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Preplan Your 2007 Health Care
This is the second installment of a 10-week
series on financial matters to address before year-end.
Employees are expected
to spend 8 percent more in 2007 than they did this year on health care. Not
counting what employers spend on behalf of their workers, the average employee
will spend $275 per month next year on health insurance, co-payments,
coinsurance and deductibles (Source: Hewitt Associates).
Is it possible to plan for health care needs?
Not entirely, but an annual review of your health care costs and your insurance
can make you better prepared.
Flexible Spending Accounts,
also known as flex plans, allow employees to set aside pretax wages to cover
medical costs not covered by insurance. Most flex plans have a use it or lose it
feature meaning you must use the dollars in your flex account by year end or
you forfeit leftover money. If you have money left in your flex account, first
ensure that any medical costs not covered by insurance during this year have
been submitted for reimbursement. Second, go through all your medical costs for
the past 12 months. If a child is no longer on your health insurance or if a
family member has been diagnosed with an on-going condition like asthma or
diabetes, you may need to adjust your flex plan withholding downward or upward
accordingly.
Health Savings Accounts
work differently. These accounts require that you purchase a health plan with a
high deductible at least $1,050 for individuals or $2,100 for a family and
an out-of-pocket expenses limit of $5,250 for individuals and $10,500 for
families. HSA funds can be rolled from year to year you dont lose unused
funds at year end, as with a flex plan. When used for medical care,
contributions, earnings and withdrawals are tax free. Because HSAs are not
created through an employer, they can provide a safety net for medical care if
you lose your job.
Medicare Part B
provides supplemental health coverage for
recipients of Medicare. Beginning in January, the premium portion paid by
recipients will go from 25 percent of the plans total costs to an income-based
premium scale for individuals with over $80,000 in modified adjusted gross
income. At the end of the three-year phase in, a recipient may pay as much as 80
percent of the premium. Recipients may want to start now finding additional
monthly funds to cover the premium increases or finding alternative coverage.
We can help you determine the best vehicles to
put money away for health care costs. Call our office if you would like to
schedule a review of your health care expenditures and your options.
Next week: Rebalancing Your Retirement Accounts | 
