly reduce the overall return on your investment.

Surrender Periods:  Annuities typically have surrender periods during which you cannot withdraw your money without incurring substantial penalties. These periods can last several years, limiting your liquidity and access to funds.

Tax Implications:  While the growth within an annuity is tax-deferred, withdrawals are taxed as ordinary income rather than at the potentially lower capital gains rate.  

Inflation:  Fixed annuities provide a stable income, but they do not adjust for inflation unless specifically designed to do so. Over a long retirement timeframe, inflation can significantly reduce the purchasing power of your fixed annuity payments.  

Who Should Consider an Annuity?

Annuities can be a valuable component of a retirement plan, particularly if you fall into these categories:

Pre-Retiree or Retiree:  Individuals nearing or already in retirement who want a guaranteed income stream to cover essential living expenses can benefit from annuities.

Risk-Averse Investor:  People who prefer to avoid market volatility and want a secure, predictable return on their investment may find fixed annuities appealing.

Lifetime Income Seeker:  Individuals concerned about running out of money in retirement can use annuities to make sure they have income that will last the rest of their lives. Lifetime annuities provide payments for as long as the annuitant lives.

High-Income Earner:  People with higher incomes who make the maximum allowable contributions to other tax-advantaged retirement accounts and would like to minimize their tax exposure further might use annuities for additional tax-deferred growth opportunities.

Individual Without Pension Plan:  Workers without defined benefit pension plans can create their own guaranteed income stream through annuities, mimicking the predictable income that a pension provides.

How to Integrate Annuities into Your Financial Plan

To effectively integrate annuities into a financial plan, consider the following steps:

Assess Your Financial Goals:  Determine your income needs, risk tolerance, and retirement goals. An annuity can be one component of a broader strategy designed to meet these objectives.

Consult a fee-only Certified Financial Planner (CFP):  A CFP who is a fiduciary and is obligated to work in your best interest, can help you understand the complexities of annuities, compare products, and determine if an annuity aligns with your overall financial plan.

Diversify Your Income Sources:  Use annuities to complement other income sources, such as Social Security, pensions, and investment withdrawals, to create a balanced and diversified income strategy.

Conclusion

Annuities can play a crucial role in a well-rounded retirement plan, offering guaranteed income, tax-deferred growth, and protection against longevity risk. However, they come with complexities, fees, and potential drawbacks that require careful consideration. Consulting with a Certified Financial Planner can help determine if an annuity is the right choice for your retirement strategy, ensuring that it aligns with your financial goals and risk tolerance. By understanding the various types of annuities, benefits, and limitations, you can make an informed decision to determine if an annuity makes sense for you.

What is IRMAA? 

IRMAA stands for Income Related Monthly Adjustment Amount. It is an additional amount that higher income Medicare beneficiaries are required to pay for Medicare Part B (medical insurance) and Medicare Part D (prescription drug coverage).  It is an extra charge added to your monthly premium if your income exceeds certain thresholds.

Who is Affected by IRMAA? 

IRMAA affects individuals enrolled in Medicare Part B and Part D whose total household modified adjusted gross income (MAGI) rises above specific income thresholds. These thresholds are based on your tax return from two years earlier. This rule can come as a surprise for those with low income this year but experience an increase in Medicare premiums due to higher income levels two years earlier. 

How is IRMAA Calculated?

The calculation of IRMAA is based on the modified adjusted gross income (MAGI) amount. MAGI includes all taxable income plus certain deductions such as student loan interest or contributions to a traditional IRA. The Social Security Administration (SSA) determines your IRMAA based on the MAGI reported on your tax return from two years prior.

The income thresholds that trigger IRMAA vary depending on whether you are filing taxes as an individual or jointly. For example, individual tax filers whose MAGI exceeded $91,000 and married couples whose MAGI exceeded $182,000 in 2022, are subject to additional IRMAA payments for Medicare Part B & D in 2024.

The IRMAA amounts are recalculated annually and can change based on inflation. Therefore, it is essential to stay informed about any updates to the IRMAA thresholds.

Why Does IRMAA Matter? 

Understanding IRMAA is crucial because it directly impacts your healthcare costs. Depending on how high your MAGI amount is, the additional amount you are required to pay due to IRMAA can significantly increase your Medicare premiums.  The monthly increase in Medicare Part B premium can range from $70 to $419 per month and the increase in Medicare Part D premiums can be anywhere from $13 to $81 per month.  For individuals on fixed incomes or with limited resources, these extra costs can be a financial burden. 

In addition, failing to pay your IRMAA can result in penalties. The SSA will add the IRMAA charges to your Medicare premiums, and if you do not pay the increased amount, you may face penalties or even lose your Medicare coverage.

What Can Be Done to Reduce IRMAA Charges?

While IRMAA may seem like an unavoidable expense, there are strategies to help manage and potentially reduce your IRMAA costs:

1.    Plan Ahead: Since IRMAA is based on your income from two years prior, consider how certain financial decisions, such as retirement account withdrawals or selling investments, might impact your MAGI and subsequently your IRMAA.

2.    Utilize Tax-Advantaged Accounts: Contributions to tax-advantaged retirement accounts like a 401(k) or IRA can reduce your MAGI, potentially lowering your IRMAA.

3.    Roth Conversions: Converting funds from a traditional IRA to a Roth IRA can also lower your MAGI since Roth IRA withdrawals are not included in the calculation.

