- Misleading Medicare Advantage Ads: What to Look Out For
- How Seniors Can Get Help Paying for Everyday Needs
- How an Incentive Trust Can Influence Your Heirs
- How a Health Savings Account Can Boost Your Retirement Savings
Misleading Medicare Advantage Ads: What to Look Out For
Dear Savvy Senior,
I’m currently enrolled in original Medicare but have been thinking about switching to a Medicare Advantage plan during the open enrollment period. Many of the Medicare Advantage ads I’ve seen offer lots of extra benefits beyond what traditional Medicare offers and no monthly premiums. What are your thoughts?
- Considering a Switch
Dear Considering,
Be very leery of the Medicare Advantage ads on TV, radio, social media and that come in the mail. While many of these ads may tout free vision, hearing, dental and other benefits with zero monthly premiums, they aren’t always what they claim to be.
Advantage Basics
Medicare Advantage or MA plans (also known as Medicare Part C) are government approved health plans sold by private insurance companies that you can choose in place of original Medicare. The vast majority of Advantage plans are managed-care policies such as HMOs or PPOs that require you to get your care within a network of doctors in a geographic area. You can sign up for one of them during open-enrollment season from Oct. 15 through Dec. 7.
MA plans have exploded in popularity in recent years as insurers have flooded the airways with advertisements, often by celebrity pitchmen, that promote low-cost options with lots of extra benefits.
But be aware that the Federal government has deemed many claims in MA ads fraudulent and misleading. Some ads imply that the Centers for Medicare and Medicaid Services endorses or prefers a specific plan. Others promise more cost savings than you really get. And if you choose the wrong plan, your doctor may not be a member of that plan’s network, or you may end up paying out-of-pocket for medically necessary care.
This past September, the U.S. Department of Health and Human Services began cracking down on these ads, but you still need to practice self-defense. Here are some tips to help you make a good decision.
Cover your needs: When evaluating MA plans, make sure the one’s you’re considering cover the doctors you like and the health care facilities you normally go to. Also, make sure all of the prescription medications you take are on the drug plan’s formulary.
To help you compare plans, a good first step is to call the office managers of the doctors you use and find out which Advantage plans they accept, and which ones they recommend. Then go to the Medicare Plan Finder tool at Medicare.gov/plan-compare to compare plans in your area.
Understand the details: Some MA plans promote no monthly premiums, but the reality is that you are still responsible for your original Medicare costs including your Part B premium and deductibles and copays for covered services. Moreover, you may have to pay more out-of-pocket if you see a doctor outside the network. Also, if the plan is an HMO, it generally doesn’t cover non-emergency care out of network, so an individual may be responsible for full costs. A PPO on the other hand, allows people to go out of network, but they generally have to pay more to do so.
Do some digging: Many MA plans tout free vision, hearing and dental benefits that are not covered by traditional Medicare, but these benefits are often limited. For example, a plan that offers free dental coverage may cover only cleanings and x-rays. Extensive procedures such as root canals or caps may not be covered, or the plan may limit the dollar amount it pays. Find out the coverage details so you’re not surprised later.
Get help: Reach out to your local State Health Insurance Assistance Program (SHIP) at ShipHelp.org or call 877-839-2775. These are nonprofit programs that provide unbiased one-on-one Medicare counseling and assistance.
You can also report any misleading MA claims to the Senior Medicare Patrol Resource Center at SMPResource.org or by calling 800-447-8477.
How Seniors Can Get Help Paying for Everyday Needs
Dear Savvy Senior,
What types of programs are available to help seniors struggling with their everyday bills, and how do I go about finding them? Since I lost my husband last year, my Social Security survivor benefit is barely enough to get by on.
- Searching Senior
Dear Searching,
I’m very sorry for your loss, but you’ll be happy to know that there are dozens of different financial assistance programs and government benefits that may be able to help you with your everyday costs.
To locate these types of programs, your best resource is BenefitsCheckUp.org. This is a free, confidential online screening tool designed for older adults and people with disabilities. It will help you find federal, state and local benefits programs that can assist with paying for food, utilities, health care, medications, housing and many other needs. This site – created by the National Council on Aging in 2001 – contains nearly 2,000 programs across the country.