4.    Strategic Timing: If possible, time certain income-generating events, like selling assets, to occur in years where it will not push your MAGI over the IRMAA thresholds.

5.    File an Appeal: If you experience a significant life-changing event, such as retirement or the death of a spouse, resulting in a reduction in income, you can file an appeal with the Social Security Administration via Form SSA-44 to request a reconsideration of your IRMAA. 

Understanding how IRMAA is calculated and its potential impact on your healthcare costs is essential for effective financial planning during retirement. By employing strategic financial planning strategies, individuals subject to IRMAA can potentially minimize its impact and ensure their healthcare needs are met without experiencing significant financial strain.

This content is developed from sources believed to be providing accurate information, and provided by Attune Financial Planning. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information only.

Parts A and B: Original Medicare

There are two components. Part A covers inpatient hospital care, skilled nursing facility costs, hospice services, lab tests, surgeries, and some home health care services. While very few beneficiaries must pay Part A premiums out of pocket, the annually adjusted standard deductibles still apply.^1,2

Many pre-retirees are frequently warned that Medicare will only cover a maximum of 100 days of nursing home care, provided certain conditions are met. Part A is the plan with these provisions. Under the current Part A rules, a beneficiary would pay $0 for days 1–20 of care in a skilled nursing facility (SNF). During days 21–100, a $176 daily coinsurance payment may be required.^1,2

Knowing the limitations of Part A, some look for alternatives to manage the costs of extended care. Part B covers physicians’ fees, outpatient hospital care, certain home health services, durable medical equipment, and other services that are not covered by Part A.³

Part B does come with some costs, however, which are adjusted annually. The premiums vary, according to the Medicare recipient’s income level, but the standard monthly premium amount is $170.10 for 2022, and the current yearly deductible is $198.¹

Part C: Medicare Advantage Plans

Sometimes called Medicare Part C, Medicare Advantage (MA) plans are often viewed as an all-in-one alternative to Original Medicare. MA plans are offered by private companies approved by the federal government. Although these plans come with standardized minimum coverage, the amount of additional protection can drastically differ from one person to the next. This is due to unique provider networks, premiums, copays, coinsurance, and out-of-pocket spending limits. In other words, comparing prices and services offered by different vendors may be the best way to find a Medicare Advantage plan that works for you.³

Part D: Prescription Drug Plans

While Medicare Advantage plans often offer prescription drug coverage, insurers also sell federally standardized Medicare Part D plans as a standalone product to those with Medicare Part A and/or Part B. Every Part D plan has its own formulary, or list, of covered medications. Visit Medicare.gov to explore the formulary and prices of approved drugs for your Part D plan, organized by tier.

Medicare.gov is a great place to start all your research. There, you’ll find answers to your most common questions and more information on the different Medicare plans offered in your area.⁴

1.    Keep Track of Current Conditions

One of the first steps in wildfire preparedness is to stay informed about local conditions. 

•  Sign up for emergency alerts and notifications from local authorities and stay updated on weather forecasts.  Thanks to today’s technology and social media platforms, it is easier than ever to track the movement of wildfires to help you stay informed.
•  Use Google Maps.  Wildfires can be tracked by using Google Maps app on our phone. There are many layers you can add, including wildfires. With this filter, you can see all the wildfires in your area and how big they are. To access this layer, click on the button on the top right of the map below the search bar, which has a diamond logo layered over another diamond.
• Familiarize yourself with evacuation routes and emergency shelters in your area. 

Awareness and early warning are critical and can make the difference to how you are impacted by a wildfire.

2.    Create a Defensible Space

Creating a defensible space around your home is a crucial element in protecting it from approaching wildfires. 

• Clear vegetation and debris at least 30 feet from your house, removing dead plants, dry leaves, and other flammable materials. 
• Trim tree branches within 10 feet of chimneys and roofs to reduce the risk of embers igniting your home. 
• Regularly maintain your gutters, removing leaves and debris that could become fuel for a fire. 
• Replace flammable materials such as wood shingles or siding with fire-resistant alternatives like metal or cement.  

If you cannot do these things yourself (especially roofing material), hire local help or contact your local government office for assistance.

3.    Develop an Emergency Plan

Prepare an emergency plan for your household to ensure everyone knows what to do in the event of a wildfire. 

• Establish evacuation routes and designate meeting points outside your neighborhood. 
• Assign responsibilities to each family member, such as gathering essential documents, packing emergency kits, or securing pets. 
• Practice fire drills regularly to reinforce the plan and make adjustments if needed. 
• Consider vulnerable family members, such as children, the elderly, or individuals with mobility issues, and ensure their needs are accounted for in the plan.

4.    Prepare an Emergency Supply Kit

Prepare an emergency kit containing essential supplies that can sustain your family for at least three days. Your kit will vary depending on your needs, but here are some general things that Cal Fire suggests you include:

• Face masks or coverings (respiratory masks, such as N95 and KN95 masks, provide the best protection from the small particles in wildfire smoke)
• Three-day supply of nonperishable food and three gallons of water per person
• Map marked with at least two evacuation routes
• Prescription drugs or special medications
• Change of clothing
• Extra eyeglasses or contact lenses
• Extra set of car keys, credit cards, cash, or traveler’s checks
• First aid kit
• Flashlight
• Battery-powered radio and extra batteries
• Sanitary supplies
• Copies of important documents (birth certificates, passports, etc.)
• Pet food and water

5.    Additional Safeguards

These additional tips can further protect your home against wildfires:

• Install fire-resistant shutters or coverings for windows to protect them from radiant heat. 
• Purchase fire proof safe where you can store important documents, records, photographs, and other mementos.
•  Ensure your address is clearly visible from the road, aiding emergency responders. 
• Keep flammable materials like firewood or propane tanks at least 30 feet from your home. 
• Regularly maintain your property by removing dead vegetation and regularly watering plants. 
• Install spark arrestors on chimneys to prevent embers from igniting your roof.

Our climate is becoming increasingly hotter and dryer and we can no longer ignore the possibility that we will be impacted by wildfires.  It is no longer a matter of if but when.  However, by staying informed, creating a defensible space, developing an emergency plan, assembling an emergency kit, and safeguarding your home, you can reduce the risks associated with wildfires and protect yourself, your loved ones, and property. 

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This content is developed from sources believed to be providing accurate information, and provided by Attune Financial Planning. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information only.

What are Health Savings Accounts (HSA)?

An HSA type of savings account that lets you set aside money on a pre-tax basis to pay for qualified medical expenses. By using untaxed dollars in a Health Savings Account (HSA) to pay for deductibles, copayments, coinsurance, and some other expenses, you may be able to lower your overall health care costs. HSA funds generally may not be used to pay premiums.

While you can use the funds in an HSA at any time to pay for qualified medical expenses, it is important to note that you may contribute to an HSA only if you have a High Deductible Health Plan (HDHP).  For plan year 2023, this means that with this type of health plan, your insurance company will not cover the cost of any coverage until you have paid the first $1,500 if you are single or $3,000 if you are a family.

For 2023, if you have an HDHP, you can contribute up to $3,850 for self-only coverage and up to $7,750 for family coverage into an HSA. HSA funds roll over year to year if you do not spend them. An HSA may earn interest or other earnings, which are not taxable.

After the age of 65, HSA funds operates just like an Individual Retirement Account (IRA) and the funds can be used for any type of expense penalty free.

Advantages of Health Savings Accounts (HSAs)

1.    Tax Advantages: 

One of the significant benefits of HSAs is the potential to receive a triple tax advantage. Contributions made to an HSA are tax-deductible (regardless of income level), reducing your taxable income. In addition, the earnings on the account grow tax-free, and qualified withdrawals for medical expenses are also tax-free. This triple tax advantage can result in substantial savings, which makes HSAs an attractive option for you if you are seeking to minimize your tax burden.

2.    Savings and Investment Growth: 

HSAs allow individuals with another way to save money for retirement. Unlike other healthcare accounts, such as Flexible Spending Accounts (FSAs), HSAs do not have a use-it-or-lose-it policy. Any unused funds in your HSA can be carried over from year to year, allowing your savings to grow. Furthermore, many HSA providers offer a wide assortment of investment options (like an IRA), which can potentially increase the value of your account over the long term.

3.    Flexibility in Spending: 

HSA provides flexibility in how the funds are spent. You can use the money in your HSA to pay for many types of qualified medical expenses, including deductibles, copayments, prescription medications, dental and vision care, certain alternative therapies, etc.  After the age of 65, the money in your HSA account is treated like an IRA and the money in the account can be used for any purpose whatsoever.

4.    No Required Minimum Distributions (RMDs):

Unlike an IRA where it is mandatory that distributions be taken starting at age 73, there is no such requirement for an HSA.  You can keep the funds in your HSA as long as you like and only withdraw the funds when you need it for medical or other reasons.  If there are funds in the account upon death, the HSA can be passed to your beneficiary.  They than can use the funds in the HSA for their own healthcare needs.

5.    You Can Take It With You: 

HSAs are not tied to a specific employer, meaning you can keep your HSA even if you change jobs or retire. This portability allows you to continue contributing to your account and using the funds for qualified medical expenses.

Disadvantages of Health Savings Accounts (HSAs)

1.    High-Deductible Health Plan (HDHP) Requirement: 

To open an HSA, you must have a qualifying high-deductible health insurance plan (HDHP). HDHPs typically have higher deductibles and out-of-pocket expenses compared to traditional health insurance plans. This requirement may be a disadvantage for you if you anticipate significant healthcare expenses or prefer lower out-of-pocket costs throughout the year.

2.    Limited Contribution Limits: 

HSAs have annual contribution limits set by the IRS. While these limits are adjusted each year, they may not be sufficient for you if you currently have significant healthcare needs or anticipate significant healthcare needs in the future. In 2023, the annual contribution limit for an individual with self-only coverage is $3,650, and for those with family coverage, it is $7,300. If your annual medical expenses exceed the amount of your contributions , you may find these limits restrictive.

3.    Withdrawal Penalties: 

While HSAs offer tax advantages, non-qualified withdrawals from the account may be subject to taxes and penalties. If you withdraw funds for non-medical expenses before the age of 65, you will be subject to income tax on the withdrawn amount, plus a 20% penalty. This penalty can discourage you from using HSA funds for non-medical purposes, which limits the flexibility of the account.

4.    Limited Accessibility: 

While HSAs can provide significant benefits for managing healthcare costs, not everyone has access to them. To open an HSA, you must have an HDHP, which may not be available through your employer or may not be the best option for your specific healthcare needs. Lack of accessibility can be a significant drawback for if you would otherwise benefit from the tax advantages and flexibility of an HSA.

Should You Participate in an HSA?