To identify benefits, you’ll first need to type in your ZIP code and choose the types of benefits you’re interested in. Then you’ll need to answer a few questions regarding your personal and financial situation. Once completed, you’ll get a list of programs to choose from, followed by a personalized report that explains each program, and tells you where you can get help or how to apply.
If you need some assistance or you don’t have internet access, you can always speak with a benefits support specialist by calling 800-794-6559. You can also get help in-person at any of the 85 Benefit Enrollment Centers located across 41 states. See NCOA.org/article/meet-our-benefits-enrollment-centers to search for a center in your area.
Types of Benefits
Depending on your income level, location and circumstance, here are a few of the many different benefits you may be eligible for:
Nutrition assistance: Programs like the Supplemental Nutrition Assistance Program (SNAP) can help pay for food at the grocery store. The average SNAP benefit for 60-and-older households is around $105 per month. Some other nutrition programs that are available to seniors include the Senior Farmers Market Nutrition Program and the Commodity Supplemental Food Program.
Utility assistance: There’s the Low-Income Home Energy Assistance Program (LIHEAP) that provides assistance in lowering home heating and cooling costs. And the Weatherization Assistance Program that helps you get free energy repairs and services to lower your energy bills.
Broadband assistance: For reliable, high-speed internet, the Affordable Connectivity Program (ACP) provides a $30 monthly subsidy that can be applied toward your home internet cost. The ACP works with certain internet providers like Cox, which offers discounted and free high-speed internet through their ConnectAssist plan (see cox.com/digitalequity).
Health care and medicine: Medicare Savings Programs and Medicaid can help or completely pay for seniors’ out-of-pocket health care costs. And for assistance with medications, there’s a low-income subsidy program called ‘Extra Help’ that helps pay premiums, deductibles, and co-payments on Medicare (Part D) prescription drug coverage. You can also search for prescription drug help through patient assistance programs or your state pharmaceutical assistance program at Medicare.gov.
Supplemental Security Income (SSI): Administered by the Social Security Administration, SSI (see ssa.gov/ssi) provides monthly payments to very low-income seniors, age 65 and older, as well as to those who are blind and disabled. In 2023, SSI pays up to $914 per month for a single person and up to $1,371 for couples.
In addition to these benefits, there are dozens of other programs BenefitsCheckUp can help you identify, like housing assistance, property tax reduction, veteran’s benefits, senior transportation, caregiving support, free legal assistance, disability services, job training and more.
How an Incentive Trust Can Influence Your Heirs
Dear Savvy Senior,
What can you tell me about creating an incentive trust? I have an adult son and daughter that are both financially inept. Before I die, I want to put some type of requirements in place that they will need to follow in order to receive their portion of my estate.
- Frustrated Father
Dear Frustrated,
If you want to influence your heirs even after you’re gone, an incentive trust is definitely an option to consider, but be careful how you construct it because it can cause unintended, unfair consequences. Here’s how it works, along with some tips to help you create one.
Incentive Trusts Basics
An incentive trust is an estate-planning tool designed to help encourage your heirs in a direction you desire when you’re no longer around.
With an incentive trust, some or all of your assets are passed to your trust when you die rather than directly to your heirs. Your trustee is empowered to distribute funds from the trust only if and when your beneficiaries do whatever it is you have specified in the trust.
For example, an incentive trust might encourage a beneficiary to graduate from college, enter a particular profession, get married or even have children. They could also reward beneficiaries who do charitable work or supplement the incomes of those who choose low paying, yet meaningful careers like teaching or social work. Or they could penalize beneficiaries who don’t work by cutting off or decreasing distributions or placing restrictions on heirs with addictions by requiring that payments go directly to rehab centers.
But be aware that these types of trusts can also have drawbacks. A poorly constructed incentive trust can have a high risk of unintended consequences. For example, if your trust provides a financial incentive for your children to be employed full-time, but one of them gets sick or seriously injured in a car accident and can’t work, they would be punished unfairly.
You also need to know that incentive trusts aren’t cheap. You can expect to pay an attorney $2,500 to $5,000 to draft one.
There are also legal limits on what you can do with an incentive trust. While state laws vary, incentive trusts that encourage a beneficiary to join or leave a particular religion, or leave a spouse or not marry at all, can be challenged in court and possibly struck down.
How to Create One
To create a solid incentive trust that accomplishes what you envision, you need to hire an estate-planning attorney who will include precise instructions that clearly spells out your wishes. You’ll also want to include language granting your trustee the right to use his or her discretion and that the trustee’s decisions should be final and binding.