Health Savings Accounts (HSAs) offers individuals and families a unique financial tool for managing healthcare expenses and saving for retirement.  With tax advantages, potential investment growth, and flexibility in spending, HSAs can provide significant benefits.  However, there are potential downsides. The requirement of having an HDHP, limited contribution limits, withdrawal penalties, and limited accessibility are things that should be considered when evaluating whether an HSA is the right choice for you.

It is vital that you carefully assess your healthcare needs, financial goals, and available options before choosing to participate in an HSA.  A financial advisor like myself or your healthcare professional can provide you with  helpful guidance. By carefully considering the advantages and disadvantages, you can make an informed decision and determine whether an HSA is in alignment with your overall healthcare and financial strategy.

_______________________________________________

This content is developed from sources believed to be providing accurate information, and provided by Attune Financial Planning. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information only.

In 2021 alone, the Federal Trade Commission received 1.4 million reports of identity theft.¹ Identity theft can happen in a number of ways: in-person, online, through email or over the phone. However it occurs, identity theft affects a large number of people per year.

Let’s learn about how you can protect your identity and sensitive information online and in-person. 

Tip #1: Don’t Assume Your Identity Will Never Get Stolen

No matter how careful you are with your personal information, never assume that you are immune to identity theft. According to a recent report, nearly 33% of Americans have experienced at least one identity theft attempt in their lives.² That figure only includes the cases of identity theft that were properly reported. There could be other cases that were either never reported or never even discovered. 

There is so much data in today’s world that it’s impossible to keep yourself completely safe, but by understanding the risk of fraud, you can grasp how important it is to follow these and other cybersecurity tips. 

Tip #2: Use a VPN When Using Wi-Fi to Increase Data Protection

A virtual private network (or VPN) can help keep you safe when you’re browsing the web on Wi-Fi. A VPN creates an encrypted connection between your computer and the VPN server, meaning that all your internet usage is routed through this connection. Most VPN servers actually have multiple layers of encryption to help keep you and your information safe. Signing up for a VPN is easy and you can set one up on both your mobile device and your computer. Check out these comprehensive instructions from The Verge, a popular technology publication. 

VPNs also mask your IP address (which indicates where you are located and provides information about your computer) and personal information. 

Tip #3: Don’t Share Your Passwords or Use the Same Password for Multiple Sites

Hopefully, this tip is common sense, but don’t share your passwords with others, especially people you don’t know. If you do need to share your password, use a password management site like Keeper or LastPass that allows you to share a record with someone without showing them the actual password. Or, change your password right after sharing it with someone. 

In addition to not sharing your password with others, don’t use the same password for multiple sites, especially if it contains identifying information such as your address, children’s names or pet names, etc. 

A strong password is long, contains a mix of upper- and lowercase letters, contains numbers and symbols, has no ties to your personal information, and doesn’t contain any dictionary words. 

Tip #4: Sign Up for 2-Factor Authentication

In addition to creating a strong password, always sign up for two-factor authentication when possible. Two-factor authentication (or 2FA) is an extra layer of protection for your login info. It usually requires you to sign in with your password and then use a second method to verify it’s you. For example, Google can send a unique code to your phone number or backup email address to confirm it’s really you trying to sign in. 

Tip #5: Be Careful About How Much Personal Information You Share on Social Media

In today’s world of posting everything from pictures of your grandkids to what you had for lunch on social media, it’s important to be aware of what personal information you are sharing online. Hackers can easily get information from your Facebook or Instagram profile and use it to hack into your other accounts. Never share your address, phone number, photos of personal IDs (passport, driver’s license, birth certificate, etc.) or full date of birth on social media.

We live in a very connected world, and it’s more important than ever to protect your information and your family’s information. Staying safe online and practicing these tips will help prevent you from falling victim to increasing identity theft scams.

When was the last time you reviewed your policy? It's important to understand the ins and outs of your coverage to make sure that you have the right amount and that you have coverage amounts you're comfortable with. In this article, we'll break down a policy and what each coverage means.¹

Overview of Homeowners Insurance

Homeowners insurance covers quite a bit more than just the physical structure. While the physical structure of the home may include attached structures, fixtures, and built-in appliances, many don't realize that your insurance also provides personal liability coverage for injuries or damage that occur from covered accidents. Many homeowners choose to add additional coverage, which may include unattached structures, personal property, medical payments, additional living expenses, sewer backup, and umbrella liability.¹

Understanding Your Policy Coverages

Your homeowners policy will depend on the type of dwelling you have. Most single-family homeowner policies involve the following types of coverage:

1. Dwelling: Pays for damage to the house and attached structures.
2. Other Structures: Pays for damage to structures not attached to the house (fences, sheds). Coverage is typically a percentage of the total dwelling value.
3. Personal Property: Pays the value of damaged or lost possessions (furniture, electronics, clothing). Coverage is typically a percentage of the total dwelling value.
4. Loss of Use: Pays some additional living expenses during home repair. Coverage is typically a percentage of the total dwelling value.
5. Personal Liability: Covers financial losses from property damage and personal injuries to others if found legally responsible. You can choose the amount of personal liability coverage you'd like to add.
6. Medical Payments: Pays medical bills for people hurt on the homeowner's property or by the homeowner's pets. You can choose the amount of medical payment coverage you'd like to add.
7. Water Backup of Sewer: Pays for losses to the house from sewer or drain backup. Coverage is typically a percentage of the total dwelling value.
8. Personal Umbrella Liability: Pays for losses from bodily injury, property damage and personal injury to others beyond the policy limits. Coverage is typically a percentage of the total dwelling value.
9. Flood Insurance: Separate policy that pays for flood-related damages to the house and contents.
10. Earthquake Insurance: An add-on or separate policy that pays for damages to the house and other covered items caused by an earthquake.¹

A Caveat: What Isn't Covered

In the section above, you may have noticed that flood and earthquake insurance are not commonly included in your homeowners policy. Damage resulting from earthquakes or floods is not covered by your standard insurance and requires separate policies. Even if you're not in an area prone to floods or earthquakes, it may make sense for you to add these policies, just in case.¹

How Much Coverage Do You Need?

When it comes to insuring your dwelling, you should have enough insurance to fully rebuild, should your home be destroyed or become unlivable. You can insure your home based on replacement costs (the cost to rebuild) or actual cash value (ACV). ACV is based on the current market value. It may make sense to review these options with an agent to determine which one is the best choice. Should you need to use your insurance, you'll need to pay your deductible first before the insurance pays any claims. Depending on the type of damage involved, an insurance or claims adjustor may need to inspect the property as well.¹

It's also important to note that when you set your deductible, consider which is easier to pay. The lower the deductible amount, the higher the policy cost will be.¹

It's important to read your homeowner's policy carefully to ensure your home and family are protected. Make sure you know the specific types of damage your homeowners policy will cover. Some policies, for example, might exclude damage from windstorms and hail if you live in a hurricane-prone area. Check the details to determine what, if any, exclusions may apply.¹

Review and Update Your Policy

When was the last time you reviewed your homeowners policy? Insurance policies should be reviewed annually to determine if your coverage still makes sense. Home values can change, and if you've made major purchases or upgraded appliances, your home coverage needs to reflect that. It's also important to inventory your personal belongings annually to ensure that you have the proper content coverage. Something as simple as purchasing a new TV or as complex as inheriting family heirlooms changes the replacement cost of your valuables, and many homeowners neglect this important step.

Who Should Utilize Open Enrollment?

The Open Enrollment Period (or OEP) is for anyone looking to make a change to their health insurance coverage, whether through their workplace or the federal market. This could include looking for a cheaper plan with similar coverage, gaining coverage if you previously had none or changing your coverage altogether to better meet your needs.

Tip #1: Assess Your Current Costs 

When thinking about changing your health insurance plan, it’s important to reassess your healthcare-related expenses. Take a look at how much you’re currently paying per month for your plan as well as what sort of out-of-pocket expenses you paid over the past 12 months. 

These could include:

• Routine doctor’s visits
• Specialist visits
• Prescriptions
• Emergency room or urgent care visits

Unless you foresee any major changes in the coming year (such as pregnancy), this could be a helpful indicator when it comes to determining what type of coverage will be cost-effective and appropriate for you.

If you found your out-of-pocket expenses to be too high, now’s your opportunity to search for a plan with lower deductibles (although your monthly premiums will likely rise).

Tip #2: Choose Your Marketplace

You’ll may be able to gain coverage through several marketplaces including:

• Your or your spouse’s workplace
• Federal marketplace
• Local or state marketplace
• Private exchange
• Directly through insurance providers

If you have the option to gain coverage through your employer, this will likely provide you with the lowest premiums. That’s because your employer pays a portion of the premium, which tends to be lower anyway.

If your employer does not provide healthcare coverage (or you wish to look elsewhere for it), you can gain coverage through the federal or state marketplace. You’ll start at Healthcare.gov, which will then direct you to your state’s marketplace (if applicable). While premiums are likely to be higher, you may be eligible for premium tax credits to help offset the monthly cost.

Tip #3: Decipher Your Available Plan Types

There are four common types of health insurance plans you’ll come across when selecting coverage: HMO, PPO, POS, EPO.

Health Maintenance Organization (HMO)

Pros: HMOs tend to have lower monthly premium costs and out-of-pocket costs as compared to other plan types. 

Cons: You’re typically limited to seeing providers only in your network, and these must be coordinated by your primary care provider (unless it’s an emergency). This gives you less overall flexibility.

Preferred Provider Organization (PPO)

Pros: PPOs offer the user more freedom when it comes to choosing healthcare providers and specialists. You can see people outside of your coverage network, although this will typically result in higher out-of-pocket costs. Additionally, you typically will not need a referral from your primary care provider to make appointments with specialists.

Cons: Out-of-pocket costs and premiums tend to be higher for PPO plans, especially when compared to an HMO.

Point of Service Plan (POS)

Pros: With a POS plan, you have the flexibility to visit out-of-network healthcare providers, but typically at a high out-of-pocket cost.

Cons: Similar to an HMO, you will likely need a referral from your primary care provider to see a specialist or have a medical procedure done. Additionally, your primary doctor will coordinate your care for you.

Exclusive Provider Organization (EPO)

Pros: An EPO will typically offer you lower out-of-pocket costs, and a referral is not needed to see specialists or have medical procedures done.

Cons: You will be required to visit specialists within your network, unless it is an emergency. An EPO will typically provide less flexibility and freedom when it comes to choosing care providers.

Tip #4: Account For Your Current Providers

As shown above, every plan type either requires you visit in-network providers or offers lower out-of-pocket costs for visiting an in-network specialist. If you already have preferred providers on your current plan, switching plans could jeopardize your ability to visit them in the future (or cost you more to do so). 