This allows your trustee to make common sense rulings, which will reduce or eliminate the chances of unintended and unfair consequences. It also makes it very difficult for beneficiaries to successfully challenge the trust or trustee in court. When a trust grants final decision-making authority to its trustee, it becomes almost impossible for beneficiaries to successfully argue that this trustee is not correctly implementing the trust’s terms.
The key is to select a trustee who’s smart enough to interpret your intent and has sufficient backbone to stand up to beneficiaries when necessary. You also need to select a successor trustee too if your first choice can no longer serve. Fees paid to a trustee vary widely depending on the state’s fee schedules, the size and complexity of the trust, and conditions laid out in the trust.
To find an experienced attorney in your area to help you create an incentive trust, see the National Academy of Elder Law Attorneys (naela.org) and the American College of Trust and Estate Counsel (actec.org).
How a Health Savings Account Can Boost Your Retirement Savings
Dear Savvy Senior,
I’m interested in contributing to a health savings account to help boost my retirement savings but would like to better understand how they work. What can you tell me?
- Almost 60
Dear Almost,
A health savings account, or HSA, is a fantastic financial tool that can help you build up a tax-free stash of money for medical expenses now and after you retire. But to qualify, you must be enrolled in a high-deductible health insurance plan. Here’s an overview of how they work and how you can open one.
HSA Rules
HSAs have become very popular over the past few years as the cost of health care continues to skyrocket, and because more and more Americans have high-deductible health plans.
The great benefit of a HSA is the triple tax advantage that it offers: Your HSA contributions can be deducted pretax from your paycheck, lowering your taxable income; the money in the account grows tax-free; and if you use the money for eligible medical expenses, withdrawals are tax-free.
And if you change jobs, the HSA moves with you.
To qualify, you must have a health insurance policy with a deductible of at least $1,500 for an individual or $3,000 for a family in 2023. In 2024, the deductible rises to $1,600/individual or $3,200/family.
This year, you can contribute up to $3,850 if you have single health insurance coverage, or up to $7,750 for family coverage. Next year (2024) you can contribute significantly more – up to $4,150 for single coverage or up to $8,300 for family coverage. And people age 55 and older can put away an extra $1,000 each year. But you cannot make contributions after you sign up for Medicare.
The money can be used for out-of-pocket medical expenses, including deductibles, co-payments, Medicare premiums, prescription drugs, vision and dental care and other expenses (see IRS.gov/pub/irs-pdf/p502.pdf, page 5, for a complete list) either now or when you retire for yourself and your spouse as well as your tax dependents.
Unlike a flexible spending account, an HSA doesn’t require you to use the money by the end of the year. Rather, HSA funds roll over year to year and continue to grow tax-free in your HSA account for later use.
In fact, you’ll get a bigger tax benefit if you use other cash for current medical expenses and keep the HSA money growing for the long term. Be sure to hold on to your receipts for medical expenses after you open your HSA, even if you pay those bills with cash, so you can claim the expenses later. There’s no time limit for withdrawing the money tax-free for eligible medical expenses you incurred any time after you opened the account.
But be aware that if you do use your HSA funds for non-medical expenses, you’ll be required to pay taxes on the withdrawal, plus a 20 percent penalty. The penalty, however, is waived for those 65 and older, but you’ll still pay ordinary income tax on withdraws not used for eligible expenses.
How to Open a HSA
You should first check with your employer to see if they offer a HSA, and if they will contribute to it. If not, you can open an HSA through many banks, brokerage firms and other financial institutions, as long as you have a qualified high-deductible health insurance policy.
If you plan to keep the money growing for the future, look for an HSA administrator that offers a portfolio of mutual funds for long-term investing and has low fees. Some of the top-rated HSA providers in 2023 are Lively, HealthEquity, OptumBank, Fidelity, HSA Bank and Bank of America.
After setting up your HSA plan, adding money is pretty straight forward. Most plans let you do online transfers from your bank, send checks directly, or set up a payroll deduction if offered by your employer. To access your HSA funds many plans provide a debit card and most allow for reimbursement.
Send your senior questions to: Savvy Senior, P.O. Box 5443, Norman, OK 73070, or visit SavvySenior.org. Jim Miller is a contributor to the NBC Today show and author of “The Savvy Senior” book.