When comparing plans, make sure to check whether or not your current healthcare providers are in-network. If they are, you should have no problem continuing to see them as you did before. If they’re out-of-network, you’ll either have to find a new provider or prepare to pay more for every visit.

Picking the right health insurance plan for you and your family can feel daunting, confusing and rushed. With some time left before open enrollment, do yourself a favor and create your plan of action now. Reduce the stress and headaches by understanding what type of plan may be right for you, what coverage you know you’ll need and determine what marketplace you’ll be buying from. When November hits, you’ll be more than ready to make a decision that’s right for your healthcare needs.

The COVID-19 pandemic has brought many shifts in the economy and business capacity, which has inevitably impacted the employment status of thousands of Americans. As a result, the health coverage status of many has also changed. Below we’re exploring how you can stay prepared when confronting the following four different coverage scenarios that may arise during COVID-19.

Scenario #1: You’ve Lost or Anticipate Losing Coverage 

There is a yearly Open Enrollment Period to sign up for health insurance (for 2020, it was November 1, 2019 - December 19, 2019 for most states).² However, Special Enrollment periods are offered for individuals facing certain life events, such as loss of health coverage or having a baby. In light of a global health crisis, it is even more critical to have health insurance, and individuals who may have lost their health insurance — or need to make a change in their coverage — can take advantage of a Special Enrollment Period. Below is a summary of individuals that may be eligible: 

• Those who lost a job-based plan in the past 60 days 
• Those who are expected to lose coverage in the next 60 days, including those losing coverage through a parent or guardian because they will no longer be a dependent
• Those who have been furloughed
• Those who have COBRA continuation coverage after losing job-based coverage 

Individuals who lost their jobs, but did not previously have health coverage because their jobs didn’t offer it, do not qualify for a Special Enrollment Period.³ 

Scenario #2: You Can’t Pay a Premium Due to a Hardship Related to COVID-19 

If you are unable to meet a premium payment deadline, the U.S. Centers for Medicare & Medicaid Services recommends checking with your insurance company to extend the deadline or delay termination of your coverage. In most circumstances, there is a one-month grace period according to your state's law, and if you’re receiving financial assistance, there is a three-month grace period. However, if your income level has changed, you’re encouraged to updated your insurance application, as you could qualify for additional savings.³

Scenario #3: Your Child Moved Home or Has Recently Graduated 

Your child may now be living with you after being sent home from their college due to COVID-19. He/she may also simply be home for the summer or is now returning home after graduating college. With the unemployment rate at 14.7 percent, recent graduates may have difficulty finding a job (and therefore, coverage by an employer).⁴

If your child was enrolled in a student health plan (or lived in a foreign country or U.S. territory for 60 days before their move home), he/she may qualify for a Special Enrollment Period and may be eligible to be covered under your plan. If your child is under 26 and you didn’t plan or don’t plan to claim them as a tax dependent, they can create a separate application through their own Marketplace account. However, if you claimed or plan to claim your child as a dependent, you can update your application to include your child.³ 

Scenario #4: You or Your Dependents Need to Be Tested for COVID-19 

Many health insurance plans are waiving co-pays for testing related to COVID-19. Some are also waiving cost-sharing for treatment, while others are not. If you anticipate visiting your doctor with COVID-19 symptoms, check the details of your health insurance plan to better understand the potential costs involved. In addition, several providers are offering virtual or telehealth services as part of their plan.⁵

With six vaccines currently in clinical evaluation and around 70 in pre-clinical evaluation, the World Health Organization is maintaining a coordinated effort to curb the spread of COVID-19.⁶ Until then, however, taking steps to remain safe and understand the details of available healthcare resources remains critical. 

During the first week of July, Southern California experienced two very large earthquakes; the largest in over two decades.  One registered a magnitude of 6.4 and the other 7.1 with the damage caused by estimated to be over $100 million.  The epicenter was over 100 miles east from the city of Los Angeles.  If the quakes occurred within the Los Angeles city limits, experts estimate it would have caused over $200 billion in damage.   Because only about 10% of California residents have earthquake insurance it is no surprise that the those whose homes were damaged by last week’s earthquakes have been impacted financially as a result of having to pay for repairs or rebuilding themselves.   Sadly, some residents have been forced to walk away from their homes because they cannot afford to rebuild.

Why Don't Many People Have Earthquake Insurance? 

Knowing that the damage caused by an earthquake can be devastating, why is it that so few people have earthquake insurance in California?   The first and biggest reason is the cost of coverage.  Earthquake policy premiums can cost anywhere from $1,000 to $5,000 and possibly more per year depending on the size and quality of your home.   The second reason is the perceived notion that while “the big one” will happen someday, it won’t happen tomorrow and possibly not even in my lifetime.  The largest earthquake to happen along the San Andreas Fault (California’s largest Faultline) was in 1906 and that registered a magnitude 7.9.  The largest earthquake that occurred in recent memory happened 30 years ago along the Loma Prieta Faultline and that one registered a magnitude 6.9.  Because the cost of earthquake premiums are so high and the chance of a major earthquake occurring seems low, the popular thinking is why pay insurance for something that probably won’t happen.

When Should you Get Earthquake Insurance? 

In reality, according to the U.S. Geological Survey published in 2014, there is a 72% probability of a major earthquake with a magnitude of 6.7% or above occurring in the San Francisco region in the next 30 years.  The question we must ask ourselves when it comes to deciding whether or not to purchase earthquake insurance is:  If a major earthquake happened tomorrow and it caused major damage to my home, can I afford to rebuild it on my own?  If the answer is yes, then you are one of the lucky few and you probably do not need earthquake insurance.  If your answer is no or not entirely, then you should consider obtaining coverage.  The other important point to consider is that if your home is destroyed by an earthquake and you still have a mortgage on your home, your lender can still hold you responsible for your home loan.  You cannot simply walk away.    For most people, having to pay for the cost of repairing or rebuilding a home, temporary living arrangements, and a mortgage will be difficult or impossible to manage financially.  While the burden of paying for earthquake insurance seems high, when it is compared with the emotional and financial cost of having to bear the full burden of rebuilding on your own, the annual premium might not seem that unreasonable when compared to the alternative.

What are the Risks of Not Getting Insurance? 

When deciding to purchase any type of insurance including earthquake insurance, one has to weigh the risks of the event happening against the cost of insuring against that event.  For some, the cost of earthquake coverage is just too high and are willing to accept that risk; especially if you believe “the big one” will not happen anytime soon.   Even if it does happen, some believe the chance of their home being destroyed is remote.

However, because both the cost of rebuilding and the size of home mortgages have grown so much in recent years, especially in the San Francisco Bay Area, obtaining earthquake insurance is something more and more Californians should seriously consider.  Contact your agent and / or go to the California Earthquake Authority website for more information about earthquakes and obtaining earthquake insurance.

Regardless of whether you have earthquake insurance or not, you and your family should be prepared in the event of an emergency.  If you don’t already have one, consider purchasing an Earthquake Emergency Kit for your home and auto.  You can go to the Centers for Disease Control and Prevention website for more information.

Purchasing insurance is a big step, so please feel free to reach out if you have any questions regarding this. 

contact us for your insurance consultation 

This content is developed from sources believed to be providing accurate information, and provided by Attune Financial Planning.  Please consult your financial, legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information only.

529 Plans

One of the most common ways to save is through a 529 savings plan.  The major benefit of a 529 Plan is that the investment growth is tax-free if it is used for college costs.  In some states your contribution is also tax-deductible.  There are other ways to fund college costs including tapping into your 401K plan, Individual Retirement Accounts, or home equity.  Insurance sales people offer another option:  using permanent life insurance to fund college costs.  I wanted to provide a summary of how permanent life insurance works as well as the advantages and disadvantages of this option to pay for college costs.

How Does Permanent Life Insurance Work?

A permanent life insurance policy provides the insured a death benefit that lasts until the insured reaches 100 years old. In addition, a permanent life policy acts as a savings account that generates a cash value.  

With each premium payment that you make, a portion goes to the death benefit and another is placed into a cash value account.  The longer you own a whole life policy, the larger the cash value portion will be and the smaller the amount of your death benefit.

For example, suppose you purchase a permanent life insurance policy with a $1,000,000 death benefit.  In the first year, you might have zero cash value.  In year 10, your Cash Value could be $100,000 and your death benefit would be $900,000.  In year 30 your cash value could be $400,000 and your death benefit would be $600,000.

In this example, if you were to pass away at year 30, your beneficiaries would receive a death benefit of $600,000 but the insurance company would keep the cash value.

What are the Advantages?

The largest benefit of a permanent life insurance policy is flexibility.  You have the ability to access the cash value for any reason by surrendering the policy, taking a cash withdrawal, or taking out a policy loan (up to the total amount of the cash value).  This money can be used for any purpose including paying for the cost of college.   With a 529 Plan, you will be taxed an additional 10% penalty on any non-college related withdrawals.  The second attractive feature of using permanent life insurance to pay for college is the accumulated cash value is guaranteed by the insurance company.  Third, a permanent life insurance policy has a number of tax advantages:  interest earned on the cash value grows tax deferred, withdrawals made up to the total amount paid in policy premiums are tax-free, and any amount taken as a loan from your cash value, is made tax free.  The fourth advantage is that the cash value is excluded from financial aid calculations as they are not seen as parental assets.

What are the Disadvantages?

The biggest disadvantage is the cost of premiums.   A 30-year-old who purchases a whole life policy with a $500,000 death benefit can expect to pay an average of $4,500 per year.  The second disadvantage are the annual costs.  Most permanent life insurance charge an average of 2% per year in fees. The third disadvantage is the amount of time it takes to build up a sizable cash value. It can take at least 10 years for the cash value to grow just beyond the amount paid in premiums.  Fourth, any cash value withdrawals made in excess of the total premiums made will be taxed as ordinary income.  Fifth, cash withdrawals and unpaid loans reduce the value of your death benefit.  This could be significant if you are counting on the death benefit to support your family if you were to pass unexpectedly.

What’s the Bottom Line?

The estimated 4-year cost of a University of California education is estimated to be as high as $140,000 for a California resident student who lives on campus.  Because of the amount of time it would take to build the cash value in a permanent life insurance policy to cover this 4-year cost, this option would make the most sense for families who are very risk averse, are high income earners, and are able to start saving very early in their child’s life.  

However, it is when your children are very young that your budget is the tightest and you need the most life insurance coverage.  But because the cost of a permanent life insurance policy is very expensive, the amount of coverage that you could afford would be much less than a term life insurance policy.  For example, a whole life policy with a $250,000 death benefit can potentially cost $4,500 per year.  You could purchase a 20 year term life insurance with $1,000,000 death benefit for $400 per year.

Unless you are a high-income household who can afford the premiums and need additional tax deferred investment vehicles, you are better off utilizing life insurance for what it is intended for:  providing your loved ones with the financial protection they need in the event of your untimely death.  The best way to do that is with term life insurance.  The money that would otherwise go to a whole life policy can be invested in a 529 college savings plan which is much less expensive, offers tax-free growth (for college related expenses), and can provide a better rate of return.

Have  more questions about paying for college? 

contact me today

This content is developed from sources believed to be providing accurate information, and provided by Attune Financial Planning.  Please consult your financial, legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information only.

What Exactly Does Umbrella Insurance Cover?

As a homeowner, you may have someone visiting your home. If they slip and fall, you could be held liable for their injuries and any other damages sustained. An umbrella policy is extra assurance that their bills will be taken care of without you suffering a huge hit. It helps avoid certain lawsuits and keeps your finances in order.

Even though your current homeowners policy should cover injuries and damages, there are instances where certain injuries are so extensive that they may not be covered, or at least not fully covered. This is an added benefit that will keep your investment safe. You may be wondering, what could possibly be covered by this type of policy. Here are a few examples:

Property Damage

With an umbrella policy, any damage or loss to someone else’s property will be covered. That could mean your kid playing baseball and accidentally shattering someone’s window, to damage to a vehicle where you are the party at fault.

Bodily Injury

For example, if you have a dog and they bite someone, you’ll be thanking yourself that you have an umbrella insurance policy. Additionally, if you have guests over and they slip and fall on your property, those injuries will be covered under this type of policy.

Personal Liabilities

This type of insurance also comes in handy under other personal liabilities. If you are ever sued for slander or libel, or someone accuses you of malicious prosecution, this policy will cover your expenses. Although this type of policy is often ignored, discussing the possibility of having an umbrella policy in place to protect your interests with an agent can give you more information and peace of mind.

Who Needs Umbrella Insurance?

Adding this additional coverage to your policy is important to consider if you are someone that has a lot going on, whether you entertain a lot, have a number of individuals over, have a business to run or have other situations that could put you in a position to compromise your investments. If you use your automobile a lot to transport things or are just on the road a lot, having an umbrella insurance policy to supplement your auto insurance policy could be just the thing you need. Or, if you transport a number of people from place to place, this would come in handy if you were to ever get in an accident and someone got hurt. If you are a parent that transports a lot of kids from place to place, this is a policy that should definitely be considered.

Understanding how an umbrella insurance policy can meet your needs will benefit you in the long run. It’s always better to be safe than sorry.  To determine what the appropriate umbrella coverage is for your unique situation, consult your property and casualty insurance provider.

_{This content is developed from sources believed to be providing accurate information. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information only.}

Often families forget to take out life insurance policies on stay-at-home parents, due to the fact that at least on paper, they are not bringing in the money necessary to cover the bills, but what many people fail to realize is the financial contribution that stay-at-home parents actually make to the household.

The Financial Contribution of a Stay-At-Home Parent

While most will agree that being a stay-at-home parent is often one of the toughest jobs in the world, many fail to actually put a monetary value on how they contribute to the household.  If the stay-at-home spouse was to suddenly pass away and all of the duties that they usually performed had to be outsourced, the annual total could be as high as six figures. Listed below are just some of the expenses that a stay-at-home parent provides for a family and how much it would cost if you had to hire others to complete these tasks.

Childcare

The most significant expense that would need to be replaced in the event of a stay-at-home parent's death is child care. According to the 2017 Parents and High Cost of Childcare Report, researched by Childcare Aware of America, the report shows that Americans average 7 to 12 percent of the average median salary in America providing the cost of child care for their children. This can vary from state to state with some states running higher than 12%. On average, a household will spend an estimated average of $900 per month or $11,000 per year, per child on childcare.¹ It is this expense alone that often causes one parent to decide to stay at home in the first place.

Household Chores

Cooking and cleaning are the primary functions in the household that one might have to outsource in the event of a stay-at-home parent's passing. House cleaning rates can run an average of $9.00 to $15.00 per hour with cooking duties adding on to that cost. Additionally if instead of hiring out a cooking service you were to outsource grocery shopping, meal prep, or food delivery services you can expect an added expense for that as well.

Miscellaneous Duties

Stay-at-home parents are often the bookkeepers, repair people, gardeners, and personal assistants that help maintain the household. While these duties could fall to the remaining parent, it would be difficult to fit in these additional hours while still providing for the family through a traditional job and taking care of children after work hours. Outsourcing these tasks can add hundreds of dollars to your monthly budget.

Buying a Life Insurance Policy for a Stay-At-Home Parent

Purchasing a life insurance policy for your stay-at-home spouse can be a little more complicated as there is no income level to set the amount by and you will need to create an estimate of the duties your stay-at-home spouse performs and what it would cost to have those tasks replaced by a third party to help determine what the spouses income actually would amount to.

Additionally, you will want to follow the same rule of thumb that you would with a wage earner by determining what five times the value of their income would be to help establish the amount of life insurance that should be carried for them. If you have multiple, or really young children, you will want to be sure to include enough to cover them for child care up through school age. 

Don't wait until it's too late to realize how much your stay-at-home spouse contributes financially. Protect yourself and your children by protecting them with a stay-at-home parent life insurance policy to ensure your family's future in the event of your spouse's death.

^{1 https://usa.childcareaware.org}

_{The information in this material is not intended as investment, tax, or legal advice.  The opinions expressed and material provided are for general information only.}